Decline of long-lead bookings makes season ahead harder to predict

As mountain destinations anticipate or begin ski operations for the 2020-21 winter season, all eyes — from state and local government to the liftie — are focused on what the season will look like not only operationally on the mountain, but downstream through the balance of the community. 

As tourism-dependent economies, most towns are anxious about how, when, or even if guests will travel this season, how long they’ll stay and what they’ll spend while here. But seeing that far ahead is proving to be a real problem at most mountain towns as booking lead times contract dramatically, making the “view” ahead murky at best. And it’s not likely to change much in the months to come.

Consumers adopted a “wait and see” attitude back in May, with most reservations booked at that time not scheduled to arrive until more than 180 days in the future; uncertainty created a very “long lead” booking window. But with reopening and the socialization of COVID-19 management policies in late May and June, pent-up demand was released, and lead times compressed from 180 days to about 30 – whiplash indeed, and visualized by the grey line on the accompanying chart. 

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Long-lead bookings fall off

The release of winter operating plans by the major ski operators in August and early September brought lead times back up as bookings for January through April increased dramatically (see the orange line on the chart), while the short-lead bookings remained constant. However, with that second wave of pent up demand that focused on winter bookings spent and increasing incidence of COVID-19, consumers have returned to a cautious stance, with long-lead bookings falling off dramatically over the past 45 days. Though there is still modest volume, they now make up a fraction of the total transactions and the majority of reservations taking place over the past 45 days has been for November and December arrivals, with little activity beyond Martin Luther King day in mid-January. 

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Erik Austin, vice president of Reservations at Vail Resorts, which has lodging inventory across North American resorts, echoes this broader industry data, though perhaps not as dramatically, stating that “lead time for reservations continues to drop as we get closer to season start, down 11 days now, with growth to Christmas, and January through March all down (versus last year).” 

Predictions becoming increasingly difficult

We expect that, as incidence of disease continues in both source and destination markets, those booking lead times will remain compressed for the foreseeable future. 

On the upside, lodging properties, activity providers and other suppliers are able to accurately anticipate the immediate future and plan staffing and supply chains accordingly, assuming there are no short-term disruptions. But booking activity is so focused on the short-term that even two months into the future is hard to anticipate, which creates angst and may make some suppliers reluctant to guarantee staffing beyond the immediate 45 days or force them into over- or under-ordering supplies such as food and liquor.

On the downside, the crystal ball for the balance of the season is murky. While the period through Dec. 31 is important both in terms of setting the tone of the season and realizing those first critical revenue collections, the majority of revenue and occupancy for the industry occur in January through March, and those dates rely heavily on early bookings that are yet to substantially materialize. This makes long-term planning — from staffing and supplies to engineering, town operations, budgeting, and tax revenue collections — hard to anticipate. 

Complicating the issue, the resistance to booking long-lead reservations isn’t mirrored in the prior year data set, meaning that while consumers wait, booking pace — the measurement of reservations made this year versus last year for a corresponding set of arrival dates — is creating occupancy and revenue deficits for January through March that will be harder to overcome. 

Some bright spots in short-lead data

But despite the difficulty seeing long-term, there are bright spots in short-lead data that we can use, even if only to mitigate angst and build positive anticipation, both in the current lodging data and in the greater marketplace. 

First off, both October and November are reporting strong revenue gains at mountain resorts, with October revenue up 22 percent versus October 2019, and November (on the books as of Oct. 31) up 22.9 percent. In a bit of a mixed message, while these gains are being driven by extremely strong room rates, they’re not being driven by strong occupancy, which was all but flat for both months. This is information about the type of guest that’s currently booking that lodgers can use to create the best possible revenue-generating scenario going forward. 

Secondarily, the strong room rate for October and November is also showing up in longer lead reservations. Importantly, this means that lodging properties are not being forced to decline room rate at a time when occupancy is weak, a combination that the industry had to adopt coming out of 2008-09 and from which it took almost 72 months to recover. 

But it also means that price doesn’t appear to be a significant barrier to occupancy, leading us to assume that health and wellness are, and making recent announcements of highly effective vaccine candidates from both Pfizer and Moderna that much more strategically important to the industry in the long-run, hopefully instilling renewed confidence in the consumer to return to longer lead bookings, and restoring the view of the runway ahead as the industry spools up for takeoff and recovery.