Positive signs seen for Vail economy
August 31, 2009
VAIL, Colo. – VAIL – Observers of the local economy are seeing bright spots, including a recent upturn in real estate activity as well as large crowds at events in Vail.
At the same time, some say Vail can expect a winter much like last winter, which saw tourists spending less money while hotels and stores slashed prices to attract customers.
“It’s now looking like holding your own against last year, which was arguably a tough year, would be a safe bet,” said Ralf Garrison, whose company, the Advisory Group, studies destination resorts such as Vail.
Vail’s best hope is a combination of great snow, improved consumer confidence and a savviness from retailers who understand the new state of the resort industry, Garrison said. Guests are looking for value as well as vacations close to home, he said.
In Vail, hotel occupancy was down 8.7 percent in July compared with last July. Advanced bookings, compared with the same times last year, are down 29.7 percent for September and 36.6 percent for October.
For June, Vail sales tax collections dipped 21.8 percent compared with the previous year.
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Those numbers aren’t good, but, as Garrison noted, at this time last year, the bottom had yet to fall out of the economy.
“The question is, when we pass the anniversary of the change in booking patterns, will things settle down to a point, will they end up being flat or will they be better or worse than last year?” Garrison said.
On a positive note, Vail is outperforming other mountain resorts, according to a recent report by Garrison, which showed other resorts’ hotel occupancy dipping by 13 percent in July compared with last year, compared with Vail’s 8.7 percent drop.
Earlier this year, Vail devoted about $550,000 in additional marketing funds to bolster summer tourism. The “Vail All the Love” summer campaign has included advertising as well as a Web site. Last fall, the town devoted about the same amount of extra funds toward winter marketing.
If the sizes of crowds are any indication, that marketing was effective in bringing people to town.
Five big summer events – the Teva Mountain Games, the Fourth of July celebration, the Vail Arts Festival, the Bravo! Vail Valley Music Festival and the Vail International Dance Festival – saw increases in attendance, according to Kelli McDonald, economic development manager for the town of Vail.
Last winter, Vail and Beaver Creek saw more skier visits – 1.6 million and 931,000, respectively – than the previous winter.
“We’re getting a lot of people coming to Vail, both in the winter and summer,” McDonald said, but added there seems to be a “padlock on their pocketbook.”
People are buying less expensive retail items and meals, McDonald said. Vail marketing efforts will increasingly target lucrative “destination” guests, who come here from out of state and often spend significant amounts of money on hotels and dining. At the same time, the community wants to keep the share of market of Front Range guests that it was able to get last year, she said.
The town has not yet discussed devoting extra money to marketing Vail this winter as it did last winter and this summer, McDonald said.
Another big local industry, real estate, has struggled over the last year after coming off a record boom that culminated in $1.5 billion in sales in 2007. Sales through June of this year are 36 percent of what they were through June 2008, according to data compiled by Land Title Guarantee Co. in Eagle.
But the industry has shown signs of improvement this summer. About $95 million in transactions were completed in June – the highest monthly amount so far this year.
Harry Frampton, an owner of Slifer Smith and Frampton, a large local real estate company, said his company has seen positive signs in the last couple of months.
“There’s no question in the last 60 days, we’ve had very significant sales,” Frampton said.
While some discounting was necessary to make sales happen, July and August were good months for the company, he said.
“We are encouraged,” he said. “There’s no question there’s more confidence out there than there was nine months ago.”
Frampton’s other company, East West Resorts, manages rentals and lodges across the West. Bookings during the summer saw an uptick, with lots of late bookings and customers who were looking for deals, he said. He expects business this winter to be “not dissimilar” to last winter. We may not see as many big groups coming here, but we will likely see a fair amount of individuals looking for good value, he said.
But, right now, there are not too many positive stories coming from local businesses, said Don Cohen, executive director of the Economic Council of Eagle County, a nonprofit group promotes the economic health of the county.
“There is not a singular story at all I’ve gotten of hope and renewal, ‘Oh, my business is really doing well,’ or ‘I think we’re turning a corner here,'” Cohen said.
While national travel may be strong, international travel will be down, Cohen said, adding that he believes the real estate and construction sector will continue to struggle this winter. The lodging and hospitality communities are gearing up for a season of lowered expectations, he said.
“Success would look like they were at least hitting last year’s numbers,” he said.
Unemployment rate, another economic indicator for the county, eased in July. The rate decreased to 6.8 percent for the Edwards area, down from 7.8 percent in June. However, it is still significantly higher than the 3.5 percent rate of last July. Colorado’s unemployment rate was 7.7 percent in July.
Cohen said he’s doesn’t yet see on the horizon creation of permanent jobs here, though there will be demand for seasonal workers this year.