Too much competition in Summit County, some say
Business owners across Summit County point to the same issues to explain a two-year downturn in sales: 9/11, war, reduced traveler confidence, drought.
Retailers, ski area officials and restaurateurs are waiting for a national economic upturn and a great snow year for business to improve, but those in the short-term rental market are contending with an additional challenge: increased competition from a diluted bed base.
“You can’t double the inventory in a flat industry and expect there to be no consequences,” Michele Tonti, owner of Tonti Management, said in an interview last week.
For two decades, the number of skier days in North America hovered around 50 million. As skier numbers remain flat, development continues to add units to the county’s bed base. While some units serve affordable housing needs, many are upscale developments that are increasing competition in the property management industry.
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“The pie has gotten bigger, but the slice much smaller,” said John Gain, owner of Breckenridge Central Lodging. “So the town’s tax base looks rosy but us individual guys are dying of cancer from the inside.”
Gain said nightly rentals are down 20 to 30 percent.
In the mid-1990s, Gain’s company could rent a two-bedroom unit 90 nights and a three-bedroom unit 120 nights in a season. Today, the same units would rent for 75 nights for a two bedroom and 100 nights for a three bedroom, he said.
And although rack rates steadily rose over the past few years, with a two-bedroom unit currently renting for $295 per night, this year Gain reduced rates by 35 percent in February and March and is selling nights for as much as 50 percent off in April.
Owners of Grand Timber Lodge and Tonti Management said those companies also reduced rates this spring to attract late season customers.
“Some [customers] are better than none,” Gain said. “The lack of customers and too much competition have lowered the rates.”
Gain said business also is hurting because of shorter stays. In 1982, when Gain opened up for business, average length of stay was 6.2 nights, he said. In 1995, it was 5.2 nights and today it is 4.6 nights.
“You have to clean the units twice as much, and it triples the weekly cost,” he said.
Like other businesses, Gain said his bottom line is further reduced by a list of rising costs.
“Soap, toilet paper, hourly wages, health insurance; everything costs more,” he said, noting one exception in telephone service, which costs a fraction of what it did 10 years ago.
But Gain said he quickly spent those savings and more on Internet marketing.
Cathi Kneuper, 12-year homeowner and owner of Copper Vacations at Copper Mountain Resort, remembers when, in 1995, competition for skiers from other Western states really heated up.
“And then the building started,” she said. She estimates that 500 units were added to Copper’s village when Intrawest built five new buildings in the village core.
“It’s all about supply and demand,” said Kneuper, who worked at the resort’s central reservations office before purchasing Copper Vacations four years ago from East West Resorts, where she had been an employee. “With only 500 beds, Copper Mountain didn’t fill their beds Sunday through Thursday to begin with, so to add another 500 condos dilutes the pool.”
Business was down the last three seasons, but despite the fact that rack rates are equal to 1997 prices, this year has shown an improvement, Kneuper said. The going has been tough, but she said she firmly believes development is necessary to win more of the skier market share.
“Every single ski resort in this nation is adding beds,” she said. “If we’re going to compete with those other resorts, we have to go through growing pains.”
With about 60 property management companies in Breckenridge (Copper has only a handful), Gain predicted competition would be “filtered out” to sustain the industry.
“I believe the smaller mom and pops could survive, but not like they used to,” he said.
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