Destimetrics - Summer Occupancy Is Down At Western Mountain Destinations; Daily Rates Still Edging Up

After nearly seven years of consistent year-over-year growth, aggregated lodging results among 18 mountain communities in six western states is starting to experience small but measurable declines. The DestiMetrics’* monthly Market Briefing released yesterday by Inntopia, revealed that modest declines that started appearing more than a year ago are emerging as a slight, but consistent, negative trend.
For the month of June, actual occupancy was down 4.5 percent compared to June 2018. And even though the Average Daily Rate (ADR) for the month was up 3.1 percent, the decline in occupancy led to a 1.6 percent decrease in revenues for the month.
The full summer period from May through October showed a similar pattern. As of June 30, occupancy is down 3.4 percent compared to the same time last year with reduced year-over-year occupancy in all six summer months—a notable change from last month’s Briefing when four of the summer months were showing increased occupancy.  In contrast, ADR for the summer months is up 3.4 percent and continues to help offset the declines in occupancy, though not enough to push aggregated summer revenue higher than last summer. The result is a slight 0.5 percent decrease in summer revenues this year.
“For the first two months of the summer season, lodging performance in western communities has not been as robust as we’ve seen in past years,” said Tom Foley, senior vice president of Business Operations and Analytics for Inntopia. “Although rates are continuing to tick up, they are increasing at a slower rate than any time in the last six years, and the cooling occupancy figures are pulling revenue figures down for the summer to essentially flat year-over year.”
Bookings taken in June for the upcoming six months also provided evidence of a notable shift in mountain travel vacations. Bookings made during June for arrivals in June through November were down an aggregated 9.4 percent compared to the same time last year. While bookings for the month of November shot up 21.1 percent, the other five summer months were down with September showing the most dramatic decrease—down 31 percent. This is the fourth consecutive month of weakening booking pace among participating properties.
Economic indicators for the month of June were once again mixed. The Dow Jones Industrial Average (DJIA) rebounded 6.23 percent from May to post the highest monthly closing on record and to become the strongest June since 1938. The market was buoyed by the Federal Reserve hinting it will lower interest rates in the near future to mitigate the impact of trade instability with China.
“While Wall Street is celebrating the Federal Reserve’s possible positive announcement, many businesses are struggling to adapt to the economic challenges and business fluctuations created by trade wars and tariffs--both threatened and real,” cautioned Foley.
In a flip flop from last month, despite the record high in the DJIA, the Consumer Confidence Index (CCI) fell a sharp 7.5 percent to close the month at 121.5 points. This marks the largest decline in confidence since July 2015 and the fifth drop in the CCI in the past eight months. The Unemployment Rate rose to 3.7 percent during June and was driven by prospective employees returning to the job market with the creation of 224,000 new jobs—dramatically exceeding analysts’ expectations and surging well past last month’s anemic 72,000 new jobs. The unemployment figures go up when new job seekers are included in the monthly statistics.
“Western mountain destinations are clearly experiencing a different set of circumstances this summer than for the past six to seven years when consistent increases in occupancy and rates delivered steady revenue growth,” Foley explained. “Metrics for the summer are softening, a pattern we first detected back in 2018. The declines are not yet dramatic but the increasing demand for summer mountain recreation and lodging has put pressure on the supply which has led to rising rates,” he continued. “Those rising rates are starting to lower demand, and while properties have been able to maintain and raise rates thus far, occupancy is continuing to slide and it will be interesting to see how properties strike the balance between maintaining visitors and revenues for the remaining summer months,” concluded Foley.

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