Destimetrics - Inbound Travel From Canada, Western Europe, & Now Mexico Continues To Slip; Daily Rates Edge Up While Occupancy Dips

For the sixth consecutive month, the booking pace for DestiMetrics* 17 participating mountain destinations in seven western states reached its longest downward streak since the onset of the COVID-19 pandemic. The most recent data released by Inntopia in their monthly Market Briefing revealed that despite some recovery in financial markets and economic indicators, booking reticence for summer vacations persisted while bookings from international visitors in Canada, western Europe, and now Mexico, continued to decline.

The Average Daily Rate (ADR) edged up two percent in May while occupancy dipped a scant 0.7 percent compared to last year at this time. However, that lower booking pace during May reversed the positive upward year-over-year occupancy trend for the full summer. As daily rates for the entire summer rose an aggregated 3.7 percent, overall aggregated occupancy went from a positive position at the end of April to being down 1.2 percent by May 31. Bookings from Canada are now down 55.5 percent while western Europe is down 35.5 percent. And for the first time in months, there is a decline from Mexico—down 5.4 percent. Domestic bookings are up just 1.7 percent. The overall booking pace during May for the full summer was down 7.1 percent.

After several post-pandemic summers with consistent year-over-year growth, occupancy for the upcoming summer is sluggish although higher rates are helping to offset those losses for lodging properties. July occupancy is down 5.1 percent, August is down a slight 0.9 percent, and September has slipped down 4.7 percent.

“The financial and political turbulence of the past few months continues to have an impact on bookings—even with some good economic news and an uptick in consumer confidence during May,” explained Tom Foley, senior vice president of Business Intelligence for Inntopia. “The Memorial Day weekend, the unofficial kick-off to the summer season, was pretty ‘so-so’—as expected, but the larger concern now is that the two busiest months of the summer—July and August, are clearly underperforming.”

The role of economic news

After three tempestuous months, the Dow Jones Industrial Average (DJIA) reversed direction and closed on May 31 up 1,600 points or 3.9 percent as investors responded to an easing in trade tension between the US and China. Strong corporate earnings contributed to the surge, but the Dow is still 5.9 percent lower than its recent high of 44,910 in December 2024.

The Consumer Confidence Index (CCI) released by the Conference Board revealed a positive reaction to the market news by rising 12.3 points up to 98 points (14.4 percent) and a dramatic improvement from the five-year low of 87.7 points recorded in April. Confidence improved across all income and age groups as well as political affiliations. In contrast, the Consumer Sentiment Index (CSI) from the University of Michigan was unchanged from April at 52.2 points but it was the first time in four months that a decline has not been reported. Respondents to both surveys reported being more optimistic about trade with China but indicated ongoing concerns about wages and future inflation.

The latest data about unemployment and jobs were mixed as the Unemployment Rate remained unchanged at 4.2 percent, but job creation slowed down notably as only 139,000 new jobs were added during May. Additionally, job creation numbers for the two previous months were adjusted downward—with March going from 185,000 to only 120,000 and April dropping from 177,000 to 147,000. However, wages also continued to outpace inflation–now up 3.9 percent in a year-over-year comparison.

Consumer prices increased by 0.1 percent in May and inflation rose from 2.3 to 2.4 percent, the first increase in the national inflation rate since January. “There is some evidence that tariff costs are being passed to consumers but drops in energy and some commodities like vehicles and apparel have helped offset some of those daily consumer costs,” noted Foley. “The good news for the travel industry is that thus far, consumers are paying appreciably less to get to their destinations this summer as gasoline prices and airfares are down significantly from last year at this time and are helping to offset the higher costs of lodging.”

Keeping an eye on

• Holidays are not really hitting as the Memorial Day weekend limped in with year-over-year increases in occupancy of less than one percent for the three nights of the holiday weekend. But high expectations for the days before and after the 4th of July weekend are currently mostly lagging behind last year with the exception of July 4, up 2.8 percent and July 5 up 2.1 percent. All other dates between July 1-11 are down and have been declining.
• Economy properties edged up in May as the luxury category struggles in a reversal of the past several months, economy properties priced up to $250/night have slightly increased rates while also boosting their occupancy and in turn, improved their revenue. This was the only category to record strengthening in either occupancy or revenues. Moderately priced properties at $251-$400/night decreased their rates slightly but did not improve their occupancy and netted softer revenues as of May 31. And the luxury tercile charging $401/night and above raised their rates by 1.4 percent but that resulted in a 3.2 percent drop in occupancy.

“The most notable conclusion from this month’s data is the undeniable impact that rate is having on bookings,” stated Foley. “Consumers are more price sensitive than they were during the peak inflation surges in the immediate post-pandemic period. We’re seeing a clear pattern that just about every time that year-over-year daily rates rise at all, the booking pace declines—and on the rare occasions that rates have dropped, those dates pick up bookings,” he continued.

Foley went on to observe that “the mountain lodging industry appears to be shifting to a philosophy of quality over quantity, choosing to attract fewer guests but targeting those willing to pay a bit more to drive revenue–while sacrificing the higher customer volume. And this may be a solid, if not the only approach available right now,” he elaborated. “So, as the volatility continues and consumers remain cautious as they await what impact tariffs will have on inflation, lodging properties will have to continue with diligent and balanced rate management and re-visit past successes with value-added strategies,” he concluded.