Destimetrics - Booking pace slipped back in August but delicate balancing act impacting winter bookings.
Faced with continued rising prices and inflation during August as well as disappointing news about jobs, consumer confidence wobbled further, and the combination kept western mountain lodging properties walking a tightrope to attract rate-sensitive consumers without losing ground on revenue. The 17 mountain destinations participating in DestiMetrics* monthly data round-up continued to grapple with fluctuating inventory availability along with a decline in the August booking pace—following increases in the previous two months. In the monthly Market Briefing released by parent company Inntopia, the summer season is likely to finish with modest increases in rates and revenue while occupancy is still too close to call with two months of the season to go. These summer patterns are continuing and the early indicators for the upcoming winter are showing modest revenue and rate increases with declining occupancy compared to last year at this time.
“As the old adage goes, ‘it ain’t over ‘til it’s over,” but after some early season struggles back in April and May, lodging suppliers have tinkered with their pricing in response to consumer pullback and have managed to strike that delicate balance between attracting the right visitors that ensure they are maintaining their bottom line,” observed Tom Foley, director of Business Intelligence for Inntopia. “What emerged over the summer was that, in general, properties with stronger gains in rate captured less occupancy while those with softer, sometimes even reduced rates, managed to pick up additional occupancy.”
August occupancy picked up notably
Compared to last August, actual occupancy was up a solid 4.6 percent while the Average Daily Rate (ADR) eked out a 0.1 percent increase. That boost in occupancy easily offset the essentially flat rates to deliver a 4.6 percent increase in revenues for the month compared to August 2024.
Summer season holding close to last year
As of Aug. 31, summer occupancy was up a scant 0.7 percent compared to last year with June and August outpacing last summer while May, July, September, and October are all down modestly with declines ranging from 0.3 percent on-the books for October to being down 2.4 percent in September. Daily rates for the full summer are up 2.5 percent but with some significant variance between months with August posting a miniscule 0.1 percent gain while October is currently looking at a robust 10 percent increase over last October’s rates.
First glimpse at winter
With data now available through February, occupancy on-the-books for November through February as of Aug. 31 is showing a one percent decrease for those months with daily rates up 3.3 percent. Currently, November is showing the steepest drop, down 10 percent compared to last year while December and January are posting gains of 5.5 and 3.3 percent respectively.
“Winter data are showing the same characteristics as summer, with bookings gravitating towards those months that rates are down or close to flat, and shifting away from periods when rates are up,” explained Foley. “This type of rate management has been key to holding revenue gains this summer despite the challenges with booking volume, and we’re now seeing a clear picture of what that looks like playing out at the beginning of the winter booking season,” he continued.
Foley went on to clarify that “the critical months of December and January are currently both gaining in revenue, even though rates are down or flat for those months, because consumers are attracted to what feels like a cost-saving opportunity. And the opposite is true for November and February, with higher rates, lower occupancy, and early revenue losses.
Economic indicators
After an essentially flat July, the Dow Jones Industrial Average (DJIA) moved up 3.1 percent to finish at an all-time high monthly closing of 45,544.88 points as investors were encouraged by both strong corporate earnings and some trade deals with two key economic partners--Japan and the European Union. While Wall Street is confident of a cut in interest rates in September, consumer confidence remains weak as inflation continues to persist, and the impact of tariffs is finally being felt.
Both the Consumer Confidence Index (CCI) released by the Conference Board and the Consumer Sentiment Index (CSI) from the University of Michigan declined slightly in August. The CCI dipped 1.3 percent and marks the seventh consecutive month that the index has languished below the significant 100-point mark. Most notable for mountain destinations, vacation intentions fell for the second consecutive month with plans for domestic and international travel declining. The CSI was also down—5.7 percent. Respondents had a negative assessment of both current and future business conditions along with concerns about unemployment and inflation. The negative sentiments were recorded across the economic and political spectrum.
Unemployment and jobs weakened considerably again in August as the Unemployment Rate inched up to 4.3 percent. In the jobs report, employers only added 22,000 jobs to payrolls while the June numbers were revised from 14,000 new jobs to a decline of 13,000—marking the first loss of jobs since December 2020 at the height of the pandemic.
Inflation increased again in August and at a higher rate than expected, narrowing the gap between wage growth and rising prices. Hitting 2.9 percent for the month, this is the highest level since January as prices were up 0.4 percent from July, the highest month-over-month increase since January. Some of the biggest jumps were in airfares, up 5.9 percent from July and gasoline, up 1.9 percent from July. “Both of these products have a considerable influence on travel decisions for consumers—as does dining out which also edged up last month,” noted Foley. “And, as it relates to wage growth, which has been keeping ahead of inflation for many months, that gap has shrunk from 1.6 percent to 0.8 percent, and that can definitely have an impact on savings and discretionary spending like travel.”
Keeping an eye on
Occupancy booking pace slips back to negative territory. This measurement of bookings taken in August for arrivals in the next six months compared to the same time last year, dropped 5.9 percent after posting upticks in the booking pace during June and July. This is the sixth decline in the past eight months and reflects ongoing rate sensitivity by consumers. “The data clearly indicates that consumers are shopping properties over time and watching rates closely and are either deferring their bookings, shifting to a lower-priced category, or adjusting travel dates to find rates that fit their budget and comfort zone,” pointed out Foley.
Room Nights Available (RNA) which has been shifting appreciably from month to month recently, once again declined during August—moving from a deficit of 32,000 fewer units in July to a deficit of 42,000 in August. That trend is currently persisting into the winter as there are currently 35,000 fewer units available than last winter as owners are either using their properties more often, taking them out of rental programs, offering to non-paying guests, putting them on the market, or have sold them.
Winter occupancy flipped to negative during August as on-the-books winter occupancy dropped significantly during the month, moving from being 10.6 percent ahead of last year as of July 31, to being down one percent as of Aug. 31. “These are early days in the booking season, so this drop has to be taken with a grain of salt,” cautioned Foley. “It will be interesting to see if consumers will be more confident about the economy and more confident to making a booking if interest rates are lowered by the Federal Reserve in September,” he added.
International arrivals continue to be down significantly but have stabilized and even improved slightly. Overall, international visitors are down 38.6 for the summer which is an improvement from last month when they were down 39.9 percent. Canadian visits are down a dramatic 56.8 percent, less than the 57.8 percent recorded last month. Bookings from Mexico are up 15.5 percent—a significant improvement, while visits from the Southern Hemisphere are down 44.2 percent and Europe is down 26.9 percent.
Economy properties improved a bit during August as price sensitive consumers appeared to gravitate in their direction. Economy rates edged up 1.6 percent in August and enabled a 0.6 percent increase in occupancy after losing ground in both categories during the previous two months. Moderate properties were essentially flat with a scant 0.1 percent increase in rates, occupancy, and revenues while the luxury category lost occupancy as they tried to capture an 0.8 percent increase in rates. All three pricing categories improved slightly in August, but the economy tercile performed the best, capturing a 2.2 percent increase in year-over-year revenues compared to moderate properties with an 0.1 percent uptick and luxury properties with an 0.2 percent increase.
“The bulk of summer business is now over but the two remaining fall months have potential to allow the summer season to end on a high note—even though consumers continue to approach travel spending cautiously with any rate increases. The data clearly shows that rate increases--whether month-over-month or year-over-year--inhibit booking volume while softer rates are attracting stays,” assessed Foley. “But as we look ahead to winter, at this point it is a mixed bag with two months up and two months down but facing the same consumer hesitation that we’ve been tracking since April. What we do know though is that everything from lowering interest rates, global tensions, and a few early seasons storms can dramatically change the dynamics in a very short time,” he concluded.
*DestiMetrics, part of the Business Intelligence platform for Stowe-based Inntopia, tracks lodging performance in resort destinations. Each month, the forward-looking reservation data is compiled and aggregated with individualized results for each region and distributed monthly to subscribers at participating resorts. Approximately 28,000 lodging units in 17 mountain destination communities across Colorado, Utah, California, Nevada, Wyoming, Montana, and Idaho contribute to the data pool, and represent an aggregated 55 percent of all available rental units in those regions. Results may vary significantly among/between resorts and participating properties.
