Destimetrics - Dry Conditions and Economic Headwinds Combining To Blow Back Bookings & Occupancy At Western Mountain Resorts
With the critically important holiday season coming up fast, Mother Nature has been unusually stingy with snowfall across most of the West. And despite the stock markets going gangbusters and savings accounts rising, other economic news such as higher prices and lower job numbers have had a chilling effect on consumer confidence and pushed it to its lowest level since the pandemic. The combination has had a significantly negative impact across 17 western mountain communities in seven western states. The sobering news was released yesterday by DestiMetrics* in their monthly Market Briefing from Inntopia and includes data from approximately 28,000 lodging units in Colorado, Utah, California, Nevada, Wyoming, Idaho, and Montana. As of Nov. 30, the booking pace during November plunged 19.8 percent for arrivals in the next six months with declines in arrivals for all six months.
“This ‘one-two’ punch from low snowfall and a troubled economy was a significant blow as we recorded the weakest booking pace we’ve seen since June 2022,” reported Tom Foley, director of Business Intelligence for Inntopia. “Opening day has been pushed back for many resorts and the amount of open skiable terrain around the region is hovering around 11 percent except for a handful of destinations. And unfortunately, the forecast for much of the region is not looking promising at this point,” he continued.
November delivered a weak launch to winter season
In a year-over-year comparison to last November, actual occupancy was down a considerable 6.9 percent while the Average Daily Rate (ADR) edged up 1.3 percent. But that uptick wasn’t enough to offset the lower occupancy and aggregated revenues for the month were down 5.7 percent.
Winter off to a sluggish start
For the full winter season from November through April including actual and on-the-books data, occupancy is down 3.7 percent compared to last season with deficits in all months except December. In contrast, ADR is up an aggregated 3.7 percent with increases in all months—most notably in February—up 6.6 percent and April up 10.7 percent. In aggregate, the seasonal rate increase almost offsets the lost occupancy but not quite, as seasonal revenues are down a scant 0.2 percent for the full winter. “And while softness in prior months has been isolated to one–and sometimes two–price tiers, occupancy and revenue weakened up and down the spectrum, impacting economy, moderate, and luxury properties similarly,” Foley noted.
Thanksgiving holiday occupancy experienced a sharp retreat to an almost entirely negative performance compared to data as of one month ago when Thanksgiving weekend and the 10 days between Nov. 21 and Dec. 1 were all up. However, the holiday weekend finished with daily declines between four and five percent. Delayed openings are cited for the stark reversal from on-the-books data from one month ago. And while Christmas and the pre-New Year’s bookings softened somewhat, that 28-day period looks better than the Thanksgiving weekend and a bit ahead of last season. Post-New Year’s Day occupancy held steady while a few of the individual dates posted moderate increases. Of the 28 days from Dec. 15-Jan. 11, 11 days are posting gains in occupancy while 17 are posting declines—as opposed to 18 days of gains and ten days of declines on-the-books 30 days ago.
Economic news and impacts
Even though the Dow Jones Industrial Average (DJIA) fluctuated dramatically during November including a sharp 3,000-point drop mid-month as investors worried about over-investment in tech sector, it managed a complete recovery and closed the month up 0.3 percent to finish at 47,416.4 points and an all-time high monthly close. “As mercurial as Wall Street was in November, it was still the shining star of the economy,” offered Foley.
Once again, both the Consumer Confidence Index (CCI) released by the Conference Board and the Consumer Sentiment Index (CSI) from the University of Michigan declined in November with the CCI dropping a sharp 6.8 points or 7.1 percent to reach 88.7 points and marking only the second time that confidence has dipped below 90 points since the peak of the pandemic in February 2021. The CSI dipped moderately in November but reached a near-historic low of 50.3 points—a dramatic decline from November 2024 when it was 71.4 points. Pessimism about the present situation and the short-term outlook were spread across all income, age, and political groups.
“Strength on Wall Street usually bolsters consumer confidence but the results we are seeing in these two consumer surveys along with the booking activity we’ve been tracking the past month strongly suggests that it is the high-end consumers who are driving current business in both the broader economy and, until this month, resort destinations,” observed Foley. “But while the CCI tells us that higher income groups indicated a steady intent to travel, that is a broader intent and doesn’t factor in the specific travel triggers for winter in the mountains, most notably snow–as western resorts have seen faltering performance at all price levels this past month.”
Due to the lengthy government shutdown in October, unemployment and jobs data from the Bureau of Labor Statistics was delayed until Dec. 16. That report confirms consumers’ concerns about continued soft jobs data, with 64,000 jobs added in November. And while this is an improvement from the original decline reported from ADP, it reflects an ongoing weakening job market–and that has consumers on edge. The national unemployment rate increased to 4.6 percent in November, the highest since October 2021, and significantly above the record low 3.4 percent recorded in April 2023.
Keeping a close eye on
Snowfall is the single most crucial ingredient for a successful winter, and this season is notably behind with only 11 percent of terrain open as of Nov. 30—compared to the typical 35-40 percent for this time of year. And the upcoming forecast is less positive with a weak La Nina expected to warm things up.
Occupancy and demand booking pace is at its lowest point since June 2022. After being essentially flat in October, both retreated significantly in November. Seasonal occupancy pace was down 19.8 percent while demand pace was equally dramatic, down 19.2 percent. The reversal is being blamed on marginal snow conditions and open terrain availability along with unchanged room rates that are unappealing to visitors looking for the likelihood of more attractive snow and slope conditions. Demand booking pace differs from occupancy as it is a straightforward measure of room nights booked during the month and removes the variances driven by shifting inventory out of the calculations.
International winter demand remains mixed but mostly down with overall bookings from international markets down 30.6 percent—a slight improvement from one month ago when it was 32.9 percent. By market, seasonal bookings from Canada are down a dramatic 43.9 percent, but an improvement from 30 days ago when it was a 52.9 percent decline. Bookings from Mexico retreated slightly but are still up 24.3 percent and remain the strongest international market. Western European bookings slipped a bit but remain up 3.3 percent compared to last year. Oceania bookings improved significantly from last month, moving from a 28.4 percent decline as of Oct. 31 to a 13.1 percent decline as of Nov. 30.
Length-of-Stay was a bright spot in the data during November as stays for that month stretched to 3.24 nights, the longest November stays since November 2020 and an aggregated .36 nights longer than last November. However, the remaining five months of the season are currently posting shorter stays. Foley pointed out that “while .36 nights doesn’t sound like much of an extension, you can look at it as an extra night stay for every three bookings a property makes—and that adds up to some real numbers.” He further elaborated that “although the remainder of the season is seeing shorter lengths-of-stay due to conditions and the economy, consumers clearly want to stay longer but are having trouble justifying the extension at the higher price points.”
Booking lead-times extending as early season snow failed to materialize, consumers deferred their ski and snowboard trips with the hope of better snow conditions later in the season. Last year, bookings were made an aggregated 55 days in advance but this year, that lead-time has extended to 59.8 days.
Average Daily Rate (ADR) is essentially unchanged despite thin conditions. At an aggregated $697/ night, rates edged up 0.1 percentage points from last month for the season with rate increases being posted for every month.
Rate gains are no longer offsetting declining occupancy—at least for the full season, as seasonal revenues dropped from a 3.2 percent seasonal gain as of Oct. 31 to a 0.2 decline as of Nov. 30. However, individual months vary with the rate gains in December, February, and April offsetting the decreases in occupancy in those months. “In recent months, higher room rates have helped to offset softer occupancy as more affluent travelers continued to book and offset the declines in the lower price terciles,” added Foley. “But that isn’t the case this month with even luxury travelers pulling back, reducing the ADR safety net and pushing revenue into negative territory.”
Occupancy and revenue dipped in all pricing categories—from economy to luxury. Economy properties up to $450/night lowered rates by 1.1 percent and occupancy has lost 3.7 percentage points to arrive at a 6.9 percent decline in seasonal occupancy. Moderate properties priced from $451 to $900/night also eased rates a slight 0.5 percentage points but gained no occupancy and lost 4.4 percentage points to reach a 4.4 percent decline in occupancy. Luxury properties over $901/night boosted rates during November, causing the first retreat in this category since early last winter with occupancy for the season down 4.6 percent and revenue down two percent.
“The lack of snow combined with increasingly pessimistic consumers who are less confident than they have been since the depths of the pandemic, is leading to the slowest booking pace in several years,” confirmed Foley. “This could be the signal for properties to further explore tweaking value-added enticements and incentives that matter to consumers, working with partners on the mountain and in the communities,” he suggested. “Although it is still early days and this is not yet a deep crisis, a solid snow and booking foundation for the winter did not arrive in November, and we’re seeing a retreat in booking activity at the wrong time,” he added. “While we can’t control the weather, politics, or the economy, it is time for a close assessment of those factors that the lodging industry can control and act accordingly,” Foley concluded.
