Mountain towns see modest uptick in tourism, but winter season still in doubt
Occupancy rates across Western mountain resort towns are significantly lower this summer than in 2019, an expected result of the COVID-19 pandemic. There is a glimmer of hope for businesses that rely on travel and tourism, however — rates in July showed improvement.
The news comes from the latest DestiMetrics report by Inntopia, which tracks lodging performance in resort towns, including Park City. For its Western resort town report, it includes data from locations in Colorado, Utah, Nevada, California, Idaho and Wyoming.
Tom Foley, Inntopia’s senior vice president for business operations and analytics, said the most crucial indicators of the mountain resort tourism industry’s health right now are booking rates and the ability to fill in vacancies. By those measures, he said, July turned out to be an “excellent month,” with the strongest booking numbers since February.
Much of the activity is coming in the form of same-month bookings, rather than advance reservations, which Foley said is attributable to uncertainty brought on by the coronavirus pandemic.
“This is the booking equivalent of folks looking over their shoulders and saying ‘the coast is clear,’ Foley said. “They’re booking while they know the caseload in their own community and household, the caseload in the destination, what policies are in place, COVID-19 management at the destination, rates, etc..”
Bookings for months ahead, however, have not kept up with last year’s pace. Again, Foley said, this shows people are hesitant to book a vacation too far in advance, a trend that is difficult for those in the lodging business to manage.
“There’s a huge hole in the planning process when you’re not laying in your foundational bookings for the weeks or months ahead,” he said. “On the downside, it’s the equivalent of driving in a fog; on the upside, lodging properties appear to be able to keep rates higher for longer periods of time. Unfortunately, that means that the discounts as arrival dates approach are deeper than usual, but since they’re holding the rate up longer, there’s a net win to be had in year-over-year rates, which are positive for the months ahead.”
Another metric Foley said is indicative of the health of the lodging business is the average daily rate, which increased by 6% this July compared to July of last year. While the rate increase was not enough to offset the decline in occupancy — revenue was down 23.8% year-over-year — it did still show improvement compared to June, which saw revenues 62% below the same period in the prior year.
Foley said increasing rates is a sensible tactic in this environment.
“There’s a valid argument that says that those that are traveling now are going to and are willing to pay the price, but that those that are not traveling are not resisting due to price but rather due to personal health and comfort, and no amount of discount is likely to entice them,” he said. “Therefore, play the rate card when you can and roll back when you need to, after the initial wave of pent-up demand has diminished, leaving the reticent traveler to entice.”
Looking ahead to the winter, Foley said advance bookings are down sharply but there are some reasons for optimism. Christmas and New Year’s both fall on Fridays, and he said bookings for those weekends are strong in many of the mountain resort towns and represent potential bright spots on the calendar. At this point, he said, there are too many factors at play and the winter season is too far out to accurately predict how lodging will be affected. First, there are the usual factors — the weather and the economy. The weather is always a question mark, and the economy, he said, is likely to still be hurting.
“And then we have a lot of added factors this year, chief among them being COVID-19,” he said. “There are many downstream factors to that, such as how a destination is choosing to manage it, local resident sentiment, incidence of disease in the market, to name a few.”
Perhaps the biggest unknown, he said, is the ski resort response to COVID-19. How the pandemic affects mountain operations will be an enormous factor in lodging performance.
“Capacity on hill, if limited, may drive in-town capacity restrictions,” he said.
The election in November, too, is likely to affect vacationers.
“Federal policies are likely to play a role,” he said. “This year’s election and the consequences of it are going to add another unknown factor to consumers’ considerations and may actually force them to hold off on bookings until an outcome — and any resulting changes to the federal response to COVID-19 — are known.”
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City Hall in December posted strong sales-tax numbers, powering past projections and nearly equaling the figure from the same month in the previous year, as Park City continued to beat expectations amid the continued spread of the novel coronavirus.