Midsummer Occupancy, Rate and Revenue Cooling at Mountain Destinations

As of July 31 – the midpoint of the summer season for western mountain resorts – variations in lodging performance among seven different states in the region and 290 properties is more apparent than in previous months. However, aggregated data released last week by Inntopia in their monthly DestiMetrics Market Briefing revealed that though occupancy growth is slightly slowing as 2018 progresses, overall metrics continue to creep upward toward an expected seventh consecutive summer record.

"Disparity among destinations is broader than in the past, as some struggle with capacity issues, others with wildfire smoke, and others are still working to refine and capitalize on their summer message," says Tom Foley, vice president of Business Intelligence for Innotopia.

Occupancy for the month of July declined by 0.7b percent compared year-over-year, yet revenue increased a full 2 percent for the month, bolstered by a 2.6 percent gain in the Average Daily Rate. For the fully summer – May through October – occupancy is up 2.2 percent and ADR is up 2.1 percent, leading to a seasonal revenue increase of 4.3 percent compared to last summer. Along with July's dip, September is showing a 5.4 percent decrease in occupancy, but the other four summer summer months are posting increases.

"As some properties reach essentially full capacity on weekends and holiday periods, it is pretty difficult to increase the occupancy numbers," Foley says. "But with modest upticks, aggregate revenues are managing to keep a bit ahead of last summer."

The Briefing also reported on bookings made in July for arrivals in the six months through December – this figure is down 4 percent compared to last July. However, bookings made in July for arrivals the same month were up 5.8 percent. Bookings for August through December arrivals were down every month except November year-over-year.

Key economic indicators were also summarized in the monthly report.

The Dow Jones Industrial Average rose 4.2 percent and delivered the third increase in the last four months, while moving it above the 25,000-point benchmark for the first time since February. A surge in the Gross Domestic Product during the second quarter of 2018 was credited with the uptick in the DJIA, although a cautionary note suggested the strength of the GDP was reflecting stockpiling and bulk buying in advance of the U.S. imposition of tariffs on Canadian, European and Chinese products.

"Most analysts agree those tariffs will have an impact on earnings, hiring and consumer prices over the coming months if the tariff disagreements are not resolved during that time," Foley says. "Analysts also agree that the Q3 GDP in mid-October will be key to determining whether these trade actions have been effective or damaging to the U.S economy in the short-term."

The Consumer Confidence Index rose 0.3 percent, making it the fourth increase in the past seven months, but still indicating a flattening pattern as up and down shifts have been less than 1.4 percent in the past three months.

Employers added 157,000 new jobs in July – below the 193,000 positions expected and a considerable cooling in job creation from the previous two months. Despite the decrease, the national employment rate dropped to 3.9 percent. 

"A subtle, but notable shift occurred this month in the number of destinations reporting year-over-year increases in occupancy and revenue compared to the number reporting decreases," says Foley. "Last year at this time 12 of our 18 participating destinations were reporting occupancy gains while six were reporting decreases. This year, that has shifted to a 50-50 split with only nine reporting increases and nine reporting decreases. Although a rough wildfire season may be impacting performance in some regions, it is notable that as consumer confidence levels out, inflation picks up and trade tariffs threaten markets and pricing, we might just be seeing some early signs of economically driven softenings in bookings and rate for mountain destinations in the months ahead."