December Snow Brings December Bookings

Rate management driving growth; snow plays vital role

Strategic rate management coupled with widespread snowfall across the western portion of the U.S., helped turn December from a challenging month to a revenue winner for mountain lodging properties. That assessment was delivered by Inntopia in its monthly DestiMetrics* Market Briefing released yesterday. As of December 31, bookings made for arrivals in the month of December were up a whopping 50.9 percent compared year-over-year comparison to in-month, for-the-month bookings made last December. Those bookings were largely driven by a decline in the Average Daily Rate (ADR) as properties worked to increase bookings for a month that had been pacing down since August.

"In last month's briefing, we were looking at December's occupancy with some concern as the timing of Christmas and school holidays was presenting challenges," said Tom Foley, senior vice president of business operations and analytics for Inntopia. "Lodging properties responded to the situation by adjusting rates to attract consumers and when Mother Nature delivered widespread and signficant snowfall in most regions, December occupancy rebounded nicely."

Actual occupancy for December was up 4.2 percent compared to December 2017, but the average daily rate dipped 3.9 percent to deliver essentially flat revenues with a 0.1 percent gain in revenue year-over-year.

The remainder of the winter season and into early summer also benefitted from the accelerated December pace. As of December 31, aggregated occupancy for the winter season from November through April cropped up 4.7 percent in comparison to this time last year. April was once again the only winter month showing an occupancy decline – down 14.2 percent as the Easter holiday moved to later in the month – from April 1, 2018 to April 21, 2019. In contrast ADR is down a moderate 1.5 percent for the overall season with decreases occuring in four of the six months. The balancing act between occupancy and closely managed ADR is delivering an aggregated 3.2 percent gain in revenues for the season as of December 31.

"As we enter the peak ski season months, western mountain lodging is poised for another strong season bolstered by healthy snowfall and savvy rate management," said Foley. "Now that 'snow hangover' concerns have been assuaged, room rate is becoming a more compelling consideration for skiers and riders as we see what appears to be consumers pushing back a bit against some historically high room rates in the industry. While declines in room rates are expected as a part of yield management, at the industry level we are seeing a lot more of it this year than any time since 211-12."

Consumers are also keeping an eye on the economy. Key indicators during December were mixed. The Dow Jones Industrial Average (DJIA) had a chaotic month with wild swigs up and down spanning more than 6,400 points from the month's highest to lowest points. The DJIA closed on December 31 down 8.5 percent from November's closing and 12.3 percent below its record monthly close in September. 

"Investors were increasingly concerned about international trade wars, particularly with China and the U.S. government shutting down prior to the arrival of a new Congress, and those concerns contributed to the instability," said Foley. "All domestic and foreign marketplaces were also unpredictable and some wariness is beginning to show up in consumer confidence which could, in turn, impact the summer destination travel market."

Consumer confidence also dropped 8.3 points in December for the second consecutive month and is its fifth decline in 2018.

Categories: Real Estate