The travel business faces a “one-two punch” from the coronavirus that threatens to cool what’s been a solid winter for Western mountain resorts, according to Inntopia, a company that examines occupancy rates and bookings for clients such as Aspen-Snowmass.
The first punch from the new virus is “travel fear” among potential consumers.
“There’s the fear of getting sick, the fear of being quarantined, the fear of making a travel commitment that’s canceled for any number of reasons, the fear of a lost investment and the fear of the unknown,” wrote Tom Foley, Inntopia’s vice president for business intelligence, in a report released Thursday.
The second punch is potential strain on consumers due to economic disruptions. The economy is expected to experience “instability” in the mid-term because of the coronavirus, the report said.
Inntopia produces a monthly report on occupancy levels and future bookings in Western mountain resorts through its subsidiary, DestiMetrics. The next report, looking at booking trends for the next six months, will be out in about two weeks.
Meanwhile, preliminary data among Inntopia’s client destinations show some consumers are already canceling their trips. The company conducted a survey of 300-plus property management companies to gauge trends.
It found 38% have seen an uptick in cancellations for future travel in the past 10 days. About two-thirds have fielded calls from future guests with concern about coronavirus, also known as COVID-19. That’s consistent with what Aspen Skiing Co. reported.
Skico Vice President of Communications Jeff Hanle said Thursday some individuals have canceled their bookings through Stay Aspen Snowmass.
He said the company is staying in constant contact with local, county and state health officials about the risk of a local outbreak to ensure they keep their guests and employees well informed.
The Pitkin County Public Health office issued an update Thursday night that it is “collaborating closely with Aspen Valley Hospital and local, state and federal agencies regarding the novel coronavirus.” County officials said earlier this week they have activated an emergency public health team anticipating the coronavirus spreading to the Roaring Fork Valley.
The first two cases in Colorado were confirmed Thursday, including a man visiting Summit County.
If the virus continues to spread and the economy sputters, there will inevitably be an impact on future travel, the Inntopia report said.
“In the category of ‘no kidding,’ destinations with larger, international guest bases, such as those in the Southeast region of the U.S. or the more elite mountain destinations in the West, will likely be impacted more significantly by travel bans or fear of travel bans than those destinations that rely more heavily on a drive market,” Foley wrote.
On the other hand, U.S. residents who planned to travel abroad may be more inclined to stay put in the U.S., creating an opportunity for U.S. destinations to pick up more domestic travelers.
As Snowmass Village has already experienced with the cancellation of the National Disabled Veterans Winter Sports Clinic in April, Inntopia said resorts that rely on group business might be most vulnerable to cancellations.
“Properties or destinations that rely heavily on group, conference and corporate bookings are likely to feel the effects sooner and more strongly than those with fewer group stays,” Foley’s report said.
Destination resorts have to gauge which action to take, if any, to offset or ease the anticipated loss of business. One option is dropping rates. Foley warned that it took several years for rates to recover after discounts were instituted to spur business after the Great Recession.
As of the end of January, mountain destination business was up 3% collectively over last year for the winter season as of the end of January.
“Three percent isn’t much to work with, but if properties were to drop rates much, they may fail to offset current flat or declining occupancy rates in many communities, pushing revenue further into negative territory,” the report said.
Inntopia’s survey of properties showed 25% of its clients are offering concessions on their cancellation policy. Another 49 percent are considering concessions.
“This will very likely be a long-term event, given the potential impact on global economies and consumer travel confidence,” Foley’s report concluded. “Making sure the industry is prepared, even at this early stage, to make decisions based on scientific fact rather than fiction or rumor, ensuring we don’t repeat expensive mistakes from the past, and being proactive rather than reactive are all things that we can do to minimize disruption and duration in the domestic destination travel market.”