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 most recent DestiMetrics Market Briefing.
As of Dec. 31, bookings made in December 2018 for arrivals in that month were up 50.9 percent compared year-over-year to in-month, for-the-month bookings made last December. Those bookings were driven largely by a decline in the average daily rate 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 significant snowfall in most regions, December occupancy rebounded nicely.”
Actual occupancy for December across the mountain resort region 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 tiny 0.1 percent gain in revenue compared to last year.
A better booking pace
The remainder of the winter season and into early summer also benefitted from the accelerated December booking pace. As of Dec. 31, aggregated occupancy for the winter season from November through April moved up 4.7 percent in a year over year comparison. April was 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 in 2018 to April 21 in 2019. In contrast, the average daily rate is down a moderate 1.5 percent for the overall season with decreases occurring in four of the six months. The balancing act between occupancy and closely managed average daily rate is delivering an aggregated 3.2 percent gain in revenues for the season as of Dec. 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,” Foley said. “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 rate are expected as a part of yield management, at the industry level we are seeing a lot more of it this year than at any time since 2011-12.”
Recommended Stories For You
Eyeing the economy
Consumers are also keeping an eye on the economy. Key economic indicators during December were mixed. The Dow Jones Industrial Average had a chaotic month with wild swings up and down spanning more than 6,400 points from the month’s highest to lowest points. The Dow closed on Dec. 31 down 8.5 percent from November’s closing and 12.3 percent below its record monthly close in September. It also marks the index’s lowest closing since September 2017.
“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,” Foley added. “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 dropped 8.3 points in December for the second consecutive month and is its fifth decline in 2018. Despite the dip, the Consumer Confidence Index remains 4.9 percent higher than at the same time last year. Employers added an impressive 312,000 jobs in December to far exceed expectations for year-over-year growth. Wages also rose during December to finish 2018 with a strong job market and a 3.2 increase in earnings growth. Conversely, the Unemployment Rate moved up from 3.7 percent to 3.9 percent as 400,000 potential workers re-engaged in their job search.
“This is the strongest year for the job market since 2015 and currently appears to be the most stable element on the economic landscape,” observed Foley.
“Although the two wild cards of snowy weather and a strong economy are both in place this winter to help deliver another winning season for western mountain lodging, consumer resistance to steadily rising rates and some cracks in a robust economy are starting to appear,” said Foley. “We are cautioning our participating properties and destinations to pay close attention to these dynamics so they can be proactive if necessary,” he concluded.
