Short-Lead bookings and declining rates across Western Mountain Destinations
For the first time since the Covid-19 pandemic was declared, lodging properties at western mountain destinations are finally seeing an appreciable uptick in bookings and occupancy for the summer months although results continue to hover well below previous years. In DestiMetrics* monthly Market Briefing released by Inntopia yesterday, aggregated summer occupancy is beginning to rebound at the 290 participating property management companies as cautious visitors took advantage of reduced June rates.
A look into the data-driven crystal ball for the remainder of summer and into the winter focuses on the booking pace during the month of June. Bookings made during the month for arrivals in June (short-term) were up an encouraging 74.2 percent while July arrivals based on June bookings were up 35.8 percent in a year-over-year comparison. Both months were boosted by considerably more availability than last year and some reduction in daily rates to entice visitors. However, bookings for arrivals in August through November remain dramatically behind last year at this same time with occupancy for September through November actually declining in the past 30 days due to cancellations outnumbering bookings.
Actual occupancy for the month of June was down 57.2 percent compared to May 2019. The Average Daily Rate (ADR) for the month was down 10.6 percent resulting in a substantial 62 percent decrease in revenue for the month.
Although occupancy for the full summer season from May through October is still down a staggering 55.3 percent, the ADR for the period is up a solid 6.2 percent with the remaining four summer months also posting appreciable year-over-year increases in ADR compared to last year. Despite the modest upticks in rate, the radically decreased occupancy is still leading to a 53.1 percent decrease in revenue compared to last summer.
“The summer of 2020 has been setting all kinds of records at mountain resorts, but not the good kind,” acknowledged Tom Foley, senior vice president for Business Operations and Analytics for Inntopia. “But not all the news been negative. For the first time since the beginning of the pandemic, the western mountain region recorded year-over-year increases in booking pace during June (74.2 percent) that led to dramatic gains for the month and filled in rooms and beds during the month that were alarmingly vacant just one month ago.”
As the economy continued to reopen in June, key indicators showed improvement. The Dow Jones Industrial Average (DJIA) crept up 0.8 percent during June from the previous month and marked the third consecutive month of gains for the Index after the dramatic declines in February and March. There was considerable fluctuation in the Index during the month as early reports of strong business recovery following the Memorial Day weekend were tempered by the resurgence of new cases, hospitalizations, and fatalities resulting from Covid-19.
“These uncertain financial markets tend to erode consumer’s trust in economic conditions and will likely result in their unwillingness to invest in discretionary purchases such as destination vacations,” warned Foley.
Cautious optimism about the future appeared in the Consumer Confidence Index (CCI) which rose 12.2 points or 14.2 percent during June. However, it remains dramatically below its most recent high in February and more than 21 percent lower than it was one year ago at this time. The national Unemployment Rate declined to 11.1 percent during June as employers added 4.4 million jobs to support the reopening of many businesses. However, new unemployment claims, while declining from the previous two months, continue to exceed 1.3 million new claims per week.
“The nearly 11 percent decrease in the daily rates for June helped entice visitors to book overnight stays and likely played a role in the sharp increase in bookings for June arrivals this year compared to last year, but there is no denying the pivotal role that pent-up demand created,” noted Foley. “However, as we look beyond the tentative short-term booking behavior of the last few weeks, we are seeing that the daily rates for July through October are all up compared to last year. But, with consumers hesitating to book longer than 40 days in advance, those rates haven’t really been tested yet, and we expect they will come down in response to market forces.”
Foley concluded by observing that “although we are seeing glimmers of hope in occupancy and rates as overnight visitors begin venturing back to their favorite mountain destinations, it is unlikely that either will be likely to substantially offset significant revenue losses this summer.”