Stingy November snowfall and rate-conscious skiers nudge winter revenues down at Western Mountain Destinations

WINTER PARK, COLO.— Despite some good economic news during November, modest snowfall across much of the West and rate-sensitive customers weary of high prices, combined to bring down on-the-books occupancy and some daily rates for the full winter season. As a result, winter revenues have retreated to a negative position from their modest gains of just one month ago. According to DestiMetrics,* the Business Intelligence division of Inntopia in their most recent Monthly Market Briefing, this is the first time since the restricted 2020-21 season that winter revenues have declined. The report noted that several peak holiday periods throughout the season are falling behind where they have been at this time for the past two years with the exception of the Easter holiday.

Average Daily Rates (ADR) eked out an 0.2 percent increase during November and along with the anemic snowfall led to occupancy figures that were six percent lower than one year ago and a 5.8 percent decline in revenues for the month.  When compared to November 2019 before the pandemic, daily rates were up 35.1 percent while occupancy was down 4.9 percent for the month.  Despite the slide in occupancy, the dramatically higher rates delivered November revenues that were up 28.6 percent compared to November 2019.

As of Nov. 30, on-the-books occupancy for the winter season has slipped down further in the past month with occupancy for November through April now down a moderate three percent in a year-over-year comparison. Declines are being posted in all six months ranging from two to six percent--except April, which is up 1.4 percent. And despite the lower occupancy, aggregated ADR for the winter is almost unchanged from last month, up 2.3 percent with increases being posted in four of the six months—only December and April are currently posting a downturn. 

When compared to the pre-pandemic season of 2019-20, winter occupancy is up 1.3 percent with gains in all months except November. ADR is up a dramatic 43.3 percent for the season and when coupled with the uptick in occupancy is delivering a 45.2 percent increase in revenues compared to four years ago.

“While aggregated seasonal room rates are clinging to levels moderately above flat compared to last year, we’re seeing that properties holding onto higher daily rates are experiencing weakening demand and as a result, occupancy in three of the six winter months is now down,” explained Tom Foley, senior vice president of Business Intelligence for Inntopia. “We’re clearly seeing that the rate-sensitivity that dominated during the summer season is carrying into winter. Even with good economic news, properties are needing to pull back on rate to drive occupancy.”

In a striking reversal of the previous three months, the Dow Jones Industrial Average (DJIA) exhibited considerable strength and rose 7.6 percent during December. This marks the first monthly gain since July and the largest monthly increase in over a year—since October 2022. Slowing inflation and cooling employment numbers suggest the Federal Reserve Bank is unlikely to raise interest rates and that perception is being credited with fueling some modest consumer optimism and stronger financial markets. 

“The DJIA’s November surge brought the Index 2.5 percent higher than a year ago and that positive market news heartened consumers as long-term savings were bolstered—and sparked strong consumer retail spending over the Thanksgiving weekend,” noted Foley. 

However, that Thanksgiving performance masks a mixed mood for consumers in November as confidence was tempered with concerns about job availability and global conflicts. The Consumer Confidence Index (CCI) rose for the first time since July, edging up 2.9 percent to reach 102 points but still below the 23-month average of 105. In contrast, the Consumer Sentiment Index (CSI) conducted by the University of Michigan, declined 3.9 percent and is also hovering slightly below its 23-month average.  “When consumer confidence and sentiment rise, lodging properties and other suppliers have the pricing power but when those metrics are struggling as they have been recently, rates and pricing become more consumer-centric and that is a trend we have been tracking since March,” Foley emphasized.

The national Unemployment Rate dropped 0.2 points from 3.9 to 3.7 percent during November with employers adding a stronger-than-expected 199,000 new positions and is also considerably stronger than the 150,000 positions added in October. Wages remained strong and wage growth paced ahead of the inflation rate for the seventh consecutive month. That wage strength should ease price-sensitivity for the travel industry in the long-term.  

*Snowfall: always a crucial part of the equation, becomes even more critical when economic or social conditions create consumer hesitancy for discretionary spending like travel. November snow was modest, at best, but healthy and consistent snowfall in the first week of December across much of the West can motivate skiers and riders to book overnight mountain trips.

*Booking pace: once again slackened in November—down 7.2 percent for the full season compared to one year ago. However, bookings made notable gains for the final two months of winter with March up 3.6 percent and April up 20.1 percent. This marks the third booking pace decline in the past four months. The most dramatic drops were for bookings made for arrivals in November, down 18.3 percent, and December, down 14.9 percent. The decrease is partially due to strong booking volume last year at this time but sketchy snowfall, a changing holiday school break schedule, and continued rate sensitivity played a role. 

*Winter occupancy: continues to weaken compared to last year and the monthly seasonal deficit has gone from being down 1.7 percent last month to down three percent this month when compared to last year. November and December saw the largest downturns in occupancy.

*Average Daily Rate (ADR): pulled back a bit more again last month but continues to remain 2.3 percent higher than last year’s record-breaking rates. With four of the six months currently posting increases, only December and April rates are trailing last year’s ADR. Rate-sensitivity is clearly illustrated as the months with higher rates are showing lower occupancy while months offering lower rates are reporting higher occupancy.

*Winter holidays disappoint: and not just December. School breaks for K-12 students during December have shifted back significantly this year with many schools not closing until Dec. 22 and leading to a softer pre-Christmas week. Lackluster snowfall and persistently high rates for the peak weeks are also having an impact but early January is looking strong because of the later schedule. However, the momentum wanes going into mid-month and the Martin Luther King Jr. (MLK) holiday weekend—currently down 10 percent compared to last year. Likewise, the President’s Day holiday weekend in mid-February is also down notably from last year.

The Briefing also indicated some shifting in bookings among the three price categories with economy-priced properties (up to $400 ADR) showing a 3.7 percent gain in rates but a 5.5 percent decline in occupancy. The ADR for mid-range properties ($401 to $850 ADR) are up 1.5 percent and recorded a scant 0.2 percent increase in occupancy. Luxury properties from $851 and above are up 1.3 percent in their seasonal ADR but are tracking a 3.5 percent decline in occupancy.

“The upshot from the data this month reveals that there are clearly fewer guest traveling to mountain resorts this winter—at least this early in the season,” reported Foley. “We are currently seeing 35,000 fewer room nights booked so far this winter across all pricing categories.”

“It is rarely straightforward, but there are so many variables in play so far this season—both positive and negative--between better economic news, a sluggish start to seasonal snowfall, changing school break schedules, and continued rate-sensitivity,” continued Foley. “The two primary ‘wildcards’ of every season, the economy and snowfall, will continue to drive the narrative this year as they typically do in winter, and both could go either way. But this is still early season and a lot can, and probably will, change based on those primary elements. The one dynamic that we anticipate continuing for the coming months is rate-sensitivity while the economy and Mother Nature shape consumer willingness to spend on discretionary purchases like travel,” he concluded.