Ralf Garrison: A midseason update pits good snow vs. bad economy | SummitDaily.com
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Ralf Garrison: A midseason update pits good snow vs. bad economy

RALF GARRISON
Business Columnist
By RALF GARRISON
ALL |

My first draft of this article is in the trash can. It started out as a mild mannered mid-season update with a lead sentence that read: “Despite some significant economic headwinds, the ski industry is proving once again that it is quite resilient and the season will turn out just fine.”

After all, we powered through the dot com bust, the 9/11 attack, and Katrina with scarcely a slip in skier day numbers. In fact, most resorts even logged increases in lodging occupancy, room rates and sales tax revenues ” numbers that more accurately depict the bigger picture. So the ski industry really is insulated, from the economic turmoil so far, right?

Then, three successive economic news bulletins came across my desk via the electronic News Spyder that we use to track economic news for subscribers to MTRIP, the Mountain Travel Research Program. Those headlines screamed the following items:

“The Consumer Confidence Index takes huge 12 point drop.”

“Oil settles at record high above $100.”

“Dollar hits record low versus Euro.”

By the time I got done editing it, oil had broken three successive records and was at $104 and for the first time, gas was being rumored to have a $4 per gallon target this summer. This most recent news reveals that the economic headwinds are turning into a gale that will seriously test the resilience of both our industry and our guests. And, the pace of change shows volatility that is disquieting to us and our consumers alike.

When consumers are confident, they are more likely to spend on discretionary activities, like leisure travel and mountain vacations in particular. For that reason, the Consumer Confidence Index is one of the economic indicators we monitor and send our subscribers monthly. According to Lynn Franco, director of The Conference Board Consumer Research Center, “The Consumer Confidence Index continues losing ground and, with the exception of the Iraqi War in 2003, is now at its lowest level in nearly 15 years (November 1993).

The cost of oil eventually determines the cost of fuel and therefore transportation, a major component of the tourism industry. Higher airline fuel costs are another blow to the struggling airline industry while higher prices at the gas station are a real and direct hit on the pocketbooks of the drive market– a market segment that is already price sensitive. High fuel costs also take money out of our consumer’s pockets.

While the sinking dollar is not new news, I have now heard the U.S. dollar referred to as the “American Peso”. The underlying story reveals a bleak picture for the U.S. economy overall and the looming threat of inflation during a stagnant economy. If there is a silver lining, this can benefit the inbound international tourism market, where the shrinking dollar makes the U.S. a great deal. It also has the potential to sway Americans to travel in the U.S. instead of abroad.

So what’s our antidote, our secret sauce? Snow. Lots of it in lots of places throughout ski country. And it’s been at it pretty much non-stop for several months! After a slow start, guests this season have had some of the best skiing in years and we sent our Christmas guests home with lots of great stories to tell, a viral marketer’s dream. But is it enough?

The Mountain Travel Research Program (MTRiP) tracks the destination skier and recent data revealed that some of those concerns are becoming a reality. For the season to date (November through January), occupancy is down 1.5 percent*, but the Average Daily Rate is up 9.8 percent*. Looking forward, February is flat despite the extra day delivered by Leap Year, March is down 3 percent even though an early Easter that lands in March, and April is down 16* percent in occupancy compared to last year. However, while occupancy is down, rates are up, and average of 9.8 percent* over season, and a peak of 15 percent* in March.

* Data is based on the Mountain Travel Research Program’s Reservation Activity Outlook, a database of about 240 properties at 15 destination subscriber participants in western U.S. and Canada who are engaged in this co-operative industry tracking program, and whose contributions are gratefully acknowledged.


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