What will the upcoming season look like?
It’s tough to make predictions, especially about the future. That’s something that I wish I had coined, but Yogi Berra beat me to it. The difficulty in making predictions doesn’t stop folks from asking and doesn’t stop me from looking at the tea leaves to offer some thoughts about the future.
It is impossible to look ahead without looking back. As we look back, overall lodging occupancy was down versus both last year and pre-pandemic 2019, but high daily average rates saved the day (as has been the trend). We should expect these trends – lower occupancy and higher rates – to continue for the foreseeable future. These local and industry trends give us a preview of what our winter seasonal visitation might look like and are important to layer with other macroeconomic trends.
The Dow Jones Industrial Average increased in October by 13.9%, to close the month at 32,732.95. This is the first monthly gain in the Dow since July and more than erases the declines in both August and September. Markets appeared less concerned about inflation during October and are beginning to anticipate ongoing inflation and higher interest rates being imposed by the Federal Reserve Bank.
While the stock market improved, the Consumer Confidence Index declined in October, losing 4.9% to finish the month at 102.5. Conversely to the Dow, this decline follows gains made in consumer confidence in August and September and is 8.2% below last year at this time. Consumer expectations regarding the short-term prospects for the economy have been low for several months and the October data suggests that we’re off to a slow start to Q4. Of specific concern to the travel industry is consumers’ intent to travel had decreased considerably, which impacts our holiday prognosis and the winter ski season.
The National Inflation Rate declined in October from 8.3% to 7.7%, its lowest level since January (7.5%). The inflation rate is the difference between consumer prices this year and consumer prices at the same time last year. The higher prices caused by inflation continue to put pressure on consumer spending and are driving many of the concerns with Consumer Confidence. This includes a pullback from vacation travel.
We’ve set the stage by looking a bit at our summer performance and the national economic headwinds. But while our success is impacted by macroeconomic trends, we’re fortunate that we have plenty of impact at a local level to help determine our destiny. There are reasons for optimism as we head into the winter ski season, headlined by Vail’s sixtieth anniversary season and new air service from Austin, TX.
Longer term – but of the utmost importance – we are making significant progress on housing. Colorado Mountain College, Eagle County, Eagle County School District, and Vail Health are all investing in housing. Numerous other projects are in various stages of entitlement or planning. Our momentum in addressing our valley’s biggest challenge is noticeable.
There is also positive momentum – albeit longer term – on health insurance costs via the Mountain Healthcare Coalition and on improving transit via the newly formed Eagle Valley Transportation Authority. There are also public-private partnership efforts to help address our early childhood care challenges.
Back to the prediction for the season ahead: we’re going to see a “return to normal”. It was never sustainable to expect the tourism growth we saw from March 2021 through June 2022 continue indefinitely. We will have solid results this season, and most importantly the foundation for our future is very bright.
Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com