Airline passengers bring in big dollars

CBMR executive discusses impacts

Last fall the town of Mt. Crested Butte gave $50,000 to Crested Butte Mountain Resort (CBMR) for use in a special airline marketing program, with the promise that the resort would be back in the spring with documented results of the program’s effectiveness.

On Tuesday, April 15, CBMR vice president and chief marketing officer Ken Stone appeared before the Mt. Crested Butte Town Council to report that the marketing program showed limited success, but proved the economic importance of airline passengers.
Stone said the special marketing program with American Airlines Vacations brought only 1.2 percent more passengers than last year. “It’s not the type of gain I thought we would have seen,” he said. However, Stone said, lodging nights were up 4.5 percent and lodging revenue was up $47,300.
He says the fact that only a few additional travelers accounted for considerable revenue increases means that vacationers are booking higher quality—and thus more expensive—rooms, a phenomena that CBMR central reservations has also been seeing this year.
“It goes to show you can drive a higher revenue… with fewer passengers,” Stone says.
American Airlines Vacations is a subsidiary of American Airlines that sells complete vacation packages and wholesale airline tickets. The marketing campaign included magazine insertions, direct mail advertisements and website listings that connected visitors to Crested Butte through the American Airlines Vacations group.
In September 2007, the Mt. Crested Butte Town Council authorized the use of $50,000 from the town’s admissions tax fund to go toward the American Airlines Vacations special marketing program.
Mt. Crested Butte instituted the admissions tax in 2002 to help fund marketing and events promoting the area. Seventy-five percent of the funds must be spent on marketing and 25 percent must be spent on transportation. The tax is 4 percent of admissions the town of Mt. Crested Butte charges for ski tickets and other admission-related events.
During the 2006/2007 winter season the town contributed $42,500 from its admission tax fund to the program.
For the past winter season the resort agreed to make a much better effort at tracking the program’s return on investment—the success of the marketing strategy compared to the town’s contribution.
In his report, Stone said last year there were 346 passengers in the program; this year there were 353. Those 353 passengers spent $123,689 on CBMR lodging, a 38 percent increase over last year.
But more important for the community, Stone said, is the ancillary spending from those passengers, money spent on everything but lodging and lift tickets, which totaled $914,620 this season. Stone says the resort used a figure of $145 per day per guest of ancillary spending, which he says is a conservative number given the clientele. “This guest actually has a higher spending budget,” Stone said.
Stone said the town may have earned $46,734 in sales tax revenues derived from the ancillary spending of guests, ticket sales and lodging sales.
The guests also accounted for nearly $5,000 in lodging tax revenues, and $3,883 in admission tax revenues.
The vacationers’ length of stay is also an important factor, Stone said, because airline passengers typically stay longer than those vacationers who drive to Crested Butte. He said a typical “drive market” vacationer usually spends only two nights in the area.
In the American Airlines Vacations program, Stone said, 38 percent of the participants had a four-night stay, and 22 percent stayed for five nights.
Mt. Crested Butte mayor William Buck asked, “Are those percentages on pace with last year?”
Stone said the average length of stay was actually increasing.
After finishing the report on the American Airlines Vacation passengers, Stone compared the results to the overall airline service into the Gunnison-Crested Butte Regional Airport.
This season CBMR and the Gunnison Valley Rural Transportation Authority (RTA) chose to offer fewer airline seats in an effort to bring passenger loads up on each flight. The RTA and CBMR offer financial guarantees to airlines flying into the local airport in the event that ticket sales do not meet operating expenses.
Overall, on American Airlines there were 2,500 fewer available inbound seats, but only 727 fewer passengers. Stone says that’s good news and means the airline passenger loads are up. The bad news, he said, is the amount of ancillary revenue that was lost on those passengers, citing the nearly $1 million spent by the passengers with American Airlines Vacations. “There’s well over a million dollars of loss to this community,” Stone said.
He reported a similar turnout on the daily United Express flights from Denver. There were 7,700 fewer seats offered on United Express, with only 856 fewer passengers.
Stone said these losses show the importance of encouraging air travel into Crested Butte with programs such as the American Airlines marketing deal. “The dollars you spent to support the airline program certainly shows the direct impact of air service to the community,” Stone said of the town’s contribution.
There is certainly demand, Stone said, because the limited air travel options forced travelers into either other airports or their cars. According to surveys conducted by CBMR, Stone said, last season only 1 percent of the resort’s guests flew into the Montrose airport before catching a ride to Crested Butte. This season, 4 percent flew into Montrose, and more travelers also chose to fly into Colorado Springs or Denver before coming to Crested Butte. “There is demand here, we’re pushing into other markets,” Stone said. This season the resort saw a 10 percent rise in visitors who drove, he said.
Town Council member Andrew Gitin said he had friends who chose a similar route in getting to Crested Butte. “For Montrose and Colorado Springs, it was cheaper for them to fly there and then rent a car,” Gitin said.
Stone said the resort would likely be back before the council next fall to ask about an airline marketing partnership.