March going out with a whimper despite great ski conditions
By Mark Reaman
As tourism cycles seem to come in waves and the recent waves have been pretty big during and since COVID, local tourism officials say early signs are pointing to a potential slowdown in numbers, both nationally and locally.
“We are experiencing a slowdown in tourism,” Tourism and Prosperity Partnership (TAPP) executive director John Norton told the RTA board of directors at its March meeting on March 24. “It seems there are national economic reasons that can be seen through the large number of layoffs in the tech industry. Even a traditional manufacturer like General Motors is offering buyouts and laying off a majority of its white-collar workforce. I’ve never heard of anything like that.”
Norton shared a chart indicating that for mountain valleys in the western U.S., demand for lodging compared to the previous months started to decline noticeably last summer. “You can see room demand heading into the tank in June and every month since,” he said. “And then lodgers started depressing the rate of price increases to respond. But room demand continued to decline with the summer and fall showing decreases of around 15%.”
“Locally, we’re doing better than average, but showing weakness,” Norton continued, adding that at least one valley lodging property said they are seeing the same downward trend for upcoming reservations. “In lodging revenues, November was down 20% and December down 1% while January numbers are confusing, but if that month was up at all, it was not by much. There’s great snow everywhere, but March seems to be ending with a whimper even though conditions are the best ever.”
RTA air consultant Bill Tomcich agreed the signs are pointing to a slowdown. He said that while about 13,000 came and went from the Gunnison- Crested Butte Regional Airport in January, which was significant, that meant there was just a 63% load factor on the planes. He credited the new boutique air carrier JSX with helping to shore up numbers. February showed a 77% load factor which was slightly down from 2022.
“March passenger numbers and load factor will be down compared to last year,” he said. “Things are slowing down across the industry. The entire mountain town occupancy was down about 5% in March.”
Tomcich said United Airlines was only flying two flights a day into Gunnison this month instead of the three they did last year. While he said JSX helped boost passenger numbers, the air carrier was disappointed in winter numbers after having a booming summer.
“While last summer was over the top, this winter JSX was disappointed in numbers. Dallas had about a 60% load factor this winter compared to about 90% last summer,” Tomcich said. “Austin flights will be at about 45%. So it will be a difficult conversation about renewing the service for next winter, but that dialogue has already started.”
Tomcich reported that the American Airlines flight out of Dallas incurred some big losses so the RTA’s Minimum Revenue Guarantee (MRG) will take a six-figure hit. The same will end up being the case for the MRG for United out of Houston.
Tomcich said United will only be flying one flight a day into Gunnison this spring, but starting on June 2, the aircraft will be upgraded with better technology that will likely make it easier to land in Gunnison more often in weather.
For the summer, United has scheduled a total of 16 flights a week between Denver and Houston.
Tomcich said that since American will not be flying from Dallas in the summer, the JSX flights should be busy. “American not flying here in the summer this year is probably a blessing,” he said referring to the lack of competition for JSX out that market.
One of the most obvious indicators of a slowdown would be through a major decline in sales tax revenues, but the finance officers in both Mt. Crested Butte and Crested Butte are not seeing that trend.
“I’m not seeing any downturn,” said Mt. Crested Butte finance director Karl Trujillo. “Our lodging revenues were up $1,000,000 last year. Our overall sales tax collections were up 33% last year. I can’t remember the last down month we have experienced, it’s been over a year.”
Crested Butte finance director Kathy Ridgeway pointed out that while sales tax revenues are still climbing, the numbers include sales by online vendors and vendors located outside of town. The revenue numbers are also not adjusted for inflation. In Crested Butte, the December sales tax was up 11% over the previous year, January was up 12% over 2022 and February revenue was up 3% from the same month last year. Crested Butte lodging revenues for the first two months of 2023 are up double digits over 2022.
Norton said TAPP is already active nationally, particularly in Texas, about promoting the summer for tourism. He and Tomcich both noted that airfares are currently very high and that is not helping to fill planes.
“We have already alerted all our properties about the slowdown in case they want to tinker with their pricing in an effort to boost occupancy,” said Norton. “That’s what we are seeing. We hope the airlines will soften their pricing in an effort to get solid load factors into Gunnison this summer.”
TAPP will stick with its core summer strategy of promoting the local mountain biking and trail opportunities. “There’s no reason to think that focus is incorrect,” said Norton. “We will add marketing effort to what seems to be working and stop doing what isn’t working.”