Destimetrics - Western Mountain Destinations: Omicron Surged, Bookings Shifted, Room Rates Still Rule

Momentum from the red-hot holiday season turned cool in early January as a staggering surge in new cases of the Omicron variant had consumers hitting the pause button on short-lead bookings according to the most recent Monthly Market Briefing released by DestiMetrics,* the Business Intelligence division of Vermont-based Inntopia. A review of the data from 18 western mountain destinations in seven states revealed that the COVID-19 pandemic still has a strong influence on booking patterns at resort destinations and shows a clear correlation that as cases rise, bookings decline and when cases begin to drop, bookings go up.

For the month of January, actual occupancy was up 39.8 percent compared to one year ago but when compared to two years ago at this time, actual occupancy declined 3.7 percent compared to pre-pandemic January 2020. Rate growth and strength continued to flex its considerable muscle with the Average Daily Rate (ADR) up 37.9 percent compared to last year to deliver a whopping 92.7 percent gain in revenue while ADR was up a solid 21.5 percent compared to the month of January two years ago--providing a 17 percent increase in revenues compared to January 2020. 

January booking pace

Bookings made in January for arrivals in the six months from January through June continued in an upward direction, but the Omicron impact was clearly illustrated as bookings made for arrivals in January were down 63.4 percent compared to last year at this time and down 33.1 percent for arrivals in February. This same booking pattern was evident when drawing comparisons to two years ago as bookings made during January 2020 for arrivals in that month were down 59.2 percent and 18.1 percent for February 2020 arrivals.

“One of the most intriguing data points for us this month was this ongoing softness in the short-lead booking pace or volume of bookings for arrival within 60 days when we compare it to both last year and two years ago,” observed Tom Foley, senior vice president for Business Process and Analytics for Inntopia. “While last year at this time we saw a surge in bookings as vaccines were being rolled out, the recent Omicron surge in early January this year resulted in a slowing of overall bookings, but particularly for short-lead arrivals. But as new cases began to ebb, booking volume started returning and that improving trend should help bolster an even stronger late February and March.”

Halfway through winter, full season very strong

As of Jan. 31, occupancy for the full winter season including actual results from the first three months of the season and on-the-books results for the final three months of the season, is up a strong 48.7 percent compared to last winter at this time with a triple-digit percentage gain for the month of April. Along with the hefty occupancy figures, ADR is up 35.2 percent and the combination are providing an impressive 101.1 percent increase in revenue from one year ago. When compared to two years ago at this time, occupancy is up 5.7 percent with gains being posted in four of the six months with only November and January showing slight declines.  Daily rates are up a striking 26.9 percent compared to two years ago and properties are showing a 34 percent increase in seasonal revenues compared to two years ago at this time.

Early view of upcoming summer

Although still relatively early in the booking season, summer is already demonstrating continued strength and growth. As of Jan. 31, aggregated occupancy for the six months from May through October is up 48.5 percent compared to Summer 2021. On-the-books ADR is up 8.2 percent and the combination of significantly increased occupancy along with a boost in daily rates is garnering a 60.6 percent year-over-year revenue gain. The perspective changes somewhat when compared to two years ago at this time with occupancy up only 1.6 percent compared to Summer 2020. But ADR is compensating for the softness in occupancy with a 29.6 percent increase compared to the pre-pandemic summer. The result is an early but optimistic gain of 31.6 percent in the upcoming summer’s seasonal revenue.

Economic indicators

In yet another reversal from the previous month, the Dow Jones Industrial Average (DJIA) dropped more than 1,200 points for a 3.3 percent decrease from December’s closing bell. The Omicron surge topped the headlines but inflation hit a 40-year high during January and uncertainty about actions by the Federal Reserve Bank on interest rate increases contributed to investor caution. But strong earnings and decreasing Omicron cases eased some angst and led to a 1,400-point recovery near the end of the month following the 33,150-point low on Jan. 24.  That volatility is expected to persist as markets react to the first round of interest rate hikes expected in early March, persistent and growing inflation, and global tensions. 

Also changing course after several months of gains, the Consumer Confidence Index (CCI) recorded its first decline since September and dipped 1.2 percent to close at 113.8 points. Despite concerns about both Omicron and inflation, consumer confidence remained relatively steady with mountain destinations continuing to see strong demand and  tolerance for high room rates.

The national Unemployment Rate ticked up slightly during January despite employers vastly exceeding expectations by adding 467,000 new jobs when analysts were expecting the job market landscape to land somewhere between a decline of 220,00 positions to the potential of 156,00 new jobs. The Bureau of Labor Statistic also adjusted both November and December job numbers upward by a total of 750,000 positions, making this one of the most robust jobs reports in many months. The Leisure and Hospitality sector was the most active—adding 151,00 jobs but still operating 1.8 million positions below pre-pandemic levels.  And, wages are up 5.7 percent from this time last year, helping to offset some of the bite of rising inflation. 

“Destinations continue to set record revenue numbers driven primarily by sustained high rates and supported by strong occupancy,” summarized Foley. “But the meteoric gains through Summer 2021 and this year’s early season seem to be diminishing a bit as November and January actual occupancy both finished below those pre-pandemic months in Winter 2019-20. This is likely due to the influence of both the Omicron effect and a shift in overall demand and something we will be watching with close attention in the next few months.”