Is recession hurting Aspen?
ASPEN ” If fears that the U.S. is heading into a recession prove true, history shows that Aspen will pay a price.
Lift ticket sales for the Aspen Skiing Co. fell 6 percent during the 2001-02 winter, after recession and the 9/11 terrorist attacks delivered a one-two punch.
Taxable retail sales plummeted by $26 million in 2001 from the prior year. Sales fell from $401 million in 2000 to $374 million in 2001. They fell another $7 million while bottoming out in 2002, city sales tax records show. It took through 2004 for taxable retail sales to climb back to 2000 levels.
The statistics indicate that Aspen’s reputation for being recession-proof is a myth.
“No one is insulated,” said Tucker Hart Adams, an economist from Colorado Springs whose former clients included the Colorado ski industry.
In a recession, Hart Adams noted, discretionary spending gets the ax first. People cut back on luxuries so they can cover the necessities.
“Travel is a discretionary expenditure ” particularly skiing, staying in a condo and eating out,” Hart Adams said.
Aspen might be somewhat protected from the full effects of a national recession because it caters to such wealthy travelers, Hart Adams acknowledged. But even the ultra-wealthy might feel the effects of this economic downturn, since the stock market is taking a beating.
Signals mixed so far
Aspen’s economic signs are mixed so far this winter. Skico reported its lift ticket sales were down 10 percent through December. Poor snow conditions in November spooked travelers away in December, company officials said.
On the other hand, the lodging industry enjoyed a strong holiday period and January has been busier than last year, according to Bill Tomcich, president of Stay Aspen Snowmass, a central bookings agency. Sales tax reports for December aren’t available yet.
Aspen lodging industry veterans noted that international travelers boosted business in January and possibly masked the effects of fewer domestic travelers. The U.S. economic downturn might be felt more in Aspen in March, when Aspen depends heavily on business from within the country.
“I think you’ll see the second part of March hurting,” said Joe Raczak, general manager of the North of Nell condominiums. “I think you’ll see a softening even with the good snow, unfortunately.”
Tomcich said the amount of business on the books for later this season is a cause for concern. Advance reservations through Stay Aspen Snowmass are down compared to last year from Feb. 9 through the end of the month, he said, and the first half of March also looks “soft.”
Snow conditions are excellent, and there are plenty of airline seats available into Aspen, so they aren’t culprits for slow bookings.
“Through the process of elimination, it is what people are willing to pay for a vacation,” said Tomcich.
Shoppers seek deals
The telephones are ringing at the central bookings agency and people are shopping, but the conversion into bookings is among the lowest Tomcich has experienced in his tenure at Stay Aspen Snowmass. He credits it to price sensitivity and the inability of prospective customers to find lodging for the periods they want. Many callers seem to be shopping for rooms for a long weekend, Tomcich said. Rooms are either not available for them or lodging properties require longer minimum stays than the callers want.
In-state business through Stay Aspen Snowmass is off 34 percent this season, according to Tomcich.
The soft periods later in the season “may be indicators of a hesitancy to spend,” said David Perry, Skico senior vice president-mountain division. However, he said there are no signs that Aspen/Snowmass customers are pinching pennies once they arrive.
While considering all the local and national economic indicators, Skico officials are optimistic that business this winter will be as good or better than last winter, Perry said. “I think that’s entirely within reach.”
He said he stressed at a meeting with representatives of the lodging industry last week that matching last season will require “very hard work.”
Differences from 2001-02
There is reason to believe tourism won’t suffer as much this year as it did in 2001 and 2002. Hart Adams said people still tend to travel during tough economic times and even recessions. They just don’t spend as much. Retail shops and restaurants might have to prepare for leaner times.
In the winter of 2001-02, air travel virtually stopped after 9/11. Places like Aspen, which rely heavily on foreign travelers, didn’t have that cushion to rely on that ski season. The Skico’s overseas business was “in the tank” that winter, one former company executive said at the time.
This year the dollar is at historic lows compared to many other currencies. International business is booming. As long as a possible U.S. recession doesn’t go global, international travelers could be Aspen’s salvation.
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