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HomeMy WebLinkAbout12. Vail_Econ_Indicator_Summary_Winter '17-'18_v4 Attachment: Vail Economic Indicators Table Town of Vail Economic Indicators Summary (Based on data as of April 30, 2018) INTRODUCTION: This summary is provided as a part of the Town of Vail 2018 Economic Development Strategic Plan and introduces a summary report of Vail Economic Indicators representing a winter 2017/2018 (November – April) seasonal view along with a more granular chart (attached). It is published twice annually as soon as practical after the data has become available, is limited in scope by the availability of data from secondary sources and is thought to be generally accurate but not independently verified. Tourism Vail’s 2017/18 winter season experienced a “mixed bag” of growth and declines in tourism indicators, which may be attributable to the low snowfall. During the 2017/18 winter season, Vail experienced a significant decrease in occupancy (-11.0%) versus the 2016/17 winter season. Winter season occupancy remains down versus the pre “Great Recession” of 2008/09 season (-14.6%), while Average Daily Rate (ADR) has increased dramatically and is up (+38.0%). Year over year, however ADR experienced a slight decline (-1.2%) resulting in a decrease (-12.1%) in revenue per available room versus last season. This metric typically correlates proximate to Town of Vail’s lodging tax collections; however, town lodging tax collections are slightly up (+0.7%) versus the prior winter season. This further reinforces the theory that lodging supply is a limiting factor as demand increases and drives rate increases during many times of the year. Comparatively, other U.S. western mountain resorts (based on overall DestiMetrics industry data), decreased in occupancy (0.9%) and increased in rate (+2.7%) and achieved an increase in total revenue per available room (+1.8%), which largely outperformed Vail’s corelating metrics. Other metrics to note are snowfall, which decreased on- mountai n (-20.47%) and in town (-36.9%); following decreases experienced in the 2016/17 winter season of (-26.4%) on mountain and (-11.4%) in town. Parking in the Vail parking structures also saw a decline (-5.7%). Gasoline prices declined (-3.2%) following a (+30.0%) increase in the 2016/17 winter season, tunnel traffic data was unavailable at the time of the report. Eagle County Regional Airport saw a large increase in available seats/capacity (+23.6%) this season, while deplanements also increased but to a lesser degree (+8.9%). A variety of special events took place during the winter months, with overall attendance and participation decreasing over the prior year (-15.1%). Notable changes from last winter include a decline in attendance at the Taste of Vail (-73.8%), Spring Back to Vail (-29.4%) and Snow Daze (-57.6%) while increases took place at Vail Symposium (+64.3%), Vail Family Holidaze (+400%) and Vail Yeti Hockey (+29.4%). Event attendance reporting is now consistently being measured by a third-party research firm (RRC Associates), which is resulting in less dramatic increases/decreases in event attendance data from season to season. Real Estate This season’s real estate indicators (excluding commercial sales) show increases across the board. Number of Transactions (+6.1%), Average Sale Price per transaction (+8.1%) and Average Price per Square (+19.6%) all increased over last season. However, Total Gross Sales (inclusive of commercial sales) decreased dramatically (-30.9%) over the prior year, which included two transactions totaling $114 million, representing the sale of Four Seasons Hotel and timeshare/condo properties. These metrics reflect continued increased demand for Vail real estate and therefore increase purchase prices and property values. Town Revenues Sales Tax is segmented by business type (retail, lodging and food/beverage) and further broken down geographically by Vail neighborhoods. Excluding out of town collections, all segments combined showed a slight increase in overall winter sales tax revenue (+1.0%) f ollowing the previous winter season’s sales tax revenue, which had decreased slightly (-2.9%). Specifically, lodging tax collections saw a slight increase (+0.7%) overall with the Vail Village and Lionshead neighborhoods showing declines of -4.9% and -1.5%, respectively. However, Cascade/Sandstone/East & West Vail lodging tax collections combined increased (+44.5%) due to the re-opening of Vail Cascade Resort and the Holiday Inn. Food and beverage (+5.2%) and Retail (+1.0%) each experienced an increase year over year. A study conducted by DestiMetrics shows that the average of taxable sales at comparable ski towns was down season-over-season in lodging sales (-6.9%) and total taxable sales (-6.4%). Other Tax Collections by the Town of Vail include construction use tax, property tax and real estate transfer tax and are reported on a calendar-year basis. As a result, these taxes do not correlate with the seasonal indicators above. Construction use tax showed a decrease in 2017 from 2016 (-2.8%). Attachment: Vail Economic Indicators Table Real estate transfer tax collections decreased in 2017 from 2016 (-7.7%). In 2017, property taxes increased slightly (+0.6%) from 2016. Town Reserves as measured by General Fund Balances remain very healthy at $29.3 million, an increase (+7.3%) over the previous year. Business Growth Business Growth is based on broader county and national indicators, many of which are tracked on an annual basis, which lag significantly, and have just been updated for the 2017 calendar year. While not as telling of the current market conditions, the Business Growth indicators show a healthy economy as evidenced by unemployment in Eagle County, which experienced another significant decrease for the eighth consecutive year, from 2.8% to 2.4%. Macro Economics The broader economic conditions have a significant impact on determining consumers’ discretionary spending and leisure habits, which in turn can significantly impact Vail’s economic performance. As of April 30, 2018, the US domestic economy is continuing to show strength, though potential instability resulting from banking reform, renegotiation of NAFTA, a projected deficit over $1 trillion, and the economic impact of decaying infrastructure remain issues of concern. But despite these challenges, markets have continued to surge forward. Over the course of the past six months both financial and consumer markets have continued the pace of strong gains that they maintained through summer 2017. The impact of these economic gains on the mountain travel industry for the winter 2018/19 season in general are apparent as Industry-Wide room rate gained for the eighth consecutive winter. However, Vail-specific room rate was not able to meet industry pace, declining year-over-year despite strong consumerism in the overall market. It is notable that on-mountain conditions likely played some role in the rate decline. Among the positive economic variables was the ongoing strength of consumer confidence, at its second-highest level since December 2000. Job creation remains a positive, and the low unemployment rate is supporting the high consumer confidence data. Additionally, the mid-term stability of gasoline and other transportation fuel prices are keeping drivers on the road and consumer goods prices down, while providing affordability in air and on the rails. Negative economic factors include the high US dollar versus foreign currencies, stagnant wage growth relative to inflation, and potential trade conflicts with major partners. (1) Consumer Confidence is firmly established above the 125-point mark for the first time since 2000 and remains above 128 points in April. Consumers are feeling more confident in both the current and long-term economic outlook and expect the economy to continue to improve over the coming six months. But consumers are also continuing a thirty-month- long streak of citing concerns about the pace of earnings growth, not significantly increased since the end of the Great Recession, though the cost of living and discretionary consumer goods, particularly travel, have increased dramatically over that same time. (2) Job Creation & Unemployment continues to be an extremely consistent part of the economic/consumer engine. Though job creation in March and April were the lowest levels since March 2017, the average for the season was 190,000 jobs per month, down only slightly from the twelve-month average of 191,000, and up from 184,000 per month in winter 2017/18. The national unemployment rate as of April 30 is +3.9%, the lowest level since December 2000. (3) Wall Street and other domestic financial markets have continued positive gains, but at a slowed pace of growth in recent months. Overall, the Dow Jones has added +3.4%, or 786 points, over winter 2017/18, considerably slower growth than the 1+1.4% gain during summer 2017, though still positive. The tech-heavy Nasdaq was stronger, adding +5.2%, while the more consumer- reflective Standard & Poors 500 has added +3.2%. (4) US Dollar Foreign Exchange Rates began to increase against the index of 12 major currencies in the world just before the beginning of the winter season, with sharp increases in both September and October 2017, potentially stifling long -lead international bookings, but then dropped dramatically in January. Over the long-term, foreign exchange rates continue to be a barrier to fulfilling to the international marketplace.