Signs of maturity?

What new hotels might say about Big Sky’s lifecycle
“The booking pace for the next six months picked up notably during August.”—Findings of a recent tourism report from Inntopia.

A round up of current indicators show Big Sky is a maturing ski destination experiencing growth with more on the horizon—including additional hotels—and other amenities designed to attract and satisfy visitors. 

Like other Rocky Mountain tourist communities, Big Sky enjoyed a busy summer season while new air service and upgrades at the resort will likely drive bookings as we head into winter. 

That’s the general finding of a recent regional report from Inntopia. Its monthly DestiMetrics Market Briefing showed aggregated occupancy in the Rocky Mountain region for the summer season from May through October is up 2.9 percent compared to last summer as of this same time (Aug. 31), while the Average Daily Rate (ADR—what visitors pay for an overnight stay) crept up 1.7 percent. 

“The combined upticks in occupancy and ADR boosted aggregated summer revenues 4.6 percent compared to summer 2017,” concluded the Inntopia briefing. Inntopia is a software, marketing and analytics company that consults with Visit Big Sky, the local destination marketing organization. It prepares DestiMetrics reports for Big Sky using proprietary data provided by unnamed local businesses. 

Inntopia collects similar occupancy data from communities across the West, and together, “It shows that during August, the region enjoyed a moderate 3.9 percent boost compared to last August while the ADR eked out a 1.1 percent gain to deliver a 5.1 percent increase in aggregated revenue in a year-over-year comparison to last August.” 

“For the second consecutive month, we are seeing notable differences between our participating properties with half reporting year-over-year increases in occupancy and ADR while half of them are experiencing declines compared to last summer,” explained Jeremy Dreiling, production manager for the business intelligence division of Inntopia. “The aggressive year-over-year revenue growth that we saw each summer from 2013 through 2016 seems to be waning, and even though we are still experiencing year-over-year increases, that double-digit growth has cooled in the past two summers with only modest growth. This is the first summer that occupancy will come close to, or match, winter occupancy figures.”

The report goes on to note how, “The booking pace for the next six months picked up notably during August with arrivals from August through January up 11.5 percent compared to the same time last year. August bookings for arrival within the month jumped 15.5 percent compared to last year while the next five months were mixed with slight declines in October and December while September and November nudged up. January bookings increased a dramatic 49.5 percent compared to the same time last year although at this point in the year, the actual number of bookings are relatively low.”

DestiMetrics also tracks key economic indexes each month and summarizes how they could influence and shape discretionary consumer spending—including recreational travel. The Dow Jones Industrial Average (DJIA) moved up another 2.4 percent in August for the fifth increase in the DJIA since the start of 2018 and brought it within 185 points of the all-time high in January. August also marked the longest bull market streak without a major correction in 60 years.

That’s one reason why the Consumer Confidence Index gained six points in July, bringing it to 133.4 points and its peak level in 2018. It’s the highest CCI measurement since October 2000. 

“These historically high confidence levels have analysts predicting that consumer spending will continue its healthy upward trend through 2018 and will continue to foster stable economic growth,” Dreiling said, adding, “It has been a balanced summer performance thus far and the opportunity to reach a seventh consecutive summer record is well within reach. Summer visitors are continuing to increase each year and we will be watching closely to see what happens to rates and revenues at these western mountain destinations as summer occupancy gets ever-closer to matching winter and ‘high season’ figures.”

In Big Sky, visitation numbers for this past summer were not as high as 2016, when many were drawn by the historic centennial for the National Park Service. But Big Sky’s popularity keeps growing during the summer, said Candace Carr Strauss with Visit Big Sky.

She said it’s unclear if growth in local visitation revenue is driven by more visitors showing up or an increase in what visitors are spending when they get here. 

Strauss reports the average annual daily occupancy rate for accommodations in Big Sky is 41.5 percent. This number is derived using proprietary data provided to Visit Big Sky by nine hospitality partners. It shows where Big Sky might sit on the evolutionary scale for Western ski towns, with the larger, more “mature” destinations enjoying a higher daily occupancy rate.

“Hey, we were just born in 1972,” remarked Strauss. “We’re kind of growing into our own, and really cementing ourselves in the forefront among a set of Goliaths.”

Those giants Big Sky hopes to slay, or least compete with are larger resorts like Keystone—which sees twice as many skier visits—and Vail, which welcomes more than three times as many. 

One sign Big Sky is primed to grow are the number of hotel rooms in the works and about to come online with the 2019 opening of the Wilson Hotel in Town Center. It will add 129 rooms. The new new Montage Big Sky at Spanish Peaks Mountain Club will bring 150 rooms. And there are between two and four hotel projects ready to take shape thanks to the recently passed Overall Development Plan for Moonlight Basin. 

The ODP—which was recently approved unanimously by the Madison County Commission—seeks to develop overnight lodging in places like the Madison Base Area, Lee’s Pool and other zones slated for building.

“The Three Peaks Neighborhood is also envisioned to accommodate a hotel because of its unrivaled views and access to a variety of outdoor recreation,” states the ODP referring to an area south of the Moonlight Basin Golf Course. 

Moonlight’s ODP includes a hotel room capacity comparison with Jackson Hole, Park City, Aspen and Vail and concludes, “While Moonlight Basin’s current occupancy rate averages 18 percent, it is worthwhile for long-term planning to understand that mature resort communities represent a 50 percent average occupancy. One way that these more mature resort communities increase their occupancy is through increased use of overnight accommodations in hotel units.”

When asked for his take on the future of overnight accommodations in Big Sky, Chris Kraus—a Bozeman-based managing director with the global consulting firm CBRE Hotels—offered praise for ongoing investments in the resort.

“Boyne’s putting capital back into the mountain,” Kraus emphasized, and the record 500,000 skier visits this past winter could be just the beginning of future growth.

“Perhaps the skier visits have been held in check due to the accommodations,” wondered Kraus, who speculated Big Sky Resort could “see a spike in visitation” following the planned build out of new base amenities and the slate of hotel options on the horizon. 

Big Sky’s assets include consistent snowfall, massive terrain and a growing list of maturity milestones like the arrival of the new eight-seater Ramcharger Chairlift. Still, said Kraus, “It’s far more immature in terms of the base area” compared to Jackson Hole and other rival resorts. 

But there are signs Big Sky is rapidly maturing. Adding the Residence Inn brand to the local mix through the Wilson Hotel is a good sign, said Kraus. 

“People say, ‘Let’s go. I’ll cash in my Marriott points,’” explained Kraus, who continues to see growth in both the hotel industry and offerings from Airbnb and VRBO. 

“Airbnb has bled into the traditional hotel industry,” said Kraus, who tracks online lodging providers. “It’s a formidable sector. It’s significant. But at the same time, the hotel sector continues to perform at record levels. There’s a lot of new rooms coming on, but the market demand continues to grow.”

Strauss with Visit Big Sky also underlined the benefit of having more, branded hotels in Big Sky.

“Having Residence Inn here is very helpful,” said Strauss. “This definitely helps with our international travel. Marriott is the number one single largest hotel company in the world. They will help get Big Sky detected on new radar screens.”

As for investors looking to be part of Big Sky’s growing hospitality sector, Visit Big Sky is working with consultants at Destination Analysts to produce a report that credibly determines current and future visitation numbers. 

“So they can look in one place and say, ‘OK, this is what’s going on in Big Sky,” explained Strauss, noting a formal lodging inventory hasn’t been done for Big Sky since 2015. 

Strauss expects more brandname hotels to consider developing in Big Sky and offered some creative ideas on other possibilities.

She pointed to Washington-based Columbia Hospitality, which runs both The Lark in Bozeman and Sage Lodge in the Paradise Valley. 

Sage Lodge is branded under the umbrella of Sage fly fishing rods, a leading manufacture of high-priced angling wands. This kind of branding works for Sage Lodge because it’s so close to world-class trout fishing on the Yellowstone River. 

Causally brainstorming in a call with the Lookout, Strauss wondered, “What if one of the major ski manufacturers (think K2 or Atomic) wanted to create a hotel property that embraced the skier culture and Lone Mountain, biggest skiing in America?”

Strauss noted how at Copper Mountain in Colorado, REI built an outdoor service center on the mountain. The giant outdoor retailer sought to build a symbiotic relationship with one of Colorado’s biggest resorts because it was a way to enhance the visitor experience and introduce new customers to the REI brand. 

“We have this in a few of our flagship store locations, and it’s meant to be kind of an adventure concierge,” REI’s Jason Lane told the Denver Post. 

“You might want to learn how to build a snow cave or how to do winter camping or winter survival,” continued Lane, describing what might be described as signs of ski resort maturity. "We can show you where to go and how to do it on your own if you so choose.”

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