On ski trips, even the wealthy want bargains
November 26, 2010
ASPEN – Even the rich want a bargain on a ski vacation – and they’re getting them at high-end resorts across the West this year.
An increasing supply of four- and five-star hotel rooms and stagnant demand from travelers is forcing properties to drop prices or add value to try to entice guests, according to tourism officials.
Aspen’s premiere property, The Little Nell hotel, isn’t immune to the trend. The five-star hotel owned by the Aspen Skiing Co. is offering free lift tickets and extra nights for customers throughout the ski season, with blackout dates only during Christmas and Presidents Day weekend. High rollers can get two free lift tickets for each full day they are at the hotel, or they can book four nights and get a fifth night free.
The deals are being offered to guests who can afford to stay in a hotel where a standard, town-view room goes for $840 per night in March.
“I think everybody is out there looking for a deal, even those that don’t need a deal,” said John Speers, Little Nell general manager.
The St. Regis Aspen also touts an Aspen ski package that includes two adult lift tickets per day, as well as $50 food and beverage credit, to customers who book at least two nights.
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The Little Nell started offering the lift tickets and free night last season to spur business during slower times of the season. It worked, Speers said, so the value-added deals were revived this season. The hotel posted its usual strong occupancy figures in 2009-10 despite the recession, and, so far, reservations are slightly ahead of last year’s pace at this time, Speers said.
Not all high-end properties have been so lucky, in large part because of the glut of rooms. Some new luxury accommodations were under construction when the real estate industry collapsed during the recession. That means they are coming on line now, while the market is struggling. A Four Seasons Hotel opened in Vail this ski season along with the Montage in Deer Valley.
Last season, a Ritz-Carlton Hotel opened in Lake Tahoe along with a St. Regis Hotel in Deer Valley and the highly regarded Viceroy in Snowmass Village.
To try to lure business, some of the new properties are offering “ridiculous rates,” said St. Regis Aspen General Manager Senih Geray.
The buzz phrase in the hotel industry is that three-star guests can afford five-star accommodations at four-star prices, according to Bill Tomcich, president of Stay Aspen Snowmass, a central reservations agency.
The discounts create a “top-down impact,” he said. Three- and four-star accommodations must drop prices or add value to compete with the discounted five-star accommodations.
As a result, the average daily rate charged by tourist accommodations dropped in Aspen and ski resorts across the West the past two years.
The average daily rate for rooms booked by Stay Aspen Snowmass fell from $440 in winter 2008-09 to $383 last winter, Tomcich said. Part of the drop was because of a popular package that offered travelers a fifth night of lodging if they purchased four nights.
Aspen’s experience wasn’t unique. The average daily rate dropped 9 percent in western U.S. destination resorts in winter 2008-09 and another 6 percent last winter, said Ralf Garrison, founder and director of Mountain Travel Research Program or MTRiP. He analyzes trends in 15 mountain destination communities that encompass 24,000 rooms.
“Consumers have gotten used to a buyer’s market where they expect to deal, deal, deal,” Garrison said.
Some tourism accommodations are reacting by taking the quickest, most convenient action – slashing prices. Others are trying to hold steady but add extras to make themselves more enticing.
Tomcich said no trend has developed yet for prices in Aspen and Snowmass Village this winter. “Where the actual rates are going to end up is anyone’s guess,” he said.
Some properties resist the temptation to drop their prices, including The Little Nell and St. Regis Aspen.
Speers said the greatest competition is for group business, which makes up only about 12 percent of the hotel’s room nights. The Little Nell’s bread-and-butter business is skiers and other leisure travelers, known as “transient business.”
Speers said he avoids dropping prices, regardless of the competition, because the consequences are too dire. Some luxury properties slashed prices during the economic downturn in 2001 and didn’t recover their pre-2001 rates for seven years, Speers said. Then the 2008 recession struck and forced adjustments again.
Hotels that cut prices can end up exacerbating their woes. The clientele they attract with the price cuts often cannot afford to eat at in-house restaurants or order room service, so revenues further erode, Speers said.
Geray said the St. Regis was able to maintain its daily rate last winter, in large part because Aspen is such a desirable destination. This winter, rates are up slightly at the St. Regis, reflecting inflation.
Geray said the pace of reservations has doubled in the past three weeks, possibly because of the snowy start to winter. That makes him optimistic that this winter will be better than 2009-10.
“Once you hit the bottom, it’s easier to rebound,” he said.