Lodging Costs Up?

[KingM]

This is a question for everyone who regularly stays in hotels, motels, condos and the like when you ski, rather than just skiing a home mountain. Have you found that your lodging costs are going up year on year?

The reason that I asked is that I've noticed a couple of things as a lodging owner. First, our costs are rising, sometimes brutally. I keep reading in the papers that official inflation rates are 3-4% per year, but I was looking at some cost increases since November of 2003 when we bought the inn. Electricity and septic are up about 30%, fuel has more than doubled, eggs and bread are both up about 30%, out plow guy charges 25% more, and the hourly rates of our plumber, electrician, etc., are up by 30-40% each over that period of time. Property taxes are going up by about 10% a year. (Vermont has a terrible property tax system, so it's not like the local schools even get to keep it.)

I have managed to lower my insurance costs and replacement of some things hasn't changed much (usually stuff, not services), so it's not an across the board increase in costs, but it's close.

The second thing I noticed is that there seems to be a lot few people who are trying to haggle about prices this year and I wonder if people are just getting used to paying more and more for their lodging, as they do for everything else.

I hate to see this happen, since skiing is already really expensive and with rising energy and insurance costs, the mountains aren't going to be able to hold the line on lift tickets. We also cater to people who are serious skiers, who want a clean room and a good bed, a nice breakfast, a hot tub, proximity to the mountain, and don't need mints on their pillows or froofy bath towels. That's our clientele, and rising costs hit them the hardest.

 

[deadheadskier]

As a general rule, ADR industry wide has seen 7% growth year over year since 2001. At least that's been my experience having spent the first ten years of my career working in hotels, up until last May.

It is quite apparent how you want to offer the best possible value to your guests, which in a small town environment such as MRV, those guests often become friends. Do you have a call around program? Are you checking each and every night what the occupancy is at other lodging properties around town and what their rack rate is for the night?

Best you can do is establish where you feel your property sits in terms of rack rate compared to the other properties in town. In the end, it will be your service and the cleanliness of your property that will win people over.

Heck, I bet all of the AZers would gladly pay 10% more each night to stay at your place than somewhere down the road because of the relationship you have established.

Guess, it's the same with all 'business' though. It's hard to remove the emotion from decisions when it's all about relationships.

 

[GrilledSteezeSandwich]

Not really...I can usually haggle on lodging when I travel during slow periods of time. Vermont is always a little pricey and I think they have a 10 percent lodging tax..along with the 9 percent restaurant tax which sucks. In Jackson Hole I paid 70 bucks a night at the 49er Inn..that included a nice room comparable to a Comfort Inn..free breakfast..internet in the lobby..daily housekeeping..free ice..and a view of the mountain behind Taco Bell..a real bargain..In Stowe I've found great deals at the Alpenrose, The Inn at the Mountain, and the Town and Country lodge. Costs for gas and lift tickets are going up a ton but since you can haggle on lodging during off-peak times..I feel the cost of lodging is changing the least.

 

[deadheadskier]

If I could mention one thing regarding service, and perhaps you already do this. The one thing that the properties I've worked for has done that has received the biggest reception in snow country is clearing people's car off in the morning after it has snowed. It's a small gesture, but when a guest comes out to load their car in the morning to head to the hill and they run into the GM brushing the snow off their rig so they are all set to go and can just head back inside, have some breakfast and not worry about it......

MAJOR PROPS......people love it

 

[KingM]

Vermont is always a little pricey and I think they have a 10 percent lodging tax..along with the 9 percent restaurant tax which sucks.

No, Vermont has a nine percent rooms and meals tax only. Most of the places around here, at least, add an additional 4% "community sponsorship" fee, which is really a special advertising thing that the Chamber of Commerce is running, largely targeting wedding business. They say nobody complains, which surprises me, but in any event, we don't add that or any other fees beyond the 9% state rooms and meals tax.

Costs for gas and lift tickets are going up a ton but since you can haggle on lodging during off-peak times..I feel the cost of lodging is changing the least.

Yeah, that was kind of my impression, too. I saw that discount page of some of the off-season deals around Rutland, and frankly, I don't know how they do it. The problem up here is that we have several months with very little revenue (April, May, November, and a week or two that are dead in June, October, and December), and you can't save your inventory, so you need to make enough during the busy times to survive the dead times. Maybe these places are owned outright, or are busier in the off-season, I don't know.

Anyway, thanks for your feedback.

 

[Geoff]

No, Vermont has a nine percent rooms and meals tax only. Most of the places around here, at least, add an additional 4% "community sponsorship" fee, which is really a special advertising thing that the Chamber of Commerce is running, largely targeting wedding business. They say nobody complains, which surprises me, but in any event, we don't add that or any other fees beyond the 9% state rooms and meals tax.



Yeah, that was kind of my impression, too. I saw that discount page of some of the off-season deals around Rutland, and frankly, I don't know how they do it. The problem up here is that we have several months with very little revenue (April, May, November, and a week or two that are dead in June, October, and December), and you can't save your inventory, so you need to make enough during the busy times to survive the dead times. Maybe these places are owned outright, or are busier in the off-season, I don't know.

Anyway, thanks for your feedback.

Some people at Killington (driven by Billy Bauer of the Grist Mill and the Summit Lodge) are trying to put in one of those local taxes to market the town. A solid 80% of residents are dead against it.

In my opinion, Vermont is going to tax their tourist industry into oblivion. Act 68 puts the commercial property tax rate up north of 2% of assessed value. The gasoline tax is big. The sales tax is fairly big. The meals tax is high. Maine has grabbed a big slice of the metro-Boston ski market that used to ski Vermont. In 1980, you'd see 35-40% Massachusetts license plates in the Killington parking lot. It's now probably less than 20%. Sunday River grabbed a big chunk of that business. I know a number of long-time Killington people who have changed mountains due to the costs.

If you're running a business, you have no choice but to jack up your prices. Otherwise, you have to shut your doors. It's a self-defeating cycle since your customers are drive-to and can go elsewhere. I guess Vermont will always have the metro-New York market locked up since there isn't all that much competition from New York State but the higher prices are going to chase away an awful lot of the fringe customers. If I owned commercial real estate in Vermont, I'd be worried about a market collapse.