Tourism Sector Moves On From Winter

Mon, 05/23/2016

by C.B. Hall Vermont Business Magazine With a frustrating ski season receding into the past, Vermont’s tourism sector is turning attention to how well it will fare as the rest of 2016 unfolds. Were there underlying factors this winter, beyond the weather, that are poised to take a bite out of summer travel, too? Or will tourism rebound as the gray landscape takes on a vernal green?

“I think we’re really going to see some great numbers,” Nick Longo, Burlington International Airport’s director of planning and development, told VBM.

Vermont is counting on a strong summer tourism season, as the state shakes off a dismal winter and the economy keeps slowly growing. Vermont Fish & Wildlife photo. ABOVE. An early morning round. Okemo Valley Golf Club photo.

His optimism matched that the industry-wide assessment that Vermont tourism is fundamentally strong. But there’s good reason to stay on top of the numbers. The Vermont economy is substantially more dependent on tourist spending than the U.S. economy in general is: The accommodations sector represents 3.29 times the share of the Vermont economy that it does of the national economy, according to federal statistics. In 2013, the most recent year for which figures are available, tourism accounted for $2.49 billion, or more than 8 percent, of the state’s economic output, according to a “benchmark report” prepared by Ken Jones, economic research analyst at the Vermont Agency of Commerce and Community Development (ACCD).

Traffic at Longo’s airport took a big hit when the Great Recession arrived in 2008. Those figures bear scrutiny, since, even with that downturn history, enplanement and deplanement numbers have not recovered.

In fact, enplanements have gotten worse every year since 2008, going from 749,000 to 594,000 in 2015, with the 2014-2015 drop coming in at 2.9 percent. Deplanements have slid every year since 2009, falling 1.7 percent between 2014 and 2015. US border-crossing statistics recorded a 10.4 percent drop in entries into Vermont from Canada from 2014 to 2015, in terms of total passengers in private vehicles.

Some have wagged a finger of blame at the slide in the Canadian dollar, which was valued at 79 US cents as of press time.

“That’s significant both in tourism and some sales and use figures,” Williamstown-based economic analyst Tom Kavet said. “You used to hear a lot of French in some of the retail outlets in Burlington. That’s a thing of the past.”

But Longo felt that Canadians, who provide 30 percent of his airport’s traffic, and whom interviewees for this article termed a very loyal clientele, came through the airport in good numbers this ski season, and surmised that BTV’s long-term traffic decline may stem from a shift from the airways to the highways, as people take a harder look at their discretionary spending.

Using Vermont’s largest airport, he said, “gets really expensive if you’re talking about a 400-, 500-dollar plane ticket for a single person.”

Crucial April tax revenues were nearly $17 million below their targets. While the headline grabber was a plunge in the vital Personal Income tax, the Sales and Rooms & Meals consumption taxes were also down for the month. Combined they were below expectations by about $1 million for what is a relatively quiet month anyway, but also down almost $6 million for the fiscal year, which ends on June 30. Much of that, of course, is because of the dismal winter season.

Some of the blame for the personal income tax revenues is a problem with personal income taxes filed using some consumer electronic filing services, including Intuit’s TurboTax. The state Tax Department said in May that some 19,000 returns resulting in about $2 million in taxes are affected. This would only be for those who itemized deductions on their federal return (1040EZ users would not be included). Taxpayers have until June 30 to re-file without penalty or interest, according to the Tax Department.

In contrast to the poor revenue results, labor numbers suggest that Vermont has shaken off the winter doldrums and moved on.

The April unemployment rate dropped another tenth to 3.2 percent. More importantly than Vermont having the fifth best rate in the nation (New Hampshire is number 2), is the labor force increased, the number of employed increased, the number of unemployed fell. All three of those key indicators were not only better than they were the previous month but also versus the same time last year.

Also hovering over the state’s tourism industry, as it moves into summer, is the recent filing of federal civil fraud charges against the owners of the Northeast Kingdom’s Jay Peak and Q Burke resorts, Ariel Quiros and Bill Stenger. It appears that the filing itself will have only limited effect from the tourist’s standpoint, however.

A statement posted on Jay Peak’s website, and attributed to “Andrew,” informed the resort’s patrons that: “We here at Jay Peak will be working with Leisure Hotels and Resorts (LHR) to continue managing Jay Peak same as it ever was [including] day to day operations of the mountain, indoor waterpark, golf course, lodging or any of our amenities that continue to be available on a daily basis here… We are anticipating our busiest summer on record… and we look forward to keeping on. It is an awkward time for us on the ground as well and we appreciate you giving us some room to figure all of this out. “

At Q Burke, a press release issued in late March, as a related payment dispute unfolded with the general contractor, PeakCM, that built the yet-to-open Q Burke Hotel and Conference Center, assured patrons that “Q Burke Mountain Resort will open for the upcoming bike, ski and ride winter seasons.”

But the 116-suite hotel and conference center is another matter.

Asked how the scandal would affect the Caledonia County resort, Jones noted that, “Burke’s a little different [from Jay Peak], in that the new [hotel] up there has not yet opened. I’m uncertain as to how they move forward with opening that… I hold out hope, but it is uncertain at this point.”

PeakCM’s president, Jerry Davis, had withheld a certificate of occupancy and filed a lien against the resort, pending payment of $5.5 million that he says the resort owes him. The shuttered luxury complex has had to cancel wedding reservations for the upcoming season. The hotel has now come under federal receivership as the other Jay-Burke developments already have.

But by early May, the certificate had been gained, the beds made and the tables were set.

The federal receiver can open the Burke Hotel anytime (he’s dropped the Q from all Burke properties), but said it won’t open until the fall. There are also pending liens that must be dealt with.

He is especially bullish on the future of Jay Peak. Michael Goldberg said business will be “better than ever,” as long as the state gets snow this winter. He said Jay has been profitable through the entire EB-5 funding fiasco. Goldberg said the management team he brought in has already found thousands of dollars in efficiencies at Vermont’s most northern flagship resort.

Meanwhile, at Amtrak’s Vermont stations patronage dropped 4.2 percent last year, while the rail carrier’s passenger count nationally declined a small fraction of a percent. The lackluster ridership figures followed many years of steady growth in US train travel, and observers have pointed to low gas prices as the culprit.

Visitors relax in the famous rocking chairs at Burlington International Airport. VBM file photo.

That interpretation, like Longo’s comments on the decline in BTV’s traffic, suggests that cost differentials are manifesting themselves in a shift in modal habits among tourists – but interviews for this article found no hint of any underlying trouble for the state’s tourist destinations, at least.

At the Vermont Chamber of Commerce, vice president of tourism Tori Ossola, like Longo, saw better times ahead. She noted that the chamber’s bulk and retail distribution of road maps and vacation guide books was “on track with last year.”

Asked about the impact of the cheap loonie, she passed on the opportunity to find a scapegoat.

“The one thing about our tourists, they are pretty loyal – especially our Canadian guests,” she said.

Like other interviewees, she pointed out that winter tourism has come to entail a lot more than skiing. That diversification proved the saving grace at several major ski resorts this winter.

In Manchester, by way of example, any economic impacts from the nearly snowless winter are difficult to discern. A new boutique hotel calling itself Taconic – A Kimpton Hotel, opened in December. General manager John Burnham reported winter occupancy “slightly below our expectations, but that’s simply because of the snowfall.”

But, citing the Robert Lincoln mansion in Manchester Village as an example, he chimed in with Ossola on how a diversification of attractions helps out.

“Hildene actually had one of their busiest years, and that’s because normally people who come up in the winter are up on the mountains. But this year, because of the ski conditions they were down here looking for other things to do.

He termed the summer outlook in Manchester “very promising.”

Ground has been broken on a new Hampton Inn and Suites in Manchester, and a start on a new destination, Aeolus Mountain Spa, is expected soon. That will bring room capacity to almost 1000 in Manchester and neighboring Dorset, whose populations total just under 6,500.

Marketing innovations in themselves can cushion the blow from many unpleasant factors, last winter’s lack of snow among them. Ossola mentioned fine-tuning in the Department of Tourism and Marketing’s (DTM) ad campaign. When the early-winter weather meant the state marketers were advertising a lot of bare slopes, “the state suspended its winter campaign . . . until conditions improved in January,” she said. “They’re more able to turn them on or off to accommodate what’s happening on the ground here.”

Turning the advertising faucet off and on represents only one technique that the DTM has been utilizing in order to boost tourism receipts.

“What we have begun to do over the last several years is really invest marketing dollars in some of our distance markets, with direct air travel to Vermont, and we’ve started to see growth with some of those markets,”  DTM deputy commissioner Steven Cook said. “Particularly we’ve seen growth from Atlanta, Philadelphia, Washington, DC. And the reason for that is, we’ve really been trying to increase the length of stay of our visitors.”

“Because Vermont is a drive market for many of our consumers we typically see about a three-night average for overnight visitors,” he elaborated. “We’ve been working towards increasing that length of stay by reaching into fly markets where consumers tend to stay longer.”

Another key to marketing a vacation in Vermont is branding – the leavening of the product with a distinctive and valued feature that competitors can’t duplicate. The aura of Vermont as embodying an agrarian, independent spirit allows the state’s food producers, for example, to charge more for their products than producers in another state might get.

The same logic offers a tool for the tourist industry, too, as it vies for the favor of travelers.

“The Vermont name carries the thought of quality and authenticity,” Cook said. “It’s very, very prevalent in a lot of the work that we do… We focus on the highest areas of interest that we find our consumers are looking for. Those areas are, really, outdoor recreation, culinary, beautiful scenery, and authentic people.”

The mechanics of Vermont’s tourism marketing set the state apart even more.

“We were the first and we continue to be the only state that has implemented a social media program in which we have a different Vermonter managing the social media channel on behalf of the state every week – every single week… We have everybody from managers of small farms to people who operate lifts at ski resorts to authors to librarians. Authentic and interesting people. It’s been a huge value to us and the travel industry.”

Gasoline prices well below their peaks of five years ago amount to positive marketing factors, too – at least for now.

“With the gas prices and disposable income – it is a complete benefit to the people of this state and all of New England… I think you’ll see that in next summer and fall,” economic analyst Kavet put it.

“Because there is a slow growth in the economy in general, I’m very confident that the 2015 benchmark report is going to show an increase in travel and tourism activity in Vermont, over the 2013 report,” ACCD analyst Jones said.

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