Lodging trends have slowed in Colorado’s mountain resorts. Whether that’s a good thing or a bad thing depends on who you ask

After a surge in the early years of the COVID-19 pandemic, occupancy and vacation rental revenues at Colorado resorts are declining.

The crisis has been going on since last yearwhen numbers began to plateau, and industry experts say 2024 could end with even weaker results for lodging properties. But compared with years before the pandemic, trends are still charting a healthy trajectory, said Tom Foley, senior vice president of lodging software company Inntopia.

Instead of the extreme swings of the past few years — when travel and spending initially plummeted at the start of the pandemic, then surged — the hotel industry is now in calmer waters. For Foley, it’s a chance to breathe.

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“This is the best, most confident feeling I’ve had about the state of the industry since March 2020,” he said, who tracks data on tens of thousands of resort-based lodging properties across the western U.S. That includes top Colorado destinations like Breckenridge, Vail and Aspen, and his data represents 55% to 70% of all properties in those areas.

He added that in 2021 and 2022, bookings of accommodation facilities increased in virtually all holiday resorts, which translated into an average increase in revenue of approximately 20% compared to 2019.

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However, from 2023 onwards, revenues have flattened and in some cases the number of beds has also decreased.

Some of that can be attributed to a natural decline after the pandemic, when vacationers flocked to rural resorts. The pandemic’s economic fallout—inflation and high interest rates—may also be dampening travel as consumers become more restrained in their spending.

“We’ve really seen extreme resistance to higher (overnight) rates since last year, and things have normalized,” he said. “And that’s different from a return to normal. The result is stable transactions, predictability, proactive opportunities for real estate instead of having to react.”

Whether this is a signal of health for the industry depends on who you ask.

“If people think 20% revenue growth … is healthy, they’re going to disagree with my assessment,” Foley said. “Healthy is sustainable.”

Last year, Colorado saw record levels of tourism, with 93.3 million visitors spending $28.3 billion, but growth in lodging spending was much slower than in previous years.

According to data from the Colorado Tourism Office, lodging spending in the Rocky Mountain region increased by 14% from 2019 to 2022, from $1.4 billion to $1.6 billion.However, expenditure in 2023 remained at the same level as in the previous year.

“We had a slight decline in mountain communities,” said Tim Wolfe, executive director of the Colorado Tourism Office. “It could rebound, but I don’t think it will be as aggressive. It could even stay low because for the first time, more people are traveling abroad than are coming into the United States.”

International travel to the U.S. has not yet returned to pre-COVID-19 levels, resulting in more same-day trips by domestic consumers and fewer long-term stays by visitors from outside the country. Colorado ski areas also saw a slight decline in visits — a 5% to 7% drop — in the 2023-24 season for the first time since 2019.

It wasn’t just the winter months that were affected. For example, Breckenridge saw a 28% drop in revenue for Colorado residents’ lodging bookings this summer compared to last — with a 14% drop for out-of-state travelers. Steamboat Springs saw a nearly 16% drop in total lodging bookings this summer compared to last, according to a Breckenridge Tourism Office comparison.

“Overall hotel and short-term rental occupancy in 2024 will likely end below 2023 levels,” Wolfe said. “We came out of this weak. The summer was essentially flat … and there’s not enough upside potential toward the end of the year to beat” early-year occupancy.

“Occupancy is what drives retail, restaurants, outdoor recreation,” he added. “So if you don’t have people here for extended stays, they’re not spending money on those other things that drive these communities.”

COVID-19 has exacerbated tensions between tourism and quality of life in rural resorts, and a recent study of mountain town communities showed a desire for a greater focus on residents and local services and not on tourism.

Another study commissioned by the Northwest Colorado Council of Governments and the Colorado Association of Ski Towns found that respondents felt their quality of life was decliningThe survey also revealed contrasting perspectives between year-round residents and those who own short-term rentals and/or second homes, with the former favoring a greater focus on residents.

“Each community has to determine for themselves how (tourism) works for them,” Wolfe said, adding that he hopes to see more diversification of travelers — including international visitors — to bring balance and long-term stability to local economies.

What the next year holds for the industry is largely unknown. Experts say trends will depend on a number of factors, including the economy and the impact of recent regulations on short-term rentals in different communities.

“It’s really too early to really know the impact of these regulations,” said Foley, Inntopia’s director. “These are things, like any economic force, (that) are massive and take a long time to play out.”

But all this could be undone by a year of heavy snowfall.

“In mountain communities, the biggest surprise is always going to be snow,” he said.