Colorado ski real estate doubles, will there be a drop on the other side? 5 factors that will shape the future
The amount spent on real estate in six of Colorado’s resort-anchored counties doubled from 2019 to…
I usually do not send e-mails out on the weekend, but wanted to make sure everyone has been following the major news in the ski industry. Vail resorts recently announced that you will need a reservation in order to ski/ride. Passholders can select up to 7 days in advance to reserve and the remaining will be reserved the week of, one at a time. What does this mean for real estate in the short term? How will this impact ski real estate long term?
Vail and Beaver Creek will implement a reservation system to access the mountain during the 2020-21 season, Vail Resorts announced Thursday. Pass holders can reserve up to seven days in advance on their passes – called Priority Day Reservations – and as many week-of reservations as their pass product allows. Walk-up tickets will no longer be available for purchase at the window, but day-of guests can purchase tickets from their mobile devices and pick up their day-use tickets at the window.
This policy will be in place for all the Vail mountains: Breckenridge, Keystone, Vail, Crested Butte, Park City, etc… I would assume that other major resorts will follow suit.
Unfortunately the policy sounds good on paper, but this is going to be a giant cluster**** and is sure to piss just about everyone off. There are some fundamental flaws/questions. Why bother paying for a pass if you are only guaranteed 7 days (and you might not get your days). If you are traveling with a family of four, why would you plan a vacation if you might not be able to ski?
I can guarantee that Vail will be gaming the system with a promotion that if you stay in a Vail property you will be guaranteed ski dates. Unfortunately with Vail, the largest resort provider, kicking off the season this way, look for Alterra and others to follow as they don’t want to get overwhelmed from the traffic that is leaving the Vail resorts.
Vail’s strategy is ill- conceived and not very well thought out. Destination travelers are immensely more profitable than drive up traffic. The way the reservation system is setup it does just the opposite and discourages destination travel while rewarding the less profitable drive up traffic that can accommodate a week of reservation. Without the destination traveler and/or drastically reduced destination traveler, ski shops, restaurants, etc… in ski towns with Vail mountains are going to get creamed as their most profitable customers are not visiting. The airlines figured this out 20 years ago with tiered pricing. For example it is cheaper to fly on a Wednesday verse Friday. The same could work in the ski industry where a pass that allows weekend visitation is more expensive than Monday through Wednesday pass. The all you can eat buffet (ie: Epic Pass) at a low entry point does not work in the age of Coronavirus. It will be interesting to see how Aspen, who has not sold passes yet, adapts to the new environment.
Nightly rentals are going to get creamed by the reservation policy. With uncertainty about ski reservations, there will be considerably less people booking ski vacations. It will be a bloodbath for nightly rentals as there will be less destination traffic and more drive-up traffic from Denver that can utilize the week of tickets and come up for one day. Ironically right after the news came out, I saw a number of listings of rental properties in Copper Mountain come on the market for sale. There will likely be a number of sales of short-term rentals, but there is ample demand to absorb them.
Commercial property will in the short term take a large hit. Many businesses will not be able to survive a winter without a large quantity of destination travelers. Look for retail, restaurant, and non-Vail hospitality properties to take a substantial hit. The failure rate of small businesses will be large this Winter due to Vail’s strategy.
The various ski towns in Colorado are desirable places to live and visit and will remain so in the long term. The virus is a short term blip that will ultimately pass and life will return to some sort of normalcy. Long term values will be fine in the various ski towns as inventory is at historic lows, build costs are astronomical, and there is a flight to smaller trendy micro cities like Steamboat, Crested Butte, etc…
This winter is going to be rough for nightly rental owners and commercial property owners along with their tenants. The reservation system will drastically reduce the most profitable customers that many businesses rely on and encourage short-term drive-up visitation. Fortunately, this should hopefully only last this season with more normalcy returning 21/22!
We are still lending as we fund in cash!
I need your help!
Don’t worry, I’m not asking you to wire money to your long-lost cousin that is going to give you a million dollars if you just send them your bank account! I do need your help though, please like and share our articles on linked in, twitter, facebook, and other social media. I would greatly appreciate it.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is the recognized leader in Colorado Hard Money and Colorado private lending focusing on residential investment properties and commercial properties both in Denver and throughout the state. We are the Colorado experts having closed thousands of loans throughout the state.
When you call you will speak directly to the decision makers and get an honest answer quickly. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games)