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12-15-14 Overview of Resort market and Economic Trends Overview of Resort Market and Economic Trends December 15 , 2014 Presented b Fi, Andrew Knudtsen, CCIM AICP Managing Principal t Economic & Planning Systems o p e tT' b� Oakland Denver Los Angeles Sacramento Economic & Planning Systems • Full service urban economics consulting firm • Offices : Denver, Los Angeles, Oakland , Sacramento • Areas of expertise : - Market and financial feasibility analysis - Fiscal and economic analysis - Financing of public facilities and infrastructure - Entitlement evaluation and policy formation - Resort economics • Previous economic studies completed for: - Snowmass Village, Aspen, Jackson, Mammoth Lakes, Truckee, Whistler, Basalt, Carbondale, Glenwood Springs, Vail, Avon, Steamboat Springs, Copper Mountain, and others State of the Industry �1 - 1 WWI Purpose • Establish a framework for understanding trends within the resort industry • Consider ways to elevate the Snowmass market position to capture greater market share • Create clarity regarding the Town 's fiscal position and the net fiscal impact of different development elements • Prepare for future development applications • Identify key questions warranting additional research State of the Industry 2 ( -4 Outline of Topics 1 . Resort Market Trends by Use — Spectrum of Use — Definitions — Part-time Residents and Guests Hotel, Fractional, Club, Whole ownership — Full-time Residents Ownership and Rental 2 . Elements that drive vitality — Occupancies — Demand — Critical mass and layout — Challenges 3 . Resort Economic Trends — Employment Trends and Conditions — Retail Sales Trends and Conditions — Building Permit Activity Trends — Residential Sales Activity and Pricing State of the Industry #` 3 1) TRENDS BY USE State of the Industry 4 Definitions • Hotel - Commercial property containing multiple guest rooms owned by a single entity. • Condominium - One dwelling unit in a group of units where each owner owns their individual air space, with an HOA that is legally responsible for maintenance of common elements . • Condominium- Hotel - Group of individually owned condominiums within a hotel , benefiting from the hotel services and bookings . • Time Share : — Historic: A single unit with divided ownership among 50+ owners, each purchasing a set week of use — Fractional : A more recent iteration that limits ownership to 8 (+/-) shares, often delivering premier locations and services — Club : An evolution within fractional that breaks ownership into increments ranging from 1 to 10 weeks, most often two to three weeks. Often networked under international hotel flags. Often using a point system to increase flexibility and mobility. State of the Industry ` 5 • Hotels • Few hotels constructed in western US resorts in past 15 to 20 years • Proliferation of upscale flags in the early 2000 's — Included condominium element — Seasonality reduces annual occupancy rates — Impacts to Net Operating Income — Operating costs unsupportable • Financing constraints continue to be present — More conservative underwriting standards — Condominium presale requirements more stringent — Greater Security and Exchange Commission (SEC) scrutiny imk State of the Industry 6 Vi Time Share • Fractional - Industry has gravitated to 1/8 shares over time, providing six weeks of usage annually - Resale market has an established record - Since 2013, 1/8 shares have established an uptick in resale prices and volume - Work in resorts where whole ownership price points are substantial - Often attract buyers committed to a specific community - Effective absorption dependent on right sizing total shares available • Club - Often sold at 1/12 to 1/20 shares, providing two to three weeks of usage. - Some strong properties. Several with sales problems. - Resale market is unsubstantiated - Introduced 'point system' to broaden appeal - Diversifies market and delivers strong occupancy rates State of the Industry 7 Permanent Residents • Local residents create the authenticity that draw the visitor • Town of Snowmass Village affordable housing programs are established State of the Industry 8 2) ELEMENTS THAT DRIVE VITALITY Occupancy Rates • Hotels — Most resort hotels hover below 50 percent annually — Stronger resorts provide higher rates Can reach 55 percent in Vail or Aspen • Condominiums — Short-term units in peripheral locations average 30% to 50% — In good locations with high performing management company, can reach 85% — For strong locations and good quality units, often find owners with low interest in placing unit in a rental pool • Fractionals — Annually can range from 60 to 70 percent, depending on location and program State of the Industry , 10 Critical Mass and Layout • Peer Community research — Commercial floor area ranges from 60,000 to 340,000 sq . ft. • Ability to induce expenditure is key — Critical mass — Variety and options — Connectivity • Challenges — Tri-nodal nature of Snowmass Village — Creating a destination within each node — Enable healthy competition that spurs greater expenditure 11 State of the Industry Relevancy - - Policy and Vision Perspective • How can the Town of Snowmass Village proceed and entitle projects with strong market traction ? • How can the Town minimize negative impacts and leverage developer interest to enhance its brand , private sector business interests, fiscal base, and community well being ? • In addition to mitigating risk posed by new development, how can the Town proactively plan for elements that will raise the bar and create benefit? State of the Industry 12 (00 3) EMPLOYMENT TRENDS 13 (El State of the Industry Total Employment 2000-2013 35,000 30,000 Eagle County,CO, 28,780 25,000 Summit County, UT, 23,422 20,000 Summit County,CO, 18,355 15,000 Pitkin County, CO, 15,706 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics; Economic&Planning Systems • State of the Industry 14 Average Wages 2000-2013 $45,000 Pitkin County, CO, $41,899 $40,000 $35,000 Eagle County,CO, $34,974 Summit County,CO, $32,414 $30,000 $25,000 Summit County, UT, $25,711 $20,000 $15,000 $10,000 $5,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics;Economic&Planning Systems 15 • State of the Industry Total Employment Index 2005-2013 2005-2008: +1 ,340 2008-2011 : -2,370 2011 -2013: +750 2005-2013: Loss of 280 jobs 140 130 120 +1,340 110 m..-—- Resort County Composite +750 100 �'"�_ -2,370 Pitkin County 90 • Net: -280 80 70 60 50 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note:Resort County Composite includes Eagle County,Colorado;Summit County,Colorado;and Summit County;Utah. Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics;Economic&Planning Systems State of the Industry 16 Guest Oriented Employment Index 2005-2013 2005-2008: +140 2008-2010: -580 2010-2013: +580 2005-2013: Gain of 140 jobs 140 130 120 ... --°^ Resort County Composite 110 +140 +580 100 • _580 Pitkin County Net: +140 90 80 70 60 50 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note:Resort County Composite includes Eagle County,Colorado;Summit County,Colorado;and Summit County;Utah. Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics; Economic&Planning Systems State of the Industry 17 Year- Round Employment Index 2005-2013 2005-2008: +1 ,090 2008-2011 : -1 ,390 2011 -2013: +440 2005-2013: Gain of 140 jobs 140 130 120 +1,090 Resort County Cornposite 110 +440 100 -1,390 Pitkin County Net: +140 90 80 70 60 50 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Resort County Composite includes Eagle County,Colorado;Summit County,Colorado;and Summit County;Utah. Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics; Economic&Planning Systems State of the Industry 18 Construction Employment Index 2005_2013 2005-2008: +130 2008-2011 : -610 2011 -2013: -80 2005-2013: Loss of 560 jobs 140 130 120 +130 110 100 90 80 70 -610 ..-�-. Resort County Composite 60 -80 50 Pitkin County Net: -560 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Resort County Composite includes Eagle County,Colorado;Summit County,Colorado;and Summit County;Utah. Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics; Economic&Planning Systems (e. State of the Industry 19 Recovery : Total Employment vs . Seasonal Employment 2008(Q3)-2013 120 —Resort County Composite 115 —Pitkin County 110 105 Guest Oriented 100 --- Employment • •- 95 %• •--a+=------------ `•' •••• •• Total 90 Employment 85 80 2009 2010 2011 2012 2013 Note: Resort County Composite includes Eagle County,Colorado;Summit County,Colorado;and Summit County;Utah. Note:Grey areas represent U.S.recessions. Source:Bureau of Labor Statistics; Economic&Planning Systems •State of the Industry 20 4) BUILDING PERMIT ACTIVITY Building Permits Pitkin and Eagle County, 2000-2013 1,000 900 ■ Pitkin County 800 Eagle County 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source:U.S.Bureau of the Census,Economic&Planning Systems te State of the Industry 22 Building Permits Pitkin County, 2000-2013 300 a Single Family 250 Attached 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source:U.S.Bureau of the Census;Economic&Planning Systems State of the Industry 23 ( 0 5) RETAIL SALES TRENDS State of the Industry 24 Quarterly Retail Sales ( $ 000s) 2003-2014(Q1 ) Retail Sales ($000s) $250,000 $200,000 _____ ____.___. _ Aspen, $197,133 •• • ••• Vail, $170,211 .••• $150,000 _ „`,---- •- --- ---'••............. .. .. i e ••... ` •10. %. MI. O. $100,000 - .. ...... Breckenridge, $101,578 •"" • ONO . i $50,000 Frisco, $40,2.08 ----.. _- aft. .............00Snowmass Village,$30,271 visi $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems (e. State of the Industry 25 Quarterly Retail Sales ( $ 000s Town of Snowmass Village, 2003-2014(Q1 ) $90,000 Total Sales $80,000 —4-Quarter Average $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source:Colorado Department of Revenue;Economic&Planning Systems State of the Industry } 26 (El ,� Quarterly Retail Sales ( $ 000s ) Town of Snowmass Village, 2003-2014(Q1 ) $90,000 Total Sales $80,000 $76,597 —4-Quarter Average $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source:Colorado Department of Revenue;Economic&Planning Systems C ,El State of the Industry 27 ,� Retail Sales Index 2003-2014(Q1 ) 180 170 160 150 140 Snowmass Village 130 120 110 100 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems State of the Industry 2g Retail Sales Index 2003-2014(Q1 ) 180 170 160 Vail Valley and Roaring Fork 150 140 Snowmass Village 130 120 110 100 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems State of the Industry 29 (e Retail Sales Index 2003-2014(Q1 ) 180 170 160 Vail Valley and Roaring Fork 150 • Aspen 140 Snowmass Village 130 120 110 100 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue; Economic&Planning Systems (0. State of the Industry 30 Retail Sales Index 2003-2014(Q1 ) 180 170 160 i Vail / Vail Valley and Roaring Fork 150 140 / Snowmass Village 130 te 120 doe 110 100 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems ,)State of the Industry 31 Retail Sales Index 2003-2014(Q1 ) 180 170 . Breckenridge / 160 • ...• • / Vail Valley and Roaring Fork 150 i ' / � 140 ' Snowmass Village 130 120 _ - 110 / � 100 .\ .—..e._ 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems , (e, State of the Industry 32 Retail Sales Index 2003-2014(Q1 ) 180 170 160 Vail Valley and Roaring Fork 150 140 411.10.1,_ Snowmass Village 130 ` Frisco 120 ♦yam 110 • 90 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems State of the Industry 33 Retail Sales Index 2003-2014(Q1 ) 180 170 Breckenridge • 160 • /i Vail • / Vail Valley and Roaring Fork . ' Aspen 150 • 140 �_...••• /! d ' . •• % ./ • Snowmass Village 130 j • , Frisco `• . � .0� 0• • 120 ' •..# __.. _.__ -.v. _ „I .'. .•. 110 / 'I- ' -------- `Z. '1 100 f 90 N. f 80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Grey areas represent U.S.recessions. Source:Colorado Department of Revenue;Economic&Planning Systems e• State of the Industry 34 6) RESIDENTIAL SALES ACTIVITY I Residential Sales Volume 2004-2014(Q3) 900 800 ■ Roaring Fork Valley Vail Valley 700 ---- — 600 , - l 500 r I I 400 i`l t I I 300 i _ 1 I 1 : : — 11 - i200 100hlIIIIbii111i1111I1I1Iii1lllIlII . 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source:Multiple Listing Service(MLS);Economic&Planning Systems (e State of the Industry 36 Average Sales Price 2004-2014(Q3 ) $3,000,000 $2,819,750 $2,500,000 $1,971,378 RoaringFork $2,000,000 Valley $1,991,402 e 4 $1,500,000 .., ,.�I ``•r �' � r, Vail Valley $1,000,000 .. ..,,.• �"..�"'" ` *' $1,073,125 ..—ai ••--.. .. dmgat $500,000 __._ $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source:Multiple Listing Service(MLS);Economic&Planning Systems (01D State of the Industry 37 Average Sales Price per Sq . Ft . 2004-2014(Q3) $1,200 $1,004 $1,000 $911 /N ! ♦ $800 / • 1 • 1 • Roaring Fork Valley �• $720 $600 s®t • • �.% ! \ ,,__ ! •'r_,,,.•--� .,.,,._® •♦ _.® Vail Valley $400 -»— "�____--....--- $433 $200 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source:Multiple Listing Service(MLS);Economic&Planning Systems •State of the Industry 38 Average Sales Price Roaring Fork Valley, 2004-2014(Q3) $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 Single-Family $2,500,000 $2,764,774 $2,000,000 $1,500,000 Multi-Family $1,000,000 $1,280,205 $500,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source: Multiple Listing Service(MLS);Economic&Planning Systems State of the Industry � 39 (E Average Sales Price per Square Foot Roaring Fork Valley, 2004-2014(Q3) $1,200 $1,000 $800 Multi-Family $804 A#11 Single-Family $600 4811011.PV $632 $400 $200 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source:Multiple Listing Service(MLS);Economic&Planning Systems State of the Industry 40 Average Sales Price Snowmass Village and Aspen, 2004-2014(Q3) $4,500,000 $4,111,521 $4,137,512 $4,000,000it �`'-- '• " 't.,,.i \. % _\ $3,500,000 .0 • $3,352,686 i $2,959,415 $3,000,000 'f Aspen $2,368,856 $2,500,000 $1,670,753 $2,000,000 �--T •� Snowmass Village $1,500,000 $1,660,022 $1,000,000 $1,316,361 $1,051,335 $500,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source:Multiple Listing Service(MLS);Economic&Planning Systems State of the Industry `- 41. Average Sales Price per Square Foot Snowmass Village and Aspen, 2004-2014(Q3 ) $1,600 $1,370 $1,400 $1,200 �'` ��"' $1,076 `mss $1,000 $1,122 Aspen $800 $718 ..• Snovass Village $600 $646 $400 $496 $200 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source:Multiple Listing Service(MLS);Economic&Planning Systems State of the Industry 42 ( Sales Price : Snowmass Village as a percent of Aspen 2004-2014(Q3) 90% 84% Sales Price 80% •�.`.`., 80% Sales Price per Sq. Ft. •M \ "1. .0 • • • 0 • 0. 70% 69% ._. ,_.. ___. ._. ._ . %I.—..or.• w \� \„` \ /\ 63% \,__ i \ 60% •\\i60%5` 50% 40% 41% 39% 30% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source:Multiple Listing Service(MLS);Economic&Planning Systems State of the Industry43 Fractional Sales Volume 2004- 2014(Q3 ) 120 ■Snowmass Village 100 Aspen 11 ■ Vail Beaver Creek 80 3 60 I 1-1 40 Ell 151111i 1 ■ MIN „ liii 111 1111 , , ! 20 II ■ ■ 1 II • m ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ..` ..� ■ ■ ■■■� i _ L . iiLI . i I �...� 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note:Roaring Fork Valley does not include Glenwood Springs Note:Grey area represents U.S.recessions. Source:Multiple Listing Service(MLS);Economic&Planning Systems ,,, • State of the Industry 27. , . 44 7) SUMMARY State of the Industry 45 • Key Questions • How can the Town of Snowmass Village best : - Improve its fiscal base? - Expand its market capture? - Enhance its brand? - Improve the quality of the built environment? - Create synergy that maximizes opportunity? • Most salient points - Timing - Market strengths - Town 's competitive position • Questions State of the Industry 46 (41 ID r n tn 0 0 a)