Industry Outlook: Travel & Tourism
Utah’s tourism industry is soaring on the wings of abundant snow and record visitation levels. A labor shortage may be the only headwind that can slow the industry down in the upcoming year.
Nan Anderson, Utah Tourism Industry Association
Dee Brewer, City Creek Center
Dennis Copyak, Le Bus
Jim Crowder, Enterprise Rent-A-Car
Breck Dockstader, Cliffrose Lodge
Jason Ford, Sheraton Salt Lake City Hotel
Reed Forrester, Delta Air Lines
Larry Gelwix, Columbus Travel
Alan Hess, Hess Corporate Travel
Kathy Hirst, Morris Murdock Travel
Mike Kerby, Bid-D
Chad Linebagh, Sundance Resort
Scott Lunt, Western States Lodging
Bill Malone, Park City Chamber
Joel Racker, Utah Valley CVB
Nathan Rafferty, Ski Utah
Coleen Reardon, Deer Valley/ Solitude
Eric Thompson, Visit Salt Lake
Sara Toliver, Visit Ogden
Vicki Varela, Utah Office of Tourism
Nancy Volmer, SLC Department of Airports
Dave Williams, Utah Office of Tourism
Matt Wirthlin, Holland & Hart
A special thank you to Dave Williams, associate managing director of the Utah Office of Tourism, for moderating the discussion.
What’s the current state of Utah’s travel and tourism industry? What are the major changes happening around the state?
VARELA: The state has invested in the tourism industry both through infrastructure and through marketing over the past 10 years. And it’s working. We went from a place in 2005 where people said, “Tourism? Utah? Yeah. That might work,” to Utah now being an international bucket list destination. We’ve seen skyrocketing increases in international visitation. Last year travelers spent $8.17 billion in our state. That translated into $1.15 billion in state and local tax revenues. We have wonderful momentum due to a great extent to the collaborative spirit of the industry. And we’re all quite optimistic about what the future holds.
FORRESTER: From an international perspective, things are going great. At Delta, we began year-round service with London in April of last year. And our partner, KLM, is coming back this season. They’re starting a new Salt Lake City/Amsterdam service in March, and they will actually carry that through November. And they’re also bringing a new product, the Boeing 787. We’re also excited about everything that’s going on at the airport. When it comes to fruition, we can look at the opportunities to add additional services.
VOLMER: Things are progressing with the airport rebuild. The work you’ve been seeing out there has been below ground. At this point, what we are doing is building a tunnel for the baggage servicing. And now we’re putting in steel piles. So you’ll start to see the facilities coming up above ground. A big milestone, too, for us is that we’ll be going out to the bond market in the next couple of weeks. We got all our ratings in from the various agencies, had favorable ratings, and so we’re really excited about that.
BREWER: International travel has been critical to our success at City Creek. And tourists, in general. Forty percent of our sales come from people who live more than 50 miles away. That’s how we define a “tourist.”
We’re also seeing some patterns change as well, where that Mighty 5 traveler and that southern Utah traveler is increasingly making another day of their trip in Salt Lake City. On any given day you will hear Italian, Portuguese, Chinese—there are many languages spoken in the gallerias of City Creek Center. Shopping is certainly something they’re availing themselves of, but it’s also the new urban product that exists here—for example, the Natural History Museum and The Leonardo. This city has grown up a lot in the last 10 years. It is now a legitimate destination that people want to avail themselves of beyond the Red Rock and the snow product that we have so successfully marketed.
THOMPSON: It’s important to remember that the word “tourism” really covers a wide range of visitor. Oftentimes we forget about the importance of the meeting and convention visitor. The Outdoor Retailer winter market draws 25,000 attendees. It’s three times the size of our ski industry. While we’ve had some really successful promotion of our ski product, we want to make sure that our industry, our partners, understand the importance of the convention and tourism market and the breadth of that as well.
We have such great partners, like the Office of Tourism, our other CVB partners, who, all together, can promote the tourism message, as well as our meeting and convention message. We’re just coming off of a year of successfully hosting the American Society of Association Executives (ASAE). This is like the Super Bowl of the meeting planning industry and association industry. And we look for some very exciting news in future bookings from that group moving forward.
TOLIVER: The partnership between the bureaus is vital. It gives us an opportunity in these destinations along the Wasatch Front to showcase what we have to offer when people are coming in to the Salt Palace.
Overall, in the smaller meetings market that we’re able to accommodate, we’re seeing really significant growth in our product and visitation. Our numbers were up significantly in 2016. But our primary visitor numbers are still through our business and meeting and convention traveler. Our leisure market is growing, and our skier visits are growing, too—it’s great to come off a very snowy holiday season and have the resorts be talking about record-breaking numbers. All of those things together mean a lot of increased visitation for our destination, and we’re hoping to continue that momentum.
How’s the ski season been so far? How are we looking?
RAFFERTY: We’re coming off a record year. Last year we beat our all-time record by 5 percent. And bookings going into the season were very, very strong. Having good snow fall is important for us, but it’s got to be good snow fall at the right time. And we couldn’t have asked for it better, having all the snow we had before Christmas, and then a couple days of sunny skies during the Christmas week, and then the snow continuing to fall. So we are in really, really good shape.
That being said, Utah still sees only a third of the visits of our neighbor in Colorado. We have a long way to go and a lot of opportunities for improvement. Our ski areas continue to invest. Last year alone, we saw $100 million invested between a bunch of our ski areas. Now we need to work with the state and the Legislature to get some of that infrastructure caught up with some of the private sector investment. The Utah Office of Tourism continues to be a super partner. And we’re all working to make sure that continues to be funded at a high level. I don’t know that it could be going much better in our industry right now.
REARDON: We’re in our second year after Deer Valley’s acquisition of Solitude. The first year’s always rough when you do an acquisition—all of the cultural integrations and getting your head around the operation and facility. But this second year has been phenomenal. We’re seeing record numbers and record revenues in both resorts. So we’re on pace for a crazy year.
We’re hosting a Grand Prix event, so we’ve got two World Cups, which make for great domestic and international coverage. And we’re really seeing the results from that. For the first time last year, international was number three in our destination marketing area. That was stunning for us.
LINEBAUGH: Sundance might be a bit unique. We certainly have a national/international customer base, but we rely a lot on the local market, especially because we’re the only ski resort in Utah County. And we’re seeing just amazing interest in skiing and snowboarding—numbers that we just haven’t experienced before. We’re grateful for the loyal base we have.
On the national side, what we’re seeing are people who are looking for a unique experience. And all of the Utah resorts offer that. I was just speaking to a guest, who was a high-profile individual. He’s been coming for eight years, and he said, “The reason I come to Sundance every year is not necessarily the snow or the environment, it’s the people.” The enjoyment he finds every day is after skiing, going into our Owl Bar, and actually having conversations with our staff and the locals. It’s just the feeling, the employment base we have here, and the experiences that are unique to Sundance.
MALONE: Park City has gone through a maturation process. It is becoming much more of a mature destination. International is becoming a bigger and bigger portion of our winter business. In the summer, almost 50 percent of our business is corporate travel and meetings, which is a big change. We’ve always just been a leisure destination. But it’s so many more things now.
Right now we seem to have kind of a changing of the guard in terms of our culinary scene. New restaurants are opening up. You seem to go through peaks and valleys with those. This year we’ve had a couple of new restaurants that are getting a lot of media attention as well. So the guest experience just keeps getting better and better in town.
One of the things we’re focusing—as a community—on is increasing our transportation capabilities internally within the community. People in our community have a great opportunity to move from resort to resort and town and restaurant and nightclubs, etc. And an enhanced public transportation ability is going to take us to that next level as a destination.
Is our hotel industry seeing growth? And what is the status of the convention center hotel? What about segments like car rentals, transportation and outbound travel?
DOCKSTADER: We’ve seen a tremendous amount of growth on our end of the state. I have a resort right at the entrance of Zion National Park. We just finished the year with 80 percent occupancy. That’s pretty high. Zions finished with 4.3 million visitors this year. So we’re seeing a lot of visitation. The Mighty 5’s been incredibly successful. Along with that comes some challenges. But there’s so much positive work being done from the state. We get a lot of support from the northern end of the state on trying to deal with those issues.
GEORGE: There’s been a lot aggressive movement forward on the convention hotel in recent weeks. And the path seems pretty clear that we will have a convention center hotel. Clearly, over the last 10 years, we’ve matured as a metropolitan destination. And with that comes the need for some of the amenities that a convention center hotel can offer. I think the program that’s been presented to us is something that would help lift all boats and buoy the entire Salt Lake tourism market.
FORD: It always sounds weird for us to say—when I’m talking to our ownership group—how we would be very excited to have a convention center hotel built. Because they shake their heads and say, “Why would you want a thousand-room property sitting right down the street from you?” But when we look at what Salt Lake would be able to offer—we have enough meeting space, we can concentrate on the individual pieces of business now in our hotel versus trying to come together and pitch some of these big conventions and say, “well, Salt Lake would like to host you, but we’ve got to make sure that all five or six hotels are all willing to throw in rooms to be able to accommodate something like that.” So we’d be very excited to have a convention center.
LUNT: We are in our biggest growth mode that we have ever been. We’ve become very much more of a regional company than just Utah. But our growth is still very much happening in Utah. We’ve got four hotels under construction right now, and probably five additional ones next year. And several of the those are in Utah. In the past we have always gone out trying to find developers that we could do hotels with. And it’s just the opposite now, where they are all coming to us.
But comparing the occupancy numbers last year versus this year—and this is as far as the state is concerned—we haven’t really grown a whole lot in occupancy. We had a phenomenal ’15 and a phenomenal ’16. It was probably our banner year. Looking at ’17, it’s hard to beat ’15 and ’16. So we budgeted pretty flat. But our growth is coming in great.
CROWDER: At Enterprise, we’ve opened eight new offices in Utah in the last year. We will open at least four more in 2017. We’re seeing growth both in the airport market and in the local market.
We’re not just seeing people rent cars from the airport—we’re seeing business travelers, retail travelers, tourists that are coming in, taking transportation to their destination, and then realizing what Utah has to offer, and then they’re renting cars locally. That’s been a big shift for us probably in the last five years here in this market. In the past, our airport was where we saw most of our tourism business. We’re seeing that spread out to Park City, to downtown Salt Lake, across the state.
COPYAK: My company, Le Bus, has been growing leaps and bounds. We’ve been buying about six or seven new buses every year. And we never used to do that. We can’t keep up with the demand. I’ve never seen it booked so early as it has now; 75 percent of our buses are already booked for next summer. That’s pretty incredible.
GELWIX: We’ve had a record year. Outbound travel is stronger than it’s ever been. In our incentive business, we’re seeing some of our clients who are based here in Utah, yet have a national or international presence, we’re seeing more of them stay home and bring their people in.
HIRST: Our meetings and incentives business is doing very well. The non-stops in and out of Salt Lake are a tremendous help. That’s a huge incentive for people to travel internationally when they know they don’t have to stop on the East Coast and mess with JFK Airport or Atlanta. We’ve seen our business really pick up with that.
What challenges does the industry face?
LUNT: Labor is a huge challenge.
REARDON: It’s getting close to crisis mode as it relates to recruiting and staffing in this great economy with no unemployment.
GELWIX: What changes would you suggest?
REARDON: However many years ago the H-2B visas. And that hurt us immensely.
RACKER: Vicki’s done some good work with the congressional delegation back in DC. And we’ve met with them, and we continue to meet with them to try and press those issues. I don’t know what this new administration is going to be. But we go out there yearly to speak with them to make sure they understand. When they’re here, we have a meeting with Representative Stewart. So we’re really trying to press those issues to see some meaningful change.
DOCKSTADER: Not being political, but Trump is a hotelier himself. It’s a huge part of his industry. And I think already there’s been information about his resort in Florida that has the H-2 visa. So hopefully we will see him put a priority on making sure that is something that is opened up. But it is going to be people reaching out—especially early on—and trying to make sure that is a priority.
LUNT: But, honestly, it is a combination of several federal issues. We’ve got a state of people that work two jobs to make ends meet. And you feel bad for a lot of these people. It really is a crisis mode right now. We can’t even get people to apply, much less hire them right now. The ones that are applying don’t even show up for an interview.
GELWIX: What are the reasons that are preventing you from just a recruitment process? There’s a reason somebody would not want this job or that job. Is it the salary? Is it the working conditions? Is it the absence of insurance?
LUNT: It’s that we’re at 3 percent unemployment.
MALONE: In our area it’s a combination of things—it’s all interrelated between affordable housing, transportation and workforce. And we just don’t have the bodies to perform all of the jobs. We have hoteliers that are going through a ski season with a hundred jobs unfilled.
LUNT: For example, we’re getting ready to open up a hotel in Richland, Washington in a couple weeks. We held a job fair and had 500 people show up for 25 jobs. And we got to handpick the best ones. We just don’t have that here. Now, unfortunately, their economy is not as strong as ours. So there’s give and takes on that. It’s tough.
KERBY: We’re in the same boat. It is impossible to find new people right now. And when we do find employees, the problem is getting them to and from work. I see traffic, especially in Park City, becoming a major problem. Right now, Park City is the only resort town that has three undeveloped bases. So you can imagine what happens when those three bases become developed out. And we have two entry points to Park City. So the problem’s coming and it’s coming quickly.
RAFFERTY: That’s something we have been paying close attention to. It’s really tough to have a great experience at a ski resort when it is so tough to get in. And maybe you had a great day, but then you get back in your car and it’s a couple hours to get home. Or you miss your dinner reservation or whatever it is.
It’s an issue. And it’s something we certainly have been discussing with our local representation and our federal guys. But it’s also something that’s pretty slow to develop. We’ve got the answer, we just need a little money to make something like that happen.
CROWDER: Part of this same conversation is the air quality. When people come in to ski here and they have a bad perception of us because it’s an inversion day, that message goes back with them. Our industry needs to be very mindful of that and help find solutions. Because our industry can be impacted even more than most other industries because those people won’t come back.
RAFFERTY: It’s first and last thing that every person sees on their way to the airport. They leave and go, “How do they live here? How do people live here when the air is as bad as it has been and doesn’t seem to be getting better any time soon?”
What opportunities are there within the industry? What are you excited about?
VARELA: This last year we extended beyond the Mighty 5 to the Road to Mighty. And the goal in the Road to Mighty is, first of all, to be equally audacious to the Mighty 5 by reminding people that the great American road trip you’ve always dreamt of—that was in Utah. It’s your birthright. You deserve this experience.
The beauty of it is that it gets people off the beaten path. It helps them understand that it’s not just the five national parks, it’s our 43 state parks, it’s the whole region, it’s our scenic byways, it’s the Utah experience that is their birthright. That campaign is working really well for us. And we’re seeing some evidence that it’s starting to shift demand. Ideally, over time, people will treat the national park as an exclamation point within their visit. And they’ll be spending more and more time at the 43 state parks.
We have a program called “Rourism,” rural tourism, that is helping some of the smaller communities that really want to build their tourism economy. It’s helping them figure out the tools to do it, everything from their marketing strategy to what infrastructure to build out.
Which then takes us to another area that I’m really enthusiastic about, and that’s our investment in recreation infrastructure. We’re starting to get real traction. The president of the Utah senate, Wayne Niederhauser, said this fall that investing in outdoor recreation infrastructure is one of the most important ways that Utah can continue to draw tourists, but also enhance the quality of life for locals and be a major economic development draw for corporations that are looking to expand or relocate here.
LINEBAUGH: It’s obvious that the biggest demographic in future travelers are millennials. We are one the most authentic travel destinations out there. And millennials simply want a different experience. They don’t want the traditional vacation, whatever that has been. They want something that’s unique, that they can’t find anywhere else. They want to learn. They want to experience different cultures. So if we all focus on millennials, Utah’s very well suited to capture that.
BREWER: The growing Chinese middle class is having a huge impact in travel around the world. Only 10 percent of the middle class in China has a passport. But the pitch of the growth from that market has just been huge in this state. And what we’re seeing at City Creek Center is not just the tour traveler, but the rapid growth of the independent traveler that’s renting cars, that’s creating their own experience. And, therefore, availing themselves of more in the state than they could in the buses that make a very quick itinerary of the state. All indications are that that’s going to continue to grow.
FORRESTER: I think an Asian non-stop destination would really put Salt Lake City on the map. I know we had one here before; but economic conditions didn’t work out. And so, unfortunately, we had to retrench. Our position with the new airport coming onboard, is that we’re going to be looking to Latin American and South America as an opportunity to provide new non-stop service. That said, we’ve got great connectivity through our hub in Seattle, which we have built up over the last three years, as well as Los Angeles. So what we’re providing currently is a one-stop to Asia through Seattle or through Los Angeles. I know that’s not optimal, but unfortunately that’s just kind of where we are in the current economic conditions.
But all of that said, once we come online with the new airport in 2020—a lot can happen in three years. You talk about the Japanese economy and the Chinese partners. Things can change. It’s fluid. And as long as we have aircraft and landing rights, there is always the opportunity to look at that.
MALONE: I just want to applaud Delta Airlines in terms of reinstating a Miami non-stop. That is, for us, in Park City, an international flight. Because that connects to South America and it connects to the growing Central and South American population in south Florida, who are a great source of future customers for us.
DOCKSTADER: During the recession we relied so heavily on European tourists down south, but now we’re seeing so many more domestic travelers and younger travelers. Millennials that are seeking adventure travel. Millennials that don’t want to go to Disney World, but want to hike and see the outdoors.