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January 2011 Hotel
Occupancy Impressive!
Regional hotels and motels posted a significant increase over January 2010's occupancy last month, starting 2011 with a bang!
With a monthly average at 67%, occupancy improved by almost 9% from January's average at 58% a year ago.
Throughout 2010, month-to-month occupancies vacillated within a few percentage points in either direction compared to 2009's monthly averages. The year 2010 ended slightly above 2009's annual average with most of the minor improvement produced over the summer months. January 2010 was not among improvement months compared to 2009 with a shortfall of -3%.
Changes in regional room capacity ended during 2009 with 2011 room availability equal to 2010's. Some adjustments were required for yearly comparisons last year with 2009 but 2011 will begin on an equal basis for room supply.
Using our formula for estimating overnight guests, the 9% improvement in average occupancy translates to a whopping 15% increase in consumers! During January 2010, we experienced an nightly average of 4,007 guests in regional hotels per night. Last month, we had 4,619! This figure is calculated using an 1.8 guests per room average occupancy.
Aside from starting the year out in growth territory, prospects for an overall better year come into sharp focus. With hotel trade contributing 20-25% of Yuma's 2% hospitality tax revenues, calendar year collections should be similarily affected. Assuming that our summer trade remains as strong or better than last year, 2011 may mark a return to growing revenues!
2010 ended with annual transient lodging revenues for Yuma County down by $2M for a -4.2% shortfall compared to 2009.
Historically, January is usually our third most active occupancy month each year. With February occupancy now ongoing, a similar increase would produce a potential occupancy approaching 90%!
February is our peak occupancy month each year as short-term winter visitors arrive to visit other visitors! It then reasonably follows that we may also see an overall increase for total visitors if we see a repeat month for hotel guests.
That is, of course, if February performs as favorably as did January.
Continued next column...
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Data such as final revenue totals and comparison rental rates for January won't be available for a few more months. 2010 ended with average daily rates lower by
-4% when compared to 2009. Should contemporary rates be lower than early 2010, potential for higher 2011 revenues would be partially offset despite higher occupancy.
Regardless of offset, it looks like a much better January for regional revenues after a long trend for flat or declining inflows.
Yuma County New Home
Valuations Fall for January
Average monthly valuations for new homes are useful for determining the price and construction level of new building from year-to-year. Yuma county, including the Foothills, saw a year-over-year decrease of -5.76% as 2010 ended. The average 2010 valuation for a new home in this jurisdiction was about $106K compared $113K over 2009.
January's average came in at only $77K, taking us by surprise. After a little investigation, we were finally able to account for this historic low average for new home valuations.
In past commentary we recently noted renewed interest in traditional winter visitor RV lots. After two years with little sales volume, lots sales of this type have dominated Foothill and eastern county sales over the past few months. Those low valuations are for those little "casitas" that often accompany new RV lot purchases.
A "casita" is a small utility building usually next to an RV pad. While of small area, each has the bare essentials to be considered habitable by itself.
With new sales for traditional site-built homes down by record proportions, these dwellings represent a higher proportion of all sales than seen in the past. These low valuations were absorbed into the higher valuations for formal homes in a balanced market. Currently, they skew monthly averages down considerably.
We expect the size and price for traditional homes to remain conservative this year but note this statistical condition for anyone following this economic marker.
Next time... we hope to have all the January building permits done.
- Paul
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