Economy Leaves Resort Town Reeling
Plummeting real estate sales and tightening travel budgets are taking a toll on resort towns.
So far, it’s business as usual in the ski mecca of Telluride.
The tiny village of 2,200 is nestled in an idyllic box canyon in the San Juan Mountains of southwest Colorado.
But there’s a storm gathering over Telluride, and it’s not the kind that will bring in more tourists seeking fresh-packed powder. The darkening clouds come from the recession, which threatens to keep skiers from the remote area. For a town that relies so heavily on tourist dollars, that could mean disaster. The future just isn’t as clear as it used to be.
“We’re in limbo here,” said Jesse DiFiore, 32, of Telluride Properties, a local real estate firm.
Difiore’s glass-walled office looks out at the top end of chairlift No. 1. He watches several empty seats pass by his window before a skier finally appears. He shakes his head.
Sitting by a roaring fireplace in the rustic lobby of the Inn at Lost Creek, John Volponi, 48, discussed the economics of running a hotel during a recession. Volponi took over as general manager of the boutique hotel last August.
“Sure, business has slowed a bit,” Volponi said. “People are booking rooms at the last minute, shopping for good rates, but they’re still coming.”
Throughout the rest of the ski season, Volponi expects to maintain a high occupancy rate. He has made a few adjustments to guest packages to ensure this, including one offering “no frills.”
“People want options right now, and the only way to please the people is to give them what they want,” Volponi said.
Telluride’s historic Colorado Avenue, the city’s main street, boasts countless high-end stores, spas and chic restaurants. According to the locals, these places are holding their own.
“The airlines are offering great rates to get here,” said Amber Schmid, a sales associate at Overland Sheepskin and Leather. “The people are still coming in, but maybe they just don’t buy as much as before.”
Telluride has long been hailed as one of the ultimate playgrounds of the rich. Celebrities such as Tom Cruise, Oprah Winfrey and Ralph Lauren have all owned homes in the area. Seven- and eight-figure price tags for property are not uncommon.
In fact, the last banking crisis the area suffered occurred in 1889 when Butch Cassidy made off with $21,000 from the San Miguel Valley Bank.
But as the economy continues to plummet like a rookie skier on an expert slope, the recession threatens to descend upon Telluride.
On January 6th, 2009, Telluride mayor Stu Fraser delivered his semi-annual “State of the Town” address. His assessment and forecast is not quite as rosy as that of the people who elected him.
“We enter 2009 with a financial reality check facing us,” Fraser said. “Our revenue flow, quite simply, comes from the people who visit our town and spend money here. Without them, we are a town without a strong revenue base.”
Many public works projects have been postponed through 2010. Adding further stress to the fragile economy is the fact that Colorado Avenue must be torn up to repair water and sewage lines. The state gave a grant to Telluride for this purpose, but with the mandate that the money be used before the end of 2009. Foot and car traffic will be diverted and the shops with the highest rents will have the most difficulty attracting customers.
Incredible wealth is one of the main factors keeping Telluride afloat during one of the worst recessions in the last fifty years, according to DiFiore.
“It’s really interesting. We have a very affluent clientele here,” DiFiore said. “They have liquid assets, and this allows them to keep coming back in spite of the economy.”
While these wealthy tourists may keep coming back, fewer of them are inclined to purchase real estate in the current economy. The month of January 2005 saw 76 sales in Telluride, totaling $51.4 million. January 2009 had just 12 sales amounting to $16 million.
“We’re seeing a couple of reasons for this,” DiFiore said. “Buyers are waiting on the sidelines for the prices to come down, and potential sellers have the wealth to weather the storm until the economy bounces back.”
As the stalemate continues, the storm clouds over Telluride continue to darken.