Council voted unanimously in favor of approving the request under the conditions that the allocation remains subject to council’s regular budget process and that participation is secured from several other entities.
The requested money is part of an effort by TMRAO to raise $500,000. The Telluride Ski Resort has already pledged $100,000 to the effort, under the same condition that other entities participate. The other entities are the Town of Mountain Village, the Mountain Village Home Owners Association and the City of Montrose, which are each being asked to pledge $50,000 to the program as well.
TMRAO hopes to secure pledges for the remaining $200,000 it says it needs from the private sector in the Telluride/Montrose region, including possibly approaching the towns of Ridgway and Ouray, neither of which participates in the program.
The need for additional funds comes directly as a result of rising fuel costs, Stewart told council. He quoted the Boyd Group International, which is an airline consulting and research group: “Oil prices are fundamentally changing how airlines operate – what aircraft they can fly, where they fly, and the product they offer.”
To emphasize the point, Stewart showed that oil prices between 2005 and 2008 ranged around $40 to $60 a barrel, while the “new normal” price over the last four years has been around $80 to $100 per barrel. “As many of you are business people, I’m sure you can appreciate what that sort of change in overhead might do to your business.”
That increase has led to airlines cutting back on individual flights and sometimes entire regional service, said Stewart, thus requiring higher guarantees from small markets like Telluride and Montrose. Even with the additional funding, cuts to service will be necessary. The goal, he said, is to minimize those cuts.
Martelon focused on the effects of potentially reduced air service to the region. Without the requested funds, Martelon predicted 11,000 fewer visitors, 25,000 fewer room nights, 15 percent less visitor spending and a ten percent reduction in sales tax revenues.
“Can any of our businesses or governments afford this?” he asked.
Martelon pointed to Steamboat Springs and the State of Colorado as examples of entities that had cut marketing budgets with disastrous results. “It took seven to ten years to recoup one year of lost revenue [by the State of Colorado],” says Martelon.
Not all the news was gloomy, however. Martelon showed that compared to other ski areas in the region, which are showing flat or reduced load factors to their airports, Telluride was trending up.
“We can look at this as an opportunity to continue that trend,” he added, explaining that other resorts’ losses could be Telluride’s gain.
Although obviously not excited by the prospect of having to allocate the funds, council members unanimously agreed that tourism is the town’s economic engine and that winter tourism relies heavily on air service.
“We’re hearing that this is important,” said Town Manager Greg Clifton. Council member Brian Werner agreed, saying that it was important enough that the town would need to “carve out the money.”
Council member Thom Carnavale was slightly more hesitant. “If we decide this is our number one issue, we need to cut $50,000 elsewhere,” he warned.
Council was, however, heartened that the request for funds was being spread across the region.
“Thanks for going to the other players,” said council member Chris Myers.
Myers also expressed his hope for a method to get locals cheaper access to flights. Stewart said while there had been vouchers and coupons in the past, he was not enthusiastic about those possibilities in the current market.
Mayor Stu Fraser said that he had encouragingly noticed inexpensive flights into the region over the past year, but that regardless, it was more important for tourism to remain consistent, ensuring local employment and income, than to achieve local discounts.
Ex-council member Mark Buchsieb also commented that he was happy to see an equitable request for funds, but he echoed fellow ex-council member Jerry Greene’s request for more equitable funding from within the business community. Greene cited an oft-repeated complaint that the air organization is supported primarily by the restaurant and lodging community, while other local businesses also benefit from the tourist industry. “Real estate gets off basically scot-free,” Greene said by way of an example.
While Greene was also unhappy with the level of data provided by the two organizations, council was much more appreciative.
Council member Ann Brady said that she was encouraged by the long-term planning and honesty of the presentation. “You didn’t pull any punches,” she commented.