Finding Balance In a Tourism Economy

In January The Insights Collective, a think tank comprised of long-time mountain and resort tourism professionals, suggested that the post pandemic environment in mountain communities was in need of some ‘balance’, a new way of thinking about community wellness and economic stability. Specifically, we proposed that communities need to systematically address emerging conflicts between the requirements of the tourism economy and the quality of life of local residents to achieve equilibrium.

Mountain resort communities met the realities of the pandemic and post-pandemic churn head-on. The very nature of the churn was such that inevitably as the dust now settles whole communities are faced with shifting perceptions about quality of life and sentiment toward their tourism economy. It has become clear that the needs of the residents and the economic engine are at odds, and new tools are needed to guide community decisions towards a state of community-wide equilibrium.. But can you actually measure the gap between the differing needs of the two? Can you quantify the degree of separation between residential quality of life and the economic goals of the jurisdiction or measure the work to be done to achieve balance? The answer, it turns out, is yes.

We went to work with the Northwest Colorado Council of Governments (NWCCOG) and the Colorado Association of Ski Towns (CAST) to build systems and tools to address the specific issue of community balance – or equilibrium. We conducted a detailed study of five Colorado mountain counties to understand residential quality of life and determine where those counties sat on a spectrum between fully tourism-centric and fully resident-centric. We call that spectrum “Continuum”. Continuum is a scale that measures centricity from different perspectives; but it’s not a typical resident survey tool, largely because it not only looks at the usual characteristics of income, age, gender, home ownership, etc., but also takes into account the perspective of government officials and second homeowners, and then applies a rigorous scoring mechanism to measure these heretofore qualities.

Continuum first methodically quantifies 29 ‘‘soft’ quality of life traits across the resident base,

including part-time second homeowners, and applies scores to those qualities before slicing the data by a wide series of traits that reveal significant variances in what’s important to residents. It measures whether quality of life is improving, declining or unchanged, but also - and this is key - it quantifies where respondents feel their community is on a continuum between resident- and tourism centricity, and where they’d like it to be. That creates not only start and target points for a community, but also a meaningful degree of work to be done, represented by the difference between the two positions, which we call the Departure Gap. The result is a new set of KPIs that measure the understanding of (1) the community’s current numerical position on the Continuum (start point), (2) the desired numerical position on the Continuum (target), and (3) the work required to shift from the current to desired state (Departure Gap). And a few things are clear as we analyze this first look at the findings:

• There’s a clear correlation between perceived quality of life perception and Continuum scores.

• Among the dozens of respondent traits, we were able to identify key ‘super categories’ that not only demonstrate the efficacy of Continuum, but are timely as discussions around inventory, housing, and home ownership flourish.

• Second homeowners have a dramatically different take than full-time residents on both what’s important to quality of life and on tourism- versus resident-centricity.

• Quality of Life is largely perceived as negatively impacted by over-visitation, and quality of life has been deteriorating in the last several years.

• Residents in all five counties studied feel their community is too far towards the tourism side of the continuum and seek a shift towards resident-centricity.

• While somewhat aligned with the broader population, elected officials perceive their community as more stable than their constituents.

• This process can be done generally, but its true benefit lies in the ability to drill down for a surgical approach by cohort.

Destination ‘Proximity’ Drives Perspective

One of the first findings that informed much that followed was the significant variance in responses based on residential status of full-time, year-round resident (68% of respondents) or second homeowner (32%). Because these variances are so clearly delineated, we’ll use residency and home ownership as the basis for the data we present here.

It became clear that full-time year-round residents – both those that rent and own the home they live in - had a more negative view of destination tourism than their second homeowner counterparts. This is the result their ongoing proximity to the destination - of actually living the impact of a tourism-based economy day-to-day.Second homeowners, by absentia, don’t experience the direct impact of tourism and are inclined to support an ongoing robust tourism trade. This is particularly true if they rent their second home as a Short-Term Rental (STR), , which makes them tourism-dependent business owners. There are also differences in how full-time, year-round residents who are renters feel compared to those that own their home. Renters have a paradoxical relationship with the tourism economy. Though most are employed directly in tourism, they see little benefit outside of the income it generates, and while like their homeowning peers they tend to push back against the tourism economy, they do so more extremely despite the potential threat to their livelihood slowing visitation may mean. .

The Quality of Life (QoL) is Shifting in Mountain Communities

Understanding the value respondents place on Qualify of Life (QoL) is at the center of putting Continuum KPIs to work. We looked at 29 quality of life factors measure what’s important to respondents. Understanding whether those factors are improving or declining sets the contextual starting place for Continuum’s application; when you know what’s broken you can fix it. The upshot? quality of life is largely perceived as declining in mountain resorts. Overall, 34% of respondents feel that QoL has declined in the past few years, while just 13% feel it’s improving and 31% saying it was improving in some respects, declining in others. As noted above, one of the key factors in a perceived decline in QoL is proximity. The more a respondent lives day-to-day with the impact of tourism the more they feel it negatively impacts their quality of life. Of the full-time, year-round residents in our study that own their home, 42% say QoL is declining and only 11% feel it’s improving. Conversely, just 18% of second homeowners – who spend less time in the community and living with tourism - feel it’s declining while 20% say it’s improving. The perceived consequence of living the tourism economy day-to-day is clear.

One of the primary issues is overcrowding, which has a downstream impact on many quality-of-life issues from parking or grocery store inventory to internet speed or first responder resources. And when we assess overcrowding, we find similar responses to those around quality of life: 49% of F/T owners and 45% of F/T Renters agree or strongly agree that the area is overcrowded because of too

many visitors, while just 30% of second homeowners feel the same way. It’s apparent that the challenges of communities are acutely internal, even to the degree that the second homeowners, though invested in the community but not physically located there, may not be fully aware of the day-to-day impact of tourism on quality of life, presenting both tactical and educational opportunities in the search for balance.

What is ‘Balanced’?

The shift in quality of life – real or perceived – has driven increased grassroots pushback against visitation in resort communities. We’ve coined this movement ‘the rise of the resident’, and it’s been more effective in changing governance in the past three years than perhaps any time before. On the whole, residents of mountain communities feel that their town is positioned too far towards tourism centricity, largely a response to surging visitation in 2021 and 2022, but anecdotally also a change in the type of visitor coming to mountain communities. Sustainability, cleanliness, and codes of etiquette are common community topics, along with long-standing issues related to overcrowding and housing. With an electorate looking for solutions, town officials and their resort operator partners face the challenge of finding the right balance between quality of life and sustaining the economic engine of tourism.

But that raises a complex question of what balance is, with different parties looking for different things from their community, most generally influenced by home ownership, residency status, and time in the community, but also by family status, income, and time in the community, among others. One thing is for certain: ‘balance’ is localized. Every destination has a different combination of constituent traits, and issues that rise to the top in destination A will not in Destination B or C. And while not necessarily able to directly determine it, resort operators are also seeking balance, compelling a holistic approach to building a community that furnishes the resources and policies to support the residential quality of life and the visitor experience But it’s not easy; as we show below using one primary set of resident traits – home ownership and residency – the devil’s in the details.

Some Lines are Clear

The Continuum is clear that goals vary widely between different resident groups. This is especially true when we look at home ownership and residency. Keeping in mind the three KPIs of (1) current position on the continuum, (2) desired position, and (3) the difference between the two (the “Departure Gap”, which represents work to be done), there are broad differences between these groups.

Residents that live in the town year-round are far more likely to perceive their community as heavily tourism-centric than second homeowners, and they’re also likely to seek a more

resident-centric focus as a future state. But while indicative of the proximity argument, that falls short of the real details. Digging in, when asked to place their community on a scale ranging from +5 (wholly tourism focused) to -5 (wholly resident focused), full-time year-round residents that rent rather than own their home place their community at 2.1 points towards tourism focused, more than any other cohort in the study.

Renters is a group that is tied intimately to the tourism economy through employment, and subsequently views their destination as strongly tourism centric. But they also experience the pressures of that economy most acutely, including a dependence on community services that can be negatively impacted if town resources aren’t directed towards them. It’s not surprising then that they favor the largest swing towards resident centricity, with a desired -1.5 point position on the continuum and the largest Departure Gap of all groups, -3.6 points. Renters see their community as furthest from their desired state. Meanwhile, their full-time year-round homeowning peers perceive the destination as less tourism focused (1.4 points), desire less resident focus (-1.1 points, and withi a -2.6 point Departure Gap are seeking less dramatic (though still significant) change.

Drilling into second homeowners, is where the ‘proximity to the community’ factor becomes apparent. Second homeowners that do not rent out their home as an STR are more likely to spend time in the community than those that do. They’re exposed to the pressure tourism can apply to the community and recognize tourism centricity, though to a lesser extent, scoring their destinations slightly tourism focused at 0.8 points on the continuum, and favor a moderate -1.1 point shift towards a more resident focused economy. But second homeowners that rent their unit as an STR are largely detached from the day-to-day impact of tourism.

They’re also at least partially, if not largely, dependent on the success of tourism to drive rental revenue and so are less likely to oppose the economy that drives that revenue. As such, they’re the only cohort across the study that favors remaining on the tourism side of Continuum, scoring current 0.8 points and desiring a future state of 0.7 points tourism-focused. And though some may argue that second homeowners are not part of the mountain community, they can be subject to significant property taxes, restrictions and fees, and , , help drive economic activity through their rentals, making their voice an important part of the equilibrium discussion.

Resident Ownership Differentiates Communities

When we pull back and look at the findings from the county level, it’s clear that residency and ownership play a major role in

community perceptions. Routt County residents, who have the highest instance of home ownership, the most full-time, year-round residents, and the lowest rate of second home ownership, view their destination more on the tourism-centric side of the spectrum than any other, scoring it at 1.9 points. They also have the widest Departure Gap, seeking a major -3.0 point shift towards resident centricity.

Conversely, Summit County, with the highest occurrence of second homeowners and some of the lowest levels of full-time year-round residents, has a more moderate -1.9 point Departure Gap and a desired state that’s almost completely balanced at just -0.4 points. This reinforces the importance residency and ownership play in the understanding

Continuum findings.

Engagement Changes Perception

While understanding the desires and needs of residents based on full time versus second homeowners there

are other important individual traits that drive quality of life values and perceptions of balance. Role in the community is one that is central to aligning the jurisdiction with the electorate. Involvement in local governance, directly or indirectly, exposes members of the community to the systems that drive tourism and its challenges and benefits to the community. An analysis of how Elected Officials and Unelected

Members of Boards responded compared to residents with varying levels of engagement in governance reveals a difference between electorate and policymakers’ perceptions. On the whole, respondents that are more involved in governance had less extreme views of current and desired states of the community, and therefore a smaller Departure Gap. For example, Elected Officials put their community closer to the ‘0’ Balanced level than all other groups, and only recorded a Departure Gap of -2.2 points from current to desired state. , But residents that are not engaged at all feel their destination is both strongly tourism centric (2.1 points), and seek a greater shift towards resident focus, with a -3.4 point Departure Gap. Between these two extremes of elected officials / board members and totally disengaged residents are residents that are actively engaged in governance but are not elected officials. This group has a considerably different perspective from their unengaged peers, with a Departure Gap of 2.4 points, almost the same as Elected Officials. It’s clear that, as proximity and living tourism day-to-day impacts perceptions, so does engagement in policy.

Elected Officials, Board Members, and Actively Engaged citizens have less extreme current and desired states and narrower Departure Gaps, while those that are furthest from the process have the most extreme. There is clearly an opportunity for jurisdictions and resort operators to work together on new or different ways to engage the community as part of creating balance.

Shifting Priorities = Shifting Dollars?

Understanding Continuum position, departure gaps, and perceived changes to quality of life are both strategic and tactical, but shifting from current state to a more balanced community is a long-term process that will be aided by iterative analysis of Continuum findings.

But there are more immediate considerations to be considered, the most notable being tourism funding. Most mountain communities have a Destination Marketing Organization (DMO) that is largely funded by the town and lodgings taxes, and whose mandate is the marketing and sale of the destination. Recent significant efforts by towns to modify DMO mandates from tourism marketing to management or even mitigation have had varying levels of success and been largely reactive, not proactive. Those shifts have been accompanied or preceded by a call to divert funding from DMOs towards community resources.

As an immediately discernable consequence to perceived change

to quality of life, we asked respondents about tourism funding. Overall, 69% of respondents either agree or strongly agree with diverting funds from marketing to other community priorities, while just 15% disagree in any way and 17% are neutral. Not surprisingly, there is a strong correlation between Continuum departure gaps and solidarity around diverting funding. 76% of full-time, year-round residents that are renters either agree or strongly agree with diverting funding, and 75% of full-timers that own their residence feel the same, the same groups that have the widest departure gaps on the Continuum.

Meanwhile, just 42% of second homeowners that rent their unit as an STR agree or strongly agree with diverting funding, while 33% disagree or strongly disagree. But most surprising is the degree to which respondents favor shifting funds, with 41% oval favoring a 25-50% reduction in tourism spending, 27% seeking a 50-75% reductions, and as many as 17% seeking a 100% reduction. The punchline here is the correlation and causation; those that favor diverting funding are the same folks that are most impacted by tourism daily-to-day.

Differences in funding desires aren’t limited to ownership and residency; there are strong correlations between many of the broader traits studied. For example, lower-income households, ironically those that are most dependent on the tourism economy, are most strongly in favor of funding diversion, while the wealthiest are least in favor. But 65% of lower income households are also renting their residence, while wealthier households are the most prominent owner of an STR unit, so the residency correlation continues. Further digging – by involvement in local governance, time in the community, etc., reveals similar correlations between those traits and ownership and residential status, helping us – and jurisdictions – solidify the interplay between residency and issues related to balance.

Opinion around funding diversion, which may be enacted through ballot measures, needs to be taken very seriously, and Continuum is an opportunity to understand dissent and address issues before long-term mandates have significant consequence on economic viability of a community and successful of resort and activity operations.

Tying it all Together

While this article focuses largely on finding community balance by measuring responses based on home ownership and residency type, we’ve done so only to demonstrate some clear delineations between community groups. Topics we didn’t cover here like respondent age, income, gender, and family size have a significant impact on how residents answered about quality of life and the community’s position on the continuum. So did length of time in the community, remote- versus on-site work, and respondents’ engagement in local governance.

And while much of what we’ve learned does come down to full-time versus second homeowner, the nuance is dramatically more complex and localized. Continuum has revealed that almost all residents in the studied communities feel that quality of life is deteriorating, that overcrowding has a negative impact on their community, and that a shift towards resident centricity is critical to lifestyle, even at the expense of the economic engine of tourism. But there are limits to what can be done, and how quickly. By understanding where quality of life is being negatively impacted and correlating that to Departure Gap numbers, policymakers can work surgically in partnership with their residential and resort constituents to find the balance that supports a healthy, sustainable tourism trade without over-sacrificing either revenue or quality of life or lifestyle. .

After spending much of the past several years being reactive, resort communities are now in a position to plan out what the future looks like. Imbalances that existed prior to the pandemic have been exacerbated, tilting things further askew, and residents, having found a voice during the sonic boom of pent-up demand, are making their concerns – and desires - known. Measuring and understanding where quality of life is changing for individual groups within the community is key to knowing where jurisdictions can tweak funding or services to address issues and move the community towards a more balanced mix of tourism and residency, without upsetting the economic apple cart that keeps the engine running.