Steamboat Pilot & Today

Steamboat Springs — A preliminary economic analysis of Routt County caused serious concern among some attendees of the Economic Summit earlier this month and now, even one of the authors of the study admits the information was prematurely disseminated.

Dr. Harvey Cutler, an economics professor at Colorado State University, provided the summit with a handout that included a table detailing employment growth rates in the local service, retail, manufacturing, government, construction and tourism industries

The table, which showed a decrease in the rates of employment growth in retail, services, construction, and tourism, did not include statistics on wages, population rates, or other, more detailed employment data, Cutler said.

"Ninety-five percent of our analysis will be based on much, much more than employment rates alone," he said, adding that it was probably a mistake to have sent out the relatively crude table.

Cutler and fellow CSU professor Dr. Stephen Davies were hired earlier this year by the city, county and Steamboat Springs Chamber Resort Association to analyze the underpinnings of the local economy.

Since the Economic Summit, Cutler and Davies have provided the city, county and chamber with a follow-up document to clarify and expand on the preliminary information. The expanded analysis raises some interesting and rather critical questions about the Routt County economy.

Included is a study of the county's annual population and growth rate. Between 1992 and 1998 the population in Routt County grew by nearly 18 percent.

"Think of the national growth rates in developed countries," Cutler said, "which are typically below 1.5 percent, and the U.S., which is closer to 1 percent. This means a growth rate around 3 percent is high. In fact, rates that high at a country level are only reached in the fastest growing developing countries.

"Routt County was the 25th fastest growing county in Colorado, out of (63) counties, over the decades of the 1990s. The population growth rate was 3.2 percent. That exceeds Colorado's growth rate of 2.88 percent as well, which, as Colorado is one of the fastest growing states in the U.S., is clearly a high rate."

That kind of growth rate can be both good and bad for the county.

On the upside, more people can mean a possibility for higher salaries, more diversity and a greater variety of services like restaurants and entertainment.

On the downside, however, is more congestion, out-of-reach housing prices, increased pollution and excessive demands on government services.

With computer models, Cutler and Davies expect to simulate what, specifically, are the impacts of a continually increasing population in Routt County.

"It could mean that existing firms and business owners will be better off, while the average worker will be worse off," Cutler said, citing an example.

The ratio of employment rates to the population also is raising some provocative questions.

Results from the analysis thus far reveal that employment has been growing at a faster rate than population. Cutler and Davies said that could be due to a combination of three factors.

First, local residents who were not working in the early 1990s may have since entered the work force.

Second, workers may be coming in from Moffat County.

A third explanation is based on the transient nature of a portion of the labor force in the county. During the seasonal periods when population increases like during the ski season temporary residents usually find employment, although their numbers may not be counted in the base population.

"Generally speaking, there has been a steady increase in employment relative to the population, that has implications for the performance of the Routt County economy as well as the functioning of the labor markets," the economic report reads.

Cutler and Davies also took a closer look at skier days and winter lodging revenues.

The most significant piece of information in the analysis is that for all six sectors of the economy, the ratio of workers to ski days is increasing. In retail, the number of workers grew by 19 percent from 1994 to 1999. This implies that Routt County had relatively more workers to serve skiers in 1999 than in 1994.

That contrasts with the fact many businesses in Steamboat Springs have been struggling for some time.

Cutler and Davies hypothesized that there may be an imbalance between the number of firms and workers in the county with respect to winter tourism. What that means is that the increase in the number of businesses from October 1997 to June of 1999 a 12.3 percent jump does not nearly balance with the lodging revenue increases of 3.6 percent over the same period.

"There seems to be a large growth rate in the number of firms for such a small time period, especially given the modest growth in lodging revenue," Cutler reported in the analysis.

The growth in firms may be related to the strong ski season in 1997, and a large increase in summer lodging revenue in 1998. Entrepreneurs may have been expecting a more permanent turnaround in both components of tourism, so a number of businesses started up.

At the Economic Summit, Cutler and Davies were particularly interested in learning why the 327-room Grand Summit Hotel was being built near the ski area.

"Capacity already seems a bit excessive. In 1997 the skier days handled the capacity pretty well, but when will skier days be that high again?" Cutler said. "Deliberate excess can be good because it can run out the least effective businesses."

As the county now has more businesses and workers per skier and per dollar of lodging revenue than in 1994, there may be too many businesses attempting to employ those workers. Therefore, it is perceived that there are too few workers in the economy.

"This is just a hypothesis," County Commissioner Ben Beall said. "It is interesting. This is why we need someone from the outside to take a fresh look at our economy. Maybe there is something there. It does seem to fly in the face of popular perceptions. Let's watch this study develop before we jump to any conclusions. The outcome may be interesting and the reaction to that outcome may even be more interesting."

It is also possible, that the new firms that came into being during the period of local growth are not all related to the ski industry. Cutler and Davies do not yet have information on what types of businesses began between '97 and '99. If the majority of the new businesses are geared toward serving locals, and not tourists, the 12.3 percent increase may actually be an example of the beginnings of economic diversification in the county.

An additional aspect of the preliminary study involves a comparison between summer and winter tourism.

"Winter tourism is seen to generate much greater income than summer tourism, but the growth rate of summer tourism usually exceeds the growth rate in winter tourism," the report states. "One of the important questions facing Routt County is whether, in the face of a declining ski industry, summer tourism will make up the difference or whether an alternative source of economic activity is required."

Eventually, Cutler and Davies will be able to simulate the impacts of increased revenues spent in different sectors, including summer versus winter tourism. They will be able to tell how much economic activity would be required in each sector to replace what may be a perpetually slowing ski industry.

"I think we've looked at quite a lot of factors," Davies said, "and posed some intriguing questions. But we're not at the point where we can say we fully understand what's going on. We're just really getting started."

To reach Bonnie Nadzam call 871-4205 or e-mail bnadzam@amigo.net