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INDUSTRY EVENTS ANNUAL NSAA TRADE SHOW AND CONVENTION 2009 The sunny beaches of Marco Island, Florida, played host to the annual NSAA Trade Show and Convention from May 13 to 16. While attendee numbers were off by 25 percent, those who did show were treated to information-packed seminars, lively panels and a trade show packed with companies ready to do business.Here are a few highlights from the program, as well as some photos. The New Administration and a Democratic Congress: How They Impact Your Resort Kelly Johnson, managing partner, Holland & Hart’s Legislative and Regulatory Affairs, Washington, D.C. Johnson addressed four key legislative changes that will potentially have substantial effects on ski resorts. First, the Card Check legislation, also called a majority sign-up for unions, will amend the National Labor Relations Act. If passed, both pensions and bargaining opportunities for employees will increase. The U.S. House would do away with union elections and simply organize with only a card check. Presently, employers do not have to come to any agreement with unions. If passed, an agreement with the unions must be made within 90 days. Johnson then addressed immigration. The H2-B visas are currently capped at 66,000 workers which is divided into two separate 6-month caps. In 2007, there were 130,000 workers with 70,000 returning. The Save Our Small and Seasonal Business Act of 2009 would amend the Immigration and Nationality Act to provide exemption from the H-2B visa cap for returning workers. Third in line was the Forest Service’s firefighting costs. In 2008, 45 percent of the forest service budget went to fighting fires—three percent of fires use 85 percent of fire-fighting budgets. On March 6, 2009, the Flame Act was passed by the house of representatives, which sets up a partitioned account for funding emergency wildfire suppression activities to relieve constrained budgets. The Senate Committee on Energy and Natural Resources still needs to vote. The requested Forest Service budget for 2010 is $4.93 billion, up from $4.75 billion in 2009. Finally, Johnson talked about the Ski Area Recreational Opportunity Enhancement Act of 2009. Introduced in March 2009, it would authorize summer and year-round activities at ski areas and on National Forest Lands. The Senate Committee on Energy and Natural Resources needs to vote, but the outlook looks positives. It is thought that by the end of Obama’s term, the act will pass. Finding Capital and Credit in a Tight Market Rusty Gregory, Baxter Underwood, Josh Fox, David Alexander This group of bankers and investors who specialize in the ski industry led an enlightened discussion on the realities of today’s market and the difficulties ski areas will encounter when trying to borrow money or find an investor or buyer. When it comes to finding buyers, the reality is that investors are largely looking for distressed opportunities. While they agree that strategic capital is starting to slowly move back in, the volume of this capital remains small and the level of leverage has changed drastically. In other words, the days of selling resorts at high multiples of EBITDA are gone. What has become popular are debt buybacks. If a ski area can trace its loan back and find out who owns the paper on any part of it, deals can be for 50 to 60 cents on the dollar for a cash buyout of the loan. But if you are looking to borrow money, now might not be the best time. Banks are trying to shrink their balance sheets, not grow them. The panelists urged attendees to look for joint venture partners, take a look at REITs, or drum up some of the industry’s old owners and see if they’d like to reinvest back into the world of wintersports. CEO Summit Tim Boyd, Peak Resorts; Mike Kaplan, Aspen/Snowmass; Rob Katz, Vail Resorts; Steve Kircher, Boyne Resorts; and Intrawest's Bill Jensen This high-powered summit gave attendees a fascinating look at some very different operations and how they deal with some very familiar subjects. Here is a sample of their thoughts: Overall thoughts on the past season... Boyd: We were physically close to the people so it was a little easier on us. We’ve experienced these times before and we’d rather have a bad economy and good weather than bad weather and a good economy. Kaplan: It was about strategic resolve after we already went through this during the 1991/92 season. Adjusting to Baby-Boomers leaving and the poor economy. Katz: What's most important for our industry is not to wait around for the economy to come back. This is the new reality. Make sure you can still connect with your guests. Jensen: This is a really critical time to stay connected to our guests. How to stay close to guests with less capital... Katz: For destination resorts, we're fighting heavily with every other vacation spot that people can choose from. Our resorts charge accordingly. The guests choose that. Kaplan: The loyalty we created in our industry is unparalleled. Our guests don't want to leave so we need to take advantage of that. On Real Estate... Jensen: Our real estate will be sold for whatever the market will pay for it. Discounts will be at about 30 percent. Kircher: I think there is still a niche for small buying concepts. What is in store for this winter... Boyd: Worse before it gets better. Katz: Better. They were in fear this winter but will have more acceptance next winter. Gregory: So what you are saying is people will be poor but used to it. Kircher: Destination will recover a little bit. Kaplan: Similar to last year. MIT Keynote: Dr. Joseph Coughlin What to do with, and after, the Baby Boomers was the clear theme of this year’s convention. [Dr. Who, head of the Age Lab at MIT,] described the “disruptive demographics” of the Baby Boomers. He hit upon many familiar themes, such as the Boomers’ propensity for staying active and refusing to grow old, but added some new insights, such as cataloging the extent to which age robs us of our flexibility, eyesight, and health generally. To keep them active, he said, provide easily accessed total solutions—integrate products and services to provide ease of use. Not surprisingly, he pointed to social networks as the source of word-of-mouth advertising. He also described women as the “family CEO” and chief consuming officer, and pointed out that women get more active in business and personal activities as they age, while men tend to “retreat” once they retire. He intimated that’s why so many men die shortly after they leave the workforce. One way to stay alive, it appears, would be to stay active and involved. Skiing, anyone? Why Conversion is More Critical Than Ever Michael Berry In this session, NSAA president Michael Berry urged the industry to renew its efforts for conversion. While growth in the industry over the past four years has been huge, that growth has been largely due to revived participants. Conversion of newbies, however, has only risen 1.7 percent to 16.7 percent. With the bread-and-butter Boomers aging, their numbers have gone from 1.2 million skiers in 1997 to 725,000 in 2008. During this time, Gen Y is the only segment that grew in participation, but their numbers will not make up for the drop in Boomers. If left alone, our participation numbers will decline annually by 2.5 percent. So how do we tackle conversion? Berry urged the audience to revisit our points of entry, mainly ski school. He said that costs in that arena need to be brought down, making it more affordable, and enjoyable, for newcomers. There is also good news on the horizon. Birth rates in the U.S. are climbing, unlike in Europe. In fact, there were more kids born two years ago than in other year in history. Building Green when the Economy has the Blues Moderator Brian Fairbank encouraged resorts to pursue green initiatives even in a down economy, for their high ROI. Kim Hosken of Johnson Controls reviewed the LEED process. Anyone who has been through this once or twice knows that the most relevant aspect of LEED certification for winter resorts is the portion dealing with energy and atmosphere—that’s where the best hard-dollar returns come from. More practical was Brent Giles’ presentation on the smaller projects Park City has undertaken, all with good ROI—from more effective thermostats in buildings and programmable timers in lift shacks to “free refrigeration” systems that utilize frigid outside air. In all, the Park City director of environmental affairs listed 19 projects that cost $681,000, generated $180,000 in rebates, and saved $130,000 a year in energy costs, for an ROI of less than four years. Finally, John Steelman of the Natural Resources Defense Council pointed out that building efficiencies have the highest ROI of all green investments, and predicted that strong bipartisan support for the Waxman-Markey climate change legislation (supporters include some business groups and conservative Republicans) would help make green building even more viable. Number Crunching: Streamlining your Operations through Cost Reductions Roger McCarthy, world-renowned resort manager and resort consultant, and Robin Smith, a snowmaking whiz and consultant, offered insight on how to boost the bottom line through cost cuts. Due to the cost of labor, including workers’ comp, health care, employee housing, and other benefits, McCarthy suggested resorts compress their structure, eliminating entire layers of the organization, and “take a hard look at specialists,” who often get added in good times but are not essential (and are thus expendable) in lean times. He urged areas to staff for non-peak times, not peak days. He also held up the example of Europe, where resorts have long sought to reduce the number of employees through automation in snowmaking and lift management (think carpet loading systems and RFID control gates). In general, he said, increase your efficiency, and pay down debt if at all possible. Smith noted that labor and energy are the two biggest expenses in snowmaking, then compared how various types of snowmaking systems and automation can cut costs. Automation can save between 33 percent and 66 percent of production costs, with no change in the snowguns or overall production volume, he said. And volume is important, he said—manage snow by volume; don’t make more than you need. If you still have big piles on the hill in May, you’ve made more than you need—and wasted money. X-Posure: managing and Promoting Youth Action Events Moderated by Jack Turner. Panel was Chris Stiepock, VP/GM ESPN’s X Games; Sue Eckersley, Executive Dir. TELUS World Ski and Snowboard Festival; and Scott Clarkson, Marketing VP, Okemo Putting on an event takes a considerable amount of planning and resources from keeping competitors and sponsors happy to crowd control and promotion. Some of the take-home advice from the three event promotion and organization experts include: -Resist the urge to produce events by committee -Create events with multiple revenue streams (brand revenue, ticket revenue, title sponsorship revenue, etc.) so that it can sustain itself for many years and grow. -Don’t imitate cool--it changes all the time because of region, demographics, etc. -Don’t take your brand for granted -Keep trying new things, even at risk of failure -Don’t give away things for free because it’s harder to charge later -With large crowd events center the planning around keeping them constantly entertained. Create content to stop them from doing bad things (which can often happen with large crowds) -Don’t waste an opportunity to go after the low hanging fruit. These are the people who come to an event, but don’t participate in the sport itself. Figure out how to get them to try our sport. -First impressions create lasting impressions...signage is key to the experience so create a clean look and make it easy to get around. -Consider video taped releases with parents when young kids are involved.
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EVENTS WRAPUP 
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