Bogus Basin is the second largest ski area in the state of Idaho. Its 2,600 skiable acres exceeds that of Sun Valley and is not far behind that of Schweitzer. But for all intents and purposes, Bogus is a community ski hill. This 501(c)(3) non-profit operation serves as Boise’s alpine recreation area.
For 75 years, Bogus Basin has relied on winter ops for its revenues. After four years of lean snowfall in the early ’10s, though, the operation had taken some financial lumps. The area needed to explore alternative ways to ring the register.
With the help of SE Group, general manager Brad Wilson and his team devised a plan to reinvigorate the resort, both from an activity and a revenue perspective. Taking a stepped approach, Bogus Basin is embarking on a 10-year, $18.5 million improvement plan.
Step one is diving headfirst into summer operations. If all goes according to plan, revenue earned during the warm season will fund winter improvements down the road, and will keep the resort humming for all but a few months of the year. And it will only require an upfront investment of $4 million.
Claire Humber of SE Group and Brad Wilson of Bogus Basin presenting their session, Strategic Capital Deployment, at SAM’s 2016 Summer Ops Camp.At SAM’s Summer Ops Camp in September, Wilson and SE Group’s Claire Humber outlined how the resort plans to tackle the venture. In an interview later this past fall, they updated the plan. Here’s the story.
What was the genesis of the expansion plan?
BRAD: Eighteen months ago, our 13-member volunteer board got the idea that we need to diversify our revenue stream. We’re only 16 miles from downtown Boise. We have around 700,000 people in the metro area, but if we don’t have snow, obviously they don’t go skiing. So we needed to explore alternative opportunities.
Before I got here, SE Group’s name was brought up by one of our board members. At that time, I was the GM at Diamond Peak in Tahoe, and got a call from the board asking for a reference for SE Group. We had just completed our master plan with them. I gave them a strong recommendation.
Little did I know I would be working with these knuckleheads—I mean, these guys—again. Shortly after, I was hired to run Bogus, largely because of my experience in developing those alternate revenue streams and sources.
CLAIRE: The Bogus board was concerned over spending money. They were pretty sure there was an opportunity in summer, but before they got carried away they wanted to prove it out. Nonetheless, the support and the desire to do it were very strong.
Our first task was to determine if there was an opportunity for summer business. That included conducting a robust market assessment and a site analysis.
In its favor, Bogus has two base areas and some low-lying terrain, all located on a parcel of privately-owned land surrounded by National Forest. And there are efficiencies in building on private land.
Because it’s a community-oriented facility, we also spent a lot of time engaging the public. We also wanted to understand what the board and the operation group were willing and able to do as far as tackling projects and expanding the operation.
The process confirmed that there was potential for some pretty significant summer operations at the mountain.
How did you quantify the overall summer market potential?
BRAD: One revelation of the feasibility study that SE Group put together was a lack of activities in the area that will compete with the types of activities we’ll be installing up here.
CLAIRE: Idaho is a very popular destination for more traditional outdoor recreation: hunting, fishing, ATV riding, hiking, etc. But there’s not a lot of developed recreation in the marketplace, including the types of gateway activities, or soft adventure activities, you traditionally see at mountain resorts—like zip lines, aerial adventure courses, lift-served mountain biking, mountain coasters, etc. That solidified the opportunity to develop a mountain recreation park of sorts at Bogus.
“YOU CAN BUILD A WHOLE LOT OF SUMMER OPERATIONS FOR THE PRICE OF A CHAIRLIFT.” — CLAIRE HUMBER
Knowing the market, how did you decide which activities to install?
BRAD: We didn’t consider a waterpark because, one, we don’t have the water, and two, there’s a waterpark in town. The actual, physical plant at the mountain eliminated some other possibilities.
Since the beginning of the project, we’ve been very clear as to the nature of the project and the price point. For example: we’re not going to have a big, long zip line here. We knew intuitively that the math just wouldn’t work with it. It didn’t fit with throughput, price point, and duration of the experience.
Further, it’s not in the character of the place. This is Boise’s alpine destination. We tried to make sure that when people come up into the mountains, they see the mountains and not a bunch of things that may or may not belong there.
The aerial adventure course is another example. We could build a big, rectangular jungle gym for adults right in the base area. But we wanted to build it into our trees, where it will fit more organically into the forest and not look like some strange anomaly in the base area. The mountain coaster will also quickly go into the trees and won’t be in any sight lines at all in the base area.
Explain the financial model.
CLAIRE: A master plan is essentially a strategic business plan. Financial modeling has to prove out the opportunity. We don’t produce a plan and then do a financial model of it. We produce a concept, and through the financial modeling, we refine and phase the concept.
BRAD: Our situation is different from a destination area. We have basically an indigenous market here. Most of the people that will be using our facilities live in the Boise area. There’s a different level of spending when you’re near home versus when you’re on vacation. Plus, we are a non-profit, and we’re here to provide both accessible and affordable mountain recreation. We had to really stick to that.
For instance, our mountain coaster pricing is around $10 or $12 per ride. If you go to a major resort, it’s more than $20 for a ride. For me, that was the biggest change from this business plan versus the one at Diamond Peak. There, folks are staying in Incline Village for a week on vacation, and looking for things to do and ways to wear out the numbers on their credit cards.
CLAIRE: When we built the financial model, we made sure the assumptions relative to visitation and to pricing were conservative and responsive to the realities of the marketplace. That’s essential, because a financial model is only as strong as your assumptions. That’s why we spent so much time doing the market assessment. It underlies our visitation, projects, and pricing projections.
So let’s talk about how you came up with the model to generate an ongoing revenue stream.
CLAIRE: A typical goal is to phase the capital improvements so that the initial items are both operational priorities and revenue-generating opportunities. That way, revenue generation happens quickly, and can self-fund the later phases of the plan.
You then pair that with the initial capital outlay. In this case, we were working under the assumption of having $4 million up front. So, what can we put in for $4 million that will start chugging initial revenue immediately and self-fund the later phases?
Those later phases include winter improvements that would otherwise be difficult to make, namely guest service space, lift improvements, and other things that don’t provide a measurable bang for the buck, but are very necessary. If you can supplement that initial capital through the additional revenue from summer operations, it makes those projects a bit more palatable.
That was the overall goal of the plan. Out of the nearly $18.5 million price tag for summer and winter improvements, almost $14 million is for facilities improvements.
A lot of times, the price tag for summer operations is much lower than the cost for improving winter operations. You can build a whole lot of summer operations for the price of a chairlift.
BRAD: So, when you look at return on investment, and your capital is lean to begin with, that’s where we can look at summer and say, “Here’s the ROI on these activities, and here’s what revenue we expect them to generate.”
In our plan, for instance, we have a low-capacity triple lift that needs to be replaced with at least a fixed grip quad, if not a high-speed, but it’s gonna cost $3 million. So that’s why we have in our plan, and I think it’s achievable, that by year four, our summer revenue will be such that we’ll be able to pay for that chairlift replacement.
“We tried to make sure that when people come up into the mountains, they see the mountains and not a bunch of things that may or may not belong there.” — Brad Wilson
Since this is a stepped plan, and in some cases “B” can’t happen before “A,” how flexible is it?
CLAIRE: Phase one includes about $4 million of activities. We showed the board how the later phases would include lift, terrain, and guest service improvements, all basically funded by that initial phase. And the board, bless them, in May 2016 said, “That’s great. We we’re all in. What do we need to do to get started by next year?” (Summer 2017, that is.) And, “Oh by the way. We want to minimize the amount of money we spend until we know this winter is going to be a good one and that we’ll generate the capital we need for that $4 million phase one.”
That is when the phasing plan started to morph into the implementation strategy. We developed a timeline and capital schedule that went piece by piece. For each item, we asked, what needs to happen for it to get built by the beginning of next year? And how can we facilitate the process, but delay the payment to the greatest degree possible?
For example, we asked, how can we work with Wiegand so that they’ll be able to build a coaster that will operate in summer 2017, but that we won’t have to pay for until February 2017? Obviously, there are things that have to get done and things that need to get paid for to keep the wheels turning. But we need to be creative about the timing of when things get done and when things can get paid for, so we can minimize the capital outlay.
BRAD: One thing to keep in mind, some larger ski areas have planning departments, so they’d be taking on a lot of this themselves. But, you’re talking to the Bogus planning department right now (laughs). SE Group stepped in and continues to act as our planning department. They’re not free of charge, but it’s allowed a small organization like Bogus to stay on top of these things.
CLAIRE: Thank you for that plug! What it comes down to is, each piece of the plan has a different implementation schedule. What the folks building the coaster have to do is different from what the landscape architect has to do. It becomes a very complicated series of parts that are all moving separately, to some degree. The only thing that keeps them together is you—the team that’s actually going to be operating it.
If you’re a small operation, it’s difficult to find the time and the personnel to keep on track. And we’ve had these moments, right, Brad? At one point we said, “Oh, shoot. The summer tubing guys were supposed to be on-site a month ago!”
How do you assign and manage all these responsibilities?
BRAD: The key is communication. Show me a ski area operation where roles or responsibilities never change. It just doesn’t exist. It’s a cooperative effort toward a unified end. What’s really important is the team meets on a regular basis. Just a quick phone call is fine to go through the list. What’s the action item? Who’s doing it? You have to be organized. Good record keeping is vital.
We have a plan in place for the actual buildout of these activities; I’ll assign a project manager to each. We’re a small organization and we’re going to put the appropriate people in charge of different things. It’s repurposing positions instead of hiring new positions.
Mountain biking is a major component of the improvements. What’s behind that?
BRAD: It’s an extension of what is already going on in this part of Idaho. A majority of the current summer activity at Bogus is related to mountain biking. Boise, as a whole, is pretty well committed to cycling. The foothills between town and the resort have nearly 200 miles of single track, all accessible from town. We have trails that either start or finish at the ski area, so you can actually start here at Bogus and ride single track down to Boise. It’s a very cool and unique setup. It has created a huge growth in mountain bike activity, which we’re embracing.
CLAIRE: The plan is to build out the mountain biking potential so you have a much more comprehensive mountain biking experience. That would include lift-served flow trails, lower level flow trails, pump tracks and skills areas, and then the food and beverage operation to support that biking destination. This athletically-driven activity complements the fun things like the mountain coaster, summer tubing, and other activities.
Do you anticipate running other activities and events? Will the guest services improvements power other sources of summer revenues?
CLAIRE: Programing and events are both very significant pieces of the puzzle. There is a plan to increase the number of events hosted at the mountain. Weddings are something that often come up.
BRAD: The time will come for us to consider weddings, but we’re taking advantage of other opportunities first. Unlike other activities in the plan, there is no shortage of places to have a wedding in Boise.
Kids’ programs, for example, are a big opportunity. During the winter, we do a tremendous amount of learn-to-ski programs focused on youth. And we’ll be trying to incorporate similar programs for activities during the summertime, whether it’s in the aerial adventure course or mountain biking or something similar. As a non-profit, we’re here for the people of Treasure Valley, and we need to keep that first and foremost. A lot of these activities are going to allow us to continue that, hopefully for another 75 years.