1998-1999 Economic Analysis

Unfavorable early-season snow conditions and widespread variation in snowfall characterized the 1998-1999 ski season, producing mixed financial performance. The season saw a decline in skier visits and profit before taxes. At the same time, increases were recorded in revenue, operating profit, cash flow and expenses. According to the annual Kottke report, skier visits fell from 54.12 million in 1997-1998 (second highest on record) to 51.95 million in 1998-1999. The Rocky Mountain region posted the weakest financial performance, pulling national averages down, especially in profits before taxes. The other regions showed increases in profitability in the 1998-1999 season, illustrating the importance of viewing both national and regional data for a complete picture.

The study was prepared by the National Ski Areas Association (NSAA) in conjunction with RRC Associates. As in the past five studies, two-year comparisons are provided for all financial data. It should be emphasized that only resorts that provided complete financial data for both the 1998-1999 and the 1997-1998 seasons are included in the report, which ensures validity in the year-to-year comparisons. The basic reporting format has not changed from previous reports. Results are provided by overall national totals, by regions and resort size as measured by VTF/hour. Minor changes in the survey form were made to permit more precise recording of expenses and revenues to aid in understanding the specific expense/revenue relationships in the industry.

1998-1999 vs. 1997-1998 Results

• Skier visits fell to 51.95 million, a decline of 4 percent compared to 1997-1998 visits.
• Profit before taxes declined from $973,000 to $929,000, down 4.5 percent.
• Average gross fixed assets increased from $28,114,000 to $30,530,000, up 8.6 percent.
• Average VTF/hour increased from 12,398,000 to 13,139,000, a rise of 6 percent.
• Average gross revenue increased from $15.7 million to $17.1 million, an increase of 9.2 percent.
• Average revenue per skier visit increased from $51.67 to $57.81, up 11.9 percent.
• Average lift ticket revenue increased from $24.80 to $25.38, a modest increase of 2.3 percent.
• Operating profit increased from $3,385,000 to $3,580,000, up 5.8 percent. However, operating profit on gross fixed assets recorded a slight decline (11.7 percent in 1998-1999 versus 12 percent in 1997-1998).
• Before-tax cash flow increased from $2,578,000 to $2,786,000, up 8.1 percent.
• Average lift revenues represented 43.9 percent of average total revenues compared to 48 percent in 1997-1998, illustrating that the trend of expanding non-lift ticket sources of revenue as a valid one.
• Expenses per skier visit increased from $48.47 to $54.67, up 12.8 percent.
• Overall average ticket yield as a percentage of the average weekend adult price was 62 percent, indicating heavy discounting.

Profitability

The study reports profitability several ways. It provides operating profit before amortization and depreciation, interest and taxes. It also shows profit before tax. These measures are shown by the total sample and VTFH size in Table 1 and by region in