No one can exactly predict future changes in the ski industry, but it is fairly easy to anticipate what forces will exercise the greatest influence during the next decade. The real trick is to measure the direction and strength of those forces, to factor in outside and unknown events and to guess the influence of every ski area operator’s nemesis — the weather.
Still, at the risk of having to eat my words later on, I looked into my crystal ball and offer these predictions about the good and the bad that lies in our future. There follows my visceral prognoses for the 90’s.
The Range Wars
A number of factors have come into play in recent years that will lead to serious skirmishes among area operators, foreign owners of U.S. areas, environmental groups, the Federal government and state agencies. The fighting will begin like the shoot-out at the OK Corral with one-against-one gun slinging (individual areas vs. the USFS) over issues relating to significant increases in timber fees, escalation of GRFS rates and perceived manipulation of accounting principles. On one hand, the question might be asked: “Is the U.S. government becoming entrepreneurial by trying to make an operating profit from skiing and benefit from bottom line performance?” On the other hand, the question might be: “Can there really be a true partnership of private and public interests when the government appears to want a share of the profits, but is becoming terribly restrictive and assuming little if any responsibility for cooperation in trying to make a venture work?”
The standoff will compound itself into industry-wide involvement with environmental challenges (some justified, others not) which will focus on the Three W’s: water rights, wetlands and wildlife habitat. Those will be the major confrontational battle lines in the 90’s and any area operator who goes into significant expansion without professional help in this arena is preparing himself for self-taught brain surgery. The results of the battle of the Three W’s will affect our entire industry and its ability to respond properly to market growth in the future.
The environmental community is now highly organized, well financed and politically very effective. Good area operators and genuine environmentalists can usually resolve problems . . . but how do you handle the beady-eyed eco-zealot whose stated objective is to “stop all growth at any cost”? Those types are out there and they are zeroing in on skiing.
The Corps of Engineers and EPA (they used to be at odds on wetlands issues) are now mutually self supporting. In combining their strengths, they (along with the environmental community) have lent significant support to state agencies that formerly were not critical negative decision makers. The approvals process will get tougher. One recent project, for example, was required to undertake complete hydrologic analysis of every water bar in the area. Cost for engineering and implementation on 100 acres of new terrain is in the $500,000 range — that’s $5,000 an acre just for water bars! Two years ago this requirement would have been unheard of.
Energy Availability and Costs
Like the fuel crisis of the 1970’s, the cost and availability of electrical energy will be a significant determinant to expansion of existing snowmaking systems and installation of new ones. Frankly put, we’re running out of power in many regions and significant snowmaking projects (our life blood) are in jeopardy. This situation will worsen in the 90’s in the U.S. Canadian resorts will maintain an advantage with plentiful hydroelectricity, a non-depletive resource.
Thus, the trend in the next decade will be away from the old high pressure (100 psi or more) systems to the new and field-proven low pressure (40 psi) Dendrite process. Tests have shown that energy savings average 50 percent with Dendrite and, in certain normally-experienced climatological conditions, the savings can be as high as 75 percent.
Foreign Investment
Acquisition of U.S. resorts by overseas investors will continue unless road blocks in the form of permit restrictions cause a backing off. We will see more resort properties sold to Europeans, Canadians, Australians, Japanese, Koreans and Chinese. (The Japanese already own about $300 million of our industry.) Foreign interests will extend beyond the boundaries of ski areas and go deeply into the commercial/retail aspects of local communities.
Because many foreign entities are already far ahead of this country in travel innovations, they will introduce many new ideas and conveniences for skiers. To name a few:
- One-stop-shopping (by phone, computer or in person) for all aspects of vacation from departure to return.
- Baggage and skis delivered from home directly to the skier’s room or condo at the resort. (Watch out for unions on this one.)
- Courtesy rooms at airports for individual resort guests.
- No front desk check-in required. Do it from your room or condo by phone or computer.
- No cash required at the resort. Use a special card with pre-verified credit.
- Full business services available at the resort including computer interlinks with home office networks, faxes, steno pool, dictation/transcribing, translation/interpretation, stock quotes/remote buy-sell capability and paging services (by beeper) when on the slopes.
Insurance
Still a heavy cost and no decline in sight until a few more heavy-hitting underwriters get back in. This could be some years away. As long as plaintiffs’ lawyers (dealing with a society that for three generations has been welfare dependent) can practice contingency law and are able to justify (at least to themselves) that: their client is not responsible for his/her actions, someone else is always to blame, someone else must pay, insurance companies and ski areas have limitless wealth.
Technology and Sociology
Further forecasts from my crystal ball show a lot of changes in the way ski resorts operate and the impacts of demographic trends. To name a few:
- More social planning/structure in resorts. People spend a lot more time socializing (or trying to) than skiing, but condos are not easy places for serendipitous meetings to take place.
- Computerized get-together services at resorts whereby people with similar interests (golf, bridge, tennis, etc.) can meet.
- Base lodges will improve and it will become socially acceptable to remain in the lodge after 5 p.m. and maybe stay for dinner.
- Resort communities will need significant re-planning and reconstruction. Property values will warrant the razing of older (but very expensive) structures to make room for newer commercial space that is better planned and can turn a higher profit.
- Summer utilization at better resorts will increase, offering a pleasant life style for Mom and the kids while Dad commutes a couple of times a week. Summer utilization of marginal areas with token amenities will dwindle.
- Good golf courses (more than one per resort area) will enhance summer activity, especially with Japanese clientele. But they will be well designed for the user, not killer courses or cow pasture pools that many resorts develop on the South 40.
- The second baby boom is upon us and is the next wave of skier growth that will be felt in the 90’s.
- Boomerangers (grown up kids who have come back home to beat the high cost of living) will be found unacceptable and ejected.
- DINKS (Dual Income No Kids) couples have already started to become “with kids,” and will tend to start families in their late 30’s and early 40’s because older women having kids is now medically and socially acceptable.
- OPALS (Older People with Active Life Styles) will add to the growth potential. They’re the fastest growing segment of the population, control immense wealth ($7 trillion) and have plenty of disposable time and money — no mortgage, no kids in college. These folks demand quality and service — and will pay for it.
- The gross numbers of ski market potential will increase to annual growth rates of six percent to seven percent by 1995-96.
- The industry will (must) form an organization, or revamp an existing one, along the lines of the National Rifle Association, that can put three million signatures on Congressmen’s desks in a week. (That’s political clout!) This organization will represent a broad base of ski consumer interest such as: wise use of public lands versus “preservation,” unwarranted threats to ski area expansion, powerful responses to the anti-growth voices, opposition to unreasonable “forever wild” designations for public lands and waterways, etc.
- Snowboards will continue to increase in popularity and become a not-insignificant newly-tapped market segment. They’ll be more acceptable in the resorts as users understand the protocol of ski slope behavior.
- Concern over the perceived “Greenhouse Effect” will start to reverse itself. The nine-year sun-spot cycle will come to an end, climatological conditions will become more stable and the panic artists who have been making the “death knell” predictions will have to go back to real work because government grants will be significantly cut back.
- U.S. banks and the investment community will become truly interested in skiing as a viable industry in and of itself. Real estate will be recognized as just one of the many positive economic eggs that are produced by skiing.
- Skiing will achieve political recognition as a positive economic and social force in states that now have restrictive policies on development in the mountains. This will come about by 1992 as a result of the mild nation-wide recession, which will occur in mid to late 1990 (with a real downturn in the Northeast), and realization by some anti-ski politicians that people in rural environments have a strange habit — they like to eat three meals a day.
- Ski resorts will reduce preseason cut-rate ticket sales and borrow start-up funds from banks at lower rates.
- As an alternate fund-raising technique, ski areas will sell seasonal parking spaces to help pay for an expensive facility that everyone has historically used for free.
- Lift ticket prices will reach $55 to $60 or more — and will still be a good investment.
- A number of ski areas will convert to (or start up as) club operations. They’ll either be very high ticket with full quality services and a multi season focus, or they’ll be cut rate family-oriented ski facilities only.
- Ski by the hour or ride will become commonplace. Computerized ticketing and microchip/bar code accounting for individual use will enhance this trend.
Wrap Up
The crystal ball is getting hazier now. Lot of talk about quality and service (the buzz words of the 80’s) finally being recognized, ski-by-reservation systems that work, whiz bang ski/boot/binding combinations with computer sensor release mechanisms, sonic snow grooming and horizontal transpo systems for base areas. Fun.
In any case, it looks like there’s going to be a lot happening in the 90’s. Some good, some not so good. Foreign investment will continue, resort operations will be fine-tuned like a good hotel, the better areas (using Disney-like crowd control techniques) will see average utilization rates in the 70 percent range and the market will grow to almost 100 million skier visits per year at the turn of the century. Our resorts must expand to accommodate the pressures.
On the flip side, we’ve got some serious anti-growth pressures facing us in the form of public agency ambivalence and the Three W’s — Water, Wetlands and Wildlife. We must respond aggressively. Professional legal/environmental assistance will become increasingly important in planning and expansion. Area operators and suppliers alone cannot put the vote threat on the bureaucratic desks in Washington. We must energize the latent political muscle of over 15 million skiers who should stand up and be counted.
My conclusion? — With the ski industry’s new unified leadership we have an opportunity to come out of the 90’s much stronger than we’re going in.
The Power of One
On the political side, Jim Branch offers these predictions about the direction of the forces that rule the infrastructure of our industry.
USIA
McKinsey and Company accomplished one big thing — they forced a decision that was inevitable and the union will prove to be a positive one over all, with one voice delivering one unified message from pro-active leadership. One of the problems will be that oil and water don’t mix — but neither do they explode when put in the same container. The former SIA and NSAA interests can work within one framework for individual, as well as common, goals. The skiing public isn’t aware and doesn’t care that there may be vestiges of factionalism within the organization.
Headquarters for USIA will undoubtedly remain in McLean, Va. However, a suggestion has been made that a structure something like the Eiffel Tower be erected over the offices. This will help guide first-time visitors who get (with 93 percent probability) non-English-speaking cab drivers from the airport.
Trade shows and conventions will improve with more professional leadership. Associate members (from NSAA) will hold technically-oriented trade shows separate from the annual convention, and the area owners will run their own convention with a stronger generic learning and social/gala focus. Both shows will be effective, and with paranoia and anxieties reduced, the two groups will be able to communicate more effectively.
The Las Vegas show will evolve into a true industry-wide event, with different sectors serving different interests. Here all elements of the industry will have the opportunity to co-mingle and learn from and about each other.
ASF
With the full horsepower of USIA behind it, American Ski Federation will become even more productive in their lobbying, information dissemination and political effectiveness efforts. As an industry we’ll need this, because we’re headed into an intensely adversarial period against forces outside our industry which have a significant influence on us. J.B.
