During the 1990-91 season, ski resorts across the country suffered from Mother Nature’s failure to send snow, the public’s reluctance to travel during the Persian Gulf crisis and the recession. It was the second season in a row to be impacted by unusually bad weather conditions in most regions of the country with California the hardest hit.
Utah, which set a new record for skier visits, and Colorado, which recorded the second best season in terms of skier visits, were the only bright spots.
Even though the 1990-91 season was plagued by unfavorable circumstances, it was not the worst ski-year in history. The infamous no-snow 1976-77 season still holds that dubious honor.
But economic performance was close to the lowest level recorded. The industry posted an average 3.9 percent operating profit (profit before income tax and interest expense) as a return on gross fixed assets (GFA) down from 7.4 percent in 1989-90 and 8.4 percent in 1988-89. This weak performance was the second lowest in the history of the study. The lowest came in 1976-77 when the operating profit was 1.6 percent.
Dollar profits before taxes were down measuring $27,000 compared to $540,000 in 1989-90 and $701,000 in 1988-89. Again this was the second lowest performance recorded in the study; the record low being 1976-77 when the average ski area showed a loss of $65,000 for the season.
1990-91 vs. 1989-90
- Skier visits were down (46.7 million vs. 50.0 million).
- Operating profit was down (3.9 percent vs. 7.4 percent).
- Average before-tax profit was down ($27,000 vs. $540,000).
- Average total revenue was down 3.7 percent.
- Days of operation were down (116 vs. 117).
- Average revenue per skier visit increased .8 percent to $24.31 from $24.12 in 1989-90.
- Gross fixed assets were up.
- Operating costs were up.
In addition to operating profit and profit before tax, an important figure to look at is before-tax cash flow (before-tax profit plus depreciation), because cash flow provides a measure of an area’s or the industry’s ability to retire debt. For the average area, cash flow was $1,010,000, a 31.5 percent decrease from the $1,474,000 of 1989-90.
Discounting continued at a more vigorous rate than before. The average weekend lift ticket price was $28.93, the average ski lift ticket revenue was $20.68 or 71.5 percent of the listed price, which compares to 74.5 percent in 1989-90. This is to be expected in a poor snow year when early season discounts are kept in place longer and other discounts are given because of marginal conditions.
Profitability and Performance
Only 61.5 percent of the respondents reported operating profits (profit before interest and taxes). In spite of that low percentage there have been two other years that recorded a worse performance. For the infamous 1976-77 season, only 56.0 percent of the areas reported an operating profit and for the poor snow year of 1980-81 61.2 percent reported an operating profit.
Table 1 shows the profit picture of the average ski area responding to the survey as well as the top half, bottom half and loss areas. The top half profit areas continued to perform well above industry averages, recording an average operating profit of $2,328,000 and a 12.1 percent operating profit on GFA. The bottom profit areas recorded a 3.1 percent operating profit on GFA.
| 1990-91 Respondents (000) | Top Half (000) | Bottom Half (000) | Loss (000) | |
|---|---|---|---|---|
| Gross Fixed Assests | $16,062 | $19,225 | $19,118 | $11,087 |
| Total Gross Revenue | 8,520 | 13,148 | 8,826 | 4,572 |
| Less: Operating Expenses | 7,889 | 10,820 | 8,240 | 5,263 |
| Operating Profit (Loss) | 631 | 2,328 | 586 | (691) |
| Less: Interest | 604 | 619 | 781 | 450 |
| Profit (Loss) Before Tax | 27 | 1,709 | (195) | (1141) |
| Number of Respondents | 130 | 40 | 40 | 50 |
Table 2 presents a summary of the average performance by region. All of the regions except California and Nevada recorded an operating profit. New England, the East and California all failed to record a profit before tax. The Northern Rockies recorded the most impressive performance with operating profit as a percent of GFA at 8.2 percent followed by the Central Rockies with 7.8 percent.
The California/Nevada region again led in revenue per skier visit with an average of $29.55, which was down from the $31.40 recorded in 1989-90. The California region was followed by the Central Rockies with $25.94, the Northern Rockies with $24.54, New England with $24.52, Western Canada with $24.46, the East with $23.41, the Midwest with $18.90 and the Pacific Northwest with $18.66.
| Total Sample | New England (000) | East & Ontario (000) | Midwest (000) | Central Rockies (000) | Northern Rockies (000) | California and Nevada (000) | Pacific North West (000) | Western Candda (000) | |
|---|---|---|---|---|---|---|---|---|---|
| Sample Size | 130 | 27 | 17 | 13 | 19 | 16 | 15 | 12 | 11 |
| Gross Fixed Assets | $16,062 | $17,891 | $11,434 | $3,264 | $24,921 | $12,225 | $22,967 | $11,567 | $19,615 |
| Total Average Revenue | $5,823 | $5,908 | $3,969 | $1,486 | $10,776 | $4,809 | $7,190 | $4,175 | $6,456 |
| Less: Direct Expenses | $1,639 | $1,470 | $996 | $434 | $3,019 | $1,421 | $2,014 | $1,332 | $2,226 |
| Gross Margin | $4,184 | $4,439 | $2,973 | $1,052 | $7,758 | $3,389 | $5,176 | $2,844 | $4,230 |
| Less: General Expenses | $2,571 | $2,929 | $1,989 | $688 | $4,204 | $1,726 | $4,043 | $1,673 | $2,197 |
| Depreciation | $983 | $1,061 | $666 | $181 | $1,613 | $665 | $1,592 | $666 | $1,114 |
| Operating Profit | $631 | $449 | $317 | $183 | $1,941 | $998 | $(460) | $505 | $919 |
| Less: Interest | $604 | $748 | $408 | $88 | $1,353 | $239 | $575 | $270 | $804 |
| Profit Before Tax | $27 | $(299) | $(91) | $95 | $588 | $759 | $(1034) | $236 | $116 |
| Critical Ratios: | |||||||||
| Health (Debt/Cash Flow) | 6.1x | 9.9x | 7.5x | 2.4x | 6.4x | 2.1x | 12.4x | 2.7x | 6.0x |
| Profitability: | |||||||||
| Operating Profit/Gross Fixed Assets | 3.90% | 2.50% | 2.80% | 5.60% | 7.80% | 8.20% | Loss | 4.40% | 4.70% |
| Before Tax Profit on Equity | 0.50% | (4.9)% | (3.3)% | 12.80% | 4.80% | 15.10% | (14.3)% | 5.80% | 1.40% |
| Performance | |||||||||
| Average Utilization | 30.80% | 30.90% | 47.10% | 35.20% | 36.00% | 28.60% | 25.50% | 22.90% | 28.50% |
| Day/Nights Operation | 116 | 114 | 103 | 122 | 104 | 120 | 105 | 144 | 129 |
| Policy and Planning: | |||||||||
| Capital/Capacity Ratio | $2,783 | $3,048 | $3,528 | $2,063 | $2,772 | $2,426 | $2,684 | $2,019 | $3,201 |
| Operating Cost/Capacity | $5.81 | $6.00 | $8.98 | $5.68 | $6.54 | $4.84 | $6.56 | $3.19 | $5.08 |
| Total Revenue/Skier Visit | $24.31 | $24.52 | $23.41 | $18.90 | $25.94 | $24.54 | $29.55 | $18.66 | $24.46 |
| Top Profit Areas | 100% | 10% | 8% | 15% | 23% | 23% | 3% | 8% | 13% |
| Bottom Profit Areas | 100% | 15% | 15% | 10% | 18% | 8% | 13% | 15% | 8% |
| Loss Areas | 100% | 34% | 16% | 6% | 6% | 8% | 18% | 6% | 6% |
| Skier Visit (000) | 223 | 227 | 157 | 69 | 398 | 185 | 235 | 215 | 248 |
Revenue and Cost trends are shown in Table 3 and compared to the Consumer Price Index.
| Year | Consumer Price Index (1967=100) (January) | Average Advertised Ski Lift Ticket Price | Average Lift Ticket Revenue Per S-V | Revenue Per S-V | Operating Cost/Season Capacity Ratio |
|---|---|---|---|---|---|
| 1980/81 | 260.3 | 13.81 | 10.91 | 12.59 | 4.40 |
| 1981/82 | 282.2 | 15.60 | 12.46 | 14.40 | 4.19 |
| 1982/83 | 293.1 | 16.43 | 12.90 | 15.06 | 4.52 |
| 1983/84 | 305.2 | 17.55 | 13.61 | 15.73 | 4.18 |
| 1984/85 | 316.1 | 18.68 | 14.45 | 17.01 | 4.82 |
| 1985/86 | 328.4 | 20.37 | 15.68 | 18.71 | 4.99 |
| 1986/87 | 333.1 | 21.51 | 15.89 | 19.04 | 4.87 |
| 1987/88 | 346.7 | 23.36 | 17.09 | 20.36 | 5.28 |
| 1988/89 | 362.7 | 25.03 | 18.77 | 22.50 | 5.32 |
| 1989/90 | 381.5 | 27.20 | 20.27 | 24.12 | 5.66 |
| 1990/91 | 403.1 | 28.93 | 20.68 | 24.31 | 5.81 |
| 10 Year Compound Annual Growth Rate | 4.5% | 7.7% | 6.6% | 6.8% | 2.8% |
Complete Study
The 1990-91 study is the 23rd annual study and the 18th produced by the Business Research Division at the University of Colorado. The study is conducted for the Economic Study Committee of the United Ski Industries Association. The report is presented in one volume containing 105 tables covering national data, regional and operational characteristics. Copies of the 1990-91 season Economic Analysis of North American Ski Areas, may be obtained from the Business Research Division, University of Colorado, Campus Box 420, Boulder, CO 80309, (303) 492-8227. The cost is $100. Copies are also available from the United Ski Industries Association, 8377-B Greensboro Drive, McLean, VA 22102, (703) 556-9020.
