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July 2011

How Sound Are Winter Resorts?

Industry experts weigh in on the state of the industry and its future.

Written by Moira McCarthy | 0 comment

The numbers look relatively impressive. A total of 60.1 million skier visits this past season, up from 59.7 last year and the second highest in history. Learn a Snow Sport Month participation is at 75,000 this past season—up more than 100 percent from the year before. Season pass sales are the highest ever. Skiers and riders were a bit freer with their wallets in the base lodge.

But, resort leaders say, here’s the thing: most of that comes thanks to the hard work of a certain employee who can be, well, fickle from year to year. Mother Nature did her all to make things great this past year. The question is: are we building an industry that can thrive even when she slacks off?

It comes down to this: can technology trump nature? Will Baby Boomers fade away or come on stronger? Can mountains beat out youth sports like ice hockey and indoor soccer for future customers? Or, is flat the new up?

A closer look at the numbers suggests there may be more to do to grow our industry. For instance, the number of skiers nationwide remained flat at 10 million, give or take. That number has been flat for 15 years. Are we growing our business well enough long term?

Tim Mueller, owner of Okemo, Vermont; Sunapee, New Hampshire, and Crested Butte, Colorado, said he had a great year, particularly in the East, where “collateral spending was improved, lodging was good across the board and even our ski shops had a pretty good year.” In looking back, he says, “The eastern snow trumped the bad economy.”

In other words, while the economy had improved a tick, it was the seemingly endless snow this winter that really made things work.

Brian Fairbank, owner and operator of Jiminy Peak, Cranmore and as of recently, Bromley, points out that in New England we’ve had “trifecta” years the past three years: the Christmas, MLK and President’s Day weekends were all excellent. But, he has to ask, “What are the chances of that happening again?”

The good news is, positive changes are occurring. Gear is now so forgiving; a newbie can become a true skier in a relatively short period of time. People looking to commit can find great season pass deals almost everywhere. And more and more resorts are building summer activity programs to bring more revenue in and keep chugging along.

In other words, while some things may look concerning, this is not an industry asleep at the wheel. And the resort consumers seem ready to do all they can to stay a part of this world.

“People are tired of being in a funk,” says Chris MacInnes of Crystal Mountain in Michigan, where unemployment and recession were a fact long before the rest of the nation caught on. “There is much more optimism out there. I see a new enthusiasm about snow sports. You know, the vast majority of our business comes from the top 10 percent of (incomes). They are all very much out to find a memorable, meaningful lifetime experience. I think there’s something going on in snowsports; people are realizing it’s a multi-generational experience, and they want in on that.”

Still, that flat number of current skiers and riders (holding steady for 15 years) is concerning. Mueller wonders if we are doing enough to bring new people in and keep them here. “it makes us all a little nervous,” he says. “Snowboarding has leveled off.”

Mueller’s resorts have participated whole-heartedly in learn-to-ski-free programs, but he wonders if those programs are doing enough to create lifelong skiers. He says his resort numbers are not in yet, but he does believe they are not getting as much traction from the programs as he would like—for the sake of the industry—right now.

And at Pats Peak, N.H., management is facing an issue that’s really tough to get around: there are simply fewer school kids right now.

Resort GM Kris Blomback says the area’s hometown high school used to graduate 500 kids a year. Now they’re graduating just over 200, which means the resort’s robust student ski programs have been suffering. The area is considering reaching out to other towns, to make sure the area reaches all the local kids it can. Looking toward the future, he says the local community won’t return to a graduating class size of 500 until 2016 or 2018, if current projections are correct. Other communities in the demographically-challenged Northeast or Midwest may be facing, or experiencing, similar shifts.

Blomback says the industry cannot simply wait for those numbers to change. “[Even if you see an upward trend on the horizon] you’ve still got to up your skier visits in the meantime,” he says. He applauds NSAA’s growth initiative, which has, for more than decade, been studying skier visits, total skier numbers and identifying the demographic groups ripe for targeting.

Mueller has hope in something else, too. “The change in ski technology, the twintips and all that, has rejuvenated things a bit,” he says. And technology will continue to make it easier for skiers and riders to expand their horizons.

Roger McCarthy, a former resort exec and current consultant, wholeheartedly agrees. “What we’re seeing is an incredible shift in technology,” he says. “Going back 20 years, snowboarding was a brave new frontier. Now, everyone has a quiver of skis. You can get skis twisted in all sorts of ways to make skiing on all kinds of snow just so much simpler.”

That, he believes, is one of the best things this industry has going for it. “Now you can ski the crappiest snow and look pretty good on that kind of snow, and not even have that much ability,” he says. “And that in itself opens up a whole domain that used to just be pretty much for the elite. Frontiers are being smashed down in terms of technology. We’ve had the clothing (to get us out and comfortable in most conditions) for a long time now. Now we have the skis that are just unbelieveable.”

Fairbank points out that equipment shops had a banner year, proof that people are again willing to invest long-term in this sport. Mueller agreed, saying the shops at his resorts had much improved seasons as well.

But what if Mother Nature pulls a fast one? More and more resorts are realizing they need to branch out into summer programs as well, as a way to increase revenue year round.

At Spirit Mountain, Minn., those three other seasons may just be the key, says executive director Renee Mattson. “We need to make ourselves much more weatherproof,” she says. “We need to work to become year round.” Right now, Spirit is in the permitting process for a zip line, mini golf and tubing, all things that can add to the reasons a person might visit. They already do a “gangbuster business” when it comes to weddings and other summer functions, she says, so the leap to do more seems plausible.

Spirit, located in and owned by the city of Duluth, can draw on a sizeable audience. “We have 3.5 million visitors going through here in the summer,” she says. But still, she is not assuming the area will throw up a zip line and see profits soar. “I’m not a believer in ‘build it and they will come,’” she says. “I believe you build it and then market the hell out of it. That’s our plan.”

Fairbank is considered an industry leader in what he has done with summer. This summer he’s working to expand the offerings and appeal at Cranmore, where he believes its location—in the heart of summer tourist mecca North Conway, N.H.—will help it trump Jiminy’s success. In fact, the prospect of what Cranmore could be in the summer is part of what led him to purchase the resort a year ago.

Fairbank usually suggests that resorts looking into summer programs (and he predicts as many as 250 resorts will add new summer programs over the next few years) think carefully about their investment and return. For instance, if you put in a $1.5 million mountain coaster, you’re going to need 60,000 visits a year to make it turn a profit. If you are a relatively quiet traffic area, a better choice may be a more affordable $500,000 aerial adventure park that only needs 10,000 visitors a year to do well.

And, it may be easier to convert newbies from summer mountain guests to winter ones with the aerial park, he believes. “Some of the summer offerings attract people who are looking for adventure, but not with rigorous physical activity,” he notes. “The aerial parks may translate more to people who want more action and might enjoy skiing or riding.”

Blomback says Pats is working on making winter business better as well, and says most resorts need to do the same. “We are always in continuous improvement mode to make our snow surfaces even better,” he says. “A ski season that is not-so-good could be an unmitigated disaster for some. We are working on making sure that is not the case. I dare not tempt the snow gods. I am very humbled by them.”

Humbled by the snow gods might be a good management plan. He needs to only look a short distance away to Tenney Mountain and Ascutney, which both closed this past season. cont.

So what of that flat number of total skiers? While no one disagrees we need to do more to bring more newbies in—and no one believes we’ve found the magic bullet yet—some say a flat skier/rider population might not be bad news.

“I’m not discouraged by it,” says Fairbank. “We’ve made a 10 percent growth (in skier visits) over a five- to six-year period. That’s good news to me. And look: we’ve survived the recession. The past two years, we had records and hit it out of the park. If we keep investing in those kids programs, the kids are going to love it and then mom and dad are kind of stuck. They’re going to have to come.”

McCarthy agrees. “Even if what we have is enough new people coming in to remain flat, I’m thinking that’s good news,” he says. “I think flat is good, and I’m optimistic we will remain flat or even do better that.”

As for the decline of the “aging Baby Boomer,” McCarthy dismisses it as an immediate concern. “Sure, they are aging, but they are in better shape than my parents were 20 years ago,” he says. “When I am waiting in the dark for the first gondola at Whistler, there are two groups in line: the young kids and the older semi-retired or retired Boomers. These Boomers are going to put more days into this than we’ve seen any other generation in the past. And that’s good news.”

Mattson believes the key will be locking in families. While she admits, as do others, the competition with youth sports is challenging, the key is to get families to “get it” about skiing.

“Last year I had a friend come out here and ski with her family for the first time. She came with her daughter. And afterward she said to me, ‘The best part of my day were those six minutes on the lift with Sara. No iPods. No phones. No coaches or other players. Just us.’ That made it for me. It’s an opportunity for a family to socialize without distraction.”

No doubt, winter sport has its unique attractions. Family time and outdoor recreation create a healthy and sought-after lifestyle. Can we communicate that to enough newcomers to keep the industry flourishing? That’s the challenge.

357,000,000: dollars of planned capital improvement spending by resorts in 2011.
290,000,000: dollars of planned capital improvement spending by resorts in 2010.
200,000,000: dollars of planned capital improvement spending by resorts in 2009.
60,100,000: skier visits in 2010-11
59,700,000: skier visits in 2009-10
10,000,000: number of skiers/riders nationwide in 2011
10,000,000: number of skiers/riders nationwide in 1994
75,000: Learn a Snow Sport Month visits in 2011
30,000: Learn a Snow Sport Month visits in 2010
9,160: average number of season's passes sold per resort in 2010-11
1,600: average number of season's passes sold per resort in 1993-94.
36: percentage of total area visits in 2010-11 that came via season passes, highest ever.
30: percentage of total visits recorded by snowboarders; stable for past 3 years.
12.4: average pre-tax profit margin, in percent, for 2009-10 season.
0: change in the number of lessons taught this year compared to last.
- 15: percent decrease in number of lessons taught per resort compared to 1993-94

Sources: 2011 Kottke Report, 2009-11 NSAA Economic Analyses, LSSM