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January 2016

Trust the Process

After working together for 16 years, Greg Goddard and Claire Humber have forged a productive and fun working relationship. In 1999, Goddard, general manager for Gunstock Mountain Resort in Gilford, N.H., hired SE Group to conduct a concept study for Greg’s first master plan for the resort. Humber, SE Group director of resort planning and design, worked on the project. Since then, Gunstock has gone from a winter resort that needed attention to a four-season attraction in the popular Lakes Region of New Hampshire.

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Greg Goddard, left, of Gunstock, N.H., and Claire Humber of SE Group talked about the resort's summer business planning process at SAM's Summer Ops Camp 2015 in Camelback, Pa., last September. Greg Goddard, left, of Gunstock, N.H., and Claire Humber of SE Group talked about the resort’s summer business planning process at SAM’s Summer Ops Camp 2015 in Camelback, Pa., last September.

Theirs has been a collaboration borne of trust, patience, and adaptability. From Claire’s big picture perspective to Greg’s focus on the minutia of the operation, it was an entertaining chat with two people who clearly enjoy working with one another, even if they don’t always agree.

We talked with these two about the process of turning Gunstock into what it is today—and what it will be tomorrow.

SAM: Step one to any big undertaking is coming up with a master plan. So, Greg and Claire, take us back to how the process worked in deciding on this latest round of summer improvements at Gunstock.

GREG: The first go-around that I had with Claire and the SE Group team back in 2010 was more exploratory in nature. The market study that we did, coupled with the successes other resorts they’ve worked with had in summer business, it was an “aha” moment that it was something we really should be considering. The market research led us to believe that we really ought to do something, and then the logical next step was sorting out the somethings. So, we created a laundry list of everything everybody and anybody was doing for summer business, both in and out of the ski industry.

CLAIRE: It’s important to determine how many people are in your marketplace, and then gain an understanding of where you fit within the competitive marketplace. We quickly came to realize that in this region there are quite a few lake-oriented activities, and here is Gunstock. It is the mountain in the lakes region. So there was an opportunity to do gravity-oriented and mountain-oriented things that are not happening nearby.

GREG: We realized pretty early on that this part of the market was going to begin to expand, so we quickly made the decision that we better go big or go home. That’s why we settled on what was, at the time, the longest zip line in the continental U.S. and New England’s largest aerial treetop adventure. The only way we were going to make ourselves known in what was already a crowded summer marketplace was to really do something that was going to move the needle right off the bat, and then backfill from there.

SAM: Greg, you’re in a rather unique position. The county owns the resort you run, so a board of governors—which consists of 17 politicians—must approve any capital plans. And, you need to come up with a new master plan every five years. How does that affect your planning?

GREG: In December 2013, I felt we were limited by the existing master plan. I told my board of commissioners I wanted to revise it, and they shut me down almost immediately. So then I went back to Claire, frustrated.

She said, “Well, it wasn’t so much a new master plan that was needed, but more an implementation strategy for the existing plan.” That was a novel way to look at it! We put our heads together a few times, then I went back to the board and told them we’d dropped the idea of doing a new master plan, but instead wanted to start a project implementation strategy. And that’s what we did.

CLAIRE: It sounds kind of flip, as though we were being clever and manipulating semantics. But at SE Group we are seeing this theme with a lot of our clients: “I have this great master plan, but I don’t know where to start.” It can be a daunting task when you have a limited amount of capital and a lot of choices on how to spend that money, and within those choices there are a lot of different considerations.

It doesn’t just come down to what is going to produce the most revenue. What about guest service? What about capacity? Contributing to the bottom line is obvious, but what about maximizing visitation?

In Greg’s situation, they have these great summer activities, and people come and stay for a couple hours, then they leave. How do you get them to stay? Then the other side of the coin is the daunting fear of deferred maintenance. We see the strategic implementation strategy as the next step of master planning.

GREG: Developing this strategy was about a 15-month process. It started with dusting off the master plan and redoing the market study. We built a toolkit including the market assessment and a peer group financial analysis that we did through RRC Associates. Then we went through several years of our existing guest research. And finally, we conducted on-site observational exercises in winter and summer, during which a few of us—including myself, folks from SE Group, and John Ashworth from Bull Stockwell Allen—observed things while the resort was operating, and made notes.

So, now we had our own observations, market research, and our guest’s observations to work with, which led us to the first grand list of things we knew we wanted to include in our implementation strategy.

SAM: So you carefully put together this list of fun things to bring to the resort. Time to break ground and make it all happen, right?

GREG: Not exactly. When we gave our talk at SAM’s Summer Ops Camp, I said this was my first “oh my god” moment. We came up with a list that added up to $21 million in capital improvements, without including deferred maintenance, equipment upgrades, etc. So the next step was to organize, prioritize, and try to figure out what things on that list were most important.

CLAIRE: It’s a balancing act. A lot of the decision making is happening around a financial model. If the results look bad, we manipulate the phasing within the model and explore how the results change. The interesting thing is, if you look at the financial model without any phasing, it goes upside down in a big hurry. You can’t expect future revenue to dig you out of a $21 million hole right away, especially with debt service.

But if you think about how those things might be phased in strategically—putting in the things that generate a lot of revenue right away, so that they start to feed future capital improvements—the model can improve quickly.

GREG: I’ll give you a couple examples of how that all works.

One conclusion we came to regarding the adventure park was that it was really time for the next big thing. A mountain coaster had been on our radar screen since back in 2009. However, we decided to opt for higher-price-point, lower-throughput attractions with a high thrill factor, so we installed the zip line and the aerial treetop course. Now that we are starting to build critical mass with visitation, the coaster makes sense.

When you look at the financial model for the coaster, it’s a very high profit margin attraction. It was a conscious decision for us to put it early on in the process, because while it required us to borrow some money, we felt that it was the best option with that financial model, as it starts generating revenue with which to fund other projects.

The cabins at our campground are another example. Our studies showed that our cabins generate a lot more revenue than bare sites, and they pay for themselves in just three summers. So we built them into the model as an ongoing expenditure. We are going to build a couple of cabins every summer, and by year four they’ve paid themselves off. You’re building incrementally as you go along, making sure occupancy is where it needs to be before building the next batch.

SAM: What tools does SE Group use to help operators like Greg figure all this stuff out?

CLAIRE: I’d call it a process more than a tool. It’s more an extension of the planning process. The foundation is a typical pro-forma financial model, but the thought comes in the strategy behind the phasing of the model, and taking into consideration guest service, capacity, bottom line, ongoing maintenance, etc.

Since master planning is big picture, the decision making becomes a very big picture process. It’s not just about the physical attributes of the site; you have to consider operations, the bottom line, guest experience, etc. I don’t think there’s any one tool for that. It’s more of an art that uses science. We use business tools that ask, “what are your goals?” and then asks, “Out of those goals, which are the most important?”

GREG: That process was a big part of the next steps we took, once we had started to generate that list of things we wanted to include. The analysis goes way beyond the capital costs. How many people does it take to run an attraction on a day-to-day basis, what kind of maintenance budget do you need, how long are you going to depreciate it for, what’s it going to mean for your other facilities, marketing, accounting, etc.? There were several times during this process where we said, “If we’re going to be adding all of this infrastructure, we are going to need more maintenance people,” so we built additional maintenance staff into the model.

CLAIRE: These considerations that we’re talking about—guest service, capacity, bottom line, visitation, ongoing maintenance—are all things that are continually part of the master planning process.

GREG: I frequently got frustrated because I want to do this as though I’m building my budget for the next 12 weeks. Whereas the SE Group team sees this being a big picture exercise. I have a tendency to get too deep in the weeds. I didn’t only want to know how many people it was going to take; I wanted to know what their schedule was going to be.

SAM: Speaking of getting frustrated, were there any instances where either of you had a…moment?

CLAIRE: We’ve worked with Gunstock for quite a long time and I know Greg is very optimistic and lighthearted. But there were moments when Greg was quite downhearted about the whole process. We had conversations during this project where I got off the phone and went, “Oh, boy.” One of those was early on with the $21 million first go around model. That had more red in it than a Christmas photo. But we soldiered on.

I think you do have to trust the process. In the planning process, things often get messy before they get tidy. That’s a good thing, because if you try and be linear in your thinking, you’re going to miss things.

GREG: I agree completely. I did get discouraged a few times along the way. I was getting a lot of feedback from my team, some of whom were saying, “This is a load of crap. You’re just doing math problems that don’t mean anything in the real world.” I knew better, but there was still a devil on my shoulder whispering in my ear.

An interesting thing happened though, after the dismal failure of the first model. I had involved my team very heavily in working through our priorities, finding things that they thought were critical for us to do. That didn’t turn out so well. So, I told them, “This means we need to go back and seriously reconsider our priorities.” Some of the projects we thought were critical just did not make financial sense in the near-term, so we bumped them down on the list. They will happen eventually, when it makes sense.

Eventually, when they saw how it all worked, I finally got buy-in.

SAM: Sounds like the process is working?

GREG:Yeah. I keep this planning book on my desk, and not long ago, Doug Irving, our operations director, brought in a pamphlet for super deluxe cabins. Doug said, “This guy thinks he can build us some great cabins for $50k-$60k.” I pulled out our little book, and said, “Doug, according to our implementation strategy, we aren’t building any deluxe cabins until year three. We probably ought to focus on the more rustic cabins right now.” He realized we were jumping the gun a bit. It’s definitely working for us for that sort of thing.

SAM: Master planning is a huge undertaking. Any advice for folks looking to dive into this process?

CLAIRE: They should start by giving SE Group a call!

GREG: That’s what I was going to say. Call SE Group! They’ll hook you up!

Honestly, the best first step you can take is to gather whatever research materials you can. The observation study, peer study, market study, guest research results— all of those things really gave us a lot of useable data that led us down the path that we took as we went through the process of planning a strategy. You’ve got a real tool kit to start with and then you have to hammer after it.

CLAIRE: I would echo what Greg said—do your homework, make sure you understand what your opportunities are. You have to be able to qualify and quantify your opportunities, because they will not be the same as anybody else’s.

GREG: The more homework you can do on your own, the more it’s going to be meaningful to you. You don’t have to pay someone to provide all that stuff, a lot of it is already at your disposal—your guest research, your ticketing software, there’s so much information buried in those. It’s a matter of taking your head out of your daily routine and just digging into it. We get so busy in the day-to-day that we don’t take the time to study it.

CLAIRE: There’s another gem in there—make sure you keep your data organized and actually look at it. Understand the value of data but also at what level you need to be looking at it. Sometimes if you get into the minutia of it all, you can get lost in the numbers. Analysis paralysis is real.

My last piece of advice would be: Trust the process.