Daly Leaves Vail Resorts
In a statement, Vail Resorts said it “must evaluate every position to ensure that every employee is in a necessary role to contribute to the company’s ultimate success. . . . If sacrifice is required for Vail Resorts to prosper, then that sacrifice will take place fairly up and down the line, including at the highest levels of the company.” The position of president has been eliminated as a result of this process.
Daly, who had been president of Vail Resorts and Vail Associates since 1992, took the change in stride. “It’s a great opportunity for me to make a change in my life,” he told SAM. “Some people have treated this as a funeral, and it really isn’t.”
“I’ve had a wonderful career with Vail Resorts,” he continued. “Unfortunately, the business isn’t growing as fast as we had anticipated and staffed for. If the business isn’t there, you have to respond, and that’s especially true for a public company.”
At press time, Vail’s stock price was above its 52-week low of $12 a share, at $14.16–30 percent off its 52-week high of $21.
The Mad, Mad World of Insurance
Ski areas have largely greeted the collapse of the K & K Insurance Group’s ski program, and an 80% to 300% rise in insurance rates, with a Mad magazine-like “what, me worry?” attitude. Three weeks after K & K informed its customers that the company would be unable to renew their insurance policies, the market seemed to be taking the changes in stride. As one insurer said, “it’s not a matter of getting insurance, but at what price.” And prices were destined to rise anyway as the insurance market hardens, as Blue Pages pointed out last issue.
K & K had been underwriting ski areas since 1988, with TIG as its carrier. But TIG was downgraded from A- to B+++ last April by ratings firm A.M. Best. This prompted K & K’s parent company, Aon Corp., to cancel its contract with TIG. K & K sought a new carrier but was unsuccessful. Other insurers have stepped in to fill the void, such as Willis (with the lion’s share), Acordia and Tenant Risk Services.
Of course, new coverage comes at a price. While rates have increased by 80%, typically, for many areas that have a long and solid history of sound risk management with their insurers, those areas that have been forced to find a new carrier are often paying rates up to 300% higher than last year.
So, why no outrage? “We knew rates were too low,” said one area manager.
The biggest response will be renewed risk management efforts, as areas seek to improve their loss record in every way possible. For areas with high losses, though, any gains will come too late to ease rates this season.
Bitchin’ News
Breckenridge stirred local controversy this fall with aggressive and (to some) insulting ads in youth snow mags. The ad’s headline, “The town will be your bitch,” galled mainstream residents. The ads were pulled.
Within a month, a second brouhaha erupted over the use of allegedly drug-related terms on the Breck website. Out of the 100-page site, one paragraph spoke of private stashes, powder lines, and craving a powder fix. The resort pointed out that these are common terms among skiers, but some locals weren’t amused.
The incidents are the latest flashpoint in the clash between skiing’s older, established clientele and the younger snowboarders and freeskiers who are the customers of the future. In trying to talk the language of their various customer groups, though, the ski industry is finding that what appeals to one can offend another. Let’s hope that everyone learns to co-exist; the industry can’t afford to lose its customers, current or future.
Indoor Riding Arenas
Snow domes seem to flourish everywhere except in the U.S. New snow domes are open or currently under construction in such unlikely places as Dubai, Qatar, and Malaysia, joining similar facilities in Japan and Europe.
Snow Creation International hopes to join this club, too. It is set to break ground on a $22.5 million dome, dubbed Snowlab, in Las Vegas. Target opening date is November, 2003.
Snow Creation’s founders believe that most earlier efforts bombed because they never answered the basic question, “How do you expect to make any money?”
Part of Snowlab’s answer is to keep construction costs low. Indoor arenas elsewhere have cost $70 million to $400 million, making Snowlab’s $22.5 million price tag seem almost cheap. Location is part of this: Snowlab is being built in an abandoned gravel pit four miles west of The Strip, which reduces construction costs. And the pit is not exactly high-priced real estate. It covers 80 acres with a vertical drop of 260 feet; Snowlab uses 25 acres and 180 vertical.
In another twist, Snowlab is marketing to snowboarders and freeskiers. The main feature of the dome is a regulation-size Superpipe, created by Chris Gunnarson’s Snow Park Technologies. The arena will also have a sizable terrain park, tubing area and a beginner slope. Why the pipe and park focus? Many skiers go to the mountains for the scenery, say Snowlab’s creators, and they acknowledge that an indoor arena in a gravel pit–even a nicely landscaped gravel pit–can’t provide that part of the experience. But in pipe and park, scenery isn’t an issue.
Another novelty: temperatures in the dome will be kept just above freezing–most domes are cooled well below that mark. That’s made possible by yet another innovation: the arena will feature cryogenic snow, produced with technology licensed from Polar Snow that perMits Snowmaking at warm temperatures.
Anywhere other than Las Vegas and this would be a long shot. But here, it just might work.
Warming Up to the Greens
Here’s a first: the California Ski Industry Association (CSIA) joined a coalition of environmental groups in support of a bill that requires makers of SUVs and light trucks to conform to the same CO2 emissions stan-
dards as cars. The cause? Curbing global warming. The impetus? Some ominous studies conducted by UC Santa Cruz and the Scripps Institute. ‘We’re the canary in the cage,” said CSIA’s Bob Roberts, adding, “We felt we needed to make some friends on the green side of the ledger.” :
Olympian Effort
If Vancouver, one of four finalists for hosting the 2010 Olympics, gets the Games, the biggest winner will be Whistler/Blackcomb. While the cost of building venues for skating, etc., are estimated at CDN$620 million, improvements to the Sea-to-Sky Highway, which is the most likely link between the city and ski and snowboard events at Whistler-Blackcomb, could cost double that amount–or more. Improvements to rail service or development of a ferry link between Vancouver and Squamish would also amount to a subsidy for the Intrawest resort.
The costs have provoked some local opposition. But B.C. premier Gordon Campbell, who ran on a pro-Olympic stand, has consistently supported the bid and the road improvements, which he says can be accomplished for about CDN$650 million.
A Sea-to-Sky superhighway would vastly ease the transit experience into Whistler/Blackcomb, much as I-70 has done for Keystone, Breck, Copper and Vail. Which reminds us of an old saying: “Be careful what you wish for, you just might get it.”
Short Swings
At presstime, two areas were rumored to be close to sales–Bear Valley in Northern California and Boston Mills/Brandywine in Ohio. Both have been on the market for the past few years. They are expected to change hands prior to the ski season. Word is that both have been courted by some of the multi-resort players.
Accounting scandals on Wall Street are impacting ski country real estate. Former Enron CEO Kenneth Lay has been unloading his multi-million-dollar Aspen properties. Bernard Ebbers, former head of disgraced Worldcom, has sold his Beaver Creek condo. Former Tyco CEO Dennis Koslowski is selling more than $17 million of real estate in Bachelor Gulch and Beaver Creek, including an 18-room mansion. Adelphia bosses John and Timothy Rigas still own their two $4 million-plus Beaver Creek condos, but SEC officials may force the two to sell and return the proceeds to Adelphia investors, says the Vail Trail.
