The Les, George and Adam $57 Mil. Challenge
On Page 15 of this issue is an ad quite unlike any other we have run in our 36 years. American Skiing Company, Vail Associates and Booth Creek Partners are putting themselves out in front of the industry, pledging a total of $18 million over three years as their share of what they envision as a $57 million industry-raised fund that enables “a media campaign that creates a heightened awareness of skiing and riding.” Numbers like these can get one’s attention and will surely preempt a lot of the Marco Island agenda.
Reading between the lines, it is clear the three prime movers are anxious to avoid the disasters of the 1989 “awareness raising” campaign by the newly integrated USIA. The dependence on a media campaign is the same, but the human mechanisms for getting it launched are very different. The message seems clear: We don’t want a bureaucratic NSAA/SIA program, full of people, politics and committees; we do want the whole thing organized and implemented by a small, focused group of “no more than six people from both inside and outside of the ski industry.” This advisory committee is seen as being headed by NSAA’s Michael Berry.
One of many questions bound to be asked: What about the conspicuous absence of Intrawest? Speaking for that company, Ed Pitoniak, senior vp of resort enterprises, said “There is no sound of closing doors here;” but added that Intrawest wanted to get a better idea of how the money was to be spent. “While we all agree with Les Otten that we need to take action to help grow the sport, one of our concerns is over the efficacy of advertising as a means of growing participation in our sport.” Pitoniak added, “We also wonder whether it is the acquisition of new skiers and boarders that is the key issue or their retention.” As of now, Pitoniak said Intrawest is more interested in cooperating on support for programs at the local or regional level that have a more direct impact on customers than does media advertising where money tends to be spent on faith that there will eventually be a return on the investment. These and other viewpoints guarantee a lively debate on the bold challenge.
Aspen Cops Lion’s Share of Enviro Awards
Aspen Skiing Company (ASC) was the big winner in this year’s Golden Eagle Awards. In addition to winning the overall award for environmental excellence, ASC won in two of the five silver awards for specific disciplines as well: Fish & Wildlife Habitat and Community Outreach. Steamboat won a silver in Area Design, Whistler/Blackcomb in Environmental Education and Stratton in Water Conservation.
The Skiing Company, which administers the program, continues to have trouble attracting entries from smaller area operations—perhaps with good reason, since they are mostly up against professional ringers: the entries from Stratton, Vail, Aspen and Whistler/Blackcomb were from people with the sort of title Chris Lane of ASC has: Director of Environment Affairs. Too bad, because it’s an excellent program and our industry needs to publicize its white hat success stories.
Resort Real Estate Boom With No End in Sight
They started getting in line at midnight at The Canyons, Park City, Utah. Some were stand-ins, paid up to $500 to hold a place in the queue. The line was not to buy something, but to get first dibs on an opportunity to buy a unit in a new condominium vacation home complex for which the company did not even have approval from the county to build. By the end of the day, some 210 reservations had been taken for what was originally intended to be 75 condominiums.
In a 4,500 square foot airplane hanger in Santa Monica, California, Intrawest created (with the help of Merv Griffin Productions) an apparently irresistible ambiance for the sale of 130 condominium units at Mammoth Mountain, getting commitments for over $36 million in 24 hours. Prices ranged from under $200,000 for studios units to over $600,000 for 3-bedroom units. Intrawest also sold all 108 mountain homes at Copper Mountain, Colo., in less than six hours. This was all part of an extraordinary four-week period for Intrawest during which the company sold 376 units (they prefer the term “mountain homes”) for a total of $94 million at real estate launches, not only at these two, but also at Stratton, Vt., and Snowshoe, WV.
And we haven’t even mentioned the crazed real estate climate at Vail/Beaver Creek, where, judging by the real estate ads, “affordable housing” seems to mean up to $1.5 million and where the luxury category might start at $2.5. And up.
Several inter-related things seem to be happening at once: >Baby Boomers are rewarding themselves with a comfortable mountain get-away; >lawyers, arbitrageurs and siliconaires are spending their pocket change on whatever is trendy—$15,000 cases of fine wines, a Lamborghini, a playpen at Beaver Creek; >there is a weird, the-end-is-coming fear that “unless I act now all the good stuff will be gone.”
How much of this activity will create “warm beds” as contrasted to the deadly inactive ones is debatable. Unlike the time-share purchasers, the rich-rich don’t really care about the income: and besides, they’ve paid so much for the place there’s no way they can command commensurate rentals.
In the meantime, at least parts of the industry are awash with cash and expansion plans to match. The publicly traded ski operations are trumpeting to get upward movement on their stocks; others are weighing whether or not now isn’t the best time for an IPO, rather than later. “Let the good times roll,” as they say in New Orleans. And few are so ill-mannered as to wonder out loud what happens with an economic downturn.
European Markets Really Are Opening Up
The lift construction nubers show the European Union concept of opening up markets is actually working. For years, the thought of an Austrian lift being installed in France was to think the unthinkable. Culture, history, eugenics—everything was against it. A Frenchman just wouldn’t feel right riding such a lift. Ditto for Austrians riding a French lift.
Now those barriers are falling, as the 1997 figures show. According to a report in ISR, while Poma still had 40 percent of its domestic market, the Italian Leitner and the Austrian Doppelmayr respectively got 25 and 30 percent of the French business. The French would be remiss not to reciprocate, so note that Poma installed a big cable car in Italy and opened up in Austria with its first detachable—a six-pack at Serfaus.
Inventory of Skiers and Boarders Inconclusive
American Sports Data (ASD) sports participation study for calendar 1997 shows downhill skiing with a 9 percent drop, XC up 4 percent and snowboarding up 33 percent. The National Sporting Goods Association (NSGA) found downhill skiers down 15.3 percent, XC down 25.6 percent and, surprisingly, snowboarding down 18.8 percent. Last year, NSGA had boarding up 32.5 percent, while ASD showed a decline of 7.1 percent. All of which confirms what both organizations say: that with small participant bases, there is no statistical significance in such spikes. In practical terms, what does it all mean? Simple: last year the snowboard industry was trumpeting the NSGA numbers and the fact that it was “the fastest-growing activity NSGA measured.” This year it’ll be “NSGA? Never heard of them. But ASD says riding is da bomb.”
Art of the Leveraged Equipment Purchase
We are now just starting to see the shape of the future and the big guys are clearly having a ball. Intrawest was the first out of the starting gate when it put its three-year ski and snowboard rental needs out to bid last fall. That’s a goodly hunk of business (in the $15 million range) which Rossignol and Salomon won. Next to announce was Booth Creek which spread its three-year rental equipment and area uniform needs over six suppliers: Dynastar (skis), Smith (poles), Salomon (ski boots and bindings), K-2 (snowboards), Original Sin, a Dynastar division (snowboard boots and bindings) and Marker (uniforms).
Key to both transactions, and an incredibly important factor for the future, are the underlying marketing commitments. Tim Petrick, Booth Creek’s COO, whose background as the top sales executive at K-2 gives him deep insights into the equipment side of the industry, explained the buying decisions this way: “Beyond selecting vendors [for their products], we were looking for true marketing partners who will assist in increasing participation in winter sports. . .[The vendors we chose] presented marketing plans to us that we believe will advance the strategic objectives of our respective brands” [meaning resorts]. Intrawest, of its commitment, said: “Salomon and Intrawest will embark on the development of several aggressive joint programs designed to drive retail, rental and ticket revenues as well as promote the adventure of snow sports.”
To a degree that the resort side of the industry could once only dream about, what is happening is that at least some of the huge sums equipment manufacturers have spent in the past chasing racing glory and lavishing on trade promotion to the unresponsive, often quirky retailer component, will now be spent committed to working with ski areas to actually promote to the public—to romance the sport and build the customer base. The ski area is finally playing a crucial role in the business plans of the equipment and clothing people. It took awesome buying leverage to bring this about, but hey, there’s nothing wrong with that.
Still, what about all the independent areas that can’t get the goodies that clout bestows? Are their purchases of rental equipment, for instance, subsidizing the special deals the conglomerates get? Look for ad hoc buying cooperatives to form.
Vail’s 885-Acre Expansion Finally Approved
On April 21, Vail got final approval of its Category III expansion on a 3-0 vote of the Eagle County commissioners. It all followed what seemed like an interminable series of hearings, in the course of which some industry heavy artillery was mobilized to beat back an eleventh-hour regional EPA attempt to ignore the NEPA process and bring up new, but untimely objections. The commissioners’ backbones were also stiffened by a tough letter from the Arnold & Porter law firm spelling out that, as a matter of law, the county had no authority to put restrictions on land use involving public lands. The Board of Commissioners did put certain minor conditions on their approval, but the day was convincingly Vail’s. The fat lady sings May 4 when final ratification is completed.
