Ski Towns Face Uncertain Future
With so many areas building, or having built, base villages, it’s time to ask: what happens to these villages in the future? A recent survey of second home owners in Colorado, specifically the ski-rich counties of Eagle, Garfield, Grand and Summit (home to Aspen, Vail, Beaver Creek, Breckenridge, Copper, Winter Park and Keystone) revealed the extent to which second homeowners are the main driver of the local economy. It also raises questions about the future of ski towns.
Second homeowners comprise 60 percent of all owners in the four-county area, and their home ownership accounts for 44 percent of the economy’s basic jobs, via services and retail. That’s a greater impact than comes from skiing and riding themselves.
Some unanswered questions: how many of these owners will retire to the mountains, and what effect will this have on the ski areas’ bed base? Many owners are Baby Boomers, and as they hit retirement age, they may well retire to their second homes. In Eagle County, home to Vail and Beaver Creek, about half of the homes in the $100,000 to $400,000 price range–which form an important part of the bed base–are second homes. Second-home owners own an even higher percentage of more upscale units. If these owners begin to retire to these homes, the rental bed base will shrink.
An influx of retirees would change the nature of ski towns. Some retirees will continue to ski, but some may not–and they will be sleeping in beds that would otherwise be filled with skiers. Retirees may not turn Vail and Aspen into Boca Raton, but ski towns could well lose much of their vitality.
Wheeling and Dealing the Mountains
What’s a ski area worth? Recent sale offerings provide a glimpse. Most prominent, perhaps, is county-owned Montage, Pa. Officials asked for a minimum of $9.6 million, but none of three bidders was willing to pay that up front. Instead, bidders (including Snow Time Inc., the mid-Atlantic powerhouse) offered about half the asking price. Montage has 21 trails, five lifts, a tubing hill, and a built-in local market, but has regularly lost about $250,000 a year. At present, the county plans to negotiate with interested bidders. If all else fails, it will operate the area itself, and steal development ideas proposed during the sale process.
In Vermont, the owners of Maple Valley have posted the area in eBay’s real-estate section (SAM’s, too) for $2 million. It last operated in 2000-01. The 800-foot-vertical, 400-acre, 16-trail area has two aging double chairs, a T-bar and tow, as well as snowmaking and lights for night operation. Two other key assets: the full-service base lodge and water withdrawal rights from the West River, which flows past the area. The postings have drawn interest from Korea, Canada, and the U.S. One entrepreneur floated an offer to swap his $2.9 million yacht for the resort, a deal which the owner, a former yacht owner himself, torpedoed.
A Bigger Red
Red Mountain is poised to become B.C.’s latest growth area now that a new investment group has purchased the resort. But it’s not exactly poised for an immediate makeover. The investors, headed by entrepreneur and new homeowner Howard Katkov, aim to introduce a larger (but not large) audience to the uncrowded feel of Red’s signature tree skiing and the mining-town character of nearby Rossland, without overwhelming either. To handle its hoped-for audience, the ownership plans to build 1,300 dwelling units and 70,000 square feet of commercial space, expand skiable terrain from 1,200 acres to 4,200 acres, and increase visits from 110,000 to 280,000 over a 15-year period. Katkov promises to manage the the business carefully, and avoid debt. “We’re not going to swing for the fences, we’ll hit singles and doubles,” he told SAM.
A Wolf in Wolf’s Holding
Several years ago, when a landowner with 300 acres inside Wolf Creek’s permit area proposed building 200 lodging units, the Pitcher family, which operates Colorado’s Wolf Creek, was in favor. The proposal has since ballooned to 2,200 units and 500,000 square feet of commercial space–greater in both measures than, say, Aspen–and the Pitchers are rethinking their support.
Access is a sticking point. There is no road to the proposed site, and any new road would have to cross public land. And that road is subject to Forest Service approval. While not opposing development per se, the Pitchers are urging the Forest Service to consider the widest possible array of access points in the Forest Service’s EIS. Their concern: Being able to operate the resort efficiently. The proposed development is not adjacent to the area’s permit area, but surrounded by it. A small city and its access road across Forest Service land could bisect the resort’s operations.
During the initial public comment period, reaction ran about 9 to 1 against the project. While the Forest Service hopes to complete its EIS within a year, it is likely that any development is several years down the road.
The Big 3 Post Some Big Numbers
Skier visits were down slightly at Vail Resorts, Intrawest and American Skiing Company. But otherwise, the three reported decidedly different results in their fiscal third quarters, which include the bulk of the ski/ride season.
Vail resorts fared best. Though visits at the company’s five resorts were off 1.3 percent, mountain revenue for the third quarter was $234.2 million compared to $210.8 million during the same period last year. Resort revenue, which is a combination of mountain and lodging revenues, was $283.8 million, a rise of $26.8 million over 2003. Overall, third quarter net income rose from $33.5 million last year to $62.5 million in 2004.
Intrawest recorded improved revenues for the fiscal 2004 third quarter ended March 31 despite a 5 percent slide in skier visits. Total revenue for the quarter was $437.3 million compared with $402.5 million for the same period last year. Resort operations revenue for the quarter increased to $299.5 million from $283.4 million, but resort operations profit fell, to $100.9 million from $104.6 million.
ASC reported a loss for the nine months ended April 25 of $38.4 million, slightly less than the $42.8 million loss a year earlier. The company recorded a 2 percent decline in skier days. Total consolidated revenue was $267.1 million for the first 39 weeks of fiscal 2004, compared with $248.7 million in 2003.
All three have credited aggressive cost controls for improving their performance despite the drop in skier visits. And all three see sunnier days ahead, thanks largely to real estate. At Vail, CEO Adam Aron has outlined a vast series of construction projects, and estimates the stock market has undervalued Vail’s real-estate holdings by about $100 million. Intrawest’s Leisura real estate partnerships have reduced debt and improved the profitability of resort operations. And ASC has recently reduced its outstanding debt by $80.4 million, mostly by spinning off Killington real estate to a developer.
sugarbush Dials Back
What do you do when the largest hotel in your area has only 42 rooms? You build a bigger one, especially if you’re as sizeable as Sugarbush, Vt. That has been the resort’s plan for more than a decade, but it seems karma is against them. In the mid-90s, American Skiing Company was looking at the Grand Summit concept, but local opposition and economics put the plan on hold. This time around, the plan was to build a 300,000-square-foot, fractional-ownership lodge, à la Sun Valley, but common sense prevailed.
“The project quickly ballooned to $90 million,” said Bob Ackland, president and CEO of Sugarbush. “We just didn’t want to take on the risk of a project that size. Our focus has always been the hill first and we can’t jeopardize that.” Nonetheless, the lodging situation remains critical, so the ski area will regroup and go back to the drawing board for more options.
In the meantime, many of the folks that bought into the luxury lodge concept encouraged the area to keep their portion of the $24 million in pre-sales for a future lodging project, but Sugarbush plans on returning the money until the future is more certain.
short swings
With new luxury townhomes in Vail’s Lionshead expected to fetch $7 million to $9 million, buying into Vail’s rebirth will not be cheap. Even parking spaces will be premium-priced. The resort is constructing 114 privately-owned underground parking spaces in Vail Village which are expected to sell for $100,000 each. . . Back in October the U.S. Army asked Alpine Meadows and Mammoth to return the areas’ leased avalanche-control Howitzers, presumably to resupply forces in Iraq and Afghanistan. Apparently, they are not urgently needed: The Army has neglected to pick up the guns. . .Absolut is not the only liquor company annoying Vail Resorts. Long-time friend, Coors Brewing, recently released its new low carb beer–Aspen Edge. Good Luck finding it at any Vail resort.
