Trends in the making were visible everywhere at NSAA’s Annual Convention and Trade show at the Disneyland Hotel, Anaheim, Calif., in May. The major new trend was in ski industry leaders viewing their businesses in relation to the broader spectrum of recreation and tourism rather than the narrow focus of our small industry.
This was the intention of Tom Corcoran, outgoing chairman of NSAA, and it was aptly fulfilled in the meetings and seminars. The topics were serious, informative, and, most of all, consistently of a high caliber.
The agenda, combined with the location of the hotel that allowed for visits to Disneyland before and after the show (perhaps a few participants ventured over during the show), brought a record number of attendees from ski areas. There were 179 areas registered (plus another seven entities counted as ski areas in NSAA’s figures), 169 exhibitors and a total of 1,360 people including press, spouses and additional personnel. Predictably, the bulk of the areas represented came from the West (102), with the East a distant second (46), followed by the Midwest (17), Canada (11) and overseas (3).
In the exhibitor ranks, there were 70 new faces and NSAA reported that 15 other companies which wanted to exhibit were turned away for lack of space. A minimum of 40,000 square feet is required to hold the NSAA show, which restricts the number of hotel/convention sites able to accommodate the show. NSAA puts further restraints on the site selection in that the display space must be adjacent to the accommodations of the participants and there must be resort facilities. In any case, space has been reserved for the next three meetings: Opryland, Nashville, Tenn., in 1986; MGM Grand, Reno, Nev., in 1987 and the Diplomat Hotel, Ft. Lauderdale, Fla., in 1988.
Organizational news included a vote by the membership to put a second associate member on the board of directors, giving exhibitors a stronger representation. NSAA also announced that it will publish a directory of members to be given to members by Janet Nelson only. This will include a listing of ski areas and associate members with addresses and telephone numbers as well as names of key personnel.
At a press conference and in an unscheduled meeting, incoming NSAA Chairman Nick Badami addressed the two most potentially damaging problems of the moment—the proposed tax changes and weaknesses in the insurance industry—in a sanguine and unflappable tone. We must monitor the tax situation, he said, and the insurance industry has a problem, but the ski industry is in a better position than many other entities as far as accidents and costs are concerned.
Following is a closer look at the highlights of the meetings and main speakers at the NSAA convention as covered by SAM’s staff and guest observers.
The Insurance Enigma
Perhaps one of the most eagerly attended sessions of the convention was the one on insurance, but the eagerness was a little bit that of the condemned felon attending a briefing by the warden as to what lay ahead: one wanted the straight skinny, but there was obviously going to be precious little good news.
First there was a slide show prepared under the direction of Dick Houlihan, NSAA’s liaison on insurance. This effectively covered the broad subject of casualty loss and insurance premiums as they relate to a ski area’s operation. Drawing on the statistics provided by the two largest insurance programs—the NSAA plan administered by Kendall Insurance, and the WASIP program administered by Pettit-Morry—the presentation reviewed the basics of risk management for our industry. This informative slide program is also available through NSAA for use by regional ski area associations.
Following that, Joe Sargent, an insurance specialist with a collateral ski area affiliation (Killington), gave a chilling picture of the disarray that exists in the insurance markets and in the whole casualty field. The presentation was highly technical and well above the ability of most of the audience to follow, but the bottom line nonetheless came through quite clearly. Among the items:
- It isn’t just the skyrocketing settlements and jury awards that are driving premiums up, it is also the underlying malaise of the insurance industry.
- Underwriters have been coping with spiraling awards by reaping the high interest yields on accumulated premiums. But declining interest rates have made a shambles out of that device.
- The reinsurance markets for underwriters—call it the laying off of bets—have dried up; there have been some major failures, with more in the offing. This ultimately affects us—adversely, of course.
- The big excess coverages—the upper end of the multi-million dollar umbrellas—are going to be extremely hard to come by. They will be hard to get even for areas with long and good experience with their insurers; they may be impossible to find for insureds without that preferred customer relationship.
- Because of the increasing size of the awards, and the resultant need to set aside larger sums as reserves against every potentially damaging claim, the total amount of the insurance float available for coverages has decreased, and will decrease further. This is so even though premiums are being increased. With that decrease the total dollar amount available for writing policies has decreased in accordance with statutory requirements. This has turned a buyer’s market into a seller’s market, or in extreme cases, into no market. “The thought of some of those areas having to go bare scares the hell out of me,” said one insurance executive after the talk.
- The most immediate bottom line was, of course, that no matter how bleak it all looked—with premiums going up anywhere from 60 to several hundred percent—it would probably get worse before it got better. But the bright side of his message was that our industry has fared much better than others in the whole casualty loss field. “Keep a low profile and try to keep it that way,” was the final message from Sargent.
The audience seemed to find it hard to feel they were fortunate, but people did seem to understand that rising premiums were not the result of our industry being unfairly singled out, but rather a result of broad economic factors.
—David Rowan
Tax Tactics
President Reagan’s tax proposal had not been issued at the time of the NSAA Tax Committee meeting, so a wait-and-see attitude as expressed by NSAA Chairman Nick Badami seemed appropriate. He advised members to gain as much knowledge of the tax proposals as possible and to understand their impact on the ski industry. The tax article by Dick Houlihan in the May issue of SAM was recommended reading. (See page 24 for Houlihan’s review of problems posed by the President’s new proposal.)
[At the ASF meeting in San Diego in June, it was agreed that in-depth study of the President’s tax proposal was required before the ski industry could take a stand or initiate action. The accounting firm of Arthur Young is doing an analysis of the provisions that could affect the ski industry and Marty Wilson, chairman of the NSAA Tax Committee will make a report on that analysis. From this study, as well as from input of NSAA members, a consensus position will be established. This could take two weeks to one month or more, according to Cal Conniff. “There are political pluses and minuses to plowing ahead in Washington,” he said.
SIA will also analyze the President’s proposal in relation to their business interests, according to Joe Prendergast. “In the short run it may benefit them,” he said. “But I have serious reservations about whether the thing (the tax proposal) is going to go anywhere—at least for the immediate future.”
Nick Badami said, “The SIA could care less (about the tax proposal). The impact for them has not been analyzed, but the big beneficiaries will be the retailers.”
Badami also said he was pleased that NSAA didn’t make any commitments to positions or actions at Anaheim because there are many things in the President’s proposal that were not in the previous proposals. “As it turns out,” he said, “Our least problem is the second home issue. We can deal with that. There are 15 or 20 things that are much more damaging to the ski industry. There appears to be many onerous provisions for us. At least it looks bad on the surface.
While we are all for simplification, I don’t think this (tax proposal) is simple at all.”]
Marketing Within and Without
As usual, marketing topics drew good-sized crowds as well as lively and enthusiastic audience participation.
Jim Spring reported on a skier survey conducted by his firm, SMART, last winter. At three eastern areas, 1,180 skiers were asked their attitudes, perceptions and behavior toward skiing. Highlights included:
- 86 percent said they had a good to excellent experience.
- Many criticized the price of food.
- 30 percent said skiing was a good value.
- Most said they took a mid-week winter vacation.
- Most said they didn’t ski midweek because they have no one to ski with.
Spring recommended better packaging and utilization of the ski school to overcome the last objective as well as increase business. He is also recommending expansion of the survey to 20 ski areas across the country.
Lisa Kovitz of Dorf & Stanton, the ski industry’s New York PR firm, said the current effort is to reach non-ski media and the level of interest has gone way up. She said that using industry people in various speaking capacities has been highly successful, as has local TV coverage of skiing topics.
She also called upon ski areas to submit feature story ideas as well as photos and 3/4 inch TV tapes for Dorf to use in publicity.
Janet Nelson explained the objectives and format of the ski area marketing ideas book that she is directing for NSAA under the aegis of Ski Area Management. Ski areas have been asked to submit their best marketing ideas which will be summarized as to objective, procedure and results in the book.
Although several hundred submissions have been received, less than 100 were judged original and unusual enough to be included in the book. Areas with good marketing ideas that they want to share are being asked to contribute to the book.
Bill Stenger, chairman of the Marketing Committee, summarized by asking the audience to share their marketing successes particularly in the “friends get people skiing category.” There followed an excellent and lively exchange of ideas.
The Ski USA international marketing seminar drew a larger-than-expected audience. Bernie Weichsel, who heads the logistical part of the committee, said that in its fifth year, the collective of 14 American ski resorts is well established overseas. He admitted that the strength of the U.S. dollar has been detrimental in bringing skiers to this country, but interest in skiing here is still enormous.
Committee members reported on overseas progress. In England there is pent-up demand for U.S. skiing, but we need packages that offer all the nuts and bolts of a trip here (Raivo Puusemp). Marketing in Japan has been successful and there is still great potential. Last year an eight-page newspaper insert on Ski USA was a coup. (Eric Dixson) In Australia, Ski USA has made solid contacts with the travel trade and it also has a representative there. Australians love the U.S. and get five to six weeks of vacation per year. (Paul McCollister) In Mexico tourism out of the country is on hold, but skiing in the U.S. still gets good press. (Marshall Lewis)
Service Makes Excellence
Taking a somewhat contrarian view of marketing, Jim Branch, president of Sno-engineering, gave an informative, thoughtful and entertaining slide presentation of the ski area experience. He reviewed 16 main categories where things can go wrong or right for skiers and mentioned hundreds of ways that ski areas can do better.
Where Branch took a contrarian stand was in his emphasis on the importance and manageability of service. “Everybody is basically selling the same product,” he said, “so service is the difference.” But, he said, the promises and images (the expectations), often don’t match the product and service. For the ski consumer, disappointment in service cannot easily be made up or corrected. The reason? Image management of a product can be controlled by a marketing department, but with a service, marketing has little or no control.
Branch then showed negative service situations and corrective measures. These ranged from access roads to ticket windows to lavatories to nurseries to trail maps. A significant point was that a negative perception of service affects the perception of cost geometrically—and negatively.
Skier Safety in Two Parts
In going from building to building to reach sessions of the NSAA Convention the trick was to avoid getting caught in a maze-like wharf that would undoubtedly make you late. We didn’t want to miss, “Skier Safety and Awareness Programs: What Works, What Doesn’t and Why.”
Chris Stoddard of NSAA, initiated the program on a positive note reassuring the audience that injuries have been going down and that skiing has fewer fatalities than other sports. When they do occur, it is predominantly to the young male, skiing too fast for his ability. Stoddard reviewed the projects that have been undertaken by the Safety Committee during the past season including a new logo and the slogan, “Be Aware, Ski With Care.”
Panelist Dan Frank explained skier control policies at Ski Windham, N.Y., and showed original ideas for projecting the Skiers Responsibility Code. This has the effect of making the skier more aware of the risks of the sport and aware of his need to take the responsibility for his own safety. Slides of the baffle system used to control the speed of skiers at Winter Park, Colo., were shown by Shelly Shelton. In addition, Winter Park has managed to directly involve employees by giving away several free trips to winners of their safety slogan contest. Of special interest was Bob Autry’s presentation of the “Mogul Mike” program at Mammoth Mountain, Calif. This award winning film has been shown to thousands of young skiers in school programs. Mogul Mike also gives ski and safety tips on TV and radio and is used in very creative ways on posters, coloring books, T-Shirts and ski poles.
Jim Moore, president of Camelback, Penn., explained the Ranger Program in which off-duty state troopers were hired to control reckless skiers. He stressed that this program is not an alternate to other programs, but an addition and its reception by the Camelback skiers was very positive. He also endorsed and offered financial support towards Mammoth Mountain’s project to make a new Mogul Mike movie and asked for sponsorship from the other ski areas.
Dashing across to another building the next day, we continued on the subject of safety at “The Ski School’s Role in Skier Safety Education” given at the PSIA ski school directors workshop. Werner Schuster, safety coordinator for PSIA and author of “Risk Awareness and Skiing Safety,” discussed the important role a ski school can play in educating skiers. While the instructor is aware that safety comes first and makes sure that the ski lesson is given in a safe environment, the message doesn’t always get through to the student. Training courses must be given to instructors to teach them how to incorporate safety messages into their lessons. To aid ski school directors, Gwen Allard, administrative vice president of EPSIA, is presently writing the “Leader’s Guide,” a manual that will tie in with the risk awareness film “The Other Curriculum.”
Not only must instructors make their students aware of skiing safely and the meaning of signs and barriers at the ski area, they must present a good role model by skiing slower and in good control. In case of a student’s injury, they must follow proper procedures for accident investigation.
Schuster also cautioned the directors that the teenagers today will be young adults in a few years and enter the high accident risk group. They must be warned now. They must be made aware that the downhill racers they emulate are proficient at turning and can control their level of speed.
—Marilyn Hertz
B77—Proposed changes
The ANSI B77 Standards Committee meeting at Anaheim moved the approval process considerably forward by accepting a number of significant proposals. Before they become a part of the Standard they have several significant hurdles to cross, and adoption “isn’t likely before the beginning of next ski season,” according to committee secretary, Chris Stoddard.
The principal proposals agreed to were: 1) Minimum bullwheel ratio to wire rope diameter would be 80:1 for fixed grip chairs; however, when the ratio is less than the old 96:1 requirement, more frequent inspections would be required, including periodic NDT. And 2) Installations of at least 3,000-ft slope lengths would be allowed to have a minimum static wire rope design (safety) factor of 4.5 when new.
For detachable grip carriers, maximum rope speed would be specified by the designer and established as functional by testing and operational performance criteria.
There was also a provision for a holding brake rather than a back-stop on detachables so that reversible-type systems could be accommodated.
The biggest change of all, however, is seen to be that the changes proposed “would leave more to be decided between the lift designer and the purchaser,” as Stoddard put it. “The changes take out some of the ‘design manual’ aspects of the standard and substitute operational performance restrictions or criteria, and more comprehensive testing and inspections to determine whether the purposes of the Standard are met.”
—David Rowan
Saving Energy Money
Since the energy crisis of the 70’s, many energy consuming businesses have taken advantage of ways to save on power costs. But the ski industry has been slower to get into this potentially beneficial area. The “New Technologies in Energy Management” session addressed this point and drew a substantial audience.
Benjamin Brant, vice president of The Energy Institute, pointed out that the lower operation costs can increase profit margins by as much as two to five percent and free substantial amounts of money for other uses. He said there are several financing techniques to acquire the necessary equipment, all of which pay for themselves. One is to have a third party make the capital investment at no cost to the operator. The payback is when the area operator shares a percentage of the savings with the third party. Besides that, there are leasing and industrial revenue bonds to cover such large capital investments. In addition, insurance underwriters will guarantee the projected energy savings or make up the difference.
Brant gave a case history of energy savings in buildings at Vail in which micro-computers are being used to monitor the energy in the buildings and control the equipment. He said it is also possible to look at a total mountain approach for comprehensive energy management.
Clem Kopf, president of Kopf & Kopf Engineering, said that ski areas at the end of the line on the power grid often experience problems such as frequent interruptions and poor service and maintenance. He then discussed on-site power production and the ramifications of relationships with utility companies.
He also explained ways to interconnect with a utility and meter on-site power production. In these and all instances, Kopf pointed to the fact that it is important for high-energy users, such as ski areas, to know how to deal with a utility, because rates are not necessarily on a schedule. He cautioned that sometimes a new idea in energy management doesn’t always work or save money.
Employee Evaluation
This session was entitled, “Effective Performance Review and Evaluation,” but the speaker, Kurt Einstein, chairman of the Einstein Human Resource Institute in New York City, either got his speaking engagements mixed up or simply decided after the program was printed that “How to Hire Employees” would be a better topic. Never mind, it was a good and entertaining talk that drew a large crowd.
That the past can predict the future is a myth, said Einstein, which makes references hogwash. Rather, the predictors of success fall into two categories: capability and personality. And of the two, personality is the most critical because most people fail on jobs (87 percent) from personality problems, he said. The most important relationship on the job is between the boss and the employee, so the boss had best have a good understanding of himself to proceed with job matchmaking.
As for capability, asking a person to explain in detail how they accomplished their most important achievements, generally reveals skills that are repeatable, said Einstein. People can’t bluff the details. If people do lie significantly on these points, that is reason to reject them.
Einstein wound up with a few performance review tips: be sure the person knows his responsibilities and his time schedule, ask him how well he has performed the job, make the review a learning experience and allow room for an employee to take risks. That is how he will grow.
Advice from Disney
“Training Your Employees to Make Your Guests Feel Great” and (or) “The Disney Approach to Human Resource Development” were the titles of two seminars conducted by Disneyland management. Although the second one was stated in loftier terms, the information essentially covered the same ground. And, both sessions were SRO. Similarities between Disneyland and ski areas were pointed out in that both are in the recreation/leisure business, hiring young and skilled professionals in technical and non-technical jobs, and both are seasonal employers, service-oriented with a tradition of hospitality. The main difference between the two institutions is that Disneyland as an employer is highly organized and efficient, operating an employee “university” to which attendance is required for new employees as well as for refreshers.
Employees are given a short course in human relations at the University and they are taught to add a personal touch such as making eye contact with guests, offering to take photos with good manners and friendly phrases. The employees are also asked to be even more upbeat and courteous when conditions such as bad weather or overwhelming crowds and lines, are especially trying. Things an employee must never do are spelled out. (Snow White must never be caught with a cigarette in her mouth, even if she is on her break.)
Some useful and easily translatable tips from the Disney management included the adding of another event to a hectic holiday schedule, e.g. a special Christmas parade during the very heavy Christmas season. They feel this extra effort heightens the pleasure and helps in crowd management.
“I wouldn’t mind having some of their problems,” said one ski area operator, “such as having four applicants for every job.”
—Ann Rowan
Computer Trends
Tom Foster, a computer systems consultant for Main Hurdman, offered an invigorating presentation titled “Planning Computer Information and Communications Systems.” He said the attitudes of people in industry have evolved from the computer as a job-stealing tyrant to today’s view as a very useful tool that can improve the overall quality of life on the job.
Foster then gave his impression of computers in the ski industry. Our technology is experiencing dramatic growth, our skiers are becoming increasingly sophisticated and because of the low-growth market, competition between ski areas and between ski areas and other recreational activities is increasing. This points to a drastically growing need for accurate and useful information. This is one of the most important benefits to be derived from a computer system.
Foster listed what he views as the “Top Ten” applications of computers in the ski industry today: general ledger, payroll, revenues, accounts payable, fixed assets, inventory control, personnel scheduling, equipment maintenance, process control, reservations.
As an example of what is possible with an all-out commitment to establish computers at a ski facility, Foster showed a design of a fully-integrated computer and communications system. This system was developed for a theme park that included a ski facility. The computer system would accomplish all the functions listed above in addition to numerous innovative applications. The concept was quite exciting, especially regarding the possibilities for using parts of the system in some existing large ski areas.
The ski school directors also held a workshop on computer technology.
The workshop began with each participant explaining the extent of computer usage within their ski school. Currently this varies from completely non-existent through fairly extensive use, with the majority of ski schools near the lower end of the scale.
The current applications being used include payroll, lesson scheduling and daily recordkeeping of types of classes and student numbers. All of the above programs are very easy to use and save the people using them quite a bit of time.
When the group was offered a “wish list” that would identify the computer applications that they would like to see in their ski school, the conversation got quite animated. Most of the energy seemed to focus on developing more information that could help managers to “fine tune” their operations and planning.
One suggestion was to develop a “real-time” analysis of the ski school’s percentage of sales. This would allow a close scrutiny of the actual market and its behavior. The other idea was to accurately plot average daily class size. The combined use of these would allow development of an accurate staff budget for the next season. Another advantage would be the tracking of potential trends in a market, both positive and negative.
The next topic was the basics of getting started. Several warnings came out, obviously as a result of previous mistakes. First and foremost, don’t expect a computer to solve any current organizational problems; it will only magnify the problems. Any potential user must have an efficient manual system in place before considering a computer purchase.
The discussion shifted to how to go about getting involved with computers. The final consensus was that the best way is to hire a qualified consultant.
—Curtis Bender
Government Issues
Ray Housley, deputy chief of the U.S. Forest Service was the lead-off speaker at the Public Lands Committee meeting. He reviewed the Forest Service objectives of the past, saying they had been met, and then iooked at the future, predicting there will be more competition for public land. He said that recreation in this environment will have to prove economic justification and respectability.
Housley said the Forest Service has been stepping back from day-to-day supervision and will continue to do so. He said that permits will be in for scrutiny, but that the fee system works well. The interchange of land with the Bureau of Land Management, although 35 million acres of land is involved, will have little impact on the ski industry. (Members of the audience, however, said that the impact was most significant for them.)
Jerry Groswold, chairman of the committee, listed issues that need to be studied: 1) the dual permit system, 2) trades of land with ski areas, 3) use of land for second homes and 4) the land trades with the Bureau of Land Management. He said that although he disagreed with some approaches of the Forest Service, the ski industry was fortunate to have such a good landlord.
X-C Finale
The wrap-up session of the Convention was Jonathan Wiesel, president of National Nordic Consultants, discussing the role of cross country skiing at alpine areas. He said that potentially alpine areas could make more money from cross country than centers dedicated to that sport because they have the equipment and facilities at hand. Good track is the key to the touring and recent advances in track setting machines have changed the economics and direction of the sport.
The cross country participant is also changing, according to Wiesel, becoming more affluent, like alpine skiers. He predicted that by 1990, cross country would have more participants than alpine skiing, based on current growth. The benefits to ski areas are that trail fees and lessons at top touring centers now bring in $17 to $24 per skier per day. A far cry from the days of free use of trails and snow.
