At the close of the dismal 1994-95 season, King Ridge, N.H., requested a short-term restructure with the ski area’s primary lender, New London Trust. The bank rejected the plan, which had included the shareholders putting in more than $350,000 of additional capital, and started foreclosure proceedings. On June 28, the King Ridge ski area was sold at public auction.
Unlike many other ski area auctions before it, this one saw the 35-year-old area sold off piece by piece, eliminating any hope that it would reopen for another season. Equipment broker Hugh Knapp said it was the first time in 20 years that he had seen an area dismantled and broken up by an auctioneer’s gavel.
Ironically, before the auction, a major New England developer bid $750,000 to buy the area and continue its operation, but the bank chose to auction the pieces and parts for a grand total of $788,500. The multiplier effect aside, for such a small differential the New London/Sutton region lost one of its largest employers, taxpayers and recreational outlets.
It could have read like any obituary in a small town paper, the black ink a hollow testiment to the loss of a beloved community member. But you wouldn’t find this tribute in the obituaries. You would find it instead in the financial section, the fine print buried under the cold declaration: PUBLIC AUCTION. Another small ski area loses its life.
So what, you say. By ski industry standards, King Ridge’s annual contribution to the nation’s skier visit count was but a small ripple on a big pond. The problem is, the water in this particular pond is stagnant and we’ve all watched as a small ripple magically expands across the water’s surface.
The trend has been clear for nearly a decade. Small-to-medium-sized ski areas have been disappearing at an alarming rate. Of the 215 ski areas that have ceased to operate since 1982, virtually all were doing less than 200,000 skier visits per season. Is there more happening here than just a consolidation of players in the world we know as the ski business? Or are these losses just the painful path of a mature industry following a natural business cycle? And why are some smaller areas able to survive—even prosper—while others disappear like October’s first snow?
“People have less leisure time today than they did 10 to 20 years ago,” said Stacy Gardner, director of communications for the National Ski Areas Association, “so when they make the decision to go skiing, they want everything to be perfect. It’s gotten very expensive to meet the expectations of today’s skier.”
Therefore, she implies, areas that aren’t able to keep up with those expectations draw fewer skiers to their slopes, which means they generate less revenue, which means they have less money for improvements to bring the skiers back…and the downward spiral to extinction begins.
Skip King, communications director at Sunday River, Me., calls it “an accident of geography.” Citing examples such as Nashoba Valley and Wachusett in Massachusetts, King explains the ability to survive: “The small ski area in and of itself is probably viable as long as it’s in the right place—say 15 minutes to half an hour outside of Boston. The real problem is, if the small area is within the same travel time as a major ski area, it makes it incredibly tough.”
The expansion of interstate highway systems and improved overall road quality has probably also played a role in the demise of many a small ski area. Improved access into the mountains has changed the perception of proximity within major markets, thus benefitting some areas to the detriment of others.
For example, prior to I-93, which provides a non-stop artery from the heart of Boston through to the White Mountains, King Ridge was one of the closest ski areas to this market. Today, it takes almost the same time for Boston skiers to drive to large areas such as Waterville Valley or Loon as it did to get to King Ridge.
Okay, so geography changed and that explains why some areas got left in the cold. But do a few less areas make a difference? Bernie Weichsel, president of BEWI Productionss, Inc., thinks that the loss of small ski areas bespeaks a more critical issue.
“Where the industry is hurting,” says Weichsel, “is in bringing new skiers into the sport. At the same time that we are losing these incubators, the remaining players are fighting over a shrinking pie. Without these local areas, it’s essential that alternate opportunities be developed to bring newcomers into the sport—cheaply and hassle-free.”
While no one argues the need for more skiers, why aren’t small areas able to make it as learn-to-ski hills anymore? In response to the growing concern that we need to bring newcomers to the sport, most large areas now offer free learn-toski packages during some part of the season. Now, no one would suggest that these free programs should not be offered; they are an attempt to sustain or grow the industry. The point is, small areas are trying to pay their bills by selling what others are giving away free.
“What’s changed is the cost of running a ski area,” said Skip King. “Cost of staff, wage burdens, worker’s compensation—it’s staggering and it’s not going to get any cheaper.” True enough. There are few, if any, financial advantages to being small. In fact, from a cost perspective there are tremendous disadvantages. (Maybe the politically correct phrase would be *economically challenged*.) Small areas don’t pay less per kilowatt hour to run the lifts or fire-up the snowmaking system. The compressors, guns and hoses that pump out the product are actually more expensive for the small ski area to purchase because they lack the benefit of economies of scale. And being smaller doesn’t mean you have fewer jobs to do, just fewer people to do them. “It’s such a complicated job to run an area, you wear so many different hats,” said King. “In this day and age, who wants to do that job without it being financially worthwhile?”
At the same time that expenses are proportionately higher for the small area, revenue opportunities are inversely limited due to a smaller capacity and a lower rate structure. On a sellout day, large ski areas can handle four to six times the maximum capacity of an area like King Ridge. With higher pricing and similar or lower cost structures, profit margins per skier visit are greater for large areas than for small.
From a marketing perspective, small ski areas fight an uphill battle. Small and large areas basically fish the same waters. The difference: small areas are using a bamboo pole while the large areas cast deep-sea nets.
To get a perspective on the marketing resources, consider that some of the large areas have marketing budgets that are two to three times the total gross revenue of King Ridge! Even that free, yet powerful force known as word of mouth is greater for large areas because of sheer volume. Lastly, even when the small area is able to bring in a new customer, they hold onto clientele for a much shorter life cycle.
“We’d spend our efforts bringing new skiers into the sport, hold their hands until they felt comfortable on intermediate terrain and then we’d lose them to the big mountains,” said Maura Gorman, ski school director for King Ridge. “The better we did our job, the faster we lost our customer base.”
Now, none of this is put forth as sour grapes, but is merely hypothesis as to what is causing the small to medium size area to fail. Will such failures impact the industry? Of course. But the impact will be what we make of it. Some areas will prosper even more because there is one less slice of the pie to be cut. Other areas may follow the King Ridge path, victims of the same laws of economics. And still others may recognize a new opportunity as the trend unfolds. Nevertheless, as one source put it, “There is no bad guy in any of this.”
Much as we love the ski business, and recognize that it’s in our blood, we cannot forget for a minute that it *is* a business, and we must face the realities of that business. As with the age of the dinosaur, the days when small ski areas flourish are gone.
Left behind is a rich, but limited supply of fossil fuel that will keep the industry engine running. How long it will run on this resource is anybody’s guess.
In the meantime, alternate sources must be found before the engine runs dry. Will it be the same? Of course not. But as someone wise once said, the only constant is change. So we can, and should, mourn the loss of another area. But let’s not look back for too long or we’ll be unprepared for what lies ahead.
