LAS VEGAS SHOW CONTINUES SLIDE
An earlier trade show date — urged by large suppliers and some retailers — was expected to do little this year to spur exhibiting or attendance by either group. At the Feb. 29 – March 4 Las Vegas Ski Show (if attendance followed 1991’s pattern of pre-registrations), less than 5,700 retailers could be expected, down from the previous recent high of 8,064 attendees in 1989.
According to USIA, the fact of fewer ski shops in business resulted in a smaller pool of buyers to draw from. Additionally, some shops sent fewer people. Fewer suppliers, too, added up to less exhibitors at the ski show, and less exhibit space. About 220 hardware and apparel companies showed this year, down from 233 exhibitors in 1991 and 257 in 1989. Total square footage of the show’s ski section was down 11 percent from the average of the previous four years.
USIA’s concurrent Sports Exposition at Las Vegas has shrunk even more, reflecting troubled times in the sporting goods industry: the number of exhibitors has sagged by one-third in two years. And that adds up to less revenue for USIA.
AMERICAN EXPRESS YANKS CARD FROM STEAMBOAT
Do you have “We prefer Visa” stickers on your lift ticket windows and shops? At Steamboat, American Express didn’t like it, and asked the resort to remove the offending decals. Steamboat refused and in late-January Amex said the resort had to stop accepting payment by its card. Ironically, says Steamboat marketing head Charlie Mayfield, American Express had asked the resort to give it a preferred card status, similar to Visa’s, six months earlier.
It’s hard to see what the big credit card firm has gained by flexing its muscles at Steamboat. Mayfield told me that American Express card usage has been in steady decline at the resort for several years, with Visa and Mastercard getting three times more usage. Most Amex cardholders possess other credit cards, so Steamboat claims the yanking has done little to inconvenience guests. The resort has also accepted checks and even sent bills. According to Mayfield, local merchants are offended by Amex’s action, and two restaurants stopped accepting “The Card.”
Even as it extracts less from the merchant’s take, Visa also sponsors events at Steamboat and contributes to the resort’s marketing, as did American Express. Steamboat says Amex is welcome to re-install its card any time.
Is the credit card company concerned? Maybe. Two weeks after losing the Steamboat battle, American Express launched a wide-ranging newspaper advertising campaign and $25 incentive program to persuade skiers to use its card at dozens of ski resorts in New England, the mid-Atlantic states, Colorado, Utah and California.
WEICHSEL FIGHTS FOR “SKI USA”
People coming from abroad to ski at U.S. resorts represent one of the fastest growing segments of the market. Principal beneficiary is Colorado, which is garnering an estimated 7 out of 10 of the foreign skiers arriving here in growing numbers. Some Colorado folks want their own international marketing campaign to focus exclusively on attracting European and other skiers to Vail, Aspen and other of the state’s resorts. Trouble is that Bernie Weichsel’s 16-member SKI USA organization is already doing an effective job of selling foreigners on the idea of coming to ski in America.
Under a plan partly devised by Vail marketing chief Kent Myers and Colorado Ski Country head John Lay, a stand-alone Colorado effort could focus on British travel agents, year-round tourism, and Mexico. (Vail will start direct flights from Mexico City into Eagle Airport, March 21.)
“Bernie is good at attracting tour operators and the press,” Myers advised me. “We asked him to work for us.” As for Weichsel, he tells me he applauds the fact “Colorado wants more prominence in international marketing,” and he’s prepared to give the state an add-on program. “But a separate campaign is the wrong approach.” Besides, he says, SKI USA already gives the Colorado resorts a good deal: “Nine of our 16 member-resorts are from other states. Colorado is getting 70 percent of the skier-days while having to shoulder only 40 percent of SKI USA’s costs.”
Not all Colorado resorts want to see Weichsel’s SKI USA effort fragmented. The sabres of the Rocky Mountain separatists and nationalists were still rattling as this issue of SAM went to press.
MORE SKI RETAILING CHAINS ON THE BLOCK
The British conglomerate that owns Herman’s World of Sporting Goods, has been struggling for two years to find a buyer for the chain, once a mighty force in ski retailing. Now another conglomerate, California-based Pacific Enterprises, wants out of retailing. Through Thrifty Stores, Pacific owns the 50-store Gart Brothers chain (big in the Rocky Mountain region), MC Sporting Goods (Midwest) and the Big 5 chain which also sells ski product.
I talked to Ken Gart who admits he doesn’t rule out his family buying back the chain it sold to Pacific five years ago for more than $15 million. Meanwhile, Gart says Pacific plans to take one or two years to make the divestiture, and “it’s business as usual. We’ve been at this for 63 years, and plan to go on opening new stores.”
SHOULD CONDOS BE TAXED AS COMMERCIAL LODGING?
A nightmare we hate to dream is that all those condominium units occasionally used by their owners as ski homes, but which primarily form the bed-base of ski resorts, may lose their residential status and get taxed as commercial real estate. Well, the nightmare — or, at least, the threat — is at hand in Colorado. A proposed bill in the state’s legislature would double the taxes on condominiums rented more than 30 days a year, by reclassifying them from “residential” (taxed at 14.34 percent of assessed value) to “commercial” (taxed at 29 percent of value).
Ski resorts, lodging associations, real estate agencies, property owners and others opposing the bill say it will encourage condo owners to withdraw their units from rental pools, drastically reducing resort bed-bases. Thousands of units would be affected in Summit, Eagle and Pitkin counties; as many as half may be owned by non-residents. (Aspen’s Ken Moore recently found 58 percent of Pitkin properties owned by people with mailing addresses outside the county.) Colorado ski interests tell me they’re optimistic about quashing the legislative proposal.
SCATHED GILLETT SOON TO EMERGE FROM BANKRUPTCY
On January 21, I received a press release saying Gillett Holdings, Inc. had successfully negotiated an agreement allowing Vail’s owner to settle with its creditors and emerge from pending Chapter 11 bankruptcy proceedings. But a few days later, I learned, GHI’s bondholders, including Carl Icahn (whose own TWA is in bankruptcy — see my report in November, 1991 SAM) reneged on the agreement. Reason? They consider the deal too generous to George Gillett, 53, architect of Vail’s number-one status in the North American ski resort industry. Gillett would get 5 percent of GHI, (possibly worth $3 million plus) and a $1.5 million annual salary.
Under the restructuring, Apollo Investment Fund — an entity led by former Drexel Burnham Lambert dealer Leon Black — would have 52 to 55 percent of GHI, in effect controlling Vail Associates (VA). Apollo’s financing, in turn, comes from Altus Finance, a subsidiary of the giant French bank Credit Lyonnais. The bank’s largest stockholder is France’s Caisse des Depots, a pension fund which coincidentally owns Compagnie des Alpes. Alain Lazard, who represents French ski interests in the U.S., tells me Compagnie des Alpes controls Tignes, Les Arcs, Les Menuires and resorts accounting for 8.1 million skier-days, or 15 percent of French skiing.
Over creditor objections to the Apollo-led restructuring, Gillett may be hoping a federal bankruptcy court in Denver may issue a “cram-down,” compelling a settlement with creditors along the lines described in recent press reports: An estimated $1.2 billion of claims against Gillett Holdings reduced to about $500 million, with investors and creditors subject to different levels of repayment priority.
The situation is rich in irony. For one, Leon Black was a high-flying executive with Drexel Burnham when the firm was instrumental in the huge leveraging of Gillett’s television operations. That ultimately led to the Vail chief’s present financial downfall. Now, Black and other former executives are the target of an action themselves. Court-managed Drexel wants to reclaim $250 million it paid them in bonuses shortly before Drexel filed for its own bankruptcy in early 1980.
Meanwhile, Denver newspapers recently published accounts of Gillett’s nouveau lack of richesse, including the fact he’s forced to drive an 8-year-old Audi and that his two sons at Middlebury and Notre Dame, concerned about out-of-state tuition costs, returned home. The truth is that Gillett has taken a huge financial loss, but a $1.3 or $1.5 million salary wouldn’t exactly leave him destitute. Most of all, he should take personal pride — as should his family — as one of the more intelligent, creative leaders the ski industry has seen in a long time.
Gillett tells me Vail’s operations and guests have never been impacted by the bankruptcy, and VA has continued to spend $7 to $10 million a year on capital improvements.
SHORT TURNS. . .
Skiing for the jobless: Brodie Mountain’s Matt Kelly gives a $200 credit to buy lift tickets (good Monday through Friday) to people bearing proof they’re unemployed. . . Jay Peak’s Bill Stenger says the difference between American and Canadian TV weathermen is that the latter urge viewers to go out and enjoy sports in the cold weather. When temperatures plummeted below zero at Jay on the northern Vermont border, Stenger says his parking lot was 90 percent filled with Canadian cars. . . Ski lift broker Hugh Knapp was the subject of a recent Associated Press story in which he predicts ski resorts will shrink “from 560 today to as few as 400”. . . I hear Gretchen Fraser has recovered her Olympic medals which I reported last summer as stolen from a display in the Sun Valley Lodge.
