The Winds of Change
We don’t yet have the perspective of history, but it is probable that the past year has seen change for our industry that will shape our commercial futures for a long time. The immediate causes are not hard to find, but the real impact is harder to pin-point. Probably the most significant change has not been imposed on us; rather it has found its way into our own attitudes.
Old assumptions that were never meant to be perpetuated were suddenly questioned and found to be hollow. Remember the old 15.9 per cent growth rate? Every market report, projection and hypothesis started on this one beautiful, warm premise. It was the Truth, from which all other knowledge flowed. Ted Farwell, who deduced the figure looking backwards from the mid-sixties, never meant it to be an immutable law of skier growth, but everyone wanted to believe it was universally and eternally true, so it became Truth.
Well, this and many other dogmas and shibboleths started to be questioned widely and openly this past year. We were changing.
Then there has been literally a “revolutionary” change—a politicizing of the industry in which there is a new feeling that things can be made to happen, made to change. Coping with the threats of the energy crisis back in November and December gave the industry a deserved feeling of unity and purpose. A fine job of impacting the industry’s position on the Washington scene was accomplished. Another example of joint action resulted from the April 2nd meeting in Boston of about thirty key eastern ski area figures, including the heads of nine state ski area associations, at which the serious economic situation for many eastern areas was squarely faced, and corrective action planned (see news item on Page 24).
If you don’t like something that is happening to you, don’t just belly up, but do something about it. That seems to be what is happening, and it is good.
Another parallel observation is that the regional ski area associations are being revitalized. The previous NSAA Executive Director was fond of saying that “the regional associations are dead; they have no place.” We at SAM have never felt that way. In fact, in last year’s Spring issue we urged NSAA actively to promote and assist regional ski area associations. This now appears to be happening, and it is great. The regional trade show programs espoused by us over the past year are also flourishing. The coordinating role for NSAA in all these regional activities is an unglamourous, but useful one.
Going back to that growth rate figure that we have been kidding ourselves on, it is encouraging that moves are now under way to do something about it. First in order of importance is the thinking of NSAA Executive Director, Cal Conniff, that we need more knowledge about ourselves. If our growth rate isn’t 15.9 per cent, what is it? As an important segment of the outdoor recreation field, the ski industry needs some new basic research—research that goes far beyond the dribbles that we, as an industry, have been able to generate on our own. It is a decade since the last federally-funded market research was done (the Department of Commerce-financed “Skier Market Northeast North America,” commonly called the “Farwell Report,” and the later western study undertaken by the U.S. Forest Service). The betting is that new federal funds can be found to conduct a major and continuing study of the ski industry and its impact on communities, states and regions.
Another new awareness is that no matter what the growth rate in active skiers may be—if, indeed, it is not at zero—it can and should be bigger. The base on which we want to build must be broadened if we are all to grow. Our profile now is narrow, demographically elitist and numerically insignificant. As an industry, we have allowed this to happen—perhaps made it happen.
It is not a matter of trying to make a mass sport out of skiing, or pretending that it has a great potential for the inner city ghetto dwellers. Rather, it is a matter of making outdoor winter recreation more accessible, more available and at more reasonable prices to many more people. The energy situation has given some urgency to the recreation programs of communities across the country. No matter what gasoline shortages may exist in the future, the luxury of cheap and total automotive mobility is probably something of the past. We are looking at $1-per-gallon gas right square in the eye, and that alone has to change things.
As Parks & Recreation magazine said, “. . . the close-in county, municipal and private resources may be in for a whopping increase as people try to find their leisure opportunities closer to home.” We think that there should be, and will be, a sharp upturn in available outdoor winter recreation close to urban centers, and that this can involve a lot of skiing. If it does—if we help make it happen—then we will be broadening the base of the sport and creating new converts who can then go on to the challenges of the bigger ski hills and destination resorts.
There are many in our industry who fear and fight any involvement of the public sector in ski area development. When existing businesses are threatened, or when grandiose destination resorts are involved, we feel the same way. But we feel that the creation of many new close-in ski facilities across the country will result in enormous good for the whole ski industry. These may be developed privately, or jointly with the public sector or wholly municipally. The point is that the whole industry will benefit from this new way of breeding new skiers.
Right now the industry feeds on itself and talks to itself. The Rockies’ gain, for instance, tends to be at the expense of New England. The promotion effort tends to be concentrated in the inward-looking ski publications. If more effort were made to create more skiers the market would grow, just as the tennis market has—and does.
But there is another ingredient that must be reckoned with: if we are to broaden the base of the sport we must make it available at much lower prices. This is not to say that the existing ski areas overcharge. Certainly, based on any return-on-investment formula, they don’t. But the industry must be aware that one of the biggest—we think the biggest—reason for the decline in growth rate is cost. Not poor snow conditions, not overcrowding, not accident rate, but just plain dollars and cents in an inflationary society. Existing skiers ski fewer times or find an alternative like a winter membership in an indoor tennis facility. Very simply, our sport is losing its appeal to an important potential market segment because of cost.
Another competitor is comprised of what the Europeans call the “sun sports.” The allure of the Caribbean, Florida or Baja is pretty great in January, and all the special clothing and equipment you need is a bathing suit. The sea is free.
By comparison, our skiing vacationer in January not only has several hundred dollars worth of clothing and equipment to contend with, but lift tickets to boot. If you multiply this by several members of the family you readily see how our sport starts out with great cost handicaps—and the costs are rising fast. Ski Business magazine estimates that skis will increase this year in price from 5-10 per cent across the board, and boots 12-18 per cent. Cost of materials, labor, foreign exchange rates—they are all part of the scene that mandates these rises, but, sadly, we see little or no effort to counter the trend. The industry seems intent on selling Ferraris and Maseratis to every man, woman and child, novice to expert, and nobody can see the need for VW marketing. The big loser untimately is the the ski area operator.
Of course, the sport has always appealed to the demographically up-scale (a marketing euphemism for rich), and there are lots of these around, shuttling around between the glamour ski resorts. They constitute a market for whatever skis, boots are currently proclaimed “hot.” And perhaps part of the appeal and glamour of our sport lies in its exotic clothing and equipment. But this frantic catering to the top stratum of the sport is suicidal for the industry. The top is there, but the middle and bottom of the market is evaporating in front of our eyes.
These are all big problems for which there are no facile solutions. But merely to face up to them will put us ahead.
A SAM Editorial
On Property Tax
Speaking out for California areas and potentially the rest of the ski operators in the United States, my concern centers over the rising tidal wave of property tax (possessory interest) assessments being levied against our ski area properties. Several operators consider this financial threat the single most important problem facing the skiing industry.
Most county assessors in the State of California are now, or shortly will be, using the “Income Approach” to determine property value for the purpose of assessing property taxes on possessory interests and fee interests. It is our contention that the income approach is not an equitable way to determine assessed value as it penalizes good management. The fellows who are doing the best job are the fellows who will be paying greater taxes for their efforts.
There should be concern for what good management is doing for the environment on the whole. Generally, good management means profitable management. To be profitable in the ski industry means providing the best all around ski experience for the greatest percentage of skiers. The best all-around ski experience in our industry today is provided by the operator who not only caters to the greatest amount of the skiers’ physical needs, but provides them with the “Psychological well-being” associated with the total skiing experince—the environmentally sound operation development—which concerns itself with erosion problems, the scalloped ski runs, the hidden lifts, the clean surroundings, and the proper sewage facilities. The time is coming when the environmentally poor operator will find his own demise, but until that time, why should the profitable, environmentally-concerned operator have to pay more in the form of increased property taxes?
The time has come to give the ski industry the same break as the other industries under the provisions of the Open Space Conservation programs as set forth in the Williamson Act (California Land Conservation Act of 1965). Certainly the preservation of a maximum amount of the limited supply of recreational land is necessary to the conservation of the state’s economic resources, and is necessary not only to the maintenance of the recreational economy of the state, but also for the assurance of adequate, healthful and nutritive (and I use this word honestly) recreation for future residents. This rapidly urbanizing society of ours has to begin to realize that recreational lands, and specifically those lands devoted to skiing purposes, have a definite public value as open space, and the preservation in recreational use of such lands constitutes an important physical, social, aesthetic and economic asset to existing or pending urban or suburban developments.
Therefore, let us consider the possibility of establishing “Ski Area Recreational Preserves”, similar to the Open Space Agricultural Preserves that are established under the California Land Conservation Act. Let us tie up our mountains for a designated number of years in a recreational preserve, in turn for favorable treatment in County property tax/possessory interest assessments. I believe this approach will still allow us the opportunity to continue to develop environmentally-sound, ski-oriented facilities that can be both rewarding to future generations as well as profitable for current management.
John Koeberer
General Manager, Tahoe Donner
President, Sierra Ski Areas Assn.
A time for all seasons
Length of season has always been a major problem for the winter sports industry — perhaps the major problem. It’s a problem, too, for public land administrators who worry about optimum use of the public lands, and who, like ski area operators, are concerned about the marginal economics of modern day ski resorts.
If the private sector is to continue to provide public winter recreation on public lands, a healthy industry must be maintained. Increased prices are a nearsighted solution to improved economics — if any solution at all. A better solution is increased business with minimal increased costs or capital outlay.
Some advances are still possible in winter use, of course. But the big opportunity and challenge and need is for profitable summer use of existing facilities. As with our schools, it is not sound economics to use major capital assets only part of a year. Of even more importance, is the need of the American public for additional recreation opportunities.
Summer use of ski trails offers a grand opportunity for the public to “rough it” and experience nature with a minimum of effort and exertion — just the formula to ease a urbanizing nation back to nature! Ingenious businessmen and public land managers should be able to capitalize on such a combination of need and existing facilities!
Roy Feuchter
Acting Director of Recreation
Forest Service, Washington, D.C.
‘Gold Pass’ thoughts
We feel compelled to take a position that may be unpopular, but there is a principle at stake. NSAA has worked out a “gold pass” program for raising $120,000 for the U. S. Ski Team. So far so good.
The 150 participating areas agree to honor the $1,500 fully-transferable passes. Given the fact that the 1,000 passes represent exposure for participating areas to considerable lost revenue, the program is genuinely generous, and very welcome funding for the team. As we said, so far, very good.
The halo gets a little tarnished in our opinion, though, when a 20 per cent bite is put on the receipts for NSAA “administrative costs” in administering the program. You can do a lot of administration for $30,000! (Actually, NSAA originally asked for 50 per cent.)
Clearly the money is earmarked to give relief to NSAA’s troubled finances. And there isn’t a thing in the world wrong with that, especially in a year when much of the membership — areas and suppliers alike — finds it difficult or impossible to meet dues obligations. What sours it for us is the use of a tax-deductible, worthy cause like the U. S. Ski Team as a front for NSAA budget relief. Indeed, NSAA makes no bones about it, and refers, in the NSAA Newsletter, to “$30,000 retained by NSAA to carry out important programs for the benefit of our industry.”
To summarize, we think it is very sensible for a ski area association to fund itself, partially or wholly, through the sale of its own assets in the form of season passes. The Eastern Ski Areas Association has a very sound program designed to do just that. But we question whether it should hide behind a charitable front. We think it deceives the public which buys the passes, and is demeaning to NSAA. Perhaps our sensibilities on this sort of thing have become tender as the result of Watergate revelations on campaign financing.
Anyway, we are delighted that NSAA is helping to raise this substantial amount for the team, and again we cite the enlightened generosity that attends it. As the Europeans have long known, a strong national team is good for the industry.
A SAM Editorial
The “last year” Yardstick
We think it is time we stopped kidding ourselves, and started reporting our seasons more meaningfully. The horrors of this past season in many segments of the east are not understood at all when figures are compared with the previous season—itself a horrible year. By the same token, if these same areas have just a normal season next year they will be reporting increases of five hundred to a thousand percent. No doubt, wind of this will reach skiers who will want to know why-in-hell those grabby area operators have to profiteer that way. (Of course, maybe some bankers, even the dumb ones, will be impressed by this sort of increase in profitability—but we sort of doubt it.)
A SAM Editorial
A Friend in Need
We rather liked what happened this winter not far from our office. Dutchess Ski Area, in Beacon, N.Y., was facing Washington’s Birthday weekend without much snow, and the weather forecasts were not promising. Not far away, in East Fishkill, a ski area called Parker’s Outdoor World had built up a hefty base and were in great shape for the weekend. Next thing you know, the Parker president, Vincent Gubitosi, had loaded up his two Hedcos and they were doing their thing down at Dutchess. No rent . . . just good competitors. We think that’s pretty great.
A SAM Editorial
A new trade show era?
We hope that the issue of the trade shows is now almost resolved. The fundamental conflict has always been that NSAA has seen them as a source of revenue, and the suppliers have always looked for them to be a viable market place. In recent years the trade shows have not been good for the suppliers, and more importantly, they have not been good for the great majority of NSAA member areas.
We are cautiously optimistic about the four regional shows announced by NSAA. They could be very good. Certainly the non-NSAA regional shows this past winter (Quebec, Midwest and Sierras) were on the right track. They will be very good if costs are reasonable enough to make for a market place where sellers and buyers can afford to participate fully.
A SAM Editorial
