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Ski Resort Economics: What really works?

post #1 of 124
Thread Starter 

Just posted this as an article, but in light of the recent PCMR BS, I thought I'd go ahead and put it on the forum too just to throw some more fuel on the fire.  snowfight.gif

 

I remember a guy once explained to me some years back that “Ski resorts are just like golf course communities.  The golf course itself is a money loser and is only there as an amenity to attract real estate development”.  Over years of casual conversation with other armchair experts, I have been led to believe a few of these supposed axioms regarding resort economics.  One the most enduring may be -

 

“The true economic driver of any big resort is not ticket sales, but lodging and real estate”

 

Just as an example of popular sentiment, here is an online forum post from an anonymous skier – “The only reason we get to go skiing at all is because the actual ski area is on Forest Service land, and the use permit requires them to allow the general public to buy lift tickets. Otherwise, most resorts would absolutely love to kick everyone off the hill except for landowners, people renting hotel rooms or places to stay, and their guests...”

 

Read more at epicski.com/a/ski-resort-economics-what-really-works

post #2 of 124

Below is  a quote from the linked article.  It assumes some things that simply don't test out when compared with other successful operations of the same type.  Mt. Baker, as an example, is also a very financially successful ski area but it doesn't have any of the features that are touted as examples of why Bachelor is profitable.

 

1. Bachelor's terrain is not really "world class" unless you decide that skiing on a volcano is cool.  Baker's (and that of many other Cascade areas) is much more interesting, which I've experienced and have heard Bachelor regulars mention as well.

2. High speed quads.  Baker has none.

3. Baker has no scanners, except for the human kind.

4. Baker has only a web site and is not "always announcing new...events."

5. Baker IS a no nonsense mountain that has a passionate rider community, way more so than Bachelor.

 

Bachelor doesn't have on hill lodging, but within 20 minutes on a wide, smooth, straight road there is lots of resort style lodging.  The closest lodging (in the United States) to Mt. Baker is 1.25 hours away on a steep windy road, and nearly all of it is not resort style at all.

 

Yet both ski areas are financially successful.  It's much more complicated than the article makes it out to be.  But it is obvious that real estate development is not necessary to have a profitable ski area and it's also obvious that keeping your local population happy is key.

 

You could do a similar comparison with any ski area in WA or OR.  None of them have big development, and most of them are doing just fine financially.

 

 

 

"Yet despite all this, and a reasonable daily lift ticket price, Bachelor seems to be a “myth buster”.  What it does have is world class terrain with continued expansion announcements, the lifts are mostly newer high speed quads with automatic ticket scanners, and their web and social media sites are always announcing new on/off mountain improvements and events.  It is a skier’s mountain with a no nonsense attitude and a passionate rider community."

post #3 of 124

I only have 2 half days skiing Mt. Bachelor and while some of the terrain and lifts were closed due to extreme weather, out of what was open, I didn't see the "world class terrain" quoted in the article.

 

In addition I encountered more unsolicited anti-management/ownership opinions from locals at Mt. Batchelor than I have ever experienced at any mountain before or since. It was quite an eye opener for me. These two facts tend to discredit the credibility of the article for me.

 

Most mountains need the real estate sales, be it hotels, condos, or houses, to help pay for infrastructure such as roads, sewers, water and other utilities. Eventually the resort will run out of land to develop or the demand for real estate will be saturated. Often times those ski resort homes spend most of the winter unoccupied.

 

So at some point ticket sales and passes are needed to pay for operating costs: fuel, electricity, labour, lifts, grooming machines, snowmobiles, and company vehicles etc.

 

The simple fact is that ski areas without the real estate development need large populations near by, and ones with the real estate to sell need both nearby populations and easy access for out of town skiers.

post #4 of 124
I have never skied Batchelor so I am not trying to defend it but does "world class terrain" have to be steep? What if it is just long, interesting and varied like say Franz's at Whistler or Warm Springs at Sun Valley?

I would think that "world class" terrain from a ski area economics perspective would be terrain that appeals to the broadest range of customers. To be sure, steep terrain is important if for no other reason than street cred and perception.
post #5 of 124
Thread Starter 
Quote:
Originally Posted by Posaune View Post

 

2. High speed quads.  Baker has none.

3. Baker has no scanners, except for the human kind.

4. Baker has only a web site and is not "always announcing new...events."

 

 

These were mentioned as signs of a viable profits and that money being reinvested into the mountain.  They are things that cost money and ROI must be justified.  So I don't get your insinuation that Baker somehow has a superior business model because they don't have these things?

 

BTW  Is'nt Baker @2hour drive from the metropolis of Seattle/Tacoma?  This gives it proximity to a huge market. 

post #6 of 124

Compared to say, Stevens Pass, not all that many make the trip from Seattle... more come down from Vancouver BC... 2 hours each way... usually a little more... is a long schlep up an back when Stevens, Alpental, and Crystal are closer. Real estate... look at the big ones and see how many changes of ownership and bankruptcies they've gone through compared to those that find a better balance between community and the ski hill.

post #7 of 124
Quote:
Originally Posted by SB77 View Post

I have never skied Batchelor so I am not trying to defend it but does "world class terrain" have to be steep? What if it is just long, interesting and varied like say Franz's at Whistler or Warm Springs at Sun Valley?

I would think that "world class" terrain from a ski area economics perspective would be terrain that appeals to the broadest range of customers. To be sure, steep terrain is important if for no other reason than street cred and perception.

Bachelor is not steep, nor is it varied.  It is long, however.  I find it uninteresting.

 

Quote:
Originally Posted by Fritzski View Post

Quote:
Originally Posted by Posaune View Post

 

2. High speed quads.  Baker has none.

3. Baker has no scanners, except for the human kind.

4. Baker has only a web site and is not "always announcing new...events."

 

 

These were mentioned as signs of a viable profits and that money being reinvested into the mountain.  They are things that cost money and ROI must be justified.  So I don't get your insinuation that Baker somehow has a superior business model because they don't have these things?

 

BTW  Is'nt Baker @2hour drive from the metropolis of Seattle/Tacoma?  This gives it proximity to a huge market. 


I must have not made my point clearly.  I was not trying to say that Baker is better than any other place, just that the examples from Bachelor that were used to show what ski areas should do to increase profitability do not apply in other contexts, such as Baker, a place I know well.

 

It's really more like 2.5 to 3 hours from Seattle.  Many more skiers come from Vancouver.

post #8 of 124
Good discussion and thought provoking article. I think what works is that the ski area has to have something special going for it, and it seems like there are a lot of factors that could go into "special"; alone or better yet, in combination. My favorite reason for ski area success is 1)good skiing:-) that is, good terrain and/or snow (e.g., Mt. Baker, Jackson Hole), but others include 2)good management (Vail Resorts, Intrawest), 3)great amenities/resort infrastructure including quality real estate development and nice scenery or ski town vibe (Aspen, Park City), 4)proximity to market (Mont Tremblant, Hunter), 5)innovative marketing (Whistler and Monarch), and 6)having a rich sugar daddy owner (Snowbasin, Jay Peak's EB5s). I'm sure there a other reasons I'm overlooking including a variety of niche operations like local teaching hills (Cochrans), heli-skiing (CMH), etc. Today's most successful ski areas have a bunch of these attributes. If Fritzski's point is that real estate development isn't going to be the big savior for future ski area economics I think demographic trends would support that.
post #9 of 124
Quote:
In addition I encountered more unsolicited anti-management/ownership opinions from locals at Mt. Bachelor than I have ever experienced at any mountain before or since. It was quite an eye opener for me. These two facts tend to discredit the credibility of the article for me.

That was my experience in 2007.   Bachelor was an early adopter of high speed lifts.  Summit in 1983 was either first or second in the US, not for crowd control but because the chairs need to be taken down at night or in bad weather.  All of those high speeds were built before Powdr Corp took over ~2003.  Bachelor is in fact the classic case of a big bean-counting corporation taking over a resort from the family founders and alienating the locals to the extent that skier visits declined during a banner year in the PNW when other OR and WA skier visits were rising.  When the penny-pinching began to result in lift maintenance issues, Powdr Corp finally woke up and has been running the area more responsibly for the past 4-5 years.

post #10 of 124
Quote:
In addition I encountered more unsolicited anti-management/ownership opinions from locals at Mt. Bachelor than I have ever experienced at any mountain before or since. It was quite an eye opener for me. These two facts tend to discredit the credibility of the article for me.

This was exactly my experience in 2007.  Mt. Bachelor was an early adopter of high speed lifts.  Summit in 1983 was either the first or second in the US, built not for crowd control but so the chairs could be removed at night or in the frequent severe weather.  Al of those high speed lifts were there before Powdr Corp took over ~2003.  Bachelor is in fact the classic example of a bean-counting corporation taking over a ski area from the founding family and alienating the locals to the extent that skier visits declined during a banner PNW season whey were rising elsewhere in the region.  

 

The article describes Mountain, Lodging and Real Estate as the key income drivers, and looks for examples of successful areas that only have "Mountain." Monarch and Mt. Baker are good examples, as are the coop/community areas like Mad River Glen, Bogus Basin and Bridger Bowl.  These areas tend NOT to have a lot of high cost infrastructure like high speed lifts and fancy lodges.  My understanding is that Mad River and Bogus Basin have had some close calls financially in bad snow years.  High speed lifts in these places get built gradually from the profits of good years more than by going into debt.

 

When Powdr Corp bought Bachelor, they identified that "Mountain" was the only revenue source and therefore cut expenses to the bone, selling  off half the groomer fleet, laying off many permanent employees and cutting back marketing outside the PNW.  When the penny pinching eventually resulted in lift maintenance issues, Powdr Corp finally woke up and has been running the area more reasonably in the past 4-5 years.

 

I agree with jamesj that if you only have "Mountain," you need some kind of special attribute to attract business.  Mammoth has so many such attributes that SKI magazine said it was the second most valuable ski area in the country (to Vail) in 1986, a time when the ski area's revenue base was probably 90+% "Mountain."

 

I'm quite familiar with the Mammoth/June situation as it's my "home area."  The town bankruptcy was due to a botched real estate project at the airport.  I'll stay out of the finger pointing on that one, but both the airport and the RE project were motivated by ambition to turn Mammoth into more of a national vs. regional destination.

 

In 2006 Mammoth was sold from the founder to a corporate owner, Starwood.  Unlike Bachelor, the level of service and infrastructure at Mammoth remains excellent.  However, the top-of-the-market sale resulted in a high debt load, so the bad year in 2011-12 resulted in violation of debt covenants. This gave the lenders the power to make operational decisions that year, one of which was closing June Mt.  With a more normal year in 2012-13, the lenders do not have that power now, and MMSA management has announced the intention to reopen June in 2013-14 and invest $11 million there by 2015-16.   My personal view is that June is a non-viable ski area in competition with Mammoth, but that cooperatively run it's ideal for beginners and as a safety valve when Mammoth is most busy.

post #11 of 124
Thread Starter 
Quote:
Originally Posted by DanoT View Post
 
Quote:
I only have 2 half days skiing Mt. Bachelor and while some of the terrain and lifts were closed due to extreme weather, out of what was open, I didn't see the "world class terrain" quoted in the article.

World class terrain is an entirely subjective term and for all intensive purposes has nothing to do with the point of this article.  In fact, if Bachelor's terrain is lacking, it just adds another disadvantage it seems to be successfully dealing with.

 

Quote:
In addition I encountered more unsolicited anti-management/ownership opinions from locals at Mt. Batchelor than I have ever experienced at any mountain before or since. It was quite an eye opener for me. These two facts tend to discredit the credibility of the article for me.

I only started skiing there about three or four years ago.  In conversations with locals and the Dir. of Marketing, it seems that mountain management had indeed deteriorated badly.  In the several years since, there has been a concerted effort to provide an improved product and reconnect with the customer that has been favorably noticed by the local clientele.

 

Quote:

 The simple fact is that ski areas without the real estate development need large populations near by, and ones with the real estate to sell need both nearby populations and easy access for out of town skiers.

It may be a simple fact, but Bachelor has neither and that was my point.

post #12 of 124

I think there needs to be a distinction between ski areas and ski resorts when you talk about their economics.  Two different business models, two different focuses in my opinion.  The places that are pure skiing, that is why you go there, they have a product to sell (skiing) and they can focus on it.  The resorts have restaurants, lodging, non-skiing activities, along with skiing which creates whole new challenges. 

post #13 of 124

Alex Cushing ran Squaw at a profit while ignoring the real estate business. Most of the restaurants and all of the hotel rooms, including the village, were owned by others. (Squaw bought the village in a distress sale after Cushing died.)  Whatever else you think about the man he was a skier.  The current model of real estate development being the main profit center is driven by greed and in large part by the need to cover the huge debt these resorts are saddled with when outfits like KSL buy them. People say that these are smart businessmen who know what they are doing.  If the great recession has taught us anything it is that smart businessmen and bankers can be really stupid. Many a business in this country has failed under the burden of overindebtedness. 

Can a ski area make money on operations?--yes, (but probably not a lot), if it is not drowning in debt.  Will major ski areas be run this way--I doubt it. Look for leveraged buyouts, massive developments, and periodic bankruptcies to continue. 

post #14 of 124
Dan Graves is doing it right

2010 article. http://www.flatheadnewsgroup.com/whitefishpilot/sports/article_4b481fe1-0fb4-54c5-8a06-19794f7f07a3.html

2012 article.
http://www.flatheadnewsgroup.com/whitefishpilot/article_3ead8d70-83f0-11e1-a2f3-0019bb2963f4.html

Can't find the equivalent for 2013, but they're putting in a new chair and opening up terrain access. I think their focus is on skiing, not real estate, but then up until this spring there wasn't much money to be made in real estate around here. (Newsflash, if you didn't buy, you missed the low.)
post #15 of 124

We get a lot of resort VPs coming to have a chat, the most recent being from VR, Big White, Silverstar and Powdr, and a couple of community co-op groups that are working on reviving their areas, and get to look see at little initiatives like Univeral/Mammoth/Tahoe tv ad campaigns to international tourists through to a new kiddie skidoo, on wheels, for low season/summer. Every hill is different. Every management team is different ...and has too many short-sighted beancounters with too little life experience and an inability to walk a mile in the shoes of the snowballer thrower to the kerzillionaire trophy wife.

post #16 of 124
Thread Starter 
Quote:
Originally Posted by oldgoat View Post
 

Many a business in this country has failed under the burden of overindebtedness.

 

Can a ski area make money on operations?--yes, (but probably not a lot), if it is not drowning in debt.  Will major ski areas be run this way--I doubt it. Look for leveraged buyouts, massive developments, and periodic bankruptcies to continue.

Exactly.  I think the resorts experiencing the most hardship right now are those that leveraged heavily in real estate right up to the crash and are now hobbled by debt.  It could take years to rectify their balance sheets.

post #17 of 124

Didn't Whistler go into bankruptcy right about the time of the Olympics there? East West partners also filed for bankruptcy in 2010. I see by their web site that they're still in business. For folks like that bankruptcy means they get to stiff their creditors and employees, the principals get to stay rich, and they keep right on doing what put them into bankruptcy in the first place. 

post #18 of 124

I see China outlawing practices like the use of 'fake independent self employed piece worker' contractors before the US does as just happened in the Cal Supreme Court:

 

By Carl Borden, Associate Counsel, California Farm Bureau Federation

The California Supreme Court has denied petitions for review of two California Court of Appeal opinions with big consequences for agricultural and other employers compensating their employees by piece-rate incentive plans.

The 2nd District Court of Appeal held that an employer should have paid its automotive service technicians, who were paid on a piece-rate basis for repair work, a separate hourly minimum wage for time spent waiting for vehicles to repair or performing other non-repair tasks. (Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36.)

While the Gonzalez court expressly did not consider “any obligation with respect to mandatory rest breaks,” the 3rd District Court of Appeal squarely did so in the other case. In line with the Gonzalez court, the 3rd DCA held that “a piece-rate compensation formula that does not compensate separately for rest periods does not comply with California minimum wage law.” (Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864.)

The employer in each case filed a petition for review with the California Supreme Court. The Court denied the petitions in Gonzalez and Bluford on July 17 and August 28 respectively. (Gonzalez v. Downtown LA Motors, LP, No. S210681; Bluford v. Safeway Stores, Inc., No. S211498.)

 

 

 

US regional under and un employment rates, and many other factors, affect resorts.

 

At SV for example, the new employee housing is ...closer to walk to and park at  free - at the competitors' bars and restaurants! And all because 'someone' wants as many condos per sq.inch as possible.

post #19 of 124
Thread Starter 
Quote:
Originally Posted by oldgoat View Post
 

Didn't Whistler go into bankruptcy right about the time of the Olympics there? East West partners also filed for bankruptcy in 2010. I see by their web site that they're still in business. For folks like that bankruptcy means they get to stiff their creditors and employees, the principals get to stay rich, and they keep right on doing what put them into bankruptcy in the first place.

    Thumbs Up    I work for the airline industry...      :bs:

post #20 of 124
Quote:
Originally Posted by oldgoat View Post
 

Didn't Whistler go into bankruptcy right about the time of the Olympics there? East West partners also filed for bankruptcy in 2010. I see by their web site that they're still in business. For folks like that bankruptcy means they get to stiff their creditors and employees, the principals get to stay rich, and they keep right on doing what put them into bankruptcy in the first place. 

 

It didn't go bankrupt, but it had serious debt trouble that led to Intrawest, Whister's owner at the time, "selling" Whistler to a public company for the income from the sale of stock. In the end, Intrawest owned 25% of Whistler, so they basically sold most of their interest in the resort to repay the debt.

 

They got rid of their 25% interest in 2012.

 

So, while I'm sure all of the principals of Intrawest are doing just fine for themselves, Their errors led to Intrawest having to sell most of its resorts, including its crown jewel, Whistler.

 

Low level Whistler employees still have the jobs they had, the loans were repaid (barely), and I think Intrawest management has learned something from their enormous mistakes and probably feel lucky they still had a company left when the dust settled.

 

It seems like they are managing the resorts they have left better than the Whistler era when everything was about building massive amounts of real-estate.

post #21 of 124

What if you have a successful ski area evicted by its landlord - attached to your former ghost town (now thriving)?

post #22 of 124
Quote:
Originally Posted by anachronism View Post
 

 

It didn't go bankrupt, but it had serious debt trouble that led to Intrawest, Whister's owner at the time, "selling" Whistler to a public company for the income from the sale of stock. In the end, Intrawest owned 25% of Whistler, so they basically sold most of their interest in the resort to repay the debt.

 

They got rid of their 25% interest in 2012.

 

So, while I'm sure all of the principals of Intrawest are doing just fine for themselves, Their errors led to Intrawest having to sell most of its resorts, including its crown jewel, Whistler.

 

Low level Whistler employees still have the jobs they had, the loans were repaid (barely), and I think Intrawest management has learned something from their enormous mistakes and probably feel lucky they still had a company left when the dust settled.

 

It seems like they are managing the resorts they have left better than the Whistler era when everything was about building massive amounts of real-estate.

 

I'm pretty sure it was Intrawest's parent company that got into financial trouble and that forced the sale of prized assets like Whistler/Blackcomb (the crappy assets that got the parent company in trouble would be unsalable so the good stuff has to go).

 

WB gets 2.2 million skier visits and seems to be doing fine. BTW for the past 2 decades Nippon Cable has owned 25% of WB and I think still does. So Intrawest was selling off a portion of its 75% ownership position to the public while the resort itself was not in trouble.

 

Panarama was another asset that Intrawest was forced to sell a few years ago. It has a Intrawest village of I think 14,000 beds but was not doing well and only getting about 200k skier visits. The resort was purchased by a group of businessmen from the nearby town of Invermere.

 

Also nearby to Panorama is the recently approved for development, Jumbo Glacier Resort which would include 2300 vertical of summer glacier skiing at over 11,000 feet ASL and 5,500 vert. in winter. Current plans call for a scaled down in size upscale village of only 1500 beds and 23 lifts at build out. So this development will not rely very heavily on real estate development.

 

With Calgary being a little too far away to provide a lot of day skier visits, Jumbo must be figuring to have most of their customers stay overnight at Panarama and then travel the half hour or so to Jumbo. There is lots of local opposition to Jumbo and if European lift companies and other European investors that are being wooed do their due diligence, they will discover that the Western Canada Interior is way over built in terms of local ski hills with great snow and terrain that have expanded way beyond skier demand. Many of these resort wannabes are a great place to ski due to lack of crowds especially at Xmas and other holidays.

post #23 of 124

Intrawest also sold Copper Mountain to Powdr Corp just before the Olympics at Whistler to make a debt payment, as their creditors were threatening to foreclose on Whistler during the Olympics.

 

I agree with others that the massive debt is a common theme in ski areas running into problems.   On the other hand, I love to see the ski areas using their money/credit to make improvements that benefit us skiers, as many have done in Colorado this summer:

 

http://www.epicski.com/t/121470/colorado-ski-areas-invest-in-dining-chairs-snowmaking

 

Even if the parent companies go BK, those improvements will be picked up cheap by another operator and will likely be around for decades.  Good for us skiers, but a rough ride for the employees and locals.

post #24 of 124
Quote:
Originally Posted by DanoT View Post
 

 

I'm pretty sure it was Intrawest's parent company that got into financial trouble and that forced the sale of prized assets like Whistler/Blackcomb (the crappy assets that got the parent company in trouble would be unsalable so the good stuff has to go).

 

WB gets 2.2 million skier visits and seems to be doing fine. BTW for the past 2 decades Nippon Cable has owned 25% of WB and I think still does. So Intrawest was selling off a portion of its 75% ownership position to the public while the resort itself was not in trouble.

 

Panarama was another asset that Intrawest was forced to sell a few years ago. It has a Intrawest village of I think 14,000 beds but was not doing well and only getting about 200k skier visits. The resort was purchased by a group of businessmen from the nearby town of Invermere.

 

Also nearby to Panorama is the recently approved for development, Jumbo Glacier Resort which would include 2300 vertical of summer glacier skiing at over 11,000 feet ASL and 5,500 vert. in winter. Current plans call for a scaled down in size upscale village of only 1500 beds and 23 lifts at build out. So this development will not rely very heavily on real estate development.

 

With Calgary being a little too far away to provide a lot of day skier visits, Jumbo must be figuring to have most of their customers stay overnight at Panarama and then travel the half hour or so to Jumbo. There is lots of local opposition to Jumbo and if European lift companies and other European investors that are being wooed do their due diligence, they will discover that the Western Canada Interior is way over built in terms of local ski hills with great snow and terrain that have expanded way beyond skier demand. Many of these resort wannabes are a great place to ski due to lack of crowds especially at Xmas and other holidays.

 

I was probably over-simplifying things, but yes, my point was that because of the Intrawest and their parent company's mistakes, they had to sell their crown jewel, and not all of the bad debt was related to skiing investments.

post #25 of 124

Getting back to the main point of the article, I agree that it seems that there are two main ideas of how to make money from skiers. One is by using the mountain as a hook to sell real estate and rent beds, the other is to have a skier focused operation and to view lodging as merely an accommodation to serve the skiers using the slopes.

 

The real estate option is more profitable when successful, but it also carries a lot more of a debt load, and can bring down the whole operation if done incorrectly. I think a resort is pretty unhealthy if the area operations don't pay for itself, and it has to sell condos to balance the books. If you aren't getting enough skiers to pay the bills, it means that you aren't doing well enough at winning your business, and real estate will not bridge that gap forever.

 

I think too many ski area operations are seduced by the idea that real estate sales can make them rich.  They attempt the Vail model of a ski area to support real estate development, but without the understanding of how to make for a good ski experience to get customers.

 

A few examples come to mind:

 

1. Stagecoach ski area- originally intended to be a second resort in the Steamboat area with 20+ lifts, it failed two years in because of credit issues- they had vastly overextended themselves with spending money on infrastructure to support a large base area concurrently with actually building lifts and cutting trails. The result was they had essentially no income because of the minimal progress they had made in building the ski area, but massive debt related to starting construction on all of the condos. http://www.coloradoskihistory.com/lost/stagecoach.html

 

2. Durango Mountain Resort- I really think this one is going to fail, and is a good example of why alienating your local population is a really, really bad idea (see also Crested Butte). About 5 years ago, DMR decided they wanted to move from being a good local ski hill to being a destination resort for Texas, New Mexico, Arizona, etc. They built a LARGE base village, financed by LARGE increases in ticket and season pass prices. They have started to price discriminate against the local population, selling 4-Pack tickets in places like Albuquerque, but not locally.  Making local skiers pay more than out of towners is a great way to piss your local ski population off, and they have managed to do so.  Now they have ticket prices $25 higher than Wolf Creek, but have worse terrain and get about half the snow. I have yet to meet a local skier happy with the mountain, and they are happy to share their displeasure with tourists. It doesn't seem like the condos are moving- Real estate at DMR is what I would call insanely cheap, indicating that the market isn't really brisk. An example

 

On the other hand, other ski areas are showing that engaging their locals brings in business. Monarch's experience shows this.  Monarch is a small mountain, with snowfall a bit above average, but counterbalanced by ZERO snowmaking capability, with 1100 vertical feet that has solid advanced terrain, but very little expert/double diamond stuff (although Staircase puts hair on your skiing nuts).  When it was bought in 2002, it was a mountain stuck in the 1980's- It had lifts 30-50 years old, a base lodge of the same age, was an afterthought in the local community (Salida closed up shop in the Winter), and it was a mountain too far away to attract Denver business.  It's main market was Colorado Springs, but the C Springs skiers could drive the same distance and ski Summit County, and could ski A-Basin or Loveland on a cheaper season pass.

 

After it was purchased by largely local investors, without changing a thing on the mountain, they reinvigorated the ski area.  They got the local business community on board with promoting the area, and have seen a lot more winter business in Salida related to the area.  They started working social media hard, making sure everybody knew exactly what they were improving on the mountain every off-season.  They revamped their pass, and went from one of the worst deals in Colorado to what in my opinion is the best, by far- partner days with ski areas all over the country, including most small Colorado areas, all for $300 and change. The result was a lot more business, even though the mountain remains largely the same mountain with the same terrain that it has had for 30 years (the only exception being the opening of hikeable terrain that was previously snowcat only).

 

With their profits, they have invested in things that have really helped the ski experience. last year they renovated and expanded their lodge, and it is beautiful. Showing their focus on the ski experience, the lodge includes a much, much larger and nicer brown bag area.  They are moving forward with a modest expansion to the backside, with overwhelming community support. The ski areas has a different attitude- its hard to put it in specifics, but the service, from the ticket taker, to the lifties, to the food service folks, is just better than it used to be, and everybody seems happier knowing that the area is headed in the right direction.

 

As we move into a post-boomer era, where without a miracle the skiing population will decline, I think the leaner areas focusing on skiing, minimizing debt, and creating efficient operations will be much better positioned than those fighting to sell condos to recover their debt in a smaller ski market.

post #26 of 124

Good examples. I think A-Basin is another example of how a skiing-first type operation can thrive with good management. I think when they were owned by Purina along with Keystone, they were a bit of an afterthought-- old lifts, limited terrain, lack of facilities, etc. As you say about Monarch, stuck in the 80s. In the 15 or so years since they were sold to I-don't-know-who, they have stayed a viable option for locals by offering great deals on season passes and maintaining the agreement with VR to stay on the epic pass (I'm really curious about the terms of that deal). At the same time, they have made tremendous on-mountain improvements (expanding into Montezuma Bowl, adding snowmaking, replacing the Lenewee Mountain lift, building the Black Mountain Lodge and SnowSports building, expanding parking and adding a shuttle, etc) all while maintaining its unique, laid-back atmosphere. I don't have inside info on their financial condition, but I can imagine it is going ok considering they are still planning more improvements/expansion. All of this was done without building a single condo (where would they put it?).

post #27 of 124
Quote:
Originally Posted by CluelessGaper59 View Post
 

Good examples. I think A-Basin is another example of how a skiing-first type operation can thrive with good management. I think when they were owned by Purina along with Keystone, they were a bit of an afterthought-- old lifts, limited terrain, lack of facilities, etc. As you say about Monarch, stuck in the 80s. In the 15 or so years since they were sold to I-don't-know-who, they have stayed a viable option for locals by offering great deals on season passes and maintaining the agreement with VR to stay on the epic pass (I'm really curious about the terms of that deal). At the same time, they have made tremendous on-mountain improvements (expanding into Montezuma Bowl, adding snowmaking, replacing the Lenewee Mountain lift, building the Black Mountain Lodge and SnowSports building, expanding parking and adding a shuttle, etc) all while maintaining its unique, laid-back atmosphere. I don't have inside info on their financial condition, but I can imagine it is going ok considering they are still planning more improvements/expansion. All of this was done without building a single condo (where would they put it?).

 

Ralston Purina spent a ton of money on Abay in 1978- Exhibition, Pali, and I think Norway were installed that year. I think they figured they had spent enough money at that point.  Unfortunately, they made that investment just before the high-speed lift revolution, making that investment seem more outdated than it really was through the 19980's and 1990's.

 

Monarch, Loveland, A-Basin, Ski Cooper, Wolf Creek have a base on forest service land. It is VERY, VERY rare for the Forest Service to approve hotels on forest service land (at least in CO), and it is public land, so there is no option for real estate.

 

It has not escaped my notice that these ski areas are all doing well for themselves.  They have much leaner balance sheets, and Vail charging $120 a day allows them to charge $60 and it seems like a deal.  Lacking real estate also helped them weather the 2008-2010 implosion.

 

Ski Cooper was on life support only existing because its owner, the City of Leadville, fed money to it. Despite having severe limitations in terrain and location, it has now made money for the past decade and is now debt free- instead of talking about how to keep it running, they are talking about how to expand and how much.

post #28 of 124

A downside to expansion is even when the resort doesn't have to go into debt to fund it, they almost always charge more.

 

Wolf Creek has one of the most ambitious expansion plans I have ever seen. 5 new lifts (at an area that currently has 5 lifts), expansions over the ridges to both sides, and replacing 2 existing lifts with high-speed installations all during the next ten years. It will go from a place with 5 lifts (1 high speed) and 1600 acres (not all lift-served), to somewhere around 2200-2300 acres lift served, ten lifts (3 high speed).

 

Wolf has said they are not going into debt, instead they are simply spending their yearly profits to add about a lift a year.

 

- http://www.youtube.com/watch?v=l9DjA3shjsA

 

They are essentially in year one of this plan, replacing an existing lift with a high-speed. Next year they intend to rebuild the lift they removed and reinstall it so that it serves as the exit from the Alberta area instead of a LONG catwalk.

 

Season pass prices increased $50 this year. I expect to see similar increases as they build it out.

 

I'm not really sold on the improvements making the ski area better. For one, they propose adding 3 more lifts to serve Alberta, currently served by 1.  Worse in my eyes, the lifts serve to allow access to beginner terrain that currently is only accessible by skiing expert terrain, stuff that right now tends to be FUN untouched powder playgrounds. Adding beginning skiers to scrape off the snow will diminish the expert experience, adding that many lifts will increase the number of skiers in that area. Right now Alberta is a unique thing- 1000 acres served by 1 lift with no cut trails, making maximum skiing density of 1.2 people per acre per hour (and the lift almost never runs at capacity), and real density much less. Adding 3 lifts will end that.

 

The bottom line is that the expansion may create an area I like skiing at less, with a much higher lift ticket price. And, ten years from now, we may be well into the demographic decline in skiing, and I don't know whether the expansion will make Wolf fare better or worse when there are less people skiing.

post #29 of 124

Revelstoke is another example of the real estate sales model not working. The original principal owners were real estate developers from Toronto and Colorado who didn't know the local market for skiing or real estate. They initially put ads in the Vancouver papers offering condos (bachelor suites) in the low $500ks which is more expensive than Whistler and roughly equal to downtown Vancouver. They also ignored at least one ski industry consultant who advised them to not proceed with the project due to too small a local population and too remote and hard to get to, not enough intermediate terrain, and too low of a base elevation. And the local airstrip is only suitable for small planes and gets too many cancelled flights due to low cloud cover.

 

There are currently a half dozen mega homes (one owned by Bruce Willis) a hotel and a condo building that had to drop prices to garner any sales.

 

I gave the original owners 5 years of loosing money before they bailed but I was wrong as they sold out to a minority investor after one year, screwing a lot of contractors out of money owed in the the process. Revelstoke's current billionaire owner's core business is a hotel chain and he is on record as saying that if he had it to do over again he would not have bought in.

post #30 of 124

The owner of this place has 3 others, and they're never used in winter. The view from 'my' bathroom is pretty good. I feel like I'm peeing in the lake, it's so close. :D Another guy has a "Castle" that's never used in winter. I sort of wonder if American ski hotel developers are sane. When at Squaw I see few lights on in the evening and at night, and the underground carpark always seems more than half empty. And face it, if there was demand, Nstar wouldn't be advertising 35% off its places over summer, Squaw wouldn't offer 40% off, and resorts wouldn't need to offer season passes like $350'ish  for Homewood (another proposed development hill).

 

 

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And if I'm  not using something, they're family can use mine. Fair's fair. I prefer slopeside.

 

The owner of one of one of our hills sold out and bought a chunk of Canada. The last 75 properties were dumped on the market for about $115k each on average.

 

Another lidt/hotel/mountain dining/hire/ski school owner did the same: 24 properties for around $3m in a give away.

 

There's a lot of For Sale signs. A place has to make $5k to $20k just to cover the property tax. Values fell ... and the government land manager invented ways to run up 'service fees' to compensate. And the land manager brought in $500parking permits for all (and a fee on mass transit bus pasengers) so vistations dropped 40% which'll reflect badly in losses so places are offering really good deals to stay afloat. But greed on one end, like the $500 car passes for every car ....and $43 fees to drive in convoys when the road ices up ...are just leading people to desert the hill. The land manager knows they'll be sacked if they don't meet targets so desperation kicks in. (I wish we could send them to North Korea to learn a few things). We can fly to Japan on sale fares at $650 return.

 

CREATOR: gd-jpeg v1.0 (using IJG JPEG v62), default quality

 

 

Back at Squaw with its plans for 1100 condos + mass transit + aquatic park and maybe a bob sled type ride and maybe boating excursions and stuff, I've seen that fail back in the 60s-70s after 5 years. and  a realtor wrote:

 

"So far this year the sales activity at the Village at Squaw Valley, in terms of units sold, has been slow, although equal to this time last year (8 closed escrows).  However, in terms of dollar volume we have seen a 52.5% increase from the same time last year.  Both the Average Sales Price and the Median Sales Price are 50%+ higher. In my opinion this is due to several reasons;

  1. Buyers are buying larger condominiums (two and three bedrooms), that of course have higher prices, and
  2. Distressed Properties (Short Sales and Bank Owned) are no longer a factor at the Village.

Of the 56 units sold in 2010, 2011 and 2012, half (28) were one bedrooms condominiums.  So far this year, only 1 of the 8 units sold (13%) was a one bedroom.

At this time last year 2 of the 8 sales were of Distressed Properties.  Of the 26 current active listings in the Village and the 8 closed escrows to date this year, none are Distressed Properties.  In 2010 and 2011, 15 of the 38 sold condominiums were distressed properties or 39.4% of the total units sold. In 2012 of the 18 Village condominiums sold, only 3 were distressed property sales (16.6%), two closed in the 1st half of the year, and one in December.  Sellers no longer have to compete with the lower prices of these Distressed Properties; therefore listing prices are now higher.

Currently there are 4 condominiums in escrow, only 1 is a one bedroom and none are Distressed Properties:"

 

Where's the demand? Other realtor offers me foreclosures.

 

Elsewhere smaller hills are bringing in management consultants and they hope that by not treating locals like shiite, the hills will survive.

 

Imo, hills that gouge and rely on real estate too much just end up in tears.

 

VRI's end of year figures are out on 27 September for the fiscal year to July 31. iiirc, they're still having a hard time to sell places in boring Nstar.

 

 

And then I open my emails and see that preferred parking is worth $750. Huh???? I hope that's not the future. As I said, the visitation stats show a 30-40% decline when idjits started charging $500 to park in satellite parking.

Enter to win one of three great prizes: 

  1. California Ski Industry Assoc Gold Pass ($2250 value) fully transferable to friends & family to 27 ski resorts in CA and NV
  2. Gold Tahoe Super Pass ($789 value)                       unlimited skiing at Squaw Valley, Alpine Meadows and Sierra at Tahoe
  3. Preferred parking spot at Squaw Valley ($750 value)   park in a secure lot just steps away from the slopes  

Save the Date November 8th: GOTR-S will announce the raffle ticket winner at our Open House at our new office at the Parasol Building in Incline Village. Need not be present to win. All proceeds benefit Girls on the Run - Sierras. For official contest rules, visit  www.GirlsOnTheRunSierras.org/raffle

 

But the social side of these types of events is good for the Soul.

 

Personally I think there's something on the Balance Sheet called "Goodwill" that's too often overlooked by myopic beancounters - please ensure Obamacare cures these wilfully blind people.  I see at a lot of places that those who buy real estate or memberships in club lodges on the hill are buying the social interaction and the Soul. Why stay in any Hilton or eat in any McDonalds when you can go to your  favourite hills and catch up with friends, most of whom end up with kids in race clubs or freeski together.

 

 

We down under have a lot of 'scratch my back, I'll scratch yours" with resorts like Big White, Fox, Head and many others sponsoring kids racing. In 5 minutes on the phone Travelplan gave every facebok friend an extra 5% of the catalogue price to fly/ski/stay at resorts in Nth America so the travel agency is happy, and we're saving a dollar.

 

And we again with Soul, we have a hill of 8000-odd beds full to the brim with aspiring winter olympic kids and nordics. Which is good business and good for the soul. Why have vacant real estate?

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Edited by veteran - 9/4/13 at 4:19pm
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