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What drives the ownership at ski resorts?

post #1 of 4
Thread Starter 

In econ classes, the professors always used "the ball bearing factory" as the business example. Nobody intrinsically wants ball bearings so every decision will be made on a strict measurement of profit and capital worth. Snow ski resorts could be as far from that "ball bearing factory" model as possible. More similar to wineries? (You know how to make a small fortune in wineries - start with a large one!) Or "green" capital funds? Or an employee owned ball bearing factory?

 

There is money in ski resorts. And this is an interesting time in ski resort evolution. KSL corporation bought out a major family owned resort (Squaw) recently The consolidation of resort ownership is changing the scene. As @quant2325 noted in another thread, many of the apparently "family" ski resorts are owned by a few major players. Some of the resorts of these big corporation resorts appear to be struggling financially.

 

What drives the consolidation and how do these corporations react to market challenges?

 

Eric

post #2 of 4

Eric,

 

Most large corporations are driven by one thing, profit.  Few will have a vision, as opposed to a monetary goal, that a family owned and run business might have.  If the corporation is publicly owned there is constant pressure to maintain and increase revenue and profits....one way or another.  Long term plans will go by the wayside if profits fall.  If management cannot drive the business in a profitable way it is inevitable there will be cuts, price increases, or even a sale (probably to another large company) of unprofitable units of the business.  Smaller, family run businesses generally are much more in touch with their operations.  Most owners were hands on and knew how to survive the bad times.  Large businesses tend to run by the numbers. 

 

There are some fantastic large ski areas but I don't think the consolidation of ownership is overall beneficial to the ski industry in the long term.  It is producing mainly large areas that cater to those who ski a week or two and can afford their high prices for everything.  The industry needs smaller areas for those who cannot afford those areas or who just want to ski more often and locally at affordable areas.  We can't turn back the clock but those smaller, less expensive areas were the "breeding" grounds for the industry over the past 70 years. 

 

I am thankful that a few of these areas still exist near me and I frequent them during the winter.  Hope they can hang in for a few more years.

 

Bill

post #3 of 4

For the two public companies is the space?  Maximizing shareholder value (duh).

 

For the private companies or families?  Either the "love of the skiing" or ego.  There are better ways to make money than depending upon the weather.

 

For the techies that bought PowMow?  They really want a base camp.

post #4 of 4
Quote:
Originally Posted by quant2325 View Post
 

For the two public companies is the space?  Maximizing shareholder value (duh).

 

For the private companies or families?  Either the "love of the skiing" or ego.  There are better ways to make money than depending upon the weather.

 

For the techies that bought PowMow?  They really want a base camp.

 

There is at least one more reason that private investors buy ski areas.

 

Monarch was purchased a little more than a decade ago by a group of investors, most of which are business owners in the Salida area, including owners of several Salida hotels.

 

Success was far from guaranteed.  The mountain barely survived the 1980's after a ton of drama and legal problems related to its owners. In the 1990's it was passed around to several absentee owners that did little to invest in the area. Meanwhile, season passes for the I-70 areas became dirt cheap, and Monarch's season pass was absolutely uncompetitive.

 

Meanwhile, Salida was a rafting town that closed up in the Winter, and the town saw little income in the offseason.

 

So, a group of several local investors (and non-locals too, but it is the local group that does the day-to-day management of the area) stepped in and bought it  The primary goal was to make the ski area successful enough to get winter traffic in Salida, and to keep the ski area operating period- if the ski area were to close, Salida would become even a deader place in the Winter Months.

 

It is different now. The ski area is making a ton of money. The season pass allows free skiing at a ridiculous number of resorts, some much larger and much better known than Monarch. Monarch sells season passes all across the country now. It sells season passes to people who never even come ski the mountain. And in entices people to make trips that never would have considered the place before. Those people need places to stay.

 

Quote:
 

"For a long time, Salida wasn't a ski town and it struggled in winter," said Moorhead, Monarch's longtime manager who first started working at the area in 1976 and owns a stake in the hill. "They've seen us come in and make a huge difference, and they appreciate that. Now, winter has a substantial impact."

Don Jackson said his Salida Super 8 hotel saw its best winters ever in 2008-09 and 2009-10, years that the tourism industry was weathering declines. Jackson, another owner of Monarch, credits the hill's growing attraction with budget-minded skiers as fuel for the wintertime fire in Salida.

"We jumped at the chance for ownership," he said. "It's not that often you get a chance to really impact your off-season."

 

 

 


 Savvy owners of family-friendly Monarch ski area enjoy profitable reign - The Denver Post http://www.denverpost.com/ci_17429575#ixzz2pBQJR37i

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