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Economy impact on destination resorts.

post #1 of 12
Thread Starter 
I know some of you are not fans of large, corporate ski resorts and the changes they bring to small mountain towns.
I think the current economic downturn may bring what you've been asking for. There will be less tourist travel, less need for lodging and less ski industry related employment than in years past.

My guess is:
1) lift ticket sales down as much as 10% this year
2) real estate unit sales at half of peak sales years
3) almost no new housing starts
4) what few properties sell will sell at below replacement cost
5) expected amenities in developments will be deleted from the finished project
6) at least one large "ski area resort" will have enough financial trouble this year to impact the quality of their service with closed lifts or reduced maintenance
7) if the economy continues as weak as it seems to be today at least one of the larger resorts will close

Some of you live in the mountains and work in the industry. What do you think? Does the future look as gloomy from where you sit as it does in my home town?
post #2 of 12
We're not really a destination resort, but I think the impacts will be noticeable here as well. We managed to weather the downturn better than most regions...until this past month when housing numbers started to slump even further.

Last season was a record for us, due in part to the strong canadian dollar. With that falling a bit, I think we'll be down for that reason, but not catastrophically.
post #3 of 12
I think you are spot on, and to compound things if the weather does not cooperate this season, it will be quite disasterous for the industry.
post #4 of 12
So much for "spending is what makes America great"! There's no spending our way out of recessions any more. There's nothing the "middle class" hadn't spent. Many even spent what they don't have (home equity).

That said, places like Aspen might not get hit half as bad as Vail. Different kind of clients.

Impact to resorts that cater to weekend crowd would be the most unknown. Probably depends on gas price and unemployment more than housing house.
post #5 of 12
You did not factor in airline tickets. Resorts make their money on travelers, not locals who usually pay a one time fee for a season pass and don't eat on the mountain. The price of flights has doubled from what it was a few years ago. I would say that destination resorts, especially those in areas like Summit county, will be affected the most.
post #6 of 12
I think there's going to be a very fine line here for people.

On one side, people are hurting but still want to/can afford to ski. In this scenario, day areas may actually see business increase at the expense of destination resorts. People in Seattle ski the local hills but cancel their usual trip to Whistler.

On the other side, people are hurting so much that they cut back skiing altogether. The whole industry suffers, including smaller day use resorts close to metro areas.

Where exactly that line is will be different for different people of course. Where most customers are at the moment, I don't know.
post #7 of 12
Keep in mind, last year was a record setting year for the industry in terms of skier visits. Wonderful snowfall over the entire western US, in many cases better than anyone could remember, helped fuel those visits. Unless we get similar weather patterns, I don't think 08/09 would match 07/08 regardless of what the economy is doing.

1) "lift ticket sales down" - doubtful
2) "real estate unit sales at half of peak sales years" - I think that's optimistic - they're down even more
3) "almost no new housing starts" - many lots at resorts get sold with a clause that states construction must happen within a certain number of years from purchase. There will be plenty of custom home starts.
4) "what few properties sell will sell at below replacement cost" - that remains to be seen. It's certainly not at that point yet in most of the resort towns I've been to recently (Summit Co, Jackson, etc.)
5) "expected amenities in developments will be deleted from the finished project" - I'd agree.
6) "at least one large "ski area resort"...closed lifts or reduced maintenance" - this would be tough to tell. Many resorts already do variable operating times on their lifts and it's tough to say whether they do something this year is part of an ongoing plan or something new.
7) "if the economy continues as weak as it seems to be today at least one of the larger resorts will close" - I don't think we'll see a resort outright close. Perhaps one might change ownership, but that's pretty natural within the industry anyway.
post #8 of 12
Even though gas prices soared and the housing market started tanking last fall, this past ski season was (almost) a record breaker for us regarding skier visits and snow fall. Now that the summer season is ending, it turned out to be by far the busiest summer festival/tourist season I have ever seen here.
Housing sales are way down, people are actually loosing $ on spec homes (unheard of previously). The ski area continues to invest $ in more lifts, terrain, and restaurants. My job is secure, my housing is stable, and my season pass is already in my hands. So, I am fine... for now!
post #9 of 12
Originally Posted by at_nyc View Post
That said, places like Aspen might not get hit half as bad as Vail. Different kind of clients.
Then again, a lot of the Aspen clients could be in jail by the time this thing plays out...
post #10 of 12
I think it depends on the resort. The best in breed will do fine, the others not so much.

The resort I work at had the busiest summer ever and season pass sells are up. As long as mother nature cooperates we will do fine.
post #11 of 12

Ski Industry

Already Started/Last Year etc.

Tamarack Ski resort in Cascade Idaho is Kaput. There is presently 144 million in liens. B ank of America is in the process right now of repossessing a high speed quad and they are taking it out. No real estate sales etc. etc. Two Swiss entrepeneurs are losing everything. The real losers are the people who did all the work and aren't going to get paid. The two Swiss guys are probably somewhere in the Lucerne area either hiding or planning their next Big Developement.

Here is a very contemporary example of failure in the ski industry. Why did it happen, probably a lot of reasons, too many to mention . Hope they don't get any bail out $$.
post #12 of 12
Allow me to look at this from the point-of-view of a person who needs to plan out big trips, given the paucity of local big-time skiing (Liberty, Whitetail and Round Top don't really qualify as "big," even as a single unit):

My guess is:
1) lift ticket sales down as a whole: 4-6 percent at the destinations whose ticket prices are stratospheric (e.g. Vail, Aspen, Deer Valley, Killington, Stowe), 6-10 percent at the mids, anywhere from 5-20 percent at the smaller resorts where fickle weather can wreak havoc (e.g. Liberty and family).
2) real estate unit sales 1/3 of peak sales, if not worse (it'll be a "fire sale" the likes of those seen in the early 1980s when the dust settles, I think).
3) almost no new housing starts - I agree here with the others.
4) if any properties sell, they'll be at a big loss for the developers.
5) amenities will be shelved at almost all developments, as they can't be dangled as enticements if the lenders aren't there to back the developers up.
6) many large resorts will see reduced capacity "slowdowns" at mid-week and off-peak times. I think this will be seen more at the resorts with somewhat redundant lift layouts (e.g. Vail), but I can also imagine some of the other big resorts closing entire sections of mountain for mid-week periods.
7) if the economy continues to be in the dumps, at least one major resorts in the Rockies and two in the northeast will close up for good. The capital investment community is really freaked out right now (has been for a few years), and given the current financial climate, it can take years to recover. And many resorts are running on very large loans right now - just one disruption (bad snow year, recession, accident) can cause an irreversible death spiral, especially for the big resorts that rely on folks shelling out big dollars for tickets and who rely on out-of-area patrons for bottom line estimates.

I think that the big resorts in Colorado, Utah, Wyoming and the Tahoe area will see big hits this winter, as many of them rely on out-of-state visitors to make ends meet. And given that the airlines are all on borrowed time these days (and with higher fares, awful baggage fees and reduced schedules), travel will be a low smaller in scale for most folks who would typically go out for "the Big Ski Vacation™."

Even I have to tighten the belt this year: DC ain't getting any cheaper, and it makes no sense for me to move to the burbs.
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