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So, just how profitable is a ski school?

post #1 of 53
Thread Starter 
I really loved the last thread, The Elephant in the Living Room although I was mostly a lurker not a contributor given the time commitments of my real job. I have printed it out and will read it tonight.

But, I was wondering and I am hoping that the SS management in this Forum can help determine, just how profitable is a ski school?

It seems to me that much of the discussion about unions and professionalism revolves around the kind of business a ski school is. I just don't know.

For example, if the ski school is wildly profitable and they pay a Level III with 20-yrs experience $8.50/hr (as does a ski school I know at a major New Hampshire resort) then they are really scamming the instructors.

But, if the ski school is barely profitable, then keeping wages low might be in order.

So, how does the resort feel about the ski school? Is it wildly profitable and they use it as a cash cow, and thus want to keep wages low; or, is is marginally profitable, or even, perhaps loses money and they use it as a loss leader?

Curious minds want to know.

post #2 of 53
I may be wrong, but I believe some (or maybe many) ski schools in Europe are run as co-operatives with full profit-sharing.
Maybe someone knows more than me?
post #3 of 53
At most ski areas, ski schools usually are the #3 revenue generator, behind lift tix and food / beverage. LT will average out at about 50-60% of the gross, f/b at 20%, ss at 15%, with the balance being made up of rental, etc. The average school runs at about 45% labor costs, so you can figure an almost 50% net for that department. But many areas charge back certain costs, such as grooming, some lift related expenses, etc So they can reduce that bottom line even further on paper. (Read" How to lie with numbers")

At the very large destination resorts, such as Vail, Aspen, Heavenly, etc, ski schools actually come in as the #2 revenue generators. Still working with under a 50% labor cost(including indoor staff), you might begin to imagine the kinds of numbers we are talking about. During an average year, the Vail/ Beaver Creek Ski School generates in excess of 30 MILLION dollars. Drop the 50%, and you can see that ss contributes mightily to the company's bottom line. :

Last winter(2000-01), Vail Resorts posted it's record season. The company was happy, the stockholders(the ones which receive a dividend) were happy, and the employees who worked hard made a few bucks. Upper level mangement received their bonuses(one of which was 2.6 mill), mid- level got a little extra, while the working staff was promised an average 3% wage increase for 2001-02. For various reasons, that wage increase was eliminated after 9/11, with the company anticipating a severe downturn in business. After having worked so hard the year before to justify that raise, it vanished. Supposedly, everyone in the company had their raises put on hold, including mid and upper management.

But come March 1, suddenly it was realized that maybe we weren't doing so badly. The raises were issued, starting March 15, rather than retroactively. Because of this, many of us are now wondering if there will be bonuses paid out to the upper tiers.

If the company had truly cared about the employees, it could have kept the raise in place with just 1/2 of that one bonus. But we were told in no uncertain terms, where we stood in the company, by the individual who received that particular bonus.

So- are ski schools profitable? Mostly, yes.
How do the areas feel about the schools? We are a necessary evil, and we can help. Plus if the ski area is on USFS land, it is mandated that the area supply a ski school of some sort.

post #4 of 53
Vail Snopro

I heard the story when out there last week. These events sure do bring out the best in folks don't they. I believe it is rationalized as "the trickel down effect " or that "a rising tide raises all ships."

I am sure you feel bouyed by the windfall of your executive.

Sorry if it rubs you, It rubs me, and happens even in small business.

Still, I don't want their life. even with the $$


Dumb poor and happy

post #5 of 53
I agree! And the guy who received that bonus? He couldn't buy a turn with a handful of hundreds!

But the greater question-. Does he care? Not in the least! And that's the guy who is running one of the largest(notice I didn't say "finest") ski areas in the country. He couldn't give a rat's ass about skiing. To him, running this company is nothing more than a paycheck. Just as it was at United and which ever cruise line he worked at before Vail.

And it's the same for the owners of the company, all based in NY. I've skied with several of them, and none have a heart or soul for skiing. And just think- they don't even have to pay for it!!!


post #6 of 53
and the buggers don't tip either :
post #7 of 53
VailPro has it about right, although his analysis reflects a higher end destination scenario. NSAA tracks results regionally and to some degree distinguishes day areas from destination.
Percentage of gross by department varies by package splits, number of local rental shops, concessions etc. and how the company is broken up i.e. Real Estate sales and lodging/hospitality. Ski School contributions can be as low as 6% to 15%, but national average is in the 10% range. It is in the net where the difference lies.
A day area may operate on a 30-40% labour to revenue, destination 40-50% labour to revenue. This usually includes training, salaries, comp and other fringe, and may or may not include tickets, admin, rentals and food (kid centers).
Direct operating costs are low, 10% or so. Basically, an area is looking at a 50% return, unless they allocate costs like snowmaking, grooming etc to the mix as Vailpro indicated.
There is no downside. With minimal if any show-up pay, and a incentive matrix for sales generation, instructors act as contractors. No snow, no work, no exposure. Lots of snow and it is pure gravy.
How many other business types out there would like that set up?
post #8 of 53
And he got a sweet deal on the Beav crib! VP, combining VBC, that's about $15/skier visit...I am guessing here. The national range is from around $2 at some day areas to an average $7 at medium sized destinations. I always pay attention to $/student and penetration rate though.
Talked to Murtha on the phone when I was at the w-convention, said hi.
post #9 of 53
Necessary evil, eh?

This is a very important thread, WV Skier. Thanks for getting it started. The elephant is getting splattered all over the universe.

How about those concession schools? What are their margins?

It seems some can't afford to buy their instructors coats.

[ April 18, 2002, 10:34 AM: Message edited by: nolobolono ]
post #10 of 53
Concession schools are toast. I interviewed in PNW and the unwritten mandate was to squeeze 'im out. I am not a mercenary and didn't like the pay so no dice. I know another high profiler who did a season or so but was too singed by the war. It is a matter of time. Old shacks with unindemnifiable equiptment have run their course and the charm of the "Bonne Marche" school is now a memory.
Not my opinion but the inevitable instinct of corporate ownership.
post #11 of 53
>>>For example, if the ski school is wildly profitable and they pay a Level III with 20-yrs experience $8.50/hr (as does a ski school I know at a major New Hampshire resort)<<<

$8.50/hr??? and we were bitching about getting $13/hr in 1972!!! That was thirty years ago. I almost can't believe that a selfrespecting instructor of any level would work for so little, four hours work will bring in $34. Unbelievable...

post #12 of 53
McDonalds in Vail starts at between $8-9 p/hr, and includes housing...

post #13 of 53
All is not lost!

There is a movement afoot in Vail to start another ski school. Unfortunately, it would be untimely to release details at this point. But it might likely run more along the lines of many european schools...

Less cost, less overhead, more pay. What a concept!

[img]smile.gif[/img] [img]smile.gif[/img] [img]smile.gif[/img] [img]smile.gif[/img] :
post #14 of 53
Between ownerships (actually during control of a trustee out of bancruptcy), I attempted to acquire the AF school as a concession. A good friend held both the school and rentals that way for 10 seasons.
I proposed the Euro model, profit sharing, benefits and % ownership...the plan left plenty for me, who would basically have the exposure intitially. One could live the lifestyle, give great service, invest in the staff and live comfortably....only corporations are greedy!
post #15 of 53
Thread Starter 
Yes, Ott, $8.50 and that's for a LIII. For a LII it's $7.25 and newbies are $6.75. Of course, the incentive is not to work hourly, but to build your clientele and do request privates where the LIII split is 50/50, LII is 60/40, and LI is 70/30.

There was a bit of a hidden agenda in asking my question. I really do not have a clue about how profitable a ski school is, but, I know that my ski school does a LOUSY job of marketing, both in general, to attract customers, and to existing customers in an attempt to get them to return.

I know I could do better using fairly simple "customer relationship management" techniques. For example, my ski school doesn't capture email addresses (I do that myself), nor do they do mailings or followups of any sort. (As an aside, one of the things I've started doing is carrying a digital camera and taking a bunch of pictures during the day. I sent one or two a few days following the lesson as a thank you, and I'll send a couple more in the fall as a reminder/teaser.) There are a whole lot of things that can be done. If anyone really cares about retaining customers!

So, I was wondering how profitable a ski school was because if it was marginally profitable there might be an opportunity, in the same way that many companies outsource their cafeterias and other "non-core" services, to outsource the ski school to a group of entrepreneurs (me).

What are your thoughts?


[ April 18, 2002, 04:44 PM: Message edited by: WVSkier ]
post #16 of 53
My thought on this is 'more power to you' but what about the other 28,000 instructors in this country who instruct and rarely see the same face twice?

post #17 of 53

Another school at Vail? Could this be the MOVEMENT I have been hearing about?

Is this corporate entrepreneurism or a genuine indy start-up?
post #18 of 53
Whatever is going on at those other areas is interesting and obviously sometimes horrible.

In Aspen, the labor to rev ration is definitely more than vsp's 45%. And yes, I agree with Ott and others that Level 3 pay of less than $10 is pretty horrible. Again, our people do way better than that.

And vsp is right that the school produces the second biggest contribution.

It is definitely a money maker, but that doesn't mean that the school is rolling in dough or that the company is rolling because of it. The labor to rev is not the only factor in the final contribution. You also have to bring in such things as tax, insurance, worker's comp, administration, marketing, etc. etc.etc. Ultimately the bottom line contribution in schools to the over all company is more between 10% to 30% of the school revenue. I normally feel that if a school produces near the low end, that it is too costly to run--all expenses including labor are too high. After all, one of strange concepts the business is to make a profit and a lot of that stuff that goes to the bottom line is used to service debt and help with new investment. (They don't just put it bags and take it back to Chicago.)

If the amount is near the 30% end, I believe these pros should start getting some more money.

(As big) HOWEVER, you don't really know what's reasonable for a company until you know its market, its debt needs, its plans, its history, etc. It's really hard to come up with a set figure of what it SHOULD be industry wide.

[ April 19, 2002, 07:58 AM: Message edited by: weems ]
post #19 of 53
Well stated, Weems.
What if a school could reduce all of those overheads? Reduce indoor staff, and what if each instructor really did become a "contractor"? Of course that means carrying your own liability, health, WC, etc. out of your own pocket.

Could we reduce the cost to the client, and allow the instructor to see more of the cash?

And I'm not just referring to underground teaching....

post #20 of 53
You already know that in europe the majority of the schools are run by the instructors as co operatives.These co operatives are then affiliated to national organisations.

Taking France as an example, ESF is the larger older scheme. The more senior & older instructors tend to get the better deal with the way their co operatives are set up. ESF tends to be slower & more conservative with taking up new technique.

The International school is the younger & is more flexible & go ahead. They have 60 schools affiliated. I would guess they give out information & possibly assistance to start up co operatives, although most of their literature would be written in French. Their website is http://www.esiffes.com/. They have lots of English speakers, so a telephone call might not do any harm.
post #21 of 53
Interesting question vsp. And I don't know the answer.

I do know that I have always preferred working for "big brother" because of the issues you mention: I don't think I have the business acumen to take care of all those things myself. I've always appreciated the support and collaboration of the area company. If I didn't like the one I was in I moved. If I liked the one I was in, but didn't like what they were doing at the moment, I quit management and returned to teaching. (No company will ever get in the way of the magic that my students and I will create together.)

I think I've always had choices.

Back to your question, the indoor staff is a support system. It's there for a reason. I appreciate them and what they do and am not sure we'd operate so well without them. I think the overhead is useful, because it supports the group. I like the synergy.

I think the result of your idea would destroy accountability and create huge confusion for the guests. Just think of all the things we can do as a team within one company that would be denied our guests if we were all separate. Just think of all the interdepartmental cooperation, hr benefits, training, etc. that would go away.

I may be able to survive such a paradigm because I'm experienced. I'm not sure a lot of others would, and I am sure we'd have a lot of unaccountable hacks out there.

Would we reduce the cost to the client? Maybe. Maybe I would charge more for myself! (arrogant jerk!). Would we create higher quality (or fulfillment) across the board? Doubtful.

[ April 19, 2002, 11:10 AM: Message edited by: weems ]
post #22 of 53
That news about Vail is very interesting. It's always seemed funny to me that here in the US, where open competition is mantra, you have total ski school monopolies at each hill, while in europe, more accustomed to rules and limiting competition, you have multiple ski schools at some resorts.

I can't get over how if I teach a 2 hour private, I get paid 22 bucks before tax, but SS takes $180! Someone's making money on that one and it ain't me.
post #23 of 53
Ant, the whole set up is different in Europe--including all the piste services etc.

Without comparing the merits, I will say that we, as a company, have fought for and won, in court, the right to be the sole purveyors of ski instruction on the areas we operate. Our rationale has to do with our belief that we can generally provide a safer, more consistent, and better product for the public. Obviously some disagree, and that's their prerogative. But having won that legal right, we feel someone having another school in our areas is a bit like their walking into someone else's restaurant and serving your own food.

We don't have a monopoly, we have a business. The courts make decisions about monopolies as they did when they told Vail that it had to divest itself of Arapahoe Basin when it purchased Keystone.

We have no more a monopoly than Disney has when it operates all the rides at its amusement parks. In other words, you are allowed a monopoly on the goods and services of the "plant" you operate. The European areas are not set up this way, for many reasons. Their accountability perhaps takes a different form.

As for your ratio of wage to lesson cost, certainly the company makes more than you do on that one, by a significant amount. That doesn't mean that they're making a significant amount of money.

I happen to believe that the pass price war on the front range is devaluing the product and your wages suffer as a result. I believe there are lots of people skiing, but

1. they are being trained to enjoy an expensive product at very little cost to themselves, and
2. the areas are seeing lots of skiers but nvery little revenue.

Now this is purely conjecture on my part, but I do believe that this is the usual result of price war. Having said that, more power to them! If they keep people skiing, then I'm sure we'll get our share in Aspen--and at a price that pays fair value for the goods and services they buy. And then we can keep our wages up.

Of course, I may be way off base. They don't let me count the money bags, or even touch them, because I'm not known for my economic acumen!

[ April 19, 2002, 02:29 PM: Message edited by: weems ]
post #24 of 53
Interesting, weems. Skiers can rent equipment off base I presume and bring it into the Aspen ski areas, why can't they rent an instructor and do the same, or why not control rental equimpment coming from outside? And people do haul their own food in their backpacks.

Just a hypothetical... ...Ott
post #25 of 53
Your ski school is a monopoly. Maybe no one has the money to put up a legal battle to challenge it. But it is a government granted monopoly. Maybe if Colorado had some independent ski schools (and learn to ski programs), then maybe they would have more local skiers.
We have lots of independent ski schools in the Northwest. We have lots of kids learning to ski. hundreds of buses full of 7 week learn to ski programs students.
We don't have a pass price war, we have far too many skiers for that to happen. They haven't lowered season pass prices out here, they keep going up. No buddy passes etc.
Expensive ski lessons are bad for skiing, and for the growth of skier numbers.

Ski schools are a big business.
See link for Vail resorts breakdown of revenues by catagory lifts, ski school, dining, etc

And Interwest Corporation breakdown near bottom of page.

[ April 19, 2002, 06:58 PM: Message edited by: NordtheBarbarian ]
post #26 of 53
Ott, that's a good hypothetical. I suppose that a privately owned place like Deer Valley could do just that. However, this would not be a very bright decision, I think. It would be like, you can't bring your own shoes into my restaurant, you have to rent mine instead. There are limits. In Taos, years ago, Ernie Blake tried his best to keep other shops out of Taos Ski Valley, but ultimately, that became a losing and self-defeating battle. Ultimately, you work out whatever arrangements you need to grow your business.

I know we lose some ski school business to the underground just as people smuggle popcorn into the movie theaters. But when you pay the lease on the restaurant (or own the building) you try to be the guy that serves all the food.

At the moment, if someone rents another instructor and takes him or her to the area, we don't allow it. It's part of the condition of using the lifts, and it's written on the pass. It's been challenged before, and we've won it. I suppose it could be challenged again, but obviously we would defend it vigorously.

On the issue of food, the restaurants on-mountain used to refuse seating to those bringing their own lunch (both our restaurants and the privately leased ones). The Forest Service decided that this did not serve the public properly and asked us to allow people to bring their own food. We complied. (My memory is vague on this, but I think this is the story.)

I'm not saying even right or wrong here. So don't anyone get too outraged. I'm just pointing out realities.

[ April 19, 2002, 07:37 PM: Message edited by: weems ]
post #27 of 53
Nord, it is no more a monopoly, as I said, than Carnival Cruise Lines owning all the shuffleboard concessions on their ships, or Disney operating all the rides in their parks. It IS a monopoly within the "plant". But it is not a monopoly in the "anti-competitive" sense that usually defines illegal monopoly. You can get perfectly good ski lessons in many other areas in Colorado. Now if Aspen Skiing Co. owned all the ski schools in all the Colorado areas, then THAT would be a monopoly.

Also sounds like you've drawn a nice balance up in the Northwest. Wonderful. I think the areas there maybe look at the number of ski schools as sources of skiers and that's fine. I wonder if the pros are making a living?

And you're right, expensive ski lessons aren't much of a help. I'm bummed that ski school has to make a profit at all, because I would like to give the lessons away. (That's why they don't let me be in charge of the money around here!). That's why we've been keeping our prices relatively flat for a few years now. We may drop our beginner's prices next year. But a few years back, we rebuilt the whole program, and included levels 1-4 (not just first timers!) in the beginner's price--a huge discount--and guess what? No increase in volume. What's up with that?

I'll tell you what's up with that. In our area, price has not been at the top of the list in ANY guest survey we've done.

For me, the role of price is one of those mystical things that I'm somehow not allowed in my life to understand. I've been too busy learning and sharing skiing!
post #28 of 53
Weems, I have no opinion one way or the other, but how do you think having a monopoly creates “a safer, more consistent, and better product for the public”?

Regarding the restaurant analogy you provided, you would think the same about taking your own wine into a restaurant wouldn’t you. That is, you can’t take you own wine into a restaurant. Well in Australia you often can. It’s called BYO (for Bring Your Own). Sounds crazy, how can the restaurant tolerate this? The answer is the restaurant charges the person a small amount to open the bottle, called corkage. Sometimes it’s a few dollars for the bottle, sometimes per person. Everyone is happy. The restaurant doesn’t have to stock a cellar, with the associated overheads, yet still profits from the person drinking. The diner can chose which wine they want to drink, and can normally buy the bottle far cheaper elsewhere.

Now think about your analogy again in this light. What if the mountain’s management gained their “corkage” from each person taking lessons? That is, any number of ski schools/instructors could set up shop there and they payed the mountain a commission per student? With more schools in the area the price will almost certainly drop, and they may actually try to provide some level of service to differentiate from their competitors, which is good for the students. Cheaper prices means more people will take lessons, plus more schools means more jobs for instructors. If you’re good you’ll be in demand and earn more money, if you’re not good you’ll earn peanuts because the schools will claim they can’t afford to pay you any more because they’re trying to undercut their competitors. The mountain still gets its cut and probably ultimately gets more clientele as more people have taken lessons, advanced quicker, and enjoyed the whole process so they come back again.
post #29 of 53
I recently had a day of skiing with a fellow Bear. Happened to be an instructor. Had a FULL DAY of instruction, as it turned out. Best damned day of my last decade of skiing - a breakthough. Wouldn't consider teaching me for money, but: Who the hell knew whether or not he was teaching me? Does anyome search me for candy when I go to a movie theater? Maybe there needs to be a "paradigm shift" [gotta love the lingo]. Maybe instructors should be OWNERS. Maybe more areas should become COOPERATIVES. Maybe some union clout could get some attention. It just disgusts me to read about "owners" who don't give a rats ass about skiing. About 90% of my professional time is directed to a rural electric cooperative, of which I'm general counsel. It's owned by the CONSUMERS. Believe me, we have a very different approach from the investor owned electric companies. This thread and the associated thread have sort of gotten under my skin. Now it's not just theory.
post #30 of 53
Pete. we have the BYOB thing in the states, too. if you ever hsve the pleasure of having dinner with d-chan, you will find out.

So, d-chan, what do you think of Pete's analogy?
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