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How much money do ski resorts make?

post #1 of 11
Thread Starter 

Every year lift ticket, lesson and rental rates keep going up, to the point where its now prohibitive to go skiing (for casual people with no season pass). Instructors don't make much money and depend on tips, so the ski school revenue is going somewhere.

 

Do their costs go up that much each year or is it just more profit? Is there a list of the most profitable ones by area?

post #2 of 11

Think of all the overhead...It's not cheap to make snow, buy groomers, fuel, insurance, repairs, etc

post #3 of 11

Yeah, that's an interesting question that I've recently wondered myself. I have to think that they don't make that much, especially not during crappy years in a recession.

 

I'd imagine that there are many seasons that they operate at a loss. Expenses must be pretty similar year to year (running lifts every day, grooming runs, paying patrol/staff, etc.) but visitation will fluctuate. I'd be really interested to know how some of the less crowded resorts make any money.

 

While prices go up year to year, there are also a ton of deals (think Epic Pass), both seasonally and weekly, designed to attract more visitors. So it never really seems like they're just sitting back on top of a pile of 100-dollar bills.

post #4 of 11

I'd imagine a resort needs to make a lot of money during the span of a few months, so that they can sustain the business over the period of the year that they aren't open or running full swing. They probably also have to make up for lousy snow years, as well.

post #5 of 11

The prices don't have to be as high as they are if certain things were cut out, like high speed lifts, some of the grooming, snow making, etc. the price would go down.  I ski at Mt. Baker which has no high speed lifts, grooms only a small amount of the hill, and has no snow making and tickets are still $51 on the weekend and $43 on the weekday.  The owners make money every year; so much that they replaced every chair in the area over a period of years, building a new one every two or three years and they paid cash for every one of them.  If these lifts had been high speed quads they couldn't have done it without getting a loan.  So it's possible to make good profits without charging huge amounts for lift tickets, at least in this local market.

 

If you want the amenities, then you have to pay for them.

post #6 of 11
Quote:
Originally Posted by Posaune View Post

The prices don't have to be as high as they are if certain things were cut out, like high speed lifts, some of the grooming, snow making, etc. the price would go down.  I ski at Mt. Baker which has no high speed lifts, grooms only a small amount of the hill, and has no snow making and tickets are still $51 on the weekend and $43 on the weekday.  The owners make money every year; so much that they replaced every chair in the area over a period of years, building a new one every two or three years and they paid cash for every one of them.  If these lifts had been high speed quads they couldn't have done it without getting a loan.  So it's possible to make good profits without charging huge amounts for lift tickets, at least in this local market.

 

If you want the amenities, then you have to pay for them.


Agree with Posaune.  $34 daily lift ticket, $109 season pass, $25 Boomer Fridays (over 40) =======  3 chairlifts, all slow fixed grip doubles, great snow, 1100 vertical, $4 Moosedrool, almost always open early, if you're a local you get some special priveleges regarding where you can ski.  If you ski a lot you know most of the lifties, ski patrol and even the CEO owner who visits in the bar and on the hill, one of the principle owners even serves free popcorn in the bar.   Have I skied better hills, sure but there is something bad about paying $80 for a lift ticket.
 

post #7 of 11

A few comments on my hill, as I've more or less seen their books. Some of this is indicative for ski areas in the Alps, some not:

-Our hill makes a killing on ancillary services and loses money on ski operations. The ski pass, priced at around 30 euros, is something of a loss leader. Pricing is a dicey issue and I don't think an operator could just set prices based on market forces; there's a sense that skiing is a sport for the masses and should be accessibly priced.
-The main expenses are HR and electricity. This is a different cost structure than US resorts have, where a lot of workers are ski bums paid in passes and services. Most European hills don't or can't do that; all the workers at our hill are on contracts, some seasonal, some full-year. And employment carries very high extra costs in Europe. Power is very expensive in Italy too.
-Insurance is much less of a factor here than it is for US hills.

-The resort has supported itself for the last year or so on the sale of the former site of the departure point of the tram, now replaced with a gondola. They sold the property to developers for something like 10 million euros.

-Ancillary sales for the resort are mostly food. The resort doesn't own ski-rental shops or hotels and has no parking concession. The lack of this wider revenue base is what's hampering its earnings ability. Like most European resorts, Skiarea Valchiavenna grew organically above an existing town. It owns virtually no property of its own for development; it runs the lifts on a concession deal. Furthermore, even if it were to buy/develop hotels, condos, etc. in town, it would be competing with entrenched local interests, mostly families who've run businesses in the valley for generations. These families have no control over the lift operations (eg, when the ski area opens and closes), and vice versa. So the resort could stay open through May, say, but the hoteliers could decide to close at the end of April. Or vice versa. And this happens.

-The resort has divided its ops into two companies, one that counts the cash from food sales, the other that racks up losses from ski operations. That latter "badco" will never be allowed to go bust; the region will prop it up or buy it at some point to guarantee all the jobs it creates, directly and indirectly.

 

So, to return to the original question of how much (my) resort earns, the answer is bupkes, at least from skiing. If they had their way, they'd just keep their restaurants open and shut the lifts (and indeed, some days, it seems like that's just what they do).

post #8 of 11

As an American addendum to prickly's description, my brother used to work as a year round management employee for Stevens Pass, a day area.  He said that they priced tickets to break even on hill operations and made their profit on everything else, like: food, rentals, lessons, and the ski shop.

 

For day areas this makes sense.  You want to lure weekenders in with basic costs that are as low as possible, and then suck the money from their wallets with the extras.

post #9 of 11

the local hill in WNY puts about $4 million back into the resort every year on things like snowmaking, lifts and lodges.  I imagine they must be making quite a bit more than that to do it every season. 

post #10 of 11

I have been officially out of the ski area game for awhile but I imagine things are tougher in this economy than 10 - 15 years ago.  Operating costs and Insurance smoke ski area's profits and have forced areas to make their money in areas other than where one would expect.  They don't make it on lift tickets.  They make it on huge profit margin areas like food, ski school, leased concessions and for those lucky enough, a connection to real estate ventures.

 

While things may have changed, a ski area was considered to be kicking ass (and envied) by making around 22% on a good season.  The highest percentage I was ever aware of was a one season event with the "Big K" at around 44%.  It was only one season and the seasons either side of that were marginal.  (think accounting practices here) This was in the days of SKI ltd's ownership. To the best of my knowledge it was rare for any management company to consistently top SKI.  They were pros at wringing out pennies.

 

Many areas in the country are there because they are quietly owned by successful businesses that need a write off, and in some cases by eccentric guys who want an area to "go play at' when he is away from work. 

 

 

 

post #11 of 11
Quote:
Originally Posted by Uncle Louie View Post

 

The highest percentage I was ever aware of was a one season event with the "Big K" at around 44%.  It was only one season and the seasons either side of that were marginal.  (think accounting practices here) This was in the days of SKI ltd's ownership. To the best of my knowledge it was rare for any management company to consistently top SKI.  They were pros at wringing out pennies.

 

 



And then American Skiing took over and consistently lost money because of their huge debt costs.  Finally the house of cards collapsed and Powdr Corp. took over, cut costs signficantly (and also drove away about 1/3 of the skiers).  Now they're trying to lure them back (in a recession) but at least the're making money and putting it back into the mountain.

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