Small Resorts in the West in Jeopardy (WSJ)

[Slide of Hans]

. . .


On the broader point, one big challenge is finding new areas for development - anywhere near existing facilities (airports, towns, roads) likely is already fully developed from a ski standpoint (absent carving a few more trails). And doing a "greenfield" development is really tough because of the need for infrastructure. Even if you had a great ski hill (or potential one) - how do you manage to get flights to somewhere nearby if the best airfield is tiny.

A perfect example of this is Jumbo GlacierBC, approved under a favorable regulatory environment. No air field, no local population = no project.

 

[crgildart]

One big difference I see is that mom and pops don't gouge day trippers on the price of private lessons. You can get a half day private for under $200 at most of them. Perhaps they should to make up the missing revenues and cover costs? Another big part of the puzzle, albeit politically volatile, is the increasing need for more snowmaking infrastructure and the water to deliver though that infrastructure. Without that these places are doomed.

 

[Mendieta]

At the risk of bringing a bit of politics into the discussion...

For as long as I can remember the "correct" thing to say is how important small/family businesses are, the backbone of America, and on and on. But our taxation/regulation/sort-of-free-market systems obviously (at least to me) favor the large. Survival of the fittest as determined by marketing budget.

BTW... I'm all for regulation and inspection. "Ski at your own risk" only goes so far with me. I expect to feel safe on a lift. When I go off-piste, I don't expect every tree branch to be trimmed above my head level; that's why I wear a helmet (retired the old one when dent area exceeded smooth... no comments about my ducking inability, please).

We all want to see the mom/pop resorts stay around, but also love the idea of access to multiple mountains at the best possible cost/day.

I don't know how to get to the proper balance, but it sure feels to me that the Dark (Large) Side of the Force is in ascendance.

Does anybody know which and when was the last independent ski resort that opened in the USA? I don't follow the industry closely, but all I can think of are expansions of existing places.

I hear ya. Add to this legal costs / liability management. It is much easier for a large conglomerate to manage that. Huge issue here in the US, not just for the skiing industry. But an outdoors sport business is obviously pretty vulnerable under the prospect of frivolous lawsuits.

I vote with my wallet, and I have season passes with privately own, independent places (Mt Rose and Sugar Bowl). Yes, both together cost more than a collective type pass. Why do I do it? The Vibe, and smaller crowds, typically. The benefit I would see in having one of those mega passes, well, everyone sees that. So, most of the places owned by mega-corporations get crazy in weekends, when I actually get to ski, most of the time.

Oh well -- I hope the independent can stick around. It is up to us, to some extent ...

 

[Wilhelmson]

I don't know much about it, but in the Northeast it seems that in less populous areas, community support, a few local philantripists, and volunteers (yikes) might be a more viable model in this era.

 

[wallyk]

It's not the regulatory climate, much less the environmental lobby. It's the snow. A quick perusal of any of the websites cataloging lost ski areas will find the words "......after several lean snow years" in almost every listing. Snowpack across the American West is down massively since 1915. This study was just published with some new, scarier data.

l

Have not looked at reasoning why ski areas become defunct, I'm sure throughout the decades there are a lot a reasons: financial, weather, lack of interest, etc..... That fabulous four letter word that we at Pugski revere, "snow", as a primary reason seems sound. Snow, or lack there of, and how it's impacting the smaller ski areas in the west is what the original article is about.

I think about the current state of the ski industry and reflect on my own skiing history. I first put on skis at the age of 5 in 1977 at an area my uncle managed in Wisconsin that's now gone. I remember parking at the top and my parents cheering for me as I made my first run on my own. Nostalgia for sure but memories at a young age are not about business reality.

For those who own the ski areas, skiing has always been and always will be about making money. My local hill, Welch Village, is independently own and operated. While I enjoy the short lift lines I realize that for someone in the office behind the ticket counter financial reality is embedded in that lack of traffic.

I firmly believe that the independent ski area is the true soul of American skiing. I'm fortunate to make multiple trips each year to larger areas in CO/UT, for most the smaller ski area is skiing. It's the place where they grew up learning. It's where their kids will learn to ski and discover the freedom associated with skiing. It's where racing starts and future Olympians are born. Most important it's where people come to have fun and relax.

Not trying to be sappy or preachy, but the threats to these small areas are real. As a skier who respects the past, present, and future of the sport that has provided me with countless smiles and memories, each area that closes is a loss that goes beyond simple words.

 

[Itinerant skier]

Really interesting article . . . how does the revenue from multi-resort passes get divided up? Is it done on a per-use basis (i.e., if you use your X pass 5 times at one place and 10 at another does the first place get 1/3 and the second 2/3 of the pass cost)?

What I'm really wondering is why a smaller place can't join the pass groups and get some revenue that way.

Bolding mine. I would love, love, love a multi-resort pass to a group of Independent resorts. Big and small alike. If the Magic and the Bridger and the Anthony Lakes, etc, etc types could get at least 20ish resorts together and offer a combined pass (unlimited or multi-day), I would buy it in a heartbeat. There's the Powder Alliance in the West, which is in that vein, but heavily date restricted and only 3 tix per resort.

The Mountain Riders Alliance has a $39 discount card for 6 truly local and independent resorts. While some of the discounts are good ($44 off peak tix at Diamond Peak, 2-4-1 at Granite Gorge), others are a bit dubious (5th person in a vehicle gets a free ticket at Hurricane Ridge).

 

[Nathanvg]

So given current economics the US will probably not see another major resort built over the next 20-25 years?

Most major ski areas start out as small ski areas. Almost all ski areas open with just a handful of lifts. What's more likely is over the next 20 years is a small ski area becoming big. Think of the growth of snowbasin or canyons had around 2000 or so.

Another big part of the puzzle, albeit politically volatile, is the increasing need for more snowmaking infrastructure and the water to deliver though that infrastructure. Without that these places are doomed.

I think snowmaking in the rocky mountain west is way less important that most think. Most of these ski areas have less than 20% of there runs even partially covered by snowmaking. Natural snow is critical to all ski areas. Natural snow varies year to year. What's critical ins't snowmaking but rather a financial model to expects snowfall variation.


Lastly, regarding ski market saturation, I think the market is growing in a number of ways. Primarily, large ski area valuation, investment and revenue are increasing at a rapid rate. What this tells me is that size of each ski area and size of all areas on a pass is a key marketing advantage. Small ski areas would be wise to create more partnerships. These partnerships have almost no cost while producing lots of value to the skiers.

The other major factor is limited supply (as a result of regulation). Ski areas grew rapidly int he 90's but once regulation increased, those that had big ski areas had only one option to increase profits, increase price. Unfortuently, I see that trend continuing. The big ski areas wouldn't be spending $300M+ on new lifts this year unless they thought they thought they could either raise ticket prices or attract more skiers. Current day prices are so high, it's clear ski areas are not looking to grow number of skiers but rather cost per skier.

 

[wallyk]

Most major ski areas start out as small ski areas. Almost all ski areas open with just a handful of lifts. What's more likely is over the next 20 years is a small ski area becoming big. Think of the growth of snowbasin or canyons had around 2000 or so.

Lastly, regarding ski market saturation, I think the market is growing in a number of ways. Primarily, large ski area valuation, investment and revenue are increasing at a rapid rate. What this tells me is that size of each ski area and size of all areas on a pass is a key marketing advantage. Small ski areas would be wise to create more partnerships. These partnerships have almost no cost while producing lots of value to the skiers.

Appreciate the thoughts.......

1. If many of the larger resorts grew organically, which current area has the greatest probability to growth? Taos? Louis Bacon, bought the area 4 years ago and seems to have plans to expand the physical and financial capabilities of the asset. The town is approx 70 miles from Sante Fe....yes the airport is not as large as DEN or SLC but still can get flights from most major cities.

2. Have been looking at the valuations of MTN, Vail Resorts, and what's interesting is that 10 year quarterly EBITDA is increasing while operating margins have remained pretty consistent and during the same period returns are pretty healthy as well.....should the Vail customer be looking for more consistent capital upgrades to enhance the existing improvements at the core areas???

3. Have been thinking about smaller more niche areas combining economic forces to create a competitive pass. Maybe spending too much time on that idea lately.....Mrs WallyK is not happy with my recent "ramblings" about this topic.....Sounds good in theory but lots technical and financial ambiguities to navigate.

 

[David Chaus]

Re: WSJ, I just paid $12 for a 12 week online subscription. Apple Pay made it easy, seems to me I can afford that for a trial period.

Re: smaller resorts. The article focused on regions that have always been dependent on somewhat volatile and unpredictable weather patterns. OTOH, the PNW has pretty reliable snow most years, and has mostly smaller to medium sized day-tripper ski areas, most of which are doing fine. Bachelor I suppose is a destination resort, through the nearest lodging is 20 minutes away; Crystal Mt also has everything regarding terrain and lifts that you’d want in a major destination, though limited slope side accommodations. Bachelor and Crystal and pretty much everything else is day-tripping for locals, and are pretty busy on weekends and pretty empty on weekdays. I have not heard of any that are having financial difficulties or on the fire sale block. *Note: Eastern and Southern Oregon have a couple for small areas without much in the way of population nearby, and with dryer climate, so I have trouble thinking of those as PNW. But that’s just me.

 

[LKLA]

Re: WSJ, I just paid $12 for a 12 week online subscription. Apple Pay made it easy, seems to me I can afford that for a trial period.

Re: smaller resorts. The article focused on regions that have always been dependent on somewhat volatile and unpredictable weather patterns. OTOH, the PNW has pretty reliable snow most years, and has mostly smaller to medium sized day-tripper ski areas, most of which are doing fine. Bachelor I suppose is a destination resort, through the nearest lodging is 20 minutes away; Crystal Mt also has everything regarding terrain and lifts that you’d want in a major destination, though limited slope side accommodations. Bachelor and Crystal and pretty much everything else is day-tripping for locals, and are pretty busy on weekends and pretty empty on weekdays. I have not heard of any that are having financial difficulties or on the fire sale block. *Note: Eastern and Southern Oregon have a couple for small areas without much in the way of population nearby, and with dryer climate, so I have trouble thinking of those as PNW. But that’s just me.

Wow - you spent $1 a week?!?!?!

 

[Monique]

It's not the regulatory climate, much less the environmental lobby. It's the snow. A quick perusal of any of the websites cataloging lost ski areas will find the words "......after several lean snow years" in almost every listing. Snowpack across the American West is down massively since 1915. This study was just published with some new, scarier data.

http://www.oregonlive.com/environment/index.ssf/2018/03/snowpack_in_western_states_dow.html

This, for sure.

I was discussing the cost of Breckenridge condos recently with my aunt, who lives in Utah. I casually tossed off, "Then again, there's value in owning property in one of the few places in the US that will still have snow in 50 years." She paused. We agreed it was depressing, not necessarily wrong.

 

[Sibhusky]

I've been trying not to jump in here, because the last thing I want is us getting put on some multi-area pass. But we are independent, we've grown pretty organically from a town hill in 1947 to a destination resort today. They are making money. Not hand over fist, I'm guessing, but they've been steadily upgrading facilities and making the place just a wee bit nicer every year. And skier visits have been increasing every year. So, they don't need this multi area pass thing. People are coming for the value AND THE SNOW. There have been quite a few years now where other regions have been having snow issues, but even in our leaner years we've been better off. Yes, our pass and ticket prices have increased (and the locker prices especially!!!) but we're way more reasonable than most. So, I'd say we're bucking the trends seen mentioned in other posts. You don't need to charge an arm and a leg, you don't need to join these multi pass consortiums, you don't need 8 packs and bubbles and gondolas and 27 tee shirt shops. You just need to watch your pennies, which is what the current management has shown a talent for, in addition to creating a significant summer revenue stream. It helps to have the snow gods on your side, no doubt. Fortunately, for my lift line times, we have the good old fog reputation scaring more people off.

 

[Tricia]

I deleted a bunch of content in this thread that was discussion about Wall Street Journal's Paywall.
I'm sorry if some of you can't read the whole article, but you have the choice to subscribe or not.

Please stay on track with the content of the thread, re: small resorts in jeopardy.

 

[New2]

I assume you mean Yellowstone Club . . .

While you may be right about oversaturation, I don't think the bankruptcies of YC, Spanish Peaks, and Moonlight Basin are a result of oversaturation - they all went bankrupt as a result of the financial crisis in 2008, along with some shady financial dealings.

On the broader point, one big challenge is finding new areas for development - anywhere near existing facilities (airports, towns, roads) likely is already fully developed from a ski standpoint (absent carving a few more trails). And doing a "greenfield" development is really tough because of the need for infrastructure. Even if you had a great ski hill (or potential one) - how do you manage to get flights to somewhere nearby if the best airfield is tiny.

Yeah, Yellowstone, not Yosemite And yes, the financial crisis pushed all the newest developments into bankruptcy--but both federal land managers and prospective developers need to assume that there will be economic downturns in the future, just as there have been in the past.

Re: Greenfield development, that's certainly true near Denver, Reno, and Sacramento. But there's still tons of private land near Salt Lake that could be developed... Wasatch Peaks Ranch is the most obvious, land comparable to Snowbasin right off the interstate, 35 minutes to the airport. But the Wasatch, Uintah, Oquirrh, and Tushar Mountains still have tons of private land pretty close to SLC. Spokane, Santa Fe, Albuquerque, Durango, and Grand Junction could all be feasible jumping-off points for new destination resorts, and they all already have winter air service.

Really interesting article . . . how does the revenue from multi-resort passes get divided up? Is it done on a per-use basis (i.e., if you use your X pass 5 times at one place and 10 at another does the first place get 1/3 and the second 2/3 of the pass cost)?

What I'm really wondering is why a smaller place can't join the pass groups and get some revenue that way.

I think the MAX pass's revenue structure must have been something like this, which is why so many smaller/independent resorts jumped on board. But it didn't last.

Interesting thoughts..........was under the impression that the lack of major resort development was more attributed to the current federal/state regulatory climate and involvement of special interest groups and less about industry economics. Thought that I had read sometime ago, can't remember how long ago but believe that it was pre-crises, an article about California legislature suppressing the development of a proposed resort sized ski area.

I don't recall a proposal quashed in California within the past few decades, but it's certainly possible. There's the "resort" proposal between Squaw Valley and Alpine Meadows, but I never got the impression that that was about anything other than squeezing more money out of Squalpine's owners. And California's regulatory/political environment is almost certainly the country's most hostile toward new ski developments. But it's also already an oversaturated market, with plenty of small and mid-sized ski areas right on the brink, particularly with recent drought. A new development seems likely to just push one or more of the existing resorts over the edge.

It's not the regulatory climate, much less the environmental lobby. It's the snow. A quick perusal of any of the websites cataloging lost ski areas will find the words "......after several lean snow years" in almost every listing. Snowpack across the American West is down massively since 1915. This study was just published with some new, scarier data.

http://www.oregonlive.com/environment/index.ssf/2018/03/snowpack_in_western_states_dow.html

Economic downturns and dry/warm years are what push many marginal ski operations into former ski operations, for sure. At the same time, there are operators who make it work. But it absolutely takes capital.

Most major ski areas start out as small ski areas. Almost all ski areas open with just a handful of lifts. What's more likely is over the next 20 years is a small ski area becoming big. Think of the growth of snowbasin or canyons had around 2000 or so.

I agree this is more likely. But there's a constantly-moving-target problem here. Brundage, Purgatory, Sierra-at-Tahoe and Taos have all grown over the past 30 years or so to be "big" in 1988 terms... but over the same timeframe, the big resorts have continued growing and even outpaced them.

I think snowmaking in the rocky mountain west is way less important that most think. Most of these ski areas have less than 20% of there runs even partially covered by snowmaking. Natural snow is critical to all ski areas. Natural snow varies year to year. What's critical ins't snowmaking but rather a financial model to expects snowfall variation.

So true.

The other major factor is limited supply (as a result of regulation). Ski areas grew rapidly int he 90's but once regulation increased, those that had big ski areas had only one option to increase profits, increase price. Unfortuently, I see that trend continuing. The big ski areas wouldn't be spending $300M+ on new lifts this year unless they thought they thought they could either raise ticket prices or attract more skiers. Current day prices are so high, it's clear ski areas are not looking to grow number of skiers but rather cost per skier.

I think the rising cost of day skiing and ancillary products at major resorts is a big boon to smaller areas, letting them get by in a value niche that wouldn't exist if everyone went back to discounting for day traffic.

1. If many of the larger resorts grew organically, which current area has the greatest probability to growth? Taos? Louis Bacon, bought the area 4 years ago and seems to have plans to expand the physical and financial capabilities of the asset. The town is approx 70 miles from Sante Fe....yes the airport is not as large as DEN or SLC but still can get flights from most major cities.

Taos's current footprint is hemmed in by wilderness, but there's at least some chance it could expand across the valley. My understanding, though, is that it's still getting very little traffic outside the 15 busiest days of the year. The new ownership seems to be making good decisions, so maybe....

Silver Mountain, Idaho also has new ownership, and plenty of private land around for relatively easy development. With Mount Spokane and Lookout expanding, and Schweitzer already a decent-sized resort, the whole area might be poised for takeoff. Maybe.

June Mountain, California, also has the potential to be big, if the community gets behind it and Alterra (or whoever they sell it to) is willing to put up the cash.

Re: smaller resorts. The article focused on regions that have always been dependent on somewhat volatile and unpredictable weather patterns. OTOH, the PNW has pretty reliable snow most years, and has mostly smaller to medium sized day-tripper ski areas, most of which are doing fine. Bachelor I suppose is a destination resort, through the nearest lodging is 20 minutes away; Crystal Mt also has everything regarding terrain and lifts that you’d want in a major destination, though limited slope side accommodations. Bachelor and Crystal and pretty much everything else is day-tripping for locals, and are pretty busy on weekends and pretty empty on weekdays. I have not heard of any that are having financial difficulties or on the fire sale block. *Note: Eastern and Southern Oregon have a couple for small areas without much in the way of population nearby, and with dryer climate, so I have trouble thinking of those as PNW. But that’s just me.

Spout Springs in Eastern Oregon is for sale and didn't operate this year (it definitely fits in your low population/dryer climate category, though). And Cooper Spur on Mt. Hood is on holiday/weekend life support while the Forest Service dithers in implementing a congressionally-mandated land trade that will let Mt. Hood Meadows ditch it for good. At that point, it goes on the auction block, and it remains to be seen whether anyone will take it. And the PNW markets have definitely been healthier since an earlier wave of consolidations/closures (Multorpor, Yodelin, and the 5 ski areas that are now Summit at Snoqualmie). So even in the PNW, it's not 100% rosy. But yes, relatively reliable snowfall and proximity to big population centers is definitely a driver for successful day trip areas.

I would love, love, love a multi-resort pass to a group of Independent resorts. Big and small alike. If the Magic and the Bridger and the Anthony Lakes, etc, etc types could get at least 20ish resorts together and offer a combined pass (unlimited or multi-day), I would buy it in a heartbeat. There's the Powder Alliance in the West, which is in that vein, but heavily date restricted and only 3 tix per resort.

It would be great if more folks considered the Powder Alliance as a real alternative/complement to Epic and Ikon, and it's a great benefit for skiers who can use it. The current Powder Alliance website doesn't have any 2018-2019 details, but Mountain High's advertising this: "Get 3 days at 18 premier winter destinations including Brian Head, UT, Sierra At Tahoe, CA, Crested Butte, CO, and many more. Tickets are FREE midweek, 50% off weekends, holidays not included" (http://www.mthigh.com/site/tickets-and-groups/season-passes/18-19-season-pass-add-ons). Not really clear to me whether the 50% weekends count against your 3 days, or whether you can get 50% off tickets on holiday weekends. It would definitely be nice if they could work out how to give folks more of a discount for more days/blackout days, but it's not clear to me whether this gets there.​

 

[Slide of Hans]

Most major ski areas start out as small ski areas. Almost all ski areas open with just a handful of lifts. What's more likely is over the next 20 years is a small ski area becoming big. Think of the growth of snowbasin or canyons had around 2000 or so.

The other major factor is limited supply (as a result of regulation). Ski areas grew rapidly int he 90's but once regulation increased, those that had big ski areas had only one option to increase profits, increase price. Unfortunately, I see that trend continuing. The big ski areas wouldn't be spending $300M+ on new lifts this year unless they thought they thought they could either raise ticket prices or attract more skiers. Current day prices are so high, it's clear ski areas are not looking to grow number of skiers but rather cost per skier.

Although regulation has played a role at some areas, most on forest service land have an approved master plan spells out where approved expansion can occur. Since the 1990' lift service terrain expansion has occurred at crystal, bachelor, teton pass, Mt hood meadows, Jackson Hole, Eldora, Bridger, canyons, telluride, Abasin, taos, Sipapu, whitefish, Disco, Maverick to name a few. Wolf creek, and Homewood are permitted for expansion right now.

Some locals don't even want an expansion, Crested Butte for example.

as others have suggested, its a combination of snow, local population, insurance, and infrastructure. No population just closed Teton Pass. Low snow killed two of my northeast favorites- hickory and Ascutney. The small areas cant keep up with insurance and aging lift replacements. Most people who go to the big resorts and ride on HSQ or bubble sixers, and expect the same at a smaller area. I ski at Stratton this year and everyone complains about the slow snowbowl triple that's five minutes slower than a HSS - it is now being replaced by a HSQ. Almost no one i talk to there even knows about magic, across the valley, home to an old double and a decrepit triple.

 

[tball]

I think snowmaking in the rocky mountain west is way less important that most think. Most of these ski areas have less than 20% of there runs even partially covered by snowmaking. Natural snow is critical to all ski areas. Natural snow varies year to year. What's critical ins't snowmaking but rather a financial model to expects snowfall variation.

Snowmaking is super important in the rocky mountain west. While snowmaking only covers 20% of runs, those are the beginner and intermediate runs that 80% of skiers spend their time skiing,

With good snowmaking our high elevation resorts can almost guarantee good skiing on groomers at Christmas, and usually provide a decent experience at Thanksgiving too. Those are two times of peak demand, obviously. Ski season is short. That makes it a tough business. Generating revenue in November and December by making snow is KEY to the business model that expects snowfall variation!

 

[jmeb]

Some locals don't even want an expansion, Crested Butte for example.

Not sure that is the best example. Every skier I know down there is cool with the proposed Teo expansion. It doesn't take anything away since it's all closed during the ski season anyway, and there is plenty of BC skiing available all around the area. They part I've heard mix responses on is the proposed North Face lift which would bump out a lot of the North face even more than it already is.

 

[SpikeDog]

I've got a pile of WSJ's to go through after the Utah Gathering, so I'll just wait for the print version of the story to dig in.

The "several lean snow years" issue resonates with me. Several local hills aren't getting my visits due to lack of snow and blah terrain. White Pine in Pinedale, WY is a struggling local hill, and after walking down the steepest run this summer after the total eclipse, I can see why it needs about 5' of snow to cover the boulders. Soldier Mountain was also mentioned, and I used to ski at Pomerelle in Idaho quite a bit too. 3 similar hills, not much snow (well, Pomerelle gets reasonable dumps due to geography), but the main reason they don't get my $$ - TOO FLAT! Maybe Pebble Creek and Bogus Basin have some steeps, but generally the Mom and Pop hills are just that, hills. Great if you are starting your kids out, but too boring otherwise.

 

[crgildart]

I think snowmaking in the rocky mountain west is way less important that most think. Most of these ski areas have less than 20% of there runs even partially covered by snowmaking. Natural snow is critical to all ski areas. Natural snow varies year to year. What's critical ins't snowmaking but rather a financial model to expects snowfall variation.

Fifty years ago snowmaking was barely a blip on the radar at all North American resorts.. Same scenario, less than 20% of their terrain had manmade snow as a back up. I get that most of the central and northern Rockies aren't in any danger of losing viable winter for several decades, perhaps a century, but a consortium of Utah resorts spent quite a bit of money analyzing climate data and came to the conclusion that their reports are in serious jeopardy sooner rather than later. Many of the SLC area resorts have more than quadroupled their snow making infrastructure and capabilities post Y2k and aren't slowing down on that effort. This isn't just an East Coast and MidWest threat. Heck, even A-Basin needed tons of manmade to get open around Thanksgiving this season..

 

[Slide of Hans]

Not sure that is the best example. Every skier I know down there is cool with the proposed Teo expansion. It doesn't take anything away since it's all closed during the ski season anyway, and there is plenty of BC skiing available all around the area. They part I've heard mix responses on is the proposed North Face lift which would bump out a lot of the North face even more than it already is.

Oh, I meant the Snodgrass mountain expansion at Crested Butte. The teo ws a good add for the expert, but the owners (muelhers) wanted more blue Terrain, thier mantra was "the money is in the blues". That's what it's all about, the $.