To look at the headlines in the business press, it appears as though the ski industry is now going through the same type of meltdown the high-tech stocks experienced last year. Since March, the number three resort operator in North America, American Skiing Company, has called off a proposed merger with the largest independent hotel management company in the United States, and the companys CEO, Les Otten, has resigned. Charlie Lockes Resorts of the Canadian Rockies chain of ski areas has filed for protection from its creditors. In Fernie this winter, lawsuits were more common than snowflakes. Aspen Skiing Company, Vail Resorts and other American operators have recently announced layoffs. And this week came news that Whistler-Blackcomb is the only Intrawest resort that wont post skier visit numbers higher than last year.
On top of all this, of course, is the growing realization that the North American economy is slowing down. How long it will continue to decline is anyones guess.
But the ski industry is full of conflicting indicators. Across the United States, skier visits this past winter are expected to total more than 54 million for the fourth time in the last decade. And in Canada, skier visits are likely to top 18 million, which would be a new record. However, despite the near record totals in the United States, skier visits to destination resorts were actually down. The reason, according to most analysts, is the abundant snow that most of North America received this winter. Rather than travel to destination ski areas, many people went to their local mountains and hills.
Whats interesting here is that about five years ago, when consolidation was sweeping the industry and companies like Intrawest, ASC and Vail Resorts were buying up ski areas like Saturday morning shoppers at a garage sale, one of the suggestions made was that these multi-resort companies could revitalize the ski industry and entice new people to take up the sport. But while 54 million-plus skier visits in the United States could be a record, its not substantially above the 20 year average for skier visits in that country. In other words, it appears it was the snow provided by Mother Nature, rather than any marketing efforts by the operators, that brought more people to the hills more often this past winter.
The situation also points out how dated skier visits are as a tool for measuring the industry. In its third quarter financial statement this week Intrawest noted that while skier visits at Whistler-Blackcomb will be down slightly from last season the actual numbers wont be released because they might mislead investors and affect share prices, another sign of how the industry has changed revenue per skier visit will be up.
But perhaps the most important measurement for the ski industry in the 21 st century is real estate sales. While the major resorts are happy to steal skier visits from one another, if they can sell that skier a condo they likely have him for good.
And even if its a non-skier/boarder who buys the condo, that person or family is still likely to visit regularly and spend money in restaurants, shops, bars, golf courses and any manner of other activities. As a former Vail president who left to go into real estate sales once summed it up: it makes no difference if the people who buy real estate at mountain resorts ski, the regions economy is driven by people who come to the mountains for many reasons.
So while the ski industry hasnt managed to entice a whole lot of new people to become skiers or boarders, even in this past winter of abundant snow, it has been successful in enticing people to invest in mountain real estate.
But as the affairs of Resorts of the Canadian Rockies and American Skiing Company suggest, managing that real estate properly can be as crucial as snow on the hills.