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The ups and downs of resort expansion - part 5



Capital improvements on hold due to number of factors

Ski resorts across North America will not be investing as much in capital improvements, real estate and on-mountain facilities this year.

"Everyone's taking a wait and see approach," says Paul Mathews, president of Ecosign Mountain Resort Planners Ltd.

"Business will probably be down 10 to 15 per cent this winter" due to an economic slowdown and the Sept. 11 terrorist attacks, he explains.

Jimmie Spencer, the president and CEO of the Canada West Ski Areas Association, says the current mood, albeit cautious, is optimistic.

"We won't be any worse off than last year," he says.

The majority of resorts in British Columbia and Alberta experienced a poor snow year last season and have cut back on capital improvements due to lower than expected revenues.

But, according to Mathews, there have also been some other bumps along the road to resort consolidation and capital spending.

Companies such as Resorts of the Canadian Rockies – owner of eight resorts, including Fernie, Kimberley and Lake Louise – and American Skiing Co. – owner of nine resorts, including Steamboat, Colo., and Heavenly, Calif. – have experienced a variety of financial problems. The two companies have spent the summer trying to get their finances in order.

"Those situations are still playing themselves out," he says.

The development and expansion of what some call "McResorts" or "Resorts-R-Us" in the 1990s follows a general trend of other resort companies copying, what Mathews calls, the "Whistler model."

"Whistler was the first resort to bring a pedestrian village and beds close to the mountain," he says.

But, according to Mathews, there is more spending and investment on the horizon.

"All the resorts across North America" – except in B.C. and Alberta – "made big earnings last year and have plans for next year," he says, noting that there are 42 resort villages currently under design or construction.

Mathews, meanwhile, says this year's lack of capital investment is due to the cyclical nature of ski resort development.

According to Mathews, the six-year period from 1992 to 1998 saw an era of resort consolidation and significant capital investment.

Mathews points to Intrawest Corp.'s $574-million investment in Whistler as an example. Intrawest is currently part way through a $80-million revamp of Creekside.

"Capital improvements attract people to invest in real estate," he explains.

According to B.C. Assets and Land Corp.'s 1999-2000 end-of-ski-season report, 16 of B.C.'s major resorts will invest $308 million in improvement projects over the next five years.

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