Ski industry hopes for gains in second half

Ski industry hopes for gains in second half

Edelstein, Art

When Vermont Ski Area operators dream it is a vision of white. Snow descends in soft blankets a week or more before Thanksgiving and falls in regular intervals until April. In this dream Christmas falls midweek and eager skiers take twoweek holiday vacations. Deep into their REM sleep, ski operators never see rain or ice storms or long thaws in January. And, as they wake from their slumbers they find a strong economy with a slightly weakening dollar that has attracted numerous Canadians and Europeans to our slopes.

So much for dreaming.

This year, while the early-winter brown patches finally turned to blankets of white in February, making for tremendous skiing conditions – snowy and not too cold. But many on the slopes of the Alpine ski areas, as well as at the Nordic facilities, at Turkey Day had nothing to track for their customers. Christmas was OK snow wise, but the all too predictable calendar placed Christmas on a weekend and business was lost due to the shortened holiday. Then there was fickle January with freezing rain, warm rain, and deep cold – probably not a nightmare but a bad dream just the same.

Operating a Vermont ski area is probably not for the faint of heart or those who want to bank on a sure thing. However, they are optimists and ski area operators think they can still make up for the poor first half of the season, which ended just as Punxsatawney Phil saw his shadow.

“We got off to a slow start with not much snow at Thanksgiving. It’s how we kicked off the season,” explained Dave Dillon at the Vermont Ski Areas Association.

A survey around the state confirms this impression.

“This year so far December was fairly soft with the exception of Christmas week itself,” said Ski Area Association president Bill Stenger at Jay Peak.

His estimation is that the state’s ski areas are two to three percent “to as much as 20 percent” behind last year’s figures. However, he said, this shortfall can be made up if February through March are strong snow months.

“We got off to a slow start, Thanksgiving was not great,” agreed Pam Cruickshank at Okemo Mountain near Ludlow. However, Christmas was “great” and Martin Luther King Jr. weekend was “the best in the history of Okemo.”

“We’ve have difficult weather patterns and little natural snowfall,” said, Cruickshank who, like others interviewed for this report, said it was difficult to create the momentum down country for skiing “when the snow doesn’t fall.”

Okemo is about five percent below last year’s figures, however, revenues are up over last year, according to Cruickshank.

“Our momentum for the rest of season looks strong”, said Cruickshank. She sees Presidents’ Week looking strong due to advanced bookings as well as the remainder of the season.

“There is no panic button being pushed,” she said. “We make snow and look forward to a good rest of season.”

VSAA counts 16 Alpine ski areas and 30 Nordic areas among its members.

Speaking for members a-round the state, Dillon summed up the situation so far this way. “The ski season is very much cyclical with an ebb and flow, the earlier you can kick off the better and Thanksgiving is typically the start.”

Because Christmas fell on a weekend, that profitable holiday was cut short, and although by then the snow was reasonably deep, the ski areas, and other businesses that profit from skiers came up short, according to Dillon.

Even skiing giant Killington is reporting a slow start. This megamountain with 200 trails, and 33 lifts, which was the first Vermont ski area to open on November 9, had fewer skier days according to vice president Gillis Lynn. He would not disclose numbers as the mountain is publicly traded and owned by American Skiing Company based in Park City, Utah.

Killington employs 2000 in mid winter and is the most developed mountain in the east. It also reports the most skier visits in the east, typically one million per year and has a footprint in the town of Killington of over six miles.

“In general we turned the corner, at the end of January, on what started off as a slow beginning,” said Jeff Wise at the Stowe Ski Area. “We’ve seen positive trends regarding business in the past few weeks, he added.

Wise said an aggressive snowmaking strategy to stockpile snow on trails helped keep the trail in good condition when the snowfall ebbed.

At the halfway point in the season Wise won’t predict how this year will compare with last season. “We’re optimistic about being up from last year,” he offered.

One of the few bright spots where the numbers are up is Bolton Valley Ski Area in Chittenden County. where owner Bob Fries said his revenues were “up a bit over last year by about five percent.”

Last year the mountain did 160,000 skier visits in what he calls “a small to medium area.”

“It’s never good enough,” claims Fries, who is in the third year of ownership of the ski area and expecting to turn red ink into black this year by breaking even. While this year got off to a slow start, by Christmas revenues were up and the mountain did well three of the four January weekends, he explained.

Stratton Mountain near Manchester is about on par with last year for skier visits, said general manager Sky Foulkes. But, because statewide skiing was down last year, he does not necessarily see a par year as good. “This is not necessarily a good news story yet considering last year,” he noted.

Foulkes’ fingers are crossed because his mountain is marketing itself with aggressive packages including lift tickets and rooms. Also, heavy snow in the primary marketplace had helped. When Boston got a 30-inch dump and New York City sloshed around in over a foot of snow in late January, skiers started salivating and the phones began to ring at Stratton.

“This happened at just the right time or the winter would have been written off,” he admitted. Bookings here are now strong for the second half of the season and Foulkes said he is optimistic.

“The season has been going well,” reported JJ Toland at Sugarbush in Warren. The snow at the end of January and then warm temperatures and sun have him in an upbeat mood. “We’re right on track and ahead of last year,” he chimed. Last year was good too, and Sugarbush was up eight percent while the statewide average was down 14 percent.

At Smuggler’s Notch in Jeffersonville president Bill Stritzler reported skier days down about five percent. But he is optimistic. “We have good momentum and expect to make it up.”

Vermont has 30 Nordic or Cross Country ski areas. Most rely on natural snow and have no snowmaking ability. The poor start to the season didn’t put many smiles on the faces of these operators.

“This season has been difficult mainly because snow didn’t arrive until late and we didn’t get all that much of it,” said Colin Lawson at Grafton Pond near Brattleboro. “We got 20 inches in mid January, that’s basically what we have been working with. Many of the areas didn’t open until very late”.

“We’re somewhat in the doldrums in the Nordic industry we lost Christmas week. Then the floods before Martin Luther King Jr. weekend came,” said Tony Clark at Blueberry Hill in Goshen.

“We are surviving on counting the flakes that come down,” quipped Clark. “We may lose five to ten percent of our business this year.” With good snow the rest of the season the loss could be mitigated, he said adding “there is a lot of pent up energy among skiers.”

Dillon said the VSAA is coming off a somewhat lackluster year in 2003/2004 where skier days were five percent below the previous year at about 4.2 million. The ski industry brings in $750 million in direct revenues and $700 million in indirect revenues to other businesses such as restaurants, gas stations, and lodging establishments according to a UVM Business School study of several years ago. Currently the ski industry employs 16,000 Vermonters over the course of the season and that Dillon said, is “a bunch of wages.”

Vermont remains the third largest ski state behind Colorado and California. Our core markets are New York, Boston and Philadelphia but more and more Montreal will become a market as the Canadian dollar strengthens against the US dollar. More Europeans can be expected on our slopes with the Euro strengthening as the value of the dollar drops, noted Dillon.

Nationally, according to the National Ski Area Association, figures show that U.S. ski areas tallied a total of 57.07 million visits during the 2003/04 season and this represents the third best season in the U.S. ski industry’s history. The ski industry’s three best seasons ever occurring during the past four years including the record 57.6 million visits last season, the secondbest 57.3 million visit 2000/01 season, and 54.4 million visits in 2001/02 season. The Northeast was up 1.3 percent over its ten-year average. Snowboarding accounted for 30.6 percent of total visits, up from 29.8 percent the previous season, but was basically flat in the Northeast region at 26.3 percent, up from 26.1 percent. According to this report, 259 of the nation’s 494 operating ski resorts contributed information. These 259 resorts accounted for approximately 47.5 million skier visits.

Amenities and Capitol Spending

There is heavy capitol investment at several of the state’s ski areas on amenities such as golf courses, indoor recreation, kids’ parks, condominiums and hotel rooms, the result area operators say of what the market demands in an up to date ski resort. According to the mountain managers, if they don’t spend the money market share will dwindle.

“The Vermont ski industry is healthy but struggling to grow,” said Stritzler at Smugglers Notch. “If you don’t grow you can’t invest and then can’t compete with the western resorts, cruise lines, or Disney parks.” According to him, most of the Vermont ski areas would “rather not have to grow. It’s a lot of work and risk but we don’t have any choice.”

“I don’t think the industry in Vermont has any choice,” he conceded. “There are too many activities that we compete with too many competitive choices for us to stay stagnant.”

Constant upgrading of infrastructure is necessary, said Cruickshank. “It’s keeping it fresh. It’s difficult to survive without being a four season destination. We can’t survive on skiing alone.”

To that end Okemo has two 18 hole golf courses. Tim and Diane Mueller owners since 1982, have invested in an upgrade at Jackson Gore, a $60 million extension of the mountain with 16 new trails, four new lifts, and a 117-unit hotel/inn. The mountain added 108 acres to its trail network and increased its bed base by 117 new units, this section is now interconnected to four other mountain areas and has five summit areas in all.

Stenger at Jay Peak said his resort is expanding its bed base by budding real estate available for rental. The resort began adding 350 beds in 2004 for a 20 percent increase in bed base.

Jay Peak is evolving to a four season resort and opening its golf course spring 2006. “Ski areas to stay viable and competitive have got to have a four season capacity,” said Stenger. “The costs of operating are so substantive you have to have a four season income or you struggle. Every substantive area has tennis, golf, hiking, biking and other outdoor activities,” he explained.

At Killington “People are looking for product improvements,” according to Lynn. “The market continues to get more quality conscious,” he noted. In the past year Killington spent $2 million to improve snowmaking, gutted a cafeteria and put in a food court. It put new grills in seven base lodges and revitalized the resort in terms of branding, color schemes, and revamped its on mountain signage.

Lynn said the company has “completely refocused on terrain parks and pipes, (jumps and ramps and boxes to slide on.)” Bear Mountain is a free skiing area, there is more extreme skiing and new snow grooming equipment including a state of the art Zaugg groomer.

“We focus on our base lodges and on the mountain, not on after or non-skiing activities”, Lynn explained. “The whole Killington region is robust with things to do.”

Killington is not building more rooms. It currently manages 700 plus rooms and there are 15,000 beds in the region. However, a new real estate company, SP Land Co., will be developing the village area at Killington over the course of many years. This will take at least a decade, said Lynn.

Stowe is expanding with a ten year $300 million investment in Infrastructure including erosion control, water sewer and electric upgrades and, last year two new lifts. It built one of two snow making ponds with 117 million gallons of capacity. It is currently in the midst of constructing six new mountain cabins, which are large duplex units, for a total 36 cabins with 72 units in all.

Stowe will build a new base lodge and new hotel starting this spring. This summer another high speed quad lift, replacing a double chair from 1950s, will go up as will more snowmaking on Spruce Mountain.

“We’re revitalizing the resort area by providing amenities at the base of the mountain that previously never existed,” said Wise. “This is also providing us with the opportunity to do improvements on the mountain to enhance the skiing and riding experience.”

Wise, speaking for Stowe, summed up the general consensus guiding the Vermont ski industry’s strong push in investment: “We have found to sustain the long term success of this ski area we need to provide the type of on mountain and mountainside experiences that today’s consumer demands.”

Copyright Boutin-McQuiston, Inc. Mar 01, 2005

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