Posted: November 07, 2013

Three keys to the ski economy:

Snow, snow, snow

Jeff Rundles

In the real estate business, the conventional wisdom is that there are three essential elements to success: location, location, location.

For the ski industry – a major component of the Colorado economy – there are also three ingredients to success, and they are just as simple: snow, snow, snow.

Oh sure, there are other factors in building a sustainable and growing skiing economy, like the burgeoning development of summertime activities on the mountain terrain, the explosion of full-season and packaged passes, managing changing demographics, marketing the world over, site improvements and transportation; and they are all issues tackled daily by ski industry professionals like the moguls on a black diamond run. But they pale in comparison to the fanfare of snow burying the Rockies.

Want proof? Twenty-nine years ago, on Oct. 15, 1984, the Denver Broncos beat the Green Bay Packers in Denver on Monday Night Football 17-14 in a slippery, sloppy game that was almost impossible to see on nationwide television because of a blizzard.

“That was a legendary event in the ski industry vocabulary,” says Melanie Mills, executive director of Colorado Ski Country USA, the leading trade association for the industry in the state. “We had switchboards back then and they lit up almost immediately. We’d love it to happen again. Snow is a big part of the story here.”

Colorado has “America’s Best Skiing” – a phrase now trademarked by the Colorado Office of Tourism – but that image can be greatly enhanced, or substantially diminished, by snow, or lack thereof. While the number of Colorado skier visits – that is one skier/one day, the supreme industry measure – has approached 12 million annually for the last decade (roughly an average of 7 million for the 21 member resorts of Colorado Ski Country USA, and 5 million for the four Vail properties), it was off more than 1 million visits in the 2011/2012 season, a bad year in wintery precipitation. In fact, that year the weather was so awful that it represented the lowest total visitor count in 20 years, according to David Beline, director of consulting services for Boulder-based RRC Associates, a research consulting firm specializing in travel, tourism and skiing. The challenge for the ski industry, he says, is “snow.”

“The industry in Colorado is doing well – it could be better – but with 90 percent of your revenue happening in four months there’s definitely a limitation on the business,” Beline notes.

“Two years ago we had a very challenging winter,” adds Blaise Carrig, president of Vail Resorts Inc., operators of 10 noted ski areas in five states, including the iconic Colorado resorts of Vail, Beaver Creek, Keystone and Breckenridge. “Last year we had a challenging beginning to the season, but once we saw the snow (just after the holidays), we saw the skiers bouncing back.”

 

Flurry of activities

Beyond snow – over which there is very little control – the ski industry and resorts themselves are engaged in a flurry of activities designed to boost the bottom line. 

One of the more innovative initiatives is a concentration on the pre-season sales of full-season and package passes. Anywhere from $140 to $3,000, pass-holders can enjoy unlimited or limited/restricted ski days at individual resorts, statewide resort combinations, or access to a variety of U.S. and even European ski destinations.

“We went to the pass system about 10 years ago,” says Mills. “The upside for the guest is that if you buy early, you are skiing for less than you were in the 1970s. It does provide (the operators) a bit of a hedge (against the mercurial weather) and it also builds loyalty; but therein lies the curse. We have more than 25 great ski areas, but with a pass you’re only going to one or two.”

Adds Vail Resorts’ Carrig: “Our season pass program has become so strong that we are offsetting the effects of weather. It is a commitment from our guests up-front. It is partially a hedge against the weather, but it also breeds loyalty.”

Carrig notes that Vail Resorts sells about 300,000 passes per year, with a majority of those sales coming from destination skiers traveling to its resorts. “(The Epic Pass) is a terribly compelling product,” he says. “Part of our strategy is to have a series of resorts to appeal to a broader audience.” 

Another big push for resorts and industry stakeholders is building up the summer business. Since ski areas operate under leases from the U.S. Forest Service, the activities allowed on the mountains have been severely limited for decades. That all changed in late 2011 with the passage of the Ski Area Recreational Opportunity Enhancement Act, introduced in Congress by U.S. Senator Mark Udall (D-Colo.) and subsequently co-sponsored by nearly all of the Colorado Congressional delegation.

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Jeff Rundles is a former editor of ColoradoBiz and a regular columnist. Email him at jrundles@cobizmag.com.

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