Three keys to the ski economy:

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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This legislation broadens the lease language beyond alpine and Nordic skiing to include such summertime activities on the mountains as zip lines, mountain bike terrain parks and trails, Frisbee golf courses and ropes courses. It specifically prohibits, however, tennis courts, water slides and water parks, swimming pools, golf courses, and amusement parks, but nevertheless is expected to annually sustain up to 600 extra jobs and bring in an additional $40 million to local communities in direct spending nationwide.

In response, Vail Resorts is pumping $20 million into each of three resorts – Vail and Breckenridge in Colorado – to create the Epic Discovery, which will include summertime activities coupled with environmental educational opportunities.

“We see this as a great opportunity to tap into new destination business for summer activities,” says Vail’s Carrig. “The door has opened to a much larger view of what summer could be, and our company is taking the lead on that with a real commitment.”

Expect to see similar developments at nearly all of the state’s resorts. “We’re now authorized to provide things we couldn’t do before, and it will provide employment year round and act as a hedge when we don’t have snow by Thanksgiving,” says Ski Country’s Mills.

“I think most resorts will find their biggest opportunity in developing their summer business,” adds Al White, executive director of the Colorado Office of Tourism and a prime marketer of everything Colorado.   

But some are jumping on board the summertime bus more eagerly than others. The Beaver Creek Property Owners Association and the Greystone Condominium Association recently filed a lawsuit against Vail Resorts to prevent the construction of a park complex planned for the mountain facing Beaver Creek Village and in close proximity to the residences.

Largely the disagreement stems from conflicting definitions of what Beaver Creek homeowners consider an amusement park. Vail Resorts is calling the proposed ride the “Forest Flyer,” or raised alpine slide.

Another big effort is in marketing. At the Colorado Office of Tourism, with its annual $15 million budget, the marketing spend breaks down approximately to 60 percent for summer tourism, 8 percent for the autumn color season and 32 percent for skiing – the relative proportions each season contributes to the state’s tourism economy. 

“We try and kick it up a notch in years like 2011/12, when the weather struggles, and we try and respond when there are significant opportunities, like ‘It’s snowing in Colorado!’” says White.

The push for the tourism office, White says, is away from the typical “steep and deep” marketing, showing off daredevils on tough runs in heavy powder – referred to in the industry as “Ski Porn” – and more toward portraying family skiing, “because it appeals to a broader audience.” The office targets spot markets where it feels the industry can receive an incremental lift from its efforts. For several years it has targeted Chicago, Minneapolis and Dallas.

At Ski Country USA marketing is also aimed at the destination skier because Colorado visitors are hit heavily from the resorts themselves, says Mills. “We’re looking to get people to Colorado for skiing instead of competitor states and countries.” The international ski marketing efforts here tend to focus on the United Kingdom (the No. 1 international draw for years), Mexico, Brazil, New Zealand, Japan and Korea.

“In the last five years Australia has moved into the No. 1 international location,” says Mills. “Australians love to come here in January.”

And while family-friendly marketing is in the mix, Mills doesn’t dismiss the hotdogs.

“We (Colorado) are an incredible family destination; we’ve got great children’s programs and ski schools all over the state,” she says. “But we also get the people who want to ski their brains out, and everything in between. Other states don’t have that.” 

There are many other challenges and opportunities in Colorado’s ski industry and everyone involved is highly dedicated to find solutions. Traffic on I-70 is another example. Ski industry leaders are deeply involved in pushing for the incremental improvements to lessen the “aggravation” of the commute. Many baby boomers, that large generation that drove the industry over the last 60 years, are hanging up their skis, so there is a push to entice kids and young adults; the latter group has lately been either falling or flat-lining in participation.

But perhaps the biggest effort by the industry and areas themselves is the overall improvement of their ski mountains and facilities.

“Our company has been most aggressive in capital expenditures – $130 million in 2013 alone, a record for us – with a primary focus around the basic elements of skiing,” says Carrig. These improvements, he notes, include new lifts, restaurants, better grooming and more snow-making.

“Meeting and exceeding the consumers’ expectation in quality is a big focus,” Carrig adds. “Our resorts have a very high-end clientele from a wealth perspective. They are willing to spend money and they have high expectations.”  

According to Mills, Colorado owns about 20 percent of the market. “We have to do our part to keep that steady or growing. We all have the opportunity to remind people what an experience a day in the mountains provides.”

So it seems that the industry and the individual players are poised to take advantage of the “America’s Best Skiing” reputation year round and worldwide. But a massive Rocky Mountain snow storm – one that hits television and gets the Internet buzzing – couldn’t hurt.