Above average winter for US ski areas

deadheadskier · May 16, 2009

http://pressherald.mainetoday.com/story.php?id=256632&ac=PHbiz

curious if this is true for revenues and if so, what excuse does that give resorts for the lack of scheduled capital improvements this summer.

GrilledSteezeSandwich · May 16, 2009

I'm thinking that ski areas are going to have to be lean to survive..which means less improvements..but when October and early November roll around and there's a blast of cold air..I still see resorts in the east and the rockys competing to open first..and I feel like there will always be a few kings of spring but for most resorts..they need to just focus on keeping th trails busy from Decembr to March..wiith specials and promotions if needed. It's important...better to sell 2,000 tickts at $40 each than 1,000 tickts at $60 each..

ski_resort_observer · May 17, 2009

If you read the article it says skier visits and snowfall was down equals less revenue which means resorts are going to be smart and not take on more debt in a down economy.

To say it's been an "above the 10 year average" year and call that positive is just a worthless stat that gives the wrong picture. In Vermont, for example, as been mentioned several times here, is way below the 20 year average. 1988 Vermont had 5.2m skier visits, this year it will be about 4m. That's a decline of 23%.

GrilledSteezeSandwich · May 17, 2009

ski_resort_observer said:
If you read the article it says skier visits and snowfall was down equals less revenue which means resorts are going to be smart and not take on more debt in a down economy.

To say it's been an "above the 10 year average" year and call that positive is just a worthless stat that gives the wrong picture. In Vermont, for example, as been mentioned several times here, is way below the 20 year average. 1988 Vermont had 5.2m skier visits, this year it will be about 4m. That's a decline of 23%.

You also have to take into account that Vermont has alot less ski areas than in 1988 and has Vermont seen over 5 million skier visits in the last decade?

deadheadskier · May 17, 2009

ski_resort_observer said:
If you read the article it says skier visits and snowfall was down equals less revenue which means resorts are going to be smart and not take on more debt in a down economy.

To say it's been an "above the 10 year average" year and call that positive is just a worthless stat that gives the wrong picture. In Vermont, for example, as been mentioned several times here, is way below the 20 year average. 1988 Vermont had 5.2m skier visits, this year it will be about 4m. That's a decline of 23%.

While I hear what you're saying, I do think comparing this years numbers to the recent ten year average is a more relevant way of looking at things than making comparison's to 1988.

It does make sense to hold onto cash, but it is often the companies that are somewhat aggressive in down economies that rise to the top when things get better. An example of that would be Okemo and Sunday River during the recession of the early 90's.

bobbutts · May 17, 2009

deadheadskier said:
While I hear what you're saying, I do think comparing this years numbers to the recent ten year average is a more relevant way of looking at things than making comparison's to 1988.

It does make sense to hold onto cash, but it is often the companies that are somewhat aggressive in down economies that rise to the top when things get better. An example of that would be Okemo and Sunday River during the recession of the early 90's.

Agree, but he said not taking on more debt rather than saving cash, big difference. Also future economic/market uncertainty may be another factor.

ski_resort_observer · May 17, 2009

It does make sense to hold onto cash, but it is often the companies that are somewhat aggressive in down economies that rise to the top when things get better. An example of that would be Okemo and Sunday River during the recession of the early 90's.

I don't think there is much cash to hold onto these days.

When operating a ski resort or any business for that matter what the average for the past 5,10,20 years doesn't mean all that much in my view. Except maybe coming up with a catchy headline to fill the page in the paper. In the short term things don't look real rosy businesswise for next season. Only a fool IMHO would risk their bottom line in building improvements with such an uncertain next couple of years. If I was a resort and did have some cash, I would hold onto it at least for another year.

I think Okemo took alot of risk but they didn't start building Jackson Gore until the late 90's and both Okemo and SR were taking their resorts to the next level. I think Okemo hit a sweet spot and used it to grow to 600,00 skier visits. Otten built SR into a major resort back then with financing, not cash.

When ASC got going in the mid-90's and latched themselves to a huge debt monkey in order to buy SKI Ltd even when things seems good after that the biting dog was snipping at their heels for many years before they finally toppled over. Debt can maim you even in a good economy, it's a killer in a down economy.

Another diference between now and then. Getting credit/financing back in the 90's was availible, today, not so much, but getting better. Lots of businesses have project shovel ready but getting the financing has proved to be dificult. I think that's part of Ginn's reasoning for holding back with Burke.

Saying that companies that take risk during a down economy rise to the top when things improve is a fair statement and does happen. Currently tho I think a lack of cash, appetite for taking on new debt in the current economy and dificulty getting credit/financing are the reasons for a lack of major improvements for next year.

deadheadskier · May 17, 2009

ski_resort_observer said:
I don't think there is much cash to hold onto these days.

When operating a ski resort or any business for that matter what the average for the past 5,10,20 years doesn't mean all that much in my view. Except maybe coming up with a catchy headline to fill the page in the paper. In the short term things don't look real rosy businesswise for next season. Only a fool IMHO would risk their bottom line in building improvements with such an uncertain next couple of years. If I was a resort and did have some cash, I would hold onto it at least for another year.

I think Okemo took alot of risk but they didn't start building Jackson Gore until the late 90's and both Okemo and SR were taking their resorts to the next level. I think Okemo hit a sweet spot and used it to grow to 600,00 skier visits. Otten built SR into a major resort back then with financing, not cash.

When ASC got going in the mid-90's and latched themselves to a huge debt monkey in order to buy SKI Ltd even when things seems good after that the biting dog was snipping at their heels for many years before they finally toppled over. Debt can maim you even in a good economy, it's a killer in a down economy.

Another diference between now and then. Getting credit/financing back in the 90's was availible, today, not so much, but getting better. Lots of businesses have project shovel ready but getting the financing has proved to be dificult. I think that's part of Ginn's reasoning for holding back with Burke.

Saying that companies that take risk during a down economy rise to the top when things improve is a fair statement and does happen. Currently tho I think a lack of cash, appetite for taking on new debt in the current economy and dificulty getting credit/financing are the reasons for a lack of major improvements for next year.

great post

truthfully, I'm just putting ideas in Win's head. Who knows, maybe he'll buy Stowe and offer the best combined pass imaginable in the east.

eastcoastpowderhound · May 18, 2009

many in the business who were reasonably successful this year feel like they've dodged a bullet and now they're hedging their bets. Never know what the weather is going to look like for next winter...so plan for an off snow year and an off economy. In addition to credit being tight for major capital improvements, many businesses are either having their short term lines of credit cut in half or axed completely. Its a tougher environment all the way around...so they are hanging on to their cash...if they made any.

Geoff · May 18, 2009

ski_resort_observer said:
I don't think there is much cash to hold onto these days.

When operating a ski resort or any business for that matter what the average for the past 5,10,20 years doesn't mean all that much in my view. Except maybe coming up with a catchy headline to fill the page in the paper. In the short term things don't look real rosy businesswise for next season. Only a fool IMHO would risk their bottom line in building improvements with such an uncertain next couple of years. If I was a resort and did have some cash, I would hold onto it at least for another year.

I think Okemo took alot of risk but they didn't start building Jackson Gore until the late 90's and both Okemo and SR were taking their resorts to the next level. I think Okemo hit a sweet spot and used it to grow to 600,00 skier visits. Otten built SR into a major resort back then with financing, not cash.

When ASC got going in the mid-90's and latched themselves to a huge debt monkey in order to buy SKI Ltd even when things seems good after that the biting dog was snipping at their heels for many years before they finally toppled over. Debt can maim you even in a good economy, it's a killer in a down economy.

Another diference between now and then. Getting credit/financing back in the 90's was availible, today, not so much, but getting better. Lots of businesses have project shovel ready but getting the financing has proved to be dificult. I think that's part of Ginn's reasoning for holding back with Burke.

Saying that companies that take risk during a down economy rise to the top when things improve is a fair statement and does happen. Currently tho I think a lack of cash, appetite for taking on new debt in the current economy and dificulty getting credit/financing are the reasons for a lack of major improvements for next year.

I agree that if I had cash at a ski resort, I'd put it under my mattress rather than spend it on improvements this year.

...But I quibble over a few of your points....

Okemo didn't even have permitting in the late 1990's for the Jackson Gore expansion. That was more recent.

In my opinion, Les Otten's mistake was retaining 51% ownership of ASC when he took it public. If he'd diluted himself down to 10%, he would have injected enough capital into the company to get rid of much of the debt and refinance the rest at lower interest rates. The debt buying the Preston Smith empire wasn't the issue. It was his greed in trying to keep that huge ownership stake a couple of years later at the IPO.

Burke has always and will always be a non-starter. It's too far from the metro-NY and metro-Boston markets. Anyone dreaming of doing their empire there is likely doomed.

deadheadskier · May 18, 2009

Geoff said:
Burke has always and will always be a non-starter. It's too far from the metro-NY and metro-Boston markets. Anyone dreaming of doing their empire there is likely doomed.

Burke is actually the same distance from Boston as Sunday River and a much easier drive.

While I think it would be near impossible for Burke to ever become a 'major' area; it's market share potentially could double with the right capital investment.

ski_resort_observer · May 18, 2009

Geoff said:
I agree that if I had cash at a ski resort, I'd put it under my mattress rather than spend it on improvements this year.

...But I quibble over a few of your points....

Okemo didn't even have permitting in the late 1990's for the Jackson Gore expansion. That was more recent.

In my opinion, Les Otten's mistake was retaining 51% ownership of ASC when he took it public. If he'd diluted himself down to 10%, he would have injected enough capital into the company to get rid of much of the debt and refinance the rest at lower interest rates. The debt buying the Preston Smith empire wasn't the issue. It was his greed in trying to keep that huge ownership stake a couple of years later at the IPO.

Burke has always and will always be a non-starter. It's too far from the metro-NY and metro-Boston markets. Anyone dreaming of doing their empire there is likely doomed.

Jackson Gore opened for the 03/04 ski season and I remember Tim Meuller saying it took 10 years from proposal to opening for the Jackson Gore expansion. I realize in Vermont getting all the permits, especially the infamous ACT 250, takes several years but I remember the trail cutting starting in circa 1999 so I might be off a year or so.

ASC's financial well being definately seemed to go south right after the IPO. The stock price starting falling pretty much from the get go and it didn't take long for ASC market value get so low that their biggest creditors starting calling in the loans. That's when the Oak Hill boys signed on with a huge investment and taking over as majority owners. What were these guys thinking?

I like Burke very much but agree with you about their ability to become a major resort. There are several threads about how for several years it seemed like no one wanted to own Burke. I give Ginn a 50/50 chance of actually doing anything with the place and I would think folks in the West Burke community would be pretty skeptical regarding any plans Ginn might come up with in the future for Burke.

thetrailboss · May 18, 2009

Geoff said:
Burke has always and will always be a non-starter. It's too far from the metro-NY and metro-Boston markets. Anyone dreaming of doing their empire there is likely doomed.

Well.....

It is very close to Boston and a very easy drive...it is all interstate as you probably know and only 8 miles of Route 5 and Route 114 driving. This "stigma" is one reason why it is having a hard time. By that reasoning though, Sugarloaf and Jay Peak would not be doing well (Jay draws more than just the Montreal crowd).

And Burke's biggest problem right now from where I am, which gets worse every year, is that their infrastructure needs are enormous. You'd dump millions to deal with just the lifts....not to mention the need for more snowmaking.

Will it be 'the Empire?' No, but I think that they are going for the "alternative approach" to the other resorts.

Before the economy tanked, Ginn could have done one of two things: either try to pre-sell the place and "promise" the improvements to come, or invest money into the ski area, like a loss-leader per se, and make people interested. The point: when to improve the ski area. What they did seemed to be too much for the former approach and too little for the latter. Not having a high speed lift to the summit, no matter how you spin it (bad pun), really turns off a lot of potential skiers and potential real estate investors. So things are stuck right now and not changing any time soon. The lifts will spin this season, but it will be another season in which things are simply on auto-pilot/life support.

deadheadskier · May 18, 2009

Burke just needs someone ambitious like the Saddleback folks.

Throw in a HSQ to the summit, another lift to get you out of the East Bowl, replace the mid-burke lodge and up the snowmaking and you've got a shot at capturing quite a bit of the Boston skiers from other places that are of a similar drive.

I can't wait to get back next season and truly sample the place on a day when it's not raining and I have fresh legs.

thetrailboss · May 18, 2009

deadheadskier said:
Burke just needs someone ambitious like the Saddleback folks.

Throw in a HSQ to the summit, another lift to get you out of the East Bowl, replace the mid-burke lodge and up the snowmaking and you've got a shot at capturing quite a bit of the Boston skiers from other places that are of a similar drive.

I can't wait to get back next season and truly sample the place on a day when it's not raining and I have fresh legs.

You're right, DHS. Bobby Ginn didn't lack in ambition here...the economy hit him hard. The changes you suggested would probably need about $15 mill or so....maybe less if you bought a used FG lift for the East Bowl. There are trail upgrades needed to handle the influx of traffic...

Above average winter for US ski areas

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