Attn. Killington, Chris Danforth, Marketing Manager - RE: SPRING SKIING

[mlkrgr]

I think there's a wealth of experience among many of the long time Killington skiers, many of whom spoke regularly with Killington senior management and who, through those conversations, learned an awful lot about the economics of the business. And, there are an awful lot of people who know a lot more than Powdr about eastern skiing and marketing (something Jon Cumming doesn't really believe in) especially marketing in the east. All you have to do is go back to Powdr's first year here and review all the bad decisions they made, ignoring all the people telling them how bad those decisions were, and all the decisions they subsequently reversed. So, while few people here have had the opportunity (or bad luck) to have run a ski area, there's a lot of people who know how a lot more than you would expect among an average customer base.

Yes; and I think the quality of a business manager is not too much correlated with experience. I'm seeing plenty of good quality 20 somethings run good businesses of their own just because they don't like or can't break into the big business environment. As I'm educated in business; but I'll consider myself relatively inexperienced, there's two ways you can operate your business. You can control every $.01 you spend tightly and possibly cut in areas that people value thus completely turning away people from all areas of your business or you can make good long term decisions even though you may end up taking a loss sometimes.

I think if there's more than a 3 or so ski areas opened when talking about May skiing, it gets to be unprofitable for all, but I would do it on weekends only because there is enough people that will praise the business through word of mouth, social media, etc. So I would run it until I can at least feel confident that the snow will stick around.

 

[oakapple]

All you have to do is go back to Powdr's first year here and review all the bad decisions they made, ignoring all the people telling them how bad those decisions were, and all the decisions they subsequently reversed.

This demonstrates that, like most people, they are not immune to reason and common sense; which suggests that if they decline to keep the mountain open past the date it is profitable to do so, that decision is probably sensible, as well.

Of course, I suspect there is some selective memory here. There are enough Killington partisans that practically every decision will be a bad idea in someone's opinion. Everything that doesn't work, someone will be able to claim that they knew it all along.

 

[Geoff]

K never lost money running late into may, asc just sent the money elsewhere. Killington was one of the few resorts that always made a profit for ASC.

Other than Sugarbush, all the ski resorts made an operating profit. The ASC problem was finance, not ski area operations P&L. When you overpay for ski areas and fund the acquisitions with junk bonds, it doesn't matter how much operating profit you make. You can't pay the interest on the junk bonds.

The way Killington got to a million skier visits was by creating a sense of value for their customers. If you're going to pick a mountain to rent/buy real estate and buy season passes every year, a long season and wall-to-wall snowmaking (and a vibrant off-season) make it a lot easier to justify committing to the resort. Fall skiing is back in a half-assed way with one antique triple chair and an inconvenient walk up a very long stairway at the end of the day. Killington is likely to slam shut the last weekend of April this year. Spring skiing is dead. Killington also violated one of the huge Preston Smith principles by not blowing snow on all the trails. Why would anyone tie up hundreds of thousands of dollars of capital for a vacation home at a resort that now runs such an austerity budget that they can't even make snow on everything?

Eventually, the Eiger guys in Texas will figure out that their Utah "partner" as totally destroyed the value of their real estate holdings. I sure hope there is some fine print in the contract that allows SP Land to boot out POWDR. Condos don't make economic sense when they only rent 30 days per year. There is zero midweek business so you can't rely on any rental income beyond Christmas, Presidents week, and the high season weekends. With the resort taking 40% of the rental income, that doesn't even cover taxes, insurance, utilities, and condo fees. New development is a non-starter until the midweek business is marketed properly and brings the price of the existing housing stock back. You can't command $500 per square foot when everything else in town is selling for $150 per square foot.

 

[steamboat1]

BUMP.

Does anyone think it's acceptable that Bear is closing at the end of this month? ALL THE SNOW IS OVER THERE. They quite literally didn't make snow on Double Dipper so they could make a bunch of snow at Bear for the dew tour. Does it make any sense for them to close bear and keep the k-1 open......NO!

The skiing is going to get very limited real quick if they close Bear April 1 like they announced. Downdraft & Double Dipper are 2 of the main challenging runs off K Peak. To only have Cascade open is going to get old fast. Now if they wanted to make good PR with their customer base they could at least keep the SPQ running for a few more weeks. Judging from Powdrs past performance I doubt that they will losing any good will they garnered by getting open early this season. It really is a shame they didn't blow any snow on those 2 trails this year as both hold snow very well. Instead they focused blowing snow on Highline & Conclusion catering to the local racers & bump competitions. How many days this season were both Highline & Conclusion closed to the public? I didn't even mention Needles Eye often being closed which basically services 2 high speed lifts. This past Tues. they groomed out all the bumps skiers left on Conclusion & it was open & skied magnificently. It was then closed for the rest of the week while they set up for some competition this weekend. Glad I at least got to ski it for one day. Notice I didn't even mention the DEW Tour. By the way something was going on at Bear again this weekend & they closed middle & lower Skyeburst all week again forcing everyone skiing off the Bear Mtn. Quad & Skye Peak Quad to funnel into lower Wildfire just like during the Dew tour. It was a real mess even on Fri.

 

[deadheadskier]

Having trails dedicated to race programs isn't unique to Killington. At Gunstock, Cannonball is closed off for race programs more often than it isn't. I've also been there on days where Tiger is closed as well. Is what it is. At a small area like Gunstock, losing 1 trail impacts trail variety considerably more than closing two trails at a larger area like Killington. Those families pay big money for the race programs for their kids, so I don't really have an issue with it.

I'd imagine the decision to operate K1 instead of SPQ is to consolidate operations to one base area. By having SPQ run, folks will expect the Bear lodge to be open. That's additional ticket seller(s), custodial staff, F&B personnel, power to heat and light the lodge etc. If I were a K regular, I'd absolutely prefer them operating SPQ and SSQ over K1 and SSQ, but from a base area operations standpoint, it makes sense to consolidate spring operations to one base.

 

[steamboat1]

Having trails dedicated to race programs isn't unique to Killington. At Gunstock, Cannonball is closed off for race programs more often than it isn't. I've also been there on days where Tiger is closed as well. Is what it is. At a small area like Gunstock, losing 1 trail impacts trail variety considerably more than closing two trails at a larger area like Killington. Those families pay big money for the race programs for their kids, so I don't really have an issue with it.

I'd imagine the decision to operate K1 instead of SPQ is to consolidate operations to one base area. By having SPQ run, folks will expect the Bear lodge to be open. That's additional ticket seller(s), custodial staff, F&B personnel, power to heat and light the lodge etc. If I were a K regular, I'd absolutely prefer them operating SPQ and SSQ over K1 and SSQ, but from a base area operations standpoint, it makes sense to consolidate spring operations to one base.

They can operate the SPQ without having services at the Bear Mtn. Lodge. Same way they did during the week the 1st year Powdr operated K only having the Ramshead & Snowshed lodges with full service. Only having bathrooms open at the Killington base lodge during the week didn't stop them from operating the K-1 gondola now did it?

Closing Highline & Conclusion when conditions are limited like this season has been for the most part certainly does have a considerable effect on the available trails to ski. Closing lower & middle Skyeburst certainly has a major negative effect on skiing the Skye Peak area.

 

[deadheadskier]

Even not having services, you still need to power the building and have a custodian on. It still requires more labor than consolidating everything to the K base lodge. I'm not saying I agree with the decision from a skiing experience perspective, but I understand it.

IMO, crying over trails closed to race programs is pointless. KMS students and weekend race program families were sold the experience at the start of the season. The mountain can't take it away mid-season due to a down snow year and a few customers bitching that they want to ski those trails.

 

[Wavewheeler]

They can operate the SPQ without having services at the Bear Mtn. Lodge. Same way they did during the week the 1st year Powdr operated K only having the Ramshead & Snowshed lodges with full service. Only having bathrooms open at the Killington base lodge during the week didn't stop them from operating the K-1 gondola now did it?

I remember then. When I first came to Killington (I think ASC still owned it) and skied midweek EVERYTHING was open..even the Peak Lodge! It was rather nice to be able to grab lunch and a view up there but I was surprised at how much was open given the (few) number of people there.

After that Powdr must've taken over because it was drastically different midweek. Peak Lodge was never open again and there were only bathrooms at Bear with Ramshead and Snowshed being the only places you could get lunch. That's when I really started liking and appreciating those waffle places! I LOVE the Empanada place down at the end of High Road at the Skyeship.

I don't recall there being a problem with access to ski areas but I wasn't skiing any of the more difficult stuff then because my daughter was younger. We stuck mostly to greens and blues.

Closing Highline & Conclusion when conditions are limited like this season has been for the most part certainly does have a considerable effect on the available trails to ski. Closing lower & middle Skyeburst certainly has a major negative effect on skiing the Skye Peak area.

When I was there early February midweek for two days there wasn't any natural snow. Most of the double blacks off K1 were indeed closed. Highline and Conclusion were closed for racing and it was frustrating to see that all that wonderfully groomed packed powder on Highline time after time and not be able to go down it. By the time the racers packed up it has been pretty much skied off and icy but I took a run down anyway.

I would've liked to have access to those trails because if you ski Snowdon then you are down to one short black(Mousetrap). I'd loved to have Highline and Conclusion open, especially after enduring the long, cold ride on the sloooww Snowdon Quad (I can't wait for it to be replaced). We like running the blues there too so we put up with it but I'd love the option of having those blacks open to me.

Fortunately, considering there was NO natural snow, I enjoyed myself on Eastfall/Spillway and Cascade and Superstar off the K1 Gondola and Superstar was open as well. But stuff like Double Dipper, Ovation, Vertigo..all closed without any snow at all on them.

Out of the two days I was there one day Panic Button/Needles Eye trail was closed in the morning and the lift was closed all day. But on the second day the other day the quad and trail were open because the Skyeship gondola was closed. Bear Mountain Quad was closed the entire time.

I would've been PO'ed if they hadn't had Skyeburst completely open. That hasn't happened to me yet and we really enjoy that run down to Bear. Losing trails especially on an "off year" like this one to racing/competitions is a real downer but I understand the reasoning behind it. Doesn't mean I like it though.

As a midweek skier I'm used to not having everything available. It just isn't profitable for the mountain to have everything open as they would on weekends and holidays when the crowds come in. We deal with closed restaurants too. One restaurant we like was only open one of the three nights we were in town. It's the price you pay for lower prices, smaller crowds and lift lines. It's a trade off I gladly make, especially since the hotel we stay at gives us a night free for a midweek stay.

 

[mister moose]

This demonstrates that, like most people, they are not immune to reason and common sense; which suggests that if they decline to keep the mountain open past the date it is profitable to do so, that decision is probably sensible, as well.

This demonstrates your lack of understanding of the current dynamics in play at Killington, and a serious flaw in logic.

"If they correct some mistakes, then all decisions are sensible."

I would not buy stock on that advice. Would you?

 

[WWF-VT]

Condos don't make economic sense when they only rent 30 days per year. There is zero midweek business so you can't rely on any rental income beyond Christmas, Presidents week, and the high season weekends. With the resort taking 40% of the rental income, that doesn't even cover taxes, insurance, utilities, and condo fees. New development is a non-starter until the midweek business is marketed properly and brings the price of the existing housing stock back. You can't command $500 per square foot when everything else in town is selling for $150 per square foot.

This sounds like the analysis of a real estate investor rather than a second home/condo owner in a resort area. If someone has the income to spend $500 per square foot for a condo then maybe they are looking to spend Christmas, Presidents week and high season weekends using their condo rather than relying on rental income to fund their real estate ownership and the cost of a Killington black out pass.

 

[skiur]

Other than Sugarbush, all the ski resorts made an operating profit. The ASC problem was finance, not ski area operations P&L. When you overpay for ski areas and fund the acquisitions with junk bonds, it doesn't matter how much operating profit you make. You can't pay the interest on the junk bonds.

The way Killington got to a million skier visits was by creating a sense of value for their customers. If you're going to pick a mountain to rent/buy real estate and buy season passes every year, a long season and wall-to-wall snowmaking (and a vibrant off-season) make it a lot easier to justify committing to the resort. Fall skiing is back in a half-assed way with one antique triple chair and an inconvenient walk up a very long stairway at the end of the day. Killington is likely to slam shut the last weekend of April this year. Spring skiing is dead. Killington also violated one of the huge Preston Smith principles by not blowing snow on all the trails. Why would anyone tie up hundreds of thousands of dollars of capital for a vacation home at a resort that now runs such an austerity budget that they can't even make snow on everything?

Eventually, the Eiger guys in Texas will figure out that their Utah "partner" as totally destroyed the value of their real estate holdings. I sure hope there is some fine print in the contract that allows SP Land to boot out POWDR. Condos don't make economic sense when they only rent 30 days per year. There is zero midweek business so you can't rely on any rental income beyond Christmas, Presidents week, and the high season weekends. With the resort taking 40% of the rental income, that doesn't even cover taxes, insurance, utilities, and condo fees. New development is a non-starter until the midweek business is marketed properly and brings the price of the existing housing stock back. You can't command $500 per square foot when everything else in town is selling for $150 per square foot.

sending money to pay off debt is still sending it elsewhere.

 

[Rogman]

While SP Land and Killington are partners in the village, their interests aren't really aligned. SP Land wants to maximize ROI in the land, Killington wants to maximize ROI in the resort. The price point SP Land is targeting (500/ft) cuts the Killington bread and butter skier out of the market, more importantly, expensive homes are more likely to sit idle when the owners are away than cheaper homes. On the Killington side, the decisions made my Killington to maximize their ROI (closing lifts and lodges, shortened season), have had a dramatic downward impact on real-estate values. Bottom line: Killington has been profitable under POWDR, but at what cost?

 

[Highway Star]

Even not having services, you still need to power the building and have a custodian on. It still requires more labor than consolidating everything to the K base lodge. I'm not saying I agree with the decision from a skiing experience perspective, but I understand it.

It's absolutely silly for them to not have bear open in the spring when they blew $100k's of snowmaking there while puroposely neglecting snowmaking in the canyon. All they need is a basic BBQ at the bear deck with a beer bar.

 

[UVSHTSTRM]

What blows my mind is how Killington still blows a ton of snow, more then is needed to get to mid/late April (most years) on Superstar. Each year, especially this year with with the outdoor bar area, I hold my breath this will be the year they go to mid may....boy what a sucker I am.

 

[Geoff]

This sounds like the analysis of a real estate investor rather than a second home/condo owner in a resort area. If someone has the income to spend $500 per square foot for a condo then maybe they are looking to spend Christmas, Presidents week and high season weekends using their condo rather than relying on rental income to fund their real estate ownership and the cost of a Killington black out pass.

Killington is not a market where there are potential customers lining up to pay a million dollars for a 2,000 square foot vacation home in the middle of the Snowshed parking lot. If you want a vibrant slopeside lodging arrangement that adds value to the resort, most of it has to be in the rental pool. That simply isn't possible at $500 per square foot once you factor in Act 68 property taxes and condo fees. Your million dollar condo needs to generate $50K just to cover taxes, condo fees, insurance, and utilities. Unless you happen to have a million bucks lying around, you need another $50K to cover the mortgage interest. You can command that at a major western destination resort because they have near-100% occupancy in peak season. It sits there paying for its self any time you're not there using it. At Killington, it would sit empty midweek most of the time.

 

[mister moose]

Killington is not a market where there are potential customers lining up to pay a million dollars for a 2,000 square foot vacation home in the middle of the Snowshed parking lot. If you want a vibrant slopeside lodging arrangement that adds value to the resort, most of it has to be in the rental pool. That simply isn't possible at $500 per square foot once you factor in Act 68 property taxes and condo fees. Your million dollar condo needs to generate $50K just to cover taxes, condo fees, insurance, and utilities. Unless you happen to have a million bucks lying around, you need another $50K to cover the mortgage interest. You can command that at a major western destination resort because they have near-100% occupancy in peak season. It sits there paying for its self any time you're not there using it. At Killington, it would sit empty midweek most of the time.

Agree. News Flash. (most) Wealthy people aren't stupid. Most got that way from hard work and shrewd money management. While it is true that some people, especially the folks with huge money, won't care if their condo sits empty, many will care. Many will be happy to sign a 7 figure loan agreement IF they can deduct the expenses because the rental income is sufficient for qualifying out from under the hobby loss rules. That means Geoff's analysis holds water in my view for a portion of the buyers.

I suspect most of the people wealthy enough not to care if their 7 figure condo in Killington is empty would rather not care if their 7 figure Vail condo is empty. They might not even be the market. Note that Claybrook at Sugarbush is selling mostly quarter shares, although some 100% units are on the market for $500+ a sq ft.

Just like skier demographics are wide and varied at Killington, the housing demographic needs to be equally varied. I'm sure we'll see a mix of price points in the final design.... whenever that might be.

 

[deadheadskier]

It's absolutely silly for them to not have bear open in the spring when they blew $100k's of snowmaking there while puroposely neglecting snowmaking in the canyon. All they need is a basic BBQ at the bear deck with a beer bar.

How many fewer skier visits do you anticipate the mountain doing during weekends in April by closing Bear instead of closing the K1?

 

[Ski the Moguls]

How many fewer skier visits do you anticipate the mountain doing during weekends in April by closing Bear instead of closing the K1?

How many fewer next year season pass sales will there be? How much less F&B sales? Lots of things go into the mix, some are hard to measure. Keep as much open as the snow allows and the skiers will come. Yes, a few other mountains are open into May, but none are closer to the NYC market than Killington.

 

[dennis]

It's absolutely silly for them to not have bear open in the spring when they blew $100k's of snowmaking there while puroposely neglecting snowmaking in the canyon. All they need is a basic BBQ at the bear deck with a beer bar.

Based on past posts, why would they with pass holders like you, you would be in the parking lot with a cooler bitching about the weather that they should be able to control, no?

 

[deadheadskier]

How many fewer next year season pass sales will there be? How much less F&B sales? Lots of things go into the mix, some are hard to measure. Keep as much open as the snow allows and the skiers will come. Yes, a few other mountains are open into May, but none are closer to the NYC market than Killington.

You're not answering my question. How many more skiers will show up at Killington with Bear open instead of the K1? If there are more skiers, then one would assume there would be more F&B sales. If the skier visits are the same, then one would assume the F&B sales would be the same only consolidated to one service point with less labor needed.

Regarding season pass sales for next season; are you not going to renew at Killington based upon this decision to close Bear April 1st?

As I stated before, I personally would much prefer that they operate Bear over K1. I know for me, it's likely I ski other mountains during April until the end of the month when it's Superstar only as that will likely be the best skiing product left available. Killington will still get my business though. It will just be later in the month.