Big Burke announcement

[thetrailboss]

thankfully Burke has a great raw product and with the hotel it will get more beds in town, especially good considering they'll be ski in/ski out. even though management decisions continue to be perplexing i'm relatively happy with where things are and where they're going. after the snowmaking debacle in december i was nervous it was going to be a torturous year.

Thank God it snowed.

 

[SkiRaceParent]

Thank God it snowed.

Hopefully the next non-snowy year they will have the snowmaking limitations somewhat remedied.

 

[thetrailboss]

Hopefully the next non-snowy year they will have the snowmaking limitations somewhat remedied.

Yes. I also hope that they understand that this is a very capital intensive business and that they can't nickle and dime things too much. From what I have been seeing and hearing, Ari's concern is ONLY the short-term $$$ he can get. I think he has made some bad decisions for the long term by trying to decrease short-term costs.

 

[SkiRaceParent]

Yes. I also hope that they understand that this is a very capital intensive business and that they can't nickle and dime things too much. From what I have been seeing and hearing, Ari's concern is ONLY the short-term $$$ he can get. I think he has made some bad decisions for the long term by trying to decrease short-term costs.

I'm hopefully it's part 1 of a three phase plan: phase 1) balance the annual operating budget (don't know about this year but I know last year they got rid of a lot of excess legacy and people costs. got people pissed but it had to happen, as you know.). phase 2) get hotel built and find selective improvements/augments/capex to make/spend. phase 3) based on sustainability, figure out what you are or can be when you grow up (may or may not lead to bigger capex spend). that's at least how i'd do it, and besides the perplexing management style, i'd be right where they are within phase 1 (with perhaps renting the snow making capacity in addition, than what they had this year, which hopefully is a no brainer for them next year).

 

[VTKilarney]

Their marketing director said that resort sales were on par with the past three years. So balancing the budget is not coming from increased revenues. Those three prior years saw a loss. At this point, I am not sure what they could cut in order to break even.

It's definitely going to be crucial for the new hotel to at least break even, because they certainly can't afford to absorb more loss. But of course the corporate structure is probably more complicated than I am assuming.

I think that the hotel will do quite well in the winter. The question is how well it does for the remainder of the year. I've got my fingers crossed.

 

[SkiRaceParent]

Their marketing director said that resort sales were on par with the past three years. So balancing the budget is not coming from increased revenues. Those three prior years saw a loss. At this point, I am not sure what they could cut in order to break even.

It's definitely going to be crucial for the new hotel to at least break even, because they certainly can't afford to absorb more loss. But of course the corporate structure is probably more complicated than I am assuming.

I think that the hotel will do quite well in the winter. The question is how well it does for the remainder of the year. I've got my fingers crossed.

I dont believe they lost much $ last year, I heard it was (near) break-even, mainly driven by the (~500k-1 million if i recall?) in cost cuts.

edit: granted, this is based on heresay, but then again, most everything else is here based on that, so i'll keep it and just note it as speculation not fact.

 

[VTKilarney]

I dont believe they lost much $ last year, I heard it was (near) break-even, mainly driven by the (~500k-1 million if i recall?) in cost cuts.

I thought that they lost somewhere in the vicinity of $200,000 - but I could be COMPLETELY mistaken about that.

Their expenses are probably a little bit higher this year since they have added some front office staff.

These numbers must sound like pocket change to a place like Killington.

 

[SkiRaceParent]

I thought that they lost somewhere in the vicinity of $200,000 - but I could be COMPLETELY mistaken about that.

These numbers must sound like pocket change to a place like Killington.

I agree, small #'s. With that said, $200k loss is not a huge loss. Up near or over a million per year is the kind of loss that would shut the place down after several years. Solving for that was step #1, I believe. And it had to be done (as you said) through cost cuts since revenue is about even.

 

[deadheadskier]

I thought that they lost somewhere in the vicinity of $200,000 - but I could be COMPLETELY mistaken about that.

Their expenses are probably a little bit higher this year since they have added some front office staff.

These numbers must sound like pocket change to a place like Killington.

2003-2004 I was assistant director of F&B at a small ski area in Maryland called Wisp. At the time, they were doing about 100K skier visits annually. So, fairly similar numbers to what I assume Burke does. The ski area, golf course and associated revenue centers did $7M for the year. $1M of that came during Christmas week. 1 week out of 52 produced 14% of the years revenue. President's and MLK combined for another $1M.

I only bring this up to illustrate how critical Christmas week is and how blowing it can easily result in that $200K loss you brought up.

Burke likely lost money again this year due to their pitiful performance over Christmas and MLK due to lack of open terrain. I'm guessing whatever money they saved by not renting snowmaking equipment, they lost three times over in reduced revenue.

If the hotel is complete for the holidays, but they offer a similar on snow product, the financial results could actually be worse. Who is going to pay huge money to stay in a hotel over the holiday week to ski 12 trails? Now, you're not only losing money on the ski product, but you're losing it on the lodging product too.

 

[thetrailboss]

2003-2004 I was assistant director of F&B at a small ski area in Maryland called Wisp. At the time, they were doing about 100K skier visits annually. So, fairly similar numbers to what I assume Burke does. The ski area, golf course and associated revenue centers did $7M for the year. $1M of that came during Christmas week. 1 week out of 52 produced 14% of the years revenue. President's and MLK combined for another $1M.

I only bring this up to illustrate how critical Christmas week is and how blowing it can easily result in that $200K loss you brought up.

Burke likely lost money again this year due to their pitiful performance over Christmas and MLK due to lack of open terrain. I'm guessing whatever money they saved by not renting snowmaking equipment, they lost three times over in reduced revenue.

If the hotel is complete for the holidays, but they offer a similar on snow product, the financial results could actually be worse. Who is going to pay huge money to stay in a hotel over the holiday week to ski 12 trails? Now, you're not only losing money on the ski product, but you're losing it on the lodging product too.

BIG + 1 here.

Burke's ski season is short. By losing two of three critical holiday weeks you are already behind the 8 ball so to say. From what I heard President's Week was cold and that drove some away. They do have "some" summer business now, but I don't think it's as much as it could be.

I think they may have gone from too many staff to now too few. Want-ads were up all season. I think that they could have trimmed some from the payroll initially and made some other changes without torching the house as they did.

 

[thetrailboss]

And I don't have any sources anymore regarding revenue figures. For the past several years they never really said anything. But if they are saying that they did about the same as the past three years than that is not saying much. With all the snow that they had and largely primo conditions they should have done better. Granted the cold was an issue but I think they should have done well this season.

 

[VTKilarney]

What's interesting is that skier visits were up. It looks like skiers spent less money per capita to ski and are perhaps spending less on food and beverages. They may need to rethink their promotional offers.

 

[thetrailboss]

What's interesting is that skier visits were up. It looks like skiers spent less money per capita to ski and are perhaps spending less on food and beverages. They may need to rethink their promotional offers.

Where did you see/hear that skier days are up?

 

[VTKilarney]

Where did you see/hear that skier days are up?

Their marketing director told the Caledonian Record that skier visits were up and that resort sales were on par with the past three years.

 

[VTKilarney]

By the way, there is another nasty letter to the editor about Q Burke in today's Caledonian Record.

 

[VTKilarney]

Here is an excerpt from the Letter to the Editor:

So what to do? Our family plans to speak with our wallet. To be honest the only reason we are purchasing season passes next year for our two children is because they are both in the BMA junior program (the BMA relevancy factor). My wife and I are foregoing season passes next year. If not for BMA we would take all our business elsewhere. Pure and simple.

 

[thetrailboss]

Any chance you can post the whole letter?

 

[VTKilarney]

Any chance you can post the whole letter?

I emailed a copy to you.

 

[faQ]

Some funny comment replies to "end of season" FB post.


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[faQ]

What's interesting is that skier visits were up. It looks like skiers spent less money per capita to ski and are perhaps spending less on food and beverages. They may need to rethink their promotional offers.

I wouldn't put too much faith in any of these numbers. It is an assumption to think any the reporting in the past two years is accurate and even if the data was tracked correctly (which I doubt), I am pretty sure they would say anything they wanted anyway.


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