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w w w. n s a a . o r g August/September 2011 • NSAA Journal • 17
Key Indicators for the 2011/12 Season and Beyond
EYE ON THE
INDUSTRYBy Dave Belin,
Director of Consulting Services, RRC Associates
ttendees of NSAA’s National Convention and Tradeshow held in May in
Carlsbad, Calif., enjoyed numerous thought-provoking presentations
and informational breakout sessions, many of which took a hard look
at current economic conditions. Some of the presenters took a macro-
level view while others tailored their presentations to be more specifi c
to ski resorts. At times, the messages were somewhat confl icting, which
raises the question: How do you separate the bull from the bear? The
fact is, each perspective has relevance. While the ski resort industry has
enjoyed a rebound from the Great Recession, macro-economic forces and
demographic trends remain a threat to the industry’s continued success in
both the near- and long-term. g
aAugust/September 2011 • NSAA Journal • 17
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NSAA Aug-Sep 11 prepress.indd 17 7/13/11 2:13 PM
18 • NSAA Journal • August/September 2011 w w w. n s a a . o r g
Among the presenters, NSAA invited two Harvard-trained econ-
omists in order to gain a better perspective on the state of the current
business environment. Tyler Cowen, Ph.D., a renowned economist and
professor from George Mason University, Fairfax, Va., offered a more
bearish outlook, while Todd Buchholz, a former White House director of
economic policy, was notably more bullish. A prolific author, Dr. Cowen’s
most recent work is titled The Great Stagnation and he further shares his
views in his “Economic Scene” column for The New York Times and contri-
butions to other major media outlets. Buchholz is also a frequent commen-
tator on the U.S. and global economy, with his insights and expertise in
the areas of finance and business strategy often appearing in The Wall Street
Journal, The New York Times, Forbes, ABC News, CBS, and CNBC.
Another presenter, Mike Shannon, the managing director of KSL
Capital Partners, also offered a more bullish view in his comments. KSL is
a private equity firm Shannon founded in 2005 that focuses investments in
high-end golf and spa resort properties. KSL recently committed to invest
more than $50 million in capital improvements at California’s Squaw Valley,
which the firm purchased in 2010.
Many macroeconomic trends have an impact on the snowsports
industry: Gross Domestic Product (GDP) growth, consumer confidence,
unemployment rate, stock prices, home prices, and others. The near-
term future of these figures is decidedly uncertain. Projections from the
Blue Chip Economic Indicators, a consensus forecast of top U.S. busi-
ness economists, show the U.S. economy growing “at a modest, trend-like
pace over 2011 and 2012.”
The Blue Chip report goes on to say that through 2012, GDP will
continue to grow slightly at an estimated 2.6 to 3.1 percent; unemploy-
ment will likely stay relatively high at more than 8 percent; while inflation
is projected to remain “well-contained” at 2 to 3 percent. The combina-
tion of GDP growth and a high unemployment rate suggests that worker
productivity continues to increase, with businesses doing more with the
same number of workers.
PER CAPITA DAILY SPENDING AT SKI AREAS (EXCLUDING LODGING AND TRANSPORTATION) AVERAGED $104 FOR THE 2010/11 SEASON, UP FROM $95 LAST YEAR, A GAIN OF 9.5 PERCENT.
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NSAA Aug-Sep 11 prepress.indd 18 7/13/11 2:13 PM
w w w. n s a a . o r g August/September 2011 • NSAA Journal • 19
Clearly the indicators provide a mixed
outlet about the state of the national economy.
Yet, specific to the ski industry, indicators
appear to be pointing to a moderate recovery,
with the industry nearing or outpacing the
2007/08 season, which was the prior peak for
the industry on several measures. Here’s a quick
look at some of those ski industry indicators:
• The U.S. ski industry recorded 60.54 million
skier and snowboarder visits, the best season
on record, according to the final 2010/11
Kottke National End of Season Survey. This
marks the second time that the ski industry
has broken the 60 million visit threshold,
representing a 0.6 percent increase from last
season’s 59.8 million visits, and a .1 percent
increase from the industry’s previous record
of 60.5 million visits set in 2007/08. (See
related story pg. 7.)
• Similarly, at $3.3 billion spent, the
2010/11 season was the best-ever for total
snowsports equipment sales, according
to research published by Snowsports
Industries America (SIA). Equipment sales
this season eclipsed the prior record of $3
billion set in 2007/08. Sales of equipment,
apparel, and accessories were all very
strong, with the latter two setting records.
(See sidebar pg. 21.)
• Per capita daily spending at ski areas
(excluding lodging and transportation)
averaged $104 for the 2010/11 season,
up from $95 last year, a gain of 9.5
percent. According to the NSAA National
Demographic Study, the prior high for this
figure was $110 in the 2007/08 season.
• Lodging occupancy at Western ski
resort destinations was up 5.7 percent
for the season, while average lodging
rates were up 1.5 percent, according to
the Mountain Travel Research Program
(MTRiP). According to MTRiP, stronger
demand helped to propel the increase in
mountain lodging occupancy, which is
consistent with the previously mentioned
increases in visits and snowsports equip-
ment sales.
• For the 2011/12 season, capital expendi-
tures at U.S. ski resorts are projected to total
$357 million, up 31 percent from $272
million in 2010/11. Of note, a significant
proportion of the projected expenditures
are real estate-related, an encouraging sign
that may suggest resurgence within that
important segment of the industry.
• At press time, data for the 2010/11 NSAA
Economic Analysis of U.S. Ski Areas, the
most comprehensive financial survey g
Todd Buchholz, a former White House director of economic policy, delivered a bullish keynote address on the U.S. economy during the 2011 NSAA Convention and Tradeshow. Buchholz is a frequent commentator on the U.S. and global economy for The Wall Street Journal, The New York Times, and Forbes Magazine, as well as ABC News, CBS, and CNBC. In his presentation, “New Realities in the Post-Recession American Economy,” Buchholz was decidedly optimistic as he placed into context positive economic news such as rising stock markets, business profits, and consumer confidence, with less hopeful news such a persis-tent unemployment and a stagnant housing sector.
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NSAA Aug-Sep 11 prepress REVISED.indd 19 7/19/11 1:37 PM
20 • NSAA Journal • August/September 2011 w w w. n s a a . o r g
for the industry, was still being processed. However, initial figures
for lift ticket revenue per skier/snowboarder visit and ticket yield
appear to be positive. Early indications show a 5.4 percent increase
in average ticket price and a 2.2 percent increase in lift ticket yield.
The average lift ticket price is now $78.76, while average lift ticket
yield is $38.80. Compared to a 0.6 percent increase in total visits for
2010/11, the increase in ticket price and yield suggests a regained
level of pricing power for the industry.
• On a contrary note, lesson participation was flat in aggregate and
down as a proportion of total visits. Obviously, the long-term success
of the ski industry hinges on cultivating new customers, and lessons
are a typical avenue for people entering the sport. The stability in
lessons is therefore somewhat troubling. Visitation models demon-
strate that long-term, sustainable growth in the industry will be
strongly tied to improved retention of entry-level participants, in
large measure through improved and upgraded lesson programs.
Based on these key indicators, the 2010/11 season clearly represents a
comeback from the 2008/09 and 2009/10 seasons, which were negatively
impacted by the Great Recession. The numbers show that the 2010/11
season has, in many respects, brought the industry back to the peak expe-
rienced in the 2007/08 season.
While there is reason to believe that this moderate growth should
continue, there is a risk in complacency. Snowboarding, which has contin-
ually represented 30 percent of visits for the past several seasons, has clearly
hit a plateau. Lesson volumes are flat, and growth from an increased rate of
participation among current participants can only take the industry so far,
in that the bulk of those participants are growing older and beginning to
hang up their gear. The aging of the participant base is a specific long-term
risk, particularly if not counteracted by a resurgence of new customers.
Simply put, visitation growth experienced by the industry over the past 15
years has been almost exclusively attributable to participants aged 45 and
over, a trend that is unsustainable in the long term.
With the national economy in the process of a fragile recovery, ski
resorts performed relatively well in 2010/11. The industry has largely
rebounded from two weak seasons and is in a position to continue that
growth, but certain challenges exist. Growth in visits, season pass sales,
snowsports-related retail sales, consumer spending at ski areas, and lodging
occupancy are all positives, while customer demographics and stability in
national unemployment, lessons, and snowboarding could undermine
that growth. The various directions of these trends show how it is possible
for both bears and bulls to be right about the future of snowsports. At
this point, we’d favor the bullish side. As the Danish physicist Niels Bohr
jokingly said, “Prediction is difficult, especially about the future.”
Contact Dave Belin, Director of Consulting Services, RRC
Associates, by email at [email protected]. n
Wells Fargo celebrates over 30 years of dedication to the ski industry and remains committed today Recent transactions include credit commitments to:
© 2011 Wells Fargo Bank, N.A. All rights reserved. MC-2505
Sacramento Commercial BankingScott Myers • Senior Vice President • 916-588 4033Gardiner de Back • Senior Vice President • 916-558-4027
NSAA Aug-Sep 11 prepress REVISED.indd 20 7/19/11 1:37 PM