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TABLE OF CONTENTS

BBC RESEARCH & CONSULTING i

Introduction

I. The Telluride/Mountain Village Gondola System: Overview

The Gondola System ................................................................................................................... I–1

Ridership/Riders/Exits/Trips vs. Individuals ............................................................................... I–2

Annual Gondola Ridership Trends .............................................................................................. I–3

Gondola Use Seasonality ............................................................................................................ I–3

The Telluride/ Mountain Village Connection ............................................................................. I–5

II. Gondola Ridership Segmentation

Gondola User Groups ................................................................................................................ II–1

Gondola Use by Gondola Segment: Time of Year and Time of Day .......................................... II–5

Summer Segmentation .............................................................................................................. II–8

Capacity Implications .............................................................................................................. II–11

III. Current Capacity Issues, Use Forecasts and Potential Economic Issues

Gondola Exits vs. Gondola Entrances ....................................................................................... III–1

System Utilization, Capacity and Crowding .............................................................................. III–1

Segment Crowding ................................................................................................................... III–4

Forecasts of Gondola Use ......................................................................................................... III–7

Gondola Ridership Projections ............................................................................................... III–11

Projection Summary ............................................................................................................... III–14

IV. Implications of Gondola System Constraints

Current Gondola Beneficiaries ................................................................................................ IV–1

Implications of Future System Congestion .............................................................................. IV–2

INTRODUCTION.

T

BBC RESEARCH & CONSULTING INTRODUCTION, PAGE 1

INTRODUCTION

ThisanalysiswaspreparedbyBBCResearch&ConsultingincoordinationwiththeTelluride/MountainVillageGondolaSubcommittee.TheGondolaSubcommitteewasformedin2016andchargedwithevaluatinglongtermrepair,replacement,andoperationaloptionsforthenow22‐year‐oldTelluride/MountainVillagegondola.ThisreportispartofalargeranalysisofprospectivetechnicalandfinancialsolutionstochallengespresentedbyanaginggondolasystemthathasovertheyearsbecomeacriticalelementoftheTelluride/MountainVillagetransportationinfrastructureandthetourismeconomy.

Thisstudyhasmultipleobjectives:

Provideacomprehensiveanalysisofgondolausepatternsandridershiptrends;

Developforecastsoflongtermgondolasystemuseandpotentialcapacityconstraints;

IdentifyelementsoftheTellurideregionaleconomythatbenefitfromgondolaoperationsorwouldbeharmedbygondolaserviceconstraints;and

Createanauthoritativefoundationforaregionalstakeholderandopencommunitydiscussionofgondolaengineeringsolutionsandfinancingoptions.

Thisstudyrepresentsthesecondphaseofathree‐partanalysis.Phase1wastheGondolaSystemEvaluation&ConditionReportpreparedbyOutdoorEngineersinNovember,2016.Basedinpartonthedatadevelopedhere,athirdphaseofengineeringanalysiswillevaluatelongtermgondolasystemrepairandreplacementoptions.Ultimately,theGondolaSubommitteeplanstotakealloftheseconsiderationsanddevelopmentoptionsbacktotheTelluride/MountainVillagecommunitytoinformregionalstakeholderandopencommunitydiscussionsofalternativegondolainvestmentorreplacementoptions.

TheTellurideMountainVillageGondolaSubcommitteeiscomprisedofrepresentativesfromtheTownsofTellurideandMountainVillage,theTellurideMountainVillageOwnersAssociation,TellurideSkiandGolfCompany,LLC.,andSanMiguelCounty.

SECTION I.

The Telluride/Mountain Village Gondola System: Overview

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Asnotedabove,thegondolasystemservesfarmorethanapoint‐to‐pointconnectionbetweenthetwomunicipalities.InadditiontocarryingriderstoandfromTellurideandMountainVillage,ridersusethesystemtoaccesstheskiareaandtheMountainVillageparkingstructure,whichalsohousestheMountainVillageTownHallandtheVillagegrocerystore.TheSanSophiaStationexitatthetopoftheridgebetweenTellurideandMountainVillageisusedextensivelyinthesummerasaportalformountainbikers,hikers,andcasualvisitorsseekingeasyaccesstomountaintrailsandmountainviews,andinwinterbyskiers.Thereisalsoapopulardestinationrestaurant(Allreds)attheSanSophiaStation.

Thediversedestinationsandusersubmarketsservedbythegondolaunderscoresitsvaluetothecommunity,butalsopresentamajorsourceofcomplexityinconsideringcapacityconstraintsandfutureredevelopmentoptions.Projectinggondolauseand,inparticular,overcrowdingofspecificsegmentsrequiresanunderstandingofthoseridersubmarketsandhowthegondolasupportseachofthoseconstituencies.

Ridership/Riders/Exits/Trips vs. Individuals

Inthisreport,theterms“rider,exits,trips,andridership”aregenerallyusedsynonymously,meaningonepersonridingonesegmentofthegondolasysteminonedirection.Gondolausage,i.e.ridership,isactuallymeasuredbythetotalnumberof“exits”(personsleavingthesystem)thatoccuratallsixexitoptions.Thus,whenitissometimesreportedthatthegondolasystemattracts2.8millionridersayear,itispreciselyindicatingthatthegondolaexperiences2.8millionrider‐segmentsperyear.

Correlatinggondolatripswithacountofindividualridersiscomplicatedandhasinherentimprecision.Forexample,mostindividualriderswillinduceatleasttworider‐segments(outandreturn)withanygiventrip,althoughaskierridingthegondolaupbutreturningbyskis,wouldonlyinduceonerider‐segment.SkiersstayinginMountainVillageoftenaccesstheskimountainwithoutusingthegondolasystematallandcouldconceivablystayintheVillageindefinitelywithlittleornogondolainteraction.Similarly,skiersstayinginTelluridealsohavechairliftoptionsforaccessingthemountainandcouldalsostayinTelluridewithoutusingthegondola.

Summeruseofthegondolahasevenmoreusepermutationsbecauseridershipmotivationsaremorediversethanthewinterfocusonskiingandvillage‐to‐villagetransport.Forexample,surveydatasuggeststhatmanyriderswillusethegondolasystemasaninitialmeansofexploringthearea.TheseguestsmightridefromTelluride,getoutattheSanSophiaStationtoseetheview,reenterthesystemandexitatMountainVillage,andthenfinallyreenterthesystemandridetotheMountainVillagegrocerystore—beforereturningbythesamerouteinreverse.Inthisinstance,oneindividualwouldproducesixrider‐segmenttrips.

Similarly,ariderleavingMountainVillage(forexample)andexitinginTelluridewillproduceone“exit”count.Anothersimilarrider,wholeavesMountainVillage,exitsbrieflyatSanSophiatoenjoytheview,andthentravelsontoTelluride,wouldproducetwo“exits”Thislaterexampleproducedtwoexitcounts,butdoesnotburdenthesystemmorethandidtheinitialriderwhoproducedonlyone“exit”count.

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Gondola Ridership Segmentation

BBC RESEARCH & CONSULTING SECTION II, PAGE 1

SECTION II. Gondola Ridership Segmentation

Fromaperspectiveofsystemfunctionality,thegondolaisreallyaseriesofthreegondolasegments(sixseparateentrancesandexits),eachofwhichfacesdifferinguseandcapacitypressures,dependingontheseason,timeofday,destinationoftheriders,andavarietyofexternalfactorsincludingskiconditions,weather,andspecialevents.Systemusersincludelocalresidents,workers,dayvisitors,anddestinationguests,allofwhomhavevaryingobjectivesforridingthegondolaandinterfacewiththesystematvaryingtimesofdayandlocations.

Thissectionprovidesasamplingofthegondolausedatadevelopedinthisstudyandinformationdevelopedbywinterandsummergondolaridershipsurveysthatwereconductedasapartofthisanalysis.1Theridersurveydatasupplementstheridershipdatabyprovidingaprofileofusersandanunderstandingofridershipmotivations.

Gondola User Groups

BBCsurveyedgondolariderstodeterminewhereridersreside(theirpermanenthome);wheretheyspentthepreviousnight;thepurposeoftheirgondolatrip;andwheretheyfirstenteredthegondolasystem.

Thefollowingusergroupsegmentationanalysisprovidesinsightintohowthesystemisusedatdifferenttimesofdayandyear,andthuswhereandwhencapacityissuesmightarise.Thesedataalsoinformanunderstandingofeconomicactivitysupportedbythegondolasystem.

Visitor residency.Thisstudyidentifiesthreebasicgondolausergroups:

San Miguel County residents(personswhomightbecommutingtowork,ridingforrecreationalpurposes,orridingforbusiness/personalreasonsbuthaveapermanentresidenceinTelluride/MountainVillage,SanMiguelCounty);

Regional residents(personswhoresidentsinMontroseCountyorothercommutablecommunities);and

Destination guests(touristsandsecondhome‐ownersandtheirguestsspendingthenightinTelluride,MountainVillageorelsewhereintheregion).

Overthecourseoftheyear,approximately70percentofgondolaridershipisassociatedwithnon‐residentvisitors,althoughsomeofthosevisitors,particularlyinsummer,aredayvisitorsandnotspendingthenightlocally.TheremainingridersareresidentsofSanMiguelCountyor

1BBCResearch&Consultingconductedwinterandsummersurveysofgondolariderswiththeintentionofsupplementingsegmentridershipdata(exitdata)withinformationonriderdestination,systementry,placeofresidenceandlocationofpriornight’sstay.Surveyswerecollectedoverthecourseofeachseasonatdefinedtimesofdayandconductedateachsegmententry.Over9,700,five‐questionsurveyswerecompleted.

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Figure II‐4. Where Did Riders Spend the Previous Night?

Notes:

Regional Residents live outside San Miguel County but within a 150‐mile radius

Source:

2017‐2018 Gondola Rider Survey.

Amongdestinationguestsridingthegondola,48percentofskiseasonvisitorsstayedinTelluridethepreviousnightand43percentstayedinMountainVillage—anearevensplit.Inthesummerseasonhowever,MountainVillagehousesahigherproportionofdestinationguestsridingthegondola(47%)thanTelluride(30%).ThelargercontributionofMountainVillagelodgedgueststosummergondolaridershipdoesnotnecessarilyindicatehigheroccupancyoralargerbedbaseatMountainVillagebutlikelyoccursbecauseTellurideinsummerbecomestheprincipalvisitordestinationandunlikewinter,TelluridelodgedguestsdonothavetousethegondolatogettoTellurideattractions.

Thesummerseasondataalsoindicatethatdestinationguestsridingthegondolahaveamorevariedgeographicorigin(23%stayingoutsideTelluride/MountainVillageinthesummercomparedto9%inthewinter).

Purpose of ride.FigureIII‐5showstheridersstatedobjective(determinedbypersonalsurveydata)bylocationofresidence.

Ski Season

Telluride/ Lawson Hill 48% 48%

Mountain Village 33% 43%

Montrose 3% 1%

Other San Miguel County 5% 1%

Other location 11% 7%

Total 100% 100%

Summer Season

Telluride/ Lawson Hill 40% 30%

Mountain Village 39% 47%

Montrose 6% 3%

Other San Miguel County 3% 4%

Other location 12% 16%

Total 100% 100%

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Interviewswithsystemoperators,exitdataportrayedinthisstudyanddatafromthePhaseIengineeringstudy,supportthefollowingconclusionsaboutcurrentgondolademandandsupplyconditions:

Accordingtogondolaoperators,waitinglinesoccasionallyoccurattheMountainVillagebasewithpersonsreturningtoTelluridethroughtheSanSophiaStation.Dependingonweatherandtimeofyear,linescanstartaround3:30p.m.andremainforanhourormore.LinesaremorepronouncedwhenskiconditionspreventpeoplefromskiingintoTelluride.Undertheseconditions,additionallinesformattheSanSophiaStation,asskiersattempttoenterthesystemthereandareconfrontedwithfullcabinsarrivingfromMountainVillage.OperatorswilloftenleavecapacityinthecabinsfromMountainVillagetoaccommodateSanSophiaStationentries,whichisfrustratingforguestswaitinginlineattheVillage.Underfavorableweatherconditions,riderswillself‐regulatebyhavingadrinkoramealinMountainVillageafterskiingandwaitingforthelinestodiedown.

Duringskiseason,thereisoftenasecondaryrushleavingMountainVillageforTelluriderestaurants(fordinner)whichcanoverlapwiththeskiersattemptingtogetbacktotheiraccommodationsinTelluride.

Currentlythelongestlinesoccurwithperiodicactivitiesassociatedwithspecialdestinationevents.ThisincludesJuly4thtravelfromMountainVillagetotheTellurideparade(9a.m.tonooncongestion);occasionalcongestionassociatedwitheveningmusiceventsinMountainVillage;andperiodiclinesassociatedwiththeTellurideFilmFestivalandBluegrassFestivalattractions.

Duringevents,lineformationissometimesassociatedwiththestart/stoptimeofindividualbands,filmsorsimilarspecificattractions.Ontheotherhand,festivalgrowthislargelycappedbylimitsonticketsalessofuturedemandatthesepeakperiodeventsarenotexpectedtogrowsignificantly.

Summerweekendsareincreasinglyproblematic,typicallyfromMountainVillageintoTellurideattheendofthedaybutalsoatmid‐morningfromTelluridetoSanSophiaorMountainVillage.Congestioncanbeexacerbatedbychangesinweatherconditions(e.g.thunderstorms)thatdrivepeoplebacktotheirovernightaccommodations,orsummertouristbehaviorthatresistfullloadingofcars.Summerisgrowingfasterthanwinterandfestivals/weathervariationsmakesummerhardertopredict.

WintermorninglinesfromTelluridewilloccuroccasionallyonpowderdaysandpeakChristmasweek.PeakperiodskiingdemandcanbemitigatedbyalternativechairliftcapacityoutofTelluride(whenavailable).

AtTellurideandMountainVillage,linesmayalsoforminthelasttwoweeksinMarch(duringspringbreak),particularlywhenTexasandArizonaschoolshaveconcurrentschoolholidays.

Manyoperationalconsiderationsareassociatedwithcapacitylimitations.AsnotedinthePhaseIengineeringanalysis,theseincludegondolastaffingdecisions,visitorfamiliarity


withgondolaloadingprocedures;andsummerbicycleuse—allofwhichinfluenceloadingefficiency.

ThefollowingSectionIIIpresentsforecastsoffuturegrowthandgondolausagebasedonthepatternsdemonstratedhereandtheprospectsforfuturegrowthinbothTellurideandMountainVillage.

SECTION III.

Current Capacity Issues, Use Forecasts and Potential Economic Issues

BBC RESEARCH & CONSULTING SECTION III, PAGE 1

SECTION III. Current Capacity Issues, Use Forecasts and Potential Economic Issues

Thissectionidentifiesthecircumstancesinwhichgondolaridershipiscurrentlyconstrainedbycapacity;providesforecastsofgondolademand;documentswhereandunderwhatcircumstancesfutureridershipandcapacityimbalancesarelikelytooccur;andofferscommentsontheeconomicconsequencesofgondolaservicedeterioration.

Gondola Exits vs. Gondola Entrances

Gondolaridershipdatarepresentthenumberofexitsateachstation.Crowdingorlineformationoccursatportalentrances.BBC’sanalysisusesexitdatatopredictreciprocalmeasuresofportalentrycongestion.Whenexitsatanindividualstationexceed600personsperhour,BBC’smodelindicatesthepossibilityofcrowdingattheassociatedentrystation.1Forinstance,ifexitdatasuggestthatthenumberofpersonsexitingthegaragestationintheeveningisexceedingthe600personsperhourthreshold,BBC’smodelallocatesthoseridersbacktoanoriginationpointinMountainVillage,thusindicatingwherelinesmightbeforming.Otherstationsaremorecomplicated.Forinstance,ifexitdatasuggeststhatthenumberofpersonsexitingattheTelluridestationinthelateafternoonexceedsthresholdlevels,themodelallocatesthosepersonsbacktoanoriginationpointinMountainVillageand/orSanSophiaStation.Inthatexample,wealsoknowthatweatherandsnowconditionssubstantiallyinfluenceridership.PersonsfacingagondolalinewillskibacktoTellurideifsnowandweatherarefavorable.Conversely,moresignificantlineswillformifskiingalternativesarenotattractive—anexampleofhowgondolauseisaffectedbyexternalfactorssuchasweatherandskiconditions.

Insum,BBC’smodeluseshistoricsystem‐wideexitdatatoidentifytimeofdayandtimeofyearwhenlinesarelikelytoformanddetailedsegmentridershipdatatoidentifyspecificlocationswherecapacityshortfallsareevidenced.BBCthentranslatesridershipdata(exits)intoentrancedataatcriticalsystemportalsinpreparationforgondolasystemuseforecasts.

System Utilization, Capacity and Crowding

FigureIII‐1(onpageIII‐3)showsanentireyear’sdailygondolaridership(sumofallsixsegmentexitcounts)fortheperiod2011to2017.Eachdotrepresentsthesumofallriderexitsfromeachgondolasegmentforthatspecificdayandhour.Thesedataprovideasinglerepresentationofsystem‐wideuseandthusanindicationwhenhighlevelsofsystem‐widegondolaridershipsuggestthepotentialforcrowding(lineformation)onindividualgondolasegments.

1Practicalsegmentcapacity(personsperhour)isanindicatornumberthatissubjecttomanyfactorsincludinggondolaspeed,numberofcars,numberofworkersassistingwithloading,thepresenceofbicycles,childrenordisabledcustomers,andtheexperienceofcustomerswithgondolaloadingprocedures(seepriorGondolaConditionsAnalysis,op.cit).


Crowdingpotentialisshownbyreddots.Thesedatademonstratehowcapacityissueshavegrownoverthepastsixyears.ItshouldbenotedthatGondolacapacitywasexpandedin2017bytheadditionofnewcabins,lesseningsomeofprioryears’issues.Also,itisacknowledgedthatsomereddotsarelikelydataentryerrorsorone‐offoccurrences(e.g.occasionalsystemshutdowns)thathavebeenkeptinthedatasettoretaindataintegrity.

Thesystemwidedatachart(SumofAllStations)representsanindicatorofthepotentialforlineformationonanyindividualgondolasegment.BasedonthepracticalcapacitydiscussioninthePhaseIGondolaSystemEvaluationreportandanecdotaldatafromgondolaoperators(SectionII),BBCsetanumericthreshold(1,400totalsystemexitsperhour)toindicatewhencrowdingwaslikelytooccursomewhereonthesystem.

Asshown,thenumberofdayswiththeprospectofgondolacrowdingsomewhereonthesystemhasgrownfromroughly10days,afewwithmultiplehoursperday,whenlineswerelikelytooccur,in2011‐12toroughly20daysin2017‐18withover50totalhoursofpossiblelineformation.ItappearsthatcapacityissueshavehistoricallycenteredaroundChristmasweek,theJuly4thholiday,andfestivalweekends.Inrecentyears,system‐wideindicatorsofprospectivecapacityshortfallshavegrowntoincludemultipleweekendsinthesummerandpeakperiodsduringskiseason,withmultiplehoursduringbusydays.

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Segment Crowding

Asdescribedpreviously,thegondolasystemhassixtravelsegments.BasedontheindicatordatainpriorFigureIII‐1,BBCexaminedhourlyanddailygondolaexitdataforeachgondolasegmenttoidentifywhichparticularsegmentsmightbeexperiencingridershipcongestionasindicatedbyhighlevelsofsegmentuse.Thesedatasuggestthattwosegments,MountainVillagebacktoTellurideviatheSanSophiaStationandTellurideloadingtoSanSophiaandMountainVillage,weresubjecttocrowdingatcertaintimesofdayandcertaintimesoftheyear.Thiswasconfirmedbyinterviewswithsystemoperators.

ThefollowingFiguresIII‐2andIII‐3showthedayandlocationofcurrentcongestionfortheMountainVillagetoTellurideandTelluridetoMountainVillagesegments.Redindicatorsaresetat600exitsperhour(seecapacitydiscussioninGondolaCapacityReport,byOutdoorEngineers,Inc.2016).

Asnotedpreviously,theseexitdataareindicatorsofpotentialcongestionandthereissome“noise”intheunderlyingdataset.Therearereddotoutliers,i.e.individualsegmentexitcountsthatappeartodenoteverybusyconditionsduringperiodswhencongestionintuitivelyseemsunlikely.Thedatasetusedhereincludesover100,000hourlydatapoints.Thereareundoubtedlysomeerrorsinthedatacollectionanddatareportingprocess,whichbecomevisuallyapparentinthegraphicportrayalofinformationbutarenotsignificanttotheresultsandinterpretation.Therearealsotimeswhenthegondolashutsdownforsafetyormechanicalreasons,whichmaycauseimmediatecrowdingandhighexitcounts,butisnotanongoingcongestionissue.BBChaschosentoleavethesepointsinthedatasetsratherthanmanipulatethedatawithoutpreciseknowledgeofthespecificsineachsituation.

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Thesefigurespresentamoredetailedpictureofhowtheindividualsystemsegmentsareburdenedoverthecourseofadayandthroughmultipleyearsbygrowthinridership.Thereddotsareindicatorsthatlinesarelikelytoformatthecorrespondingentrytotheseparticularsegments.Noothersegmentscurrentlyappeartobeneartheirrespectivecapacitylimitations.ThesedataindicatethatcongestionissuesareincreasingandthatmostproblemsoccurwiththetripbackfromMountainVillageorSanSophiatoTelluride.Thenumberofdaysperyearandthenumberofhoursperdayinwhichcrowdingoccursisalsogrowing.CrowdingatthestationinTellurideiscurrentlylessofapronouncedproblembutdoesoccurperiodicallyespeciallyonpeaksummerweekendsorduringevents.

Forecasts of Gondola Use

AsdocumentedinSectionI,gondolauseoverthelongterm(20years)hasgrownatabout3.3percentperyear.Theareastagnatedduringtheeconomicrecession,experiencingasmallannuallossofridership(2009‐2012)beforethenationaleconomyrecoveredalongwithColoradotourismingeneral.Inmorerecentyears(2014‐2017),totalgondolausehasgrownatabout3.5‐4.0percentperyearwithmorerapidgrowthinsummerandslowergrowthinwinter.

Futuregondolaridershipwillbedeterminedbythearea’scompetitivepositionwithinthelargerColoradomountainresortmarket,andbytheabilityofMountainVillageandTelluridetoexpandorbetterutilizethecommunities’collectioncommercialaccommodationbedbaseandpotentialgrowthofresidentanddayvisitorgondolause.Thesefactorsandtheassumptionsunderlyingthegrowthforecastspresentedherearedescribedbelow.

Competitive tourism positioning.TheTellurideareaeconomyisdrivenalmostexclusivelybytourism,mostnotablyovernightguestvisitationinTellurideandMountainVillage.

WebelievethatTelluride’sofferingsinbothwinterandsummerarehighlyattractiveandverycompetitivewithothermountainresorts.Althoughaccessandrelativeremotenessfromlargeurbanmarketsarelimitations,webelievedemandfortheamenitiesandattractionsofTelluridewillremainstrongfortheforeseeablefuture.BBCsurveydataindicatesthatthefreegondolaitselfispartofthearea’sattraction.Thearea’sabilitytoaccommodateagrowingvisitorpopulationwilldependonmanyfactors,includingvacanciesintheexistingrentalunitbase,rentalpricingstrategies,newresidentialandcommercialhousingdevelopment,andtheabilityandwillingnessofthecitizenrytomakethepublicinvestmentsnecessary(e.g.parking,utilities,specialevents)tostimulateandaccommodateadditionaltourists,dayvisitorsandresidents.

Development of visitor accommodations.Futureovernightvisitorgrowthwillrequireincreasesinoccupancyratesforexistingunitsordevelopmentofnewsecondhomeandcommercialaccommodationunits.AccordingtotheTellurideTourismBoard,theTelluride/MountainVillageareahasapproximately4,000availablerooms,whichincludeshotellodging,managedcondominiumsandprivaterentals.Thecommercialbedbaseisroughlyevenlydividedbetweenthetwocommunitiesalthoughthereisvariationinthetypesofunitsavailableandseasonalpricing.


Duringthe2016‐17corewintermonths(Jan‐March)bothcommunitiescombinedaveragedabout57percentoccupancyforavailablerentalunits.2Thebusiestweeksexceeded65percent,suggestingthatpeakweeksduringthewinterarenearingwhatisconsideredeffectivefulloccupancybutthereremainsconsiderablecapacityduringtherestoftheseason.3Duringthesummerhighseason,thetwotownshaveoccupancyratesatabout60percent.Overall,commercialoccupancyrateshaverisenslowlyoverthepastfouryears.Notably,atthiscurrentlevelofoverallcommunityoccupancy,thegondolasystemisexperiencingperiodicovercrowding.

Weestimatethatwithintheexistingbedbase,winterandsummerseasonaloccupancyratescanriseanadditional10‐12percentagepointsbeforebedbasecapacityconstraintsbegintosignificantlyrestrictmarketgrowth.Itcanbeexpectedthatascapacitybecomesconstrained,lodgingpriceswillrise,dampeninggrowthrates,butalsopresumablystimulatingconstructionofadditionalnewdevelopment.Developmentconsiderationsareasfollows:

MountainVillagehasatightlyprescribeddevelopmentprogramdefinedinitsPUDagreementwiththecounty.Thisagreementdefinesthenumberandnatureofunitsthatcanbebuilt.Underthisagreement,MountainVillageisapproximately73percentbuiltoutandhas822unitsremainingtobebuilt(2018).Historically,MountainVillagehasgrownin“lumpy”additionsofnewunits,aslargerindividualprojectscomeonline.Sincetherecession,therehavebeennonewlargemulti‐familyprojects.Singlefamilyhomedevelopmenthasbeensteady,redevelopmentofolderunitsincreasing,butthetheseunitsaddverylittleoverallaccommodationcapacity.

Overthelast20years,MountainVillagehasaveragedabout50residentialunits(ofallkinds)peryear.Continuationofthisratewouldsuggestbuildoutinabout15‐18years.

TelluridedoesnothavetheformalrestrictionsofMountainVillagebutithaspracticalgrowthlimitationsassociatedwithitshistoricpreservationlimitationsanditsnarrowvalleylandconstraints.Overthepastdecade,Telluridehasaveragedabout10‐12newunitsperyear,mostlysinglefamilyhomes.Therehavebeennolargescale(morethan20units)projectscompletedinthepastsevenyears.Inthefuture,Tellurideisexpectedtocontinuewithverymodestannualgrowthrates.Thetowndoesn’thaveaspecificbuildouttargetbuttheabsenceofdevelopableandlimitedinfillsitessuggeststhatthecommunitywillcontinuetogrowveryslowly,addingverylittlebedbasecapacity.

Theintroductionofgraymarketprivaterentalunits(e.g.VRBO)overthepastdecadehasbeentransformationalandtheseunitsnowaccountforapproximately20percentofrentalbedsinbothcommunities.MountainVillagecurrentlyhas470unitswithlicensesforshorttermrental.AccordingtotheTellurideTourismBoard,theTownofTelluridehasasimilarnumberofgraymarketunits(430).Thisgraymarketphenomenonessentiallycreatednewvisitorcapacitywithoutnewphysicaldevelopment.Thegraymarketismaturingandsome

2TellurideTourismBoard,PresentationMaterialsprovidedbyExecutiveDirector,2018.

3Aseasonaloccupancyof70‐75percentsuggeststhatsomedaysarenearingfullcapacityandsomeformsofunits,orqualityofunitsmaybescarce.Pricesarelikelytobehighorrising.Intheseinstances,visitorsmaygoelsewherebecausetheycannotfindthetype,sizeorpriceofunittheyseek—eventhoughunitsareavailable.


communitiesareapplyingrestrictionsonprivaterentalsandwilllikelyaddonlyafewpercentagepointsofadditionalcapacityinthenextdecade.

Insum,commercialaccommodationsdevelopmentslowedtoatrickleduringthe2008‐2014recessionandhasstillnotrecoveredtoprioryears’experience.FuturebedbasegrowthwilloccurlargelyinMountainVillage.Overthepastdecade,expansionofthegreymarkethasbeenperhapsacriticalelementstimulatingovernightvisitationandsupportingthegondola’ssteadyridershipgrowth.

Resident population growth.SanMiguelCountyresidentsaccountforroughly24percentofallgondolaridership(priorFigureII‐1),whichincludeworkcommutes,recreationandpersonaluse.FigureIII‐4showsresidentunitcountsandpopulationgrowthratesforbothcommunitiesintheperiod2000to2016.

Figure III‐4. Resident Population

Source:

U.S. Census Bureau American Community Survey and Decennial Census.

Despitetheadditionofanumberofaffordablehousingprojectsandrelativelystrongeconomicgrowth,SanMiguelCountyhasgrownonlybyabout1percentperyear.MountainVillagehasgainedover200residentsbutTelluridehasactuallylostresidentpopulation(about350residentsbetween2010and2016)ashousingpriceshaveimpactedresidencychoice.

Housingoccupancy(FigureIII‐5)datarevealssimilartrends,thetotalnumberofhousingunitsinMountainVillagegrewrapidlysince2000,nearlydoublingin16years.Conversely,thenumberofresidentoccupiedunitsgrewbyonly90units,suggestingthatthemajorityofgrowthwasinthesecondhomeorhoteldevelopment.Tellurideshowsevenmoredramaticresults,growingitshousingbaseslowlyoverthepast16yearsandactuallylosingpermanentresidentunits.

Figure III‐5. Housing Occupancy Status

Source: U.S. Census Bureau American Community Survey and Decennial Census.

2000 6,594 978 2,221

2010 7,359 1,320 2,325

2016 7,767 1,546 1,972

% change 2000 to 2016 18% 58% ‐11%

% change 2010 to 2016 6% 17% ‐15%

San Miguel

County

Mountain

Village

Town of

Telluride

2000 1,022 520 51% 1,937 1,013 52%

2010 2,066 751 36% 2,070 1,086 52%

2016 1,934 630 33% 2,020 848 42%

% change 2000 to 2016 89% 21% 4% ‐16%

% change 2010 to 2016 ‐6% ‐16% ‐2% ‐22%

Mountain Village

Housing Units

Town of Telluride

Occupied Households

(Permanent Residences)

Occupied Households

(Permanent Residences) Housing Units


In‐townresidentpopulationshavediminishedinrecentyears,largelybecausehousingandrentalpricesareforcingresidentstoseekhousinginthecountyorothercommunities.Wedon’tseethistrendabatingexceptforpublicsponsorshipofemployeehousing.Diminishedlocalresidencewilldampencasualresidentgondolause.Regardless,employeeuseofthegondolawillremainstrongevenifemployeesarecommutingfrommoredistantcommunities.

Day visitors.Afourthfactorinconsideringfuturegondolauseisaccessfordayvisitation,4whichaccountsforabout5‐10percentofwintergondolaridershipand15‐20percentduringthesummer.Weexpectdayvisitorusetocontinuetoriseinproportiontoallridership.Themostsignificantpotentialconstrainttodayvisitorpresencewouldbechangesinthecommunities’parkingpoliciesorwillingnesstopromoteandservedayvisitorpopulations:

AspricesriseintheTelluridelodgingmarket,dayvisitsarelikelytorise,especiallyforsummertravelers,althoughtheabsenceofalarge,nearbybedbaseisaconstrainingfactor.

TheMountainVillageparkinggarageisanimportantsourceofgondolausers:dayvisitorsandregionalresidentsandworkers.Thegaragehasbeensubjecttovaryingpricingstrategiesinrecentyears,butoperatorsreportthatthefacilityfillsmostsummerweekends,peakwinterholidays,andduringevents.TheTownhasallowednearbystreetparkinginhighdemandsituations.Thegaragecanaccommodatetwolevelsofexpansion.

Telluridealsoprovidesaninterceptlotanddayvisitorparkingwithshuttleservicesbetweenparkingandthegondola.Servicesareusedbylocalresidentsandguests.Althoughconstrainedonpeaksummerweekends,thecurrentsystemworkswellandhaswidespreadsupportinthecommunityasatrafficreductionmeasure.

Fordayvisitorsthegondolaisanimportantattractioninandofitself.AscenicgondolarideandexplorationofTelluride’shistoriccommunityisthecoreofadayvisitor’sactivity.

Other external considerations.Finally,itshouldbenotedthatanumberofoperatingfactorsorexternalinfluencescouldaffectgondolademand:

Asnotedpreviously,festivalswithtightperformanceschedulescaninducegondolaridershipinconcentratedperiods.EventhesmallmusicofferingseveningsinMountainVillageduringthesummerwillcausegondolacongestionifallparticipantsexitatonetime.

Gondolaoperatorscaninfluenceeffectivegondolacapacitybyanumberofoperatingpractices(staffing,loading,mountainbikepolicies,etc.),whichcaninfluencesystemefficiency.

Gondolacrowdingitselfmaybecomeaself‐limitingfactorwhereridersavoidpeakperiodcongestionanddeferorreduceoveralluseofthesystem.

4DayvisitorsaredestinationtravelerswhoarespendingthenightelsewhereintheregionandonlyvisitingTelluride/MountainVillageforthedayorevening.


Gondola Ridership Projections

Lookingforward,theeconomyappearsstrongandnewlodging/residentialdevelopment,particularlyinMountainVillageisexpectedtoresumebutatmodestannualrates.Capacityremainsintheexitingvisitorbedbasealthoughthelodgingcapacityexpansioneffectsofthegraymarkethavelargelybeenrealized.Residentuseofthegondolawillslowasresidentsliveoutsideofthetwocommunitiesbutthisisnotalargefactoringondolause.Dayvisitationwillgrowbutdramaticdaymarketexpansionislimitedbytheabsenceofalargeregionalbedbase.

BasedontheseconsiderationsBBChasprojectedthefollowingseasonalgrowthrates.

Winter.Winteractivityisalmostentirelydrivenbydownhillskiingandassociatedactivities.Mostobserversviewskiingasamature,climate‐sensitive,andhighlycompetitivemarketwithmodestoverallgrowthprospects.TheTellurideSkiResort,inthemannerofmostskiareas,hasexperiencedunevenfluctuationsinannualskiervisitsbasedlargelyonweather,skiconditions,andnationaleconomictrends.Wintergondolaridershiphasaveragedabout2.0percentperyearoverthepastfiveyears,whichincludesanelementofrecoveryfromthe2009recession.

Ourforecastmodelassumes2.0percentannual,system‐wide,wintergondolaridershipgrowthforthenext10yearsdecliningto1.0percentperyearthereafter.MountainVillage,withitsimmediateadjacencytotheskiarea,willcontinuetocollectthelargestshareofwintervisitorgrowth.Bywayofcomparison,theRegionalWastewaterMasterPlananticipatesa1.5percentannualgrowthrateforwintersummerinbothcommunities.

Summer.Summerhashistoricallybeenthesourceofmostgondolausegrowth.DespiteTelluride’sinherentsummerattractiveness,weseelimitationsinthearea’sabilitytomaintainthepaceofrecentsummergrowthexperiencedsincetheeconomicrecoverybegan.Itappearsthatthearea’smultiplesummerfestivalsarenowoperatingnearcapacity,whichlimitsgrowthexpectationsonthebusiestweekendsofthesummerseason.Thereislittlelocalappetiteforexpandingtheslateofsummerfestivalsandefforts.SummervisitationappearstobeconcentratinginJuly(SectionI,FigureI‐3)despitemarketingeffortstoexpandoff‐peakactivity.

Wehaveassumeda2.5percentsummergrowthrateingondolausageinyears1‐10(2017to2027)—slightlybelowhistoriclevelsbutcontinuingthetrendoffastersummerthanwintergrowth.Weproject1.5percentannualsummergrowthinyears10‐20(2027to2037).Weanticipatethatthedistributionofridershipamongguests,workers,local,anddayvisitorswillremainroughlyincurrentproportions.

Future ridership.ThefollowingFigureIII‐6showssystem‐widegondolaridershipinfive‐yearincrementsfora20‐yearprojectionperiodreflectingtheaboveassumptions.

Weanticipatethatsystem‐wideridershipwillgrowfrom2.8millioncurrentrider‐segmentstonearly4.0millionby2037.


Figure III‐6. Mountain Village Exit Ridership over a 20‐year Projection Period, 5‐year Increments

Source:

BBC Research & Consulting, 2018; source data from TMVOA.

By20years,summerridershipisexpectedtoreach54percentofannualsystemuse.

Asdemonstratedthroughoutthisreporttheoverallnumberofridershipislesstheissuethanisthechallengeofaccommodatingadditionalridershiponkeygondolasegmentsatcongestedperiodsoftheday.MountainVillageoriginatedridershipwillgrowmorerapidlythanTelluridebasedridership,largelybecauseofanticipatednewdevelopmentintheVillage.Inthewinter,VillagelodgedguestsappeartousethegondolalessfrequentlythanTelluridelodgedguestsbuttheiruseismoreconcentratedattheendofdayintoTelluride,whichisthemostimmediateandseverebottleneck.

ThefollowingFigureIII‐7highlightshowthatlevelofgondolaridershipwillaffectcongestionissuesatthecriticalMountainVillagetoTellurideandTelluridetoMountainVillagesegments.Evenwithin10years,congestionandlineformationwillbecomecommonandby2037,thesystemwouldexperiencelineformationatpeakhoursonover70percentofoperatingdays.

2017 1,355,000 1,458,000 2,813,000

2022 1,496,000 1,650,000 3,146,000

2027 1,652,000 1,866,000 3,518,000

2032 1,736,000 2,011,000 3,747,000

2037 1,825,000 2,166,000 3,991,000

% Change 2017‐2037 35% 49% 42%

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Projection Summary

ThepriorSectionIIpresentedacomplexgondolaridershipprofilewithvaryingridershipmotivations,dailypeakingissues,andconsiderableseasonalvariations.Theforecastspresentedinthissectionsuggestafuturewithincreasingconflictsbetweenridershipdemandandgondolasystemcapacities.AccessbetweenMountainVillageandTelluride,andviceversa,willbecomeproblematicmultipletimesadayduringanincreasingperiodofthebusysummerandwinterweeks.Intheimmediatefuture,thisshouldremainmoreofamarketirritantthanasignificantproblem.Onlyafewdozendayseachseasonandfewhourseacharecurrentlyaffectedandtheremaybeshorttermoperatingmeasuresthatcanmitigatecustomerdissatisfaction.Longerterm,theseforecastssuggestsystemiccustomersatisfactionissuesthatwillaffectthesuccessofthelocaleconomy,theeconomicrelationshipofthesetwocommunities,andthecoreattractivenessoftheTelluride/MountainVillageexperience.ThisisthetopicofthefollowingSectionIVofthisreport.

SECTION IV.

Implications of Gondola System Constraints

BBC RESEARCH & CONSULTING SECTION IV, PAGE 1

SECTION IV.Implications of Gondola System Constraints

Prior sections of this report document the gondola’s function as a unique form of multi-seasonal,multi-portal transportation infrastructure. Section III, immediately preceding this section,provides forecasts of gondola usage and projections of potential user congestion under likelygrowth and development conditions. This section offers observations as to the economic andgeneral community development implications of these projections.Current Gondola BeneficiariesThe gondola has served the Telluride and Mountain Village communities remarkably well forover 20 years. This report documents how residents, employees, guests, businesses andproperty owners from both communities have grown to rely on the gondola and benefited fromits free and efficient transportation function. The gondola has allowed both communities,residents, local businesses, guests, and the ski area operator to share markets and avoid themountain/core town separation problems that has plagued other resorts. The success andstability of Telluride/Mountain Village has also had positive ripple effects throughout theeconomy of San Miguel County and into Ridgway and Montrose.We would argue that the gondola has allowed both communities to leverage the marketstrengths of its neighbor. In winter, Telluride guests and residents have reliable and convenientaccess to and from the ski area. In summer, Telluride guests have convenient, non-vehicularaccess to hiking, biking and mountain scenery at San Sophia and Mountain Village. In the samemanner, Mountain Village guests and residents have access to the commercial amenities andhistoric character of Telluride, as well as the same convenient access to the hiking, biking andmountain environments afforded guests in Telluride. Concurrently, the gondola significantlyreduces the number of cars and the vehicle miles traveled within both these towns—a source ofcontinual cost, pollution and debate in other mountain communities.The only real criticism of the gondola’s function has been the perception that the gondola haseffectively drained the commercial vitality from Mountain Village and that easy access toTelluride has restricted the Mountain Village core from developing its own retailing andrestaurant capacity. In considering the experience of other new mountain resort communities,this is a weak claim. In our view, the gondola allowed Mountain Village to weather the difficultdecades of early resort development when the scale of the new residential development istypically inadequate to support a robust village economy and in turn, the lack of a robust villageretail and service center undermines the attractiveness and the success of the entire resort. TheVillage may now be at a point where its own commercial base is viable, effectively nursedthrough the early years by gondola operations.


Finally, it is notable that, a large share of guests, particularly summer guests, ride the gondola asa means of casual exploration and entertainment without a particular destination focus—thegondola itself has become one of the area’s prime attractions.Implications of Future System CongestionThe current gondola congestion issues are limited to a few hours a day over a small number ofpeak period days. Thus far, these system shortcomings have probably not altered consumerbehavior to any great degree, or significantly diminished the quality of the visitor experience.Nevertheless, these same peak period days are also the periods when the retail and restaurantsare busiest and the commercial lodging base charging the highest rates. Visitors should bereceiving the highest value for their spending and be afforded the best possible experience.Guests have many other resort options, and returning home with stories of Telluride’scongestion or gondola inconvenience is not of long term benefit to any local entity or enterprise.The forecasts presented here suggest that even in the near term, gondola congestion will deepenand increase in duration. In the longer term, congestion is deeply problematic. Near term, theTelluride/Mountain Village communities can address these peak period problems with apatchwork of admittedly stop gap mitigations: Supplemental buses. Evidently, this has been done on a number of occasions, particularlyfor festival demands and peak winter transport back to Telluride. It offers a temporary andlargely unsatisfactory fix. Operational changes. Chair lift operations focusing on bikers in order to reduce mountainbike loading issues; additional staff to help increase loading to full capacity. Festival/event size or duration management. Not an attractive option, but possible bettermanagement of events with an eye toward gondola capacity limitations could reducegondola peaking pressure.Ultimately crowding on the gondola will produce a traffic response very similar to what occurswith congestion on any street system. Users will either time-shift, find other travel routes, oravoid system use altogether. Under these circumstances, the unique visitor experience offeredby the Telluride and Mountain Village would be undermined, damaging the area’s character andvisitor attraction and ultimately reducing the resorts’ collective attractiveness.More directly, after mitigations are tried and confront their respective limitations, we wouldexpect the following trends: Winter return to Telluride in the evenings will become increasingly problematic. Telluridelodged skiers will leave earlier during the day or ski down in poor conditions to avoid lines,neither of which are attractive options. After experiencing this problem, we would expectskiers to book future lodging at Mountain Village avoiding the issue, or go elsewherealtogether. Mountain Village guests will avoid evening travel into Telluride with the potential benefit ofincreasing sales in the Village. This is not the economic panacea some have suggested. As


shown in Section I, winter bar and restaurant sales in Mountain Village are already quitestrong. The Mountain Village core’s commercial issues are largely a summer problem.Adding marginal winter sales from guests who would actually prefer to be somewhere elseis not an effective solution to the larger problem of village vitality and diversity. It should also be noted that relaxed lingering is one critical element of great public places,and anxiety about the timing of gondola travel, or relying on frustrated guests underminesthe sense of calm and relaxation that should pervade and vacation experience. In our view,Mountain Village’s commercial core will be best served by supporting a highly functioninggondola service that maintains the unique and highly valued inter-town experience that isat the core of current visitor experience. Over the longer time frame, the potential for frequent gondola lines during most summerweekends, critical winter months and during events becomes highly problematic.Congestion develops in both directions from Telluride and Mountain Village duringmidmorning and midafternoon and evenings on most days. Eventually, system congestionwill also impact the movement of employees and residents who currently have the luxury ofmoving easily between communities, homes and jobs. We presume that more resident,guests and employees will try to rely on private cars to get to destination exacerbatingexisting parking and traffic problems.Ultimately, without expanded gondola capacity the two communities will effectively furtherseparate from each other as each begins to pursue its own self-interest. Telluride’s commercialcore will suffer without the easy flow of customers from the larger Mountain Village bed base.Mountain Village’s attractiveness will be diminished as the character, entertainment andattractions of Telluride become less accessible. Most importantly, the uniqueness and the basiccomfort and civility of the gondola system—a defining element of the Mountain Village andTelluride experience—will be lost, putting this resort back on a roster of many other attractivebut less compelling mountain resort alternatives.

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