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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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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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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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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

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