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The future of Utah skiing: is it all uphill from here?

The Future of Utah Skiing

The ski industry has experienced little to no growth in annual skier visits for over a decade. Total U.S. skier visits in 1979 were approximately 50 million. Skier visits reached a high of 53 million in 1988, but have declined since to 50 million in 1990 and 47 million in 1991. Utah resorts, however, experienced an all-time high of 2.7 million skier days last year, up by more than 10 percent.

At least part of the 1991 national decrease was a result of the uncertainty caused by the Gulf War in early 1991 as well as an unusually poor snow year in California. Nevertheless, the overall trend in U.S. skier visits over the past 13 years shows that there has been no growth.

Skier visits have been projected through the year 2001. The anticipated growth rate through that year is less than 1 percent, meaning that total skier visits will be approximately 56 million.

Reasons for the Low Growth in Skier Visits

Include the Following:

* Expense of Skiing. With lift tickets approaching $40 per day and ski equipment and clothing striving for new highs, many families are finding less expensive recreational pursuits.

* Competing recreational opportunities. As the expense of skiing has increased, the cost of some competing vacation activities has increased less rapidly or, in some instances, decreased. Also many herefore "exotic" vacation spots, such as Jamaica, are aggressively promoting tourism during the winter months.

* The "graying" of America. As the average age of Americans rises, more individuals are seeking warm climate vacations that require less physical effort. Unfortunately, just as individuals approach their 50s and affluence, they often lose interest in skiing.

Characteristics of Successful Ski Areas

Successful ski resorts have many or all the following attributes:

Physical Characteristics

* Proximity to population and/or easy access from more distant population bases.

* Consistent snow pattern.

* Good trail system providing fun skiing for all levels of skiers.

* Substantial vertical drop.

* Snowmaking system capable of providing consistently good snow conditions throughout the season.

* On-site accommodations and after-ski activities.

* Well-maintained buildings and equipment.

Management Characteristics

* Marketing. A competitive and strategic marketing plan aimed at specific ski market segments designed to increase market share.

* Operations. Customer-oriented, responsive, and communicative service employees with priorities for safety, cleanliness, and the comfort of the skier.

* Finance. Capital expenditures determined by an analysis of the return on investment; closely monitored budgets to control operating expenses.

* Real Estate should not be relied upon to provide cash flow because of the uncertainty and risk of real estate sales due to changing tax laws, economic conditions, interest rates, etc. Harry McCoy, a Salt Lake City-based attorney and recreational real estate expert, said, "Those resorts that rely upon real estate sales to provide substantial cash flow to support ski and other resort operations are playing Russian Roulette with a fully loaded pistol - a potential recipe for disaster."

* Year-round orientation of resort to build year-round cash flow and loyalty to the area.

Future of the Ski Industry

* In the near future, growth of one ski area will occur at the expense of other ski areas. A growing ski area will "steal" market share from other ski areas. The ski industry has become highly competitive.

* Changing demographics provide opportunities for those ski areas that develop their products to meet the changing needs, that is, catering to the aging skiing population, providing children's programs for the baby boomers, and more.

* Ski areas that are well managed, properly financed - providing good value to the skier and concentrating their marketing efforts on specific market segments will continue to do well. Those ski areas that are not well managed will likely experience a decline in business.

Although industry trends indicate little or no growth in skier visits in the near future, many ski resorts will continue to do well. Competition from other recreational enterprises however, will intensify, requiring ski areas to continually improve their product and develop new programs to address the changing needs of the population.

Fred Jones is a principal at Ski Country Advisors, a division of Houlihan Valuation Advisors.
COPYRIGHT 1991 Olympus Publishing Co.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Publication:Utah Business
Date:Dec 1, 1991
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