It took two guys like author Chris Diamond and his editor Andy Bigford to make this book as valuable as it is. Their combined 88 or so years in the industry means they have the knowledge, perspective and access to write this book, and the book takes full advantage. When Chris says “ski” he means ski, snowboard, etc. through the whole book.
It’s both a strategic evaluation and a history of the ski/snowboard/mountain resort business. Like most of you, I was aware of the events and transactions Chris describes. But having them laid out chronologically and the competitive impact and interrelationships evaluated was great. It caused useful thinking.
What does Chris conclude? The subtitle of the book is a good place to start.
“Alterra counters Vail Resorts; mega-passes transform the landscape; the industry responds and flourishes. For skiing? A North American Renaissance.”
“My premise in this book,” he says, “is that the Epic revolution, as others have followed Vail Resorts’ lead has initiated a renaissance in skiing. For decades, the media focused on the high cost of skiing, but now the standard refrain is “what a deal” the new passes are. Total skier visits can be expected to grow coast-to-coast, and not just at the mega resorts. This energy will eventually expand the number of total participants, if that hasn’t happened already.”
“It is my view that these recent changes have rescued skiing from the trend of becoming, in effect, a rich person’s sport.”
Isn’t it interesting how consolidation has, so far, turned out to be a good thing? Or at least a necessary thing. In doing turnaround work I quickly learned that doing “more of the same” isn’t the path to success. I’d come around to the idea that some consolidation was necessary and appropriate for the industry, but that it would lead to a “renaissance?” Not sure I’m that far along in my thinking, though I can see how I might have to get there in the not too distant future.
What’s Chris’s business proposition? He states it pretty clearly using Holiday Valley’s strategy as an example.
- Make great snow [technology continues to make that easier].
- Take care of your guests.
- Know your markets.
- Maximize summer opportunities [So you’re not a one season business].
That’s from his chapter on small to midsized areas but, you know, all pretty good business advice for any resort. Early on in this chapter I considered skimming it. Glad I didn’t. Aside from turning out to be really interesting, it highlighted some consistent themes over the history of the industry
1. How important commitment, passion and optimism have been (are, I’d say).
2. The role, for better or worse, of real estate.
3. The bad things that happen when commitment, passion and optimism obscure the importance of good financial management and a solid balance sheet.
When you think about it, what’s going on is that the survivors of the consolidation are doing better business. Well, that’s what happens in a consolidation. Like, for example, retail. Adapt or die. Know your market and take care of your guests (customers). What an original idea!
It’s true that many small hills have gone away and, as Chris acknowledges, they were great places to learn. But they only existed when times were easier and the industry was growing madly and they floundered (Chris describes plenty of this) when times got hard and the environment changed, but they wouldn’t or couldn’t change with it.
Now, as Chris also describes, some of these places are being resurrected by communities, local governments, and investors/skiers who have resources (including for the significant capital improvements required) and are prepared to run the places with best industry practices.
The story for the industry is not fundamentally different from other consolidating industries. A revolution? Nah. Too fraught a term for me. Let’s say that the pressures of a changing competitive environment have finally, after many years, reached a tipping point where it was, for the individual players, adapt or die.
Chris’ hypothesis is that the mega passes, along with cheaper lodging (VRBO, etc.) are bringing affordable skiing to more people as long as you’re willing to plan in advance. The mega passes have become the brand, and customers are planning and plotting to get the best deal. The resorts, meanwhile, are using dynamic pricing, buddy passes, and other permutations of pass terms to give their customers choices and control – what customers want in most industries these days- and influence their behaviors. Chris and I agree that this process is just beginning and that the ultimate result will be that few people will be walking up to the window and buying day passes.
But what, you say, about all those hills that have closed, mostly to never reopen again? Where will we get new participants? Yeah- problem even with all the positive changes Chris outlines.
He reports that retention has increased from 15% to 19% over the many years during which we’ve been trying to move the needle. He also reminds us of all the improvements in equipment, process and teaching technique for teaching beginners that have evolved.
Perhaps most importantly, he makes it clear that the larger, consolidating, remaining resorts know that developing new, committed skiers is imperative. Their acquisition of and relations with other resorts as well as the structure of their pricing and pass products are focused on the issue.
And perhaps, since we’re trying to change human behavior and tried to do it through the Great Recession, we shouldn’t be too hard on ourselves. I’m not sure 15% to 19% over a decade or more is so bad. With the changes going on now, I can even imagine it accelerating.
So, everything is fine, right? It’s conceivable that Chris as a consummate industry insider might be on the optimistic side, but he does point out some issues.
To paraphrase, he says the industry will be fine if we don’t have a recession. I’d change that to “until we have.” The business cycle has not been rescinded and we won’t have any more fun in a recession than other industries.
He also notes our inability to crack the diversity puzzle. I’ll just include myself on the list of people who don’t have a solution.
Climate change. Yes of course, though it’s amazing that this industry still has people resisting the idea. Tactically, we are relying on improved and increased snowmaking and warm weather activities to deal with this. The big players are counting on geographical diversification. Strategically, the industry is active in sustainability and confronting climate change.
He also discusses issues with demographics; an aging base and drop off in snowboarding. He spends just a paragraph on issues of income, and I think more time might have been warranted. Skiing may be getting less expensive, but it’s never going to get cheap. What I know about the stagnation or even decline in real middle class and below incomes over several decades gives me pause. Skiing may be “cheaper” but if taking advantage of that requires a $500 or higher outlay months before you hit the slopes (plus equipment, lodging, transportation, food, apparel even if they are all cheaper), does it matter? Economics limits our customer base.
The answer? Snowmaking, good management, and summer activities generating year around cash flow. It doesn’t hurt if some of your competitors have gone out of business. You need to read this book. The integrated strategic perspective is very important as you consider what your industry business should be doing.
I’ve never met Chris. I think I might have met Andy. If you guys are going to be wandering around Denver in a couple of weeks, I’d love to talk with you. Among the things I’d like to ask is if the numbers exist yet to evaluate the extent of the decline in cost to go skiing.