Opinion Interesting new video: The business of ski resorts

[Bogong]

A fascinating and well made new video from Wendover Productions, The business of ski resorts summarises the ski resort industry in North America remarkably well and the parallels with Australia are very strong. There aren't any of the errors that are often made by reporters outside the industry. And yes, Australian resorts get a mention as part of the Vail Empire.

 

[telecrag]

We get the profit figures, so you can see how much profit your ticket price gets too.

Also, mountain biking makes skiing look cheap.

Interesting video though thanks.

 

[Jacko4650]

A fascinating and well made new video from Wendover Productions, The business of ski resorts summarises the ski resort industry in North America remarkably well and the parallels with Australia are very strong. There aren't any of the errors that are often made by reporters outside the industry. And yes, Australian resorts get a mention as part of the Vail Empire.

Very interesting. Highly recommended for regular snowsports enthusiasts.

 

[Telezacski]

Enjoyed, cheers

 

[emkae]

Excellent!

 

[nezumi]

A fascinating and well made new video from Wendover Productions, The business of ski resorts summarises the ski resort industry in North America remarkably well and the parallels with Australia are very strong. There aren't any of the errors that are often made by reporters outside the industry. And yes, Australian resorts get a mention as part of the Vail Empire.

Came up on my feed this morning - was a good watch.

It's intriguing to me to see the claimed numbers of skiers and boarders in the USA, especially as a % of total population. According to this Reuters article there are 900,000 skiers and snowboarders in Aus, which would make us 10% of the US snow user numbers, but at 7% of the total US population.

 

[Bogong]

Came up on my feed this morning - was a good watch.

It's intriguing to me to see the claimed numbers of skiers and boarders in the USA, especially as a % of total population. According to this Reuters article there are 900,000 skiers and snowboarders in Aus, which would make us 10% of the US snow user numbers, but at 7% of the total US population.

The quality of a report like that made by a YouTuber on a shoestring budget is incredible. It's better researched, presented and edited than the sort of thing TV stations make on 10 times the budget.

I find that sort of thing fascinating and had thought of doing something similar on the Australian ski industry, but getting proper stats and costings was just too hard for me to compile as a hobbyist running a minor website without ads. (Although he did use a few phrases that I used in one of my articles, so perhaps he read it?)

Even local ski mags and snow industry reporters like Rachael Oakes-Ash haven't written articles or produced videos covering things like that. But the conditions of the American ski industry seem to be very close to our own, even down to dealing with bureaucrats while running a ski resort on Crown land.

 

[nezumi]

The quality of a report like that made by a YouTuber on a shoestring budget is incredible. It's better researched, presented and edited than the sort of thing TV stations make on 10 times the budget.

I find that sort of thing fascinating and had thought of doing something similar on the Australian ski industry, but getting proper stats and costings was just too hard for me to compile as a hobbyist running a minor website without ads. (Although he did use a few phrases that I used in one of my articles, so perhaps he read it?)

Even ski mags and local snow industry reporters like Rachael Oakes-Ash haven't written articles or produced videos covering things like that. But the conditions of the American ski industry seem to be very close to our own, even down to dealing with bureaucrats while running a ski resort on Crown land.

I wouldn't be so sure about shoestring budget. There's a reason that I have him subscribed on YouTube - he is experienced and *good* at what he does, and it shows in his subscriber count. This translates directly to revenue on YouTube. Estimates on his ad revenue alone put his income at around $365,000 per annum from YouTube (US Dollars) Source

 

[chrisj]

Here's another interesting one that popped up on YouTube this week:

 

[skibiz]

The Business of Ski Resorts doco presents the challenges faced quite succinctly - and really highlights the need why the historical day pass model needed to change. It will be interesting to see the impact of Epic & Icon on Australian visitor numbers this year. Buller reported record numbers for 2018 - 420,000, great snow. The test for pass success will be visitor numbers with less snow. Indicating that there is still some vulnerability, even with passes in place, earlier this month Vail announced 7% fall in season to date numbers, this decline attributed to the late arrival of snow at Whistler. (Whilst visits down, revenue up +0.4%!).

Passes get down to frequency. Looking at what we know in Australia re av skier/boarder frequency (not in doco) suggests conflicting data. ASAA reported 2.36 million skier days in Oz for 2019 (2.39m for 2018). Reported skiing/boarding participation estimates range from 225,000 per year (4 year av reported by Sport Australia for 15yrs + age) to over 900k per year reported by Roy Morgan and the 2019 Vanat Report. (For context SA also report near 900,000 tennis participants - a far more accessible/affordable sport.) (Sport Australia suggest gender mix of 66M/34F and RM suggest 60/40, so this is reasonably consistent.) Assuming the skier days are correct, calculated av frequency per participant is low 2's to 10 times per season (Sport Oz). Would welcome comments.

 

[Bogong]

Skibiz, there have always been good years and bad years. It's a bit like farming, in a good year businesses in the ski industry put aside some of their profits to help them through the inevitable bad years in the future where they will make a loss. Now farmers, owners of a single ski resort and stand alone ski businesses like lodges and ski hires are private companies or sole traders and that's part of their accepted business model.

But a listed public company like Vail has to do things differently because of stock exchange traders. Institutional investors like super funds as well as "mum and dad investors" are happy to buy a stock and keep it for many years, but traders make their living by forcing the price of a company up or down and only hold shares for very short periods. That's why so few companies with naturally erratic profits in areas like farming or skiing are listed public companies, the volatility of their share price is inevitably far greater than it is for companies in other areas. Vail tries to overcome this tendency to erratic profits and a volatile share price by geographic diversification and by pre-selling season tickets. Merlin (the former owner of Falls Creek and Hotham) has the same approach with even greater geographic diversification and having its fingers in a dozen different segments of the tourism industry.

I don't think there is any danger to well funded and sensibly managed stand alone ski resorts like Buller, at least in the medium term. In the long term the greatest danger is how much warmer and/or drier the climate gets, but that is an issue for the entire ski industry, not just public companies like Vail.

 

[Hermannator]

Interesting - I also saw this on my yt feed. Very interesting points on how much the true cost of employees is, e.g. housing and transport. The issue of limited staff housing has been well covered on this forum and has been a problem for a long time and continues to worsen. Yet, seemingly legions of staff turn up wanting to work at a ski resort each year (the pay is so low because too many employees turn up?). What gives?

Other opinions from 'around the traps' suggest that resorts are just 'glorified real-estate companies'... so many aspects to this.

 

[Dr_Phil]

Enjoyed both videos. Found the second especially interesting as it talked about beginners returning.

calculated av frequency per participant is low 2's to 10 times per season (Sport Oz).

I'd been thinking about Vail's revenue insurance policy they call an Epic Pass and wondering what proportion of Aus participant's are in the one weekend or one 5 day trip per year, due to either dollar or time constraints. A lift seasons pass is of no interest to this bunch.

Before watching the second video, I'd also been think the Epic pass wasn't going to help replace aging participants with new ones. And then wondering if Vail think climate change means they don't need to worry _too much_ about replacing their retiring customers

 

[currawong]

Enjoyed both videos. Found the second especially interesting as it talked about beginners returning.

I'd been thinking about Vail's revenue insurance policy they call an Epic Pass and wondering what proportion of Aus participant's are in the one weekend or one 5 day trip per year, due to either dollar or time constraints. A lift seasons pass is of no interest to this bunch.

Before watching the second video, I'd also been think the Epic pass wasn't going to help replace aging participants with new ones. And then wondering if Vail think climate change means they don't need to worry _too much_ about replacing their retiring customers

in the US Vail have a multi-resort multi-day pass as well (epic for everyone). if you don't need a season pass they still want you to lock you in by offering a discount on pre-paid tickets

 

[nezumi]

Enjoyed both videos. Found the second especially interesting as it talked about beginners returning.

I love the concept of the first-timer-to-life-timer pass, that's awesome.

Hotham has previously had their Brand New Day offer, but it's usually put on so early in the season that there's limited support infrastructure available for getting up the hill, and Hotham is slightly too far from Melbourne for a day trip, especially with only one driver.

 

[parkmonkey]

The idea that staff are an inconvenient cost and not an asset has always been a problem in the ski industry

 

[Dropbear]

Here's another interesting one that popped up on YouTube this week:

I was interested to hear their suggestion that skiing in the US is declining as baby boomers age, and that fewer millennials there are taking up the sport, often due to cost.

Is this demographic trend occurring in Australia too?

I feel like the (un)affordability of skiing is a significant barrier, but there doesn't seem to be much effort at the moment to address this relative to efforts made to attract people in the "luxury" end of the market.

 

[chrisj]

I feel like the (un)affordability of skiing is a significant barrier, but there doesn't seem to be much effort at the moment to address this relative to efforts made to attract people in the "luxury" end of the market.

Well the resorts have two models available, like most retail businesses - high margin, low turnover or low margin, high turnover. Given the Australian resorts are already very crowded, their only real option is high margin, low(er) turnover.

 

[Telemark Phat]

I was interested to hear their suggestion that skiing in the US is declining as baby boomers age, and that fewer millennials there are taking up the sport, often due to cost.

Is this demographic trend occurring in Australia too?

I feel like the (un)affordability of skiing is a significant barrier, but there doesn't seem to be much effort at the moment to address this relative to efforts made to attract people in the "luxury" end of the market.

No

 

[gareth_oau]

Well the resorts have two models available, like most retail businesses - high margin, low turnover or low margin, high turnover. Given the Australian resorts are already very crowded, their only real option is high margin, low(er) turnover.

well tha's just silly - opt for no. 3 - high margin, high turnover

 

[currawong]

I spent so many nights in my 20s and 30s camping or sleeping in a car at the bottom of ski hills. if young skiers are prepared to do that then skiing is much cheaper (with a season pass) than it was back then.

 

[nezumi]

I was interested to hear their suggestion that skiing in the US is declining as baby boomers age, and that fewer millennials there are taking up the sport, often due to cost.

Is this demographic trend occurring in Australia too?

I feel like the (un)affordability of skiing is a significant barrier, but there doesn't seem to be much effort at the moment to address this relative to efforts made to attract people in the "luxury" end of the market.

As a (relatively) young snowboarder, with a young family, the upfront costs are a relatively significant barrier to entry - this is the biggest difficulty that I have in enticing people to join me on a trip.

Once you are regularly going to the slopes, the cost-per-day reduces significantly. As Currawong mentions, with the season passes on offer (Epic especially), you can get multiple days on the lifts quite easily. Part of the difficulty, more so in Vic than in NSW, is the cost of lessons. If these are as much or more than a lift pass, and if people don't persevere through the first few difficult/ungainly days, then the retention rates of people will be low.

I've just done a very quick comparison on the cost of three scenarios, each for a couple visiting Mt Buller at the end of July.
1) Weekend stay, drive up Friday night, first timers, "impulse" buy, minimal research. Discover pass Sat, lift and lesson Sun then home. Staying on mountain in cheapest non-bunk accommodation I could find. All gear hired. $2,513 total, or $628 pp/day
2) Midweek stay. Essentially the same as 1, but with a bit more research and staying off-mountain, driving up daily. still daily lessons and hired gear (Mansfield). $2,073, or $345.50 pp/day
3) Monday to Friday, staying off mountain. Own gear and no lessons, just wax of boards/skis. Buller $68 individual daily lift passes. $1,972 or $197.20 pp/day.

I am the type of person who obsessively over-researches any purchase or spending decision, so I am more likely than most to first timers to spot these types of bargains/deals. But there are ways and means out there of reducing the cost, including camping.

 

[Telemark Phat]

The difference between the US and Australia demographically is Interschools. The industry here would be very different without them.

 

[parkmonkey]

Resort entry fees are way over the top

 

[Bogong]

Resort entry fees are way over the top

That's because other local government areas receive all sorts of subsidies both direct and indirect from state governments. If a drought stricken shire council in the wheat belt cries poor, no state government would refuse to tip extra cash into their coffers. But not so with a ski resort management board after a poor snow season.

Ski resorts get far less subsidies and never get assistance packages, despite their fixed costs being higher. So in order to break even, Resort Management Boards have to slug visitors with high entry fees in winter and property owners with enormous taxes, despite them having only four months a year to make their money.

Now I'm not saying ski resorts are totally efficient in the way they spend their money, but I doubt anyone would dispute that there is much less waste or over paying for services than you get in a typical suburban council.

 

[Dr_Phil]

I was interested to hear their suggestion that skiing in the US is declining as baby boomers age, and that fewer millennials there are taking up the sport, often due to cost.

There is a lot of angst in some sectors of the US economy that repayments on student loans are preventing millenials from supporting the wider consumer economy. In cities, lots of millenials are even not getting their drivers licence, and not buying a car!

 

[currawong]

The difference between the US and Australia demographically is Interschools. The industry here would be very different without them.

in our ski club, we have a staged membership for kids. initial installment, 2nd installment at 18, final installment at 25. I think usually mum & dad pay the installment at 18 but they have to pay it themselves at 25. many default at 25. I think it is other priorities rather than purely expense. member accommodation rates are pretty good - $426 for a week in peak season with cooked brekkie thrown in.

 

[cornice11]

in our ski club, we have a staged membership for kids. initial installment, 2nd installment at 18, final installment at 25. I think usually mum & dad pay the installment at 18 but they have to pay it themselves at 25. many default at 25. I think it is other priorities rather than purely expense. member accommodation rates are pretty good - $426 for a week in peak season with cooked brekkie thrown in.

what are the installments just out of interest?

 

[currawong]

what are the installments just out of interest?

initial joining fee $1475
at 18, additional fee $3145
at 25 $2680 (resellable $4000 debenture is issued at this stage)
total $7300

I think it's only for children of members. If a parent becomes a member (same total cost) I think they can usually join up kids under this scheme without waiting for someone to sell. kids' annual subs are 1/2 adult rate.

 

[cornice11]

thanks. its a good way to keep kids able to go to a club, but a lot of money for 20 somethings to find.
some of the stories of how the original ski clubs were set up in the mountains also show how things have changed - cant imagine groups of uni students building a ski club these days.

 

[Hermannator]

There is a lot of angst in some sectors of the US economy that repayments on student loans are preventing millenials from supporting the wider consumer economy. In cities, lots of millenials are even not getting their drivers licence, and not buying a car!

Much the same here... https://www.racv.com.au/royalauto/moving/news-information/teenage-driving-licences.html
Plenty of folk wanting lifts to ski hills connecting via FB groups etc during the season

 

[Telemark Phat]

I'd love to be able to live without a car again. Having to own a car is the thing I enjoy least about rural living.

 

[oldgeezer]

Another large cost ski businesses would face is public liability insurance. Despite typical lift passes contain wording to the effect you waive your rights / hold harmless the operator I am sure insurance would be significant.

In Australia this became apparent in the public liability insurance crisis. Liability insurers had been making money from investing premiums suddenly all started withdrawing from the market and/or increased their premiums as investment returns dried up. The ski fields all had to raise ticket prices and Selwyn, which had sold day tickets for about 60% of Perisher and Thredbo went to near 75% of the majors the next season for as a low cost operator the impact of the rate hike was more significant for Selwyn than the majors.

 

[Hermannator]

Some big rises in insurance premiums for club lodges too of late... (in the order of 11% p.a.)

 

[skibiz]

I was interested to hear their suggestion that skiing in the US is declining as baby boomers age, and that fewer millennials there are taking up the sport, often due to cost.

Is this demographic trend occurring in Australia too?

I feel like the (un)affordability of skiing is a significant barrier, but there doesn't seem to be much effort at the moment to address this relative to efforts made to attract people in the "luxury" end of the market.

Here's what I've found re skier age mix, this from the annual participation surveys conducted by Sport Australia. I await 2019 data before making a call on the age trend but as it becomes more expensive I'd expect that this will impact the age mix moving forward -as it might already be doing. It appears that Snow Australia doesn't have any focus on skier numbers, new demand, age profiles, market trends. It is all about racing. I suspect the Epic/Ikon strategy is existing skiers skiing more (and their kids) - easier to execute than generating entirely new demand.

 

[gareth_oau]

Here's what I've found re skier age mix, this from the annual participation surveys conducted by Sport Australia. I await 2019 data before making a call on the age trend but as it becomes more expensive I'd expect that this will impact the age mix moving forward -as it might already be doing. It appears that Snow Australia doesn't have any focus on skier numbers, new demand, age profiles, market trends. It is all about racing. I suspect the Epic/Ikon strategy is existing skiers skiing more (and their kids) - easier to execute than generating entirely new demand.

i recently started skiing so that must bring down the average.
I’m 56

 

[Dropbear]

Here's what I've found re skier age mix, this from the annual participation surveys conducted by Sport Australia. I await 2019 data before making a call on the age trend but as it becomes more expensive I'd expect that this will impact the age mix moving forward -as it might already be doing. It appears that Snow Australia doesn't have any focus on skier numbers, new demand, age profiles, market trends. It is all about racing. I suspect the Epic/Ikon strategy is existing skiers skiing more (and their kids) - easier to execute than generating entirely new demand.

Interesting stats, looking forward to seeing more updates when you get more data, skibiz.

 

[Bogong]

... It appears that Snow Australia doesn't have any focus on skier numbers, new demand, age profiles, market trends. It is all about racing...

The decline of regional, state and national peak bodies for skiers, ski clubs and the ski industry is an interesting subject. They started in the 1930's, boomed in the 50s and 60s and then went into a slow, gentle decline. They tried all sorts of strategies to revive interest, income and membership, but nothing worked in the long term. So while it's sad that there isn't an effective ski industry peak body for anything but racing, the reason is that broad apathy in recent decades deprived them of money and clout so they gradually closed down or survive as largely ineffectual shadows of what they once were.

So skiers, ski clubs and ski businesses have no one but themselves to blame for the lack of an effective peak body to lobby for them and promote ski related causes.