If you want a business where you have a lot of control, here’s some advice:
Don’t operate a ski resort.
It’s too risky. Too dependent on the whims of Mother Nature. If you don’t have enough snow, or you get too much rain, or the winter’s too mild, you’re in trouble.
And then there are other variables to consider. If the economy’s bad, if people don’t see snow in their back yards, if gas prices/airline prices/lift tickets are too high, customers stay away. Add the short time frame in which you can make money, and it’s a wonder anyone succeeds.
Turning a profit is hard enough for a large resort with a lot of resources. But for smaller resorts — those who are teetering on the edge of solvency, anyway — a year with any of the above problems can be a disaster.
Recently I learned about three ski resorts on a downhill slide:
• Snö Mountain in Pennsylvania: Formerly known as Montage Mountain, Snö is scheduled to be sold at auction on July 17th. Things have not gone well for Snö. The mountain defaulted on a $5 million state loan in November, and had its power cut off by the local utility for three weeks in October. However, according to The Scranton Times-Tribune, Snö is hopeful it will be able to close a deal to refinance the property, obviating the need for the sale.
• Echo Mountain in Colorado: Despite record-breaking revenue this season, Echo will be on the auction block, too. Racebrook, a private equity firm, says it is putting the mountain up for auction “to focus on their other business ventures while ensuring a guaranteed date of sale, allowing the new owner time to prepare for the next winter season.”
• June Mountain in California: A sister to Mammoth Mountain, June has not made a profit in 26 years. The LA Times says the closure will give the company time to evaluate its future. From the LA Times article: Mammoth Mountain Ski Area has long had plans to expand June Mountain and add long runs to increase the popularity of the resort. But the resort operator says the plans were “never realized and June Mountain has, in turn, suffered from an identity crisis that has both stifled its ability to achieve its full potential and required substantial financial subsidy from Mammoth on an annual basis.”
Who’s to say that things won’t turn out for the best. Perhaps these mountains will be aquired by people with deep pockets and a strong commitment to the ski industry. Perhaps Snö will regroup. Perhaps Mammoth will reconsider. Still, it’d be a shame if these mountains joined the ranks of closed, or “lost” ski areas that have become a too common casualty of the ski industry (more on this here). Ascutney, a ski area not far from me here in Vermont, closed a couple years ago. So sad to go by and see it abandoned and unused.
My own private dream? To acquire one of these closed areas, rename it “Mount Diva,” and make it a mecca for women’s skiing. Who’s with me on this?
Hi! I just wanted to share a bit of information about another ski resort that looked to be going downhill during the summer of 2011. Powderhorn Mountain Resort in Western Colorado was put up for auction in early August. Despite a lot of local angst and nail-biting, it worked out beautifully. When the gavel fell, Andy Daly (current mayor of Vail, former CEO of Vail, Copper Mt and former owner of Eldora), along with Tom and Ken Gart had purchased the resort. They brought energy, investment and optimism to the resort. Add the best snow to be found in Colorado last season and Powderhorn was the only (I believe) Colorado resort to see an increase in skier days. Changes are still being made and the excitement remains palpable.
I’ve never skied Echo Mountain, but I only hope they have such a good outcome (and actually, they had pretty good snow last season too).
So Wendy, bring your checkbook and come to the auction! Wave your hands wildly and create Mount Diva! I’ll come ski with you.
Yes, good things at Powderhorn. I only hope that the other mountains have as good an outcome. It certainly is possible.
Trust me, if my checkbook was a bit (uh, make that a lot) bigger, I’d definitely be
at the auction. It’d certainly be fun.
Thanks for this post Wendy. I must say that indeed, running a ski area can be a risky business. Consider that if you rely on snowmaking (as many areas in the East do) it could cost a cool million a year just for the electricity alone to run those pumps. A brand new high-speed chair starts at 4 million.
After a bad season, shifts in the ski industry are often seen, with some areas going up for sale and others simply sliding away. The current state of the industry reminds me a bit of publishing in which the big names get the good contracts (or the skier visits, as the case may be) and the little guys get a smaller and smaller share of the pie. June is a good example of a “small area” that can no longer be subsidized by its big brother. However, I do believe that any area can make money. But it takes a careful feel for the business–an understanding and appreciation for the sport, a sense of what the customers want, and a willingness to play to the needs of the people instead of your ego. Also, a ski area should be able to make it through at least one terrible season without going broke. Otherwise its simply too heavily
levered. Granted in this economy, that’s hardly possible.
As for buying your own ski area, here’s my advice. Leave that to those deeper pockets willing to take the risk. Instead, support your local area and enjoy the benefits of not having to run it. And that includes actually getting to ski. You’d be surprised by how many ski area operators never have time to ski.
Good points, Kim. You’re right about the big guys getting the most skier visits.
I agree — we should support our local areas. People tend to overlook the important
role that these areas play. Many are more readily accessible, more affordable, and
even more family friendly than the larger resorts. They’re great places for kids
starting out, and for families who want to ski together. It’d be a shame to see
I believe June will ultimately be sold. It really is too bad. Mammoth Mt Ski Area put in a new quad last season but laid off a bunch of people at the end of March. Bad snow years happen. Doesn’t mgmt plan for a bad year? People still go up to Mammtoh, ticket prices stay high. One wonders what the heck is going on.
More gloomy news: The town of Mammoth Lakes declared bankruptcy(http://news.bostonherald.com/news/national/west/view/
With June not opening, it lessens the value of my season pass. I can get a refund if I want. I won’t do that, but a pass for the Tahoe resorts is looking like a better deal.