This article in SkiAsia.com truly fascinates me! It’s really hard to pin down an exact number of active snow sport participants in the world. Outside of Winter Olympic news, The whole notion of skiing in China has been mostly off my radar. Bad analyst..Bad analyst!
So, just thinking “out loud”….
Many resorts don’t report visits and many people who haven’t skied in years identify themselves as skiers in blind surveys. The number is estimated at around 100 Million worldwide.
Whatever the real numbers are in traditional winter sport countries, the emerging markets in Eastern Europe, Russia, China and elsewhere are on the verge of swamping existing demographics in a very profound way.
The US has roughly 12 Million active participants who generate about 55 million visit/days each year. It has been that way for a couple of decades.
Now, here is China setting a goal to increase the number of skiers and riders in their country from their current 15 million to 300 million over the next five years!
You read that correctly Three…Hundred…Million…New…Participants.
In Five Years!
The American ski industry has struggled for 20 years just to break even on participation growth.
In reality, the US industry has not created a net gain in participant numbers in a VERY long time. In fact, if you look at this chart, there appears to be a serious “down-bubble” on its way in the U.S. as the number of new, young participants has been shrinking and older participants “age-out”.
According to the 2017 Laurent Vanat report, the recognized authoritative study of global snow sports market data, while Vail Resorts, and Aspen-KSL are making headlines by moving the deck chairs around the Titanic, China has grown to 646 ski areas and Russia to 354 resorts. Sure, many of them are on run with a surface tow but, it won’t stay that way.
A friend of mine from Kyiv just sent pictures of her Ukrainian ski vacation. Good slopes, good snow, great accommodations and the food was 5 stars on any gourmet’s chart. All at the cost of about 20% of a Colorado vacation.
For a long time, in the US, the number of participants and the number of visits per season has been either flat or declining. Western Europe is seeing declining numbers as well. Switzerland is tanking in a major way.
Revenue growth has come almost exclusively from price increases.
Coupled with declining visitation, that model is unsustainable as fewer skiers are forced to pay ever higher prices to float the industry boat. VR and Aspen/KSL may enhance their margins by aggregating revenues and creating some economies-of-scale but it doesn’t change the industry’s foundation elements, declining numbers and rising prices.
Products like the Epic Pass are merely the hand the magician wants you to be fascinated with while he lifts your wallet. With declining numbers of customers, the only way they can keep their investors happy in the long term is to raise prices. They have proven incapable of creating new customers.
Faced with emerging, growing markets with cheap and in some cases, government subsidized pricing, it will be much less expensive to enjoy your annual winter vacation in China or Bulgaria than in Colorado.
Do the math folks. The world’s fastest growing economy plus 300,000,000 new participants plus government built and operated airliners plus millions of acres of new government subsidized ski resorts. They already manufacture an awful lot of the equipment you buy.
Should China decide one winter to offer free flights, lodging and skiing to Europeans and North Americans, what might be the result? Overnight, the entire western snow sport industry might well become what has been sneeringly referred to as a “feeder resort”.
The pressure on prices in the western industry will be tremendous. In the short term, the pressure on publicly held North American consolidators may well be more than investors are willing to bear.
Certainly there will be downward pressure on pricing at destination resorts as more options become available in emerging markets
The good news is that small non-destination venues that do not rely on snow making will enjoy a significant competitive flexibility. If they can cover the costs of operating the lifts, they can stay afloat. Highly leveraged operations will struggle…unless…
Unless, large western operations can involve themselves in development of resorts in these emerging markets…(They probably have and I have just been focused elsewhere) It certainly puts the Whistler acquisition in a whole new light for me!
And, it makes sense for them to do so. Pricing in traditional western markets has been treading the tipping-point of the supply & demand curves for a long time. Growth in participant numbers are flat or declining.
Conversely, Eastern Europe, China, and Russia are creating new snow sport participants in very large numbers already. Now that China has made snow sports compulsory for kids in Beijing, the number of new participants may grow as much as 40% year-over-year for the foreseeable future.
Let’s talk about Brain-Drain.
You cannot pack 300 Million new people on the existing slopes. There is going to be a whole lot of building going on.
North American resorts are ALREADY having trouble finding enough ski instructors to cover the demand.
China and Russia and Eastern Europe will need expertise and the only place to get it in a hurry is from the mature markets of Western Europe and North America.
With Snow-Job wages in the US as ridiculously low as they are, it would not be hard for subsidized, emerging markets to drain off the best and brightest. Resort design, engineering and construction talent, snow making experts, resort operations and travel experts, all of these skilled workers, and many more, are targets for predatory hiring practices.
American snow sport organizations such as NSAA and PSIA already spend a lot of resources on fishing for new instructors on college campuses. The North American instructor corp is already an aging population.What happens to the supply of new, young instructors should China decide to offer a one year paid internship with free housing on American campuses..or worse..to already certified instructors?
There are a variety of competitive responses available to western snow sport operators, not many, but some very interesting possible outcomes. The one that I find the most worrisome is this…
The NUMBER…..300,000,000 new participants is mind boggling, breath taking.
Add that to growth in other emerging markets and who the heck cares about a paltry 12 million Americans?
If I am Vail or Aspen/KSL I get over there and develop a cut-rate feeder market and drive North American skiing development into THE destination for the global elite. Private gondolas and $20,000 per night rooms….THAT kind of “elite”.
Broad based North American participation from the middle class would no longer be a significant business consideration. If you can consistently attract 60,000,000 visit/days out of the world’s wealthiest skiers, who the heck cares if Joe the Plumber can afford to ski?
What bugs me is that current operations such as Aspen/KSL and Vail are already boiling that frog. Pass prices are going down but the cost of everything else associated with a ski trip are going up at rates higher than inflation.
Slowly as the glam and bling rise, and the western middle-class declines, snow sports are increasingly out of reach for a growing number of traditional participants.
But, with millions of new participants on the near horizon there may be enough of the world’s newly minted millionaires in China and Russia that the western ski industry can afford to simply walk away from it’s traditional base.
The article doesn’t spell out HOW China will create these millions of new skiers and riders. Even if it is just all grade school kids, they will grow up one day.
Time will tell and I will be watching closely from here on out. Now if you will excuse me I have to go read Benny Wu’s market studies on the Chinese snow sport industry….