Time to Get this Party Started!

Enough of this off season! Last Spring was chock full o’ news with Vail Resorts and Aspen/KSL running amok with huge bags of cash buying up resorts. We’ll be keeping an eye on how that all shakes out.

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Aspen Nips the Catz Tail! Trump Saves the Ski Industry!

We have some product reviews coming your way that you won’t want to miss.

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You will likely finish reading this installment confused by the many twists and turns and incomplete directions. GOOD…You darned well should be! The ski industry is slowly killing itself and the reasons are as complex as they silly.

Trust me though, I’ll get you straightened out on it all by the end of this season 🙂

What finally shook me out of my summer doldrums were two articles from the same author and source. Both articles referenced “experts” who talked about why the ski industry isn’t growing. I am always interested in that subject and I read them both, several times.

What struck me was not the specific opinions of the two experts but how two experts could be looking at the same industry and come up with conclusions that are perfect opposites. Could it be that the industry is failing to grow because there simply isn’t anyone who knows what is really going on?

The first article I saw was posted by ISPO.com and you can read it here. READ ME. 

Basically it claims that skiing is too “elitist” and needs to find a way to get more people from lower income demographics to participate. The article didn’t say it in so many words but I had the distinct impression that the intent was to socialize or, at least, to have governments subsidize snow sport participation.

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China plans to grow snow sports in an unprecedented way. If they are successful they would nearly double the number of active participants in the world. I wrote about that last year in…

Senior Skiing To Grow 400% Worldwide. 

If the rest of the alpine world is to survive, they may well have to learn how to compete against government subsidized resorts in China and Russia.

From that perspective, I can sort of understand where this expert is coming from. BUT, it seems like “experts” in Japan, Korea, OZ, NZ, Canada, and the US are gearing up for what they believe will be a  Wave of affluent Chinese coming their way.

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Given that China has proved it can build a world class ski resort in less than a year, it is likely that millions of folks from Japan, Korea, OZ, NZ, Canada and the US will pass them in the air…on their way to China...to enjoy government subsidized, world class skiing…on a free seat on government owned Chinese Airliners.

What I am saying is that China would very easily take the decision to offer free everything from travel to lodging to meals and lifts. One or two seasons of that could absolutely trash the ski industry in most traditional alpine countries.

Sometimes I wonder if Vail Resorts and Aspen/KSL understand that the 30 some resorts they own between them will be the only ones open in 15 years and are aligning themselves to serve only the wealthiest of the wealthy from around the globe. It’s already cheaper to take the annual ski vacation in Europe than it is to Colorado. How soon before it is even cheaper to enjoy world class powder in China?

The second article, from the same author and website… different expert.….posted in the same week contends exactly the opposite…Skiing is not “elite” enough. It needs the elite and not the “masses”!

First, I am curious to know who gets to decide if YOU are an “elite” or a member of  “the masses”. That decision almost never works out for you when you don’t get to make it.

This second article I didn’t spend a lot of time with. From the perspective of industry specific knowledge, the “expert” didn’t seem to have much. It was more like the standard Google/SEO – blast the world with “branding” thing that appears 400 times a day in my Facebook news feed.

From my view, it is really just a guy trying to sell some consulting time. I based that on the claim in the article that in a market populated by fairly affluent people he seems to think that dominating Google is the strategy of choice.

My thought is that the more easily you can define a target the easier it is to hit it. You go on LinkeIn, search keyword “ski” and bang – 1,000,000 affluent skiers that you can contact directly. His claim that “targeting” is dead is foolishly myopic and “tech-centric” and flies in the face of everything we know about how people in those “elite” classes make buying decisions.

Look, I am a free market guy and if you can get someone to spend $40 for a Cheeseburger by putting it on the menu as “Boeuf Haché avec du Fromage”…congratulations! PT Barnum told us many decades ago how that works.

I will make a prediction right now that $40 cheeseburgers and $300 lift tickets aren’t going to save the ski industry. Neither will socialized skiing. 

Again, the problems facing the industry in its traditional haunts has been the same problem for more than 20 years. The number of participants isn’t growing and neither is the number of times they go skiing each season. The industry has known for a long time that they need to do a much better job of hanging on to beginners.

The woeful statistic is that 82% of people who try it, don’t come back. NOTHING the industry has tried in the last 25 years has had any significant impact on that number.

According to the 2017 global industry study by Luis Vanat, participation in snow sports has been, and still is, in steady decline in traditional alpine nations.

The only places where it is growing are in Russia and China. 

The only demographic data that tracks directly with the decline in alpine sports is the decline of the middle classes in traditional alpine countries.

This conclusion is bolstered by the fact that Russia and China enjoy rapidly growing middle class. It is also supported here in the US that of the 200 plus ski areas lost in the last 20 years  most are predominantly small, local, low cost ski areas.

The cost of a day of skiing has grown much faster than inflation during a period when fewer and fewer people could afford even the low end of the cost spectrum.

All that boils down to that the ski industry really cannot have any impact of political and economic models. If current political and economic policies are eating away at your sources of revenue then you have to do something.

There are two ways to make a million dollars. Sell one million people a one dollar item or sell one million dollar item to one person. Between those extremes there are any number of potential blends of strategy and tactics to reach that goal.

So far, all we see are companies inching their way up the ladder. The cost of participating in lift served snow sports has been rising at a rate much higher than wage growth.

At a time when part of your client base is rapidly disappearing to economic policies, driving prices in the opposite direction only exacerbates the problem. Given the shrinkage in youth participation, the industry may well be heading toward a bubble that will fundamentally alter it and leave it no means of recovery.

When I was a kid in the late 50s and early 60s there simply weren’t many ski areas around. There were mountains of surplus military ski equipment that could be used on whatever local bump kids used for sledding. Our family “ski vacation” consisted of driving up Thompson canyon west of Ft. Collins and skiing the roadside ditch. Mom would drive us up and Dad would ski down with the kids. Then Dad would drive and Mom would ski with the kids. I had been skiing 15 years before I experienced a mechanical lift at a ski area. The current growth in a return to those halcyon days of hiking for turns is a breath of fresh air

In many towns these days the local sledding hills are shut down due to legal liability concerns. Kids are less active generally. Thanks in part to the explosion of a million cliff hucking, drowning-in-an-avalanche, GOPro videos, millions of mothers are deciding that skiing is too dangerous for their children.

There seems to be a growing list of reasons to NOT participate. At least, that list is growing faster than the list of reasons to give it a go and stay with it. The high costs certainly make it easier to stay away.

There are a lot of reasons why people don’t stick with it. Costs are certainly a part of that equation. Costs won’t change until the industry feels that is the only way it can survive.

One of the reasons that shows up in the annual surveys is poor proficiency. People think their skiing sucks and who is going to spend their annual vacation money doing something they suck at?

The problem is that there is much the industry can and should do about proficiency but they simply don’t care to do them. Lessons are expensive and will remain expensive, period.

When ski resorts are operating a government granted monopoly, there will not be any competition for the monopoly ski schools. Until there is, instruction will remain as expensive as it is ineffective and customer losses to “poor proficiency” will continue. Collision accidents on the mountain due to poor proficiency and over-crowding will continue to climb.

Sure skiing is expensive. The interesting thing is that once you reach a point in your life where you have the time to go skiing and you can afford to go skiing, the industry isn’t interested in you anymore.

Have Senior Skiers Been Abandoned? The Wrinkled Irrelevants…

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The outlook for increasing average proficiency is pretty bleak. Instructors with a lot of experience are “aging-out” of the profession and not enough young people are taking it up.

Instructor shortages are so severe that resorts are offering $1000 bounties to any employee who helps them poach an instructor from a another resort.

 

The outlook is so bleak, in fact, that the Professional Ski Instructors of America (PSIA) have taken to designing instructional programs for companies who make teaching machines.

But hey, it’s almost December and the local mountain is open. So, we’ll just keep on skiing and riding and muddle through somehow.

Kowabunga!! Tips Up Folks!

 

 

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Senior Skier’s Network Update

Thanks to you, the Senior Skiers’ Network is growing like a weed. As our three months anniversary approaches we have 8,633 readers in 82 countries around the world! Each of you reads more than one article when you visit, with a very low “bounce rate” of only 11%.

You prefer news about the snow sport markets around the world by a 3 to 1 margin. That kind of surprised me. The most popular articles concerned the Vail Resorts and Aspen/KSL acquisitions

Articles about inexpensive alternatives are the second most popular, followed closely by Do It Yourself ski instruction.

Well Done World!                      Thank-you for your support!

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Senior Skiing To Grow 400% Worldwide

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”….

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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.

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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”.

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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.

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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.

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China recently flew its first domestically designed and manufactured airliner. 

China recently announced it will open a new “Silk Road” for western trade.

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”.

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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.

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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?

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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.

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They have their Old-Schoolers too! Very Old school 🙂

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….

Stay Tuned!

Hail Gordon!

Summer is upon us and time to go hike the mountains..deeper than we can go in winter…
 
I am constantly amazed by the daring, ingenuity and perseverance of our ancestors. Just when you think you are farther back in the mountains than any human has been before, you round the creek bend and there sits the remains of an old steam “Donkey engine”. Backing the day if it couldn’t be packed on your own back or a mule..you didn’t go…makes an AWD SUV seem kind of ridiculous.
 
Proud I am of my own people and proud of our neighbors to the north with their own story to tell….to the railroaders..and the 10th Mountain who showed us what is possible. ..and this man for so many decades of great music!