The Fall Line Meets the Bottom Line (Cont.)

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Outside Magazine November 2002

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The Fall Line Meets the Bottom Line (Cont.)

SKIING DIDN'T START OUT with such fancy trappings. When it was introduced to the United States by immigrant Swedes and Norwegians during the mid-19th century, it was all about the Nordic ideal of idraet: spartan outdoor exercise that bred strength, toughness, and health. This romantic ideal helped define the first major wave of American ski resorts in the 1950s, and continued as late as the 1970s, when many ski areas were still simple, family-run hills where people learned to ski on the cheap.

But between 1982 and 2000, the number of U.S. ski areas shrank by a third, to 503, most of the casualties mom-and-pop areas that couldn't keep up with an increasing demand for extras. Since then skiing has become a mainstream tourism business, as dependent on off-slope entertainment as it is on snow. The high price of competing has meant that the big resorts have gotten bigger at the expense of the small, and prices have risen every year.

Today, three publicly traded conglomerates control many of the largest, best-known resorts in North America, places like Vail, Beaver Creek, Breckenridge, Keystone, Copper Mountain, Steamboat, Whistler/Blackcomb, and Killington. The Big Three—Vail Resorts Inc., Intrawest Corporation, and the American Skiing Company—have interests in 18 ski areas in the United States, lease about 40,000 acres of Forest ServiceÐmanaged land for their operations, and sell 24 percent of U.S. lift tickets. In 2000, the trio reported they'd taken in $1.74 billion, netting almost $212 million. Calculated before interest, taxes, depreciation, and amortization, though, this figure was a slippery one and hid the fact that these companies either didn't make much money or lost a good deal.

With government on their side and Wall Street backing them through the nineties, the Big Three have profoundly reshaped modern skiing, and to some degree what they've done has been a logical response to marketplace realities. When they came along in the late 1980s, the industry was flat. Skiing had grown with the nation's 78 million baby boomers, but statistically, participation in the sport drops off a cliff after people turn 44, and this brought some hard realities to bear.

The most basic was this: At least in the short term, if a ski area wanted to increase its skier visits, it could do so only by poaching customers from competitors. The Big Three reacted by investing massively in the sport's infrastructure—with snowmaking, high-speed lifts, gondolas, and new terrain—while embarking on a seemingly contradictory strategy that made skiing a less important component of financial success. Reading the demographic tea leaves, the companies saw two potential proÞt centers: selling real estate to boomers and attracting nonskiers by turning resorts into four-season vacation spots.

The result, in the Big Three's own corporate phraseology, is not really about skiing at all, but about providing a scripted leisure experience, with base villages, shopping clusters, and lodging all carefully laid out to maximize spending. "I would draw a parallel to Disney," Scott Oldakowski, 39, former senior vice-president for real estate sales and marketing at the Park City-based American Skiing Company, told me. "There's a certain expectation you would have that's been set by Disney when you get to their resort. . . . We can create what we feel is a collective expectation of a staged experience."

During the 1990s the Big Three dictated the stakes throughout the North American skiing world, and independent ski areas—from Stowe and Telluride down to small hills like SolVista, Colorado—anted up. High-end real estate development is a strategy also being pursued by privately held ski-resort conglomerates like Boyne USA Resorts, in Boyne Mountain, Michigan, and Booth Creek Ski Holdings, in Truckee, California.

The question is whether this is an inevitable ordering of the ski world. Certainly big is not always wrong, nor is all change undesirable. (Fast lifts and good grooming can be a fine thing.) But whether you like the big-resort aesthetic or not, the unsettling truth is that theme-park skiing all too often is bad for ski towns, bad for the public lands exploited during resort expansions, bad for the ski business, and, some would add, bad for the sport itself.

Even the Big Three have not been rousing successes, if judged by the perpetual-growth expectations placed on large public companies. Although they have grossed substantial sums of money selling real estate, they have failed to impress Wall Street, because their operating costs and debt service are so high. By 2001, the American Skiing Company was seriously struggling. Its troubles climaxed with the departure of Les Otten—the man who, as much as anyone, invented the Big Three's style—and the company's takeover by its creditors.

When that happened, many insiders started questioning the whole premise of the Big Three. "I don't particularly believe in these villages," said one top ski industry executive who asked not to be named. "I just don't see them being as successful as the developers envision."

This dawning realization has produced a back-to-the-future movement inside the industry. In this next wave, which will be marked by the coming of age of 72 million Generation Y kids, small local ski areas may hold the key to skiing's revival—a revival that must find a way to convert more uncertain beginners into ski aficionados.

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