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.)

"WHAT'S WRONG WITH SKIING in America is that it's too expensive, it's getting more expensive, and it doesn't have to be," says Lito Tejada-Flores, 61, a widely respected ski instructor and author of the bestselling Breakthrough on Skis series. The top price of a single-day ticket will almost certainly break the $70 barrier this winter or next. Last year a 27-resort industry survey revealed that an average three-night ski trip sets one person back $1,608. Prices keep going up, and they do so because executives at competing resorts have engaged in what amounts to an arms race on the slopes.

Corporate mega resorts aren't really about skiing at all, but about providing a scripted leisure experience, with base villages laid out to maximize spending. "I would draw a parallel to Disney," says one former ski executive.

The race began in the Northeast with Otten, the Newry, Maine, entrepreneur who in 1980 purchased Maine's Sunday River Skiway, the first area in what would become his American Skiing Company empire. Otten's revolutionary notion was to take the uncertainty out of ski vacations with massive snowmaking. Sunday River rolled out 1,300 guns capable of turning 9,000 gallons of water per minute into white stuff. Between 1980 and 1998, annual skier days at the resort jumped from 40,000 to 552,000.

Meanwhile, out west, Vail threw down the gauntlet with the 1985 installation of the Vista Bahn, skiing's first detachable quad chairlift, able to ferry four skiers at a time uphill at much faster speeds than traditional lifts. By the mid-1990s, U.S. ski resorts as a whole were investing an average of $100 million a year just on new lifts. In 1999 alone, Vail Resorts spent $65 million at its four ski areas on capital improvements such as lifts, grooming machines, on-mountain restaurants, and snowmaking systems.

Operating all the shiny equipment wasn't cheap. The monthly electric bill to run a high-speed quad can hit $14,000. A major ski resort can easily spend more than $1 million annually for electricity to make snow and operate lifts. At Sugarbush, a former American Skiing Company property in Warren, Vermont, electricity bills for snowmaking ran up to $300,000 per month. Higher costs meant ticket prices had to rise, and they did.

But all the capital investments could not alter the bad news that skiers were aging. The Big Three, however, saw an emerging opportunity as boomers began buying second homes. Vancouver-based Intrawest set the standard for building mountain resorts where skiing isn't really the point. Its crown jewel is British Columbia's Whistler/Blackcomb. In the nineties, the company turned it into North America's top-rated resort by developing a base area patterned after a European-style village, full of expensive condos and lively shops and restaurants. Intrawest knew that its average guest was on the slopes only two hours per day. As 42-year-old Lorne Bassel, the company's executive vice- president of resort development, puts it: "What are you going to do with them the other 22 hours?"

The answer, it turns out, is to let them shop. Bassel's team, called the Village People, designs the experiences at Intrawest's base areas to ensure maximum retail temptation. The company takes a cut from the village businesses, and although these appear to be a quirky mix of independent shopkeepers, each commercial tenant has to fit into Intrawest's overall plan, which is careful and prescriptive.

"We want to keep guests busy 24 hours a day," Bassel says. "What if I can come out of a bar at two o'clock in the morning and there's a place that sells slices of pizza? Holy cow, you've just extended my time clock and added to my experience."

The real money at Big Three resorts, though, is made developing and selling homes and condos. This approach seemed to be a surefire strategy for profitability: On a single day in August 1998, for example, would-be buyers stood in line for eight hours for the right to purchase one of American Skiing Company's 150 planned condominiums at the Sundial Lodge at The Canyons in Park City, Utah—units that existed only on paper. At the end of the day, the company had taken in $42.6 million.

Intrawest's performance was even more impressive. In four consecutive weekends in 1998, the company sold 376 unbuilt condominiums for a total of $94 million at Stratton Mountain, Vermont; Snowshoe, West Virginia; Copper Mountain, Colorado; and Mammoth Lakes. In April 1999, 139 Intrawest condos-on-paper at Squaw Valley were sold in six hours for $73 million.

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