ASPEN - The Aspen Skiing Co. is doing everything right this season - and its business might still drop.
Such is life in a recession.
Skico executives believe that all the pieces are falling in place for what would be a strong season under normal circumstances. The positive developments for the Skico and Aspen/Snowmass as a whole include:
• The number of commercial airline seats into Aspen-Pitkin County Airport will increase by 9 to 10 percent. Frontier will operate five flights daily between Aspen and Denver on weekends starting Dec. 19. That will continue through ski season. United Express boosted the number of direct flights from Chicago from two to three on weekdays, from three to five on Saturdays, and from three to four on Sundays.
• More short-term hotel rooms - known at "hot beds" - are available slopeside at the base of Aspen Mountain and Snowmass Ski Area. The 173-room Viceroy Hotel opened this week at Snowmass' Base Village. The Residences at The Little Nell will be open for its first full winter at the base of Aspen Mountain. The 26 fractional ownership condominiums are also rented out short term. In addition, the Skico's Little Nell hotel was refurbished for ski season.
• The Skico is spending more on marketing this season and is aggressively promoting special packages earlier than it typically does. Its biggest promotion is designed to draw families during the spring break period in March - a time that makes or breaks the season.
• The Skico's fundamentals are solid after a $130 million investment in chairlifts and other capital improvements over the last six years. The biggest change for this season is hand's free, radio frequency gates. Skiers and riders can pass through 42 gates on the four mountains without flashing their pass or lift ticket. The system is supposed to decrease the amount of time customers spend in lift lines and increase the time on the slopes.
• Even Mother Nature has cooperated. Natural snowfall and cold temperatures for snowmaking combined to create excellent opening conditions at Aspen Mountain and Snowmass. Skico Vice President of Operations Rich Burkley said the opening conditions were better than probably four out of five years.
Unfortunately, the missing ingredient is travelers. Skico Senior Vice President David Perry, who also oversees the company's marketing efforts, is about as optimistic of guy as exists. So it says something when he tempers expectations.
"We're still battling economic headwinds," Perry said. Even if the resorts of Aspen and Snowmass Village are at the top of their game with marketing and customer service, the best that can likely be hoped for is a match of last ski season's business, he said.
The Skico logged 1.36 million skier visits last season, down 7.6 percent from 2007-08. A visit is one skier or snowboard rider visiting a ski area for all or any part of the day. When the recession hit last fall, Skico executives forecasted a 5 to 15 percent decline in business. They were thankful to be on the lower end of that range. Staying there will be a challenge.
"It's still going to be tough to get to last year's numbers," Perry said.
Nobody in the destination travel industry is predicting a quick return to pre-recession business levels, Perry said. The travel and tourism industry is generally looking at a three-to-five year recovery, assuming all goes well, but he believes Aspen-Snowmass will bounce back quicker. But in the short-term, it will be tougher.
"Last year's depressed results are the new norm," Perry said.
Ralf Garrison, director of the Mountain Travel Research Program, which tracks hotel occupancy at 17 destination resorts in the western U.S., said the industry has its work cut out for it this winter. Last winter, occupancy was down 15 percent overall at destination ski resorts and the average rate at tourist accommodations fell 9 percent, Garrison said. Pre-season bookings show a further slide of 11 percent in occupancy and 10 percent in rate. Results at individual resorts and properties within those resorts will vary.
Bookings made in October increased slightly this year but that is compared to a horrible month last year, when the full depth of the recession was just emerging. Without improvement in the bookings in October, the outlook would have been "dire," Garrison said.
He painted a picture of consumers freaking out, sitting in a corner and sucking their thumbs last year. They recovered from the shock, but they are still cautious about spending.
As a result, the travel industry is facing "new realities" for 2010. Most travelers will stick closer to home this ski season and nearly all consumers are hungry for bargains. The "winners" among resorts will be "one-tank destinations," according to Garrison, meaning places that are a reasonable drive from major metropolitan areas. The losers will be "destinations without a real strong brand."
The best bet is to court the "resilient skier" or those who are truly dedicated to the sport, Garrison said.
Given Garrison's analysis, Aspen might be in a better position to weather the economic storm than most destination resorts. It has strong repeat business and it is an internationally famous ski resort. Skico has been willing to sink a significant and growing amount of funds in to the women's World Cup races and Winter X Games because of the exposure it brings nationally and internationally.
The races last year were watched live by 10 million viewers, primarily in Europe, according to Skico Vice President of Sales and Events John Rigney. A total of 110 million people worldwide saw at least a snippet of the races. The Aspen races were among the highest watched events of the entire alpine World Cup season, Rigney said. He speculated that was because the event is early in the season and the time difference placed it on prime time in Europe.
That type of exposure and the weak U.S. dollar should boost the Skico's amount of international business above last season. Overseas visitors accounted for 21.5 percent of all destination business for Skico last season, down from 23 percent the prior season. Perry expects that to improve by as much as 5 percent this year. The dollar is weak against the currencies of all Aspen's top foreign markets except Great Britain. He expects more visitors from Australia, Brazil, Germany, Canada and Mexico - Aspen's other major markets.
The Skico also targets a core audience domestically. Perry said the company tries to appeal to the people who ski a lot, but also to trendsetters, opinion makers and to those that find skiing defines their persona.
Those skiers and riders will be less swayed by economic conditions. "They'll find a way to go skiing," he said.
The company's ad campaign for 2009-10 follows a theme that people live for skiing. One ad in the campaign, for example, features a small picture of a desk jockey trapped at work. "I reside here," some of the copy says. A larger picture of skiers and riders hiking a ridge to Highland Bowl dominates the graphics. "But I live here" the copy says in larger type.
Other ads in the campaign feature some other aspect of everyday life juxtaposed with some thrilling feature of life on the slopes of Aspen-Snowmass. The print ads started running this fall in Ski, Powder, Freeskier, Transworld Snowboarder and Outside magazines, publications that core skiers and riders read.
Skico Vice President of Marketing Jeanne Mackowski said in an earlier interview that the ad campaign also strives to convince people to "reward" themselves during the recession by taking a trip to Aspen to indulge their passion for skiing.
Skico executives know they need to do more than appeal to core customers to spur business this year. "More people are shopping for value this year," Perry said.
The Skico has a two-pronged plan to deliver. First, it's offering service that it claims is unparalleled in the ski industry. Second, it's offering more discounts earlier than ever.
On the service front, the Skico decided last year not to lay off any employees because it didn't want to sacrifice its quality of service to pare expenses. The chairlifts remained open for the same amount of time. The same amenities were offered. The same number of positions were filled. And the same strategy will be followed this year.
The Skico isn't reducing the hours worked this winter, but it will reduce the number of workers filling those positions. Skico Vice President of Human Resources Jim Laing said the company is hiring more full-time employees this year. In year's past, when jobs were more plentiful in the Roaring Fork Valley, the Skico had to rely on more part-timers. That meant more job sharing.
This year, more seasonal employees returned to their positions and more people wanted to work full time, Laing said. The company typically fills about 1,000 seasonal positions. This year is only had to fill 800. More of the positions than usual were filled by local residents, Laing said.
For customers shopping for discounts, the Skico had three primary deals. The Perfect Storm rewarded customers that purchased four days of lift tickets and four nights of lodging with a fifth day on the slopes and fifth night of accommodation for free. The packages are available for different times of the season, with different deadlines.
Another package is designed to drive business in March, when a lot of families traditionally take ski vacations during spring break. The numbers sagged last season after families abandoned travel plans because of uncertainty over the economy. The Skico is trying to entice them with a package that lets a kid stay and ski free in March when an adult buys at least four days of lift tickets and five nights of lodging. The trips have to be booked by Jan. 15.
The final discount is the easily overlooked Escape Pass. It is designed to appeal to second-home owners or frequent visitors that will ski eight or more times during the season. The new pass is available for $299 if purchased before Dec. 18, then it's pay-as-you-go at $49 per pop. Once the buyer tops eight days, the Escape Pass is a better value than multi-day lift tickets, Perry said.
Garrison stressed that consumers "can be bought" with the right discounts. However, the Skico will draw a line. Too drastic of discounts damages the Aspen brand, Perry said.
When asked how many visitors to opulent Aspen are price sensitive, Perry quipped, "More than there used to be." It's hard to determine, he said, but it is important to nearly everyone to feel like they are getting a good value.
The latest occupancy report from the Aspen Chamber Resort Association shows the season will start slow. Reservations on the books as of Nov. 15 are about six percentage points below last year's level, but December is only two percentage points behind last year's pace. February and March are the months that tourism officials are watching. They will largely determine if the season is a success or failure.
Perry said the Skico and its marketing partners will "scramble" throughout the season to find specials that drive business. "We'll never rest," he said.