Aspen Times Weekly: As Mike Kaplan skis it | AspenTimes.com

Aspen Times Weekly: As Mike Kaplan skis it

by Scott Condon

Mike Kaplan became one of the youngest executives of a top U.S. ski resort eight years ago when he took the reins as president and CEO of Aspen Skiing Co.

Kaplan, just 42 at the time, already had vast experience in mountain operations under his belt at Taos Ski Valley in New Mexico and at Skico, plus he had earned his Master of Business Administration degree from the University of Denver.

Former Skico CEO Pat O'Donnell retired earlier than planned, proclaiming at the start of the 2006-07 season that Kaplan had proved himself ready for the top spot.

Kaplan didn't bring O'Donnell's flair for the dramatic or former Skico CEO Bob Maynard's aggressive, sometimes confrontational style, but he brought community connections that neither of his predecessors possessed. He moved to Aspen to join Skico in 1993 and then rose through the ranks in mountain operations, getting to know many of the front-line managers by working alongside them. It was evident in July 2005 that the Crown family, owners of Aspen Skiing Co., were grooming Kaplan for the top spot when he was promoted to chief operating officer.

His community roots extended beyond Skico. Kaplan and his wife, Laura, have raised four kids in Aspen, and so Mike has racked up innumerable experiences spurred by kids' school and sports activities. Kaplan also can be found pushing his limits throughout summers on his mountain and road bicycles.

He's got a calm demeanor and genuinely seems to think that Aspenites can work out their differences by establishing and maintaining a dialogue. But Kaplan also can come across as very determined. At a recent Aspen Chamber Resort Association membership luncheon on Aspen Mountain, he gave a presentation calling on the business community to get more engaged in the city government's lodging-incentive package and on Pitkin County's exploration of airport improvements. Both issues, he contends, are critical to the health of Aspen and Snowmass.

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With the recession in the rear-view mirror, Kaplan wants Skico and the towns of Aspen and Snowmass Village to take a variety of steps to remain a leading resort. And he says he believes it can be done without selling Aspen's soul.

Kaplan met with The Aspen Times recently in his office to discuss his vision of the future and provide a glimpse of what can be expected in the next few years on the ski slopes.

Aspen Times: In 2007 you talked about the Skico being "late to the party" as far as vertical integration. How successful have you been diversifying from the uphill-transportation-only business?

Mike Kaplan: The most tangible example of that is the Limelight Hotel. That hotel got built by the Paases and was done very well by the Paases, but unfortunately it didn't work out for them financially in '08, victims really of the credit crisis. After they approached us, we felt that fits into that philosophy — "Let's acquire it and make sure this property gets optimized."

We have much more of a rental-retail presence than we had. That goes back to 2001, when we acquired D&E. Integrating that into our operations takes a long time. We started with two small snowboard shops and integrated that into a four-mountain destination operation.

Then, obviously the restaurants — you've seen significant investment in the restaurants since '07. We saw that coming. The restaurants were aging, and many needed to be replaced and upgraded. We did the Merry-Go-Round and Elk Camp, and I think even Sam's was under construction in '07.

The restaurants we feel we can run well and consistently. You put that much money into a facility like that, I think it's important that you're the owner-operator. That said, we have Bonnie's and (Gwyn's High Alpine); they're doing a great job (as independent operators). We're very happy with the way they run those places.

From a ski school standpoint, beyond the ongoing sustaining-excellence standpoint, obviously the kids' facilities were a critical need to upgrade for that family part of the experience. It's vertical integration, but the key reasoning behind those types of investments: That is a core part of our youth strategy. With the X Games, we're talking to that younger generation, but another key to that lock is making sure families are attracted to this place, kids come here, learn to ski and fall in love with it. Then it becomes their home mountain for the rest of their lives.

That's been the focus. We appreciate the fact that we are a community and a resort. The diversity of the customer experience and the businesses and offerings is critical. It's what makes us different, unique and compelling. So we don't want to be in all businesses. We have no plans to be a totally vertically integrated resort operator.

AT: What are you thinking for expansion of hotels?

Kaplan: For us, it's obviously Snowmass and Base Village. We've been working on that for a while. We're hopeful that's going to move forward. We have two hotels. That'd be a third hotel.

We've been out looking for opportunities to grow both brands, the Limelight and the Nell. We're looking at a couple of mountain destination locations. We're also looking at smaller urban locations or the right urban locations, I should say, places where that might fit. We feel that might be interesting because there's that experience in the hotels here that's great service with that sort of authentic approach and style and sort of ambience that we feel would be relevant in some other markets. So we think that properties could do well in those other market and where they are might help drive business to Aspen and Snowmass.

AT: At the Aspen Chamber Resort Association member luncheon (in September), you talked about how there can be a healthy town without compromising the Aspen Idea. Tell me your philosophy — where's that balance point between healthy growth and too much growth?

Kaplan: I don't think I have a hard line that I can define. I don't think anyone can. I think the community's been working for 30-plus years on that. You have the urban-growth boundary and rural and remote policies and employee housing. I think we've done a better job of defining what we don't want and maybe reacting to things that we don't like instead of looking at what we do like and want to be. How do we sort of shape our future that way? That's not an easy thing to do, but it can be done. I think it requires open-minded engagement by all parties.

With the Aspen Idea and the Aspen Institute, we were founded on the principle of being more than just a ski resort and more than just a sleepy mining town, both those things. It's not an either/or decision. A key tenet of that was, in addition to all the cultural pursuits and offerings, to create this place to gather and think clearly and rationally and debate and discuss. It's really a part of our DNA, and there's so few places where it happens, especially now.

To have this place, this setting and some of those founding tenets, we should be sitting down and talking about that and grappling with the difficult things like that. It's not easy, but both the anti-growth people that don't want to see anything built versus those that are saying, "I'm trying to raise my family here; I want my kids to be able to come back here now that they're getting older. I want there to be a future for me and my family that's sustainable, that's rewarding," all of those things that we offer. That's really what I'm urging, is a dialogue around it. What I've seen over the last 10 years watching this, … it's not only a missed opportunity; it's a problem. It's an issue that this town needs to address.

(Kaplan points to the Lift 1A Community Co-op as a model process that was inclusive. He is frustrated it got "sabotaged" in the 11th hour by people who didn't participate or those who didn't like the direction.)

I would say the same thing happened with the lodge-incentive ordinance. It was one of the action items that came out of the Community Plan. How much time and money did we as a community spend on that Aspen Area community plan? It was a really inclusive thing and voting with clickers and thousands of meetings. That was a noncontroversial topic.

(Existing lodge owners were engaged on incentives for them to upgrade. Other meetings were held on spurring new lodges.)

I'd love to see us get all those beds back. But I've said to City Council before, "How about we target three 100- to 120-room hotels?" We'll see if some of these smaller hotel projects get approved and financed. I hope so, but from what I'm seeing in the street, it's a little bigger hotel — not huge, but 100 rooms — is where you have enough efficiencies to make it viable. Maybe these smaller hotels that are in existence and have a little bit of a different plan, maybe they can make those work. So I think 300 to 350 new hotel beds would be a great thing to shoot for, not replacement. I'm saying new. That wouldn't count the Sky or the Molly Gibson or some of those. Those are just as important, I would say — we need to upgrade some of those. The 40 percent of our bed base that is condominiums, most of those need to be refurbished. It's very, very difficult to do here right now. It's very onerous in terms of the building permits and the rules and regs.

AT: It seems like you've been more willing recently to step into the fray. Is that accurate?

Kaplan: (He brings out brochures outlining the company's guiding principles back to 1996-97. He says that's a good example of how the company has evolved over time. They have been condensed and become more concise over the years. They are now printed on every Skico business card.)

I think ultimately we are stepping out more, I am stepping out more. The main way the guiding principles have evolved is around sustainability and what the definition of that is and how we approach that. When we first come out with these, we were going to share them with the community, but if we share them, they're going to hold us accountable. Do we really want to expose ourself that much?

I think part of this has been an evolution where I like to think and I hope we're being as transparent as we can while still respecting the fact that we can't give away all our strategic initiatives to our competition. Everything we do and say gets covered, and the industry reads it.

That said, the definition of sustainability is about environmental ethic and commitment to environmentalism, but it's also about sustaining the quality of the workplace and our workforce. And also for the community. You can't separate those two. We're not going to have a happy, loyal workforce if the community isn't an enriching place to be. From the guest standpoint, they're not going to have a good time if the employee isn't happy, properly trained, productive and motivated.

The same goes for the community. They're up there on the mountain how many hours per day? Fewer and fewer because the lifts go faster and faster. There's lot of places to just go skiing. They come here because of the skiing and the community.

"We also talk about it in terms of profitability, of course. To do that cool stuff — do right by our employees, do right by our community, do right by the environment — we have to be profitable. We want to be responsible to the bottom line. We want our owners to be happy, too.

Those all interconnect in a positive way.

With that as a backdrop, we are facing a time in this community where we have to engage and grapple with some of these challenges we have ahead. Lodging is one; then there is the airport. It's Groundhog Day. We're back where we were in the late 1990s early 2000s when we were facing the retirement of the BAE-146.

(Now it's the CRJ700 that is being retired. It takes a long time to get approvals by Pitkin County and the Federal Aviation Administration, he noted, so that requires action starting now.)

It's urgent that we start on this project now to ensure that we maintain — I'm not exaggerating — the viability of commercial service into this airport. That's what's in front of us.

I have my opinions, but I'm not trying to say, "Engage so we can do this." I'm saying, "Let's engage."

AT: How would you assess the Aspen Skiing Co.'s relationship with the broader community right now?

Kaplan: I probably shouldn't answer that question because that would be for the community to answer. But I think I will say I've seen that evolve and grow stronger over the years.

AT: Why is that?

Kaplan: Maybe it is because since '96-97 we've been trying to talk about "Here's who we are; here's what we value; here's where we want to go." A key part of that strategy is recognition and embrace of the community and, maybe more, this embrace of the Aspen Idea. That's our shared vision. I think it is a shared vision. And I think we work hard to be held accountable to those values. Obviously we're not perfect, but people see us trying, at least.

AT: Let's get into mountain operations. What's the status of the Pandora terrain (to skier's right o9r south of Walsh's on Aspen Mountain) and Loge Bowl terrain (on the west side of upper Aspen Highlands)? Do you see that terrain getting developed anytime soon?

Kaplan: Pandora's is part of the Aspen Mountain master plan. We hope to start moving forward with that in 2015. We're making progress there. It's sort of been a landowner, inholding issue we've been grappling with. Stay tuned. I hope by the end of December we'll have some resolution to that.

Loge Bowl, we've started to look at that. As far as priorities, we've got High Alpine (lift replacement) and summer improvements both at Snowmass and Aspen Mountain. Expanding into Loge Bowl, it's not an easy one. It's steep. Dealing with a road in there would be difficult. Obviously we've got a little bit more work in Deep Pandora, and that East of Eden is the next step, and Loge Bowl is further out from there.

AT: What did you see in the Forest Service's recent approval of Vail's application of summer activities that stands out?

Kaplan: There was still plenty of gray area in the kind of things (the Forest Service) would approve and not approve. (Vail's) not doing a ton on the mountain-bike side, so there wasn't much there for us to see. We have been working for a while on our mountain-bike master plan, so we think we know where we want to head there. The main thing we saw there was the approval of the canopy-tour zip line, which is something we're considering, and they got approval of the mountain coaster. That was probably the main thing that we weren't quite clear on. They've said it's a case-by-case basis, so we'll have to see if that's applicable to Snowmass.

AT: Is a mountain coaster something you want to consider?

Kaplan: We're definitely considering it. We need some more feedback.

AT: What's the realistic range of your skier visits?

Kaplan: We think we can probably get to 1.7 (million). Getting over 1.5 (million) in the next two years and over 1.6 (million) in the next five years would be good. We target 2, 3 percent and, in a good year, 4 percent skier-day growth. We think it would be tough to get back to a record year without this bed base coming all the way back. We don't see it happening.

AT: What's the state of the ski industry?

Kaplan: The industry is dealing with the same things we are locally — call it technological disruption and competition for consumers' attention. They get bombarded every day with all these options. It's hard to get their attention. I think the good news is we as an industry are a unique experience.

We have to find a way to get younger, attract that next generation. That's the focus across the board. We're all concerned about the decline of snowboarding. That was a young demographic.

Baby boomers have sort of exceeded expectations in that the older baby boomers are healthier, stronger, stay more active than the previous generation. The younger baby boomers have more wealth and free time. We'll milk the baby boomers for a little while more; that's going to be a bump, but again, it's these next generations that we have to get into and hooked.

scondon@aspentimes.com

Aspen Skiing Co. skier visits

2008-09 1,283,348

2009-10 1,338,210

2010-11 1,360,960

2011-12 1,336,463

2012-13 1,376,556*

2013-14 1,483,927*

*Aspen Skiing Co. only released percentages the past two seasons. Skier visits are estimates based on Skico’s reported percentage increases.

Aspen Skiing Co. project priorities

High Alpine lift replacement

Summer improvements at Snowmass and Aspen Mountain

Deep Pandora terrain at Aspen Mountain

East of Eden terrain at Aspen Highlands

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