Aspen Skico forecasts ‘flat’ season for skier visits
August 3, 2009
ASPEN – The Aspen Skiing Co. doesn’t expect to recover the skier visits lost during the 2008-09 season this coming winter, according to its top two executives.
Skico President and CEO Mike Kaplan and Senior Vice President David Perry said the ongoing economic turmoil makes it unlikely the company will improve its numbers from last season. The Skico racked up 1.36 million skier visits last season, a decrease of 7.6 percent from the season before.
“Frankly if we had flat business levels this coming winter to last winter, it would be OK,” Perry said. “We wouldn’t be surprised by that. It would be a reasonable outcome.”
Kaplan said forecasts are nearly impossible right now. Numerous large companies have stopped issuing income projections even though they have staffs dedicated to the chore, he noted. Destination resorts like Aspen and Snowmass have the added disadvantage of losing one of their prime business indicators – advance reservations.
Resorts could foretell business with a high degree of certainty between 2005 and fall 2008 – when the economy was humming along – because travelers made advance commitments. That all changed in mid-September. Reservations ceased when the fiscal crisis exploded in mid-September, then bounced back a little bit from December through February. But by and large, the recreation travel business has been forced to rely on last-minute bookings, which frays nerves of business managers.
Perry expects advance reservations in September, October and November will be stronger than last year but not as strong as two years ago. He acknowledged that no business, let alone destination resorts, can make reliable forecasts at this point.
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“People have been polishing their crystal balls so they have some clarity for months and months now,” Perry said. “All the polishing in the world isn’t making the crystal ball clear enough.”
Kaplan said the Skico’s ability to compare one season to another is “all mucked up” right now. So his staff is preparing for a number of possible scenarios – ranging from a slight increase in skier visits to a slight decrease. The key is to be conservative.
“We’re seeing early signs of economic recovery,” Perry said. “No one that I know of is predicting a strong ’09-10 winter in consumer spending and destination recreational travel. I’m not seeing any bullish predictions.”
The national economic crisis last fall forced the Skico to scale back its expectations for the 2008-09 ski season. Rather than forecasting an increase in skier visits, it planned for a drop of between 5 and 15 percent.
The Skico kept its positions and payroll at historic levels last season even as competitors shed staff. The company plans to stick to its strategy of being fully staffed next season.
The company will focus on hiring more full-time employees and fewer part-timers so it can reduce benefits packages. However, it will have the same number of full-time equivalent positions at its four ski areas and lodging property. The Skico employs about 3,500 workers at peak season.
The commitment to quality paid off. Skico surveys last winter showed the “value of experience” as rated by customers jumped 26 percent to an all-time high, Perry said.
Despite not knowing how many customers will show for the 2009-10 winter, Kaplan and Perry are optimistic for several reasons:
• They aren’t dealing with a labor shortage.
• Airline service will be strong. United Express will reduce its schedule by one flight daily between Aspen and Denver, but there will be an overall increase in seats because there will be three flights daily from Chicago and one from San Francisco. Frontier will provide four flights daily between Aspen and Denver. Delta will continue to offer service from Atlanta and Salt Lake City. Air fares are also currently favorable for travelers for the ski season, Perry said.
• The number of “hot beds” is greater. The Viceroy will open with 172 rooms in Snowmass’ Base Village, and Residences at the Little Nell will be open for its first full winter at the base of Aspen Mountain. Kaplan said more property owners will likely rent their condos or homes this year in an effort to reduce the cost of “holding” them.
• The Skico is already working with lodging partners to offer discounted packages.
Both executives acknowledged that more customers than usual will be “value conscious” this season.
“People are reassessing their purchase decisions,” Kaplan said. “They are trimming things back to what’s really important and necessary.
“That’s good overall for us from a competitive standpoint and an industry standpoint because I think skiing is not a discretionary purchase. It’s something they’ve got to do.”
Perry said the Skico is “spending significantly more” on marketing this year, but he wouldn’t discuss dollars or content for competitive reasons. In general, the company’s marketing will focus on “competitive offerings” and bolstering its “brand authenticity.”
“During difficult economic times, people will tend to go to brands that they trust,” Perry said. “There is an opportunity to reinforce our brand, its authenticity, the appeal and great value of the Aspen-Snowmass experience.”
Customers shopping for good value will find competitive deals at Aspen, Perry said, but the Skico won’t duke it out with other resorts by offering cheap lift tickets.
“We’re never going to be the lowest-cost provider,” Perry said. “We’re not a bargain-based brand, and we should never act like one. That said, we must be competitive in the marketplace for the value-based customer.”