Marolt: A cold war in the ski biz
November 20, 2013
A guy named Rob Lovitt, who writes travel pieces for NBCnews.com, got a hold of something I wrote in this paper last year about the ski industry and called to ask me what I thought about ski biz, and we had a nice chat. I am afraid that I wasn't too optimistic, but he told me I had some interesting points. We'll see. I'm looking out for the piece he's working on.
After I hung up, I thought I'd better do some research to see if I could actually support the things I said, and sure enough, I was right. Just because you fire before you aim doesn't mean you'll always miss the target. The number of skier days, that's the total number of days skied by the few who count over a hundred and the many who only go up for a couple during the year, has more or less stayed the same since 1979. The average annual growth rate has been only 0.35 percent per year over that period. And, yes, I'm pretty decent with numbers, so I didn't put that decimal point in the wrong place.
You see that and you can't help but be skeptical about ski-industry prospects. It's no secret that the average age of the skier is going up, too. What happens when their old knees quit on them and there are no young ski bums, like there were in the '70s, to take their places in the lift lines (short as they are)?
Then I got to thinking a little more positively. They aren't making many new ski areas. Maybe they don't need a bunch of new people to take up the sport every year to keep it going. If they can just keep the growth line flat and not start to head downward with it, then maybe everything works out over the long haul. After all, they've done pretty well for more than three decades without much growth.
Pessimism is a heck of a thing to battle, though. Once it has the upper hand in your mind, it can dim a ray of hope like a mogul run in fog. The truth is that the ski industry has grown like mad over the past three decades — maybe not in the number of people who do it but certainly in the amount of money they spend to do it. Think about that. The costs of lift tickets, food, lodging and gear have gotten big air since the late '70s. There's your profit growth!
That's good, and we who live in the heart of the conspicuous spending have benefited, but, and here's where things get slushy, can the model of peak pricing continue? No. Economic gravity will prevail eventually. At some point, a dollar of enticing improvements will fail to return a dollar of new revenue. I think the technical term is "bang for buck." At first it's excitingly loud; then it gets more and more muffled with each additional shot. What? Did you say something about a new gondola? Ho-hum.
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I see it as setting up kind of a cold war in the ski industry. Companies have to grow profits. It's what they're bred to do. But what do you do when you can no longer raise prices? The only option then is to get more customers, and how do you do that in an industry that has barely netted any new customers in a third of a century? You press the button and lower prices, that's how! The idea now is that for every dollar you lower ticket prices, you get two back by enticing new skiers into the market. You can afford to do this because you are reducing the quality by not spending any more on fancy, new amenities. It's the Wal-Mart model on snow. It's all about volume. Imagine long lift lines full of budget-conscious skiers in Scotchgarded jeans cruising runs that are only groomed twice a week. It's possible: Think 1972!
This is long-term good! Skiing becomes more affordable, more people participate, and the slopes are full of excitement. When this happens, then prices can start to rise again and we can thin the crowds while getting back to catering to the elite. Great! Now, back to the pessimism — most of us will be too old to care about the long term. Like all industries, skiing is cyclical. Heading down to Base Village took more than 30 years. It might take that long to ride the lift back up.
Roger Marolt thinks that snowboarding becoming the savior of the ski industry has been greatly exaggerated. Contact him at email@example.com.
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