Willoughby: The ski industry changes its business (not swimsuit) models
Legends & Legacies
The term ski industry brings to mind a collection of factories. Perhaps the term fits because ski areas manufacture snow — and happiness. But the business model for the industry has undergone radical changes, and Aspen stands as a prime example.
Aspen Ski Club’s business kicked off during the late 1930s when they operated a boat tow from the bottom of Aspen Mountain. Volunteers helped build it. For funding, the company passed the hat. Profit lived in the land of dreams. Nevertheless, club members wanted the operation to pay for itself. Operating expenses remained low because volunteers manned the tow. But the club had to buy gas for the tow motor. The greatest outlay went to Florian Haemmerle an assistant coach at Dartmouth, the ski school director. Thor Groswold, a pioneer ski manufacturer in Denver, had helped to recruit him.
Early ski resorts such as Aspen’s followed a similar business model. Nearly all skiers had begun the sport only recently, and that meant resorts had to include a ski school. Learning to use the long skis of that period required many lessons to reach a level of comfort and competence. The ski school director’s reputation attracted skiers, who paid more for lessons than tickets. Greater than half of resort income went to the ski school, which often operated as a separate enterprise.
Friedl Pfeifer had developed a name as the ski school director for Sun Valley. After World War II, he came to Aspen. He talked the ski club into allowing him to take over the school. In trade he improved the rope tow for beginners, and planned to build lifts. Pfeifer split his time between Sun Valley and Aspen, and formed the Aspen Skiing Corporation to build the lifts. After the first year of operation, Pfeifer — who had invested sweat equity into getting the corporation off the ground — retained control of the school.
The corporation made money by selling tickets and food at the Sundeck. It made no profit during the first five years, and after that it invested much of its income in improvements.
Through the early 1960s most ski areas followed a similar model. They sold ski tickets and food, and shared the ski school income with a brand-name school director. The population of skiers grew steadily during the period, building profits despite the seasonal nature of the business. Lift building stood first in line for funds. Operating expenses such as wages for lift operators, ticket sellers, restaurant employees, and a few ski patrolmen fell further behind in the line.
Individuals built a number of ski enterprises. Starting with a rope tow, Dave McCoy built Mammoth Mountain Area. Whip Jones built Aspen Highlands, the city’s second ski business. He opened with two lifts during 1958. Following the business model Jones recruited Stein Erickson, the best-known skier in America, to lend his name to the ski school. The Highlands Ski School premiered the graduated ski length method of learning, a process that eased new skiers into the sport.
The business model of that period turned profits for Jones and Friedl Pfeifer, who developed Buttermilk. Doris Willoughby, my aunt, produced payroll for Aspen Highlands, and provided bookkeeping for many local businesses. I overheard Jones point out to her that to date he had rarely borrowed money. A bank had come to him and asked whether he wanted a loan, and he felt he did not need to borrow. But he figured it was time for a new lift, so he asked himself, “Why not?”
The second business model operated at a larger scale. Resorts such as Snowmass and Vail merged real estate sales with ski ticket sales. Similar to golf course communities of that period, ski condos offered a vacation lifestyle. In the beginning, the real estate part of the bargain may have functioned as a loss leader. Then, as the second home business and fractional ownership idea grew, property values soon outperformed ski ticket profits.
We may be reaching the end of a final cycle. To compete in the ticket market, ski areas had to improve their facilities. They installed pricey high-speed lifts and snowmaking infrastructure and technology. They spiffed up base facilities and mountain restaurants. These accomplishments required corporate-scale capital. Corporations consolidated, or gobbled up, multiple single-owner operations. This new business model depends on high-end real estate, astronomical lift ticket prices, and year-round profit centers.
Compared to skiing’s homegrown beginnings, today the sport more clearly resembles an industry.
Tim Willoughby’s family story parallels Aspen’s. He began sharing folklore while teaching Aspen Country Day School and Colorado Mountain College. Now a tourist in his native town, he views it with historical perspective. Reach him at email@example.com.