#1: Update: Covid-19’s Cost the Ski Industry an Estimated $2B, Skier Visits Down 14%:
Well, it’s officially the middle of June, which means it’s the time of year that the National Ski Areas Association releases their report on statistics from the previous season. Typically the two numbers that we find most interesting are overall revenue and skier visits. Before we jump into this year’s report, let’s take a quick look at how things have been trending in recent years. Two years ago, back in 2018, skier visits had fallen just under 3% from the previous year to 53.3 million. That figure was slightly below the 20 year average, which was 56.1 million as of 2017. Then, last year happened. After a slight down year, favorable weather and the expansion of the multi-pass offerings resulted in a monster year, with over 59 million visits, a full 11% increase from 2018. Even more notable is the fact that that figure was good enough for the 4th best ski season (measured by visits) since the NSAA began tracking the statistic. Then, this year happened.
This year, as you might expect, skier visits were down dramatically from last season. With the sudden end to the season in mid-March, ski areas were only able to log 51.1 million skier visits, down a full 14% from last year. Now, it’s worth mentioning that being down 14% from a year that was up 11% and was the 4th largest ever isn’t awful considering the circumstances. In fact, it would have been interesting to see how this year’s numbers would’ve compared to last year’s as there’s a strong chance that they would’ve been rivaled. But, unfortunately that’s not our reality. Our reality is that, in addition to a 14% decrease in skier visits, the NSAA also estimates that ski resorts lost approximately $2 billion due to the early closures. Looking ahead, the NSAA also estimates that losses could climb as high as $5 billion if next year’s operations are impacted as well. While these figures alone paint a pretty gloomy picture, it should be noted that, while it may not seem like it, the impacts of Covid-19 on the ski industry will ultimately prove to be temporary, and a number of factors suggest that ski resorts will be able to weather this storm. For more on this, check out highlight #4 below, as well as this report from the Colorado Sun, and this recap from the Aspen Times.
#2: Tensions Rising Between U.S. Ski and Snowboard Team, and NCAA Collegiate Racing:
Next up in this week’s news is a story that delves into a complex issue that’s chock full of strong, well intentioned opinions on both sides of the aisle. While the story itself has been written over the past several years and even decades, the news as it pertains to us this week really started back on June 10, 2020 when Ski Racing Magazine published an article called, “USST, NCAA Butt Heads Over NorAm Schedule,” which took a close look at the growing divide between the US Ski Team and NCAA Collegiate Ski Racing. Now, if you’re a fan of sports like Football, Basketball, Baseball, or Hockey, you might assume that it’s standard procedure for professional athletes to make their way to the pros via a strong collegiate showing. As it turns out though, that’s far from the case in ski racing.
In the recent article from Ski Racing Magazine, we’re given a detailed look into how the US Ski Team views its pipeline, and how the NCAA collegiate teams feel about said pipeline. In short, the dynamic is this: the U.S. Ski Team sees steady competition in Europe as something of a prerequisite for becoming a top-10 worldwide athlete. As such, most members who make the U.S. Ski Team opt to join the NorAm circuit which competes for the Europa Cup, meaning they don’t attend college after high school. There are however, a vast number of talented racers that do elect to attend college and make their presence known on the NCAA collegiate skiing circuit. While the NorAm schedule differs from the NCAA schedule, NCAA athletes are able to race in NorAm races, thereby allowing them to earn FIS rankings. To put it in simple terms, the NorAm team is the preferred route to the US Ski Team, and while NCAA athletes often compete against NorAm athletes in domestic races, they are far less likely to be able to make the jump to the U.S. Ski Team.
As you could likely guess, this dynamic has led to long term, underlying tensions between the U.S. Ski Team and collegiate ski racing. In the past couple of weeks, this tension has bubbled up after Tiger Shaw, CEO and President of the U.S. Ski Team (also referred to as the national governing body) made it clear that he wasn’t interested in working with the NCAA to ensure that the NorAm schedule is compatible with the NCAA schedule. In doing so, Shaw stated that his interest is not in developing a pipeline to bring athletes from the NCAA to the U.S. Ski Team. Instead, he takes the position that in order to be a top-10 skier in the world, athletes need to dedicate their life to the sport, ultimately implying the college is nothing more than a distraction. On the other side of the aisle, NCAA Alpine Collegiate Chairman and Dartmouth Men’s Alpine Head Coach Peter Dodge argues that simply because an athlete attends college doesn’t mean that they’re not committed to the sport, or less talented than NorAm athletes. While the Ski Racing Magazine article covers a wide range of rationales offered by Dodge to support his point, one statement that stuck with us was, ““The key is you’ve got to pay attention to the college races. We are at least 50% of the top 30 of the (NorAm) field.” With one simple stat, Dodge makes a compelling case for the quality of athlete competing on the NCAA circuit, and why the U.S. Ski Team should consider making it a more substantial part of their pipeline. Finally, before we round out this highlight, we should also mention that Tiger Shaw authored a letter in response to last week’s article from Ski Racing Magazine. You can read the original article here, and Tiger Shaw’s response here.
#3: Aspen Skiing Co., Owed $2.4m, Attempting to Force Liftopia into Bankruptcy:
In more ski-conflict news this week, we bring you a messy situation in which Aspen Skiing Co. (Skico) is essentially trying to force Liftopia into bankruptcy. Before we dive into the situation at hand, a quick preface to ensure that we’re all on the same page: Liftopia is an online seller of discounted lift tickets. While we don’t know the details of their sales agreements, their business model is most likely based on buying lift tickets in volume from ski resorts, and reselling them to skiers and snowboarders for less than face value. When all is working as it should, it’s a win-win-win situation for resorts, Liftopia, and it’s customers. Unfortunately, in light of this week’s news, we now know that all has not been working as it should.
This week, Aspen Skiing Co. filed a petition for involuntary bankruptcy against Liftopia. In the petition, Skico. claims that Liftopia owes their company approximately $2.4 million in unpaid contractual fees. Joining Skico in the petition are Alterra Mountain Co., Cypress Bowl Recreations, and Dundee Resort Development, who are also owed a combined $600,000, bringing the total value of the claim to $3 million. To make matters more complicated, the $2.4 million owed to Skico is attributed in large part to sales of the Mountain Collective pass. Due to the fact that that volume of money is owed to sales of a multi-pass, resort members of the pass are also currently owed their cut of the sales. In other words, what this story amounts to is that Liftopia owes a lot of mountains money, and at a time when nearly all resorts saw a decline in revenue due to covid closures, many of them are coming to collect. By filing this petition to force Liftopia into involuntary bankruptcy, the hope is that Liftopia will be forced to pay out the $3 million that it owes to its accounts. From here, Liftopia essentially has three options: file bankruptcy themselves (allowing them to restructure their debts independently), close their business entirely, or simply hope that the petition isn’t approved and that Skico’s effort fails. Of course, given the assumption that Liftopia really does owe that amount of money, and that all financial dealings are under contract, their third option seems unlikely to come to fruition. For more on this, check out the writeup from Vail Daily.
#4: Deer Valley Seeing Signs of Strong 2020-2021 Season:
Finally, we’re going out the same way we came in this week: by discussing Covid-19’s impact on the ski industry. In this highlight though, the news we’re sharing is a bit more positive. As the 2020-2021 season creeps ever closer to the horizon, and as questions linger regarding the enforcement of social distancing, we find ourselves eagerly seeking out news that might offer insights into how resorts are expecting to handle their operations in the season ahead. Part of the answer to that question ultimately comes down to whether or not skier visits remain consistent with recent years, or if we see a decline in overall traffic as a result of travel restrictions. Last week, we shared an article in which Rob Katz, speaking with investors, suggested that he expects to see a decrease in skier visits in the upcoming season, although not to an extent that would bring business viability into question.
This week, we heard another, different perspective from Todd Shallan, the President and COO of Deer Valley, who shared some insights during a virtual city-hall style meeting. In that meeting, Shallan touched on a few key points that lay out some of the expectations, as well as challenges facing resorts in the year ahead. The highlight of these comments are the facts that season pass sales and lodging reservations have been strong, suggesting to him that skiers are eager to get back on snow after having their previous seasons involuntarily abbreviated. Compared to Katz’s outlook from last week, Shallan’s observations suggest a more positive economic outlook for the year ahead. As is always the case though, there’s a second side to this coin. While early indicators suggest that interest in destination skiing remains strong amongst skiers, it also means that there are likely to be issues surrounding capacity. Noting that it’s likely that limitations will likely have to be in place in the coming season, Shallan drew attention to the need for resorts to balance the interests of their local community of skiers, with the need to bring in guests to stimulate the area’s economy. In other words, Shallan says that Deer Valley and the Park City region rely on destination skiers to keep their lodges full and shops busy, but recognizes the dilemma of potentially restricting access to skiing for locals. At present, Shallan doesn’t have an answer for this problem. For now, much like Rob Katz stated a week ago, the only thing to do is keep an eye on how the season plays out at resorts in the Southern Hemisphere. For more on this, check out the report from the Park Record.