Art Edelstein, Vermont Business
March 15, 2010

A national economy burdened by high unemployment is not crashing Vermont's ski economy. What would drastically hurt skiing here is bad weather conditions.

“The economy overall remains a concern,” said Parker Riehle, head of the Vermont Ski Areas Association. “But in the ski industry, the good news this year as with last year is folks are choosing to ski closer to home and not taking a trip to an airline-dependent destination, to a beach or mountain out west.”

This destination change, partially the result of the economy and partially due to airline hassles, has helped Vermont ski areas. Another boon to the industry is that like last year, season pass sales have remained strong, Riehle said. This is an indication that “that skiers don't want to give up skiing as a lifestyle, family sport and multi-generational activity.” he said.

In difficult economic times, the best skiing value “is to make a single mountain commitment,” he said.

Last year, there were just over 4.1 million skier visits to Vermont, which was in line with the five to 10 year average. But “average was the new up,” Riehle said.

The sport and its related activities contribute $750 million in direct spending in Vermont. Two-thirds of that, or $500 million, is spent off-mountain in villages and towns dependent on the skier economy. Tourism indicators such as meals and rooms tax held their own with pre-recession numbers last year, as corporate tax numbers collapsed.

A phone survey of ski areas reveals an industry that is having a reasonably good year. Weather appears to be the main draw to the slopes. With good conditions during the Christmas holiday, which was truncated somewhat by the loss of an extra weekend, and very good conditions for the three day weekend over the Martin Luther King, Jr holiday, the ski areas report good earnings over that period. If the President's Day holiday weekend in February met early expectations and March snows are generous, this could be a good year for the sport and businesses that revolve around it.

“We're doing good and were really strong from Christmas to the end of January, with visits exceeding projections,” said Josh Arneson at Bolton Valley Ski Resort.

“Our numbers for January are ahead of our projections, we had good snow conditions,” said Hannah Collins at Burke Mountain Ski Area.

“The season is shaping up well, we are at about what we expected,” said Tom Horrocks at Killington and Pico Peak resort.

“We've been having a great season and the Martin Luther King weekend was the best we've experienced since 1998,” said JJ Tolland at Sugarbush Resort.

Riehle said that while no hard numbers are available as of mid-February, in this season to date, the industry was “generally tracking with last year to this point” financially, based on anecdotal evidence.

While the season had a late start due to little early snow, and there were few skiing days until mid- to late December, the good weather and the fact that skiers are staying close to home has kept the skier day visits at healthy levels so far this season. What helps Vermont ski areas, even if the snows do not fall with regularity here, is when it snows in the major ski markets of Boston, New York and New Jersey, whetting the appetites of skiers. This has happened frequently this year, Riehle said.

In this period of high unemployment, the 12,000 jobs directly related to skiing are needed. Of those jobs, 20 to 25 percent are full-time and year-round. Salary figures from the Vermont Department of Tourism and Marketing show that the Vermont tourism employee who is the primary household wage earner, earns $42,350 annually, which is 15 percent above the average income of $36,949 for all employed individuals in Vermont, said Riehle.

While skiing is relatively healthy this year, the lack of significant snow since early January has hurt local Nordic ski areas where there is little snowmaking for cross country skiing, said Bruce Hyde, commissioner of the Department of Tourism and Marketing. It has also resulted in a dampened snowmobiling season.

February is usually the biggest snow month, and reservations were strong for President's Day week, said Hyde, now in his seventh year at the department. He predicted that the MLK weekend would produce revenues that would be “significantly up from the past couple of years, which weren't very good.” The critical period for the ski season is February and March, he said.

Hyde works with a budget that is currently at $3.6 million. The winter marketing campaign is about $750,000, which is partnered with the Cabot Creamery and the ski areas. He is hoping to boost the budget by $.5 million with money the state will get from federal stimulus funding.

“Every dollar of promotion we do at the state level returns $4 or more in state tax revenues,” he said.

Greg Gerdel, chief of research and operations at Tourism and Marketing, looked at how well the ski industry did as of January in terms of revenues. Revenue collections for rooms and meals and alcohol taxes collected in January reflected the Christmas season. Those numbers were up over 11.7 percent from January 2009. They brought the fiscal year to date (July 1 2009 through January 31 fiscal 2010) to a figure that is off just .3 percent from fiscal 2009.

“It indicates some stability in travel and tourism rather than falling off the cliff,” he said. “The months that were tough last year were February and March.”

Comparing fiscal 2009 to 2008 at this same time, tax revenues were down 3.9 percent. Tax revenues are off under 4 percent for fiscal 2010 compared to fiscal 2008 for the same time period.

“2008 was the strongest fiscal year in decades,” said Gerdel. “Taxable receipts for lodging in 2008 were up 9.6 percent, the strongest year for growth in lodging in memory. 2008 is the bench mark or high water mark year.”

Highway traffic numbers for December showed an overall increase of two percent over December 2008, which reflects all traffic on Vermont roads. Resort area traffic was relatively soft. Traffic was down less than one percent at Burke, and the Stowe access road was off 6.4 percent. In Warren, traffic at Sugarbush was up 8.6 percent, while the Killington access road was off 7.4 percent.

A survey of Vermont ski areas

At Bolton Valley, the big news beyond the good start to the ski season was the installation of a wind turbine last fall at the top of the Vista Quad area. The turbine was installed by Northern Power Systems in Barre Town. The first ever at a Vermont ski area and second at ski areas nationally, the turbine feeds power directly back into the electric grid, said Arneson. It will produce about 12 percent of Bolton's power on an annual basis, or about 300,000 kilowatt hours of electricity annually, the equivalent of the electricity used by 40 to 45 Vermont households.

“We did this to be more green and because we use a lot of energy,” said Arneson. “We want to be a more sustainable resort.”

At Killington, the numbers so far are meeting projections, said Horricks. However, natural snowfall was at 119 inches in early February, down from 203 at the same time in 2009. Season pass sales were good. A full season pass purchased in the pre-season started at $999, in February a pass was $1249. A daily lift ticket is $77, or $82 on Saturdays and peak days.

The economic effect, said Horrocks, does not dampen the spirits of skiers and riders who are “passionate about their sport.”

“They may not go as frequently as in the past and look for deals and bargains, and may lay off the bells and whistles like a private lesson or spend less on wine and spend less in town,” he said.

Killington did not raise its rates because “it would have almost been business suicide,” Horrocks said. There was no construction here either, reflecting a trend throughout the industry, but $2 million in snowmaking upgrades were added.

“We're about 10 percent off budget now, but February and March are potentially our best months,” said Eric Friedman at Mad River Glen in Fayston. “We can come back if we get snow.”

This cooperatively owned ski area has 2100 shareholders who represent nearly 40 percent of the revenue. Here, they budget for 85,000 skier visits. Day tickets cost $39 mid-week and go up to $62 on the weekend. Season passes sold from $295 to $750.

Friedman categorized the Vermont ski industry as “relatively strong.” He sees the state as having “a great brand,” he said.

“What people are looking for is budget consciousness, and a one-tank drive to get here so they can avoid flying,” Friedman said. “We are well positioned. This goes with a simpler lifestyle, a more down-to-earth experience that is real. We have a good mix of offerings. Something for everyone.”

Bill Stenger at Jay Peak foresees “a very strong finish” for his ski area. While December was disappointing due to a late start, the second half of the winter will have “a tremendous finish,” he predicted.

According to Stenger, the economy affects skier visits in that “people are a little more choosy about when they go skiing and check the weather carefully.”

As of mid February Jay Peak's numbers are “a little bit soft by five to six percent,” yet ahead of last year. Stenger sees this as basically consistent with the rest of the ski areas in Vermont, he said.

“It's surprisingly good after a slow start where we lost 15 days,” said Bonnie MacPherson at Okemo Mountain Resort near Ludlow.

In February, the resort was about two percent off projections for the year to date. It had its best MLK weekend on record, up 30 percent over 2009. This was due to cooperative weather and many promotional specials, she said.

Okemo is marketing with social media and has over 6,000 fans on Facebook. Earlier in the season had a “Facebook Friday” where any fan could ski for $25. The also resort conducts contests on Twitter. A contest for distinct Okemo photos brought prize eligibility. People can also sign up on the Okemo website for text alerts.

“Some people might suggest we are cannibalizing ourselves as they would ski anyway,” said MacPherson, “But in this economy people are actively looking for those deals if you make it easy for them they are going to come.”

“It gives us a database of people we can communicate with,” she said of social networking. “It takes the place of direct marketing from a public relations standpoint. With news, anybody on Facebook or Twitter finds out the news before anybody else does.”

Okemo is also seeing substantial increases in college student season passes from several schools that has amounted to a 30 percent increase in this category.

“It's a good deal,” said MacPherson. “We are more aggressive in our college pass program.”

Okemo partners with Stratton Mountain and Mt. Sunapee ski areas and tours colleges in Massachusetts and New Hampshire in the fall to speak to students.

“Not too bad, about the same as last year,” said Bill Stritzler at Smugglers' Notch Resort of the ski season so far.

People are more cautious about spending, and appear to be going out to dinner less but spend the same as in previous years, he said. Resort bookings revenue is consistent with last year, but last year was mixed. However, he said, “we're very pleased with our regional and local skiers.”

Stritzler thinks Smugglers' revenues will be on a par with last year.

“We had hoped to do better,” he said. “It's not great, not terrible.”

“We are having a very good year with good snow and good weather,” said Myra Foster at Stratton Mountain Resort. They are seeing a lot of repeat visits and new business.

“People are still feeling the pinch of traveling to western resorts,” she said. “We are finding people interested in extending stays, trying new gear and spending at Stratton Village.”

“All the percentages were up from last year as well as projections for MLK and the December holiday time,” said Toland at Sugarbush. This year has “been a great season for weather and visitorship. Food and beverage and ski school and lodging -- people are spending well.”

For the Christmas holiday week, Sugarbush was 21 percent above forecast projections and 23 percent above 2008. For the MLK weekend, the resort had close to 20,000 people, which was 31 percent over projections and 46 percent ahead of 2009.

“Overall we have some smiles here at Sugarbush,” he said.

“Bookings are looking excellent,” said Winn Smith, owner and president of Sugarbush. “Clay Brook residences are pretty full and all lodging is looking strong.”

Expansion here, which paused after the 2006-07 season, may begin again. Smith said he is considering starting on two new base lodges either this summer or a year from now.

“We are looking at finances, the economic environment and how this winter ends up, he said. “We're 90 percent permitted and finalizing construction drawings and will go out to bid.”

The cost will be in the $8 to $10 million range. In the future, with improving real estate and loans possibilities, the resort will complete the base area with more lodging.

Sugarbush is raising cash through the EB5 program, which allows foreign investors to invest in a job-producing business in exchange for a green card. Sugarbush is raising up to $20 million from 40 people at an investment of $.5 million each. Investors from Korea, Taiwan, Mexico, and the UK have brought in about $11.5 million so far, and “we've identified the remaining investors who say they want to invest,” said Smith. This method, he said, is time consuming and it will take about 2.5 years to raise the $20 million.

Without man-made snow, most Vermont Nordic ski areas are at the mercy of the weather. Business was very good at Mountain Top Inn and Cross Country Ski Center in Chittenden, up 40 percent over January 2009, said Roger Hill.

“We attribute this to snowfall,” he said. “The majority of our trails were open during that time frame, it's above average.”

This touring center relies on “a very strong local base of season pass holders,” he said. Prices for a season pass here are $200 for adults and $400 for a family of four.

Hill sees the economy affecting his business by helping to keep skiers local.

“Folks are making more local trips of three to four hours,” he said. “With snowfall down country, it gets them in the mood, same trend as Alpine. It's been a good year so far. If snow conditions hold through February, we will finish out with a great year.”

“The season has been very strong business wise and the skiing itself has been good,” said Charlie Yerrick at the Trapp Family Lodge in Stowe. “We're almost 20 percent above last year's skier visits.”

Echoing an oft-mentioned aspect of the ski industry, whether Alpine or Nordic, “the economy is less of a factor to the snow quality,” Yerrick said.

Art Edelstein is a freelance writer from East Calais.

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