Thursday, October 4, 2012

Future of the Industry Survey conducted by SE Group: Introduction

By Claire Humber
As published in Ski Area Management (SAM, October, 2012)

 In a continual effort to understand our core ski industry business and anticipate “what’s next?” SE Group recently completed an informal survey about the future of the industry. Respondents represent a true cross section of the industry—all regions of the country, destination resorts and day-use ski areas, old guard and young guns, suppliers and consultants, GMs and moneymen.
SE Group asked all participants for their thoughts and ideas for what the future holds: What does your crystal ball show you about the future—opportunities and challenges? How do you see the industry changing? What are you doing to grow your business as you think about the next 10 to 20 years? What is your greatest opportunity for growth? What is the most troubling aspect of your business as you look to the future?
As responses began to come in it became immediately apparent to us that our 10- to 20-year outlook was inappropriately long, and that a more reasonable timeframe was three to five years. As one respondent put it, "I do not think any business in today’s environment projects out that far". As well, “Business needs to be flexible based upon the changing landscape. Business plans are three to five years, not 10 to 20”.
The end result of our survey was nothing short of eye-opening and thought-provoking. We were amazed, though not completely surprised given the list of respondents, at the depth of thought found within the responses. Amazed, and somewhat at a loss about how to compile and summarize the information. As we organized the comments by subjects, a unifying theme emerged: CHALLENGE = OPPORTUNITY.
This industry is full of passionate folks who continually show tremendous tenacity, perseverance and ingenuity. This was evidenced by the numerous opportunities that were identified by respondents as responses to the evolving challenges faced by the industry.
So, SE Group decided to break down the results into six Challenge=Opportunity categories and present each one over the coming months. Our hope is that you will join the discussion in this digital forum, not just read them. We invite all of you to investigate the challenges facing the industry, and to explore the opportunities each challenge avails.

CHALLENGE 1: THE ECONOMY

While the economy was not the most frequently mentioned challenge by our respondents, it is a topic that has had a pervasive presence in all business discussions over the past four years, and thus seems a good place to start!

"Continued domestic and international economic uncertainty/volatility will likely prevail over the next 12 to 24 months at minimum, forcing operators and developers to be stingy with additional investment in the mountain, lodging and residential real estate projects. The current tepid flow of capital—both on the debt and equity side—will not change any time soon, forcing developers to halt projects, allow for assets to depreciate further into obsolescence, and postpone investments in personnel".

OPPORTUNITY: THE ECONOMY (ATTITUDE RESET!)

The industry has been dealing with the fallout of the economic crisis since 2008. It’s just business as usual for many.

But never waste a good crisis. Skier visits held, but many areas faced the realities of decreased yields, fewer overnight stays, a disappearance of the resort real estate market, a tightening of operational budgets and an absence of capital for upgrading or improvements.
In general, this restrained business environment has caused an “attitude reset” for both business operators and consumers. Within the ski industry, this reset has included a refocus on the success and longevity of operations, and a reprioritization of long-term thinking rather than short-term gain. It has also reminded many to get back to basics, and that the sport of skiing is one of the best ways to spend time with family and friends.
"Recognizing the hand it has been dealt, the industry (and its capital sources) is beginning to think more long term by taking a holistic approach to resort development, analyzing the mountain/real estate connection more closely and making sure that when all of their real estate is sold, the operating asset can succeed irrespective of volatile weather patterns or economic nadirs".
"More specifically, the industry is beginning to focus on leveraging off of its greatest assets—access/ownership of mountains/natural beauty—to create unique vacation experiences that are not necessarily defined by the amount of snow on the ground, but rather by the multitude of recreational opportunities available to the guest/owner".
"In short, we’ve recognized that while skiing is a fantastic sport, families don’t visit our resorts to ski per se—they come to us to be together and interact with nature. Offering many opportunities for them to do this does not necessitate extravagant development".

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