Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 7, 1994 TAG: 9402080009
SECTION: SPORTS PAGE: B-6 EDITION: METRO
SOURCE: By David Barudin
DATELINE: LENGTH: Long
With adult weekend lift tickets at area resorts averaging $32 ($27 on weekdays), a family of five can leave as much as $150 at the ticket window for a Saturday or Sunday on the slopes. Then there is the cost of rentals, food, lodging and, in some cases, real estate.
Some skiers are asking: ``Are the resorts getting rich or what?''
Here's an inside peek at the latest financial figures compiled by the ski industry. While they won't ease your pain at the ticket window, they may give you something to think about while you wait in a lift line.
``People have a misconception that ski areas are walking off with wheelbarrows of cash,'' said Mary Jo Tarallo, communications director for Ski Industries America, a nonprofit trade association.
What critics don't always understand, Tarallo said, a ski resort has a lot of fixed costs - from liability insurance to labor, rental equipment to real estate taxes - and they aren't cheap. Income is a function of skier visits, and the number of visits can depend on variables like cold temperatures and a hot economy.
Then there's competition.
``At the ski area level, it's a competitive game,'' Tarallo said.
That competition is keenest in the mid-Atlantic region - Georgia, Maryland, New York, North Carolina, Pennsylvania, Virginia and West Virginia - where operations depend on snowmaking far more than in New England and the Western states.
The objective is to bring the highest quality skiing to the most people possible, said Rick Barber, president of the Chesapeake Consulting Group, located in Easton, Md. Barber is an expert in ski industry economics and is the controller at West Virginia's Timberline Four-Season Resort.
``Fifty-five percent of customers come from word of mouth,'' he said. ``At Timberline, we concentrate on the skiing. When you stop paying attention to detail, then you go south fast.''
Skiing in the mid-Atlantic did start sliding south during years of slush and disappointing weather. Then abundant snow during the 1992-93 season coaxed skiers back onto the slopes in droves, extending the season and making it one of the more profitable since skiing's heyday in the mid-'80s. Average skier visits at the mid-Atlantic areas last year jumped by 10.7 percent over the previous season. The current season is building on that trend, and even may surpass it.
``It becomes infinitely easier to be in the ski industry when it snows,'' said Michael Berry, president of the National Ski Areas Association. ``That, and renewed confidence in the economy, is making the difference,'' he told the Associated Press. ``Economically, ski area operators are once again able to take advantage of the increased traffic with average gains of 40 percent in profit before taxes.''
Ski resorts across the country used their extra profits from the 1992-93 season to reduce debt levels and to make capital improvements. Debt, such as mortgages and other loans, is the single largest item on the mid-Atlantic areas' balance sheets. The average long-term debt of a ski area is $3.65 million, with nearly another million owed in current liabilities, according to an economic analysis prepared by the National Ski Areas Association.
Another way to view the huge debt picture that ski areas face, both in boom and bust years, is to understand that the average capital cost a ski area invests in its facilities is $1,519 per skier. The operating cost per skier is $6.28. Cost figures are based on slopes being skied at full capacity. Performance statistics, however, show that ski slopes are utilized an average of 30.8 percent, and only half as much at night.
All this makes being in the ski business a risky venture. Profit before taxes in a boom time like the 1992-93 season averaged 11.3 percent of total revenue, according to the ski areas associations economic analysis. The report states that while lift-ticket revenue per skier held steady at $21.04 the past two seasons, overall per skier revenue before accommodations grew by 3.3 percent. The extra revenue came from nonskiing activities.
Last season, an average 27-year-old mid-Atlantic skier spent about $38 during each visit to a ski area. Of that, some $19 came from the sale of a lift ticket, $3.25 from ski rentals, $2.50 from ski lessons, $1.60 from the ski shop, $6.60 from food and drink and about $4.50 from off-slope activities.
Of the lift revenue, nearly 30 percent quickly goes to pay lift attendants, ticket sellers, ski patrol, on-slope courtesy staff and day-to-day maintenance of equipment.
Real estate sales, which many ski area depended on for needed cash during the early days of skiing in the region, today account for less than 1 percent of winter revenues.
Property sales still are an important revenue base for many local ski areas, but most sales are made spring through fall. During the ski season, resort guests tend to rent lodging.
``Unlike Aspen or Vail, we don't get strong buyers in winter; 80 percent of ski area real estate is bought over the summer,'' said Terry Smoot, owner of Beaver Ridge Resort condos, near Timberline and Canaan Valley Resort Park.
``Families leave home on Friday after work and come to ski for the weekend,'' said Smoot. ``They don't stay long enough to kick a tire, so to speak. But they see how pristine the area is and come back in the summer. Then they play golf, sit by the pool and want to look around.''
Those who do buy at Beaver Ridge are likely to be 45 to 55 years old and have incomes of $80,000 to $150,000, a group that represents less than 3 percent of downhill skiers.
by CNB