HG: “Do you think that giant conglomerates are killing the confidence of [ski indusrty] entrepreneurs?”
TC: “As Michael Berry and I both have said, those resorts that deserve to be in business today are; those that do not, aren’t.”
Tim Cohee knows his way around the industry. His 43 years of ski industry experience started in marketing from 1979-1993 and then shifted dramatically as he became President of Kirkwood from 1993-2010. He currently divides his time between China Peak (where he is Managing Partner, CEO, and GM), Sierra Nevada College (where he has been Program Chair for the Ski Business and Resort Management the past 15 years), and both the Executive Committee of the California Ski Industry and Board of Directors for the National Ski Areas Association (where he holds seats). So it’s easy to take confidence in his harsh, but realistic comment (above).
I asked Cohee about the death of the ski entrepreneur because there has been a significant lack of growth over the last 30 years. Resorts that have opened their doors in the past two decades, like Tamarack Resort, have also had their doors repossessed in the past two decades.
First and foremost: “It’s nearly impossible to get approval to build a new ski area today on USFS land, as any new potential developer has to show need (not enough ski resorts), which is not possible today.” Cohee advised, and that “The environmental pressure alone would stop anyone from building a resort.”
Tamarack Resort was one of the last resorts to open its doors in America. The resort made it past the environmental barriers, but got tripped up on Cohee’s second blockade to making it: “the cost today without the benefit of large real estate sales is too high.” Therefore, most resorts in the last millennium collapse into bankruptcy. Tamarack might now be known better for its deserted lodge reminiscent of “The Shining” or for its lifts flying away by helicopter when the owner couldn’t pay back loans. Tamarack included plans for luxury housing developments in the resort’s development, but sales were disrupted as the housing bubble crashed in 2008. Controller and asset manager for Tamarack Resort LLC, David Papiez said, “You’d never be able to build Tamarack if you weren’t able to sell condominiums at $800 to $1,200 per square foot.”
These two barriers, environmental and financial, are more than enough to fulfill the ski entrepreneur anxiety. The topic of opening a new resort is something Cohee describes as a “non-starter regardless of the consolidators.”
Following any basic business lifecycle model, it is easy to see that the lack of new businesses and shifts towards consolidating are part of the industry maturing. The “maturity” stage, while it is the longest, is the stage right before “decline”. What we can expect in the future is (taken from Inc.), “fewer firms, and those that survive will be larger and more dominant.”
I know that conglomerates scare mountain locals. The thought is that large corporations or, worse, investment groups will take over quirky, little mountains and ruin them with unnecessary infrastructure and insane price increases. Not to mention more traffic in areas that likely can’t handle it. Placer County recently approved a plan that would allow generous development in Squaw Valley and I watched an entire community roll their eyes in the back of their heads and let out a dismayed sigh.
“A boycott wakes the parent company up,” urges Andrew Pridgen in his article The Time Has Come to Boycott Squaw Valley USA. “They play nice for about a half season, promising immediate improvements to the mountain, which didn’t really happen, while they install their own leadership team…and finally, when things seem OK, they begin to dump development plans and run as if they are UPS drivers delivering boxes of feces to your doorstep.”
HG: “Do you think, moving forward, that conglomerates, like Vail and KSL Capital Partners’ resorts, will be the future of the snow industry – an oligarchy of sorts gobbling up smaller companies/resorts?”
TC: “No, I don’t think the consolidators gobble everyone up. To assume these larger companies are going to continue to buy resorts for the sake of simply owning more resorts is, in my opinion, inaccurate.”
Cohee’s comment on consolidators was pretty much what I expected from an industry pro. At first, I thought he was avoiding the comment I mentioned from Tom Foley, Inntopia Vice President of Business Intelligence: “fewer players in the field allows for a more dictatorial approach to pricing.”
But as the interview simmered in my mind, I realized that a “dictatorial approach to pricing” might not be a bad thing. If conglomerates are the future, then companies like Vail and KSL Capital Partners will be forced to compete based on price rather than the “quality” of passes – which basically means the number of resorts offered on each pass.
If Cohee is right in his assumption that conglomerates will not gobble up all resorts, there will still be the local’s resorts – your Sugar Bowls, Powderhorns, Silvertons, Bald Mountains, and China Peaks – that will compete amongst themselves at a completely different price than the conglomerates.
“Something that never existed 20 years ago, a vast difference in pricing to allow the consumer to make decisions on where they go based on a $500 day or a $250 day. For example, 20 years ago, the difference in price between Northstar and Diamond Peak was $5; today, $50 at least, maybe more.”
Change is hard and our beloved sport is seeing quite a bit of change. If all predictions pan out, though, the industry might be changing for the better.