Former Vail and Intrawest executive Roger McCarthy took the stage at the Interski 2011 Congress in St. Anton on Wednesday, January 19th, 2011, to declare that not only are the economic and interactive models of skiing broken, but that he has seen several ways of fixing them.
“Socialization has been designed out of our villages,” McCarthy says. “It used to be people would stay in a hotel and get out and meet people. The hotel room was where you slept.” Instead, McCarthy says, condos and townhomes have created an experience that so closely mimics the home, that even while on vacation, people only get outside to buy groceries and when they go skiing.
“Now, they eat, light the fire, watch TV, text and web surf, and all in the same place,” he says. “Mom is in the kitchen and dad is watching the ballgame. We’ve completely replicated the experience that they were trying to take a holiday from. And after 4 p.m., no one is responsible for entertaining them anymore. The lift company looks after everything between 8 a.m. and 4 p.m., and after that the guest experience falls flat on its face.”
Whether it is ski weeks, teen dances, special events or even concerts, McCarthy says that the entire ski industry needs to get back to its roots. He cited the days of common tables at dinner, ski instructors who stayed on to socialize with their guests after the lesson, and, especially, the days when ski resorts were focused on doing business for more than just the Christmas holiday and a couple key weekends before the season was done.
“This industry is running at about 80 percent of capacity for only about 60 days a year -- including Christmas and maybe 20 weekends a year,” McCarthy says. “And the rest of the year it has this huge empty bed base. I think our capacity compared to our utilization is embarrassing. Our capital costs and operating structures are built around 60 peak days, and the rest of the season collapses after that.”
McCarthy says that one of the reasons many resorts may be unwilling to try and change the model, is because the majority of those beds and condos were financed using other people’s money -- the cash flow of their wealthy Baby Boomer guests. And those are the people who assumed the debt. “Baby Boomers created the demand for hundreds of thousands of new beds by ski resorts, and the guest financed it,” McCarthy says. “Now we should capitalize on what we already have. These beds are sitting empty, and the areas are not carrying any debt on them. Yet their operational costs are fixed. They could use this asset to increase their return on those fixed costs.”
With so many resorts focused on extracting as much money as possible from each guest while they are on the slopes -- and increasing that return every season, McCarthy says he realizes that part of what he?s proposing is essentially skiing upstream. “Since the industrialization of the North American ski experience, which occurred roughly between 1990 and 2005, there has been increasingly less focus on passion and more focus on profits. And those profits are measured on a daily basis. But even with downward pressure on costs, you can still deliver quality and service. The question of course, is at what price?”
The answer, he says, is capitalizing on what the resorts already own. “Whistler, where I live now, does tremendous business in the spring with events such as Gay Ski Week and the Telus World Ski and Snowboard Festival,” McCarthy says, adding that he has seen numbers that show Whistler doing more business than the entire state of Colorado during the week of April when the area hosts the Telus fest. He says that focusing on similar concepts could not only create a longer season, but also a deeper revenue stream.
“All of the best stuff at the resorts is happening during the off-weeks right now,” McCarthy says. “And it’s paying into those fixed costs, because the money that goes into running the lifts, snowcats, and the people on the mountain at that time has already been figured into the budget for that season.”
By using the off-weeks to create more long-term business for all the resorts, McCarthy says that we will all be better off in the long run. I know if my 16-year-old son meets a girl at one of these events, then they’ll be texting each other for the rest of their lives,” McCarthy says. “And it will be skiing that created that relationship for them. People used to say, “See you again at the same time next season?” But first, McCarthy says, they have to meet each other for the first time. --Peter Kray
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