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There are few sports as expensive as skiing.
A daily lift-ticket alone typically costs more than $100 with top resorts, such as Vail,
charging up to $209 for a day’s skiing.
It’d be easy to call this a rip-off.
After all, all those $209 are getting you is access, along with thousands of other people,
to one of 32 lifts between the hours of 8:30 am and 3:30 pm.
Does it really cost that much for a resort to run a few lifts?
Well, the short answer is sort of.
Ski lifts are a simple enough concept.
With the most common design, chairs, each with a capacity between one and eight, are
connected to a continuously rotating cable, pulled by motors at the top or bottom of the
lift.
Between all the redundancies and safety systems, though, they end up being fairly complex machines,
and complex means expensive.
While it varies wildly depending on length, capacity, specifications, and location, costs
for the construction of a new lift alone regularly reach $10 million, and most large ski resorts
have dozens of lifts.
In Vail’s case, once again, they have 32.
That means that, even if they were all the kinds of lifts that cost $10 million, which
they’re not, that would total to $320 million.
Those $320 million are divided by a lift lifespan of a few dozen years, then divided further
by the hundreds of thousands of yearly visitors who are each paying up to hundreds of dollars
per day, and you can start to see pretty quickly that it is not because of building lifts that
skiing is expensive.
The paradox of ski resorts is that buying and installing ski lifts, which are their
primary physical assets, only represents a small proportion of their costs.
Actually running ski lifts is trickier, but for a slightly unexpected reason.
Between working the line, scanning tickets, helping riders load, and manning the terminal
to stop the lift in case of an accident, a good number of workers are needed to operate
each lift.
Then, when you add in all the restaurants, ticket sales, rental shops, stores, hotels,
activities, and everything else a large resort has, it needs thousands of employees, but
getting such huge numbers of workers is quite tough.
The nature of the majority of these jobs is that they’re low-wage and seasonal.
That means that a resort needs to find a subset of people who are willing to move to the mountain
for five or six months and work for not much.
There are not many people who want to do that and, among those who are, they're typically
young people who will only work a season or two before entering a longer-term career.
Running a ski resort is an enormous and never-ending recruiting mission and many are unable to
fill all their positions, even when touting significantly better benefits than most other
entry-level jobs, at least in the US, like healthcare, transit passes, 401k’s, and
free ski passes.
This labor scarcity has pushed wages up for ski jobs, but even with higher wages they
run into another issue—housing.
The nature of the ski resort economy is that the towns that ski resorts are in need to
be able to accommodate a seasonal doubling or tripling or quadrupling of their population.
Couple that with the fact that resorts tend to be nestled in the mountains where there
is little flat or semi-flat land where one can build cheap housing, and the urban geography
of these areas is wacky.
Take the example of Aspen.
Aspen is home to four ski areas, all operated by the Aspen Skiing Company, and therefore,
in the winter, the greater Aspen area is also home to thousands of seasonal workers.
Many of these workers are paid the company’s base wage of $13.50 an hour, however, Aspen
also happens to be one of the world’s most expensive real estate markets.
The reason for that is, as usual, a byproduct of supply and demand.
Housing supply is quite low as the town is nestled at the end of a mountain valley with,
in the winter, only one road in or out.
Housing supply for small apartments is even lower.
The average price per square foot of a home in Aspen is nearly $1,700.
In comparison, in Manhattan, New York, it’s under $1,400.
Of course, no matter how much they pay, Aspen Skiing Company isn’t going to get workers
unless they have somewhere to live.
While prices decrease as one descends down-valley, for the most part, there would be no chance
of housing thousands of low-wage workers using the free market, so Aspen Skiing Company’s
solution is to provide subsidized employee housing at prices that all their workers can
afford.
So, while a ski resort may be able to pay their employees $13.50 an hour, their employees
cost them quite a bit more than that.
There is, however, another unique byproduct of the ski-town labor market.
The masses of seasonal workers often don’t bring cars with them, so they need ways to
get around.
Now, the US is not known for its public transportation systems, and it’s known even less for its
rural public transportation systems, but American ski towns are often an exception to this.
Many have public-transportation systems that rival those of big cities.
Colorado, home to many of the US’ most popular ski resorts, leads the nation in terms of
ridership on its rural transportation systems.
Of these, the system with the highest ridership is Aspen’s, with more than 5 million passengers
per year.
That’s remarkable for a town of 7,000, even though the system extends far beyond, and
its core routes have busses every 12 minutes or more—again, rivaling many routes in big
cities.
This system, much like those of all of Colorado’s ski towns, is crucial to get workers in and
out of the area and it represents the symbiotic relationship ski resorts and the towns they’re
located in often have.
Ski resorts need their ski towns to set themselves up in a way that’s accommodating for their
workers and guests, while ski towns need ski resorts in order to stay ski towns.
But here’s something strange: most big ski resorts, at least in the US, don’t actually
own the land they operate on.
It’s government land, and the resorts only hold permits to use the land.
This means that the land upon which one skis is public land and so, with some restrictions,
anyone can use the land regardless of whether or not they have a lift ticket.
At American resorts sitting on US Forest Service land, of which there are 122, people legally
can and do hike uphill and then ski down without a pass.
Therefore, technically, what the resorts are selling is access to the lifts themselves,
not the mountains.
Despite this, though, people obviously wouldn’t pay to ride those lifts up unless the skiing
down was good, so resorts spend huge amounts of money building and maintaining the downhill
runs.
Some of this only needs to happen once a year, like trimming any trees trying to grow in
the middle of runs in summer, while some needs to happen every night.
Snow quality can vary a lot and, without attention, can get bad quickly, so therefore, every night
snowcats go out to groom the easier and more frequented runs.
But sometimes, grooming isn’t enough to keep snow quality good.
Sometimes, there just isn’t enough snow.
The one solution to that, aside from waiting, is snowmaking.
There are many different designs of snow guns but they all essentially work the same way—they
spray out tiny droplets of water that quickly freeze.
Of course, that still requires temperatures to be below freezing, but this is common at
nighttime in even more temperate areas.
Some resorts, especially smaller ones in warmer locations, rely almost fully on artificial
snow, while larger resorts use it to extend their season or build up snowpack on high-use
areas.
There are, though, disadvantages to this.
From the ski resort’s perspective, the main one is that it’s hugely expensive.
Constructing a system over a vast mountain area is expensive, sourcing the large quantities
of water needed is difficult, and then the process itself is extremely energy intensive.
Exact costs vary, given the number of variables involved, but in general, snowmaking enough
to cover an acre of terrain costs an average of $5,000.
That means that, to fully cover one of the largest resorts, like Whistler-Blackcomb,
in snow, it would cost more than $40 million, and of course, all of that can melt in a few
warm days.
In practice, though, none of the larger resorts rely so heavily on artificial snow, at least
right now, but snowmaking still represents a huge cost for resorts large and small.
The snowsports business is, understandably, one of the most threatened industries by climate
change and the rising temperatures it can bring.
Now, the projected effects of climate change on mountainous areas are complicated.
It’s not as simple as saying that temperatures are going to be higher and therefore it will
snow less.
In some places, the change in global climate will actually bring more precipitation and
therefore more snow.
In most, though, it’s the opposite.
Lower-altitude and more southern resorts especially will see their season lengths shrink and shrink
and shrink.
Eventually, at many of these, the number of days they stay open will not be enough to
pay the bills, especially as the use of expensive snowmaking increases.
Higher-altitude and more northern resorts will actually likely benefit from this, at
least in the short-term, as more people travel to them faced with fewer alternatives.
Looking at what’s to come, the industry has become cognizant of the storm ahead and
started to make changes to address its primary threat.
While some are physical changes—like building more snowmaking capacity—most are changes
to the way they do business.
Money can overcome nature, at least for a while, so what they're doing is making sure
the money’s still coming in.
Consequently, the North American ski industry has seen massive consolidation in recent years.
This trend only started in earnest five years ago when Vail Resorts, the company that owns
Vail, went on a spending spree.
In 2015, the company owned 11 resorts.
Now, five years later, they own 37.
The link this has to climate change is that now, Vail Resorts, which is a public company,
has properties spread out across different climates so, for example, if there’s a bad
snow year in the Rockies, they always have properties in British Columbia, where the
snow might be better.
They even own resorts in Australia so Vail spins lifts somewhere on earth nearly year-round.
Not to be outdone, Aspen Skiing Company, which runs the four famous Aspen-area resorts, teamed
up with KSL Capital Partners, a private equity firm, in 2018 and formed a joint venture to
compete against Vail: Alterra Mountain Company.
Alterra now owns a more modest 15 resorts across the US and Canada.
With the resorts they own and partner with, both of these companies released offerings
that are changing the financial formula of the ski industry.
For Vail, it’s the Epic Pass; for Alterra, it’s the Ikon pass; but for the both of
them, these are essentially season passes that, instead of working at just one place,
work at dozens of resorts worldwide.
This is a killer competitive move against independent resorts since, in many ways, these
are better for the consumer and better for the company.
The consumer gets variety and flexibility at prices not much different than single-resort
season passes, while the companies are selling more season passes which is exactly what they
want.
That’s because season passes hedge risk.
Even though they’ll make more money in a day from someone buying a single-day pass,
those buying those day passes are highly weather dependent.
If there’s tons of snow, they’ll sell tons of day passes, if there’s little snow,
they’ll sell barely any.
Nobody wants their quarterly earnings reports to depend too much on the weather, especially
as it’s getting worse, and so, by getting more of their customers onto season passes,
which are typically sold before the start of the season when there are few indications
of the season’s snowfall, the consumer is sharing the risk with the company, and revenue
variability year-to-year will lower.
This is a crucial shift for the ski companies as year-to-year snow variation is expected
to only pick up.
So, in all, the real shift the ski industry is having to make is not how they run their
slopes, but rather how they make money.
For them, while they still might lobby, fundraise, and rally against it, they’re now a point
where reality is imminent, and climate change is all but another component of their financial
plans.
If you want a little bit more of the action side of snow-sports, and a little bit less
of the business side, believe it or not, Curiosity Stream has something for you to watch next.
The series, “Jeremy Jones: Higher,” follows professional snowboarder Jeremy Jones as he
attempts to be the first person to snowboard down sections of the Himalayas, and shows
everything that goes on behind the scenes of an expedition as huge as that.
This goes to demonstrate just how diverse the selection of non-fiction shows and documentaries
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