Mud Skiing: Vail’s Race to save its Winter Sports Business

How does a ski resort reduce its carbon footprint when its increased dependency on energy is a direct result of climate change?

 

 

Global climate change threatens to destroy the ski industry’s most “flakey” asset – snow. As average global surface temperatures continue to rise, ski resorts in the traditionally snow heavy regions of the northern United States are not only experiencing warmer winter months but also more variable snowfall.[1] Between 1999 and 2010, the US winter tourism industry lost approximately $1 billion in revenue due to below average snowfalls.[2]

To overcome these natural snowfall deficits and attract customers, ski resorts must increase their energy usage largely through snow making, which can account for up to 50% of a resort’s energy costs.[3] How then does a ski resort reduce its carbon footprint when its increased dependency on energy is a direct result of climate change? Vail provides an example of how one ski resort company is attempting to overcome diminishing snowfall while increasing its sustainability efforts.

Snowball Effect

At current carbon dioxide concentration growth levels, global temperatures are expected to rise by 6.7 to 14 degrees Fahrenheit.[4] At these temperatures, snow depths would decline at least 25 percent (and potentially up to 100) in the western United States.[5] Unfortunately, while overall snowfall levels are declining, warmer air allows for increased evaporation levels in the atmosphere, resulting in changing rainfall patterns across the world.[6] For example, California experienced its driest year in 2015, while New York had record snowfall.[7]  These fluctuating snowfalls make it more difficult to overcome the tragedy of the commons inherent in climate change since not all resorts feel reoccurring pain of little snow. In 2010, the National Ski Areas Association (NSAA) surveyed national ski areas, which highlighted that only 10% of respondents had completed a study of their own carbon footprint although 80% wanted to address climate change.[8] Nevertheless, Vail Resorts has promised its shareholders to focus on sustainability through reduced energy consumption targets, starting with a 10 percent reduction between 2008 and 2011 and “The Next Ten” by 2020.[9]

Battling the Storm

Vail’s “The Next Ten” campaign to further reduce its energy usage by an additional ten percent, focuses on two of the three main drivers to reduce carbon emissions: energy efficiency and renewable energy utilization.[10] At Vail Mountain (Vail Resorts owns nine other ski areas across the US), the company has invested $3 million in the last five years across the following sustainability efforts:[11]

  • Grooming technology: Vail’s grooming fleet now has upgraded GPS tracking technology, which provides real time data to operators, reducing idle time and increasing acres/gallon groomed. The groomers also have snow depth sensors, which are utilized to more effectively decide which ski trails require snowmaking.
  • Snowmaking compressor: the mountain replaced seven compressors with a single $500,000 snowmaking compressor, which saves 1.2 million kilowatts hours annually.
  • Solar power: with 300 days of sun, Vail also installed 42, 200-watt solar panels at one of its restaurants, developing an 8.4 kilowatt system.

(G)room for Improvement

Vail’s sustainability program, nevertheless, does not include the third required action for reducing carbon emissions: changing land use and management.[12] While Vail is not continuously destroying forests, the company has not come out in support of limited development of nearby lands, not wanting to limit its future growth.[13] If Vail is serious about limiting its carbon footprint, then it should consider limiting its expansion through the destruction of forest as well.

(770)

[1] The Natural Resources Defense Council, “Climate Impacts on the Winter Tourism Economy in the United States” (PDF file), downloaded from NRDC website, https://www.nrdc.org/sites/default/files/climate-impacts-winter-tourism-report.pdf, accessed November 3, 2016.

[2] Environment Leader, “Ski Resorts Call for Climate Change Policy,” http://www.environmentalleader.com/2013/05/31/ski-reports-call-for-climate-change-policy/, accessed November 4, 2016.

[3] NRDC, “Climate Impacts on the Winter Tourism Economy in the United States.”

[4] Henderson, Rebecca, Reinert, Sophus, Dekhtyar and Migdal, Amram, “Climate Change in 2016: Implications for Business,” HBS N.2-317-032 Boston: Harvard Business School Publishing, 2016), p. 3.

[5] NRDC, “Climate Impacts on the Winter Tourism Economy in the United States.”

[6] Ibid, p. 4.

[7] Ibid.

[8] The National Ski Areas Association, “Sustainable Slopes Annual Report 2016” (PDF file), downloaded from NSAA website, https://www.nsaa.org/media/249756/2015Sustainable_SlopesARFinal_Version_docx091015.pdf, accessed, November 3, 2016.

[9] Vail, “Sustainability,” http://www.vail.com/mountain/environment.aspx#/EnergySavingsTab, accessed November 4, 2016.

 

[10] Henderson, Reinert, Dekhtyar, Migdal, “Climate Change in 2016: Implications for Business,” p. 6.

[11] Vail, “Sustainability.”

[12] Henderson, Reinert, Dekhtyar, Migdal, “Climate Change in 2016: Implications for Business,” p. 6.

[13] Briggs, James, “Ski Resorts and National Forests: Rethinking Forest Service Management Practices for Recreational Use,” Boston College Environment Affairs, 28, no 1 (2000) via Boston College, accessed November 4, 2016.

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10 thoughts on “Mud Skiing: Vail’s Race to save its Winter Sports Business

  1. Another initiative the resort could take may be to recycle the wood that they cut to create ski courses to lodges and other wooden artwork.

  2. With the understanding that snow sports are the primary attraction for the winter through spring season at Vail, is the resort taking any steps to promote its alternative offerings (i.e spa packages, nature walks) or its summertime season in order to alter consumer behavior and decrease its dependence on sufficient and reliable snowfall?

  3. I find this post interesting because it’s a case in which the environmentally friendly steps being taken are likely to result in tangible cost savings for the company. The steps will also require a substantial upfront investment in many cases to reap these cost savings later. I am impressed that as a public company, Vail Resorts is able to take a longer term approach to its own energy consumption.

  4. I am curious about the magnitude of the impact of reduced snowfall on ski resort revenues. Even if resorts produce enough fake snow to compensate for trail closures, how much income can it recoup? Given that snowmaking drives 50% of energy costs, it seems unlikely. Could Vail build out more solar power facilities to power its snowmaking in addition to its restaurant/overhead? In the long run, should skiiers support ski resorts that are located in geographies requiring extensive snow-making, or should skiiers shift their preferences towards naturally colder / higher precipitation locations where the energy consumption would be lower?

  5. What I find interesting about Vail’s response is that they seem to be making smart, operationally-driven decisions that would benefit them with or without climate change, and that climate change has actually provided a positive impetus to Vail to re-examine its processes in order to optimize them. It seems the potential risk of this approach is that Vail is driven primarily by a cost-cutting motive, and is therefore not thinking about its larger contributions to the climate issue like deforestation.

  6. Firstly, excellent puns throughout. Secondly, in relative terms, ski resorts putting in place reducing their carbon footprint will have negligible effects on our global climate due to their lack of size and resource. However, they are so fundamentally dependent on the current (or previous) climatic conditions. Should they put in place these costly measures, when reducing your climate footprint is so costly, instead of delaying it until it becomes more cost-effective? And if so, are they doing this purely for perception?

    This comes back to the discussion of who should lead the way in reducing our global carbon footprint. Should all nations, regardless of wealth and GDP, and all companies, regardless of relative size of footprint, contribute equally?

  7. As you’ve stated, snow-making requires a significant amount of energy, which is is both costly for the resort and bad for the environment. An initiative Vail Resorts could take to reduce the need for snow-making is to either shorten the season or to close more slopes. I doubt Vail would want to shorten the ski season, since that would lead to a significant loss of revenue, but perhaps Vail would be willing to close more slopes in the beginning and end of the season. Even if Vail weren’t able to offer great skiing in the beginning and end of the season, perhaps they could focus on developing other activities around the resort to keep customers satisfied (and to potentially earn additional revenue). For example, if Vail were to host major concerts or film festivals (like Sundance) during those warmer weeks, perhaps Vail could continue to attract skiers who would buy ski tickets but wouldn’t require excellent conditions to have a good time and want to come back.

  8. In the grand scheme of climate change, the impact of emissions from resorts like Vail is virtually negligible, so while it is an admirable effort, the benefit beyond operational efficiency gains is effectively zero. What these resorts need to be doing is 1) scouting locations that will continue to support winter recreation with a changing climate and 2) diversifying activities into the summer season. The climate is not just warming, it is also shifting, so changing precipitation patterns could see increased snowfall in places that previously had very little. Vail should be engaging with climate scientists to identify those regions and specific valleys and aspects that will be the new lords of pow and moving in advance to secure development rights. They should also continue to push summer months, including festivals and cultural events, to satisfy current homeowners and to continue to sell real estate, the true essence of their business.

  9. This is a very topical post, Katt. As an avid skier, I have fallen victim to shortened seasons in Vail. I opted to rent equipment in mid-December rather than using my own because I did not want the protruding grass and rocks to damage my skis. Climate change is absolutely detrimental to Vail Resorts’ business model. However, the company (and others like it) are uniquely situated to raise awareness. Many of the world’s most senior business leaders spend their winters skiing in Colorado and Lake Tahoe. The company should utilize its position to raise awareness about the negative effects of global warming on ski season in traditional areas, while simultaneously scouting new areas that will benefit from “new-norm” weather patterns (as Drew F outlined above). Further, Vail resorts should work to utilize big data and better predictive computing to optimize its artificial snowmaking, as outlined in the article below:

    http://mountaintownnews.net/2016/03/15/which-ski-areas-might-actually-win-as-a-result-of-rising-temperatures4177/

  10. You bring up a great point that climate change is causing somewhat unpredictable weather extremes, which can skew perceptions about whether climate change is even a problem. To your point regarding the record snowfall in New York City, a certainly lived in Manhattan through all of that snow, and I distinctly remember comments such as “wow, it’s so cold and snowy, we don’t need to worry at all about global warming!” It appears to be largely an awareness and education issue, and while trends are quite clear in the long run, short term fluctuations can be very misleading.

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