It’s unlikely that any of the 400+ RCs that recently signed up for the annual ski & snowboard trip to Keystone, CO had climate change on their mind when they booked their registration. However, the topic is no doubt top of mind for Vail Resorts, Inc. which owns the Keystone Resort in addition to many other recognizable U.S. resorts such as Vail, Breckenridge, Beaver Creek, and Park City. The connection between climate change and the ski resort industry is not difficult to comprehend. As the Earth’s average temperature continues to rise due to the impact of GHG emissions, and as weather patterns become more unpredictable, ski resort operators like Vail will encounter significant challenges in an industry that depends so much on cold temperatures and consistent snowfall.
Long term trends point to harmful effects of sustained rising global temperatures on Vail’s business. A recent study of major ski resort towns in Colorado found that on average they are experiencing 23 fewer days below freezing each year than they did in 1980. Additionally, a University of Maryland study found that the U.S. has lost more than a million square miles of spring snowpack in the last decade, decreasing average ski season length by several days and costing ski resorts $1 billion in lost income. As the largest operator of ski resorts in the U.S., Vail is already experiencing the negative impacts of climate change on its bottom line. And the future only looks worse.
Although climate change is not likely to pose an existential threat to Vail in the near term, the same study at University of Maryland mentioned above estimated snowpack decreases of at least 50 percent for Grand, Summit and Eagle counties, and a whopping 82 percent loss in snowpack for San Miguel County by 2085, assuming continued climate change trends. These Colorado counties contain three of Vail Resort’s largest ski resorts. The impact of climate change will also be felt by Vail shareholder’s. A recent analysis performed at Stanford University that looked at how expected changes of winter temperatures in the west impacted Vail’s valuation generated an equity valuation that was 14% lower than when climate exposure was not taken into account. Clearly there is a reason for Vail to take action to mitigate the risks of climate change.
Vail Resorts must consider strategies to shift its business model away from being so dependent on consistent snow and cold. One such strategy is increasing the geographic and seasonal diversity of Vail’s business. Just last month Vail Resorts finalized the purchase of Whistler Blackcomb in a deal that increases the geographical diversity of its resort holdings. In the short term, climate change will play out in a highly localized manner, so geographic diversification will help lessen the impact, but in the long term Vail needs to more aggressively diversify its business. Another way Vail has been adapting its business model to lessen the impact of climate change is expanding its year-round offerings by developing recreational activity options such as dirt biking, mountain biking, ropes courses, zip lines and frisbee disk golf. Through geographic and seasonal diversification, Vail is taking measures that will insulate its earnings from the near and mid-term impact of climate change. But Vail must do more.
Ultimately, Vail must protect the sport of skiing and snowboarding by taking climate change head on through lobbying for policy change and supporting other advocacy efforts. While Vail has a robust program of sustainability efforts across its resorts, the company has historically been soft-spoken about climate change and the company’s role in fighting it. It’s time for Vail to step up. Ski and snowboarding adds over $13B to economic activity annually in the U.S. ($4.8B to Colorado alone), and as the largest Ski Resort operator in the country, Vail holds a unique and powerful position to influence policy. While Vail may be on the sidelines, their customers are certainly not. The skier and snowboarder community is doing what it can to save their sport. Many groups such as Protect our Winters (POW) and The Mountain Impact have formed to advocate for policy changes to curb climate change. Sadly, Vail resorts is nowhere to be found as a sponsor or supporter of these groups. It’s time for Vail to raise its voice in the climate policy debate through direct lobbying and support of advocacy groups because in the long-term, curbing the precipitous climb in global temperatures is the only thing that will save the sport they have built their business on. [750 words]
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