Skistar: the impact of climate change on ski resorts

How is climate change impacting Skistar, a ski resort operator in Scandinavia, and what are they doing about it?

The impact of climate change

For Skistar, an operator of ski resorts across northern Sweden (in Sälen, Åre and Vemdalen), Norway (in Hemsedal and Trysil) and Austria (in St Johann) [1], winter season is the busiest time of the year. The company, which ends its fiscal year in August, reported in 2017 that 54% of its annual Sales and 124% of its annual Net Income were generated during only three months: December, January and February (Skistar makes a loss during the remainder of the year) [2]. With 61% of Sales generated from ski passes, rental and school [3], Skistar is highly dependent on a steady supply of snow during the entire ski season to deliver its customer promise.

Climate change poses a significant threat to Skistar: a warmer climate reduces the natural snowfall and causes snow to melt faster, leading to potentially fewer revenue-generating days for the company. For example, the number of days (per year) with snow cover in the Södra Norrland region (where Skistar’s flagship Åre resort is located) has been steadily declining over time. Between the 1950s and the mid-1990s, the average days with snow cover was consistently ~160, but in recent years, this number has dropped to ~130 [4], thus narrowing the window during which Skistar is supplied with natural snow. Forecasts by the Swedish Meteorological and Hydrological Institute indicate that this number will continue to decline [5].

With climate change, regional weather patterns during the winter season are also likely to become more unpredictable [6]. This poses a challenge to ski resorts, such as Skistar, which risks not only bare slopes, but also disappointed customers who are unable to change their holiday plans last minute.

Responding to climate change

Skistar is adapting to climate change in several ways. In the short term, its main focus has been on supplementing natural snow supply with artificial. Continuous efforts have been made to develop the capacity of its network of snow cannons (machines that convert water into artificial snow). For example, during 2015/2016, Skistar invested in new snow cannons at its Åre resort, and upgraded the ones at its Sälen resort [7].

However, snow cannons require significant amounts of energy and water to function. To this end, Skistar recently sought permission from local authorities to pump higher volumes of water from rivers close to its ski resorts, in order to increase the capacity of the snow cannons. In Åre, the company is aiming to increase its annual consumption from 2 million to 3.2 million cubic meters of water from the nearby Åre river [8].

To accommodate for the increasing unpredictability in regional weather patterns that customers face, Skistar also offers a “Snow Guarantee”, guaranteeing skiers a refund or re-booking if Skistar is unable to provide a satisfactory skiing experience [9].

Over the medium term, Skistar is diversifying its operations to reduce the dependency on winter season in Scandinavia. In recent years, the company has upgraded its resorts and expanded their offering of summer attractions to attract visitors during off-season, for example launching adventure parks and mountain-biking trails [10]. Moreover, through the acquisition in 2016 of the St. Johann resort in Austria, Skistar has expanded its geographic presence beyond Scandinavia [11].

Recommendations

In addition to the short-term actions outlined above, Skistar’s management could consider alternative methods to ensure a steady supply of snow, especially since the broad use of snow cannons consumes significant amounts of water and energy, thus causing further environmental stress. Recent research has shown that large volumes of snow can be effectively stored between winter seasons by covering it with for example sawdust (of which there is plenty of supply in Northern Sweden given a sizeable forestry industry) [12].

Over the medium term, Skistar should accelerate its efforts in expanding and upgrading the off-season products. Although the company has certainly begun this process, more should be done. For example, Skistar could consider other recreational activities such as running, hiking and golfing to attract additional visitors during the spring, summer and fall. Ensuring revenue streams that are diversified across all four seasons is key.

Open questions

  • How can Skistar collaborate with other ski resorts to address the industry-wide impact of climate change?
  • Are snow cannons, which require significant amounts of energy (and water) and further contribute to climate change, an appropriate response to address the effects of a warmer climate?

 

(Word Count: 723)

 

[1] Skistar AB. “Our destinations.” https://www.skistar.com/en/About-SkiStar/, accessed November 2017.

[2] Skistar AB. “Financial statistics.” https://www.skistar.com/en/Corporate/investors/financial-statistics/, accessed November 2017.

[3] Skistar AB. “About Skistar.” https://www.skistar.com/en/Corporate/About-SkiStar/,  accessed November 2017.

[4] Swedish Meteorological and Hydrological Institute. “Klimatindikatorer.” https://www.smhi.se/klimat/klimatet-da-och-nu/klimatindikatorer/klimatindikator-antal-dagar-med-snotacke-1.91081, accessed November 2017.

[5] Kihlberg, Jannike. “Skidorters behov av snö krockar med naturvärden.” Dagens Nyheter, January 22, 2016. https://www.dn.se/nyheter/sverige/skidorters-behov-av-sno-krockar-med-naturvarden-1/.

[6] Weakley, Cat. “Climate change research predicts 70 per cent less snow in Alpine ski resorts by 2099.” The Telegraph, February 21, 2017. http://www.telegraph.co.uk/travel/ski/news/climate-change-research-predicts-70-per-cent-less-snow-alps/.

[7] Skistar AB. 2015/2016 Annual Report. https://vp042.alertir.com/afw/files/press/skistar/Annual_report_2015-16.pdf, accessed November 2017.

[8] Kihlberg, Jannike. “Skidorters behov av snö krockar med naturvärden.” Dagens Nyheter, January 22, 2016. https://www.dn.se/nyheter/sverige/skidorters-behov-av-sno-krockar-med-naturvarden-1/.

[9] Skistar AB. “Snow guarantee.” https://www.skistar.com/en/About-SkiStar/Snow-guarantee/, accessed November 2017.

[10] Bergman, Petra. “Klimatförändring hotar svensk skidturism.” Sveriges Radio, December 21, 2009. http://sverigesradio.se/sida/artikel.aspx?programid=83&artikel=3322382

[11] Skistar AB. “History.” https://www.skistar.com/en/Corporate/About-SkiStar/History/, accessed November 2017.

[12] Luleå Tekniska Universitet. “Lagring av snö är framtiden.” https://www.ltu.se/research/subjects/Geotechnical-engineering/Nyheter-och-aktuellt/Lagring-av-sno-ar-framtiden-1.160070,  accessed November 2017.

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6 thoughts on “Skistar: the impact of climate change on ski resorts

  1. I think this is a great essay! Ski resorts which are significantly affected by climate change, are not limited to Sweden but also include other countries. In my opinion, Skistar developed an adaptation strategy for changing climate conditions instead of developing a sustainable solution because it tried to minimize the effect of climate change on its income statement not on temperatures. Indeed, it also contributed to climate change with its snow cannon solution and we can say that Skistar created a vicious cycle, where the solution of a problem provokes the problem. I agree that ski resorts should create some initiatives to preserve commercial sustainability, but a more long-term solution would be creating an awareness campaign with other ski resorts and educating their customers about global warming. Moreover, I believe that energy and water consumption of snow cannons can also be improved in collaboration with manufacturers and more environment friendly designs can be developed. For example water used in snow cannons can be recycled or electricity need can be met with wind turbines.

  2. Great topic KZ, I think you hit the nail on the head. While snow cannons may temper the impact from shortened winters and periods with less snowfall, they are not the long-term solution (they are expensive, resource intensive, etc.). As global warming progresses, operators (specifically, in lower altitude areas) will still be left “catching a falling knife.”

    As you noted above, I believe diversification is the only real long-term solution for these operators. When I say diversification, I’m thinking of two actions:

    (1) purchasing higher-altitude locations which have a much longer runway for snowfall and should benefit from the constricting supply in the industry (i.e., fewer viable ski mountains should drive more traffic at the viable locations)

    (2) Introducing more attractive “off-season” activities (e.g., zip lining, mountain biking, golf courses, spas, etc.) to drive traffic. This sort of diversification is happening across the entire value chain. For example, many ski and snowboard manufacturers are now leveraging their manufacturing skills to produce surfboards/skate boards (i.e., Mervin Manufacturing)

    I fear that regardless of the initiatives that are implemented, it will be almost impossible to replicate the revenues/profitability of a successful ski operation. Ski operators may be forced to accept the current trends as the “new normal.”

  3. Ken,
    Fabulous essay-very intuitive but challenging problem for the industry. To your first question, unfortunately it seems that snow-making machines won’t be the answer. While I agree it’s somewhat hypocritical for the resorts to utilize these climate change accelerants, I would argue that their impact is minor given the size of the resorts. However, an even larger disincentive is that they’ll simply be unprofitable. As you mentioned, they are quite expensive and resource-intensive to operate, and as other resorts are learning painfully, as temperatures continue to rise, the artificial snow will melt faster and faster, further weakening the efficiency of production [1]. Ultimately, I feel the likeliest answers are to head for higher ground or prepare for life as a full-spectrum resort.

    http://www.wbur.org/news/2017/03/15/ski-mountains-climate-change

  4. Thanks Ken. Very relevant article right now on a real issue that most ski resorts around the world are attempting to address. Something that ski resorts in the American West are doing to combat the problem is banding together to leverage their collective voices to change state and federal policies. The larger ski resorts such as Aspen and Vail have been using sustainable practices such as using methane from coal plants to power its snow guns, and running snow cats on bio-diesel, but the smaller ski towns do not have the capabilities to do so, and when they lose ski traffic, they lose corresponding tourism revenue that they rely heavily on. By joining forces with each other, smaller towns can target legislation from a unified front and focus on things like water quality, forest health, and new business plans, in an attempt to keep skiers coming back and deal with the environmentally unfriendly measures imposed as a result of the lack of snow.

  5. This is a very difficult challenge for the ski industry, and it brings up some moral ambiguity when it comes to climate change. As mentioned in the article and subsequent responses, the most readily available fix for the impacts of climate change is creating artificial snow. Obviously, this increases energy and water consumption and further contributes to climate change. However, I would argue it is worth examining how significantly manufacturing artificial snow actually contributes to climate change. Compared to industrial nations’ outputs, I would estimate that ski hills contribute a relatively small amount. So is it better to scale back operations and make a small contribution to reversing climate change, and negatively impact the jobs and societal enjoyment that come with it? Or do the jobs and outdoor activity matter more?

  6. Great article, Ken. Enjoyed reading it.

    I’m afraid that ski-resorts will just have to accept the changing weather patterns as the new normal and diversify operations into other activities to maintain current profitability. Also agree with your point about the irony in manufacturing artificial snow – it is a short term solution. Also, ignoring the environmental impacts of that solution, I also question it’s effectiveness in bringing in the same customer base. All this is to say that times are a changing for the ski industry.

    Lastly, one other potential solution could be to introduce night time skiing during the peak seasons to maximize profits for the resorts that don’t have it already.

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