You Can’t Ski Without Snow

Snow sports are feeling the heat

A sport we all know and love during winter break and weekend getaways, skiing, is facing significant pressure from climate change. Since 1970, average winter temperatures in the U.S. have increased by 2.2 degrees Fahrenheit, resulting in proportionate decreases in snow fall[1]. Decreases in snow fall negatively effects the $12.2 billion U.S. snow sport industry that employs hundreds of thousands of people[2] and generates over $3 billion in local, state and federal tax revenue[3]. Ski sites have already declined 36% in the past three decades (i.e., down from 735 in 1984 to approximately 470 today) [4], and in a scenario in which greenhouse gas emissions continue to increase, it is estimated that only four out of 14 major Northeastern U.S. ski resorts will remain profitable by 2100[5].

What does this mean for resorts today? Ski resorts across the country, including Peak Resorts, owner and operator of 14 resorts primarily in the Northeast and Midwest, are struggling to maintain organic growth. At Peak Resorts, particularly exposed to global warming given the lower average altitude of its resort portfolio[6], revenue has declined 5% per year over the past three years[7]. And while Peak Resorts primarily consists of regional day/overnight resorts, there are larger destination resorts (e.g., Vail and Intrawest) situated in towns whose entire economies are dependent on snow fall. In such towns, during periods of warmer weather, airlines experience lower traffic, and restaurants, pubs, gas stations and stores experience fewer sales. The employees of these businesses earn less for their families and spend less, creating downward economic pressure. As a data point, the University of Maryland estimated that the state of Colorado alone would lose $375 million in revenue and 4,500 jobs by 2017 from to skier attrition due to lack of snow[8].

To combat the negative effects of climate change and hopefully reverse its negative revenue trend, Peak Resorts has undertaken multiple efforts[9], including:

  • diversifying its business model to include non-snow-related summer activities such as zip line tours, water parks, mountain coasters, horseback riding, business conferences, camps, and festivals;
  • increasing ski-able terrain;
  • extending the ski season;
  • introducing season passes;
  • investing in high efficiency snow making machines to lower energy costs and a water reservoir to increase snow making capacity; and
  • pursuing an inorganic acquisition strategy – acquired Hunter Mountain in New York in January of 2016

Other resorts in the industry have been even more progressive. Aspen, for example, is powering its snow guns with methane extracted from a local coal plant, and Deer Valley utilizes bio-diesel to power its snowmobiles[10]. Furthermore, ski resorts, brands, and athletes are banding together to create and support advocacy groups such as Protect Our Winters focused on educational initiatives, state and federal policies, and community-based activism geared towards effecting positive climate action[11].

One immediate opportunity Peak Resorts should take advantage of is to participate in the National Ski Areas Association’s (NSAA) Climate Challenge. The NSAA Climate Challenge is a program dedicated to helping participating ski areas reduce greenhouse gas emissions while improving operations via lower energy costs. The Program, which has been in effect for 6 years, requires participating Challengers to take inventory, report carbon footprints, set goals, implement at least one carbon-reduction strategy, and engage in climate change advocacy efforts. In exchange, members receive guidance and tools for implementation, public recognition (i.e., marketing advantages), as well as access to grant money via the Sustainable Slopes Program[12]. While Park Resorts’ participation in the program would just be one effort, it could represent a component of a broader proactive strategy to reduce carbon emissions and help improve the company’s prospects for sustainability and growth.

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[1] https://www.nrdc.org/sites/default/files/climate-impacts-winter-tourism-report.pdf

[2] https://insideclimatenews.org/news/23122015/climate-change-global-warming-imperils-winter-ski-industry-frets-el-nino

[3] Southwick Associates. The Active Outdoor Recreation Economy (2006), Accessed Sept. 11, 2012

[4] Oppenheimer Research, Peak Resorts, Initiation Report, 2014.12.16, page 5

[5] Mote et al. (2005). Bulletin of the American Meteorological Society 86: 39-49

[6] Macquarie Research, Peak Resorts, Spinning plates hoping for good snow, 2015.7.25, page 5

[7] Peak Resorts 2016 10-K

[8] http://cier.umd.edu/climateadaptation/Colorado%20Economic%20Impacts%20of%20Climate%20Change.pdf

[9] Oppenheimer Research, Peak Resorts, Initiation Report, 2014.12.16, page 2

[10] https://www.outsideonline.com/1930841/how-ski-resorts-are-fighting-climate-change

[11] http://protectourwinters.org/

[12] http://www.nsaa.org/media/274957/2016_Climate_Challenge_Annual_Report.pdf

 

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4 thoughts on “You Can’t Ski Without Snow

  1. MH, the struggle is real for ski resorts across the world, and there is only so much that these resorts can do. Skiing is already an expensive pastime, and if these resorts were to increase prices (lifts, tickets, accommodation, etc.) to offset the lost volume, one can assume that volumes will continue to decrease, contributing to the “downward economic pressure” you mention in the post.
    One of the methods to combat the effects of climate change that you mention is to increase ski-able terrain – do you know if that involves clearing trees / forests to do so? If so, that would seem counterintuitive to improving its sustainability; short-sightedness at best.
    Although methane-powered snow guns are innovative, skiing on “snow” from these machines does not compare to the real thing. I do not know what the solution is – I think that ski resorts probably have it the toughest when it comes to climate change – but more needs to be done to protect these incredible destinations. Thanks for contributing to the conversation.

  2. MH, great synopsis of the issues facing ski resorts! One avenue that would be interesting to explore is building new ski areas. Obvious the upfront costs of ski resorts are huge, but I think looking at a more distributed model where one hub servics more (currently undeveloped) terrain. Costs would be a huge concern now but if US ski resorts cease to exist in 40 years then there may be a situation where that type of model could become economically viable. I’d be curious to see how international ski resorts are facing the issue as well.

  3. MH, this issue is near and dear to my heart and you’ve done a great job outlining the issues ski resorts are going to need to work to overcome in the coming decades. While this is definitely becoming an acute issue for ski resorts in the northeast right now, ski areas in Colorado aren’t immune to this either, and Tahoe in California has been crushed the last couple of seasons by low snowfall related to the drought. While participating in the National Ski Areas Association’s (NSAA) Climate Challenge as you suggested is a good idea, I’m not sure it will have a material effect on the long-term trend of decreasing snowfall. As you mentioned, I think the best path forward for ski resorts, unfortunately, is diversifying their business models toward non-snow related activities.

  4. MH, thanks for writing on this – as a skiier, it would be devastating to imagine the rockies without snow.

    A few ideas came to me while reading this. I agree with Gregor and Phil that it seems like these existing resorts have few options, and should consider diversifying outside of non-snow related activities. I have been lucky enough to spend some time in deer valley in the summer, and while I missed the snow, I still appreciated the town and mountains.

    Skiing, if it’s to continue as we know it, will ultimately have to move to colder locations. There are a ton of challenges with starting new ski resorts. Most mountain regions are less accessible and ski resorts as we know it are incredibly capital intensive to build. But a few regions have begun development! According to this article in Powder Magazine, “Russia’s Prime Minister Dmitry Medvedev is developing Siberia as a winter tourism destination” – perhaps you can go join Trump skiing there?! [1]

    [1] Read more at http://www.powder.com/stories/classics/deep/#xpTG2BwhKiR3wofy.99

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