Yup, the snow – artificial and natural – is in the mountains again! There are lots of canaries in this economic coal mine, but one that might prove to be particularly interesting (at least visually) may be the U.S. winter sports resort sector – skiing and snowboarding to everyone else. The mix covers the ultra chic upscale slopes in places like Aspen, Vail and Deer Valley to local facilities more generally available to the public. Some are destination resorts, with all sort of extra costs, while others are usually nothing more than a day trip to the participants. Entire segments of our economy derive virtually their entire annual revenues during the winter sports season. And exactly what is expected out there, in a world mired in economic uncertainty, unemployment and vastly lowered expectation, will most certainly be a reflection, socio-economic class by socio-economic class, of how each such segment of society thinks about their well-being, their future and their ability to continue their addictive and very discretionary pleasures.
Last season was the second best on record, according to DailyFinance.com (November 14th), and the big ski resort operators tend to dominate their local economies. But there are mixed numbers when all revenue sources are considered; for example, rentals of private housing at ski resorts last year were still off 10-20% from the previous season. This overall $2 billion industry is made up of mostly the major resorts (about 450 in total), which generates two thirds of their money from usage fees and the balance from food, rentals, lessons and merchandise. Obviously, where you have a destination resort, lodging and meals become dominant. Helicopter rentals anyone? Worried about the season, most of the local operators have lowered room rates, which has apparently attracted an increase from overseas clients (the falling dollar may have helped here as well). The domestic trends have not been set yet.
There is clear pessimism in the air, however: "[S]ome longtime observers of the industry say the economic downturn will weigh on consumers. 'People are still hesitant about spending money on discretionary purchases,' says Dr. Gordon Von Stroh, professor of management at the University of Denver's Daniels College of Business. 'They are downsizing their expectations and pleasures.' And most skiers, he notes, are in their '20s -- a demographic that is 'reeling from lack of employment opportunities.' Meanwhile, another important demographic for the ski industry, families, may also seek more economical forms of entertainment for winter vacations." DailyFinance.com.
Expect lots of competition, particularly if the season progresses without drawing the expected crowds. Weather experts tell us that the best snow will be in the northwest this year, and La Niña may dry out some resorts in other areas (let's hear it for snow-making machines). Expect some super-bargains, even in the priciest skiing villages. Also resort condominium and detached homes are hardly selling well in the current housing crisis; it's hard enough to get a loan on a basic home, much less a trendy second home. Then again, if you work for a bailed out financial institution, your bonus this year should allow you to make an all-cash purchase. Ouch! As the overall nature and scope of the American lifestyle morphs into smaller (the average house sold two years ago was 2,300 sq. ft, and this year it was 2,100), it is clear that "downsizing" is going to impact every segment of our economy for a very long time. This has indeed been a big "reset."