The Changing Economics of Ski Resorts
The ski resort industry has always faced the same challenge, which is its seasonality. Despite often being in-season for only a few months per year, they continue to generate billions around the world. It’s reported that of 2000 major ski resorts around the world, there are 400 million skiers per year. In just France’s 325 ski areas alone, which are considered to be some of the most attractive in Europe, received over 50 million per year.
It’s clear, though, by looking at ski holiday deals at Esquiades.com, that the industry has remained strong in the face of climate challenges and a post-pandemic world.
It is said that climate change may pose an existential threat to many ski resorts, especially in Europe. A recent report found that 53% of European resorts are at high risk of losing snow cover if global warming reaches 2°C, increasing to 98% of resorts if temperatures rise 4°C. Just in the past couple of years, the French Alps have been left snowless during months where it typically falls.
To combat this, resorts are investing heavily in snowmaking. “In a 2⁰C scenario in the Alps and Nordic mountains, using snowmaking on 50% of resort slopes could significantly restore the supply of snow” according to the study. However, the viability of snowmaking does vary by region.
Resorts are using GIS technology to strategically place snow guns and infrastructure. “With GIS, resort operators can toggle on data layers showing weather trends, temperature predictions, sun exposure, wind, and other metrics to guide snowmaking investments,” explains the report.
But it’s not just about winter. One of the most viable business decisions for many resorts has been to focus on non-skiing activities, such as spas and water parks, which can also be a hit in summer. During summer, there’s the benefit of mild but sunny skies.
Revenue Streams and Industry Consolidation
Vail Resorts is one example of diversifying revenue streams in an attempt to reduce volatility. The company is moving customers away from single-day tickets and towards season passes, which helps provide a more stable income, as well as mitigate weather risks. Customers don’t need to wait until the week before to decide if the weather is right, and it can boost customer loyalty as a result.
Season pass sales have grown at 23% CAGR over the past five years, making them represent 47% of lift ticket and pass revenue. It’s also acquiring other companies to ensure it can share resources better, and adapt in the face of weather problems.
Maximising year-round revenue has become a priority for ski resorts, particularly in the US. 84% of US ski areas now operate in the summer months, and are trying to pivot towards weddings, events, and even festivals. Even in Europe, many resorts on Esquiades.com take bookings in summer months.
Resorts are also offering summer activities like mountain biking, hiking, and ziplining as these align with the mountainous terrain that exists.
While climate change threatens the long-term outlook for many ski resorts, the industry is adapting in a few different ways, from snowmaking to summer activities. Ski resorts that lie on the cusp of warmer climates may be in existential danger, but there are still methods of monetisation.
