Guest Column: Unintended consequences w/ Diamond Peak?
October 22, 2014
I appreciated reading Steve Pinkerton's article in last week's Bonanza, in which he said, "What I am defending is the need to have a fact-based, objective, inclusive and deliberate dialogue."
In the spirit of assisting in that endeavor, I did what consultants like SE Group do: By phone and on a recent Colorado trip, I discussed the DP plan with a friend knowledgeable about mountain resorts, and with the marketing gurus at Copper Mountain (with many summertime facilities) as well as with the COO of Arapahoe Basin, a smaller resort with not-so-deep pockets that is much more like Diamond Peak. The following is anecdotal, but empirical.
I was specifically interested in two key questions:
(1) What was the revenue stream from "activity-type" operations two years, three years or more out; and
(2) What had been the competitive response from neighboring mountain resorts?
The primary response was that outdoor summertime operations are initially successful but when the novelty wears off for locals and regular visitors, the resorts had to "escalate" their offerings in order to stay competitive with other resorts, engendering more capital expenditures.
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I was also told that, as the competition for summertime dollars heats up, first-mover advantage disappears and proximity to population becomes of primary importance.
This might not bode well; visitors from Sacramento/San Francisco as well as Reno are also marketed to by competitors at resorts along the way to Diamond Peak.
Also, the resorts I spoke to reported that most of their activity-type business comes from conventions, events and groups that typically visit the entire area for five to seven days and spend only a day or two at any one mountain. Those that make a profit at these activities have extensive lodging and entertainment infrastructure beyond their own resorts.
This is likely beyond IVGID's control. If large groups supply most of the revenue, we will need additional lodging. And if visitors stay in Kings Beach, Northstar, South Shore, etc., we're now competing with rival mountains owned by deep-pocketed, publicly traded resorts like Vail
This is not a "build it, they will come" decision.
As we say in the military, "The enemy gets a vote." Or, in this case, "Our competitors get a vote." So we must look beyond, "Is this a great idea or not?" to the "what if" questions.
Before we commit to a large capital expenditure using borrowed funds, we must think two or three moves ahead: seeing DP begin a summer activity build-out, what would we do if we ran Mt. Rose to keep or gain our market share? Squaw? Northstar? They get a vote.
Interestingly enough, we already have a stellar opportunity to attract "event-based" (rather than activity-based) revenue. I think those of us willing to embrace change might want to start there and establish our credibility with existing resources before we move to a larger project.
We have one of the most beautiful views in the country from the deck of Snowflake Lodge. Yet for seven months of the year, from April 30 to November 30, it lies fallow as does, except for employee training and local activities, our new base lodge.
But wouldn't Snowflake be a great spot for "the" iconic wedding photos? With little additional expense, either or both of these facilities could be used for weddings, receptions, parties, off-sites, dining, or academic / educational forums, perhaps in conjunction with SNC.
These events involve no large CapEx like activity facilities do. Our expenses would be limited to upgrades, maintenance, and other small everyday expenditures. Partnering with our lodging partners would reduce marketing expense.
And, best of all, these event-type activities are completely scalable: we can make our event facilities available only when we choose to.
For instance, if the planned summertime road construction is likely to create too much traffic and congestion, we can scale back our calendar for booking events as we choose — in advance.
Perhaps managing the unused facilities we already have, with scalable expenses and a scalable footprint, is a good first step.
Doing so will increase our experience and credibility as managers, while allowing us to assess, and add, activity-based summertime facilities anytime the community chooses to do so.
Joseph L. Shaefer is an Incline Village resident.
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