State of the Lake Tahoe ski industry: ‘This is our time’
November 1, 2011
LAKE TAHOE – Lake Tahoe has always been entangled in a wrestling match between ski industry growth and local community interests – and now more than ever, as millions in resort upgrades are under way heading into the 2011-12 ski season.
Vail Resorts is nearing completion of $30 million in resort improvements at Northstar-at-Tahoe. Across the way, Squaw Valley Ski Holdings – which now runs both Squaw Valley USA and Alpine Meadows following September’s historic combination of the neighboring resorts – is embarking on a five-year, $50 million renovation at Squaw, host of the 1960 Winter Olympics. And even more change could come if JMA Ventures’ multi-million proposed renovation of Homewood Mountain Resort gains approval.
An industry term is “yield per skier,” which designates how much each skier spends not only on the lift ticket, but associated amenities such as merchandise, food and lodging. Those on the business side of the ski resort organizational structure are consistently trying to augment this number. Conversely, local government and residents are in a constant struggle to ensure the yield is channeled toward local jobs, public projects and local business revenues while allowing for sustainable traffic levels and environmental preservation.
The continual back-and-forth is a lot to take in, as often it’s the community members struck by the dramatic changes who are unfortunately stuck in the middle.
Andy Wirth, CEO of Squaw; Bill Rock, general manager of Northstar; and Art Chapman, president of JMA Ventures, spoke about the current state – and transformative future – of the Lake Tahoe ski industry during last Thursday’s annual North Lake Tahoe Chamber of Commerce luncheon. They described the changes as not only necessary for the future of Tahoe, but as trend-setting to earmark the region as one of the best ski destinations in North America.
“Really, the three of us represent ground zero for the most innovative, interesting and expensive developments in North America, probably this year and definitely and hopefully in the years ahead,” Rock said.
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Before the major resort acquisitions started happening (Vail bought Northstar in October 2010; KSL Capital bought Squaw a month later) and improvements were announced, Wirth said in-depth visitor research was done and potential impacts to the region analyzed.
“This is our time in North Lake Tahoe – it’s our time on a much bigger scale,” he said.
Optimism for change is not shared by all. Nina Pivirotto, 24, came from Pittsburgh after graduating college to live, work and play in the outdoor recreational Mecca that is Lake Tahoe. She is, in many ways, a typical Tahoe resident – young, educated, but willfully eschewing the big city rat-race, the corporate ladders and rush to procure the corner office.
Like some, she prefers ski small resorts like Homewood – in its current state – with traditional lifts and absence of hotels or retail outlets.
“Nobody wants to see the corporate world take over Tahoe,” she said in an interview earlier this year.
However, Alex Kruse, an employee at a local snowboard and ski shop, couldn’t disagree more. Kruse, 25, sees larger corporations as an indigenous part of life in any true ski destination – the ski amenities, season pass options and culture necessitating deep pockets only found within the corporate world.
“I think it’s awesome that you can buy one pass and ride both Heavenly and Northstar,” he said, referring to the fact Vail’s Epic Pass not only gets skiers access to Colorado-based resorts such as Vail, Keystone, Breckenridge and Beaver Creek, but also secures access to Northstar and South Lake Tahoe’s Heavenly, which was bought by Vail in 2002.
Kruse said he enjoys the village atmosphere, teeming restaurants and rowdy bars that accompany a big business ski resort.
“Part of the reason I came to Tahoe is because I wanted to participate in a scene,” he said.
Countering opinions, however, beg the question: If there is a middle ground between the region’s community interests and the ski industry’s corporate world?
Standing at that intersection is Sandy Evans Hall, president of the North Lake Tahoe Resort Association. She is tasked with leading the organization as it invests millions each year into North Tahoe marketing, tourism, infrastructure and transportation projects and programs through Transient Occupancy Tax revenues – a surcharge tax paid by lodging guests to rent rooms for 30 days or less.
According to NLTRA data, the average TOT collected in District 5 of Placer County – encapsulating much of North Tahoe – totaled about $9.25 in 2009-10 fiscal year, and about $10.46 in 2010-11, an 11 percent increase.
Robust TOT funding, Hall said, in addition to the ski resorts’ visitor draws, are vital to the concept of a destination ski area – replete with hotels, restaurants and other amenities – that provides critical financial support to a healthy local economy capable of providing a decent job supply.
“What we’ve found by conducting research is the destination visitor stays in the area longer, spends more money per day,” she said in an interview earlier this year. “Also, the destination visitor typically comes from high-income brackets, and they spend money in our area.”
The last point is a big one for Hall and other regional economic leaders, as increased visits don’t only benefit the big resorts, but also the small independently owned lodging operations, restaurants, retail stores and other enterprises dependent on a strong annual influx of tourists for survival.
The resorts are aware of this symbiotic relationship. Last week, Rock underscored Vail Resorts’ charity donation program, Echo, as evidence of the company’s commitment to the entire Tahoe region; $20,000 already has been awarded to Excellence in Education, supporting schools within the Tahoe Truckee Unified School District, and to the Truckee River Watershed Council.
Another example, Rock said, is a $1 donation per online transaction between Heavenly and Northstar to the Tahoe Fund, a nonprofit corporation supporting conservation around the Lake Tahoe Basin, estimated to total $75,000 by the end of Vail’s fiscal year.
This all is coupled with Squaw and JMA Ventures, which have individually donated at the $25,000-plus level to the Tahoe Fund.
“I’m here to tell you that we’re here to continue that legacy and move on in that direction,” Rock said.
Furthermore, Chapman said planned improvements to Homewood’s lodging and village would bring an estimated 500 construction jobs, 180 full-time jobs and roughly $16-$20 million in visitor spending to the entire region through additional visitors – in addition, an estimated $7 million would be contributed annually to local public services through property tax revenues and TOT taxes.
“Clearly this investment is going to have long-term consequences in terms of adding to Tahoe as a major destination,” Chapman said. “People today are going to other ski areas including Utah and Colorado, and it was with this vision we undertook this master plan for Homewood.”
One ski resort is not a ski destination, just as one casino or one amusement park is not a destination. For tourism aficionados, a destination is a region dedicated to one dominant purpose. In Tahoe – though recreation activities abound – skiing and snowboarding is that purpose.
Yet a ski destination comes with costs as well as financial benefits. More visitors mean more traffic congestion during peak hours. For resorts to be competitive nationally, this requires land development and the notion of marketing the region as a whole – which does create some competition to local business owners unable to make such huge infrastructure investments.
The goal, of course, is balance.
“It’s like anything else,” said Blaise Carrig, co-president of Vail Resorts Management Company, in an interview earlier this year. “There are bad corporations and there are good corporations.”
Part of the reason that Vail Resorts is so successful (the company recently reported that Epic Season Pass sales volume is up 9 percent over the previous year), Carrig said, is it excels at giving the customer what it wants while keeping its eye on balancing community interests.
“Each resort has to be true to its authentic roots,” he said. “Vail owns six resorts, and I focus on cherishing and nurturing the individual position of each of those. Breckenridge is different from Heavenly. So we try to run like a small resort where it makes sense, and try to operate like a big corporation where it makes sense, like marketing campaigns or capital improvements.”
At Northstar this year, authenticity means expansion in the form of 170 acres of new sidecountry terrain, a new high speed chairlift, the construction of the on-mountain Zephyr Lodge, a 22-foot half pipe constructed by Olympic Snowboarder Shaun White and village retail improvements.
Squaw’s answer, Wirth said, was acquiring Alpine Meadows, a deal that’s been a rumor for years. Last week, Wirth said he is in discussions with Troy Caldwell – owner of the private White Wolf property separating Squaw and Alpine – about a possible future cooperative agreement, although Wirth he did not specify if such a agreement could provide a connection between the resorts.
“Troy is a great guy,” said Wirth. “He’s a great friend. He’s got a dream and we’re working together in terms of accomplishing things on a long-term basis.”
While much of Squaw’s $50 million in upgrades will be allocated toward culinary services and village renovations, Wirth said a significant outlay will be dedicated to lift infrastructure, trail maps on the mountain, and new grooming equipment with an eye toward enhancing the ski experience.
“We will absolutely compete with Vail,” Wirth said.