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Condor Capital Management’s 2014/15 Ski Season Wrap-Up

Condor Capital Management’s 2014/15 Ski Season Wrap-Up: Disappointing Weather Triggers a Nationwide Plunge in Skier Visits

MARTINSVILLE, N.J., June 08, 2015 (GLOBE NEWSWIRE) — Despite favorable economic figures and low gas prices lining the pockets of most consumers, Mother Nature proved to be an insurmountable foe during a dismal 2014/15 ski season according to Ken Schapiro of Condor Capital Management. Snowfall totals plummeted across the country, ending the season 28% below the nation’s historical average. Correspondingly, skier visits were also weak, particularly on the Pacific Coast, where a drought continued to plague southern California and unseasonably warm temperatures turned any possible snow to rain further up the coastline. Accordingly, recent figures released by The National Ski Areas Association (NSAA) indicate that skier days also suffered, finishing the season below our estimates at 53.6 million, a 5% drop relative to last season.

Across the board, skier visits were up early on in October/November thanks to some early season snowstorms and in January as snow began accumulating around the holidays. Alternatively, visits plunged during every other month of the season, with particular weakness appearing in the later months as many western resorts closed early. Regionally, on a year-over-year basis, results were consistently negative, but the severity of the declines varied drastically. As released by the NSAA, skier visits slipped slightly in the Northeast and Rocky Mountain regions by 0.8% and 2.1%, respectively, while plummeting by 6.4% in the Pacific Southwest, 9.3% in the Midwest, and 36.3% in the Pacific Northwest. Fascinatingly, the conditions causing these declines also diverged. In the Midwest, frigid temperatures made it too cold for many locals to justify trips to the slopes, while a lack of cold weather left many resorts in the Pacific Northwest empty. By that same token, blizzard-like conditions restricted skiers from making it to the slopes in the Northeast, while an extreme drought in the Southwest left many resorts bone dry.

Despite these unfavorable weather patterns and weak turnouts, resorts around the country have begun adapting to improve top line results. Vail Resorts, the leading mountain resort operator in the U.S., experienced a 0.3% drop in overall skier visits, but grew lift ticket revenue by 8% at nine of its U.S. based resorts. The company’s season pass program, fittingly named the “Epic Pass,” led the way and grew on an annual basis by a 16% clip in terms of sales and 13% in terms of units sold. Similarly, both Intrawest and Whistler Blackcomb reported stellar season pass sales growth in both of their most recent earnings calls. With weather patterns becoming increasingly unreliable, particularly on the West Coast, depending too heavily on daily lift tickets has become a risk not worth taking for many operators.

New pricing strategies focused on early season pass sales have allowed operators to hedge their weather-related risks early on and aggressively target price sensitive guests and destination skiers before the season begins. According to NSAA, this strategy is already in full effect as season pass sales increased by 6.2% over the prior year. What’s more, as marketing towards price sensitive guests and destination skiers focuses on season pass deals, not only do mountains lock in loyalty and commitment from a large market segment, but they also allow themselves room to increase margins on daily lift tickets and other less price sensitive ancillary services, such as lodging, ski schools/classes, rentals, and dining. In fact, despite the aforementioned decrease in skier days, as reported by DestiMetrics, resort revenue from mountains in Utah, Colorado, Wyoming, California, Nevada, and Oregon grew at an 11.2% pace this season.

Retail sales also grew, albeit at a more moderate 3% pace to $4.6 billion this season, according to Snowsports Industries America (SIA). Buoyed by prolonged winter seasons and freezing temperatures in the Midwest and Northeast, outerwear sales increased by 8%, while more skier/boarder specific equipment and equipment accessories sales were down 2%, likely the result of weak conditions in western resorts. Falling in line with the weather patterns, snow sports specialty shops sales were down for the entire West Coast by 5%, while up in both the Northeast and Midwest by 4% and 2%.

Overall, considering the tough hand that Mother Nature dealt during this past season, the results were not all that bad and could have been much worse. With the economy slowly but surely recovering, we expect discretionary spending to increase as we head towards next season, creating positive tailwinds for an eager ski industry. Additionally, if resorts are capable of attracting younger participants through online season pass marketing, they may be able to reinvigorate an aging pastime. With a little luck, and a little snow out west, the 2015/16 season may be groomed for a rebound.

Condor Capital Management

Founded in 1988, Condor Capital Management is an employee-owned, SEC-registered investment advisor based in Martinsville, N.J. employing 15 professional and support staff. Since Condor is a fee-only investment management firm, its fees are based on portfolio size, not sales commissions or number of trades. For more information on Condor Capital Management, please visit www.condorcapital.com or call 732-356-7323.