Condor Capital Wealth Management’s 2015/2016 Mid-Season Ski Industry Outlook: Frigid Weather in the Western Half of the U.S. Counters Weakness at Eastern Resorts
MARTINSVILLE, N.J., Feb. 22, 2016 (GLOBE NEWSWIRE) — Looking back at the first half of winter, varied weather across the United States has once again been the main determinant of the number of visitors at the nation’s major resorts. As increased snowfall in the Pacific and Pacific Northwest drew skiers to the slopes, warmer-than-usual weather in the Northeast led to a frustrating start to the season. Nevertheless, with momentum picking up, the ski industry is heading toward a strong finish across the majority of the resorts in the United States, according to Ken Schapiro of Condor Capital Wealth Management.
Across the Rockies, a series of powerful, early season winter storms have led to remarkable snow totals. According to the Colorado Ski Country USA (CSCUSA) trade group, early ski visits at its 21 member resorts were up 10% for the two month period ending December 31, 2015. Furthermore, 2015/2016 early period ski visits beat the CSCUSA’s five-year average by about 13%, due in large part to pent-up demand from a weak 2014/2015 season. In the midst of several large snowstorms, snowpack levels at many mountains in the Rockies increased to 117% of their normal levels, causing skiers and snowboarders to rush to the slopes. In fact, in an epic display by Mother Nature, World Creek Ski Area, a major resort in Colorado, has received 319 inches of snow thus far in the season! With Mother Nature complying, skier visits in this region are likely to benefit from a sizable tailwind.
In the same fashion, the Pacific and Pacific Northwest saw skier visits bounce back, as the much-talked about El Niño pattern (a term used to describe the fluctuation in sea-surface temperatures taking place in the tropical Pacific Ocean) brought record precipitation to the regions. With droughts plaguing the states of California and Washington as of late, a wet winter is a pleasant sight for many residents. As such, snowpack levels in Washington have increased to 109% of normal levels and many mountains in California received upwards of 75 inches of snow in the first few months of the winter season. The Lake Tahoe region of California has especially benefited from the favorable weather across the Pacific. Despite many resorts in the region, such as Homewood Resort, closing early last year due to anemic visitation numbers, favorable weather has allowed resorts to open bigger and better than ever this year. According to DestiMetrics, a Denver-based firm that analyzes 19 mountain destinations across California, Utah, Nevada, Oregon and Wyoming, bookings increased by 1.2% in October. As a consequence of high demand, many Lake Tahoe resorts are raising prices, with lift tickets already exceeding $100 per day. In addition, resorts are promoting season passes, which are selling at a discount in order to get goers to commit to a particular resort for the whole season. With all these factors in mind, resorts in the Pacific and Pacific Northwest are experiencing an incredible season thus far, which is likely to continue going into the remainder of winter.
In the Northeast, however, visitation and snowfall have been anything but robust. From Vermont to Pennsylvania, record warm temperatures in December caused resorts to open late, with very few trails available. For instance, Killington Resort in Vermont has fewer than half of its trails active as of mid-January. Likewise, the lack of snow caused Holiday Valley Resort in New York to open 15 days later than expected and Snowshoe Mountain Resort in West Virginia to open and close three times. While a strong blizzard in late-January aided the situation, snowpack levels across resorts in the Northeast are still at below-average totals. In order to balance out the loss of revenue from a lack of visits, many resorts, like Killington, are focused on attracting conference goers and corporate retreats. In the same manner, resorts are offering a slew of other activities, ranging from spa treatments to rollercoaster rides, in order to satisfy customers and keep them from leaving. In general, with many resorts still functioning at below-average capacity, ski visits in the Northeast may slightly suffer heading into the end of the season.
Without a doubt, resorts on opposite coasts have experienced vastly different winter conditions so far this year. As an illustration of the excellent season in the West, Vail Resorts, a major operator of ski areas in Colorado, Utah, and California, recently announced that skier visits at its U.S. resorts increased 11.1% on a year-over-year basis through January 10, 2016. In addition, the company announced that lift revenue increased 19.4% year-over-year, while dining, ski school, and retail revenue rose 14.3%, 6.7%, and 9.1%, respectively. On the other hand, Peak Resorts, a leading owner of resorts in the Northeast, reported a fall in earnings in its past quarter ending December 15, 2016. However, the company’s chief executive stated that the firm’s season is improving thanks to colder temperatures at its resorts. Similarly, Intrawest Resort Holdings announced weaker visitation numbers in December, offset by a 13% year-over-year increase in season pass sales. As the ski season continues, we expect this disparity between skier visits at eastern and western resorts to continue.
Despite benefiting from an increase in domestic visitors, many resorts in the United States are noticing lower levels of international tourism, as illustrated by Vail Resorts experiencing a slowdown in bookings from Europe, Canada, and Brazil. In addition, the firm is seeing a lack of visitors from Australia, in spite of the company’s effort to attract skiers from that nation through its purchase of a new resort in New South Wales. This is in part due to the strengthening of the U.S. dollar against foreign currencies. In light of this trend, the U.S. Office of Travel and Tourism Industries projects that international visitor volume in the U.S. will most likely stay constant in 2016. Thus, many resorts will likely feel the pain of the strong domestic dollar for the remainder of the ski season.
On the retail front, early season data points to healthy growth in snow sports sales. According to NPD DecisionKey, data gathered from August to October of 2015 show that the snow sports market is up 8% in units sold and 6% in dollars sold to $799M. However, this growth is likely to stall with record high temperatures along the East Coast and warmer-than-average weather across the country. According to the analytics firm Planalytics, weather conditions during November and December, months that result in almost half of all snow sports sales, cost winter weather retailers an estimated $421 million in sales this season. With retailers desperate to move inventory, prices for apparel are likely to be heavily discounted heading into the latter months of the season, as seen by major winter clearance sales at major retailers such as L.L.Bean and Lands’ End. With temperatures finally dropping, the hope is that retailers will be able to sell their inventory as demand for the slopes translates to demand for apparel.
With record amounts of snow in many parts of the country, this year’s ski season is turning out to be a favorable one for the industry. While weakness along the East Coast has created a drag, most resorts around the country are firing at all cylinders to draw in visitors. Should temperatures increase in March and April, as predicted by the Weather Company, skier visits may slow slightly. However, with solid fundamentals across the nation’s resorts, Condor Capital Wealth Management is expecting skier days to grow by approximately 3% for the season.
Condor Capital Wealth Management
Founded in 1988, Condor Capital Wealth 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 Wealth Management, please visit www.condorcapital.com or call 732-356-7323.