Condor Capital Management’s 2016/17 Ski Season Outlook: Early Snowfall On Both Coasts & an Improving Economy, a Positive Omen for Visits?
MARTINSVILLE, NJ / ACCESSWIRE / December 19, 2016 / With high hopes for a snowy winter season from skiers across our country, many signs are indeed pointing to a solid upcoming 2016/17 ski season. A quick look back at the 2015/16 season shows that skier and snowboarder visits increased slightly to 53.9 million, up from 53.6 million the year before, according to the National Ski Areas Association (NSAA). While this appears to be only a small increase at the margin, the devil is in the details. Snowboarder visits have been declining steadily in recent years, while skier visits have been buoying this annual figure from the NSAA. Between the two, the snowboarding industry has been challenged even more by unfavorable weather patterns, in addition to a drop in participants & sponsors. With respect to geography, a closer observation reveals that last season really was a tale of two halves, as the western half that encompasses the Rocky Mountain, Pacific Southwest, and Pacific Northwest regions all saw an increase year-over-year, while the eastern half of the country suffered due to disappointing winter weather. Of particular note was the Pacific Northwest region’s 142% increase from the prior season, which was marred by a severe drought. With early snowfall on both coasts already this year though, Ken Schapiro of Condor Capital Management sees some of last year’s trends reversing and is hopeful for a strong 2016/17 ski season.
Whereas last season was marked by El Niño – which described warmer temperatures in the tropical Pacific Ocean – this season will likely be impacted by La Niña. This phenomenon is characterized by cooler temperatures in the Pacific near the equator and will push for a more northern storm track in the U.S. In turn, this is expected to lead to greater snowfall in the northern one-third area of our country, potentially benefiting slopes in northern California, Oregon, Washington, Idaho, Alaska, and locations within Canada such as Whistler, British Columbia. So far into this season, warm and dry weather early on in the Rockies region caused many resorts in Colorado to push back their opening dates, though early bookings remained strong as skiers looked past the initially unfavorable weather. Suffice it to say, they have been rewarded since, as snowfall has picked up over the second half of November and there is optimism for a solid holiday season ahead. Upstate New York, too, has experienced strong snowfall and is forecasted to benefit from lake effect snow.
While the weather is a very important component in determining how strong the ski season will be, another important consideration is the overall health of the economy. Indicators on this front also show plenty of promise, with Gross Domestic Product (GDP) in the third quarter of this year having grown at 3.2%, the fastest rate in nearly two years. The economy could also get a jolt if president-elect Donald Trump pushes for a fiscal stimulus plan that contains tax cuts after taking office in 2017. Add to that a consumer who is growing increasingly confident amid a rising stock market and growth in wages, and the economy looks to be brewing its own perfect storm!
With improving economic fundamentals and a greater emphasis on season passes the last several years to hedge weather risk, sales of ancillary goods have become even more important. According to SnowSports Industries America (SIA) retail data that was produced by The NPD Group, retail sales in the snow sports market during the 2015/16 season came in at roughly $4.7B, generally in-line from the prior year. Specialty shop sales fell slightly, yet remained over $2B, while chain store sales slowed somewhat on a national level as well. That said, much like for any other product these days, online sales continued to grow and eclipsed the $1B mark. Across all sales channels, outerwear sales remained around $1.8B, while equipment sales nudged higher. All told, with steady retail sales over the past few years, Condor Capital Management expects sales growth at a solid pace going forward amid improving weather and economic conditions.
Although both weather and economic fundamentals appear to support a solid season, many resorts have been undertaking different initiatives to protect themselves from the cyclicality that could adversely affect business.
In addition to focusing on season passes, which allow for unlimited visits for one flat price, resorts have continued to diversify their offerings so that their properties can be introduced and used during seasons when there is little or no snow. This strategy has led to these resorts becoming a destination of sorts, with activities such as zip lining and rock climbing garnering more interest. Alongside, higher-end restaurants and shops are also being added to lure guests and increase sales as visitors look towards experiences that they can share on social media.
Looking at the larger picture, it is not easy for an established company to just build a resort, and it is much more difficult for a new entrant to just come in and make a name for itself through the construction of one. A large reason for this revolves around government regulations with the environment in mind. So, then, where have resorts turned their attention to as we make the pull to 2020? Very simply, to each other, as the big are getting bigger and are leaving the small to get even smaller. A recent example of this was the purchase of Canada’s Whistler Blackcomb by Vail Resorts, valued at over $1B, to create a behemoth in the industry. With this acquisition, holders of Vail’s Epic Pass, who already have access to several premier resorts in the U.S., can now ski at Whistler Blackcomb across the northern border for 5 days (with certain holiday restrictions) this season.
Early indications of solid snowfall on both coasts serve for optimism, though for good measure, economic conditions and deft management of the resorts themselves provide for additional tailwinds this season, according to Schapiro. If early bookings and weather indications are any indication, this just may be turn out to be a season to remember for skiers from the Pacific to the Atlantic! With these winds at skiers’ backs, Schapiro is expecting skier days to grow 3-5% in the upcoming season.
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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.