General, Advice for Entrepreneurs, Business Valuation, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, Connecticut
From closing…for good.
In the Northeast alone, Tenney Mountain in New Hampshire, Hickory Ski Center and West Mountain in New York, and Saddleback, Mount Abram, and Lost Valley in Maine are all in some mode of restoration and rehabilitation. Greek Peak in New York has seen a recent significant capital investment to bring it into the 21st century based on skier expectations that exist today of what a ski area should provide as an experience. There are others, to be sure. Bear Valley in California, Mount Washington, Vancouver Island, and Eagle Point, Brian Head and Powder Mountain in Utah, just to name a few.
So what do these areas – and all the others that are looking to remain open and profitable – have in common? What is needed to meet owners’ goals?
I urge you to take a look at the “rebirth” characteristics below, and then look within to see if any of these resonate with you:
Guest Expectations Have Surmounted Location: “Location, Location, Location” has been replace with “Snow, Lifts, Lodge.” Your lifts, snowmaking, grooming, and food and beverage service just don’t meet today’s participant’s expectations. Most skiers and riders today expect consistent, well-groomed snow and rapid, aerial uphill transportation. One example that came across my desk recently has zero snowmaking and only surface lifts, in a market that is served by two state-run ski areas that benefit from taxpayer subsidization for creating capital improvements
Your ski area is in a very competitive market. Mount Abram and Saddleback in Maine compete for visitors with Sunday River and Sugarloaf, respectively. They also compete for visitors with The Mount Washington Valley resorts and Shawnee Peak. Their competition has more water, more guns, more uphill capacity and brand recognition for snow quality. What does your competition have that you don’t?
Lack of available capital. This could be for any number of reasons; fall off in interest in real estate acquisition by guests, drought conditions, increased oversight from environmental agencies and concerned groups, increased energy costs, decline in total numbers of skiers and riders, investors’ demand for developer/operator “skin in the game, more stringent underwriting criteria from economic development lenders– these all contribute to investor skepticism when it comes to cold weather resorts. What’s the real cause of lack of capital? Cold weather resorts are inconsistent performers, at the mercy of the weather. Lenders and investors take a shorter-term view underwriting these business models than the models require to show profitability.
Is this you? Do these examples resonate with your existing business model? How are you going to addresses these issues? Give it some thought, and stay tuned for my next post that will offer some help and solutions for you.
Mirus Resort Capital advises business owners, investors, and management teams on the acquisition, sale, valuation and recapitalization of cold weather resorts, day ski areas, golf resorts, and equipment suppliers to the resort industry. Contact Mike Krongel @ (617) 816 7544 or Krongel@merger.com