business

The snow industry's left turn

Wesley Hart-McKinnon

• 5 min read
The snow industry's left turn

Following the previous two difficult snow seasons, the $2.4 billion Australian Snowsport industry faces a host of new challenges to remain profitable. 

The costs

“Skiing is expensive, but it’s still cheaper than therapy” – unknown 

In the absence of a storied family skiing lineage or wealthy family friends, one may be confronted with the costs of skiing and snowboarding. Expensive lift passes, mountain entry costs, parking fees, accommodation, equipment hire and head-shaking refreshment costs on the mountain, contribute to the prevailing belief that snowboarding is a luxury sport. 

Why so steep?

Lifts are the most expensive outlay for resorts, regularly costing between 10-20 million AUD to construct. These lifts must be powered with substantial volumes of electricity, manned all day by multiple staff and regularly serviced to keep the thousands of daily users and Jerrys safe. 

Snowcats,  often leased by resorts, are another costly expense. These large vehicles smooth over runs with a snow plough, grooming the slopes with a to create safe, corduroy-like texture on runs for the next day. 

Snow guns, becoming more important due to increasing temperatures in many resorts, have ancillary expenses in water supply, electricity and platforms outweighing their upfront costs. Vail has just invested in 421 new snow guns to meet the increasing need for artificial snow.

The huge labour demand and long hours of workers necessitates on-mountain housing for workers. Thus resorts not only pay wages, but they must also subsidise on-mountain housing for workers to make seasonal jobs more attractive to the younger labour demographic. This creates a need for a shuttle network, adding outlays on bus drivers, buses and fuel. Record high job vacancies in the 2022 snow season are putting pressure on resorts to offer higher pay and greater perks to entice more people to work on the mountain.

Challenges to snowsports 

Demographic changes are catching up to the snowsport industry. Skiing was a cultural phenomenon for baby boomers in the 1970s and 1980s. However many of the now older generation, loyal to the sport, are spending less time in the snow.  “Millennial and Gen Z participants ski and ride less than prior generations” according to the US National Ski Areas Association. The industry as a whole must develop new marketing strategies to entice younger first-timers to pick up the sports. 

Much of the young participation is coming from university groups, offering student friendly pricing on social trips to the snow, introducing new young adults to the sport. ESSA sat down with Brad Harris, the president of the Melbourne University Snowboard Team to discuss this.

“The cheapest way to get into the sport previously was to work a season on a mountain and ski or board on your days off, but with how overworked staff have been in the post covid shortages, people are becoming disenfranchised with this route.” 

“[Workers] have to choose between grocery shopping and skiing, now you have to pay your way on.” 

Brad also touched on the primary challenge facing the snowsport industry, climate change. 

“Snowfall is getting worse, it’s becoming more erratic and inconsistent.”

Southern, lower-altitude resorts as seen in Australia are facing the biggest threat. The substantial increase in temperature since pre-industrial times is responsible for the significant decline in the length of the ski season seen in the previous 60 years already. The CSIRO predicts this could shrink by up to 80 days per year by 2050.

The future of the snowsport business model 

The global ski industry has seen drastic consolidation in recent times as a response to the above issues. Vail, a global ski resort conglomerate, owned 11 in 2015 and 41 in 2022. A Vail owned lift is operating somewhere in the world at almost any point in the year. Similarly, the Aspen Skiing Company, owning four famous resorts in North America, began a joint venture with a private equity firm to create the Alterra Mountain Company, competing with Vail resorts as another global brand, buying up resorts across the globe.

Vail offers the Epic Pass, a lift pass that allows one unlimited access to three of Australia’s largest resorts and multiple others in Japan and North America. This pass is sold the year prior, with a pricing structure increasing from $800 to $1150 the closer the pass is brought to the beginning of the season. Alterra offers a similar Ikon Pass. 

From Vail’s perspective, the Epic Pass is a tool Vail uses to manage risk. Consumers are incentivised to purchase their lift tickets before there is snowfall, lowering demand fluctuations due to potential poor snowfall the following year. This reduces revenue’s dependence on the climate, increasing stability in each of Vail’s quarterly reports. Brad offered his point of view:

“Vail are not only diversifying across the world, they are diversifying weather patterns.”

From the consumer’s point of view, these passes give boarders and skiers flexibility when planning their holidays while giving them the ability to choose their destination from a range of quality mountains. Australian skiers and boarders with an Epic Pass can choose from Falls Creek, Hotham or Perisher at a price not much different than previously buying lift passes at said individual resorts.

Further resort adaptation can be seen in resorts riding the trend of increasing popularity of mountain biking and converting into mountain bike parks in the summer, providing an alternative revenue stream independent of temperature increases. Austrian snow resorts have recently covered glaciers with blankets to prevent melt in the European summer.  

This left turn within the snowsports business model marks one of the many ways businesses are innovating to work against the costs of climate change. With snowsport’s long term future in the balance, boarders and skiers will continue to rip. 

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