What’s a Ski Resort without Snow?
The largest ski resort in North America demonstrates how a others can adapt to the volatile impacts of climate change.
There is a multi-billion-dollar market that is clearly on the chopping block given implications of global warming – alpine skiing. Few industries’ performances are so overtly tied to weather as ski resorts. For many resorts in north America, the entire ski town makes a living not just on the lift tickets, but also the restaurants and gas stations in the community rely on tourists to keep their businesses in the black. Whistler Blackcomb, the largest ski resort in North America, is leading the charge for this industry in preparing for the impacts of climate change and taking an active role in shaping the future to improve its outlook for all ski resorts in North America.
Weather volatility has been a problem for seasonal business since the dawn of seasonal businesses. So what makes climate change an issue that needs to be addressed now? Scientists have identified high altitude areas to be the most susceptible to climate change compared to low lying areas. For example, For Collins, CO, which is at 5,003 feet above sea level, experienced an average temperature increase of 4.1 degrees whereas a comparably located city at sea level had a 0.5-degree average temperature rise year over year [http://cier.umd.edu/climateadaptation]. Given Whistler Blackcomb’s peak elevation of 7,992 feet above sea level, it is most likely going to be impacted before the rest of society feels the pain of global warming. Thus, Blackcomb Whistler needs to take control of their own destiny in regards to preparing for global warming impacts and leading the way in a broader industry effort to combat global warming politically.
Being one of the larger resorts with capital to deploy, Whistler Blackcomb has been adapting their business for global warming implications since the mid-2000’s. In 2008, the resort connected its two major peaks to provide increased access to the upper parts of the mountain, which have colder climates and thus better snow conditions longer then the lower elevation portion of each mountain. This project cost 51 million dollars and showed Whistler Blackcomb’s dedication to maintaining a large amount of skiable terrain. Although this move is reactionary in nature, it was a quick win for the resort and showed the shareholders and skiers alike that this resort was dedicated to its operations.
In addition to focusing on what the resort is predominately known for, Whistler Blackcomb released a 345-million-dollar master plan earlier this year that outlining other ways the Canadian resort will grow and insulate the business from weather caused volatility in the future. Mainly, this master plan painted a picture of Whistler Blackcomb Ski Resort becoming a four-season destination. With amenities such as a mountain coaster and an indoor water park that will have “waterslides, a deep-water surf simulator, cliff jumping, rock climbing, a wave pool and bowling” [ http://www.macleans.ca ] By building up the non-winter infrastructure now, the resort is positioning itself well to financially whether the bad weather that may be unavoidable in the future.
While these measures are steps in the right direction, I would develop a task force to evaluate how the potential change in weather patterns could affect potential acquisition targets for new ski areas. Moving the lift equipment would be no small task, but there is an opportunity to identify what used to otherwise be unattractive land becoming more attractive now that the weather patterns are changing. As a 20-30 year plan, I would have an ongoing team evaluating the cost benefit of expanding the resort one or two peaks north from its most northern point to potentially take advantage of improved weather conditions at adjacent peaks that have higher elevations. In addition, I would defer the expansion costs by shutting down the lowest elevated terrain of the current mountain, and relocate the lift equipment to the newly expanded, higher elevation area that will have better snow and temperature conditions.
Overall, Whistler Blackcomb is in a relatively good position to succeed amidst the unknown gravity of impact climate change is causing. By investing in their winter sports offering through new ski lifts and developing a master plan to become a successful four-season destination, the resort is leading by example for the ski industry how a company can prepare to dampen the ambiguity of climate change.
Sources
- “Environment”. Whistler Blackcomb Ski Resort. 2016. Company Website. November 2016
- Sorenson, Chris. “How snowless ski resorts are adapting to climate change”. Maclean’s. April 2016. Web. November 2016 <http://www.macleans.ca/economy/business/how-snowless-ski-resorts-are-adapting-to-climate-change/>
- Williamson, Sean. “Economic Impacts of Climate Change on Colorado”. University of Maryland. July 2008. Online Paper. November 2016. <http://cier.umd.edu/climateadaptation/Colorado%20Economic%20Impacts%20of%20Climate%20Change.pdf>
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To me, the important question is at what point does a resort make the decision that the impact of climate change is conflicting with the long-term viability of the resort as a business?
A few other questions that come to mind: What are the primary operating costs of a resort and how many snow days are required to cover those costs? Is there a way other than moving lifts for a resort to stay solvent? How can a resort monetize its offseason?
The good thing about climate change, as compared to global warming, is that it opens up the possibility that our planet could cool as a result of manmade factors. So 50% chance that all this stuff we’re putting into the air is actually a boom for ski resorts. How do you feel about taking those odds?
Great post, Dan. It’s clear that the impetus is on the ski resorts to find creative ways to remain in the black. With Vail recently acquiring Whistler, there is a huge opportunity for the resort’s leadership to leverage Vail’s model of success. In 2016, summer bookings at Vail were up 14% over the previous year (http://www.vaildaily.com/news/vail-lodging-headed-for-another-record-summer/). Another interesting thing to consider is the ways in which ski resorts can both achieve cost savings while lowering their own carbon footprint. One great example of this is the partnership between Tesla and Squaw Valley to create the mountain’s own solar grid to reduce power costs between 30-60% (http://protectourwinters.org/think-big-part-2-how-squaw-valleys-partnership-with-tesla-may-be-the-beginning-of-a-new-energy-model/).
It is amazing how many companies created plans to reduce the impact of global warming. Humans have been able to create solutions to the problems that they have created. A ski resort without snow is completely useless but we have companies such as Whistler Blackcomb that are thinking about global warming not as a long-term problem, but as a current issue that needs to be addressed immediately.
Economists like to think global warming as a negative externality that no ones now how to measure but that it exists. However, this posts does a great job at showing how global warming is measurable and how it truly affects businesses. Did Whistler Blackcomb generated this problem? probably the answer is no, but they have to make a plan to address this issues. If then we add up all the investments that companies have to do to only overcome climate change, we could easily understand that adopting sustainable practices is not optional going forward.
The fact that ski resorts around the globe are turning to summer sports as a way to stay profitable is the most tangible effect of climate change I’ve seen. That said, I do think it is the only option for economic survival. My concern is that year-round activity will expand their carbon footprint significantly, which would not only be a great irony, but also counter productive. Whistler, Vail, Aspen, and all the big mountain resort should partner together to invest real dollars and research into making their operations carbon neutral. This is more than symbolic leadership — resorts are achieving real cost savings in their operating models with retrofits and renewables. While the upfront capital requirements are steep, they’re the only way to keep the powder deep.