Seeking Snow: The Impact of Climate Change on Vail Resorts
Climate change and rising global surface temperatures are threatening the entire ski and snowboard industry. Just how much of a risk is climate change to Vail Resorts Inc. and what can they do about it?
It’s unlikely that any of the 400+ RCs that recently signed up for the annual ski & snowboard trip to Keystone, CO had climate change on their mind when they booked their registration. However, the topic is no doubt top of mind for Vail Resorts, Inc. which owns the Keystone Resort in addition to many other recognizable U.S. resorts such as Vail, Breckenridge, Beaver Creek, and Park City. The connection between climate change and the ski resort industry is not difficult to comprehend. As the Earth’s average temperature continues to rise due to the impact of GHG emissions, and as weather patterns become more unpredictable, ski resort operators like Vail will encounter significant challenges in an industry that depends so much on cold temperatures and consistent snowfall.
Long term trends point to harmful effects of sustained rising global temperatures on Vail’s business. A recent study of major ski resort towns in Colorado found that on average they are experiencing 23 fewer days below freezing each year than they did in 1980. Additionally, a University of Maryland study found that the U.S. has lost more than a million square miles of spring snowpack in the last decade, decreasing average ski season length by several days and costing ski resorts $1 billion in lost income. As the largest operator of ski resorts in the U.S., Vail is already experiencing the negative impacts of climate change on its bottom line. And the future only looks worse.
Although climate change is not likely to pose an existential threat to Vail in the near term, the same study at University of Maryland mentioned above estimated snowpack decreases of at least 50 percent for Grand, Summit and Eagle counties, and a whopping 82 percent loss in snowpack for San Miguel County by 2085, assuming continued climate change trends. These Colorado counties contain three of Vail Resort’s largest ski resorts. The impact of climate change will also be felt by Vail shareholder’s. A recent analysis performed at Stanford University that looked at how expected changes of winter temperatures in the west impacted Vail’s valuation generated an equity valuation that was 14% lower than when climate exposure was not taken into account. Clearly there is a reason for Vail to take action to mitigate the risks of climate change.
Vail Resorts must consider strategies to shift its business model away from being so dependent on consistent snow and cold. One such strategy is increasing the geographic and seasonal diversity of Vail’s business. Just last month Vail Resorts finalized the purchase of Whistler Blackcomb in a deal that increases the geographical diversity of its resort holdings. In the short term, climate change will play out in a highly localized manner, so geographic diversification will help lessen the impact, but in the long term Vail needs to more aggressively diversify its business. Another way Vail has been adapting its business model to lessen the impact of climate change is expanding its year-round offerings by developing recreational activity options such as dirt biking, mountain biking, ropes courses, zip lines and frisbee disk golf. Through geographic and seasonal diversification, Vail is taking measures that will insulate its earnings from the near and mid-term impact of climate change. But Vail must do more.
Ultimately, Vail must protect the sport of skiing and snowboarding by taking climate change head on through lobbying for policy change and supporting other advocacy efforts. While Vail has a robust program of sustainability efforts across its resorts, the company has historically been soft-spoken about climate change and the company’s role in fighting it. It’s time for Vail to step up. Ski and snowboarding adds over $13B to economic activity annually in the U.S. ($4.8B to Colorado alone), and as the largest Ski Resort operator in the country, Vail holds a unique and powerful position to influence policy. While Vail may be on the sidelines, their customers are certainly not. The skier and snowboarder community is doing what it can to save their sport. Many groups such as Protect our Winters (POW) and The Mountain Impact have formed to advocate for policy changes to curb climate change. Sadly, Vail resorts is nowhere to be found as a sponsor or supporter of these groups. It’s time for Vail to raise its voice in the climate policy debate through direct lobbying and support of advocacy groups because in the long-term, curbing the precipitous climb in global temperatures is the only thing that will save the sport they have built their business on. [750 words]
Sources:
Bagley, Katherine. “As Climate Change Imperils Winter, the Ski Industry Frets.” InsideClimate News. Inside Climate News, 24 Dec. 2015. Web. 04 Nov. 2016.
Bebb, Donna. “Climate Exposure Impact on Equity Valuation: Case Study of Vail Resorts, Inc.” Steyer-Taylor Center for Energy Policy and Finance (2015): n. pag. Web. 23 Nov. 2016.
“Economic Study Reveals Ski Industry’s $4.8 Billion Annual Impact to Colorado.” Colorado Ski Resorts. N.p., 09 Dec. 2016. Web. 02 Nov. 2016.
Kinney-Lang, By Shelby. “Climate Change Could Decimate the American Ski Industry | VICE News.” VICE News. VICE, 16 Feb. 2016. Web. 04 Nov. 2016.
“Our Partners – POW.” POW. N.p., n.d. Web. 04 Nov. 2016.
Smith, Leslie M. “Impacts of Climate Change on Narragansett Bay.” Northeastern Naturalist17.1 (2010): 77-90. NRDC, Dec. 2012. Web. 3 Nov. 2016.
“Vail Resorts and Whistler Blackcomb Complete Strategic Combination.” Http://www.prnewswire.com/. N.p., 17 Oct. 2016. Web. 23 Nov. 2016.
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Thanks for this article, George. I agree that it is crucial for Vail to stand up and vocally advocate policy changes to curb climate change as losing snow will irreparably damage their business. Standing together globally, resorts like this would bring a new dimension to the debate. Per the image you used I can imagine some powerful advertising campaigns that raise awareness of the likely future of the slopes should temperatures continue to rise. The threat of losing winter sports could be an effective motivator for policymakers, who tend to be in the demographic that partake in them the most!
Nice piece, George, and I agree with what you’ve said. I would also add a piece about climate change that weather patterns are unpredictable. In effect, some ski seasons receive an outsized amount of snow, while other years receive much less. I believe the unpredictability and large variance in snow pack each year adds to the confusion of the direct impact of climate change, although the impact in the long run is undeniable.
Great piece!
I think your analysis of needing to diversify their business away from strictly cold and snow related activities is spot on. I think the challenge though is when entering other new environments trying to predict the affects of climate change on them as well. Certain places may be good for kayaking or hiking now, but as rising temperatures and unpredictable weather and drought patters continue, they may face similar problems to what they are facing now, and in industries with which they are less familiar.
I wonder if they can also invest in technologies that can help mitigate the impact of the lack of snowfall at some of their resorts. While fake snow today may not be as sexy as the real thing, to the extent Vail and others can invest in this and other alternatives, it may provide additional options going forward. This would also allow them to stay in the industry they know best. This technological advancement may not be easy or a short-term fix, but it could help diversify them even more as the threat of climate change grows.
As a big ski-lover, I agree that they should do more to prevent climate change! 🙂
I’m even more worried about changing weather patterns in more vulnerable parts of the world, however. For example, the area immediately south of the Sahara is getting drier every year, yet they have no meaningful voice in the fight against climate change. That’s why it seems even more important for the ski industry to step in. Sad as it is, we’re more willing to listen when our immediate life is affected – also if it’s “only” skiing and not necessarily our full livelihood.
Great job George! The ski industry has to aggregate it resources together to have any major public policy victory. The insane thing is the ripple effect this will have on many tourist dependent economies in place like Breckenridge, Colorado and Ruidoso, NM. Additionally, although it is a great alternative, I am not convinced consumers will love the artificial snow. As an occasional skier, this post makes me sad.
Super interesting post!
As you can image, European ski resorts are facing the very same issues and have put climate change on top of their agendas. While the resorts in higher altitudes in Switzerland and France, where most resorts go up to 3000m plus, have seen less snow but not existential threats to their business, resorts especially in Austria have had to adapt quickly.
Kitzbühel, one of the most famous European resorts with 600k visitors each year only goes up to only 1950m (6400ft) and has seen its season been shortened by weeks over the past years. They have invested more than €100m over the past decade in artificial snow machines and new lifts to stay attractive. While trying everything to keep its skiing possible, Kitzbühel is also trying to focus on making it more interesting as a summer destination.