SKI RESORTS IN THE USA

CASE STUDY

Table of Contents:

1. Abstract…………………………………………………………………..3

2. Question 1: What are the most important changes in the environment that have contributed to the drop in revenues?..................................................4

3. Question 2: Why is management a more important success factor for ski resorts now, compared to 20-30 years ago?................................................5

4. Question 3: How is competitive environment of the resorts on the east coast different from that in Colorado? What should the east coast resorts pay particular attention to?..........................................................................7

5. Question 4: Possible changes in the environment in the near future…….8

6. Conclusion………………………………………………………………..9

7. List of References…………………………….…………………………10

Abstract

The following paper discuss factors that have lead to changing business environment and its’ impact on ski tourism industry, concentrating especially of the ski resort performance and changes that must take place in order for this business to survive and continue its’ operation on its’ highest level. First and foremost, the economic, political and environmental factors that have been changing in the previous years have lead to the decrease in revenues of the ski resorts that have been taking place since the 1970s. Further on, the management of ski resorts and ski centers must adapt to the above mentioned changes by involving themselves more in developing new ideas and practices that will overcome the changes taking place, thus increasing the efficiency and profitability. The paper also discusses the increase competition that the east coast resorts are facing with the European resort. The impact of European resorts on the East cost resorts has been examined as well. At the end, The factors that might lead to future changes in the business have been evaluated and possible suggestions have been provided that could help the ski resort business get back on track, keep its’ current and obtain more prospective customers, thus increasing revenues and gaining the competitive advantage over others.

Question 1: What are the most important changes in the environment that have contributed to the drop in revenues?

Changes in the environment are a very important factor that can affect any business and bring negative consequences if managers do not react timely to these changes. This was the case with the business of ski resorts in the USA, which experienced great losses due to changes in their business environment that occurred in the 1980’s. There were numerous issues that had to be considered in order to survive in the business. First of all, the climate change created serious problems to ski resorts due to increased temperatures which were part of global warming. The issue of global warming related to shorter winter seasons and significantly reduced amount of snowfall. Many ski resorts were even accused of causing global warming through emission of Greenhouse Gasses and damaging the environment by cutting forests in order to create new ski tracks. Furthermore, the issue of ageing of customers connected to change in the economic conditions highly contributed to decline in revenues of ski resorts. (NSAA, 2007) As the biggest number of customers of ski resorts were ‘Baby Boomers’, ski resorts had to adapt to change in needs of these customers. As a matter fact, people belonging to this generation came to an age when most of them were employed with families to support.(Anon, 1997) Moreover, the average income has decreased resulting in people not having adequate budget or time to be spent on skiing holidays. The fall in income of customers largely decreased the number of visits to ski resorts and this brought great difficulties to their business operations. As a matter of fact, due to fall in revenues, resorts had problems to keep qualified staff and the number of employees started to decrease. (Berta, 2007) Moving forward, another important factor that had to be considered was the change in customer needs. As the average income decreased, people were demanding high quality service at lower prices, which was very difficult to achieve.

Moreover, skiing was not anymore the only activity desired to be pursued by customers, as they started to demand more non-skiing activities. For this reason, the total experience of visiting ski resort became an important factor for success of resorts. Finally, demographic factor in relation to change in trends also contributed to drop in revenues. Younger generations became less fond of skiing, as technology advanced and computer games emerged as well as new extreme sports such as snowboarding which became very popular. (Palmeri, 2003) Managers of ski resorts had to find ways to adapt to all the above mentioned changes in order to get customers back and stay in business.

Question 2: Why is management a more important success factor for ski resorts now, compared to 20-30 years ago?

Taking a global look at the world of business, management, as one of its main aspects, highly evolved in the past few decades. However, its improvement was particularly important for the business of ski resorts that had to adapt to numerous environmental changes in order to survive in the industry. For this reason, National Ski Area Association (NSAA) was created in order to jointly come up with ideas for actions to be taken in the future. Managers of ski resort had to consider great number of factors in order to know in which direction to alter their business operations. First of all, the issue of climate change had to be examined. As global warming was increasing, this issue was becoming a great threat to business of resorts. This is why many resorts joined the ‘Keep Winter Cool’ campaign with goal to reduce factors that lead to global warming and inform other resorts and customers about this issue, its consequences and ways to fight it effectively. (Scott et al., 2006) Moreover, large capital investments were made in technologies such as artificial snow-making since high temperatures reduced the duration of winter seasons and amount of snow on the ski tracks. (Scott et al., 2006). Moving forward, managers were required to adapt offers of ski resorts to change in customer age and their needs. Since the average age of customers increased and they were now mostly people with families, ski resorts began to offer family packages and special discounts. Great number of activities for families with children was developed in order to increase visits. Furthermore, many high class resorts started to introduce low price offers in order to adapt to change in economic conditions. Moving forward, creating a competitive advantage became a very important issue discussed by managers of ski resorts. This was due to increased competition as many resorts were failing because of low level of management and they were not able to cope with the problematic situation. Achieving competitive advantage was possible either through offering low prices or great variety of activities. For this reason numerous resorts invested in building cinemas, art galleries, theatres, retail centers etc. in order to improve the experience offers to visitors. (Rothbaum 2005).
Furthermore, great efforts had to be put in order to attract younger customers. This could only be done by accepting their trends and applying them to business. Since 75% of snowboarders were under 24 years old and their number was constantly increasing, resorts had to provide conditions for practicing this sport.(Palmeri, 2003) In the end, as management became a very important success factor for ski resorts, managers had to devote more time to scanning micro and macro environments and developing contingency plans which would help react better to possible changes in the future. (Schermerhorn, 2008)

Question 3: How is competitive environment of the resorts on the east coast different from that in Colorado? What should the east coast resorts pay particular attention to?

Ski resorts on east and west coasts of USA can certainly be found to have different competitive environments by taking several factors into consideration. By exploring environment of ski resorts in Colorado, it can be noticed that they are experiencing longer winter seasons with greater snowfall, which is a great advantage over east coast resorts, where weather conditions are much more unfavorable. (Anon, 2007) Furthermore, the main competitive advantage of ski resorts in Colorado, which is also called ‘The Ski Country’, is that they are offering high class service, since 6 resorts from Colorado belong to the top ten list of USA resorts. These resorts are famous for offering great amount of non-skiing activities which fulfill and often exceed expectations of their customers. However, due to change in economic conditions, many of these resorts had to adapt by offering low price holiday packages to increased number of people with low budgets. Furthermore, many resorts from Colorado were acquired by large corporations and good example of this is Vail Resorts Corporation which owns 6 top class resorts in Colorado.(McGinn, 2005) The competition among these corporations is taking greater measures and many innovative ideas can be expected as they attempt to achieve competitive advantage over each other.

Moving forward, the ski resorts on the east coast are experiencing greater business difficulties than those in Colorado. First, their revenues are highly affected by short duration of winter season and small amount of snowfall.(Anon, 2007) Moreover, since most of east coast resorts are of smaller size and offer low price family packages, they do not have enough capital to invest in artificial snow-making technology and other methods of fighting global warming.

Finally, east coast resorts are experiencing great problems due to competition from European resorts which has significantly grown over the past years. As resorts from Europe are offering low price packages comparing to USA resorts, customers are increasingly choosing their offers over the ones of east coast resorts. (Leocha, 2007) It will be a very difficult task for managers of east coast resorts to come up with ideas to get customers back from European resorts and remain competitive in the USA.

Question 4: Possible changes in the environment in the near future

The near future will most probably bring several changes in the business environment of ski resorts and certain actions can be anticipated.

To begin with, global warming will continue to threaten the business and ski resorts will most definitely devote more time to fighting this issue. This can be done by greater efforts in lowering emissions of Greenhouse gasses, which are the main cause of global warming, and through incentives similar to ‘Keep Winter Cool’ campaign in order to increase the awareness of customers and resorts throughout the world. Moreover greater capital investments can be expected in artificial snow-making technology and other alternative methods that might emerge. Furthermore, it is possible that many resorts will face problems as the level of their services decreased due to loss of skilled staff, and decrease in customer satisfaction. In the end, since the number of resorts is continuously falling, this will cause competition among resorts and corporations owning them to increase even more. Managers of ski resorts will have to come with new ideas, and holiday offers will start to include many interesting activities in order to attract greater number of customers.

Conclusion

All of the above mentioned factors have lead to the severe decrease in profits and efficiency of the ski resort operations. First of all, the most important factor that has contribute to these operation problems is the climate changes factor, to be more specific the effect of the Green house and global warming. It is crucial that resort management involves itself in better planning, organizing, leading and controlling and thus develop new ideas and practices that can help the resort business go along with its’ operations. Furthermore, the importance of finding the alternative ways in artificial snow making, thus keeping the season longer, is great as well as providing customers with extra activities in order to satisfy their needs and wants. All of these bring the need for huge capital investments, and management has to manage properly those investments in order to stay competitive in the market. The most severe competition is the one between east coast resorts and European resorts, since European resorts have been proven more efficient in providing customers with services and products that are able to satisfy them. Further changes should be taking place and resorts must absorb those changes and be able to keep up with them in order to remain in this business.

List of References:

• Anon (2007) Little Snow Hurts East Coast Ski Resorts. Msnbc [online], Available from: http://www.msnbc.msn.com/id/16595573/ [Accessed 3rd December 2008]. • Anon. (1997) Ski industry forced to look at young crowd to survive. Marketing News, 31(1), p. 11.

• Anon. (2007)Ski industry climate change policy. NSAA: National Ski Areas Association [online], Available from: http://www.nsaa.org/nsaa/environment/climate_change/ [Accessed 5th December 2008].

• Leocha, C. (2007) 10 differences between skiing in Europe and the USA. USATODAY Sunday, November 4 2007, p.1-4.

• McGinn, D. (2005) King of the Hill. Newsweek, 145(8), p. 12-18.

• Palmeri, C. (2003) AN UPHILL BATTLE ON THE SLIPPERY SLOPES. Business week, 3815, p.44.

• Rothbaum, N. (2005) Hold The Skis. Smart Money, 14(12), p. 114-117.

• Schermerhorn, J. R. Jr. (2008) Management. 9th ed. New York, John Wiley & Sons.

• Scott, Daniel et al. (2006) Climate Change and the Sustainability of Ski-based Tourism in Eastern North America: A Reassessment. Journal of Sustainable Tourism, 14 (4), p.376-398.