Lifestyle based transition in Ski Towns

I've attached some quotes from an article in the weekend edition of the Wall street Journal. The broader investment market is starting to see the potential of changing demographics in resort towns and most are not seeing the whole picture. In addition people increasingly have the ability to choose where they want to live by the quality of the lifestyle and not work location. An increasing number of people are realizing they can live here without giving up a great career. Based on my experience here in Steamboat people that have made a lot of good choices in their lives now are realizing that they can work from almost anywhere or now have the flexibility to spend more time here so they are looking for a new primary of second home in Steamboat. The majority are either buying with their retirement in mind and plan to spend most of the year in Steamboat once they do retire, are ready to retire, or are looking to move their family here since they can work from anywhere and want to live / raise their kids in Steamboat.

One very important point the article misses is the transition of mountain towns to an economy based more on their overall lifestyle than just skiing. Skiing is an important part but as people spend more time in the mountains they realize Summer and Fall are just as nice and sometimes even better. Steamboat visitors start to come in the winter but what really attracts people over time it the overall lifestyle that is possible in places life Steamboat Springs, at that point skiing becomes a bonus. I can vouch for that. There is a growing body of research to support this as a broader trend. The percentage contribution of tourism to the economy in Steamboat has been on the decline for about a decade and that doesn't mean it isn't growing. It is just being eclipsed by a stronger trend of people coming here for the lifestyle then wanting to join and then contribute to the community here. It is amazing how quickly people feel a sense of ownership and want to help enhance it even if they don't live or own here yet.

The article also misses the fact that people are staying much more active. I skied a great powder run last week next to a guy only to find out at the bottom that he is 75. He had a couple of friends with him. The key here is that it wasn't surprising even though I still naturally assumed he was closer to my age. I'm sure this more than offsets the increase in the average age of skiers, I know plenty of 60 year olds here that can ski or bike me into submission.

Selected quotes from the article follow: Ski Resort Sales hit Brisk Pace By CONOR DOUGHERTY December 2, 2006 - "What's the must-have item this ski season? A resort. Some of North America's best-known ski areas have changed hands in the past year, in some cases fetching record prices, as private-equity firms and wealthy individuals are pouring money into mountains. Buyers have snapped up everything from destination resorts like Whistler Blackcomb in British Columbia to smaller ski hills in New York and Pennsylvania's Pocono Mountains. New owners are betting that with the number of ski resorts declining, the remaining players will get a bigger slice of the market. "I think the pace of deals will remain brisk," says Chris Woronka, an analyst with Deutsche Bank in New York. "We are only in the early to middle innings of activity in the ski industry."

In October, New York investment firm Fortress Investment Group LLC completed the purchase of Intrawest Corp. for $2.8 billion in cash and assumed debt, a buyout deal that included the Stratton ski resort in Vermont, Copper Mountain resort in Colorado and Whistler Blackcomb. Mammoth Mountain Ski Area was bought late last year by a group of investors led by Greenwich, Conn.-based Starwood Capital Group Global LLC. Industry analysts say rising investor interest may have played a role in American Skiing Co.'s decision in July to explore "strategic options" for its Steamboat resort in the Colorado Rockies.

Ski resorts are in some ways a perfect target. The resorts generally have low debt, and their upscale clientele is less affected by economic fluctuations. But for investors, ski resorts come with plenty of risk. Despite efforts to become year-round venues, resorts remain a seasonal business largely dependent on Mother Nature to provide good snowfall. Resorts have spent millions updating their snowmaking equipment over the past decade, but the resort business still has generally better years when there is more natural snowfall.

And there's the issue of the aging skiers and snowboarders: The average resort visitor last season was 35.1 years old, up from 33.2 in the 1997-98 season, according to the NSAA. About 30% were 45 or over. While the industry has recorded a string of record seasons -- 59 million skier visits last year, compared with an average of about 55 million over the past decade, according to the NSAA. Investors say all of this is precisely what makes ski areas attractive. Over the past two decades, competition has pushed hundreds of smaller resorts out of business because the areas couldn't afford upgrades or snowmaking equipment to weather lean snow years. There were 478 ski areas in the U.S. last year, compared with 735 in 1984."

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