Ski industry not out of the woods 

Bill Jensen paints picture of tough times ahead in the short term

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The CEO of Intrawest, Bill Jensen, delivered a sobering view on the ski industry this week with a gloomy forecast for the next two years.

"Things still do not look very good," Jensen told a packed room at the Hilton Whistler Resort and Spa at the Canadian Ski Council's (CSC) annual conference Tuesday.

"I think it's going to be a long time before we start to recover."

And while many point to the 2010 Games as Whistler's saving grace to weather the economic storm, Jensen isn't so sure.

"The challenge that I have is: Post-Olympics what is the residual benefit?" asked the head of Whistler Blackcomb's parent company, who has been at the helm of Intrawest for little over one year.

"In my opinion the jury is out on whether we will experience... a long term sustained bump in visitation."

The other facet to resort business - real estate - is also in tough times.

"Real estate has cyclically been a boon to the industry," said Jensen, who has been in the ski business for 36 years. "Unfortunately the boom is over.

"It's not just stalled, it's disappeared."

He said it could be five to 10 years before there is any sort of recovery.

In the meantime, ski resorts are struggling with the decline in revenues of the past season, which have eaten away at the revenue gains the industry achieved in the previous two to three years.

This season's declines are in the range of 10 to 15 per cent or more. And, cautioned Jensen, there could be larger revenue declines on the horizon.

In fact, Jensen said the customer was not truly impacted by "the great recession" until later in the 2009 ski season. He urged people to think of their business by comparing their numbers from Feb. 15 to the end of March when there was a "noticeable falloff" from the numbers in the early season.

"Try to think of your business going forward in those terms," said Jensen.

What that means on the ground for resorts is that purse strings will be tightening to adjust to the new financial realities.

For example, resort capital spending will be down. Jensen said the $51 million Peak-2-Peak gondola would not have gone ahead if the groundbreaking was this year.

"Timing is everything," he said.

"Right now we have limited dollars to invest."

Though resort spending will be down, now is not the time to skimp on safety. Jensen called that the "underpinning of our success."

He pointed to the two recent Airbus crashes - Air France and the Yemenia Airbus crash - and the subsequent fallout from that. The Yemenia airline may now rescind a $2 billion aircraft order from Airbus.

"(Safety is) the one thing that we can hang our hat on," he said.

Jensen's message to the industry leaders across Canada is a message that translates to business leaders everywhere.

In these economic times leaders must be decisive and sometimes those decisions can be painful ones.

Intrawest had to make some of those painful decisions earlier this year with layoffs at its headquarters in Vancouver. More layoffs occurred at Whistler Blackcomb later in the season, and year round salaried employees had their wages rolled back to July 2008 levels.

Though difficult, this is the time to "right size your business" around the new revenue floor, said Jensen.

It is also critical to focus on what you do best.

"Understand what is core to your business and what is not core to your business," he said, adding that those extraneous pursuits that are not critical to the business must be cut away.

Intrawest was bought by the private equity fund Fortress in 2006, including its $1.7 billion debt.

Though the short-term forecast appears bleak, there is a light at the end of the tunnel.

"One day the great recession will end and the market will recover," he said.

In the meantime, the North American ski industry as a whole has the marketing boom of the 2010 Games to look forward to.

"The winter Olympics for the ski industry is a huge showcase," he said.

And in Whistler's case, though he is skeptical of what the Olympics will mean to visitation in the long run, he pointed to other benefits from the Games - the improvements to infrastructure, the source of pride for the community.

The CSC conference ran from July 6-8 bringing more than 125 leaders in the industry to Whistler.

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