Tuesday, March 27, 2012

Jumbo still faces big hurdles

By on Tue, Mar 27, 2012 at 1:13 PM

Last week’s approval of a master development agreement for the proposed Jumbo Glacier Resort in the Kootenays generated predictable support from the business community and outrage from opponents.

But is Jumbo really any closer to becoming the first four-season ski area in North America?

Skeptics may recall that a master development agreement for Al Raine’s proposed Cayoosh ski resort between Pemberton and Lillooet was also approved several years ago. In the face of opposition from First Nations and the legal limbo that surrounds Crown land and Aboriginal title in British Columbia, nothing has happened since.

Proponents of Jumbo claim to have the support of the Kinbasket Shuswap First Nation. The Ktunaxa First Nation, however, is vehemently opposed.

While opponents and proponents battle it out in the Kootenays, generating headlines for the foreseeable future, there are several other underlying stories. The first being a provincial government, sinking in the polls and desperate to build support among the business community, trumpeting the announcement of the master development agreement. Last week’s approval came after more than 20 years of reviews, and about a year ahead of the next provincial election.

A related story is the provincial government’s latest five-year tourism strategy, released last fall and titled Gaining The Edge. It identifies the major trends in tourism, the obstacles holding back tourism in B.C. and some general steps to reduce those barriers (leadership through partnership and coordination; strategic marketing; world class visitor experiences).

Gaining The Edge quotes Premier Christy Clark as saying “British Columbia will become North America’s No. 1 ski destination.” That’s an ambitious but perhaps achievable goal, and Jumbo may be part of it. But if that is the goal it’s going to require a lot more detailed strategy than just building new resorts.

The absolute number of skiers and boarders has been more or less stagnant for years. Attracting more of that stagnant market to B.C. means stealing skier visits from other provinces, states and countries. The most obvious target would be Colorado, which drew more than 12 million skier visits in 2010-2011. But Colorado wouldn’t give up its market share easily. It knows better than most jurisdictions how important skiers are to the state’s economy, and has a well-established marketing plan to ensure the flow continues.

Gaining The Edge talks about focused marketing for B.C. but skiing and snowboarding is just one of six “products” to be marketed. If the premier is serious about making B.C. North America’s No. 1 ski destination more money, as well as more focus, is needed for marketing.

Part of the reason for that is because B.C. — and particularly Jumbo — is a long way away from most North Americans. One of Colorado’s advantages, as far as the North American market goes, is it’s in the centre of the continent. B.C. is in the upper left corner, many miles further from the densely populated eastern seaboard.

B.C.’s geographic advantage is its proximity to the huge California market and to Asia. California — and Oregon and Washington — have been strong, steady markets for Whistler for years. But getting to the interior of British Columbia is more of a challenge than getting to Whistler.

Gaining The Edge talks about reducing the barriers to travel to B.C., including more direct air access for Asian countries. That’s a theme the provincial Liberals have been harking on for a few years. To date, however, the federal Conservatives have been mostly unresponsive.

As far as building Jumbo, the proponent’s plan calls for three phases of construction over 20 years. They predict $15-$20 million per year in construction for 20 years. Media reports have put the total cost of the resort at $900 million.

Financing the development is where the numbers start to become questionable. At buildout there would be 5,500 bed units (plus 750 employee beds) and 20-23 lifts. For the past 20 years ski area operators have said that ticket sales alone can’t finance modern high-speed lifts. Real estate sales are what have made investments in lifts possible.

To grossly over-simplify the Jumbo proposal, $900 million divided by 5,500 bed units means you would need about $163,000 per bed unit. If a hotel room is two bed units, the average cost of a strata-titled hotel room would have to be about $326,000.

And who is going to buy vacation property at Jumbo? Albertans perhaps... But Revelstoke still has some real estate for sale — including single-family lots with their own helicopter landing pads, relics from a bygone era. Red Mountain at Rossland is also selling real estate, so is Kicking Horse…

As for ongoing operating revenues and expenses, Jumbo proponents estimate the ski area will attract 2,700 skiers per day, on average. A busy day on Whistler Blackcomb would be 25,000 skiers.

Proponents predict Jumbo will generate $12 million in tax revenue annually for all levels of government. Whistler claims to generate $376 million in annual government revenues.

The numbers, the politics, the geography all suggest Jumbo is a long way from becoming a reality.


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