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The ups and downs of resort expansion - part 5

Capital improvements on hold due to number of factors Ski resorts across North America will not be investing as much in capital improvements, real estate and on-mountain facilities this year.

Capital improvements on hold due to number of factors

Ski resorts across North America will not be investing as much in capital improvements, real estate and on-mountain facilities this year.

"Everyone's taking a wait and see approach," says Paul Mathews, president of Ecosign Mountain Resort Planners Ltd.

"Business will probably be down 10 to 15 per cent this winter" due to an economic slowdown and the Sept. 11 terrorist attacks, he explains.

Jimmie Spencer, the president and CEO of the Canada West Ski Areas Association, says the current mood, albeit cautious, is optimistic.

"We won't be any worse off than last year," he says.

The majority of resorts in British Columbia and Alberta experienced a poor snow year last season and have cut back on capital improvements due to lower than expected revenues.

But, according to Mathews, there have also been some other bumps along the road to resort consolidation and capital spending.

Companies such as Resorts of the Canadian Rockies – owner of eight resorts, including Fernie, Kimberley and Lake Louise – and American Skiing Co. – owner of nine resorts, including Steamboat, Colo., and Heavenly, Calif. – have experienced a variety of financial problems. The two companies have spent the summer trying to get their finances in order.

"Those situations are still playing themselves out," he says.

The development and expansion of what some call "McResorts" or "Resorts-R-Us" in the 1990s follows a general trend of other resort companies copying, what Mathews calls, the "Whistler model."

"Whistler was the first resort to bring a pedestrian village and beds close to the mountain," he says.

But, according to Mathews, there is more spending and investment on the horizon.

"All the resorts across North America" – except in B.C. and Alberta – "made big earnings last year and have plans for next year," he says, noting that there are 42 resort villages currently under design or construction.

Mathews, meanwhile, says this year's lack of capital investment is due to the cyclical nature of ski resort development.

According to Mathews, the six-year period from 1992 to 1998 saw an era of resort consolidation and significant capital investment.

Mathews points to Intrawest Corp.'s $574-million investment in Whistler as an example. Intrawest is currently part way through a $80-million revamp of Creekside.

"Capital improvements attract people to invest in real estate," he explains.

According to B.C. Assets and Land Corp.'s 1999-2000 end-of-ski-season report, 16 of B.C.'s major resorts will invest $308 million in improvement projects over the next five years.

The report does not include private construction of real estate at Interior resorts such as Sun Peaks near Kamloops, Big White near Kelowna, Silver Star near Vernon, Kicking Horse near Golden, Fernie and Kimberley.

The BCAL report indicates only four of the province's resorts will not embark on multi-million dollar expansion plans during that period.

In the U.S., it is a similar story.

Colorado ski resorts will spend $85 million US on capital improvements this year, the lowest total in the past six years.

"There has been a prolonged period of spending," says David Perry, president of Colorado Ski Country USA, a marketing group that represents the state's 25 resorts. "Now we are entering a period where the industry is carefully watching (spending)."

Last year, spending on capital improvements at Colorado resorts dropped by more than 50 per cent.

Also, according to the National Ski Area's Association's year-end report, spending on capital improvements at 162 U.S. resorts dropped from $418 million US in 1999-2000 to $315 million US in 2000-2001.

But the report projects spending will rebound slightly to $387 million US in 2001-2002.

Investment in real estate and on-mountain facilities, which also saw a drop last season, are also expected to rebound this year.

According to the NSAA report, spending on capital improvements is returning to a "more normal" level after seeing huge expenditures during the previous five years.

"It only makes sense to have a settling-out period," says Brent Harley, president of the Brent Harley and Associates Inc., a Whistler-based resort planning company. "Everyone's going to let the dust settle."

But Harley says most resorts feel good about the upcoming ski season.

"A good year opens the door for further development."

Notable expansions and improvements for the 2001-2002 ski season:

Canada

• Marmot Basin near Jasper, Alta., is expanding its lift-serviced terrain via a new high-speed quad on Eagle Ridge.

• Sunshine Village near Banff, Alta., is replacing its decades-old gondola with a modern, eight-person gondola. The new lift will cut travel time from the base area to resort village and ski slopes by 40 per cent.

• Apex Mountain near Penticton is adding 30 per cent more terrain to its Wild Side expert's area.

• Big White near Kelowna is adding four new runs and 40 hectares of glade skiing, which will expand the ski area's expert terrain by 25 per cent.

• Intrawest-owned Panorama, near Invermere, will try and open 280-hectares of new terrain after being stymied last year by a lack of snow. A new slopeside lodge is also slated to open.

United States

• Two well-known Utah resorts, Alta and Snowbird, will be joined at the hip. The resorts will be linked via 1,902 hectares of new terrain in the Mineral basin area. Alta, however, still does not allow snowboarders.

• Speaking of snowboarders, Aspen will be allowing single-plankers on Ajax Mountain all season. After 54 years as ski-only mountain Ajax was opened to boarders last April.

• Colorado's Telluride resort is adding 293 hectares of new terrain, effectively doubling the size of the area. Three new high-speed lifts were installed to service the new areas.



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