Survival and Growth: Lessons from the Ski Industry. Sail America Industry Conference June 24, 2015 Newport, RI

Transcription

1 Survival and Growth: Lessons from the Ski Industry Sail America Industry Conference June 24, 2015 Newport, RI

2 The Situation in the 1990s: Stagnant visits. Declining number of areas. Time poverty and competition from other leisure activities. Obesity epidemic. Climate change. Industry with a history of being distracted by grand marketing efforts.

3 Estimated Skier Visits 1978/ / Skier Visits (millions / / / / / / / / / / / / / / / / / /96 Flat visits 1996/ / /99

4 4,000,000 U.S. Population By Age and Ethnicity 1999 VS ,500,000 3,000,000 Number of Persons 2,500,000 2,000,000 1,500,000 1,000, ,000 White, 1999 Non-White, 1999 Non-White, 2015 White, Massive demographic change not in alignment with current market. Single Year of Age

5 THE MODEL FOR GROWTH Beginner Drop- Out Never Been Annual Growth in Trial Core Revival Lapsed

6 THE MODEL 1999/2000 Beginner 10% 85% Drop- Out 15% Never Been Annual Growth in Trial=0.0% Core 65% 25% Revival 25% 20% 75% 0% Lapsed

7 Projected Skier Visits: 2000 to Resulting Percent Change in Skier Visits by 2015 = SKIER VISITS ( in millions ) YEAR

8 What happened?

9 THE MODEL 2012/2013 Beginner 8% 83% Drop- Out 17% Never Been Annual Growth in Trial=-3.3% Core 65% 25% Revival 27% 27% 75% -1.7% Lapsed

10 Total Visits since 1978/79

11 Today s De Facto: Climate change is happening. Our sustainability efforts, while noble, are simply expected of us and will do little to alter the climate. The pre-boom and baby boomer generations continue to exit the sport in large numbers and will be gone almost entirely in ten seasons. Income disparity is resulting in an increasing proportion of our visitation being generated by high income categories.

12 CHALLENGES

13

14 Divisional Average Temperature Ranks, Dec 14 Mar 15 Record or Near-Record Warmth across West

15 Total Active US Snowsports Participants Decline in number of active participants

16 Number of First Time Participants Decline in number of first timers

17 Estimated Market Size for Downhill Snow Sports in U.S. 3.2% of population 10,000,000 ACTIVE Better understanding of the true size of the market. 6.3% of population 20,000,000 LAPSED 18% of population 56,800, ,200,000 Socio-Economic Match Total population

18 Generation X: Born between 1965 and Currently age 35 to % of population. 6/18/15

19 Millennials: Born after Currently age 35 and under year olds are 24.5% of population.

20 Number of Active Participants (in thousands) Number of Active Snowsports Participants by Age Cohort: 1996/97 to 2014/15 Millenials (15-33) Gen X (34-49) BB2 (50-59) BB1 (60-69) Pre-boom (70+) 4,116 5,000 4,500 4,000 3,284 1,942 1,563 1, ,095 1, ,500 3,000 2,500 2,000 1,500 1, Season Millennial and GenX essentially flat

21 Average Total Days Skied/Snowboarded Average Total Number of Days Skied/Snowboarded by Cohort: 1996/97 to 2014/15 Millenials (15-33) Gen X (34-49) BB2 (50-59) BB1 (60-69) Pre-boom (70+) TOTAL Season Significantly lower avg. days skied/snowboarded by Millennials and GenX

22 Among those who don t intend to introduce their child to skiing/snowboarding, what are some of the reasons why?

23 Percent of Visitation 35% 30% 25% 20% U.S. Snowboarders as a Percentage of Total Visits to U.S. Resorts: 1991/ / % 32.6% 31.6% 31.9% 29.3%29.6% 30.6% 29.8% 30.8%31.3% 30.2% 27.6% 25.5% 28.1% 23.9% 27.0% 26.6% 27.1% 27.6%27.7% 28.6% 27.5% 25.9%26.1%26.0% 26.7% 21.7% 23.6% 24.3% 20.9% 22.2% 18.1% 15% 10% 10.7% 9.0% 7.7% 14.4% 12.9% 5% 0% Percent Snowboarders from Kottke Percent of Visits Accounted for by Snowboarders U.S. Only, NSAA Demo Survey Source: NSAA Kottke National End of Season Survey (maximum available sample each season), and NSAA National Demographic Stud y

24 HIGH RISK ZONE Issues with gender related dropout.

25 Income Inequality and the Aging of Wealth Source:

26 REASONS FOR OPTIMISM

27 VTF/H (in 1000s) Percent Change Since 1993/94 Change in Vertical Transportation Feet per Change in Aggregate VTF/H: 1993/94 to 2013/14 Hour: 1993/94 to 2013/14 1,200, / /94 % Change 1,000,000 50% 60% 55% 996,067 50% 800, , ,462 33% 520,861 31% 642,091 32% 40% 30% 400, , , ,678 22% 20% 200, , , , , ,531 10% 0 Northeast Southeast Midwest Rocky Mountains -9% decline in areas 41% increase in VTF/H Kottke Region: Pacific Southwest Pacific Northwest 0%

28 Non-Peak Weekend Lift Ticket Price 2014/15 Non-Peak Weekend Lift Ticket Price by 2014/15 Weekend Lift Ticket Prices by Resort Resort $160 $140 $120 61% of resorts have a lead ticket priced below $60. $100 $80 $60 $40 $20 $- Source: February, 2015, Resort:

29 Average Season Pass Price Average Season Pass Price: 2003/04 to 2013/14 Average Season Pass Price: 2003/04 to 2013/14 $750 $800 $639 $606 $630 $652 $695 $691 $670 $674 $698 $684 $700 $600 $500 $400 $300 $200 $ / / / /07 Source: NSAA Economic Analysis of United States Ski Areas 2007/ /09 Season: 2009/ / / / /14 $- Season pass prices have remained almost unchanged over the years.

30 Revenue and Profit (in thousands) Skier/Snowboarder Visits (in millions) US Skier/Snowboarder Visits, Gross Revenue and U.S. Operating Visits, Gross Revenue Profit: and Operating 2001/02 Profit: 2001/02 to to 2013/14 $30, $25,000 $20, $21, $21, $23, $25, $23, $23,799 $25,680 $22, $25,949 $26, $15,000 $10,000 $5,000 $17,960 $3,445 $18,969 $18,771 $4,464 $4,596 $5,297 $5,349 $5,711 U.S. Resort Average Gross Revenue (thousands) U.S. Resort Average Operating Profit (thousands) U.S. Visits Linear (U.S. Resort Average Gross Revenue (thousands)) Linear (U.S. Resort Average Operating Profit (thousands)) Linear (U.S. Visits) $6,951 $5,432 $6,203 $6,272 $5,289 $7,114 $7, $0 2001/ / / / / / / / / / / / /14 Since 2003/04 a 53% increase in average operating profit. Season: 0

31 Real Estate (General/Diversified) Tobacco Transportation (Railroads) Utility (Water) Ski Resorts Software (System & Application) Drugs (Pharmaceutical) R.E.I.T. Oil/Gas (Production and Exploration) Broadcasting Telecom. Services Drugs (Biotechnology) Information Services Beverage (Alcoholic) Entertainment Semiconductor Computers/Peripherals Cable TV Investments & Asset Management Beverage (Soft) Telecom. Equipment Green & Renewable Energy Software (Internet) Power Healthcare Products Hotel/Gaming Household Products Metals & Mining Real Estate (Development) Utility (General) Restaurant/Dining Diversified Insurance (Prop/Cas.) Chemical (Specialty) Software (Entertainment) Insurance (Life) Insurance (General) Reinsurance Hospitals/Healthcare Facilities Recreation Machinery Apparel Shoe Environmental & Waste Services Electrical Equipment Chemical (Basic) Aerospace/Defense Oil/Gas (Integrated) Food Processing Heathcare Information and Technology Advertising Chemical (Diversified) Semiconductor Equip Retail (Building Supply) Homebuilding Air Transport Real Estate (Operations & Services) Construction Supplies Packaging & Container Business & Consumer Services Publshing & Newspapers Computer Services Trucking Office Equipment & Services Retail (Distributors) Electronics (General) Transportation Rubber& Tires Shipbuilding & Marine Furn/Home Furnishings Paper/Forest Products Oil/Gas Distribution Building Materials Precious Metals Electronics (Consumer & Office) Financial Svcs. (Non-bank & Insurance) Retail (Special Lines) Education Auto Parts Oilfield Svcs/Equip. Retail (Automotive) Farming/Agriculture Retail (General) Steel Healthcare Support Services Engineering/Construction Retail (Online) Food Wholesalers Retail (Grocery and Food) Telecom (Wireless) Auto & Truck Coal & Related Energy Brokerage & Investment Banking Bank (Money Center) Banks (Regional) Pre-Tax Unadjusted Operating Margin Pre-Tax Unadjusted Operating Margin across 96 Different Industries vs. the Ski Industry (in red): 2013/14 50% Pre-tax Unadjusted Operating Margin: 2013/14 45% 40% 35% 30% 25% 20% 15% 10% 5% 26.7% Source: NSAA Economic Analysis of United States Ski Areas and Aswath Damodaran, January th place. Just behind pharmaceuticals, software, and oil and gas. 0% Industry:

32 SAILING SPECIFIC DATA

33 Insights from AIM s Marine Group Research

34 Average Unit Cost Total Units Sold Decline in Sailboats Sold while Prices Generally Increasing $70,000 Average Unit Cost of Sailboats vs. Units Sold: 2001 to ,000 $60,000 18,600 $60,708 18,000 $50,000 $40,000 $30,000 $34,336 15,800 15,000 $50,557 14,300 14,400 $44,926 12,900 $42,195 $35,936 $35,983 $48,157 11,800 $36,503 9,300 $41,717 $38,889 $36,540 16,000 14,000 12,000 10,000 8,000 $20,000 $10,000 Sailboats Sailboats Units 5,400 4,300 4,600 5,9456,000 4,000 2,000 $ Source: 2012 NMMA Statistical Abstract, The Ssailing Company's Annual Sailing Business Review - The sailboat category has improved but still dominated by relatively low price points.

35 Average Age at Time of Purchase Unsustainable aging of new buyer base Average Age for New Buyers at Time of Purchase Avg Buyer Age at Time of Purchase Source: Info-Link Technologies

36 Percent in Age Group Parallel Aging in Powerboat and Sailboat Owners AIM Marine Group Study Powerboat Owners vs. Sailboat Owners 25.0% Powerboat Owners (AIM study) 2013 Sailboat Owners (AIM study) 20.0% 15.0% 10.0% Average age: Powerboat: 59.9 Sailboat: % 0.0% >25 25 to to to to to to to to to to Source: AIM Marine Group Research, 2013 Age Group:

37 Percent Responding Friends and Peers Particularly Influential for Sailors 100% Source of Introduction to Sailing by Age of First Sailing Experience 90% 85% 89% 80% 80% 76% 70% 68% 60% 50% 40% 30% 20% 10% 0% 10% 0% 14% 57% 10% 55% 35% 18% 5% 3% 0% 0% 0% 0% 0% 1 to 5 5 to to to to to to 34 Age of First Power Boat Experience Friends and peers are a more important influence earlier for sailors. Friends/Colleagues Grandparents Parents

38 Market Size Estimates for Boating: Reg. Powerboats & Sailboats 10M Reg. Boat Owners= 12.8M Boat Owners = 16.7M Boating Adults = 87.8M Est. Tot. Boating Participants = 96.6M Potential Participants = 266.8M Total Population = 313.9M

39 LIKELIHOOD OF PARTICIPATING LEVEL & CONSISTENCY OF ENGAGEMENT LIKELIHOOD OF OWNERSHIP HIGH HIGH HIGH P o p u l a t i o n LOW LOW LOW Powerboat Sail Other Coefficient: X Y Z Influencers: Family s participation Friend s participation Income Education level Geography Age Consistency of participation Type of participation Frequency and duration of participation

40 Lessons Learned: Know your limits. Know your market. Base your decision making on accurate and actionable data. Recognize the importance of self-interest. Define success and measure progress. Stay paranoid. See the long game.

41 Where the complacent go.

42 Emphasis on self-interest is key. The efforts of a group rarely add up to the sum of effort each individual is capable of exerting alone.