Climate change, corporate investment part of new era of ski business at Tahoe

LAKE TAHOE, Calif. — When Andy Wirth became the CEO of Squaw Valley Ski Resort in November 2010, he did so amid a precipitation-laden winter that saw enormous snow loads give skiers at Lake Tahoe plenty of coveted powder days.

“That July 4 (2011), Squaw Valley had five chairlifts open,” Wirth said.

Fast forward about half a year, and on Dec. 28, 2011, during a crucial holiday weekend for ski business revenue, the site of the 1960 Olympics had a paltry two chairlifts spinning.

The anecdote extends to the entire Lake Tahoe ski industry as two vectors have collided in the past four years.

The first is that well-heeled corporations like Vail Resorts and KSL Capital Partners have invested considerable amounts of capital into purchasing and upgrading some of the region’s most iconic ski resorts.

The second is that a prolonged four-year drought — which some weather experts have characterized as the most severe in a millennium — has rendered getting a solid return on investment in the near term difficult.

“Sure our business has been adversely impacted this year,” Wirth said.

But he and other industry leaders point to a diversification in product offerings that has allowed resorts that have traditionally relied on skier counts to determine their revenue to weather a lack of snow.

“If you looked at our capital structure and results, people would be surprised, if not shocked, to see how we’ve been able to withstand the lack of snow,” Wirth said.

SKIING IN SUMMER?

When Wirth and KSL formed Squaw Valley Ski Holdings after Squaw Valley merged with Alpine Meadows in 2011, the company pledged to invest $50 million in various upgrades.

Part of those investments were allocated to snowmaking infrastructure, which has meant the resort is able to blow more snow than previously and not rely as heavily on the benevolence of mother nature.

Secondly, Squaw and other resorts strive to make their resorts into year-round destinations that offer a more diverse and robust portfolio of recreational opportunities.

On the South Shore, Heavenly Mountain Resort, the first property to be purchased by Vail in 2002 (Vail has since acquired Kirkwood Mountain Resort and Northstar California), has expanded its offerings beyond skiing by introducing the Epic Discovery Summer Mountain Adventure package.

The mix, which is also available at Colorado Vail-owned resorts Vail and Breckingridge, offer a ropes course, mountain biking trails, hiking and informative tours

“Our overarching goal has been to utilize the existing infrastructure to allow guests the opportunity to engage more in the National Forest when they are up here,” said Sally Gunter, spokesperson for Heavenly. “Expanding our summer activities has been in the works for a long time.”

Resorts like Heavenly, which operate through a permit managed by the U.S. Forest Service, were able to expand offerings mainly due to a piece of legislation called the Ski Area Recreational Opportunity Enhancement Act of 2011.

For the first time, the act allowed mountain resorts on National Forest land to introduce activities such as zip lines, mountain bike terrain parks, disc golf courses, ropes courses and interpretive hikes.

‘A CHANGING BUSINESS MODEL’

At Tahoe-Truckee, where the summer season attracts as many, if not more, tourists as the winter season, the legislation was key to spur investment in summer actives and unwittingly helped resorts diversify heading into an era of snow-scarce winters.

Bob Roberts, executive director of the California Ski Industry Association, held up the example of Woodward Tahoe, a year-round camp at Boreal Mountain Resort that offers visitors training on trampolines for various aerial pursuits from snowboarding to cheerleading, as an example of how resorts can diversify beyond just downhill winter sports.

“You are seeing a changing business model,” Roberts said. “Now, it’s all around mountain recreation, of which winter skiing is just a part.”

Even for businesses still concerned predominantly with skiing, there are innovative products that help enterprises cope with Mother Nature.

For example, Wirth said creativity with season pass packages allows resorts to be more nimble in reaction to the fluctuations in winter precipitation.

The Mountain Collective Pass allows passholders to choose among various North American resorts, including Squaw, Jackson Hole, Snowbird, Mammoth, Whistler, Aspen and Lake Louise.

“It gives people an ability to choose,” Wirth said. “It also allows resorts to the ability to withstand some of these challenges.”

Roberts said the prospect of climate change, a warming planet and unprecedented swings in weather patterns present significant challenges, but the industry as a whole is well positioned to adapt.

“Change is endemic to us,” he said. “When we first started out, skiing was exclusively a sport. Then it became a family recreational activity and then snowboard brought a whole new dimension to it. The Millenials represent a whole different group of folks.

“Finally, you have climate change and that presents a real challenge moving forward.”

ABOUT CLIMATE CHANGE

The scientific community is officially ambivalent about the relationship between California’s drought and climate change.

While some argue the protracted dry weather is worsened by the rising temperatures and alterations in atmospheric conditions that diminish rainfall, other experts note that drought is a feature of California weather and has been so for thousands of years.

While scientists and policy makers are noncommittal, the ski industry is sure.

“We recognize that climate change is real and based on good science,” said Art Chapman, founder of JMA Ventures, which owns Homewood Mountain Resort on Lake Tahoe’s West Shore. “I think the weather patterns of the past four years are attributable to climate change.”

Chapman, much like his other contemporaries managing resorts at Lake Tahoe, points to the fact the lake is as much of a summer destination to mitigate concerns over the impacts of climate change on the business, but he and others are also advocating for policy measures aimed at curtailing carbon emissions.

“When California introduced Assembly Bill 32, the California Carbon Sequestration Bill, we were the first business group to offer our support,” said Roberts. “Largely, this is an issue we understand.”

‘A SERIOUS TOPIC’

While CSIA has been urging lawmakers to create policy capable of curtailing the appetite for fossil fuels for more than 15 years, the recent spate of cloudless skies and a disappearing winter is unprecedented.

“I’ve been skiing for 40 years,” said Roberts. “I ran Mt. Shasta in the ‘70s, and we would receive 50 feet of snow. But this is the first time in my memory that we’ve had four dry winters like this in a row.”

The prognosticators of doom say get ready for more, but Wirth said dry winters and prolonged drought are not the natural corollary of climate change. Rather, it’s increased volatility in weather patterns.

“The body of work is so immense and climate scientists have collected so many data points that I don’t see there’s anything that offers a logical person a reason to disbelieve in climate science,” he said. “You have to be careful though — when the Donald Trumps of the world tell you to look outside the window to see how climate change is progressing, that is a ludicrous approach to a serious topic.”

What many scientists assert about climate change is that there will be violent swings. In California, it will likely manifest itself through periods of drought followed by periods of heavy precipitation, Wirth said.

The challenge will be how to appropriately manage it.

Matthew Renda is a former reporter for the Sierra Sun and North Lake Tahoe Bonanza and currently is a Santa Cruz-based writer. He may be reached for comment at matthew.renda@gmail.com.