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U.S. ski industry could face an uphill ride

As the slopes begin to open, industry experts say economic and competitive factors as well as — no surprise — the weather will determine the level of success for the  forthcoming U.S. ski season.
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"People are still hesitant about spending money on discretionary purchases," says Dr. Gordon Von Stroh, professor of management at the University of Denver's Daniels College of Business. "They are downsizing their expectations and pleasures." Don Landwehrle
/ Source: DailyFinance

This weekend marks the official opening of many ski resorts around the country. Skiers and snowboarders tend to be optimistic by nature, and most reports anticipate a good season at the slopes and resorts, despite a still-tepid economy and high unemployment.

"Nationally, the ski industry had its second best year on record last year," says Jennifer Rudolph, communications director with Denver-based Colorado Ski Country USA. "So we have some momentum carrying us into this season." Rudolph says her organization's members report that early-season pass sales are trending at or above last year's levels.

Some western resorts are also reporting a rise in early-season bookings from their international clientele, as well as better reservation and occupancy rates — although that news may be influenced by lower room fees.

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U.S. ski facilities usually dominate their local economies. A recent report by First Intelligence says the industry has about 400 companies that operate around 450 ski areas — with combined annual revenue estimated at $2 billion. About two-thirds of the industry's revenue comes from facility entrance and usage fees, with the rest from sales of merchandise, food and beverages, equipment rentals, and skiing or snowboarding lessons.

Yet some longtime observers of the industry say the economic downturn will weigh on consumers.

"People are still hesitant about spending money on discretionary purchases," says Dr. Gordon Von Stroh, professor of management at the University of Denver's Daniels College of Business. "They are downsizing their expectations and pleasures."

And most skiers, he notes, are in their twenties — a demographic that is "reeling from lack of employment opportunities." Meanwhile, another important demographic for the ski industry, families, may also seek more economical forms of entertainment for winter vacations.

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The combined financial stresses mean many ski resorts, which have in recent years opened more lifts and trails to attract skiers and snowboarders, compete with one another more as they vie for vacationers — and that competition extends to local real estate markets.

Dr. Von Stroh says condominium sales in Summit County, Colo. — home to several of the state's famous ski areas — have remained below pre-recession levels. "Several longtime real estate experts say that some blame goes to the lending guidelines of government-sponsored financial institutions like Freddie Mac and Fannie Mae," he says.

Rentals in the area were reportedly down 10-20 percent for last season, compared to 2007-2008. The weaker real estate market impacts ski rentals, restaurants and other local, resort-related employment.

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Of course, the most obvious variable for any ski resort is local weather conditions. Forecasters say warmer, drier conditions from the current La Nina weather system could take a toll on some ski areas.

"Undoubtedly the best place for skiing this winter will probably end up being across the northwestern portion of the country," says John Feerick, a senior meteorologist with AccuWeather. The region is expected "to be colder than average ... as well as snowier than average." But the jury is still out, he says, about conditions this season for the central Rockies — and will depend on whether the expected snow-making weather pattern shifts further south.

Forecasting ski conditions in the Northeast, Feerick says, gets a bit tricky. "I don't think we will see anything like what we saw last year," he says. "There's going to be what we've termed a 'battle zone' between the warmer, drier air from the south and the cold and snowy weather patterns of the north. There's concern there will be a lot more ice and sleet in the interior Northeast this year as opposed to last year, where pretty much every storm was snow."

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And one other factor: the U.S. ski season is expected to be a bit longer. That's because the 2011 Easter holiday — the industry's unofficial closing weekend — falls at the end of April and "a few resorts will extend their season to be open for the holiday," according to Rudolph.