Article

Summit/Wasatch Economic Outlook

June 6, 2013

And then on the way back, our drivers hear the fact that everybody’s leaving happy, they had a great vacation. Even some days that were not-so-great skiing, they went shopping. They went to restaurants.

Stan, tell us a little bit about lodging from the viewpoint of the luxury segment.

KAMINSKI: The decision making by the North American family that is going to go and ski and spend anywhere between, depending on lodging and dining, $5,000 and $50,000 for a week-long vacation is really based on what happens in the early season from a snowfall standpoint. Two years in a row we’ve completely underperformed in March at our resort. But we’re still coming into maturity at our resorts—our growth is somewhat slowing down on a year-over-year basis. The challenge is not necessarily January-February; the challenge is March and putting together a really strong finish to the 150-day season.

And then early-season snow—two years in a row our beach resorts around the brand have been much busier for spring break than our mountain resorts.

Hans, you’re always a great barometer since you’ve been in the restaurant business a long time.

FUEGI: I would describe it as a successful but quirky season. It was the holidays. December looked to be soft, and then we more than made up for it in January. That holiday season went a lot longer than I thought it would.

We got penalized a little bit by Sundance and Martin Luther King’s birthday conflicting, falling on the same date. You really lose a pretty strong weekend with Martin Luther King, because there’s just not enough room to really maximize a return on both of these events.

With Easter being the last day of March, it was phenomenal. We were cranking probably the strongest couple weeks in March I’ve had in a long time. It went pretty well into the first week of April, and then the last week of the season was soft. And we expected that. We usually don’t do well if Easter has already happened or if Easter is too late.

We are up from last year, which is good, but it was sometimes a bit of a nail-biter.

         

Talk about the Office of Tourism’s efforts—it looks like the state is set to spend more money on marketing.

FUEGI: As a member of the board of the Utah Office of Tourism, our funding went from $7 million to $9 million this current fiscal year, and it will go up to $12 million in the next fiscal year. That all pays off through the Utah cooperative marketing program. Ski Utah gets funded to the tune of $225,000. Same thing for the chamber of commerce, the Ogden area for Snow Basin, et cetera—they all benefit from that and they all match those funds.

As those funds go up, we can afford more TV advertising, more billboards. Between what the resorts do, what the chamber does and what the Office of Tourism does, collectively, that pays off. We’re going to keep seeing the results as long as the legislature sees the wisdom of funding that offer.

Is $12 million the most that we’ve ever put into it?

FUEGI: Yes, it is. We were at $11 million when we started, and then it went down to $7 million when the economy went down, and now we’re up to $12 million. So we’re on the right track. Those efforts pay off big time, between the corporative marketing program and the $3-some million dollars that go to advertising in conjunction with what the resorts do through Ski Utah and the chamber. We’re all competing, but we all are working toward the same goal.

WHEATON: The national ski market is somewhere around $60 million. Here in Utah, we’re $4 million. So we don’t need to move that needle very much, as far as market share goes, to have a dramatic impact on what happens on the ground here in Utah. For the Office of Tourism to have that kind of change, from $9 million to $12, is huge. Plus, with the cooperative program they have, the nonprofits can leverage that money.

One of the drivers here and in most resorts has always been the real estate market. Has the market really started to come back the way it was, or are we still at a lower level?

SONNTAG: I have dreams about 2005 and ‘06. I don’t know if we’ll ever get quite there again, but you don’t need to get all the way there. Our business is very cyclical. It’s a lot like surfing: you see the waves and you count them in the distance, and you know that that seventh or eighth one is going to be the one, so you know when to start paddling. We’ve seen the signs. Lot prices are creeping up back to the point where we might even want to get into the lot sales business again. Second homes are now trading above replacement cost, which for several years wasn’t the case. Those are usually your bellwether indicators that it’s time to turn the board around and start paddling.

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