International Real Estate Consultation
And Forensic Valuation

U.S. Ski & Snowboard Resort Industry in 2012


The scope of services offered by The Doré Group has recently expanded. Along with valuable market overviews of some of our nation’s unique specialty industries (i.e., power plants, infrastructure, municipal ports, and conservation lands), we are consulting with major players in the ski industry. We would like to share some insight into this industry.


  • New York is the state with the highest number of ski resorts…52 to be precise.
  • There are only three ski areas in the nation that do not allow snowboarders: Alta (Utah), Deer Valley (Utah), and Mad River Glen (Vermont).
  • There are six “makeshift” shrines dedicated to dead musicians on Aspen Mountain.
  • Every day of the ski season, 400,000 warm chocolate chip cookies are handed out at the base of Beaver Creek Resort in Colorado.
  • Squaw Valley, California is home to the only ski-in/ski-out Starbucks in North America.[1]

Ski and snowboard resorts run the gamut from basic facilities catering to day-use skiers to high-end resorts enticing destination visitors from all over the world. According to IBISWorld, the U.S. ski and snowboard industry is “mature”, highly competitive and is impacted by major barriers to entry and mid-levels of capital intensity and revenue volatility. Heavily regulated, but with low governmental assistance, the industry is faced with significant technology changes and increasing globalization. The industry was hit especially hard by the national economic downturn due to its recreational status. Revenue declined significantly in 2009, and although increases occurred in 2010, they were not enough for the industry to fully recover. In 2011, total revenue is expected to be $2.6 billion, with net profit estimated at $182.6 million.

Resorts earn 85%–100% of their income between November and April. The average season length, which was 131 days in the 2010/11 season, is weather-related, varies by region, and can be boosted by a resort’s snowmaking capabilities. Global warming is blamed for the low snowfall in the 2011/12 season, the lowest since 1992 and the second lowest in 21 years of data. Due to subpar snow, about half of resorts opened late and closed early. Snowmaking machinery is beginning to be considered an indispensable aspect of operations. Resorts are also diversifying into summer activities, such as mini or regular golf, zip lining courses, guided or self-guided hiking trails, mountain biking courses, etc., in order to stabilize income. This trend presently caters primarily to the 15-to 25 year old crowd allowing for significant opportunities with the active baby-boomer market.


Typical services offered by U.S. ski and snowboard resorts, and their corresponding contribution to total gross income in 2011, include:

  • Equipment rental (5.6%)
  • Food and beverage sales (12.3%)
  • Lift tickets (50.5%)
  • Season passes (7.3%)
  • Snow sports instruction (8.9%)
  • Merchandise sales (5.9%)
  • Miscellaneous (9.5%)

As of 2010/11, there were 486 ski and snowboard resorts in the U.S. More than two-thirds are located in the Rocky Mountain, New England, Mid-Atlantic, and the Great Lakes regions. Those resorts in close proximity to population centers and transportation hubs have a competitive advantage over those that are more remote. In the Rocky Mountain region, Colorado and Utah are the strongest competitors; in the Mid-Atlantic region, New York, New Jersey and Pennsylvania are the top three markets; and in the Western U.S., California, Washington and Oregon are the primary competitors.


The following are the primary factors affecting competition between ski resorts:

  • Skiing quality (terrain, snow quality and coverage, effectiveness of snowmaking, grooming, etc.)
  • Resort facilities (lifts, dining, lodging, retail, etc.)
  • Range of services offered
  • Weather conditions
  • Proximity to transportation and population centers
  • Customer service (by employees and the use of technology)
  • Pricing
  • Loyalty programs

The three largest companies in the industry – Vail Resorts Inc. (29.2%), Fortress Investment Group LLC (14.7%), and Boyne Resorts (8.7%) – account for nearly 53% of the market share. In 1985, a trend of resort consolidation began as evidenced by a decline in the number of businesses in the industry by an average of 1.4% per year (from 735 in 1983 to 486 in 2011). This is expected to continue as the need for expensive technological advances and infrastructure costs will force out the smaller regional resorts; larger companies benefit from greater efficiency as a result of operating multiple resorts, have more available capital, and are able to offer skiers multi-resort passes.


The following strategies are particularly important to the profitable operation of a resort:

  • Effective revenue and cost control
  • Maximization of economies of scale
  • Proximity to population centers
  • Quality snowmaking facilities
  • Effective marketing program

According to preliminary figures from the National Ski Areas Association (NSAA), the U.S. ski and snowboard industry posted an estimated 51 million visits in the 2011/12 ski season, a decrease from the previous season and the most challenging since 1991/92. On the positive side, volatility is fairly typical in the industry, lesson participation increased indicating potential for future growth, guest satisfaction was at an all-time high, and season pass sales for the 2012/13 season are encouraging. Key drivers of demand include average annual rainfall, per capita disposable income, time spent on leisure and sports, the amount of domestic trips taken by U.S. residents, and the amount of inbound trips by non-U.S. residents. Snowboarders have dramatically increased in the past decade, from 1 million in the early 1990s to 4 million in 2001, and now account for 31% of visitors; traditional skiers decreased from 12 to 9 million. 

There are two primary categories of skiers – in-state and destination visitors. In-state skiers, which account for about one-third of resort visitors, are more sensitive to weather conditions and pricing levels. Destination visitors account for two-thirds of resort visitors and are less sensitive to weather and more affected by economic conditions as they spend significantly more on lift tickets, instruction, food/ beverage, retail goods, equipment rentals, and lodging. Most U.S. resident visitors come from California (11.3% of the total destination market segment), followed by Colorado (10.4%) and New York (7.4%). Due to the weak U.S. dollar, the amount of destination skiers coming from outside the U.S. has been increasing and accounted for about 6.5% of visitors in 2011 (7.1% of industry revenue). Skiers can also be segmented by age as follows: Under 17 (14% of total visitors), 18-24 years (20%), 25-34 (16%), 35-44 (18%), 45-54 (19%), and 55+ (13%).

The first hint of the existence of skis is in a rock drawing in Norway estimated to be about 5,000 years old. It wasn’t until almost four thousand years later that someone had the bright idea to hitch a piece of plywood to their feet with horse reins and snowboard down the slopes. Today both forms of sliding on snow are well-engrained recreational pastimes for millions of people all over the world. While the industry may experience fluctuations and gyrations, it’s here to stay. Resorts, however, can’t settle into complacency in these challenging economic and climactic times. In order to thrive, they must stay on top of marketing, consider diversification, blaze the technological trail, and maintain harmony with the environment in lieu of worldwide global warming concerns.  


Primary sources:

  • IBISWorld Industry Report 71392 – “Ski and Snowboard Resorts in the U.S.” (December 2011)
  • National Ski Area Association Economic Analysis (2010/11 Season)

[1]“Ski Trivia”, Cindy Herschfeld, New York Times, December 9, 2011.


Rail Transportation in the U.S.

December 7, 2011
Written by: Janet Doré, The Doré Group (San Diego, CA)

Ask any train-obsessed boy about trains and he’ll enthusiastically tell you that they’re a really cool way to move stuff and people from here to there. Ask any grown up train buff and you’ll be introduced to Richard Trervithick and walk away knowing more than you ever wanted to know about tanks, boilers, cylinders and driving wheels. Read on and you’ll be able to have your very own reasonably educated conversation about the U.S. rail transportation industry.

According to IBISWorld, the world’s largest independent publisher of U.S. industry research, the U.S. rail transportation industry includes both passenger and freight trains (consisting of national, regional and local railroads but excluding scenic/sightseeing trains, street railroads, commuter rail, and rapid transit systems). The primary industry products/services are bulk freight (raw materials and consumer goods), intermodal containers (goods transported in large containers via multiple shipping modes), passengers (homosapiens), and switching/terminal railroad services (i.e., packaging, freight forwarding, customs brokerage, etc.



Here are some pertinent industry highlights to ponder, put to immediate use, or file away for future conversations:

  • Because people “need” lots of “stuff”, freight service accounts for 95% of rail transport in the U.S.
  • Freight trains are responsible for moving 43% of our “stuff” across more than 140,000 miles of track, making them a crucial component of our economy.
  • More than 90% of freight railroads are privately owned, even holding title to the tracks they travel on, and (surprisingly) receive very little government subsidies.
  • Before 1970, freight trains were obligated to transport passengers. With the passage of the Rail Passenger Service Act of 1970, Amtrak was born and is now the only nationwide transporter of people (and their personal “stuff”). The freight railroads were so pleased about this legislation that they happily donated passenger equipment and more than $200 million in capital to assist the federally-owned and subsidized Amtrak system on track.
  • Coal (used to generate electricity) accounts for 45% of “stuff” transported, followed by agricultural/food products (13%) and chemicals/petroleum (12%).
  • The latest estimates indicate total industry revenue of $76.3 billion and $6.9 billion (9%) profit. The largest railroads (categorized as Class 1 systems) account for 80% of revenue with the trend toward consolidation of industry players.
  • The U.S. is the only industrialized nation without a nationwide high speed rail (125+ MPH) system. Currently, 15 countries have a system already in place and others are in the planning or construction stage. (Does it surprise you that China’s has the largest with more than 5,000 miles by 2020 and a goal for 10,000 miles?)
  • California continues to shine at spending money with the recent passage of a $10 billion bond to construct the first phase of a $40 billion high speed rail system. This is more than any other U.S. state has invested in high speed rail transportation to date. The state-of-the-art system will eventually span 800 miles resulting in a travel time of only 2-1/2 hours between San Francisco and Los Angeles at speeds up to 220 miles per hour.
  • Singapore has only one train station.

With the exception of 2009, a sickly year for most every industry, the rail industry has been experiencing a “global renaissance” in recent years mostly due to its cost effectiveness and fuel efficiency. Increases in freight traffic and profit are continuing today stimulating investment in the industry. As the labor market improves, consumers spend more, and manufacturing increases, IBISWord projects an average annual increase in revenue of 3.7% to $91.5 billion in 2016.

The following are some of the existing railroad operators in the U.S.:

  • Burlington Northern Santa Fe Corporation (26.8% market share)
  • Union Pacific Corporation (24.3%)
  • CSX Corporation (15.7%)
  • Norfolk Southern Corporation (14.1%)
  • National Railroad Passenger Corp / Amtrak (3.6%)

IBISWorld rates the rail transportation industry as follows:

  • Life Cycle Stage: Mature
  • Revenue Volatility: High
  • Capital Intensity: Medium
  • Regulation Level: Medium
  • Governmental Industry Assistance: Medium
  • Technology Change: High
  • Barriers to Entry: High
  • Industry Globalization: Low
  • Competition Level: Medium

The California High Speed Rail Authority is responsible for designing, constructing, and eventually operating the rail system. They awarded a contract to JV Partners to study and design the routes through Central California (from Fresno to Palmdale). JV Partners subcontracted with Bender Rosenthal, Inc., a commercial and right-of-way valuation group based in Sacramento, to obtain right-of-entry permits from property owners along the study route. Bender Rosenthal solicited bids to provide “On Call Appraisal Review”, “On Call Appraisal”, and “On Call Specialty Appraisal” services to facilitate this process. After receiving an “incredible response” to their RFP solicitation, Bender Rosenthal recently announced their short list of approved vendors. The Doré Group is proud to be one of 39 companies to be included in the selective group of experienced “On Call Appraisal” professionals. Beginning this fall, and extending through mid-year 2012, all of the selected firms will work closely with Bender Rosenthal in the complex planning phase of the high speed rail system.

Related Links:
IbisWorld
SIS International Research(“The U.S. Railroad & Logistics Industry”)
Association of American Railroads

Railway Age

Articles:
“High-speed rail project racks up PR costs”San Diego Union-Tribune
“High-speed rail officials concede jobs inflated”San Diego Union-Tribune


With more than 28 years of experience in real estate valuation and consulting, The Doré Group’s skilled and proactive team has the expertise to handle the most complex of assignments. This complimentary article is just one of the many ways we strive to assist our clients in navigating the real estate industry. We also welcome you to submit a personal query via our website or email our founder, Lance W. Doré,  MAI, FRICS, directly:

Submit Personal Query
Email Lance W. Doré,  MAI, FRICS

(Note that in the United States, appraisal assignments are required to satisfy the Uniform Standards of Professional Appraisal Practice (USPAP). Therefore, we reserve the right to defer certain requests based our adherence to federal standards and industry ethics.)

Solar Energy in the United States

in the United States


November 15, 2011
Written by: Janet Doré, The Doré Group (San Diego, CA)
 

The U.S. solar power industry is teeming with activity and is expected to see a significant growth in revenues in the next several years. IBISWorld, the world’s largest independent publisher of U.S. industry research, ranked the solar industry as one of the top ten industries between 2000 and 2016. Growth has been fueled by sizable government incentives, as well as new legislation requiring states to obtain a minimum portion of their energy from renewable resources. In California, Governor Jerry Brown recently signed legislation requiring that 33% of the state’s energy must be from “green” sources. Nearly two-thirds of states have enacted similar legislation. This governmental assistance is enabling the solar industry to compete with established, and less expensive, forms of energy generation. 

 

(Source: “Sunny Days for Solar Power in the United States”, American Bankers Association – Justin Molavi, Industry Analyst, IBISWorld Inc.)

The following are some of the existing operational solar energy facilities in the U.S.:

  • Solar Energy Generating Systems (354 megawatts – Blythe, California)
  • Martin Next Generation Solar Energy Center (75 MW – Florida)
  • Nevada Solar One (64 MW – Boulder City, Nevada)
  • Copper Mountain Solar Facility (48 MW – Boulder City, Nevada)
  • DeSoto Next Generation Solar Energy Center (25 MW – DeSoto County, Florida)


In order to satisfy increasing demand for renewable energy, there are numerous large capacity facilities currently in the planning or construction stages including, but not limited to, the following plants:

  • Blythe Solar Power Project (500 MW – Riverside County)
  • Topaz Solar Farm (550 MW – northwest of California Valley)
  • Desert Stateline (300 MW)
  • Antelope Valley Solar Ranch (230 MW – western Mojave Desert, California)
  • Solaren (200 MW – space-based)
  • Ivanpah Solar Power Facility (392 MW – Southeast California)
  • Solana Generating Station (280 MW – West of Gila Bend, Arizona)
  • Genesis Solar Energy (250 MW – Riverside County, California)
  • Mojave Solar Park (553 MW – Mojave Desert, California)
  • Crescent Dunes Solar Energy Project (110 MW – Nye County, Nevada)
  • Palen Solar Power Project (484 MW – Riverside County, California)
  • Sonoran Solar Project (350 MW – Maricopa County, Arizona)
  • Hualapai Valley Solar Project (340 MW – Mojave County, Arizona)
  • Beacon Solar Energy Project (250 MW – San Bernardino County, California)
  • Harper Lake Solar (250 MW – San Bernardino County, California)
  • Rice Solar Energy Project (150 MW – Riverside County, California)
  • Crossroads Solar Energy Project (150 MW – Maricopa County, Arizona)
  • San Joaquin Solar 1&2 (107 MW – Fresno County, California)
  • Calico Solar Energy Project 9100 MW – San Bernardino County, California)

In order to satisfy the increased demand for solar cells and modules resulting from this sizable increase in solar plants, construction of solar energy manufacturing facilities is also increasing.

According to IBISWorld, the key external factors driving the solar industry are: 1) tax credits for energy efficiency; 2) demand for electricity; 3) pricing of semiconductor and electronic components; and 4) competition from energy substitutes.

IBISWorld rates the solar industry as follows:

  • Life Cycle Stage: Growth
  • Revenue Volatility: High
  • Capital Intensity: High
  • Regulation Level: Heavy
  • Governmental Industry Assistance: High
  • Technology Change: Medium
  • Barriers to Entry: High
  • Industry Globalization: Medium
  • Competition Level: Medium

Without government subsidies, the solar industry would be in peril. To address this issue, the North American solar industry is focusing its efforts on reducing the cost of solar energy production in order to compete with the established energy resources should government subsidies cease.

Today solar-generated electricity comprises less than 0.2 percent of the nation’s total output creating the potential for tremendous growth. The outlook for the industry is positive assuming continued government assistance at least through 2016, increasing state mandates for renewable energy, the improving U.S. economy, and the continued movement toward green energy. Projections are for an average annual growth in industry revenue of 7.9% through 2016.

 

Related Links:
IbisWorld
“10 Industries That Are Growing The Fastest” (The Street)
US Department of Energy
American Solar Energy Society
Solar Energy Industries Association

Articles:
“LA utility says new solar plant ahead of schedule”San Diego Daily Transcript
“Mojave Solar”San Diego Daily Transcript

“Solar maker to hire 450 in SD”San Diego Union-Tribune
“French solar panel maker opens San Diego factory”San Diego Union-Tribune
“Brown promotes solar energy while lighting menorah”San Diego Union-Tribune
“Power plant closures to cost US towns jobs, taxes”San Diego Union-Tribune
“Interior backs solar, wind farms in Calif., Ariz.”San Diego Union-Tribune
“Google buys into California solar plants”San Diego Union-Tribune
“Governor Brown signs expanded renewable energy agreement with feds”
Sacramento Bee
“Sempra solar project in Arizona producing electricity as construction continues”
San Diego Daily Transcript
“Sempra affiliate expands solar portfolio”San Diego Union Tribune
“BLM seeks competitive leasing for solar, wind”San Diego Union Tribune
“SDG&E offers new solar options” – San Diego Union-Tribune
“Regulators nix new charge on solar customers”San Diego Union-Tribune
“San Diego leads state in rooftop solar”San Diego Union-Tribune


With more than 28 years of experience in real estate valuation and consulting, The Doré Group’s skilled and proactive team has the expertise to handle the most complex of assignments. This complimentary article is just one of the many ways we strive to assist our clients in navigating the real estate industry. We also welcome you to submit a personal query via our website or email our founder, Lance W. Doré,  MAI, FRICS, directly:

Submit Personal Query
Email Lance W. Doré,  MAI, FRICS

(Note that in the United States, appraisal assignments are required to satisfy the Uniform Standards of Professional Appraisal Practice [USPAP]. Therefore, we reserve the right to defer certain requests based our adherence to federal standards and industry ethics.) 

The Doré Group Designated as ‘On Call Appraisal Specialist’ for California High Speed Rail Contract

In the Fall of 2008, California’s progressive voters approved a $10 billion bond to construct the first phase of a $40 billion high speed rail system. No other state in the nation has dedicated this much money toward high speed rail transportation. The state-of-the-art system, which is slated for completion within the next two to three decades, will eventually span 800 miles and connect major metropolitan hubs and airports throughout the state making it one of the largest infrastructure systems in the world. Finally, the United States will catch up with the rest of the world’s industrialized nations, which all have such systems in operation. The first connection will be between San Francisco and Los Angeles with passengers being transported through the San Joaquin Valley in just under 2-1/2 hours at speeds up to 220 miles per hour.

The development of the high speed rail system will relieve the state’s already strained highways and airports from the additional demand stemming from a burgeoning population. Projections are for a 30% increase by 2030. The California High Speed Rail Authority contends that the rail system will cost the state two to three times less than expanding freeways and airports. Not only will the capacity of the state’s transportation system be better able to serve the population, but the local economy will receive a much needed boost due to the creation of thousands of jobs and the greater ease of movement of California residents.

Surprisingly, the environmental impact report of this massive project did not encounter any significant opposition from any major California environmental organizations. This is primarily due to placement of proposed routes within existing transit corridors and a concerted effort to avoid environmentally sensitive areas. Nevertheless, several national groups, such as the Sierra Club, express doubt about the reliability of the state’s environmental study. The actual system will be all electric and is designed to reduce pollution and the state’s reliance on foreign oil.

The California High Speed Rail Authority is responsible for designing, constructing, and eventually operating the rail system. They awarded a contract to JV Partners to study and design the routes through Central California (from Fresno to Palmdale). JV Partners subcontracted with Bender Rosenthal, Inc., a commercial and right-of-way valuation group based in Sacramento, to obtain right-of-entry permits from property owners along the study route. Bender Rosenthal solicited bids to provide “On Call Appraisal Review”, “On Call Appraisal”, and “On Call Specialty Appraisal” services to facilitate this process. After receiving an “incredible response” to their RFP solicitation, Bender Rosenthal recently announced their short list of approved vendors. The Doré Group is proud to be one of 39 companies to be included in the selective group of experienced “On Call Appraisal” professionals. Beginning this fall, and extending through mid-year 2012, all of the selected firms will work closely with Bender Rosenthal in the complex planning phase of the high speed rail system.

Click HERE to take a virtual ride on the train …

Articles:
“Jerry Brown vows to push forward with high speed rail”  Sacramento Bee
“High-speed rail project racks up PR costs”San Diego Union-Tribune
“High-speed rail officials concede jobs inflated”San Diego Union-Tribune
“Brown’s high-speed rail endorsement draws fire, praise”San Diego Union-Tribune
“Governor: Construction On Calif. High Speed Rail To Begin In 2012”KPBS.org


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