Yearly skier visits (million) - TTR Tirol Tourism Research

The future of
international ski
business
Laurent Vanat
FIS Conference 2011
4 June 2011 – Portoroz
LV/01/06/2011

Agenda
The state of the industry today
Market evolution since 2000
Impact of the 2008 crisis
Industry trends
Laurent Vanat
Challenges of the future
Resorts in the international competition
page 2

The state of the
industry today
Laurent Vanat
LV/01/06/2011

The world ski market
80 countries 27’000 lifts
6’000 places of practice 110 million skiers
2’000 ski resorts 400 million skier visits
Laurent Vanat
page 4

Market metrics
Skier : one person practising ski,
snowboard or other downhill slide,
independent of the rate of practice.
Laurent Vanat
Skier visit : one person visiting a ski
area for all or any part of a day or
night for the purpose of skiing,
snowboarding, or other downhill
sliding. Skier visits include full-day,
half-day, night, complimentary, adult,
child, season pass and any other type
of ticket that gives a
skier/snowboarder the use of an
area's facilities.
page 5

Who are the skiers ?
Spread of the skiers upon country of origin (110 million
skiers estimated worldwide)
Asia & Pacific
19%
Various
1%
Alps
21%
Laurent Vanat
America
20%
Eastern
Europe &
Central Asia
13%
Western
Europe
26%
page 6

Where do they ski ?
Market share in the worldwide skier visits (400 million
yearly skier visits)
Asia &
Pacific
15%
Various
0%
Laurent Vanat
America
23%
Eastern
Europe &
Central Asia
5%
Western
Europe
11%
Alps
46%
page 7

Major players
Country Austria Canada France Italy Japan Switzer
land
Number of resorts 254 288 325 349 547 240 481
Number of major resorts
(>1 mio SV)
USA
12 1 14 4 0 7 7
Number of lifts 3'028 922 3'731 1'948 2'422 1'774 2'970
Skier visits (million) 51 15 54 22 30 22 58
Population (million) 8 33 64 58 127 8 304
Ranking in world tourism 12 15 1 5 28 27 2
Laurent Vanat
Arrivals of international
tourists (million)
Proportion of foreign
skiers
21 16 74 43 7 8 55
66% 14% 28% 15% 3% 50% 6%
SV / inhabitant 2,1 0,4 0,6 0,3 0,2 1,4 0,2
SV / foreign visitor 1,6 0,1 0,2 0,1 0,1 1,3 0,1
page 8

Top resorts of the world
Laurent Vanat
La Plagne
SkiWelt Wilder Kaiser-Brixental
Les Arcs
Courchevel-Méribel-Mottaret
Kitzbuehl
Ischgl/Samnaun Silvretta Arena
Saalbach Hinterglemm Leogang
L'Alpe d'Huez
Whistler Blackcomb
Val Thorens
Soelden
Zillertal 3000 -Mayrhofen
Les Ménuires
Tignes
Flachau-Wagrein-Alpendorf
Davos-Klosters
Zermatt
Breckenridge
Serre-Chevallier
Mammoth
Vail
Chamonix
St. Moritz
Adelboden-Lenk
Planai-Hochwurzen-Hauser-Kaibling-Reiteralm
Val d'Isère
Les Deux-Alpes
Flaine-Morillon-Samoens-Sixt
Serfaus-Fiss-Ladis
Zillertalarena
St. Anton/St. Christoph/Stuben
Jungfrauregion
Keystone
Verbier
Avoriaz
Gstaad-Region
Méribel
Steamboat
Killington
Hochzillertal-Hochfuegen-Kaltenbach
Copper Mountain
In million skier visits
0.0 0.5 1.0 1.5 2.0 2.5 3.0
page 9

Market evolution
since 2000
Laurent Vanat
LV/01/06/2011

Canada
page 11
Yearly skier visits (million)
20
18
16
14
12
10
8
6
4
2
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

Italy
Yearly skier visits (million)
page 12
30
25
20
15
10
5
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0
Laurent Vanat

page 13
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Japan
60
50
40
30
20
10
0
Yearly skier visits (million)
2001/02
Laurent Vanat

Switzerland
Yearly skier visits (million)
page 14
35
30
25
20
15
10
5
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0
Laurent Vanat

page 15
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
USA
70
60
50
40
30
20
10
0
Yearly skier visits (million)
2000/01
2001/02
Laurent Vanat

Mature major markets
Flattening or declining
attendance
– Historical home countries of the ski
industry
– Long ski tradition
– Difficulties to maintain customer
base
Laurent Vanat
Challenge : erosion of
attendance
Future trend : flat or near
page 16

Austria
Yearly skier visits (million)
page 17
60
50
40
30
20
10
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0
Laurent Vanat

France
Yearly skier visits (million)
page 18
60
50
40
30
20
10
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
0
Laurent Vanat

Mature major markets
Still growing markets
– Industry mostly developed in the
1970’s
– High level of reinvestment over
the last decade
Laurent Vanat
Challenge : limits to the
growth
Future : Attendance will tend
to flatten
page 19

2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Scandinavia
3
2.5
2
1.5
1
0.5
0
Yearly skier visits (million)
page 20
2000/01
2001/02
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
7
6
5
4
3
2
1
0
Yearly skier visits (million)
Yearly skier visits (million)
9
8
7
6
5
4
3
2
1
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
3
2.5
2
1.5
1
0.5
0
Pyreneans
Yearly skier visits (million)
8
7
6
5
4
3
2
1
0
Yearly skier visits (million)
2009/10
page 21
2000/01
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

Central & Eastern Europe
Yearly skier visits (million)
16
14
12
10
page 22
8
6
4
2
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Yearly skier visits (million)
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

page 23
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Pacific region
2.5
2.0
1.5
1.0
0.5
0.0
2000/01
2001/02
Yearly skier visits (million)
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Yearly skier visits (million)
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

Intermediary markets
Northern Europe :
– Quite mature stage, with same challenges as major markets
– Norway still shows some growth
Pyreneans :
– Mature stage
– Higher weather sensitivity
Laurent Vanat
Central & Eastern Europe :
– Weather sensitive
– Growth potential of Eastern Europe ?
Pacific :
– Rather mature stage
page 24

Developing markets
Laurent Vanat
China :
– About 300 ski practice areas, mostly with very limited
equipment
– Development / opening of 300 more ski areas expected over
the next 10 years
– Emergence of a middle class in a young and sportive
population, generating an increased demand
– Expected skiers potential: 120 million (present situation
estimated to 5 million skiers)
page 25

page 26
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
China
5
4
3
2
1
0
Yearly skier visits (million)
2000/01
2001/02
Laurent Vanat

Developing markets
Laurent Vanat
South Korea :
20
18
16
14
12
10
8
6
4
2
0
1975
1978
– Continuous growth since 1975
Number of ski areas
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
– Industry focused on young people, offering a lot of fun
– Concepts close to amusement parks (sometimes combined)
page 27

South Korea
page 28
Yearly skier visits (million)
7
6
5
4
3
2
1
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Laurent Vanat

Developing markets
Mongolia :
– First ski resort just opened near Ulaanbaatar, with state of the
art equipment, including snowmaking and night ski.
Laurent Vanat
page 29

Developing markets
Many others ...
Laurent Vanat
– Armenia
– Azerbaijan
– Bulgaria
– Estonia
– Hungary
– Kazakhstan
– Lithuania
– Montenegro
– Poland
– Rumania
– Russia
– Turkey
– Ukraine
– ...
page 30

Small markets
Troodos, Mount Olymp, Cyprus (1800-
1920 metres) : 4 skilifts, some snowmaking
equipment
Dizin, Iran (2600-3500 metres) : 5 lifts
Mount Hermon, Israel (1400-2020 metres)
: 4 chairlifts, 3 skilifts
Laurent Vanat
Oukaïmeden, Morocco (2600-3250
metres) : 1 chairlift, 7 skilifts
Mount Parnassos, Greece (1640-2260
metres) : 5 chairlifts, 8 skilifts
Gulmarg, India (2700-4100 meters) : 6
lifts
page 31

Small markets
Afri-Ski, Lesotho : one trail produced with
snowmaking equipment, on development
Laurent Vanat
page 32

Impact of the 2008
crisis
Laurent Vanat
LV/01/06/2011

International tourist arrivals -
World
10%
-8.4%
(at 30.4.2009)
5%
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
0%
-5%
-10%
-15%
Source : UNWTO World Tourism Barometer
page 34
Laurent Vanat

+ 6.1 %
2008/09
Europe - Alps
page 35
Skier visits (million)
180
160
140
120
100
80
60
40
20
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
Laurent Vanat

Europe – Other countries
Skier visits (million)
page 36
45
40
35
30
25
20
15
10
5
0
+10.4 %
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Laurent Vanat

-5.9 %
2008/09
North America
page 37
Skier visits (million)
90
80
70
60
50
40
30
20
10
0
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
Laurent Vanat

-6.3 %
2008/09
Asia - Pacific
page 38
Skier visits (million)
70
60
50
40
30
20
10
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
0
Laurent Vanat

Effects of the crisis
2008/09 Season
Europe : Records of attendance
in most countries
– Early and reliable snow conditions
– Favourable weather of the
weekends and holidays
Laurent Vanat
North America / Asia-Pacific:
Drop in attendance figures
– Impact of the crisis on long
distance travel
– Psychological effect
page 39

Industry trends
Laurent Vanat
LV/01/06/2011

Master planning improvement
Flow optimisation – global approach
Laurent Vanat
page 41

Lifts : less but better
Reduction of the number of lifts
Evolution of the number of lifts
in France and Switzerland
Laurent Vanat
4'500
4'000
3'500
3'000
2'500
2'000
1'500
1'000
500
0
1960 1970 1980 1990 2000 2010
page 42

Less ski areas
Major markets see a decrease in the number of operated ski areas
: out of snow line, bankruptcy, restructuring, merger
USA: operating ski areas
Japan: operating ski areas
1982-83
1985-86
1988-89
1991-92
1994-95
1997-98
2000-01
2003-04
2006-07
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
800
700
600
500
400
300
200
100
0
800
700
600
500
400
300
200
100
0
2009-10
page 43
Laurent Vanat

Mergers
Zermatt, Gstaad, Lenk, Hochtoggenburg
(Switzerland)
Laurent Vanat
page 44

Closing of areas
Hospental (Switzerland) was closed last season due to
financial difficulties.
Laurent Vanat
page 45

Opening of areas
Laurent Vanat
Exceptional in 2007/08 : 2 new
international resorts :
– Revelstoke Moutain, Canada,
starting with a gondola and some
chairlifts, but aims at becoming the
highest vertical in America.
Forecasted investment USD 1
billion, over 15 years
– Krasnaya Polyana, Russia,
financed by Gazprom, with grand
opening by president Poutine in
early 2008. One of the 4 sites of the
Sochi Olympics of 2012.
page 46

Artificial slopes
Summer leisure centres
– Cap Découverte and some other in France
– More than 150 in United Kingdom
Initiators :
– Learning role
– Schools
Laurent Vanat
page 47

Artificial slopes
Loisirnord in Noeux-les-Mines, France
Laurent Vanat
page 48

Snowmaking in the desert
Laurent Vanat
Jebel Jais Mountain Resort, United Arab Emirates
(800- 1200 meters) : project of the first outdoor ski
resort of the Persian Gulf, with real snow (manmade).
Features :
– 8 seat gondola
– 4 seaters chairlift
– Skilift
– 3’000 rooms
page 49

Ski Indoor
About 50 ski domes worldwide
Biggest markets : Japan,
Netherlands & Great Britain.
Exotic places : Indonesia, Thailand,
Malaysia, Singapore, Dubai.
Laurent Vanat
Average length of slopes : 300
meters, up to 500 meters
Lifts : magic carpets, towlifts,
chairlifts
Issue : energetic consumption,
snowmaking, economic viability
page 50

Indoor snow centre
Concept of complete themed leisure centres, with
snowmaking facilities
Laurent Vanat
page 51

Concentrations
Development of big operators in
France, Scandinavia and
North America
Laurent Vanat
Resorts Skier visits Lifts
Booth Creek 4 2 million 50
Compagnie des Alpes 14 14 million 542
CNL Income Properties Inc 11 3 million 70
Intrawest 9 8 million 190
Labellemontagne 5 2 million 124
Skistar 8 4 million 226
Sofival 4 4 million 145
Vail Resorts 5 6 million 134
page 52

Bankruptcies
2 multi-resorts operators
bankrupted in recent years;
Operated resorts were
redistributed / sold to other
operators
Laurent Vanat
Resorts Skier visits Lifts
American Skiing Company 7 4 million 131
Transmontagne 5 2 million 124
page 53

Integrated business model
Traditional ski-lift company
model
Integrated model
Laurent Vanat
– Lift tickets
– Lift tickets
– Hospitality
– Rentals
– Lessons
– Leisure
– Retail
page 54

Integrated model
The operator can thus
create new villages
The place becomes a
real experience,
attracting visitors year
long, creating a
consistent revenue
stream for the operator
Real Estate
Creation of an
animated village, to
increase length of stay
Attraction of more and
more visitors, more
and more often,
spending more, coming
with family and friends
Laurent Vanat
Increase of
occupancy rate and
prices generate and
increase for
demand in Real
Estate
More visitors enable
maximisation of
operation, with year long
opening of hotels,
restaurants and shops
More Real Estate, more
attraction, attracting
always more visitors
page 55

Real Estate
In western resorts, one commercial bed generates about USD 2’000
lift tickets revenue and a further USD 8’000 for the resort in one
winter season.
Well monitored Real Estate is key to the resort management.
Laurent Vanat
page 56

Web based packages
page 57
Laurent Vanat

Improved management
page 58
Laurent Vanat

Challenges of the
future
Laurent Vanat
LV/01/06/2011

Demographics
page 60
Laurent Vanat

Demographics
Demographics and practice
Laurent Vanat
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96
age
page 61

Demographics
3 generation are on the slopes, with different profiles
and expectations
one cannot concentrate on only one group and expect
satisfy all guests.
Laurent Vanat
Dilemma between satisfaction of younger groups (=
the future) and older ones (= high revenue)
page 62

Demographics
Laurent Vanat
Baby boomers Generation X Generation Y – Echo
boomers
(1946-1964) (1965-1978) (1979-2000)
40-43 % of skiers 22-29 % of skiers 20 % of skiers
Early adopters of ski
Savour side aspects
(restaurants)
Brought their children
and are bringing their
grandchildren
Based on a US study
Smaller generation
(headcount)
Declining attendance
(phased with family
development cycle)
Less addicted to ski
Growing importance
Will soon bring more
skiers on the slopes
than generation X
Price sensitive
Features sensitive
page 63

Retention
page 64
Laurent Vanat

Retention
Laurent Vanat
Non skiers
Skiers
Abandon
Increasing
competition of
other forms of leisure
:
– Internet
– Video games
– TV and Video on
demand
– Fitness
– Spas
– Travel
– ...
page 65

Climate
page 66
Laurent Vanat

Climate
Numerous studies
OECD 2007 :
– warming of the Alps is 3 times higher than world average
Laurent Vanat
Situation
% of “snow safe”
resorts
Present 91 %
+ 1 degree C 75 %
+ 2 degrees C 61 %
+ 4 degrees C 30 %
page 67

Climate
Mitigation of the conclusions
Number of resorts is not a representative metrics of the
market
France, % of resorts reliable - OECD 2007
100%
Laurent Vanat
80%
60%
40%
20%
0%
Base
reliable
+1
reliable
+4
Number of resorts
Skier days
page 68

Climate
Mitigation of the effects :
snowmaking
Between 23 and 31% of
investments in the major alpine
countries in 2007
Laurent Vanat
New attempts for summer
storage of snow in places like
Laax : snowfarming.
page 69

Climate
Snowmaking by positive
temperature is possible
Laurent Vanat
Several equipments already in
operation in France for small
surfaces :
– Val Louron
– Mont Lozère
page 70

Climate
In Japan, complete trails are
covered with snow made under
positive temperatures
The country totals about 20
kilometres of such slopes.
Laurent Vanat
page 71

Climate
In Zermatt,
reconstruction of part of
the smelting glacier will
be done through a new
equipment
Laurent Vanat
This snow factory allows
production of 40m3 of
snow, regardless of the
temperature.
page 72

Economy
page 73
Laurent Vanat

Economy
World economy
– Impact on attendance
– Cyclical effects
Laurent Vanat
Financial situation of the operators
– Viability of the resorts
– Cash flow generation for lift renewals
– Balance between investments and revenues ; return on
investment (EUR 2 – 3 invested must generate EUR 1 yearly
turnover)
page 74

Resorts in the
international
competition
Laurent Vanat
LV/01/06/2011

Being international
Pre requisites
– Snow guarantee
– Lodging capacities
Laurent Vanat
page 76

Being international
Basic requirements
– Size of the ski area
– Modern lifts & slopes infrastructure
– Numerous and standardised lodging facilities
– After ski offer
– Snow guarantee
Laurent Vanat
Upscale requirements
– International standards in lifts, hotels and other infrastructure
– Quality food & beverage offer in the ski area
– Shopping facilities
– Wellness and leisure offer
– Proximity to jet compatible airport
page 77

Being international ...
International
resort profile
Laurent Vanat
Source : SNTF
page 78

Getting international ...
Can a local resort become international ?
How can a resort switch from domestic client base to
international ?
Laurent Vanat
page 79

National skiers
Strength of national customer base of most of the big players.
Foreign visitors concentrate on a few top international resorts.
Share of foreign visitors
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Domestic Foreigners
page 80
Laurent Vanat
Andorra
Austria
Switzerland
New Zealand
France
Bulgaria
Italy
Slovenia
Canada
Czech
Germany
Hungary
Korea, South
Slovakia
Spain
Finland
Norway
Sweden
United States
China
Poland
Romania
Ukraine
Japan
Australia

National vs international
Share in the number of skiers of foreign visitors is
less than one sixth of total attendance
Internationals
14%
Laurent Vanat
Nationals
86%
page 81

Inbound & outbound skiers
Share of the various
destinations in inbound
international skiers
Share of the various home
countries of outbound
international skiers
Laurent Vanat
Asia
America 3%
6%
East
2%
Europe
7% Various
1%
Alps
81%
Alps
1%
Europe
88%
America
0%
Asia
5%
East
6%
page 82

Skiers’ international flows
Mostly concentrated on intra-European flows
Laurent Vanat
page 83

Reality check
Weigh of international customers is limited for most ski
destination countries
Laurent Vanat
International catchments areas are limited
– Markets size
– Issue of transportation
Travel time & cost
Saturation of airport at ski destinations
Overseas skiers are anecdotic minorities
page 84

Reality check
Outbound European markets are not increasing but will
be spread over more destinations in the future
– British customers
Romania
Slovakia
Laurent Vanat
New markets are feeding themselves
– Development of ski in Asia will feed Japan and South Korea
page 85

Urban ski
Laurent Vanat
Mostly promotion actions
for ski resorts or
suppliers
– Salomon Winterwelt in
Muchen Olympic Park
– Europa Park, Rust, during
winter holidays
– Geneva, la Treille and M-
Park shopping centre
Slopes 10 – 200 meters,
focused at children
page 86

Awareness & initiation
Québec « Mobile ski resort » to familiarise children
with ski practice
– Magic carpet
– Mobile ski rental shop
Laurent Vanat
page 87

International campaigns
Maybe more sexy, but less effects
Laurent Vanat
page 88

The lessons of the crisis
Laurent Vanat
In adverse economic conditions :
– Decline of foreign customers
– Increase of local customers
– Better occupancy of second homes
– More skiers on a daily basis
– Decrease of demand for hospitality
Strength of local customer base, more
resilient
page 89

Conclusion
LV/01/06/2011
Laurent Vanat

Vision 2020
Competition to Alpine resorts will increase
Sunny beaches overseas
Cruises
Laurent Vanat
Developing winter destination
Europe and Asia)
Exotic resorts, turned into ski
through technology
(Eastern
area
page 91

Vision 2020
Some resorts will decline / close
Small and medium resorts coming out of the market
(lack of attractivity, economic viability, out of snow
line).
Some resorts will prosper
Laurent Vanat
Clear market positioning :
– Places of exception (Zermatt, Saas Fee, Chamonix …)
– Technological advantage (Dolomiti Superski ...)
– Outsiders (Ischgl, 2 Alpes …)
– Reputation (Gstaad, St. Moritz, Megève, Courchevel ...)
page 92

Vision 2020
Where will be the leading international
destinations of tomorrow ?
International resorts of the Alps
A few new resorts of international standard in Eastern
Europe and Central Asia
Laurent Vanat
A couple of “exotic” destinations
page 93

For further reference
Laurent Vanat
Available from
– www.vanat.ch, page Publications
page 94

Laurent Vanat
Laurent Vanat
19, Margelle
CH - 1224 Genève
Tel / fax / messagerie : +4122 349 8440
Courriel : vanat@vanat.ch
Internet : www.vanat.ch
Laurent Vanat
LV/01/06/2011