Ski Season Outlook by Condor Capital – Weather as a Wild Card

By AlpineZone News |
Dec 24 2012 - 04:07 PM

2012/13 Ski Season Outlook: Foundation Solid, but Weather is a Wild Card

MARTINSVILLE, N.J., Dec. 24, 2012 /PRNewswire/ — Following a dismal season last year – when U.S. skier visits plunged 15% amid a dearth of snow across the country – enthusiasts, resorts, and snow sport retailers alike are hoping for better fortunes during the 2012/13 ski/snowboard season. Although the season started out with a whimper, conditions have improved significantly recently in some areas of the country. With that said, Ken Schapiro of Condor Capital believes that with a little help from Mother Nature, pent up demand along with an improving economy and labor market should help to boost skier days by mid-single digits this season.

Although many factors influence the success of a given ski season, by far the most important is the weather. While forecasting longer-term weather/snow trends is a challenging endeavor, meteorologists have had particular difficulties this year. This stems from the fact that this year, the United States is unlikely to experience either an El Nino or La Nina weather pattern, which typically brings fairly predictable patterns regarding temperatures and snowfall in various parts of the country. Given this, skiers may want to focus more on shorter-term forecasts and specific weather events when making their winter plans. After a beginning to the season that felt eerily similar to last year’s disappointment, snowfall totals in the western-U.S. and Pacific Northwest have improved. In Colorado, Vail has received several feet of snow since early-December, with more in the forecast. Earlier this month, Canadian resort Whistler-Blackcomb noted that it had the deepest snow base at that point in the season in 10 years. Northeastern resorts, on the other hand, have struggled as a lack of snow and warm temperatures – hindering snowmaking efforts – have pushed back openings at some resorts and left others operating with limited trails.

Early indications from retailers and resorts have been mixed thus far. After previously reporting that season pass sales were tracking 17% ahead of last year and issuing a rosy earnings outlook, Vail Resorts has tempered its enthusiasm, recently noting that season pass sales are now up just 5% year-over-year. Schapiro theorizes that pent up demand by hardcore enthusiasts drove the initial pop in sales, while other skiers, with last season’s disappointment still fresh in their minds, may have waited for more-tangible signs of a good snow season before making their decision to commit to a pass. It seems as though consumers have also taken a wait-and-see approach towards booking resort stays. According to The Mountain Travel Research Program, which collects data on Western resorts, bookings for this season are down 3.9% year-over-year. While disappointing, there is still time for a rebound as less than half of bookings are typically made by this point in the season. It is also interesting to note that booking trends have been widely divergent between months, with December down double digits but February showing gains. Condor Capital attributes this to skiers focusing their trips on the “core” of the season, rather than taking a chance that resorts will be fully open during the early- and late-season months. For consumers, there is a silver lining in these sluggish bookings as some resorts have begun to offer discounts and package deals to spur demand, especially during the latter part of the season. However, it is critical to note that the recent pickup in snowfall in the Midwest will likely have a sizable impact on these figures when subsequent readings are released in the coming months.

The so-called “hangover effect” from last year has also spread into the retail market. Sports equipment maker Amer Sports (parent of Atomic, Salomon, Arc’teryx, etc.) recently reported a 15% decline in sales in its winter sports equipment segment. This was driven primarily by a steep decline in retailers’ preorders and later delivery schedules, as many stores remain saddled with excess inventory left over from last season. In a report by the SnowSports Industries America (SIA) and the Leisure Trends Group, it was estimated that inventories were up by 30% in the apparel and equipment category at the end of last season. However, after strong pre-season sales, inventories for the category are now tracking just 11% ahead of last year. It is unsurprising then, to see that while aggregate sales at snow sports retailers grew 1% in dollar terms, that lagged the 2% growth seen in terms of units sold as higher discounting likely pressured average selling prices.

Although Schapiro acknowledges that this season will, as always, hinge on the weather, underlying economic trends underpin the potential for a rebound if snow conditions are solid. Since the beginning of the year, the national labor market has seen slow, but steady, improvement. Over this time frame, the unemployment rate has declined from 8.5% to 7.7% and the private sector has regained nearly 1.7 million jobs overall. Asset prices have also performed well, with the S&P 500 Index gaining over 17% this year and the S&P/Case-Shiller Home Price Index posting its sixth straight monthly gain in September, rising 0.29%, extending the year-to-date increase to 7.04%. Economists estimate that for every $10,000 increase in household wealth, including the value of one’s home and investment portfolio, consumers spend an additional $400 on discretionary purchases. In all, these positives should help set the stage for what Condor Capital sees as a rebound year in overall skier days.

Condor Capital

Founded in 1988, Condor Capital is an employee-owned, SEC-registered investment advisor based in Martinsville, N.J. employing 15 professional and support staff. Since Condor is a fee-only, investment management firm, its fees are based on portfolio size, not sales commissions or number of trades. For more information on Condor Capital, please visit or call 732-356-7323.