Hi, the comprehensive case for this course is going to be about a hypothetical ski area, Snowflake Ski Resort which is a made up place. But to give you some background information, Greg Ralph, the Vice President of marketing and sales at Purgatory Resort near Durango, Colorado has agreed to talk about the ski industry, their results. Some of the sustainability challenges that they're facing as well as just kind of the challenges of the industry itself with the change in demographic, changing weather and changing technology. So Greg, thanks so much for taking the time to talk to us, especially on a powder day this. >> Yeah, you're very welcome, but let's make it quick. >> Okay. [LAUGH] >> [LAUGH] >> Greg, could you tell us a little bit about energy use in the ski area, especially about snow making and running the lifts and whatnot? >> Ski areas are a pretty good consumer of power. It starts even prior to the winter,with our snow making operations. So you're trying to lay down snow in late October, November to get open by hopefully Thanksgiving, mid November, and with environmental factors changing. The weather's not as consistent as it used to be maybe because of global warming or other factors or just cyclical changes. It's become paramount that ski resorts invest in snowmaking to ensure a season, 140A seasons. So you can operate a winter resort in a profitable manner, and that starts preseason with the snow making. And you're out there, whenever the weather is cold enough nearly nights, usually in the dark, pumping water and using compressed air. So you've got energy consumption there, just to pump the water up on the mountain and out of the hydrants and the guns. And you've got the pumping of the water and then the compressed air. Because snow making is a combination of air and water, adjusting those two flows to create atomization of the water molecules to get them fine enough that they fall as something similar to natural snowfall. And so you're starting that early with pretty good energy consumption there. The industry has gotten a lot more efficient in their snow making in the last few years. The manufacturers of compressed air, air compressors are producing compressors that produce more air with less electricity. And then the guns, the hydrants themselves, the nozzles on the snow making hydrants and guns. They are way more efficient where you're using a lot less water and a lot less air to produce more snow in a little warmer temperature. So with engineering and science behind us, we have become more efficient in our snow making operations. We're able to make more snow earlier and throughout the season. And make it for consuming a little less energy, a little less water, so you can do it a little more economical, a little less impact. >> And then once the season gets going and you've got lifts, you've got grooming- >> Yeah, we've got- >> And a facility that you've got to keep warm- >> At a resort like ours, you've got everything. You've got transportation of your employees and guests, how do you get them up here from town? Say you're 30 miles away from your community and your base, your labor pool. So you want to provide economic and somewhat sustainable transportation for them, something that's more efficient. So you're running employee shuttles, and you're doing ridesharing programs for those that can't make shuttles, that may have different shifts. So you're putting all those things together to try to get people up here efficiently. Then once they're here, we put them to work in departments all over the mountain. There's everything from ticket sales and ticket checkers and lodging people. And front desk and housekeeping, and then there's food and beverage which is a huge department. Hiring the cooks, the dishwashers, the servers, the bartenders for food and beverage is a big, big outlay of labor. We have ski school instructors, we have patrol with safety being a primary issue for all resorts. You've got your lift maintenance crew and your patrol that are working pre-season to make sure hazard trees are out of the way, lifts are functioning properly. Everything's inspected daily, but your preseason is when you really get everything dialed in. You get the resort polished up and you get it presentable for your winter guests. You open in the winter, you start putting people to work and you've got some pretty good consumptions of power. Just lighting the condos and his base village is pretty good electrical consumption. You've got heat for these buildings, so you're burning up some gas. You're using water for beyond snow making, you're using potable water for lodging and food and beverage. You've got all your employees that you're mobilizing to get out on the mountain in their lift stations and their work stations. Patrolers at the top of the mountain need transportation up, so the lifts are running early in the morning. They usually run an hour early just to get our people up on the mountain. So the power that we use is fairly substantial, the high speed quads really gobble up some electricity. They've gotten more efficient as everything has, and we're buying energy as efficiently as we can from our local power company. We have our own utility company up here for natural gas, cable TV or satellite TV. And we provide those services for our condos and our owners up here on our own. So we started handling utility business as well, in addition to being a consumer, we're a provider for some of it. So it's a major operation, it's a city. You're running a little city is what you're doing. >> So do you have any generators that generate electricity as either a backup or supplements? >> Yes, all our lifts have backup generators. You'll see backup generators in a lot of our buildings. At the base of our buildings because if the power does go out, we still have to, in a safe manner provide heat and light and everything for everybody. You have to be able to run those chairs, so if you do lose your electricity, there are diesel back up generators that can fire up the chair and it moves a little slower. It's not as fast, high speed experience, but you can get people off the chair in a safe manner and still operate. So yeah, we do have redundant systems built-in in a lot of our operation. >> So it seems to me that one of the real challenge is you're in the hospitality industry. People want to have a good time, they don't want to be told, don't use to much water or turn the lights off, all that sort of stuff. They just want to have a good time. You're working in the winter, today it's maybe 27, 25 degrees out, but some days I've been up here and it's 9 degrees, 10 degrees you can lose body parts. So you gotta keep people safe. >> Yeah. >> There's a certain amount of danger, because people are skiing fast, so you have to put all of that together. So when people come up here, sustainability can't be at the front of their minds. I mean they want to have fun, they're paying a lot of money for a lift ticket. How do you build this any kind of sustainability mindset? >> It is, It is about fun and personal enjoyment. Sharing the experience with friends and family members. The interesting thing about a lot of the ski consumers, especially in the local markets around the resorts. It's their mountain and they are very concerned with the sustainability of not just their mountain but their entire community. So they want to see that resort run efficiently, not disturb wetlands. You do recycling programs, buy compostable plates and things for your food service. It's something that resorts utilize more and more in our marketing messaging because the outdoor enthusiasts is very environmentally in tune. Not all of our guests are, a lot of them are just out there just to have a thrill and they don't think about it. They just come to this beautiful setting and they expect it to be like this all the time. Where I think that locals, the management of the resort, the people that are well more in tune, understand that you need to work to keep it looking like that all the time. Because you could ruin it, overdevelopment, paving over wetlands and meadows. Doing things that threaten the environment. Those are not things that outdoor enthusiasts and skiers turn a blind eye to. They are in tune to the way that we operate our resorts and they want to see programs that make you as sustainable as possible. >> That's great, that's [INAUDIBLE]. I want to come back to the snow making and people often say, ski resorts use water when they make snow. But we've got a hydrologic cycle, I mean, it's kind of a closed loop deal. Can you comment on that a little, I mean it doesn't seem to be that big of a problem. >> A great example of that one, a resort I worked at for a long time in Southern California near Big Bear Lake was right on the side of a lake, just a mile up from the lake. And we had a pipeline that went right into that lake like a straw. And that's where we drew our snow making water out of. Well, in actuality, the evaporation that happens on that liquid lake is much higher than the consumption that happens of a snow that sprayed on a mountain. Even pumping it out of the lake, atomizing the water, spraying it out on snow and then letting it melt back into the lake consumed more of the water than the natural evaporation would've lost on that lake in the winter. So as far as using snow, using water, we borrow it. >> [LAUGH] >> We borrow it, and we try to put it back in the state we found it. We try not to disturb wetlands, we make sure that any springs or rivers that we draw from, maintain their safe and natural flows. We don't draw them down below that. I don't know of any resort that does that. The water usage is not as great for snow making as you would think. Well, we may pop millions of gallons of water on that mountain. Those millions of gallons of water flow back into the earth at the end of the season. It's the natural cycle of freezing and melting. >> Yeah, that's great. I want to come back to something you mentioned or alluded to just a minute or two ago. In the Northeast, in New England, there have been probably 45 or 50 ski areas that are shut because their season's too short. They just couldn't operate economically. So what's the ski industry doing about it? It's incredibly vulnerable to climatic variation. >> It is and I think you're seeing that in the ski areas are looking at a couple things to sort of hedge their bets. Efficiency of snow making and the winter operation so you can provide a product and you can sustain that winter ski experience. Even though you have to supplement it with man made snow. The other thing that's important, that has come onto resorts in the last ten years primarily has been that you need to develop counter seasonal offerings. We're not just winter ski resorts. We are mountain resorts now that operate year round, providing other activities in the summertime, anything from mountain biking, and alpine sliding, and ziplines, and horseback riding, and fishing. Those same type of things that the natural environment has up here, we have facilities for people to stay and eat, and ride chair lifts, and get into the woods, and experience nature year round. So it's about developing those programs, putting some money into those things and then marketing them, not so much to get your winter guests back as much. And most of your summer guests are different than your winter guests which is kind of interesting. You would think they'd be the same people, but it's only about 20% that go from winter to summer. So you've got a much bigger potential operating season in the summer. If you think about it, you're not fighting school breaks. Your schools are out for three months in the summertime. In the wintertime, we're lucky if they are out three weeks. So we're getting spring break crowd here and Christmas crowd here and presidents, and we we're shooting for those little gaps. Where summer, it's a broader offering, you're able to open on a more consistent basis, draw more of the population in. And for us in the Southwest, Southern Colorado is heaven for those people that are in Texas, Arizona, New Mexico, sweltering in the heat. We can show them pictures of beautiful alpine setting with fresh air and cool temperatures. And it's pretty compelling to want to get the heck out of the desert and come up to the mountains. So offering a longer winter season through snow making and other modern grooming and ways to sustain skiing on less snow and less depth. And then providing those alternative activities for summer. It used to be the joke that we had the downtime, the slow season. It doesn't exist anymore for us at this point. As soon as we melt off in April, we're getting ready to reopen in June. So we're painting buildings, we're sprucing stuff up, we're doing our capital improvements in a very short window. And then you've got another short window in the fall. And that's even getting shorter because people are realizing the fall in the mountains is gorgeous. The trees, it's not that cold yet. There's tons of stuff to do. The trails really are better on the fall than they are on the spring for hiking and mountain biking, for the most part. >> So as an industry, could you talk a little bit about Protect Our Winters and some of these sort of industry efforts to at least acknowledge that I mean, this is an environmental- >> Protect Our Winters is an industry coalition. It came from out of cooperative efforts, the ski manufacturers were the first ones to jump on it. Retailers have gotten involved, the other industry associations have gotten involved with Protect Our Winters. It's got some big athletes that are behind it. They get out there in schools and ski events and so forth, and promote the sustainability, the importance of environmental protection to lessen the impacts of climate change. And so it's a very Popular high level initiative that's been started by the industry to sort of convey that messaging to the consumer that we really do need to make efforts to. If you want to ski up here in 20 years, you need to make some efforts now to ensure that that environment is still in existence. So it's that future thinking, it's industry-wide, everybody's behind it. It's important, it's a good organization. >> Speaking of 20 years from now, I know that a few years ago, [COUGH] there were discussions about, where's our feeder? How are we getting young people involved in skiing? And I don't know if that was an issue for you guys, and maybe snowboarding solved it. But it still seems like when I come up and ski, there's a lot of older folks. Maybe those are the days that I occasionally come up [LAUGH] here. But how are you dealing with that? >> That's one of our largest challenges. Snow making did give us a little pizzaz and a little sex appeal back in the 80s, 90s. It brought that ski or that surf and skate culture to the mountains that hadn't experienced before. It provided excitement, it was something cool. Your parents skied. You could be cool and be a snowboarder. So and one of the greatest things that snowboarding did is it gave us shaped skis. So it's a lot easier to ski now than it was before snowboarding came about. But snowboarding, unfortunately, the growth has flattened out. It's not growing at the pace it was. I think nationally, it represents about 26% of the population right now where snowboarders. It's still out there, a lot of these kids are getting on skis instead of snowboards. It doesn't have sort of the sex appeal that it once did. And the changing demographics between the baby boomer generation, my generation, and then the millennials, there's a lot of cultural differences. Financial restrictions, they're coming out of school saddled with a lot more debt. They don't own cars as much. The millennial generation just doesn't seem to own cars at the rate we did as we were growing up, so there's a challenge. I don't know many ski areas that are right in town. There are some, but not major resorts that are right in towns. So how do you get them up there? We establish ride share programs, car pool situations. There's buses that target that younger demo and provide something else. And make sure they have free Wi-Fi in the bus on the way up here. So because part of their experience is being able to share that experience, more so than we ever did. When they come up here, they want to show their friends via social media what they're up to. And maybe even stimulate some friends to join them, so they can make it a gathering point. So just the need to put Wi-Fi throughout your resorts has been a capital question for a lot of areas and something we've had to do. because if we don't have that, we're not a viable venue. It's like, if I can't go there and share it on social media, I don't go there. And that's truly a cultural shift, and there's a lot of things like that that the resorts are having to adapt to. And one of the best ways to do it is bring some of those millennials in your management team. And get their feedback, get their information. A lot of the industry conferences and stuff I go to, the most interesting things are from those younger generations. It used to be you'd go to a class or something, and it'd be the older wisdom that was imparted to you, and that's where you got your knowledge. Now it's the younger ones that I'm trying to catch up to, and half the time, three-quarters of the way through the presentation, I'm having to ask the guy next to me, what did he just talk about? So there's those things that we need to catch up to them in a lot of areas, and it's the sharing of information, I think, is the key part of that. So we are evolving, we're changing. There's more ethnic mix on the mountains. It's not just a Caucasian, white people sport anymore. There's Asian populations coming on strong into winter sports. More Hispanics are out there, more African-Americans. So what are the things that we should do to accommodate them and invite them to our resorts? We gotta quit speaking to each other, we've gotta broaden our messages out there. Invite everybody out, make it more inclusive, not so elitist. Skiing at one time was seen as a very elitist sport. Sustainability and elitism don't really work together. [LAUGH] >> [LAUGH] Yeah, I think it's great you mentioned diversity because when we talk about corporate social responsibility, diversity has always been an issue. But another issue is sort of outreach in the community. And I know that you folks do a lot. In fact, I'm on the board of a group that's supported by your local benefit day, and we'll be up this Sunday in our tent handing out cocoa. But could you talk a little bit about some of the stuff you do? I know you're pretty active in our community, anyway. >> And you'll find out most resorts are. They are very driven to contribute to scholarship funds. They donate to various requests for fundraisers. We let Girl Scouts go out on the plaza and sell cookies. We have our own charitable arm here, where we do four local benefit days. The ticket revenue is given to those four charities. They're all asked to come up here and help out. They set up their tents, they give out cocoa and maybe give out some swag of some kind. But they're primarily giving information out to our general consumer about what your organization's about. Furthering that outreach is important. The people that come up and ski are concerned about their local communities, and the environment, and those kind of things. And the more they learn about it, when they're not expecting to learn about it, it's kind of nice. It's kind of a great thing, so. >> Well, the fundraising opportunity for our little group, we're going to get a couple thousand dollars from these benefits- >> It helps. >> It's huge for us. It's huge. And I know that when our daughter was in the fifth grade, fourth grade- >> Passport program. >> Passport, yeah, and it happened twice, I think. >> Fifth and sixth grade, yeah, Colorado does that, I think Utah, California, various states that do it. And it works pretty well. Every fifth grader in the state of Colorado gets three free lift tickets at every ski area that's a member of Colorado ski country. So that adds up pretty quick, and that gets them out, they're sampling, checking out skiing. They may not have been able to do it without that benefit. And then the following year, when they're in sixth grade, they can come in and buy that same pass for $89. That gets them three free days at each area. So it's a good way to get them out there while they're young, while they're still able to go experience it. It helps for families with young kids. Lessen the sticker shock of, it was easy when you were a single guy going to buy a lift ticket. It's a lot different when you've got two kids and a wife, and you're looking at season passes for everybody. So how do you accommodate that? A couple of years ago, we started putting in a payment plan on our passes. And that's primarily for that market, so they could afford to make a monthly payment, instead of having to come in and shell out $2,000 for their family's season passes in April to get that lowest rate. They can still get that lowest rate, but not have to pay it off until December. So it lessens that hit a little bit. We try to make it as affordable on those local days or discounted so we can get more people up here. Last week, we had our big teachers appreciation day, which is a benefit for the schools. Had a couple of hundred teachers up here and school staff. They all skiied free, free lunches, and an after-ski party for them. And then we actually donate gift cards with the funds that they can use to buy school supplies. Because we know that teachers are shelling out their own money to buy the school supplies they need for their kids in their schools. And they can't afford to do that. That's not sustainable. So how can we help them? So there's all sorts of different ways that you look to help out your community wherever you can. It's important to be involved in your community. You're a leader in your community. You draw most of your business out of your community, your labor comes out of your community, you're part of it. Just because you're 30 miles away doesn't mean your not in it. >> Well, you have to be one of the big employers? >> Yes, yes, we employ- >> Hospital maybe? >> Yeah, health care, Fort Lewis employs a lot of people. But yeah, we're fully staffed around 1,100 people. So it's a- >> Interesting. >> Yeah, yeah. [LAUGH] >> Okay, so to sort of finish up, this course is about sustainable business. And I want to, this is kind of a two-pronged question. I mean, where do you see the industry going and you've kind of alluded to that, but in terms of sustainability, is there any low hanging fruit? I mean, people are smart in this industry. They've probably picked most of that, but there's probably some other areas where you see changes that could be made. >> I think the goal here, to start, has been the areas have looked at the low-hanging fruit, so to speak, was renewable energy, waste management programs, from your composting to your one-stream recycling. You're lessening your impact as you make improvements to the mountain. Engineering runs in such a way that they don't affect water shed. So you're not putting sediment into the streams when the snow goes away. The sediment's trapped on the mountain or in silt basins. So it doesn't get in the watershed and affect the fish and the natural habitat. The efficiency of snow making like we discussed, the more modern equipment, modern guns, lifts have gotten better at consuming less electricity. So you've got those programs, but you're also looking at the future things, anything you can do that help the experiential side of it. Is there a better way to transport guests up here, even from our lower lots? Are we looking at a chair, a type of chair to replace one of our beginner chairs. Chair four, for example, goes up to great beginner training but it's an old fixed grip double that's a little intimidating to load. Well, a high speed chair or a tunnel that has gondola cars and chairs can be used for up and down loading. So you could transport those people up there. They can have experience up there and then transport them back down in the gondola car. So without them having to ski, without them having to be intimidated, making their first experience at the resort better for them so they're more likely to come back. One of our challenges has been we get only about less than 30% of the people that try skiing come back for a second time. >> Really? >> Yes, so how do we grow that? That's been one of the big challenges. So we're incorporating our beginner lessons to be more friendly, so to speak, less students to instructor ratio. The modern equipment's helped immensely. The skis are so easy to turn on now. Modern clothing and textiles have made it where you're not freezing and sopping wet out there. So the experience, it used to be men, the old guys that skied from the 10th Mountain Division. The guys who started these resorts, they were hardy people. In their wool pants, and on their long wood skis walking up those hills. It's pretty easy now. We're pretty pampered. But to be something that's going to grow, that more of the general population wants to get into, you've gotta eliminate those barriers to entry. You've gotta take down those intimidating things, the elitist attitude, the fact that it's too far away, the fact that it's physically too challenging for me. Conquering those perceptions is one of our challenges to become a sustainable business. We need to be able to reach more than 5% of the population and make them believe that they can ski. And that's a huge challenge. >> One of the things that I've seen here and I think at Monarch maybe is Snowcat skiing. So on the other end of the extreme, the people that they've done a lot of skiing off of lifts, but they want a different experience. Are you kind of expanding on that end of things? >> Yeah, Snowcatting is a great opportunity. It's a way to get in the back country safely. I'm one of those people that think half the people that are going into the back country probably shouldn't be there. You need to be in there with a lot of knowledge, with someone that knows what they're doing, preferably a guide. We hear about the avalanches and the issues that happen all the time. Having experience like Halo skiing experience or Snowcat skiing experience, those people are locals in those hills. They know how the snow loads up when a storm comes in from the west, where it's susceptible to slide. They know those things and they can go out there and do mitigation efforts prior to opening after the guest, they go out there and they run lines. They throw some explosives. They trigger some avalanches. And then they bring the guest into those back country environments in a safe, more controlled manner. It's not perfectly safe. Nothing is, but if they've done some avalanche mitigation work, and you're with a guide that knows that region, chances are you're going to have a lot better time than if you're fumbling around with a couple of your buddies in the back country getting lost and potentially getting hurt. So I think it's a great way to provide that experience to those people looking to get away from the beaten path and looking for the serenity of the back country to provide that in a safer manner, which I think is important. >> One of the things, too, that you're doing is snowshoe tours. You have a naturalist twist to them and it's a pretty diverse set of activities that you offer, cross-country skiing and- >> We've added a lot of things. The snowshoe tours are a great example. They go up, the high-speed six-pack, to the top of the mountain. So it's a different, they're in a total alpine environment now. They're in the real forest, they could be in the middle of nowhere. If that chair didn't dump them there, they wouldn't know where they were. >> And that's 10 or 11,000 feet, right? >> Yeah, it's up there. So and they're given some snowshoes. There are guides out there with them, naturalists, shows them interpretive things. You're going to see some tracks out there. You're going to see different trees. They identify those things. They give you some knowledge about nature. And you're hiking around having a good old time and you ride the chair back down. So it's a great opportunity to get into the winter environment and not have to be a skier. We've added, we have snow mobile tours, we have dog sled tours, so you can get pulled around by a dog sled which is pretty cool. There's ice climbing that we offer out of the resort, there's horse-drawn sleigh rides that we offer out of the resort. So we're trying, it's not just about skiers and snowboarders anymore, it's winter guests, and providing a rounded winter experience that encompasses a lot of things for them to take advantage of. And it's neat because we're seeing people that haven't been up here before. Not everybody needs to be a skier, but everybody should embrace the winter. >> Well it's such a wonderful environment. >> Yeah. >> Winter and summer. >> Yeah, exactly. >> And there's a lot of different ways to experience. >> And summer hasn't been intimidating for them in the past, because they'll go hiking and they'll will come up and they'll horse back ride and they'll go fishing. So the mountains weren't supposed to, but you throw the snow on there, it keeps a lot of people away. So we're trying to build activities into that that are low impact, that doesn't take a lot of physical training. And provide people access so they can see what's out there and really experience it, because it's gorgeous up there. It's just different. >> That's great, that's great. Greg, is there any last thing, these are students that are thinking about sustainable business, any last words you- >> Stay in school, stay in school! >> [LAUGH] That's good. >> [LAUGH] Yeah, no, I've loved it. I've been in this business, I was ad agency for a couple years out of college, then I got right in the ski business. Started working for the US Ski Association, US Ski Team, saw the manufacturing, the retail, and the resort end of it, decided I wanted to be in the resort side. So I pursued that my entire life, and it's afforded me to meet some great people, ski some phenomenal mountains. It's a great lifestyle. And we have our challenges, the industry's got its challenges, just like most industries. But I think the appeal's so strong that if we present ourselves well to the market, we'll weather the challenges, we'll be there. We'll still exist 20 years from now. >> [LAUGH] Well I think it was great what you said about your clientele. I mean, they care about the outdoors. >> They do. >> And they want to see you do the right thing. >> Yeah, yeah, they'll hold you to it. >> They're going to help you. >> They'll hold you to it. Yeah, if they've, if we left one of our shuttle buses out in the parking court idling, and it was putting out on a plume, they'd be in our ticket office. >> [LAUGH] >> That fast, so its good, we wouldn't do that, but if we did, bam, we're going to get called on it. So yeah, people are very respectful of what they have. And we're sort of, all we are is the caretaker, the resorts are just the caretaker. We don't want to screw it up, but we want to provide the activities and the interaction between the guests and the mountains. We need to take care of these mountains, this is our livelihood. >> That's great. >> You've got the other challenges, you've got the beetles, the beetle kill. You look at some of the areas that have been devastated by that. We've done some mitigation on that. We're clearing hazard trees, we are taking down the canopy, the high canopies that some of these beetles will, when they come to the air that's what they're going to go for. So we're trying to thin those out. So we're trying to do some mitigation to try to lessen the impact, but you get further north in Colorado or over near Wolf Creek, it's one match and it's going quick. >> And they're moving this direction? >> Yep, yep, that's what I've heard. I'm fighting them. >> And that's actually a climate issue, right? >> Yeah- >> The winters haven't gotten cold enough to- >> Yeah. >> To kill them, I guess. >> Yeah, it's climate and it's just the drought conditions, warmth, yeah, when the trees get weak, the bugs can attack. If the trees were strong and they'd had good moisture and they hadn't been stressed, they'd probably fight off the bugs a lot better. But when they're stressed, those damn beetles get in there. >> Well I love what you said about borrowing. I mean, we really are just borrowing from the next generation, or- >> Yeah, we have to take care of it, we better take care of it. I want my grand kids to enjoy this stuff. >> [LAUGH] >> I don't have any yet, but there's a couple on the way. >> [LAUGH] And Greg, thanks so much for taking time with us.
