Las Vegas Ski & Snowboard Resort
Draft Master Development Plan

Ski/Snowboard Industry Overview

Skiing is a relatively young sport and recreational pursuit, having a primary economic take-off point which occurred in the post World War II period. While the physical plant and participation in the sport grew moderately during the 1950's, the 1960's ushered in an explosive era of ski development in North America, which centered in the Northeast Corridor, the Rocky Mountains and the West, with participation growing in excess of 15 percent per annum. While the North American average annual growth rate has leveled off during the past 30 years, some regions continue to experience growth. Industry analysts have suggested that these growth regions (i.e. Colorado, California, Utah and British Columbia) have sustained their positive growth patterns through continued resort development; thereby substantiating the tenet that in winter snow sliding sports, supply creates demand. Other identifiable growth stimulators within the sport of skiing include: population growth; technological improvements of ski lifts, equipment, clothing, and slope grooming techniques; the parabolic or shaped ski boom, snowboarding, snow tubing, airline deregulation and co- operative packaging of lifts, equipment, transportation and accommodation, thus creating a "total resort experience".

In the latter part of the 1980's, growth in the North American skier market slowed considerably. Total visitation in the United States remained at the 53 million level between 1986/87 and 1988/89, and dropped to 47 million by 1990/91.

Skier and snowboarder visits through the early 1990's continued to show an increase, with the United States recording close to 51 million visits. This increase could be a reflection of several factors: the end of the first Persian Gulf War; partial economic recovery; fairly good weather conditions for increased snowmaking efficiency; exposure and enthusiasm from the Winter Olympics; the continual upgrading and replacement of older chairlifts with high speed, quadruple and six- passenger lifts; increasing capacity, as well as concentrated efforts of technical and managerial staffs to market the product better.

The 2000/01 season was a record-breaking season in terms of number of visits, with a total of approximately 57.3 million visits, a 5 percent increase over 1999/00. This increase was attributed mainly to strong visitor numbers over the Christmas season and the average length of season increasing from the previous season. Snowfall accumulations were varied throughout the regions, but some areas reported a 12 percent increase in snowfall. Season pass sales increased in all regions and were also a contributing factor to the substantial increase in visitation for 2000/01.

During the 2001/02 season visitation decreased 5.5 percent from the previous season to approximately 54.4 million. Contributing factors for the decrease include the aftermath of the September 11 terrorist attacks, poor early season weather and snow conditions. Additionally, a general economic recession in many parts of the country was to blame for the drop in skier participation.

Over the long term, visitation levels have reached a new level, even with an aging population, up from a low of 47 million in 1990/91 to approximately 57 million during the 2002/03 season. This was a decrease of 1.3 percent from the previous season, but still the third best season on record. This overall increase can be partly attributed to a number of factors other than weather, snowfall levels and length of season. Many areas initiated special pricing discounts on season passes, developed on-hill accommodation, expanded visitor services and built facilities for an increasing range of "other" mountain resort experience activities. Skier visitation for the 2005/06 season set an all- time record by a substantial margin, reaching 58.9 million visits, up 3 percent from the 2004/05 season and up 2.3 percent from the previous record set in 2002/03.

Preliminary estimates for the 2006/07 season indicate a 6.9 percent decrease in skier visits to 54.8 million. This decrease was primarily due to challenging weather conditions, subsequent delayed openings and periodic closures resulting in shorter seasons for all areas except the Rocky Mountains. The Southeast and Pacific West ski areas reported declines in visitation of approximately 16.5 percent, while the Northeast and Midwest dropped 6.7 and 5.9 percent respectively. The Rocky Mountain region, in contrast set a new record of 20.9 million visits, accounting for 38 percent of the nation's total visits. Plate I.2 graphically illustrates the historic total skier visitation for the seasons 1978/79 through 2006/07.

The snow slider population may be further diversifying with the explosion of other new and specialized technology and equipment such as twin tips, super short skis and snow skates.

During the nine-year period from 1978/79 to 1986/87, a study by Dr. Marvin Kottke indicated that 60 small ski areas went out of business, while another 40 small areas grew and moved out of the small area category. This finding corresponds with data which shows the average area lift capacity increased 53.9 percent over the same time period, suggesting that although there are fewer ski areas, the total resort capacity has actually increased. We find that this trend is still relevant and can be expected to continue on into the future.

In the late 1960's, the United States alone had about 1,400 ski areas. In 1977, the United States had 929 areas; in 1984, 727, and presently there are 478 ski areas operating according to the National Ski Areas Association. Plate I.3 illustrates the number of ski areas in the United States.

As illustrated in Plate I.4, the United States average visitation per area in 1978/79 was 60,990. In 1993/94, the average visitation per area increased to 105,886. This increase was a result of the rationalization of the smaller areas. As illustrated below the average skier visitation per area for the 2006/07 season was approximately 114,691.

Prominent industry analysts predict an increasing specialization in ski resorts as they attempt to create their own "niche" to attract new domestic and foreign markets. New domestic markets such as seniors, ethnic groups, special interest groups, snowboarders and echo boomers are now being targeted by aggressive winter resort area marketing programs.

The conclusion from this data is that the North American ski industry has entered a new stage in its development. While overall growth in the ski industry has become stagnant, many ski areas and resorts are focusing on improving the quality of the "experience" to maintain loyal customers, as well as offering a wider variety of activities and amenities to appeal to a broader range of visitors. The increasing competition in the ski/snowboard market means that today's winter resort must be modern and efficient in terms of its operating equipment and plant, while at the same time provide a high quality experience for its guests.