report card
I
n the 1980s, North America dropped a lot of resorts from its roster. According to the Kottke End of Season Survey, in the 1982/83 season – the first season the study began tracking total operating U.S. ski areas – there were 735 operating ski areas. By decade’s end, 144 of those areas had ceased operations. One theory suggests that they contributed to their own demise by failing to capitalize on technology and infrastructure improvements (i.e., high-speed lifts and snowmaking) that guests came to expect. In our general assessment of the current state of North American snowmaking, we take under consideration whether a failure to modernize snowmaking equipment will contribute to yet another wave of resort closings – or worse, create a second-rate product that misses the grade in a fragile consumer market. g
A
REPORT CARD
Snowmaking on North American
SNOW CONSULT
BY ROBIN SMITH, PRESIDENT, SNOW CONSULT
w w w. n s a a . o r g
April/May 2010 • NSAA Journal • 17
Facts about the Class of 2010 For the purpose of this report, our in-depth analysis included 11 ski areas, both large and small, from various regions of the country. Limitations do exist with a sample of this size and are admittedly skewed toward larger systems. Nonetheless, our
Snowmaking Power as % of Total Winter Operations Power 100% 90% 80% 70% 60% 50%
67% of all winter perations power o is consumed by snowmaking.
40% 30% 20% 10% 0% 1
2
3 4 5 6 7 8 9 Range Among Ski Area Study Group
18 • NSAA Journal • April/May 2010
10
11
research unveils some key findings that can help open a dialog at resorts, and within the industry, centered on creating greater efficiency within snowmaking operations. The costs within snowmaking are energy, labor, transport, additives, and maintenance. On top of that, there’s the weather. Snow being made at an average temperature of 14 degrees versus 26 degrees Fahrenheit creates a huge cost savings. Interestingly – and complicating broad research on the topic – many ski areas have never quantified their snowmaking power consumption. Snowmaking oftentimes shares a primary electrical meter with many other draws, such as lifts or lighting, thereby making it difficult to isolate the actual costs. Some operations take more of an “it-is-what-it-is” attitude toward snowmaking costs. To them it simply comes down to the fact that in order to remain viable, they have to make as much snow as possible, no matter the cost. According to our research, snowmaking consumes about 67 percent of all power used during winter operations. A second study conducted by an energy audit company with a different set of resorts came up with exactly the same number. Ironically, we often encounter resorts that would hunt down and replace their last incandescent light bulb in the
w w w. n s a a . o r g
SIXTY-SEVEN PERCENT OF ALL POWER CONSUMED DURING WINTER OPERATIONS IS CONSUMED BY SNOWMAKING. interest of sustainability, but continue to use and purchase snowguns that consume criminal amounts of energy. 
Cost per Acre Foot of Snow The Cost per Acre Foot of Snow is a critical measure. Among our surveyed clients, this figure averages $2,100. But it’s the range that flabbergasts me: $680 to $3,100. Yes, resorts with big vertical footage have higher pumping and overall costs. Yes, across North America, energy costs vary greatly. But resorts in the lower end of the range have several things in common: They use high concentrations of low-energy, temperature-efficient, fixed-location guns, and mostly air/water guns. The resorts at the very bottom of that range are already automated. The resorts finding themselves at the undesirable high-end of this range continue to use a lot of traditional, internal-mix air/ water guns, tower or not, and often technology that is manual; portable, including fans; and requiring long hose runs. All of these factors can significantly decrease overall efficiency and the bottom line.
100 percent manual guns and portable fans own the high ground. Labor expense within snowmaking operations is not about pay scales, work ethic, or supervision. It’s about overall productivity, and too often productivity is constrained by an inefficient system or plan. If you don’t change either, labor expenses cannot change noticeably. 
Cost per Million Gallons Converted to Snow I like the Cost per Million Gallons Converted to Snow metric because it takes into account the actual conversion ratio of a gun or an entire fleet, but these figures continue to be debated through the industry. One acre foot of water is 325,000 gallons. Snowmaking engineers often use the range of 140,000–225,000 gallons of water to make an acre foot of snow. Of 60 volumetric tests, the best I have seen is 157,000 gallons used to make an acre foot. That was with an additive and using modern snowguns running in the “sweet spot” of their temperature design curve or jetting. The average of those 60 tests was 350,000 gallons, way above what the industry has believed possible. Energy efficiency g
Total Cost per Acre Foot
$3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
1
2
3
4
5
6
7
8
9
10
11
12
Range Among Ski Area Study Group

SNOW CONSULT
Labor as a Percentage of Total Expense Another somewhat surprising discovery was that labor costs varied greatly among the 11 resorts we researched. Labor is less than 9 percent of total costs for the resorts in the top of the class. This figure climbs to a staggering 62 percent for the efficiency-challenged group. Predictably, resorts with 100 percent automated systems occupy the cheap ground, while resorts with w w w. n s a a . o r g
Snow Consult President Robin Smith says that one key to keeping snowmaking expenses in check is to manage volume and avoid overbuilding inventory.
April/May 2010 • NSAA Journal • 19
aside, many of the old guns were not good converters of water to snow over a range of temperatures. So where does the water go? Instead of freezing, many droplets leach through the existing snowpack, resulting in no net gain in volume. Other droplets evaporate, again creating no additional volume. Finally, some droplets are so small that they’re carried by the wind to an unintended location, such as the access road that the snowplow just cleared. Fortunately for the industry, the newest generation of both tower guns and fan guns are good converters of water to snow over a wide range of temperatures. I also like this measure because it puts an easily measured dollar amount on every million gallons that aren’t pumped. Snow surface quality and managed volume are what we sell – they gives us trail count; pipes and parks; satisfied guests; and, ultimately, increased revenues. However, if you’re serious about controlling your costs, the easiest management step you can take is to stop building inventory you can’t sell.
Repairs and Maintenance as a Percentage of Total Expense Within our test group, repairs and maintenance (R&M) accounted for 5 percent of total snowmaking costs, while the range was 0.5 percent to 8 percent. One word of caution: Accounting practices tend to vary, and there may be some underreporting here. For instance, if someone on the snowmaking crew rolls the new snowmobile, is the damage expensed? And if so, within what department is it reported? In fairness, it shouldn’t be listed under the “snowmobile department.” What about snowcats dedicated to move fan guns? From which budget do the costs for repairs and maintenance to those cats get allocated? Again, it shouldn’t be the “grooming department.” Of course, the more your equipment resembles a pneumatic anvil, the lower the R&M. Traditional air/water guns have low maintenance, but that’s not a reason to buy them anymore. Automation may be more expensive, but it does
2008/09 NSAA Economic Analysis of U.S. Ski Areas: Snowmaking Cost Analysis OVERALL 2008/09
NORTHEAST
2007/08
2008/09
SOUTHEAST
2007/08
2008/09
MIDWEST
ROCKY MOUNTAIN
2007/08
2008/09
2007/08
2008/09
2007/08
PACIFIC WEST 2008/09
2007/08
EXPENSES (000) Labor
$199
$217
$259
$271
$294
$373
$109
$148
$201
$203
$139
$128
Power
$234
$237
$435
$450
$235
$271
$36
$27
$227
$203
$194
$218
Other
$125
$130
$201
$179
$288
$284
$35
$36
$56
$86
$138
$138 $484
Total cost
$558
$584
$895
$900
$817
$928
$180
$211
$484
$492
$471
Acres covered
208
204
272
272
151
150
120
118
247
239
179
174
Hours operated
747
769
943
1,028
960
948
566
496
749
819
517
485
Total acre-hours
155,376
156,876
256,496
279,616
144,960
142,200
67,920
58,528
185,003
195,741
92,543
84,390
Average cost per acre-hour
$3.59
$3.72
$3.49
$3.22
$5.64
$6.53
$2.65
$3.61
$2.62
$2.51
$5.09
$5.74
Number of areas
90
90
19
19
11
11
15
15
30
30
15
15
OVERALL
0–4,499 VTFH
4,500–9,999 VTFH
10,000–16,999 VTFH
17,000+ VTFH
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
$199
$217
$95
$126
$138
$166
$213
$205
$353
$359
EXPENSES (000) Labor Power
$234
$237
$16
$16
$121
$126
$319
$415
$506
$454
Other
$125
$130
$25
$27
$81
$88
$189
$199
$227
$228
Total cost
$558
$584
$136
$169
$340
$380
$721
$819
$1,086
$1,041
Acres covered
208
204
87
86
137
132
204
200
399
392
Hours operated
747
769
503
547
626
592
768
803
1,084
1,150
Total acre-hours
155,376
156,876
43,761
47,042
85,762
78,144
156,672
160,600
432,516
450,800
Average cost per acre-hour
$3.59
$3.72
$3.11
$3.59
$3.96
$4.86
$4.60
$5.10
$2.51
$2.31
Number of areas
90
90
21
21
30
30
14
14
25
25
20 • NSAA Journal • April/May 2010
w w w. n s a a . o r g
THERE’S A REASON THAT 80–90 PERCENT OF THE SYSTEMS OUTSIDE NORTH AMERICA ARE ALREADY AUTOMATED – THEY MAKE SNOW FOR A FRACTION OF OUR COSTS. not appear to contribute significantly to R&M costs. While the components of an automated system can be expensive up front, when or if they do fail, it’s often soon after startup – so the parts remain under warranty. Once they pass the inaugural season, the components usually can be expected to function properly for many years to come. And resorts should recognize that automation can result in reduced R&M on snowmobile and snowcat fleets as well. We also recognize that it can be frustrating when the “stupid computer” shuts down your system for no apparent reason, but in our observations, there appear to be fewer things that go BOOM in the night with automation.
capacity are doing a great job of maximizing existing assets. Poor utilization is a legacy from the build-it-big era, when we thought we could ignore marginal temperature and make up for it with massive pumping in sustained cold temperatures. Frankly put, many plants are overbuilt, given the reality of today’s weather and skier/rider demand patterns. More than absolute pumping power, a system’s speed, agility, and accuracy are key to recovering from a warming trend. Still, the bottom line remains: If you have low water utilization, you should develop a plan to improve it.
Water Plant Utilization
The measure of Kilowatt Hours (kWh) per Million Gallons Converted to Snow allows us to compare resorts with different power rates, currencies, and core technologies. The average among our clients is 45,000 kWh per million gallons converted. g
Water plant utilization among our research group averaged 41 percent. The range here was 16 percent to 80 percent. Those resorts utilizing more than 70 percent of water plant
Kilowatt Hours per Million Gallons Converted to Snow
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www.emmegiski.com 300+ INSTALLATIONS WORLDWIDE (12 in North America) w w w. n s a a . o r g
April/May 2010 • NSAA Journal • 21
If you’re a resort with the capital resources to upgrade your snowmaking system, we’d urge you not to move forward until you have a strategic plan in place. The overall goal should be to lower energy cost dramatically, reduce labor, and increase speed in marginal temperatures and fragmented operating hours. How you get there can be unique to each resort, but here are some points to consider: • An overall snowmaking solution can utilize a mix of low-energy, air/water tower guns; or fan guns; or in many cases, both. A wellorchestrated strategic plan can spell out what goes where, and they are not always interchangeable. •
Automation and temperature-efficient guns need to go on your top-priority trails. The auto-
Core Infrastructure In terms of core snowmaking infrastructure, we as an industry are not in bad shape, from Snow Consult’s view. Within the last 15 years, many resorts have upgraded their access to water in a serious way. Pumping and compressors are generally good, if not perhaps overbuilt in some instances in light of current gun and system technology. I look back and see that one of two things has happened recently: the resorts with minimal water access, oil-spewing compressors, subpar pumping capacity, and poor piping either upgraded or have already gone out of business. They flunked out of snowmaking about the same time they flunked with respect to their lifts, grooming, and customer service. Yet even among existing resorts, sections of deteriorating distribution systems – namely the piping and electrical corridors – are in many cases 20–30 years old. Most resorts have already accepted the reality, albeit begrudgingly, and they have a replacement schedule in place. Yet in the current economy, snowmaking upgrades can often be deferred.
mated snow on priority trails will ultimately offer the best return on investment (ROI). •
If capital is limited, resorts should consider purchasing auto-ready snowguns. These can be upgraded to automatic operation at a later date, but resorts should look for guns that already have a proven track record of automated success.
•
Considering the recent increase of unsold inventory, there are deals to be had out there. If you are at the top of the energy-use class, you may be able to fund your investment from savings, but only if you go big. A single trail can provide proof of your overall concept, but big savings only come as a result of big commitments. Some vendors can help with financing, but only if the savings are big enough to make the payments. This might be easier than you think! – Robin Smith, Snow Consult
22 • NSAA Journal • April/May 2010
w w w. n s a a . o r g
SNOW CONSULT
IF WE CAN FIND CAPITAL?
The range was 20,000 kWh to 68,000 kWh. If you know your system’s total kWh and your total pumping, you can score yourself.
IF YOU DON’T GATHER GOOD MANAGEMENT DATA FROM YOUR SYSTEM, START NOW. REMEMBER, IF IT CAN’T BE MEASURED, IT CAN’T BE MANAGED. IN OUR OBSERVATIONS, OVERALL DATA COLLECTION FROM SNOWMAKING IS POOR, AND EVEN THOSE WHO COULD GATHER IT OFTEN FAIL TO MANAGE THE DATA EFFECTIVELY. Snow Quality When it comes to snow quality, North American ski areas undoubtedly receive an “A” for effort, even though techniques and equipment can yield varying results. This season I was afforded a unique opportunity to ski a major top-to-bottom trail on first opening. At the top, 10,000 feet in elevation, the trail relied on natural snow. From there, the trail had a section of automated air/water towers, followed by a section of manual air/water towers, then ground guns, manual fan guns, and finally automatic fan guns. The snow quality variance was dramatic. That day the area’s top managers were doing a meet-and-greet in the lift lines, and the guests were raving about the snow conditions on the automated sections. But those raves were followed up with questions about “what happened” on some of the sections covered by
manual guns. That caused managers to boot up and check it out for themselves. Automated snowmaking, regardless of the underlying technology, delivered superior snow quality and consistency by a huge margin. Groomers, patrollers and locals thought the difference was still discernible weeks later.
Automation and Low Energy are the Future Snowmaking is a primary operational expense, and energy and labor are the two biggest components of that cost. While these facts are not bound to change anytime soon, automated, lowenergy, temperature-efficient guns can have a huge impact in lowering both the costs of energy and labor. If you’re in the high end of the class, it’s possible to drop your Cost per Acre Foot by 60 percent or more. There is a reason that 80–90 percent of the g
Duane Morris’ Sports and Recreation Law attorneys are nationally respected for their innovative and effective strategies in representing the ski industry. Our work for the ski industry helped establish the doctrine of primary assumption of risk defense, which has served as a basis for many defense victories in sport liability claims in virtually all industries. Our full range of services for the ski industry include: Litigation of all ski area-related issues, including premises liability and risk management advice and legal advice regarding incidents involving catastrophic injury and wrongful death Labor, employment and immigration issues Environmental, land use and regulatory compliance Construction law Real estate law Intellectual property and trademark issues Corporate law Finance and refinance issues Contract review and negotiations
Duane Morris: Pioneers in Sports and Recreation Law For more information, please contact: John E. Fagan, Partner 11149 Brockway Road, Suite 100 | Truckee, CA 96161-2213 P: 530.550.2055 | F: 530.452.2992 | [email protected] Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia San Diego | San Francisco | Baltimore | Boston | Washington, D.C. | Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton Wilmington | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
w w w. n s a a . o r g
[ www.duanemorris.com ]
April/May 2010 • NSAA Journal • 23
systems outside North America are already automated – they make snow for a fraction of what we spend to make snow. So what’s the definition of a low-energy air/water gun? It’s one that uses less than 50 cubic feet per minute (cfm). That is the current gold standard. A temperature-efficient gun is one that can make good-quality snow over a wide range of temperatures, from very marginal to extremely cold. Current fans on the market excel in providing snow at a wide temperature range, and they have good throw capacity that can make their modest increase in energy use justifiable in the right locations.
The Report Card Part of our purpose for this article is to provide a platform for which to grade your own operation and plan for the future. We
Sierra Research Associates Management Consultants Specializing in Human Resources and Market Research for the Resort Industry
Charles Riley & Harold Richins, Principals SIERRA RESEARCH ASSOCIATES LLC PO Box 2190 Truckee, California 96160 530.426.9361 [email protected]
certainly look forward to similar evaluations of snowmaking operations efforts in the future, which will include a larger and more diverse sampling of areas. The techniques of efficient snowmaking are well known; they just aren’t always practiced. Making snow in huge piles may impart a feeling of invincibility to snowmakers, but in the end it might not contribute to the overall economic health of the ski area.
So what’s the grade? Overall, we pass, and we have the foundation and the commitment to quality to go to the next level. Across the pond, the rest of the snowmaking world is notably ahead of us technologically, but we, too, will graduate, and maybe at the top of the class. We just may need student loans to get there. Snow Consult conducts in-depth strategic master plans for a wide range of clients. Contact Robin Smith at [email protected]. n
IF WE CAN’T FIND THE CAPITAL NOW? If you’re like many resorts and are having a difficult time finding capital , then you need a strategic plan even more. We advise our clients in the bottom of the cost-per-acre-foot class to hold off upgrades until they are ready to make a significant investment in automated, low-energy guns. For the rest of the class, we advise the following: • If you don’t gather good management data from your system, start now. Remember, if it can’t be measured, it can’t be managed. In our observations, overall data collection from snowmaking is poor, and even those who could gather it often fail to use the data effectively. • Most snowmaking is governed by a corollary of Parkinson’s Law: Snowmaking expands so as to fill the time available for its completion. Use your data to manage snowmaking by volume, not hours. Most of us make far too much snow in the wrong places and at the wrong times. Without capital, learning to manage snow by volume is money in the bank. • Invest in continuing snowmaker education. The rank and file, middle managers, and especially top management all need to learn more about such a critical line item. • Resorts that make a big commitment to pipes and parks often commi t 25–30 percent of their snowmaking resources to building features. However, consider that 90 percent of that snow is buried inventory and never sees the bottom side of a ski or board. We also see the most expensive guns being used to build this inventory, and in many operations, the park guys seem to operate with a blank snowmaking check. Where permitted, building up features first with soil and natural terrain can help, but a little management can go a long way as well. • While snowmaking departments may be resistant to change, one truth you can bet on is that if you continue to pursue the same operational strategies, you will get the same results. – Robin Smith, Snow Consult
sierraresearchassociates.com
24 • NSAA Journal • April/May 2010
w w w. n s a a . o r g
Axess
n the 1980s, North America dropped a lot of resorts from its roster. According to the Kottke End of Season Survey, in the 1982/83 season – the first season the study began tracking total operating U.S. ski areas – there were 735 operating ski areas. By decade’s end, 144 of those areas had ceased operations. One theory suggests that they contributed to their own demise by failing to capitalize on technology and infrastructure improvements (i.e., high-speed lifts and snowmaking) that guests came to expect. In our general assessment of the current state of North American snowmaking, we take under consideration whether a failure to modernize snowmaking equipment will contribute to yet another wave of resort closings – or worse, create a second-rate product that misses the grade in a fragile consumer market. g
A
REPORT CARD
Snowmaking on North American
SNOW CONSULT
BY ROBIN SMITH, PRESIDENT, SNOW CONSULT
w w w. n s a a . o r g
April/May 2010 • NSAA Journal • 17
Facts about the Class of 2010 For the purpose of this report, our in-depth analysis included 11 ski areas, both large and small, from various regions of the country. Limitations do exist with a sample of this size and are admittedly skewed toward larger systems. Nonetheless, our
Snowmaking Power as % of Total Winter Operations Power 100% 90% 80% 70% 60% 50%
67% of all winter perations power o is consumed by snowmaking.
40% 30% 20% 10% 0% 1
2
3 4 5 6 7 8 9 Range Among Ski Area Study Group
18 • NSAA Journal • April/May 2010
10
11
research unveils some key findings that can help open a dialog at resorts, and within the industry, centered on creating greater efficiency within snowmaking operations. The costs within snowmaking are energy, labor, transport, additives, and maintenance. On top of that, there’s the weather. Snow being made at an average temperature of 14 degrees versus 26 degrees Fahrenheit creates a huge cost savings. Interestingly – and complicating broad research on the topic – many ski areas have never quantified their snowmaking power consumption. Snowmaking oftentimes shares a primary electrical meter with many other draws, such as lifts or lighting, thereby making it difficult to isolate the actual costs. Some operations take more of an “it-is-what-it-is” attitude toward snowmaking costs. To them it simply comes down to the fact that in order to remain viable, they have to make as much snow as possible, no matter the cost. According to our research, snowmaking consumes about 67 percent of all power used during winter operations. A second study conducted by an energy audit company with a different set of resorts came up with exactly the same number. Ironically, we often encounter resorts that would hunt down and replace their last incandescent light bulb in the
w w w. n s a a . o r g
SIXTY-SEVEN PERCENT OF ALL POWER CONSUMED DURING WINTER OPERATIONS IS CONSUMED BY SNOWMAKING. interest of sustainability, but continue to use and purchase snowguns that consume criminal amounts of energy. 
Cost per Acre Foot of Snow The Cost per Acre Foot of Snow is a critical measure. Among our surveyed clients, this figure averages $2,100. But it’s the range that flabbergasts me: $680 to $3,100. Yes, resorts with big vertical footage have higher pumping and overall costs. Yes, across North America, energy costs vary greatly. But resorts in the lower end of the range have several things in common: They use high concentrations of low-energy, temperature-efficient, fixed-location guns, and mostly air/water guns. The resorts at the very bottom of that range are already automated. The resorts finding themselves at the undesirable high-end of this range continue to use a lot of traditional, internal-mix air/ water guns, tower or not, and often technology that is manual; portable, including fans; and requiring long hose runs. All of these factors can significantly decrease overall efficiency and the bottom line.
100 percent manual guns and portable fans own the high ground. Labor expense within snowmaking operations is not about pay scales, work ethic, or supervision. It’s about overall productivity, and too often productivity is constrained by an inefficient system or plan. If you don’t change either, labor expenses cannot change noticeably. 
Cost per Million Gallons Converted to Snow I like the Cost per Million Gallons Converted to Snow metric because it takes into account the actual conversion ratio of a gun or an entire fleet, but these figures continue to be debated through the industry. One acre foot of water is 325,000 gallons. Snowmaking engineers often use the range of 140,000–225,000 gallons of water to make an acre foot of snow. Of 60 volumetric tests, the best I have seen is 157,000 gallons used to make an acre foot. That was with an additive and using modern snowguns running in the “sweet spot” of their temperature design curve or jetting. The average of those 60 tests was 350,000 gallons, way above what the industry has believed possible. Energy efficiency g
Total Cost per Acre Foot
$3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
1
2
3
4
5
6
7
8
9
10
11
12
Range Among Ski Area Study Group

SNOW CONSULT
Labor as a Percentage of Total Expense Another somewhat surprising discovery was that labor costs varied greatly among the 11 resorts we researched. Labor is less than 9 percent of total costs for the resorts in the top of the class. This figure climbs to a staggering 62 percent for the efficiency-challenged group. Predictably, resorts with 100 percent automated systems occupy the cheap ground, while resorts with w w w. n s a a . o r g
Snow Consult President Robin Smith says that one key to keeping snowmaking expenses in check is to manage volume and avoid overbuilding inventory.
April/May 2010 • NSAA Journal • 19
aside, many of the old guns were not good converters of water to snow over a range of temperatures. So where does the water go? Instead of freezing, many droplets leach through the existing snowpack, resulting in no net gain in volume. Other droplets evaporate, again creating no additional volume. Finally, some droplets are so small that they’re carried by the wind to an unintended location, such as the access road that the snowplow just cleared. Fortunately for the industry, the newest generation of both tower guns and fan guns are good converters of water to snow over a wide range of temperatures. I also like this measure because it puts an easily measured dollar amount on every million gallons that aren’t pumped. Snow surface quality and managed volume are what we sell – they gives us trail count; pipes and parks; satisfied guests; and, ultimately, increased revenues. However, if you’re serious about controlling your costs, the easiest management step you can take is to stop building inventory you can’t sell.
Repairs and Maintenance as a Percentage of Total Expense Within our test group, repairs and maintenance (R&M) accounted for 5 percent of total snowmaking costs, while the range was 0.5 percent to 8 percent. One word of caution: Accounting practices tend to vary, and there may be some underreporting here. For instance, if someone on the snowmaking crew rolls the new snowmobile, is the damage expensed? And if so, within what department is it reported? In fairness, it shouldn’t be listed under the “snowmobile department.” What about snowcats dedicated to move fan guns? From which budget do the costs for repairs and maintenance to those cats get allocated? Again, it shouldn’t be the “grooming department.” Of course, the more your equipment resembles a pneumatic anvil, the lower the R&M. Traditional air/water guns have low maintenance, but that’s not a reason to buy them anymore. Automation may be more expensive, but it does
2008/09 NSAA Economic Analysis of U.S. Ski Areas: Snowmaking Cost Analysis OVERALL 2008/09
NORTHEAST
2007/08
2008/09
SOUTHEAST
2007/08
2008/09
MIDWEST
ROCKY MOUNTAIN
2007/08
2008/09
2007/08
2008/09
2007/08
PACIFIC WEST 2008/09
2007/08
EXPENSES (000) Labor
$199
$217
$259
$271
$294
$373
$109
$148
$201
$203
$139
$128
Power
$234
$237
$435
$450
$235
$271
$36
$27
$227
$203
$194
$218
Other
$125
$130
$201
$179
$288
$284
$35
$36
$56
$86
$138
$138 $484
Total cost
$558
$584
$895
$900
$817
$928
$180
$211
$484
$492
$471
Acres covered
208
204
272
272
151
150
120
118
247
239
179
174
Hours operated
747
769
943
1,028
960
948
566
496
749
819
517
485
Total acre-hours
155,376
156,876
256,496
279,616
144,960
142,200
67,920
58,528
185,003
195,741
92,543
84,390
Average cost per acre-hour
$3.59
$3.72
$3.49
$3.22
$5.64
$6.53
$2.65
$3.61
$2.62
$2.51
$5.09
$5.74
Number of areas
90
90
19
19
11
11
15
15
30
30
15
15
OVERALL
0–4,499 VTFH
4,500–9,999 VTFH
10,000–16,999 VTFH
17,000+ VTFH
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
2008/09
2007/08
$199
$217
$95
$126
$138
$166
$213
$205
$353
$359
EXPENSES (000) Labor Power
$234
$237
$16
$16
$121
$126
$319
$415
$506
$454
Other
$125
$130
$25
$27
$81
$88
$189
$199
$227
$228
Total cost
$558
$584
$136
$169
$340
$380
$721
$819
$1,086
$1,041
Acres covered
208
204
87
86
137
132
204
200
399
392
Hours operated
747
769
503
547
626
592
768
803
1,084
1,150
Total acre-hours
155,376
156,876
43,761
47,042
85,762
78,144
156,672
160,600
432,516
450,800
Average cost per acre-hour
$3.59
$3.72
$3.11
$3.59
$3.96
$4.86
$4.60
$5.10
$2.51
$2.31
Number of areas
90
90
21
21
30
30
14
14
25
25
20 • NSAA Journal • April/May 2010
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THERE’S A REASON THAT 80–90 PERCENT OF THE SYSTEMS OUTSIDE NORTH AMERICA ARE ALREADY AUTOMATED – THEY MAKE SNOW FOR A FRACTION OF OUR COSTS. not appear to contribute significantly to R&M costs. While the components of an automated system can be expensive up front, when or if they do fail, it’s often soon after startup – so the parts remain under warranty. Once they pass the inaugural season, the components usually can be expected to function properly for many years to come. And resorts should recognize that automation can result in reduced R&M on snowmobile and snowcat fleets as well. We also recognize that it can be frustrating when the “stupid computer” shuts down your system for no apparent reason, but in our observations, there appear to be fewer things that go BOOM in the night with automation.
capacity are doing a great job of maximizing existing assets. Poor utilization is a legacy from the build-it-big era, when we thought we could ignore marginal temperature and make up for it with massive pumping in sustained cold temperatures. Frankly put, many plants are overbuilt, given the reality of today’s weather and skier/rider demand patterns. More than absolute pumping power, a system’s speed, agility, and accuracy are key to recovering from a warming trend. Still, the bottom line remains: If you have low water utilization, you should develop a plan to improve it.
Water Plant Utilization
The measure of Kilowatt Hours (kWh) per Million Gallons Converted to Snow allows us to compare resorts with different power rates, currencies, and core technologies. The average among our clients is 45,000 kWh per million gallons converted. g
Water plant utilization among our research group averaged 41 percent. The range here was 16 percent to 80 percent. Those resorts utilizing more than 70 percent of water plant
Kilowatt Hours per Million Gallons Converted to Snow
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April/May 2010 • NSAA Journal • 21
If you’re a resort with the capital resources to upgrade your snowmaking system, we’d urge you not to move forward until you have a strategic plan in place. The overall goal should be to lower energy cost dramatically, reduce labor, and increase speed in marginal temperatures and fragmented operating hours. How you get there can be unique to each resort, but here are some points to consider: • An overall snowmaking solution can utilize a mix of low-energy, air/water tower guns; or fan guns; or in many cases, both. A wellorchestrated strategic plan can spell out what goes where, and they are not always interchangeable. •
Automation and temperature-efficient guns need to go on your top-priority trails. The auto-
Core Infrastructure In terms of core snowmaking infrastructure, we as an industry are not in bad shape, from Snow Consult’s view. Within the last 15 years, many resorts have upgraded their access to water in a serious way. Pumping and compressors are generally good, if not perhaps overbuilt in some instances in light of current gun and system technology. I look back and see that one of two things has happened recently: the resorts with minimal water access, oil-spewing compressors, subpar pumping capacity, and poor piping either upgraded or have already gone out of business. They flunked out of snowmaking about the same time they flunked with respect to their lifts, grooming, and customer service. Yet even among existing resorts, sections of deteriorating distribution systems – namely the piping and electrical corridors – are in many cases 20–30 years old. Most resorts have already accepted the reality, albeit begrudgingly, and they have a replacement schedule in place. Yet in the current economy, snowmaking upgrades can often be deferred.
mated snow on priority trails will ultimately offer the best return on investment (ROI). •
If capital is limited, resorts should consider purchasing auto-ready snowguns. These can be upgraded to automatic operation at a later date, but resorts should look for guns that already have a proven track record of automated success.
•
Considering the recent increase of unsold inventory, there are deals to be had out there. If you are at the top of the energy-use class, you may be able to fund your investment from savings, but only if you go big. A single trail can provide proof of your overall concept, but big savings only come as a result of big commitments. Some vendors can help with financing, but only if the savings are big enough to make the payments. This might be easier than you think! – Robin Smith, Snow Consult
22 • NSAA Journal • April/May 2010
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SNOW CONSULT
IF WE CAN FIND CAPITAL?
The range was 20,000 kWh to 68,000 kWh. If you know your system’s total kWh and your total pumping, you can score yourself.
IF YOU DON’T GATHER GOOD MANAGEMENT DATA FROM YOUR SYSTEM, START NOW. REMEMBER, IF IT CAN’T BE MEASURED, IT CAN’T BE MANAGED. IN OUR OBSERVATIONS, OVERALL DATA COLLECTION FROM SNOWMAKING IS POOR, AND EVEN THOSE WHO COULD GATHER IT OFTEN FAIL TO MANAGE THE DATA EFFECTIVELY. Snow Quality When it comes to snow quality, North American ski areas undoubtedly receive an “A” for effort, even though techniques and equipment can yield varying results. This season I was afforded a unique opportunity to ski a major top-to-bottom trail on first opening. At the top, 10,000 feet in elevation, the trail relied on natural snow. From there, the trail had a section of automated air/water towers, followed by a section of manual air/water towers, then ground guns, manual fan guns, and finally automatic fan guns. The snow quality variance was dramatic. That day the area’s top managers were doing a meet-and-greet in the lift lines, and the guests were raving about the snow conditions on the automated sections. But those raves were followed up with questions about “what happened” on some of the sections covered by
manual guns. That caused managers to boot up and check it out for themselves. Automated snowmaking, regardless of the underlying technology, delivered superior snow quality and consistency by a huge margin. Groomers, patrollers and locals thought the difference was still discernible weeks later.
Automation and Low Energy are the Future Snowmaking is a primary operational expense, and energy and labor are the two biggest components of that cost. While these facts are not bound to change anytime soon, automated, lowenergy, temperature-efficient guns can have a huge impact in lowering both the costs of energy and labor. If you’re in the high end of the class, it’s possible to drop your Cost per Acre Foot by 60 percent or more. There is a reason that 80–90 percent of the g
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April/May 2010 • NSAA Journal • 23
systems outside North America are already automated – they make snow for a fraction of what we spend to make snow. So what’s the definition of a low-energy air/water gun? It’s one that uses less than 50 cubic feet per minute (cfm). That is the current gold standard. A temperature-efficient gun is one that can make good-quality snow over a wide range of temperatures, from very marginal to extremely cold. Current fans on the market excel in providing snow at a wide temperature range, and they have good throw capacity that can make their modest increase in energy use justifiable in the right locations.
The Report Card Part of our purpose for this article is to provide a platform for which to grade your own operation and plan for the future. We
Sierra Research Associates Management Consultants Specializing in Human Resources and Market Research for the Resort Industry
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certainly look forward to similar evaluations of snowmaking operations efforts in the future, which will include a larger and more diverse sampling of areas. The techniques of efficient snowmaking are well known; they just aren’t always practiced. Making snow in huge piles may impart a feeling of invincibility to snowmakers, but in the end it might not contribute to the overall economic health of the ski area.
So what’s the grade? Overall, we pass, and we have the foundation and the commitment to quality to go to the next level. Across the pond, the rest of the snowmaking world is notably ahead of us technologically, but we, too, will graduate, and maybe at the top of the class. We just may need student loans to get there. Snow Consult conducts in-depth strategic master plans for a wide range of clients. Contact Robin Smith at [email protected]. n
IF WE CAN’T FIND THE CAPITAL NOW? If you’re like many resorts and are having a difficult time finding capital , then you need a strategic plan even more. We advise our clients in the bottom of the cost-per-acre-foot class to hold off upgrades until they are ready to make a significant investment in automated, low-energy guns. For the rest of the class, we advise the following: • If you don’t gather good management data from your system, start now. Remember, if it can’t be measured, it can’t be managed. In our observations, overall data collection from snowmaking is poor, and even those who could gather it often fail to use the data effectively. • Most snowmaking is governed by a corollary of Parkinson’s Law: Snowmaking expands so as to fill the time available for its completion. Use your data to manage snowmaking by volume, not hours. Most of us make far too much snow in the wrong places and at the wrong times. Without capital, learning to manage snow by volume is money in the bank. • Invest in continuing snowmaker education. The rank and file, middle managers, and especially top management all need to learn more about such a critical line item. • Resorts that make a big commitment to pipes and parks often commi t 25–30 percent of their snowmaking resources to building features. However, consider that 90 percent of that snow is buried inventory and never sees the bottom side of a ski or board. We also see the most expensive guns being used to build this inventory, and in many operations, the park guys seem to operate with a blank snowmaking check. Where permitted, building up features first with soil and natural terrain can help, but a little management can go a long way as well. • While snowmaking departments may be resistant to change, one truth you can bet on is that if you continue to pursue the same operational strategies, you will get the same results. – Robin Smith, Snow Consult
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24 • NSAA Journal • April/May 2010
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Axess
