The global skiing industry attracts almost 400 million visitors annually and while this number of ski resort visits has remained stable, new challenges are emerging for the industry. Changes in climate, an ageing population and how people use their leisure time are having resorts looking at new investment opportunities for today and to attract a new generation of winter sports enthusiasts. Demand for ski resorts in emerging markets continues to grow especially in China according to a recent analysis by Savills.
For the winter sports industry the change in climate conditions has impacted skiing conditions from a lack of snowfall to extreme weather conditions. The Swiss resort town of Zermatt was recently hit by a snowfall that stranded visitors, caused avalanches and prevented people from entering or leaving the area. The result of the weather pattern changes leaves skiers and snowboarders wondering when is the best time to visit and new technologies in snow making equipment are being advanced to provide year-round skiing and snowboarding.
Savills reports that:
‘The northern hemisphere, for example, has lost one million square miles of spring snowpack since 1970, which is an area three times the size of Texas. A sustained rise in temperature will put lower altitude resorts at greatest risk.’
For the last four years snowfall in the Alps has been below-average every season as a result low-altitude resorts got rain and the highest resorts such as Val d’Isère received high amounts of snowfall. The trend for skiers particularly at the Christmas season is to go directly to the higher elevation resorts for the best ski conditions.
Winter conditions for North America have been favourable with 110% of normal snowfall for the Pacific Northwest region in 2016/17 and 115% for the Northeast region resorts.
Snowfall amounts at the California ski resorts of Squaw Valley reached 158% and Mammouth recorded 178% of their normal snowfall amounts respectively. As a result skiing and snowboarding was available for visitors until August in 2017.
To adapt to the fluctuation of snowfall amounts, investments are being made to make resorts a year-round winter recreational hotspot. Austria has invested €1 billion in new snowmaking equipment within the last ten years. The resort at Vail, Colorado has begun finding the most energy efficient methods to groom its slopes and installing new solar power technology.
Water parks, zip lines, golf and music festivals are being offered to appeal to both skier and non-skier visitors. Environmental organizations including Protect Our Winters will be available to bring more awareness to climate change on the ski industry.
Savills reports additional investments by resorts include:
‘Indoor snow slopes, traditionally found in locations without any kind of natural skiing, are now being planned for ski resorts. Tignes, one of Europe’s highest resorts, plans to invest €62 million in a 400m-long indoor slope to enable skiing 365 days a year.’
Where to Invest
When it comes to investing in the ski resort industry the Alps have been the most popular market.
Jeremy Rollason, Director of Savills Ski says:‘Broadly speaking (and excluding the domestic markets), British buyers focus on French and Swiss resorts, the Germans on Austria, while the Dutch, Belgians and other northern European countries make up the international balance across the region. Russians are declining in influence in the top Swiss and French resorts, off set, somewhat, by growing (but still extremely low) demand from Asia.’
Paul Tostevin, Associate Director of Savills World Research reports:
‘Brits have historically been an important buyer group in the Alps. Is Brexit having an impact? The international buyer base in the Alps is much broader than it was a decade ago, so Brexit’s impact has been modest. While some British buyers have postponed plans, others have actively sought non-sterling assets to diversify their portfolios, or are taking advantage of a stronger euro and are selling to repatriate funds.’
Savills reports new investments can be found at a variety of resorts including Crans-Montana which is now promoting its image as a ‘city in the mountains’ featuring ‘…dual-season activities, new restaurants and a recently opened British International boarding school. Courchevel recently opened Aquamotion, a €65 million indoor watersports centre; Val d’Isère is to build a €200 million hotel, retail and commercial centre, while Verbier is benefitting from extensive investment from global hotel brands. New lift investment is particularly concentrated in the Alps, too.’
For the ski markets of France and Italy the outlook for ski property investment according to Mr. Tostevin is:
‘In France, the Macron government has boosted sentiment, fuelling activity, with both French and foreign buyers now more confident to make a move. The wider Italian residential market is entering a period of stability, while new tax incentives, introduced to attract wealthy individuals, could impact positively on the major Italian resorts.’
Investing in ski property has achieved yields between 1.5% and 2.5% net with most property owners renting their property to pay for the costs. Jeremy Rollason says:
‘Leaseback schemes are another option, providing freehold purchase with a discounted purchase price. First favoured in French resorts in the 1980s, such schemes are popular with investors with smaller budgets looking to offset their annual borrowing costs from income.’
For investing in North America the buyers tend to be domestic and the Canadian national real-estate market has been slowing mostly in the major cities. Mr. Tostevin reports:
‘But supply/demand imbalances continue to fuel growth in resorts such as Whistler Blackcomb. In the US, also enjoying a strong run, established, low-supply resorts such as Vail have seen annual price growth of 10%.’
Another region that has received less attention for ski industry investing has been Scandanavia, which is investing to improve their skiing infrastructure.
‘Scandinavian resorts, such as Myrkdalen in Norway, have flown under the radar of international buyers for many years. They are now rising in prominence, thanks in part, to the quality conditions on offer. Usually colder, or with more snowfall than their Alpine counterparts, they may be a good hedge against climate change.’
By Kevin Murphy: www.kevinmurphy.london