Move over Baby Boomers: the Millenials will soon be arriving in Vail
RRC Associates gives council some statistics to chew over
by Allen Best
For almost four hours on a July morning , Vail Town Council members sat through a monster PowerPoint that consisted of roughly 150 slides rich with data about mountain resorts, demographic trends, even projected effects of global warming on temperatures and snow in Colorado.
Sales tax collections in Vail vs. those in Park City? It was covered, along with statistical snapshots of both increasing racial diversity and growing income inequality.
Plus, there was this quaint fact: more 40 percent of all households in Atlanta, Denver, Seattle, San Francisco and Minneapolis consist of single occupants.
Afterward, at a quick lunch (full disclosure: he bought), I asked Vail Mayor Andy Daly the motivation for this blur of sharply-etched information.
“To avoid complacency,” he responded. “We don’t want to be like…”
Daly named the resort, and you can probably guess the one he mentioned, a destination resort that is older, still wonderful but struggling to reinvent itself.
Vail sees itself as being among the elite mountain resorts, and by almost every statistical measure, it succeeds. It aims yet higher: to be the “premier international mountain resort community.”
Last year, the town council adopted a three-legged stool of aspirations for investigation and discussion during 2014-2016. The goals are growing a balanced community, continually elevating the quality of the experience, and enhanced economic vitality.
Aspirations are one thing. To ground the discussion, Vail has been formally looked more intently beyond its own boundaries. In April, it sent a delegation to Park City, which has shaped up as a major competitor in the last decade. This summer, the town council went to nearby Summit County, to better understand the accomplishments and lessons from Breckenridge and Frisco for affordable housing.
The town also hired RRC Associates, a consultancy based in Boulder, Colo., to lay out a numbers-based education and help shape the discussion.
RRC has worked in Vail since 1978. In the 1990s, though, RRC moved more broadly into a little-occupied space in the ski industry: doing statistical research about skiers, possible customers and broad demographic trends. Michael Berry, the executive director of the National Ski Areas Association, will tell you that RRC saved the industry’s butt.
In the 1970s and early 1980s, ski areas multiplied and grew robustly, often in double-digit numbers. By the 1990s, it was a game of stealing market share. Vail was successful at this, and ski area operator Vail Resorts, even more so. Other resorts in the Rocky Mountains have also prospered, if not equally so.
But Berry wanted to understand the industry beyond reslicing the same pie. That’s what RRC provided. It identified the ski industry’s customers and helped the ski industry recreate a strategy for converting never-ever into steady customers. This hasn’t produced a new boom. It has, says Berry, allowed the ski industry to sustain a modest growth during recent years.
“Modest” is the key word here. Snowboarding enlivened the industry during the 1990s, but those numbers have faltered. Technological innovation and more robust health have allowed baby boomers to stick with the sport the way their elders could not. Even so, shadows have started deepening. And most importantly, without the somewhat unexpected twists, skier days would have stagnated even more.
Since the 1996-97 season, total skier/snowboard visits in the United States and Canada have bounced between 68.67 million and 80.9 million.
Looking more narrowly at the United States, 18 percent of the total population fits the socio-economic profile of downhill snow sports. Of the total population, just 3.2 percent are active in winter sports.
Baby Boomers (think Bill Clinton or Barack Obama) are still important: 22.7 percent of skiers were born in 1964 or earlier, including those of the “Silent Generation” (think John McCain) and of the “Greatest Generation” (think George H.W. Bush).
While hoping to milk just a few more years out of Boomers, the ski industry is now looking intently at the younger generations.
Vail, the town as opposed to the ski company, is starting to ask the same question.
“Right now, Vail is doing just fine. We are right up there with the top of the pyramid with respect to resorts,” says Margaret Rogers, a council member. “But the majority of people who come here are Baby Boomers, and we have to look forward to see how we can maintain our competitive advantage with the next generation of tourists, the Gen Xers and the Millenials.”
But what do the next generations want? Research cited by RRC worked around this question in several ways.
For instance, when asked what makes their generation unique, the top answers were:
• Baby Boomers said work ethic (17%) and respectful (14%).
• Gen Xers said technology (17%) and work ethic (11%).
• Millenials said technology (24%) and pop culture (11%)
Nate Fristoe, manager of operations for RRC, says that even when spending money for luxuries, Millenials want to feel like they’re part of the crowd. He cited the example of the Bonnaroo Music Festival, which sells luxury packages for those who want to mingle and dance but who also want clean sheets and a shower at night. Another example might be the RSVP section at outdoor music concerts, where there’s none of this sweaty body against sweaty body business.
What can Vail do in the way of events to specifically court Millenials? One idea pitched by Fristoe is a “maker fair,” which draws people who will be tech entrepreneurs.
RRC also identified several handfuls of Vail’s strengths and weaknesses, the opportunities and threats.
For example, Vail Mountain and the Back Bowls are strengths, as is the proximity of Denver and the Front Range, but also the local hospital and the reputation of the Steadman Clinic, the orthopedic center that is surgeon to the nation’s athletes and other stars.
Weaknesses? Perception of value. In fact, Vail is an expensive place, even as compared to most other competing resorts. Too, there’s almost no land to grow, such as for new facilities like a conference center or an improved concert venue.
Some attributes of Vail are strengths—but also threats or challenges. The Vail brand is strong, noted Chris Cares, the managing partner for RRC, but it may be less so among the younger generations. The Epic Pass has produced strong loyalty, but other season passes may challenge that strength.
Climate change provides an opportunity in the form of longer summers—but it is also a threat. Temperatures are projected to rise between 4 and 10 degrees Fahrenheit by 2100.
Summer, as it has since Vail started, remains the most obvious potential for growth. More than most any other major resort, Vail gets 70 percent of its sales tax during winter, a figure that hasn’t changed substantially in decades. Aspen is more even-keeled, with 56 percent of its sales generated during winter.
Telluride, as Daly noted, now reaps 52 percent of its sales tax during summer months, mostly as a result of iconic festivals.
Vail’s lodging sector has 41 percent occupancy in summer compared to 58 percent in winter. More dramatically, average daily rates are $173 in summer vs. $443 in winter (including tax).
Aspen is more balanced: 53 percent occupancy in both summer and winter, and average daily rates that swing less dramatically: $257 vs. $395.
As for threats, they include environmental degradation, either through gradual decline, such as with continued deterioration of water quality in Gore Creek, or through a big event, such as a major forest fire. I-70 also remains a challenge and threat. As with skiers, the Front Range is also the home base for almost a third of the second-home owners of Vail.
Afterward, the council members were invited to respond with ideas of their big ideas. Being connected to the outside world—physically, for travelers, and through electronic technology—was one theme especially articulated by Greg Moffet. “World’s most connected resort,” he said. One of the stated goals of the Vail council is to grow the direct flight programs, especially during summer.
But there was also a caution against ignoring the natural environment that is at the root of Vail’s attraction. Moffet at one point dispatched one idea with “it could be in Cleveland.”
Margaret Rogers specified the need to further dig into what Gen X and Gen Y want and need—and can afford.
A lawyer, Rogers says her peak earning years were in her mid-40s. Her son, a sociologist, is now 44 and makes nowhere near as much. Few sociologists earn as much money as lawyers, but Roger’s broader point is that few Gen-Xers are likely to make as much money as she and her Baby Boomer peers.
Vail Resorts is probably asking itself the same question about what Gen-Xers and Millenials can afford. It has broad concept entitlement from the town council for its next big real estate play, called Ever Vail. It is to have 422 residential units, give or take, and a new gondola to connect the 12-acre site to the ski slopes. It’s located down-valley from the existing tourism area.
In 2007, when it announced the project, Vail Resorts talked about the potential for a platinum LEED certification, the highest in a hierarchy of green-building certifications, something believed to be important to younger generations.
What else are younger buyers seeking? The company hasn’t released its final plans—and, perhaps, it doesn’t know yet. It has said it is awaiting recovery of the real estate economy.
Later in the day, I asked a Vail real estate agent the age of his customers. “All above 50,” he answered. The youngest of baby boomers this year turn 50. “That’s for homes of at least $1 million,” he added. “For the cheaper stuff in Vail—the $400,000 condos—there are some people in their 40s and even 30s.”
In Vail, there’s likely to be resistance to getting too far ahead of the game. After all, baby boomers are still paying the bills – and handsomely so. And the Millenials still don’t have mega-money.
Those who do are fabulously wealthy. Brian Chesky, a co-founder of Airbnb, the travel-sharing website, just stopped by Aspen and he’s certified by Forbes as a billionaire at age 32.
Thinking of Chesky as we walked to grab a quick lunch at Bart and Yeti’s, I mentioned to Daly the billionaires being minted through Internet successes.
“Yes, and we want them,” he answered.
This story was published in the Aug. 7 issue of Mountain Town News, an e-zine distributed to subscribers. What else did you miss in that issue? Write or call for a free, sample copy.