Ski resort surmounts a variety of challenges

Whitefish Mountain Resort has faced some stiff challenges over the last decade, but hard choices and disciplined management practices have enabled a turnaround, Chief Executive Officer Dan Graves, told a business group Tuesday.

Graves addressed the Flathead Business and Industry Association’s annual meeting at the Red Lion Hotel Kalispell, offering a good glimpse into a complicated industry.

“This industry is very unique,” he said. The seasons are “very short, very intense.”

In the 1970s, there were about 1,000 ski areas in the county, and now there are 471 left. That’s largely because of difficult realities in the business, such as enormous costs associated with operating and maintaining an area and a customer base that can be elusive.

As an example, Graves said only about 4 percent of the population that is introduced to skiing stays with the sport.

He also cited some of the costs.

Whitefish Mountain Resort has six snowcats that each cost $275,000. Only a few years ago, it invested $11 million in a new base lodge. Its snowmaking system needs $300,000 in repairs. It pays $670,000 annually in property taxes and $710,000 annually for insurance.

“The list goes on and on and on,” he said.

And it’s a complicated business made up of many different types of business operations, ranging from restaurants to gift stores to ski operations.

“You have to know a lot about a lot of businesses to keep this business going,” Graves said.

And at the beginning of the last decade, Winter Sports Inc. was in jeopardy, Graves said.

In 2000, the Big Mountain followed the lead of Canada’s Whistler-Blackcomb resorts, which had invested heavily in real estate and development.

And unfortunately in the years that followed, Graves said, “ski operations took a back seat to real estate.”

Eventually, the company was no longer being sustainably operated.

“The company was getting very close to closing its doors and going out of business,” he said.

Since Graves took the helm in 2007, the company made some basic changes in its operations and investments.

The company went to an “open book” philosophy where managers and employees were fully informed about the company’s finances, and it went to a strict practice of monitoring revenues, skier visits and labor costs on a daily basis, which Graves regards as crucial for a business that relies on a limited 125-day ski season.

It now uses a “flex labor” system that is used to adapt labor hours to customer demands on a daily and even hourly basis.

“As your volume goes up, your hours go up,” Graves said.

The resort also made changes to address an estimated $2 million to $3 million loss of revenue in the summer by investing in highly successful attractions such as the alpine slide and zip lines.

The resort ended to other costly operations and practices: no more Nordic Center, cat skiing, Thanksgiving opening days and summer concerts on the summit. It dropped its highly expensive super pipe three years ago, limited some lift operations depending on visitor volume and limited night skiing to two nights a week.

“There were so many things we were trying to do for everybody,” Graves said. “By making those hard choices it enabled us to be profitable.”

Several years ago, the resort was paying $1 million in interest alone on debt that has been steadily reduced every year since. Graves said he’s shooting for the resort to retire its debt entirely by 2013.

All those changes have been made and the resort has had two banner years for skier visits. The 2011 season was a record year, exceeding last year’s numbers by 12 percent and beating the previous record year of 2006 by 5 percent.

But Graves cautioned that the resort needs to be carefully managed in the future.

“If we don’t watch it every day, we could lose it,” he said.

Reporter Jim Mann may be reached at 758-4407 or by email at jmann@dailyinterlake.com.