Failed Ski Resorts Weren’t Designed for Skiing

Ski resort developers suffer from reliance on real estate sales revenue to support expensive operations

Palm Coast, FL – December 25, 2009

Story by Will Melton | December 2, 2009
Montana Kaimin
Until the mid-90s, ski resorts were created for skiers. Of course, real estate was big business too, but developers built ski areas where they made sense in terms of the quality of skiing. Then developers got greedy. They saw the avalanche of money that could be made from second-home owners and decided that building four-season resorts, where homeowners could ski by winter and golf, hike and bike by summer, was the way to cash in.
They bet heavily on the real estate bubble, believing that it could do nothing but grow. And it worked — for about five years. In that time, the developers’ dreams grew more grandiose and they borrowed more and more money to build master-planned communities around the bottom of new ski resorts.
Last year, the bubble burst, and it burst hard. The developers who had been riding high months earlier face-planted and found themselves in the middle of a yard sale, scraping to sell the existing houses they had built, not to mention the houses under construction and those planned.
The developers’ business model depended on rich people buying million-dollar mini-mansions they might use two months a year. When the bubble burst, would-be buyers vanished. Without a constant influx of capital from the sale of homes to keep their own asset bubbles inflated, the resort developers defaulted on their loans. It was all downhill from there. Creditors, realizing they wouldn’t get paid back, started foreclosing and the big three toppled.
Toby’s Commentary: This story sounds familiar. Skiing and golf have a lot in common. Both are funded with discretionary income; something that is in short supply now. Hopefully, the wave of baby boomers fast approaching retirement age will have time to replenish their cash.
0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply