1 st EURO-ASIAN SKI RESORTS CONFERENCE Developing New Destinations for Snow Tourism 8 9 October 2013 Almaty, Kazakhstan Introductory remarks The key processes for developing ski resorts from a systemic perspective Prof. Dr. Peter F. Keller Scientific expert of the Conference
Introducing remark The objective of my introducing remarks is not to anticipate what our speakers will present about the complex question on how to plan, to design, to promote and to exploit ski resorts. I will focus on the socio-economic and ecological structures and processes for developing successfully new ski resorts from a more systemic perspective. Almaty (Kazakhstan), skiing area
Thinking in systems The mountain ecosystem and its resources How does it impact on the development on snow tourism? Thinking in systems allows understanding the environment where ski slopes, cable cars or ski resorts are developed. The mountain ecosystem is such a system which influences largely human and economic activities. The systemic elements or facts can only be changed with heavy investments and at high costs.
The sub Alpine and Alpine zones of the mountain ecosystem have few resources for economic development and are often poor The most important Alpine products Climate and topography limit all economic activities Agriculture is mostly limited to the breeding of livestock. The investment costs for important industrial activities are too high. The hope to develop ICT based home offices in mountain areas vanished. By far not all mountain places are suitable for developing winter sports tourism. Water Hydroelectric energy Dairy and cheese food Timber and minerals Tourism
The mountain ecosystems are ecologically fragile Gases emitted by cars remain hours in the cold lakes of U shaped Alpine valleys whereas they are blown away by the winds in the flatland Pollution under the shield of cold air hot cold Resort Turbulences and dispersion of gas cold Agglomeration hot
The mountain ecosystem is determining the tourism related attractions and the activities Climate Topography Suitable spaces for skiing and gliding sports Alpine sun, snow, cool air Mountain resources Scenery Majestic peaks, splendid panorama Investment Influence the construction costs Tourism activities Outdoor recreation Determine leisure sports activities Services Needs cable cars, slopes, rescue teams Skiing depends on the resources of the mountain ecosystem
Evaluating the potential The uniqueness of the attractions and the willingness to pay for the value of destinations Why were worldwide known ski resorts so successful? The potential of ski resorts depends on the existence and the importance of natural and manmade attractions which can be called destination goods. The more important the attractions the more visitors will come to see them and to practice ski sports.
The major attractions of ski resorts are both, natural and manmade The most important manmade attractions Dolomites (Italy) are the skiing areas which differ when it comes to the vertical drop, the length, the width and the variety of the slopes and many other factors. Matterhorn (Switzerland) Worldwide known beautiful peaks and panoramas are unique natural attractions Whistler B.C
The uniqueness of its attractions gives the resort its value The more the attractions are unique the higher is the willingness to pay of the visitors Branding The willingness to pay of the visitors for unique attraction give companies rents in form of a strong brand. Value based pricing Companies profit from the uniqueness of the destination by practicing value based pricing which allows charging higher prices above the market price.
The big number and the importance of the attractions and not the developers and the managers of the resorts determine the economic success of a given resort Increased returns External economies Bigger firms Agglomeration impacts The big number of visitors allows the individual company to increase its return and win size. The resort attracts an increasing number of companies which lead to external economies in form of agglomeration advantages such as the access by airports or the building of important sports and leisure facilities.
There is a hierarchy between ski resorts The big ski resorts throw a shadow on the smaller resorts Bonneval sur Arc (France) Courchevel (France)
Considering the framework conditions The level of development and the prerequisites for development Why was the ski resort development so successful in the Alpine countries? There are many factors for explaining the success of the Alpine ski resort in the past. History and the long specialisation processes matter as does the level of development of a country.
History matters In the 18 th century, a race to the top of famous peaks in the Alps was started by adventurous mountaineers. In the Belle époque of the 19 th century, the Alps became the dream destination of the high society which Veblen called the leisure class for whom where built the palace hotels in the idyllic Alpine landscapes. They were followed by the middle class travellers for whom Thomas Cook organised package trips using the new railway system. After the second world war began the mass leisure tourism of the residents for hiking and skiing.
Successful ski resorts depend on the level of development of a country Exogenous growth factors for developing ski resorts Higher level of development through industrialisation Availability of risk capital in market driven economies Accessibilities through investment in modern means of transport Increase in income per capita and available travel budgets for a growing number of households Discovery, promotion and run on the Alps as a mountain tourism destination
Tourism pioneers profited from the excellent framework condition in a booming emerging country in the heart of the Alps The Alps were the dream destination of the Anglo-Saxon high society which Veblen called in 1900 the leisure class for whom independent innovators built palace hotels and railways which still have great success Palace Hotel Jungfrau Victoria (1856) Railway to the Jungfrau Joch 3 454 m (1912) Bernese Oberland (Switzerland)
Modern Ski resorts are the result of processes of innovation of pioneering independent innovators Skiing as an industrialised mass tourism leisure sport is a recent innovation of mountain tourism from 1870 from 1930 from 1964 from 1970 from 1980 from 1985 from 1990 Discovery of the winter season, adaptation of nordic skiing to downhill skiing First skilift and development of small ski resorts Industrialisation of skiing by built and mechanically prepared slopes Creation of totally functional ski resorts Introduction of high capacity cable cars and chair lifts Snow producing machines for garantueeing skiing on slopes Swift from performance oriented to experience led forms of skking
Choosing the appropriate Alpine development model Function, structure and planning of ski resorts Are the results of fully integrated resorts better than fragmented traditional resorts? The ski resorts were developed out of the fragmented and multi-optional mountain destinations. During the ski boom in the 1960thies were created fully functional and centrally planned ski resorts. They became later on the model for resort building all over the world.
Traditional ski resort are market places and platforms of cooperation of many companies and win size through cooperation Industries Products Transportation Kitzbühl (Austria) Hotels Restaurants Casinos Sports Horizontal cooperation Tourism related industries such as hotels or cable cars etc. Vertical cooperation Local companies built DMO
The French superstations were constructed ex nihilo at high altitudes only for the exclusive needs of the skiers Their development model was later on imitated worldwide. Courchevel 1850 (France) Avoriaz above the traditional summer resort Morzine (France)
The pros and contras of both development models Fragmented ski resort systems with many independent small companies The multi-optional supply structure allows to diversify and practice four season mountain tourism with peaks in summer and winter. The offer a wide spectre of services for many market segment. Centrally planned and steered functional ski resorts The Superstations are an innovative way to build tailor-made ski places. This fully functional resorts were largely financed by selling secondary homes in big urban complexes. They profit also from the competition among the individual companies operating under the umbrella of the destination which is a driver of innovation and growth. They were for a long time commercially successful but the introduction of a complementary summer season often failed.
Looking for the optimal growth Market forces, economies of scale and scope and agglomeration impacts Do bigger companies and resorts better than smaller ones? From a pure industrial economic approach, bigger companies can achieve economies of scale and scope by reducing their unit costs and by offering more to their customers. These advantages tend to disappear when these companies overinvests or practice price competition.
Bigger companies can produce cheaper and attract more visitors Bigger companies can produce cheaper and offer more to the visitors. They can minimize their costs. When the number of nights spent increases the costs by unit shrink. They can offer more facilities when they increase their size. Recent studies in the cable car industry proved that size of the company increases its profitability. The economies of scale shrink rapidly the more the cable car companies grow. Source:
Marginal Profitability Economies of scale are shrinking rapidly the more cable car companies grow: the example of cable cars in Switzerland 0.040 0.035 0.030 0.025 0.020 0.015 0.010 0.005 0.000 0.1 0.6 1.1 1.6 2.1 2.6 3.1 3.6 4.1 4.6 5.1 5.6 Turnover in Mio. CHF Quelle: Beritelli, Laesser und Riklin (2007)
The question is how to find the optimum between too much and not enough growth positive externalities H F E 0 K L G R Concentration in space negative externalities D
Adapting to structural change Changing consumer preferences and substitution competition Why is it difficult to rejuvenate the ski market in developed countries? The consumer preferences in the ski market in developed countries have changed. The ski market has become mature in developed countries. Despite step-by-step refinement of ski equipment, cable car and slope facilities, there are no big innovation in the air. It is difficult to rejuvenate the supply and to fight successfully against the increasing substitution competition from other possible leisure tourism activities during winter time.
The life-cycle of the innovation curve of tourism is declining despite rejuvenation by innovations 70 Skiers in millions "snowboard" "carving" 35 The ski sports Accumulated growth curve (S curve) 1960 1990 2000 time
The preferences of the consumer and the potential visitors of ski resorts have changed in developed countries Loss of winter holiday monopoly Easier access to the resorts by new means of transport and proliferation of secondary homes Less young skiers and higher desolation rate of adults Substitution by tropical beaches in the Southern Hemisphere Shorter stays spread over the whole year, excursion and cherry picking Shrinking number of skiers and end of skiing as mass tourism
Managing the resources in a sustainable way Equilibrate intensive and extensive, realising optimal growth and contribute to avoid global ecological crises Why is sustainable development so important when it comes to develop ski resorts? Snow tourism causes negative impacts on the environment and landscapes but suffers also more and more from global ecological threats such as climate change. The ecological debate was first focused on the pollution caused by the mobility of the skiers who reach remote ski resorts by car. The industrialisation of the ski resorts with built slopes, high capacity cable cars and secondary homes in urban complexes made the debate more radical.
Carefully planned ski resorts have a higher impact on employment and income than nature-near niche tourism The international community recognised in the Agenda 21 adopted at the Earth Summit of 1992 that half of the humanity depends in some way or on other on mountain resources. Since then, intergovernmental support was essential given to naturenear, community-based and mostly small sized mountain tourism projects. This didn t lead to important economic impacts. There is no doubt that carefully planned, constructed and exploited ski resorts can have a stronger impact on the income and the employment of mountain populations.
The fundamental question is how to decouple waste and pollution from growth Principle of general assessment of impacts Principle of prevention Principle of polluter pays Principle of co-operation Source: FOEN, Environment Report Switzerland, 1997, 2013
The need to find an equilibrium between growth and protection through negotiation and planning of intensively and extensively used green land New ski resort and old village Skiing area and nature Necessary compromises in the case of conflicts of interest between urgent need to develop the local economy and the need to protect nature in poor regions The case of Bansko (Bulgaria)
The new ski resorts in Eastern Europe and Asia have good snow conditions in a world where global warming as a result of human activities is becoming more and more probable
DT par rapport à 1961-1990 [ C] The increase of temperature was in the Alps three times higher than in the surrounding flat land 1.5 1 0.5 0-0.5-1 Global Alps Beniston, 2004: Kluwer/Springer Publishers -1.5 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Boosting the internationalisation of the snow tourism Opening new domestic markets and enlarging the world ski market Can emerging countries learn from the traditional Alpine ski resorts? It is a fact that the Alpine development model is imitated all over the world. This happens at a time where the ski resorts in the traditional Alpine countries have to face a flattening demand due to strong structural changes. The question is if the newcomers can learn something from the long specialization processes traditional ski resorts went through.
The new ski resorts in emerging and transitional countries open new domestic markets and enlarge the world ski market The new ski resorts in Eastern Europe and Asia are opening new domestic markets and enlarge the world ski markets. They have in general not only good snow condition but offer particularly in Eastern Europe and Asia much cheaper prices than in Western Europe. They face also problems like insufficient vertical drop and overcrowded slopes. Their management of the resources and their marketing could be improved. These items are all a matter of discussion at the 1 st Euro-Asian Ski Resort conference.
The Euro-Asian dialogue matters as the venue of the next Olympic Winter Games demonstrate Sochi 2014 will take place in 5 month Pyeongchang is ready for 2018 Almaty is a candidate for future Olympic Winter Games