Perfect storm for ski resorts?

Could the combination of the credit crunch and a poor start to the season be the perfect storm for ski resorts? After early storms France has been basking in record breaking temperatures during November.

Chill wind is blowing for Ski Republic owner

During the second half of November France has been under the influence of south-westerly airflows. On the 16th temperatures reached 19°C in the Pyrenees at 1000 meters and 17°C at 1700m in the Ariege under the effect of a hot foehn wind. The end of the month has seen temperatures 4°C to 7°C degrees above average. In Alpine town of Bourg St Maurice the average temperature has been around 12°C.

Ski resorts are looking anxiously skywards for any sign of a change in the weather. There may be some respite early next week but forecast then promises a return to mild weather. Thanks to snow canons the resort runs at Alpe d’Huez (1850m) are prepared and skiable but snow cover is thin below 2300 meters and higher up gale force winds have been pummeling the remaining powder.

Resorts will be thinking back to the dreadful winter of 2007. The snow cover, especially above 2000 meters, was quite good and high altitude resorts benefited. However poor publicity led to a drought in bookings, particularly over the important New Year period. The conditions left many smaller resorts in poor financial health. Abondance, Céüze and the Col du Porte closed their lifts, Porte Puymorens and le Desert d’Entremonts teetered on the brink. Resort operator Transmontagne went bust.

What makes this season special is the credit crunch and now it will affect bookings from free spending foreign guests. Jean-Louis Léger-Mattéi, head of Alpe d’Huez tourist office says that last season Brits accounted for around 15% of their guests but with the fall in the value of the pound the resort already noticed a drop in consumption. Last season the French Ski Lift Operators (sntf.org) noticed a 12.5% drop in visitor numbers from the UK blowing an estimated 200 million euro hole in tourist revenues. Resorts are concerned that they haven’t yet seen the full effects of the recession as many of last year’s holidays were booked before the full effects of the credit crunch were felt.

The first victim this season could be Favre Sport group who own Ski Republic. Due to tightening credit conditions the group has been forced into administration. Launched with much fanfare two years ago Ski Republic promised to revolutionize the cozy world of ski hire. Ski Republic introduced a “low cost” model to ski hire undercutting the competition by as much as 60%. The group drew much anger and a number of the shops were vandalized. Lionel Favre, the MD took over Favre Sports from his parents after an international career in finance. He accused ski shops of being a cartel hiring poor quality equipment at margins of around 80%. The investments were colossal, 20 shops and 15,000 pairs of skis. Ski Republic now totals nearly 50 shops and franchises including an outlet in Australia. In 2008 the group lost nearly half a million euros on a turnover of just over 15 million euros. Favre has told ski website Snowheads.com that the core Ski Republic business model is sound and that after restructuring he hopes the company will come out of administration in 2010.

Further Information

Abondance abandons skiing
Winter Cancelled
Transmontage goes bust
Ski resort Ceuse closes
Ski lift operators notice less Brits

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