Investments 2013 - The trend continues

Monday 24 March 2014

The 2012/2013 season benefited from early snows as well as regular snowfall during the entire season at all the pistes in France. In certain cases, the amount of snow was truly exceptional (the central Pyrenees, Isola 2000, etc.), weather conditions are expected to be satisfactory overall, especially during the February holidays. The result: high numbers of tourists and rising revenues (+4.4% and +7.8%) respectively, while France continues to be the top global ski destination.

Investments 2013
Investments 2013 - The trend continues…

> Report prepared by Mickaël Frottier, Aurélie Palluel, Martin Mazza (Montagne Leaders), Emmanuelle Galiana and Jean Berthier (Atout France), Laurent Reynaud (DSF) - Photos Dovemed

 

Pierre Lestas, Président de Domaines skiables de FranceThere is no avoiding the obvious facts: France’s ski lifts are one year older (since 2008, in the case of the chairlifts) and three years older (since 2009, in the case of the surface lifts).
Although 2013 saw a slight increase in investments and a greater number of ski lift construction projects, the overall negative trend observed since 2008-2009 - whose various causes are well-known - still continues.
In the first place, not enough attention has been paid to the consequences of the school calendar on our financial results.
We have said over and over - but to no avail - that the result has been a 30 % drop in our profit margins, and that this affects investment levels.
How can we be expected, under such conditions, to put things right once and for all?
And, in the meanwhile, regulations have become stricter still. Particularly regulations concerning environmental impact studies, whose procedures are becoming far too complex and demanding. So much so, that from now on, we’ll have to call in teams of experts in Biology and in Ecology, and employ ever more sophisticated means: heterodyne and “time-expansion” detectors, sonograms, etc.
It is high time to simplify these administrative procedures that are making it harder and harder to materialise our projects, and are even discouraging our initiatives altogether.
For example, why should an environmental impact study (and the corresponding expense) be mandatory when a mechanical ski lift is replaced by a new one of the same type? Changing that requirement would allow us to spend more time doing onsite work, instead of doing paperwork.
From the point of view of our businesses, such a change would truly be a step forward, in line with the declared intentions of the President of the Republic in the sense of simplifying our business activity. It would also be a gesture of trust and confidence on the part of an efficient State.

> Pierre Lestas,
Chairman of Domaines skiables de France

 

InvestissementsTravaux en montagneThis very positive balance underlines the marked resistance of our business sector, in the midst of a difficult economic context, and is also related to the marketing and investment policies implemented in relation to ski resorts. Improving and modernising the offer, adapting the products, is the key to making the ski resorts more attractive. After an excellent season, was there much new investment?

As in previous years, Montagne Leaders, Atout France and Ski resorts de France present the annual balance of investment made in ski resorts (See the Methodology box at the end of the article).
Once again, the entire sector did their part (and this work could not have been done without them): resort operators of course, but also suppliers of mountain products and services, as well as the regions and municipalities. This survey makes it possible - by examining the expense items - to track global investments made by and in the resorts, and to detect annual variations.

 

Investment trends did not match rising revenues

In 2013, French ski resorts invested 309 million Euros. The timid upswing, which started in 2011, continues: +1.1 % in comparison with 2012. The mountain sector investment level is slowly creeping back to the levels we knew prior to the crisis. However, the 2013 figure is clearly below the average for the ten previous years (-5 % in current € values and -14 % in terms of constant €).
Nevertheless, the 2012/2013 season and its positive results in terms of visitors, should trigger healthier investments, or at least, match the trend in income levels (+8 %). When all is said, in spite of rising investment figures, the previous year’s investment / general income ratio for mechanical ski lifts continues to drop, and stands at 24 % - the lowest ratio since 1998.

 

A premium on existing equipment and recreational equipment

Sixty percent of investment, i.e., 184 M€, corresponds to the item “mechanical ski lifts”. This level of investment, which at first sight is stable when compared to the previous year, hides a significant drop in investment in new mechanical ski lifts (-10 %), to the benefit of repair/ upgrade work and modernization of existing equipment (+46%).
Simultaneously, ski resorts are trying to reduce climate-related hazards. In the first place, by resorting to artificial snow and hillside embankments. With 40 M€ invested in 2013 compared to an average of 60 M€ for the past decade, ski resorts are no longer in a phase of acquiring new infrastructure, rather they are expanding or maintaining existing equipment.
In second place is investment related to snow grooming – always required in order to ensure basic ski conditions: 33 M€, an increase of 8 % from 2012. Finally, ski resorts are looking to diversify, and they’re betting on innovation, information and comfort. The items “signposting” and “ticket office”, while still a small part of the total, still represent dynamic investment items.

Répartition géographique des investissementsThe Northern Alps accounted for three quarters of the investment reported in 2013, a level of investment which is in line with its share of total skier-days.
124 M€ were destined for the Savoy resorts, clearly more than the average reported over the last 5 years: Val Thorens, Courchevel, or the Paradiski resorts. In Haute-Savoie, investment amounted to 75 M€ which, though less than in 2012, is still one of the highest ever destined for these mountains. Similarly, with an investment of 26 M€, the Drôme / Isère ski resorts are still benefitting from investment growth rates of more than 11 % over the previous 5-year average.

Investment on the resorts in the Southern Alps shot up strongly (+18 % compared to 2012), as a result of the policies implemented with a view to maintaining the attractiveness of these resorts (Alpes-Maritimes Departmental Council, the Queyras resorts, etc.).

Evolution des recettes brutes des domaines skiables de 1990 à 2013At the same time, investment on the other ski resort areas is markedly below the average seen in previous years, and even entails the risk of being insufficient to maintain existing capacity. For example, 18 M€ were invested in the Pyrenees, which did not see any large new project (mechanical ski lifts account for 30 % of the total investment in this mountain area, compared to 60% at the national level, and new ski lifts accounted for only 7%!); only 4 M€ for the Vosges, much below the 5-year average, and this investment was made largely by Gérardmer and Bresse-Hohneck; the Massif Central received 3 M€ investment, which is 50% less than the observed average over the last 5 years.
The Jura was the only ski area show strong growth (9 M€ vs. an average of 3 M€), attributable to the hefty investments in snow equipment on the part of the Métabief resort, the investments made in the district of des Rousses, and also at Mont Jura.

The snow-sport preferences and expectations of the users call for new types of investment, no longer based exclusively on skiing (luge, recreational spaces, signposting, totem, Tyrolean slide, etc.). At the same time, the cost of investing in mechanical ski lifts has skyrocketed. All in all, with the exception of the larger venues, the French resorts seem to be having great difficulty in making significant investments on their mountains, which is not the case of their competition in Switzerland or Austria, where they assign 30 - 40% of their yearly business income to investment, which in 2013 was about 324 M€ (according to Jürg Schmid, director of Switzerland Tourisme (Le Temps, 21 Dec. 2013) and 415 M€ (Les Echos, 6 Nov. 2013), respectively. If the expiry of public service delegation contracts weighs heavily on the decisions taken and the strategies implemented, the effects of the crisis (along with inflation or a tendency towards higher fees) cannot be overlooked.
Construction d’installations nouvelles de 1999 à 2013

 

New mechanical ski lifts

134 840 402 €

A year of trompe-l’œil

Remontées mécaniques, constructions nouvelles 2013Judging from the number of devices, this most important investment item may seem acceptable: there were more new installations in 2013 than in the previous year. But, if we look closer, there are several discouraging signs …
The total amount corresponding to these new devices is 10 % lower than in 2012. Although this comparison is a little skewed - last year, 3 of these devices represented – by themselves - an investment of more than 40 M€ in, (3S Prodains Express/Avoriaz, TC Plattières/Méribel-Mottaret and TC Saulire Express/Méribel Alpina) – the 134.8 M€ corresponding to the item “New mechanical ski lifts” is less than the average figure for the last 5 years (137 M€).
There were also fewer new installations of detachable 6-place chairlifts, which are now a standard feature in ski resort development: 7 in 2013, compared to 13 in 2012. The number of surface lifts, however, has increased: 13 surface lifts in 2012, versus 24 in 2013! It should be noted that 5 of these so-called “new” installations correspond to major modifications, and this is a growing trend.
There are, however, some good news in this investment item: the construction of 3 mixed installations, including the well-known Telemix des Jeux at Alpe d’Huez.
(Some survey responses did not provide project-management information, so the share of work awarded to the different manufacturers is not available this year).

Comparaison investissements : moyenne 2008-2012 et 2013

 

Mechanical ski lifts, modifications, maintenance, major work

48 882 687 €

A record!

Mechanical ski lifts, modifications, maintenance, major work

Mechanical ski lifts, modifications, maintenance, major work 2013Fiscal year 2010 had already been a good year, with 36.3 M€ invested in this item. In 2013, the operators of ski resorts smashed that record figure, by investing 48.9 M€ in care and maintenance of mechanical ski lift equipment. That’s a 57 % jump compared to the average for 2008-2012 (31.12 M€)!
Doubtless, assuring the safety of the facilities and complying with regulatory requirements on mechanical ski lifts are sufficient reason for this rising trend. But some of this investment is due to the voluntary decision of resort operators to extend the service life of some of the infrastructure. This is a growing trend, which reminds us of another factor: the general ageing of mechanical ski lifts in France.

 

Upkeep of pistes

9 637 853 €

Is it coming to a stop?

Upkeep of pistes

Upkeep of pistesAlready in decline last year, investment on ski piste work continues to fall, amounting to less than 10 M€ in 2013! We have to go back to the mid-90’s to find a similarly low figure, miles away from the 25 M€ invested in 2005, the record year for total investment (419 M€). Closer to the present, the comparison with the last 5-year average (17.01 M€) also shows a decrease (-43 %).
Nevertheless, the resort operators are still offering excellent piste and snow conditions, thanks to the work undertaken each season. But more could be done in terms of erosion prevention, grass-seeding, and revegetation to ensure better retention of the snow cover, and even to undertake slope re-profiling to create or extend safer pistes.

 

Snow grooming

33 389 000 €

A missed opportunity?

Snow grooming

Snow groomingIn 2013, the total number of snow-grooming machines and the corresponding investments is quite respectable. However, after a successful winter season, these figures may seem modest, in light of the importance of snow quality in the eyes of resort operators; similarly to the item for mechanical ski lifts, the manufacturers are now offering overhauled equipment comparable to new machines.
Apart from the economic context – which makes investors cautious - the 33.38 M€ can also be explained by the large stocks of used machines held by the equipment manufacturers, which negatively affects equipment renewal rates.
A silver lining: the success of equipment for snow-parks, which are always in demand.

 

 

Artificial snow

39 658 136 €

The fall in investment is confirmed

Artificial snow

Artificial snow So the figure of 35.72 M€ in 2012 was not just a passing dip; at almost 40 M€ this year, the artificial snow sector has perked up slightly, recovering the investment levels of 1999-2000. By way of comparison, the average for the last 5 years was 52.38 M€, and 59.42 M€ for the last 10. Artificial snow

Some contracts like the new installation at Métabief, the new reservoir at Carroz d’Araches and the extension of Megève towards Jaillet involved quite large sums.
But the great majority of operations involve renewing snow machines, thickening up installations, or small extensions, usually for quite small amounts.

Guaranteeing water supply remains a constant concern for operators: investment in dams for reservoirs represents 10.3 M€, more than a quarter of the total for Artificial snow.
(Some replies to the survey did not mention the details of investments in artificial snow; the ratio per constructor based on "Materials & Concept" did not appear this year.)

Neige de culture : évolution des investissements

 

 

Ticket office

6 016 211 €

Better than average

Ticket office

Ticket officeIt’s a fact: this market is now mature and almost all French ski resorts now have hands-free ski-pass facilities. So investments are basically destined for maintenance of the equipment – the encoders installed at the gates. Nevertheless, this item, which first appeared in 1998 as part of our survey, shows a figure that is relatively satisfactory for 2013 (6.01 M€), an increase of 34 % above the average for the last 5 years.
And the ticket office has even more potential, including recyclable packages and multi-product cards that can be used at different service providers in the resorts.

 

 

Vehicles – Various

16 755 170 € and 1 697 487 €

It depends on the buildings

Vehicles – Various

Vehicles – Various Just like last year, this item shows figures that cannot be relied on to detect a real trend. At 18.45 M€, fiscal year 2013 is an improvement over the average for 2008-2012 (15.33 M€). And that’s all we can say about the comparison, because this item is highly variable.
The component relative to buildings is quite variable from one year to the next, depending on the execution of large infrastructure; this year, that was especially the case for the technical centres at Aussois (1.5 M€), Courchevel (8.2 M€) and Arcs (6.3 M€).

 

 

Signposting

2 368 776 €

Average values

Signposting

SignpostingLong gone are the days when signposting was a simple matter of marking the pistes. The ski resorts still have signboards, directional signs, and arrow pointers to help orient the skiers and other users, and to ensure safe traffic on the pistes. But signage constantly evolves to cater to the needs of all kinds of users during the four seasons: information boards, educational screens and even interpretive trails for different purposes. In light of these different functions, the item remains stable compared to previous years (2.03 M€, close to the average for the last 5 years).

 

 

Safety

5 179 784 €

Safety at all costs

Safety

SafetyResort operators do not skimp on this item when it’s time to ensure the safety of visitors and skiers on the trails; they spend whatever is necessary as soon as the need arises. That’s one of the reasons for the variations shown by this investment item from one year to the next. And, in fact, 2013 shows a 30 % increase compared to the average for 2008/2012. The safety of skiers and visitors, and making sure that the ski resort will be open, are top priorities that are not constrained by budgets.

 

 

Recreational equipment

11 261 068 €

Enjoy!

Recreational equipment

Recreational equipmentAt 147 % above the 5-year average (4.55 M€), the recreational item is attracting much attention from ski resort operators. The amount of total investment received a helpful boost from the luge piste at Allos and Menuires, and the landscaping work at Chamonix, among many other recreational initiatives. Resort operators cater to their visitors’ taste for amusement and fun, offering products like the VTT or the Tyrolean slides. But they also want to satisfy all manner of visitors: picnic tables for the family, panoramic maps for those with a contemplative spirit, resting places for those seeking peace and quiet: recreation takes a great many forms!

 

 

The “Top 10”

 

Evolution des investissements par poste sur les 5 dernières années (en kE)

 

Jean Bourcet

Director of SETAM

Jean Bourcet    Directeur de la SETAMVal Thorens has always aimed at being at the forefront of innovation for ski resorts. With that goal in view, we have defined several objectives:

  • limiting the number of mechanical ski lifts by maximizing efficiency: high flow-rate ski lifts, including the high-capacity TSD with double-boarding feature, which is comfortable and safe;
  • ensuring reliability of service to our users, who sometimes have travelled long distances to visit us; our funitels are impervious to winds, and we are working on the other cable cars using weighted vehicles to ensure a good weight/wind stability ratio, a solution that is customized in the cable cars installed in 2013: Peyron sur Orelle, Pionniers, 3 Vallées and 2 Lacs sur Val Thorens ;
  • Continuing the tradition of Val Thorens and of SETAM : innovation, symbolised by the Pionniers TSC (cabin ski-lift) which incorporates 4 “vintage” cabins based on the design of the old Péclet cabin ski-lift;
  • “Keeping our visitors astonished”. The Tyrolean slide from Orelle to Val Thorens should do the trick, starting this winter.

We are getting ready for Summer 2014 with three new projects including the replacement of the chairlift at Portette, which has weighted seats and will also have the double–boarding feature, to make even more reliable the connection to the North faces of the resort and to the Orelle side.

 

Jean-Christophe Hoff

Director, SATA Huez

Jean-Christophe Hoff   Sata HuezA study of the customer-satisfaction surveys undertaken by the firm Contours over these last 3 years and our conversations with socio-occupational personnel at the resort have confirmed the importance of taking customer expectations into account when designing our investment strategy. Our coming projects will be aimed at ensuring customer satisfaction by offering a unique and flawless product, for all types of client, and regardless of weather conditions.

After a period of sustained investment these last 2 years, which was characterised by the upgrading of the Rif Nel sector and the sector of the Games, in 2014 we will focus on artificial snow-making for the mythical Sarenne piste, to ensure the top conditions demanded by our users for this unique product.
We will also replace the Lièvre Blanc chairlift in order to offer medium-elevation skiing without having to come down to the foot of the slopes. Finally, fiscal year 2015 should see the replacement of the Chalvet chairlift, to better handle the increased number of visitors from Sarenne. Finally, in the medium term, we are looking at the construction of new tourist beds at the ski station. All this investment aims at offering our visitors a comfortable ski descent experience, and an efficient ascent of the slope. This important investment programme (more than 60 million Euros over 4 years) embodies the ambitions of Alpe d’Huez and its intentions to remain an international reference in ski destinations.

 

Mathieu Dechavanne

CEO of Compagnie du Mont Blanc

Mathieu Dechavanne PDG de la Compagnie du Mont BlancRegarding all these investments, we should mention the fact that some are being made under the agreement we have with the General Council, for example the works undertaken at the Mont Blanc tramway (3 M€). The year 2013 saw works executed at the site of Aiguille du Midi – buildings, landscaping, but also the completion of the “Pas dans the vide” – the renovation of the Montenvers train lines, the work on the service car of the Mont Blanc gondola, and the replacement of the Flégère cable car. These projects, which did not involve new mechanical ski lift equipment, now give me the opportunity to thank all the personnel who’ve tirelessly worked on all these initiatives, because our users and visitors are not always aware of the work done, and their work goes unrecognised. But things will be different this year, with our new public service delegation contract, which will have 40 years’ duration. Investments will now be much more sizeable, particularly for the cable-cabin at Plan Joran and the chairlift at Les Mélèzes aux Houches!

 

The “Top 10”

Two ski resorts in the Southern Alps – Serre-Chevalier and Pra Loup – have won a spot in a 2013 Top Ten ranking largely made up of sites in the Northern Alps: four from Savoy, three from Haute-Savoie and one from Isère.
The 2013 winners shouldn’t surprise us: we’ll find some regulars of the Investment Top 10: since 2003, this is the sixth time that Val Thorens/Orelle is in the Top 10, the fifth time for Alpe d’Huez, and the seventh for Chamonix. For the period 2009-2013, three ski zones managed to make investments in the order of 30 % of their business volume: Morzine (34.11 %), Flaine-Morillon-Samoëns-Sixt (33.78 %) and Val Thorens/Orelle (29.96 %). And there’s some unusual statistics: thanks to the support provided by the General Council of Alpes-de-Haute-Provence, Pra Loup reports a five-year rate of investment that seems unthinkable for some: +/- 110 %!
Top 10 : Montants cumulés des investissements et chiffre d’affaires de 2009 à 2013 en Millions d’E

 

Methodology:

Over the years, this has become a moment much awaited by our readers, whether professionals or not: the presentation of the traditional “Investment Survey”, which reports on the different types of investment made by the operators of French ski resorts and by the Municipalities that support them.
Panel > In this edition, jointly with ATOUT France and Ski resorts de France, we submitted one and the same questionnaire to 73 manufacturers, 23 engineering firms, 205 operators of mechanical ski lifts and an equal number of municipalities.
Feedback > After several reminders, the total number of respondents was: 28 suppliers, four engineering firms, 110 resort operators – often representing several ski resorts- and the corresponding municipalities; we would like to thank them all for their cooperation. This investment report was prepared by cross-referencing the data collected from these different sources. For certain items, we discussed the results with the manufacturers so as to harmonize the figures reported by the resort operators and by the manufacturers themselves. We would also like to thank the STRMTG for providing their data concerning new mechanical ski lifts, which allowed us to verify our results. In the case of the indicator “evolution of investment vs. operating income of ski lifts”, we should mention the fact that the figure for operating income was obtained from the entire universe of respondents in our Top 100 2012/2013 published in our Edition 239.
Data entry > The data entry and compilation of all figures for each item, is a long, tedious, and demanding task. It is highly probable that, in spite of our efforts, some errors have crept in, for which we apologize in advance. As in previous years, we have divided the item “Various” into 2 parts: one for buildings, roads, etc. (“Various”), and the other for snowmobiles, quads, etc. (“Vehicles”).
Information > We’re aware of the fact that certain figures aren’t 100% accurate; but these are the numbers reported to us, and we are therefore not responsible for their accuracy. However, we’ve made an effort to ensure the consistency of data in order to minimize any errors. We cannot guarantee the accuracy of these figures which, as in previous years, are mainly intended to compare the different investment items, as well as each resort’s and each mountain zone’s share of investment, and their evolution over time.
Calculation methods > Finally, we work in current Euros and do not take inflation into account.

 

Montagne Leaders surveys

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Investments Survey

 

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