An in-depth comparison between the snow industry in France and in the United States

FRENCH AND AMERICAN RESORTS: VIVE LA DIFFERENCE!

by Alain J Lazard

The following paper was presented by his author at the "2009 International Ski History Congress" that took place in Mammoth Lakes form March 29 to April 2, 2009, and is reproduced with Mr. Lazard's kind permission.

This short presentation is limited to the comparison of Alpine activities (skiing, snowboarding and a few other marginal downhill activities) at U.S. and French mountain resorts. Because of time limitation, only the most salient differences are coveredi.

U.S., FRANCE AND OTHER ALPINE NATIONS:
Before entering the main subject of the lecture, it is instructive to situate these two countries in relation to the rest of the Alpine scene. They are, in fact, the two largest in business volume or more exactly in number of winter Alpine visits at their mountain resorts.

Both of them are flirting with the 60 million visit mark even if the 2008-2009 season might see a substantial setback from this figure, especially in the U.S.. Next we find Japan in the mid-fifty million visits, Austria just below 50 million, Italy at 39 million, Switzerland at 29 million, Canada at 19 million, etc. All the other nations are below 10 million visits.

The above numbers are made of the sum of domestic visits and international visits. Huge variation of the ratio between these two types of visits can be seen, from a very low ratio as in Japan where foreign visits represent less than 0.5% of the total visits to Austria where they represent almost two thirds of the total figure. France ranks second regarding international visits with 13 million, far behind Austria and barely ahead of Switzerland. The U.S. figure is much lower and represents some 5 to 6% of its overall number.

Please note that the manner in which Alpine visits are counted varies from country to country. Therefore, these figures cannot be taken to the letter but still give a good indication of the respective volume for each country.

A last observation: The aforementioned figures are fairly consistent, year in year out, discounting sizeable dips on poor snow year, with the exception of Japan that witnessed rapid growth in the 70's to reach an amazing 115 million visits in 1992, then collapsed afterward to remain at the current level (mid-50 million) since that time.

QUICK RECAP OF ALPINE RESORT DEVELOPMENT:
The development of mountain resorts in France began in the mid-1800's but was for summer tourism only up to the beginning of the 20th century. This is when the first winter resorts developed around existing alpine villages or small towns (Chamonix, Megève, Val d'Isère).

Sledding, playing in the snow, etc. was at least as important as skiing then. It is only after WWII that the first "2nd generation" resorts were created ex nihilo, at higher elevations, usually on municipal grazing lands. Courchevel, in 1946, was the first one and became the standard to be emulated by many others during the following decades.

In 1961, La Plagne was the first resort of the "3rd generation". It was built around the concept of the "Plan Neige", a fully integrated resort with ski-in ski-out to most if not all of its accommodations and a "Front de Neige": Up to that time, most of the resorts facilities were build right against the mountain, at the very bottom of the hill, as it was also done in the U.S. The "Front de Neige" is a wide set back between the bottom of the ski trails and the resort constructions.

It can be somewhat compared to the edge of a forest facing a wide meadow and, as far as usage, to a European or Mexican village plaza, where everybody congregates. At mountain resorts, this wide area is where the restaurants can extend their terraces over the snow, the ski schools can organize their gathering, the race courses have their finish area, the outdoor resort animation can take place, etc. Earlier resorts were built right against the mountain, discounting the benefit of such wide open area at the bottom of the hill.

One might think that the "Front de Neige" takes away an extremely valuable land area for real estate. As a matter of fact, it is the opposite: it creates a larger, even more valuable area for "trail front" properties (as in ocean front, green front properties) than would be impossible otherwise.

Furthermore, since most ski mountains are North-facing it creates a very desirable South-facing area. The "Plan Neige" and the "Front de Neige" concepts were developed using the experience acquired with the creation of Courchevel a decade and a half earlier. This is when the Alpine business took over in France and when most of the largest resorts were built (Tignes, Les Ménuires, Avoriaz, Flaine, Les Arcs, Val Thorens, etc.).

The resorts built after WWII offered excellent skiing and many services but were very urban looking and presented a strong contrast to the Swiss and Austrian resorts, more in tune with the traditional Alpine mountain environment.

This is when what we call the resorts of the "4th generation" began to be built in France: They were still fully integrated resort built around the principle of the "Plan Neige", but their architecture was a departure from what had been done until then: Smaller structures, use of traditional material, increased segregation of vehicles and pedestrians, etc. Valmorel (1976) is the best example of this new type of resort.

Many older resorts have been influenced by this movement and are slowly retrofitting, whenever feasible, their architecture. Courchevel and Val Thorens are good example of this current "upgrading" trend.

The concept of the American "base lodge", a single building where customers could find everything from lift ticket sales to cafeteria, to ski lessons, to ski rental, etc. was totally unknown in France and in most of Europe. In those countries, these services are provided by different entities unlike in the U.S. where they usually all come from the "Ski Corporation".

LEGAL, POLITICAL AND ADMINISTRATIVE ENVIRONMENT:
One word about the legal, political and administrative environment that played and still plays a determinant role regarding the development of mountain resorts. A couple of major differences exist between the U.S. and France.

In the U.S., the U.S. Forest Service (USFS) leases the land to many resorts, especially in the Western part of the country and plays a determinant "landlord" role. Being a Federal agency, any citizen has a right to object to USFS decisions. This can impact the daily operation and the long term planning of the resort. Another major difference is that there is not always a local legal authority where the resort is located.

By this, we mean that many resorts are not located within the boundary of an incorporated territory (local municipality) but administered by a more distant county administration. For example, Squaw Valley is not an incorporated town but its territory is administered by Placer County, whose headquarters is situated in Auburn, 100 kilometers away. It is easy to envision the many problems that can result from such a situation:

Response time, lack of understanding of the resort's specific needs and problems, little accountability to a community that represents a very small percentage of electors (less than 1%), etc. By the way, in theory at least, Squaw Valley should not have been granted the organization of the 1960 Winter Olympic Games that are to be awarded to a "city".

The situation in France is substantially different. First, there is not one square inch of the French territory that is not incorporated into a municipality, so there is always a very local power to interface with the resort operators. There are less than 20,000 incorporated municipalities in the U.S. covering only a small percentage of its territory. There are 36,685 incorporated municipalities in Franceii (a country with a land mass 17 times smaller than the U.S.) covering 100% of its territory.

Furthermore, the skiable terrain in a French resort is mostly located on the summer grazing land that traditionally belongs to the municipality, with some of the lower elevation terrain on private land. Hence, all the land is controlled locally instead of being under the jurisdiction of a distant county seat and/or the Federal Forest Service as in the U.S. This constitutes a very substantial difference between the two countries.

RESORT ORGANIZATION:
The main sectors of activities of a mountain resort are very similar in both countries and can be subdivided as follows:

A - Lift Operations (lift operation & maintenance – Lift ticket sales)
B - Trail Operations (trail maintenance, grooming, snowmaking, ski patrol, avalanche control)
C - Ski School (ski lessons & tests)
D - Ski Club/Race Department (coaching, race organization)
E - Ski Shops (retail sales – equipment rental)
F - Resort Promotion (marketing, special events, advertisement, public relations, documentation)
G - Food & Beverage (mountain restaurants, resort restaurants, bars)
H - Transportation (airport shuttle, resort shuttle, taxi)
I - Accommodations (hotels, clubs, apartments, condos, chalets)
J - Sales & Reservations (central reservations, internet booking, rental agencies or pools)
K - Real Estate (developers, real estate agencies)

In a typical French resort, the lift operator will handle "A" or "A & B". A word here regarding Trail Operations which is called "Service des Pistes" in France. Amazingly, this service is under the responsibility of the town and not of the lift operator(s) or "Ski Corporation". Legally speaking, the mayor is liable for anything happening on the mountain (except on the ski lifts). Very often, the mayor subcontracts the work to the Ski Corporation but still remains legally liable.

"Unlike its U.S. counterpart a typical French resort is a microcosm of true free market system, with a plethora of independent entrepreneurs..."

Some of the major resorts in France have their "Services des Pistes" operated directly by the municipality (Tignes, Val d'Isère, Val Thorens). When the city operates the "Service des Pistes", it receives approximately 15% of the gross revenue from the Ski Corporation.
The promotion of the resort in France ("F") is done by the "Office du Tourisme". The Office du Tourisme is financed by the municipality (from local taxes from all the businesses in town, including the Ski Corporation) and its president is the Mayor of the town. All the other sectors of a French resort are run by independent operators.

The situation is quite different in a U.S. resort where the minimum run by the Ski Corporation includes "A" to "G" above, except "D", if the resort has an independent Ski Club. Often, a U.S. Ski Corporation will also be, at least partially, involved "H" to "K".

In deep contrast to most of the rest of French society, where many services often involve the participation of a local, regional or national government agency, a French resort resembles a microcosm of a true free market, with a plethora of independent players. The same could not be said about a U.S. resort dominated by a single, large "Ski Corporation" and somebody looking at the two different models without knowing anything about the ski industry might be inclined to believe that the U.S. model belongs to France and vice versa.

VACATION TIME:
Another stark contrast between the U.S. and France is the amount of available free time, particularly vacations and holidays. It is easy to understand the impact that it has on tourism and on the ski industry, especially for destination resorts.

The average vacations & holidays for the U.S. are 22 days a year and 41 days for France. Furthermore, in France, the number of days of vacation is not determined by seniority but is the same for everybody, regardless the number of years on the job: Five weeks paid vacation, with one week minimum to be taken during the winter. This is a tremendous advantage for the French recreation industry that the U.S. resorts can do nothing about but envy.

RESORT CONCENTRATION AND INTERCONNECTION:
European and French resorts are much closer to each other than U.S. resorts. It is interesting to look at a satellite picture of the Alps and at one of the Rocky Mountains at the same scale. The U.S. Rocky Mountains are approximately four times larger than the Alps. The Alps (Austria, France, Italy, Slovenia & Switzerland) count some 1,100 mountain resorts. The U.S. Rocky Mountains 97.

The Austrian Cable Car Association web site displays a map showing the 255 Austrian resorts. The East to West distance of the map is comparable to the South to North distance from Mammoth to Lake Tahoe, an area that counts only a handful of resorts.

One of the results of such concentration is that, whenever possible, French (& European) resorts interconnect their lift networks with each other and sell ski passes allowing skiing at neighboring, interconnected resorts. The beauty of this is that a ski pass for a given resort that sells for so many Euros can be sold substantially more if it encompasses interconnected resorts. On the other hand, the user doesn't "consume" any more lift rides because of that (11,532 vertical feet a day on the average) and the premium paid increases the bottom line for the operators. France counts 28 interconnected ski complexes encompassing 98 resorts and realizing together 65% of all the Alpine visits of the country. There are very few interconnected resorts in the U.S. For example, the concept of the "Utah Interconnect" that has been under consideration for at least four decades has still not be implemented.

Also, it is not uncommon to have the skiable terrain of a French resort span over 10,000 acres. La Plagne covers some 25,000 acres and the complex of "Les Trois Vallées" encompasses some 55,000 acres. Vail, the largest U.S. resort covers less than 6,000 acres and only a handful of resorts are over 3,000 acres.

THE ENVIRONMENTAL MOVEMENT: The percentage of skiable terrain of the French resorts in the Northern Alps, for example, represents 5.1% of the overall acreage of the mountainsv , with 3% to 10% of the skiable terrain used for ski trails. No specific statistics exist in the U.S. but putting into perspective the 105,000 acres or so of the skiable terrain (permit area of the 97 existing U.S. Rocky Mountain Alpine resortsvi) and the 109 million mountainous acres of the six Western states constituting the U.S. Rocky Mountains translates into a percentage of 0.1% (1/1000) of skiable terrain or an impact more than 50 times lesser than in France.

"In spite of a fifty-fold difference in resort concentration, the environmentalist movement is a non-issue at French mountain resorts..."

Because of the fifty-fold difference in resort concentration, one would expect the environmentalist movement to be very active in fighting mountain resorts in France and considering it as a quasi non-existing problem in the U.S.. As a matter of fact, the exact opposite situation occurs and always leaves Europeans perplexed when they witness some of the controversy triggered by what would be considered a non-issue in Europe.

Currently, in France, the environmentalists are mostly fighting the erection of freeways, high voltage power lines and high speed train lines. It doesn't mean that opposition to resort development is nonexistent, but to a much lesser degree than in the U.S. With the current radicalization of the environmentalist movement, one wonders if the impressive highway Interstate network that was built in the 50's and 60's in the U.S. could be undertaken today.

The physical size of most of the U.S. resorts is limited by the permit area granted by the USFS. Most U.S. resorts use that somewhat restricted space quite intensively and it is not uncommon to have up to one third of the overall terrain cleared for ski trails. Consequently, the concentration of skiers within the permit area is quite high and the impact of any given U.S. resorts is more acute than it is in France.

Even though the percentage of the mountainous land dedicated for Alpine resorts is some fifty times les than it is in France the more intense impact on limited land is perceived very negatively by the local environmentalists. One must note that most of the large French resorts are located above the Timberline (around 6,000' at the latitude of the French Alps). Therefore, there is hardly any tree clearing necessary to create ski trails, which renders the process less visible and less controversial.

One possible but contrarian alternative would be to increase the permit areas of the U.S. resorts without increasing their capacity. They will still be handling the same number of visitors but their impact would be spread over a larger area, therefore diminishing the intensity of the impact and lowering it to the French level: If downhill activities are really detrimental to the environment, reducing their level of concentration, as you would do for any toxic substance, can do nothing but improve the situation. Unfortunately, such rationalization has little chance to rally the opposition in endorsing the suggested changes.

MARKET PENETRATION:
To finish, I would like to speak about "Market Penetration" or to assess the relative popularity of Alpine activities in the U.S. and in France and also retrace its evolution over time. We already spoke about "domestic visits". Now, we would like to put them in perspective to the overall population of the two countries.
For the best year ever (2007-2008 season), the U.S. realized 56.7 million domestic visitsvii for a population of 301 million. This gives us a ratio of 18.8%, or 0.188 per capita visit.

In France, the number of domestic visits is substantially less (44.9 million) but the population is much lower: 63.4 million. The ratio is 70.8% or .708 per capita visit.
The only two countries where these ratios are higher than in France are Austria and Switzerland, where they are in the 230% range, or 2.3 per capita visits, three times higher than in France that, nevertheless, ranks 3rd in that list, ahead of Norway (62%), Italy (54%), Canada (51%), Slovakia (47%) Japan (41%), Finland (40%) & Sweden (34%).

Frenchmen ski almost four times more than Americans. It did not use to be that way. Several factors influence the popularity of skiing, snowboarding, etc. in any given country:

• Availability of sufficient facilities (sites & accommodations)
• Proximity to population centers (for days skiing)
• Available time (for destination skiing)
• Disposable income/affordability of the activity
• Transportation (from the population center to the resorts).
• Winter sport culture (Winter Olympic Games: U.S.: 4, France: 3)

The U.S. and France are pretty even on all these factors, with the exception of available free time as mentioned previously. Only one of the above factors has dramatically changed over time. It is the disposable income/affordability of the activity. This factor is the only one that can explain why U.S. and France Alpine activities grew at the same rate for the first three decades after WWII, then the growth stalled for the U.S. and kept rising for France.

The best measure to gauge the distribution of income in a given country is the Gini Index. It was developed by the Italian statistician Corrado Gini in 1912, and is a way to express the equality of income distribution. A low Gini Index means that income is somewhat evenly distributed and a high index that the distribution is uneven.

An index of 0% (or 0) means that everybody has the same income, and an index of 100% (or 1) means that one person receives the total income of the country. The lower the Gini Index, the larger the middle class, an indispensable condition to have a thriving Alpine resort industry. The U.S. had a strong middle class after World War II and its Gini Index remained below 40% (35% to 38%) until the early 70's, but the situation has been degrading ever since and the index is now at 46.6%. For France, the evolution has been exactly in the opposite direction, with a high Gini index after WWII: 48.5% in the early 60s and 32.7% todayviii. As the above graph shows, when the two U.S. & French Gini index curves crossed each other in the mid ’70's, the U.S. ski industry stopped growing and France kept climbing.

We must stress the fact that the evolution of the domestic Alpine visits is somewhat deceptive. What appears as a slow growth in the U.S. for the last three decades (47.8 million visits in 1978 to 56.7 million in 2007 or +18.6%) represents in fact a decline in per capita visits: The U.S. population grew from 222 to 301 million in the same period or 35.6% and the per capita visit decreased from 0.215 to 0.188 or 12.6%. Unless there is a dramatic reversal of this trend, the U.S. mountain resorts are likely to witness slow growth, if any, in terms of number of visits. On the other hand, an increase in revenue is still possible with the adaptation of the resort to a restricted, but ever more affluent clientele, by offering more luxurious accommodations and services, a movement that has already begun at many U.S. resorts.

The French situation is quite different. During the same period the number of domestic visits has increased by 184% when the population has only increased by 16%. Consequently, the per capita visit has exploded from 0.29, a situation very close to the U.S. three decades ago, to 0.71 today, or almost four times higher than in the U.S.. France is now approaching its plateau, but at a much more enviable level than the U.S..

The drama of the U.S. ski industry is that it has little, if any, influence to modify the main factors limiting its grow: vacation time and slow but steady disappearance of the middle class.