The FAQs: Downhill Ski Resort Project

August 28, 2018

In this edition of The FAQs, questions from Members about Capital Projects have been answered by the General Plan Committee, including:

1. Why are we doing this project?
2. How can we compete with other ski areas?
3. How can we protect our investment?
4. How do we protect against weather risk?

Q: Why are we doing this project?

“The project website states that the current lodge doesn’t adequately serve the needs of members and guests. I’m curious to understand more about the demands that aren’t currently being met”.

A: The current lodge was originally built in the 70s to be the Dart Corporation sales office and was later converted to a ski lodge. Two main reasons for looking into improving the lodge are:

First of all, there are areas that are undersized for our user base, particularly the kitchen and eating area. Our ski lodge has a unique challenge: Most of our skiers are beginners, mostly children, who are brought here by their family. Some family members don’t ski so they occupy the lodge while their skiers are on the hill and also when they come in for meals or rest breaks. This creates a greater need for usable space than other ski area lodges that do not cater to beginners.

Secondly, the lodge was built before many current legal regulations were created. Tahoe Donner has a program to bring its facilities into compliance with current regulations, and building experience has shown that such alterations reduce the usable space of renovated structures. The GPC is currently evaluating the choice between remodeling and rebuilding. We do not yet know which will be the best option, but we do know that the lodge needs to be safe, in compliance with regulations, and economically the most favorable for Tahoe Donner members.

Q: How can we compete with other ski areas?

“What value can the Tahoe Donner ski hill provide to entice people to stay in TD rather than heading out to Squaw or Northstar or Alpine?”

A: The Tahoe Donner ski hill is a unique place and in its niche, is capable of competing with the best of the best in the north Tahoe area.

From the early 70s when the Dart Corporation developed Tahoe Donner, the ski hill has been advertised as “The best place to begin”. Except for the drought years before snowmaking, we have consistently drawn a bigger crowd than we can accommodate.

Our competitive advantages are strong: We are much more easily accessible from Truckee than the big areas during heavy snows. We cater to beginners. We have well trained instructors, good rental equipment and most important our entire ski hill is visible from the lodge which gives parents a great sense of security as well as the enjoyment of watching their children learn to ski. Once the beginners become more advanced they move on to the bigger ski areas, but in the meantime new beginners come to take their place.

Tahoe Donner’s ski hill is designed to serve our members and their guests, and more than half of our skiers come from that community. The capacity of our ski hill is larger than that user base, so we sell the excess capacity to the public to help defray costs.

Q: How can we protect our investment?

“How is TD going to be able to recoup the massive project costs when there so many world class ski resorts literally down the road?”

A: We know that in order to keep the Tahoe Donner ski hill truly “the best place to begin” we need to make additional changes that protect our competitive advantage. We have made, or are in the process of studying, three main changes that were recommended by the experienced ski area consultant who analyzed Tahoe Donner and compared it to industry standards:

The first was replacing the almost 50-year old Snowbird chair lift and positioning it to be friendlier to beginners.

The second is providing additional snowmaking to protect our financial performance from the whims of Mother Nature. Ski areas these days consider snowmaking as “insurance” and we know that our current investment in snowmaking has protected us from what could have been significant losses over the last two years.

Lastly, re-grading several parts of the hill that are difficult for beginners to navigate will provide a better beginner experience and continue our market position as “The best place to begin”.

Q: How can we protect against weather risk?

“If I’m remembering correctly, the ski hill has been losing money more often than not the past few years?”

A: During the drought years and before snowmaking at Tahoe Donner, the Downhill Ski Resort financial results were dominated by the whims of Mother Nature and revenue varied by five to six times from one fiscal year to the next. We added limited snowmaking in 2016 and are proposing to complete the beginner hill coverage in 2019.

Tahoe Donner Association uses a measure called Net Operating Result (NOR) to compare the financial performance of its amenities. (NOR is Operating Revenue minus Operating Expenses.) Here is a view of NOR dollars by fiscal year for the last five years, 2013-2017: