Jumbo Ski Resort – a jumbo disaster?

In BC there was a significant announcement in the last few months that a new ski resort had received final governmental approval.  Jumbo Glacier Resort has been in the works for almost twenty years but has received plenty of bad press from environmentalists and other stakeholders that felt the resort was inappropriate for that location.  I don’t necessarily agree or disagree with those views, however I have always been shocked that someone was willing to throw $900 million into the project.  Skier visits are decreasing all across North America, a combination of demographic shifts, economic conditions, and weather patterns.  WhistlerBlackcomb’s skier visits are shown below, its hardly what you would call a “growth industry”.  Is there really consumer demand for another provider?  I suppose if Jumbo was to offer something unique then perhaps there would be a business case for it.  What does Jumbo have going for it?  Great snow, lots of terrain.  Downsides?  Location.  Its not easy to get to.  WhistlerBlackcomb claims to be within five hours drive for seven million people.  How many people live five hours way from Jumbo?  Substantially less than two million.


There are two accounting lessons that can be learned by looking at this situation.  First, non-financial information is vital to understanding and analysing a business.  In the case of ski resorts, skier visits and convenience are obviously critical.  For grocers, you may find managers talking about inventory turnover and inventory transit time.  As a financial statement user, don’t forget the power of the non-financial information.  That information is not always easy to find but is necessary to complete the picture the financial statements begin to paint.

Second, understand the demographics of the business’ consumer.  The first time I really considered demographics was reading David Chilton’s Wealthy Barber 20 years ago.  If you haven’t ever read that and want to understand how important demographics are to businesses I highly recommend his books.  What do we know about North American demographic trends?  The population is aging as the picture below clearly indicates.  I’d hazard a guess that older people ski less than young people so I don’t see a huge turnaround in the key skier-visit statistic.  Where does that leave the new Jumbo ski resort?  Lots of terrain, great snow, an inconvenient location, and decreasing demand.  My guess is that someone, somewhere in the Jumbo organization will realize that there are easier ways to waste $900 million and the project will be dramatically changed before it gets started.  If you’re interested in skiing or the resort business and disagree, I’d love to hear your comments below.

Screen Shot 2012 07 19 at 2 23 46 PM

Note: this blog was originally posted on my site hosted by Pearson Education (http://php2.pearsoncanada.ca/highered/inthenews/accounting_in_the_news/)

2 Replies to “Jumbo Ski Resort – a jumbo disaster?”

  1. There are some good points in your article. However, the comment regarding declining North American Skier Visits is not entirely accurate. In fact, North American Skier Visits increased significantly (i.e. by 10 million skier visits) from the late 1990’s to 2010-11. Last season (2011-12) was significantly impacted by poor weather in the USA and Eastern Canada, which caused a major drop (i.e. one that should reverse in 2012-13).

  2. Maybe they should look to another new ski resort in BC. Revelstoke has fantastic terrain, great snow but inconvenient location. It’s opening did coincide with the financial meltdown in 2008, which pumped the brakes pretty hard on any more capital being invested. It also caused a few of the initial investors to flee, leaving Gigliardi with the tab. Not much has happened other than buildings that were prevoiusly sold, or were already started, and one lift being added that didnt really open up much extra terrain. There is a promise of a 10 year development plan, but it will take a much more substantial investment to expand the hill and provide more accomodation.

    However, ski hills dont appear over night. Panorama took ~15 years to really take off and eventually lead to the explosive real estate demand that could be seen pre-2008 in the invermere area. I wouldn’t pin that on the skiing by itself, I think the lake really sealed the deal, but its the only ski hill I have experience with that opened in the past 30 years.

    What Jumbo does have, that a resort like Revy doesn’t, is the people already driving to the area in the winter. With so many cabins (houses) on the lake, and in the area, they already have the built in skiing population. I imagine the skiing will be much better than Panorama so that will attract skiiers from the area. Also, looking at their website, they will offer year round skiing. This will likely be more of a novelty than skiiers dream, but it will help to drive summer revenue. Also, with the potential of year round skiing, there could be ski teams training there (I believe the canadain alpine team trains on the farnham glacier already) or freeskiing/snowboarding camps for adrenaline junkies. Whistler hosts these camps already, so there is demand for this type of service.

    Overall, it could end up working out. Certainly at the expense of Panorama. But, it will take a long time to find out.

Leave a Reply