Tourism case study: The Ski Industry

Europe's Endangered Slopes

December 15, 2006, Carol Matlack, BusinessWeek.com

Visitors to the famed French ski resort of Megève this month can stop by the Santa's Village display or see a performance of The Nutcracker on Ice at the local skating rink. But they probably won't be able to ski. Megève has gotten so little snow this season that a planned Dec. 20 World Cup women's slalom event had to be canceled.

Megève isn't the only European resort that's short on the white stuff. Many alpine regions had the warmest November on record. December temperatures have been unusually balmy, too. World Cup races at two other French locales and at St. Moritz, Switzerland, also were called off. Resorts in Italy and the Bavarian Alps are snow-deprived as well.

The problem, experts say, is global warming—and it's going to get worse. About 10% of the 666 medium-to-large ski areas in the Alps "are already operating under marginal conditions" because of insufficient snowfall in recent years, the Organization for Economic Cooperation and Development says in a report released Dec. 13. Within 15 years, one-quarter of the region's ski areas will be unable to offer reliable skiing conditions, the OECD says, and by 2050 the number will rise to almost 40%.

Temperature Rising

The predictions are based on the assumption that global average temperatures will rise one degree centigrade by 2020, and another one degree by 2050. Many scientists consider this scenario inevitable, even if aggressive measures are taken soon to curb greenhouse-gas emissions. The average worldwide temperature this year is about four-tenths of a degree centigrade higher than the average during the period from 1961 to 1990, according to the World Meteorological Association.

These projections cast a long shadow over the Alpine tourist industry, which draws a big chunk of its $65 billion annual revenues from skiing. Already, some banks are refusing to lend money to lower-altitude ski resorts, says Shaardul Agrawala, the administrator for climate change at the Paris-based OECD.

To survive, many ski areas are hustling to develop alternative attractions. The Berchtesgaden Land resort in the Bavarian Alps, for example, is promoting "GPS Treks," in which hikers are given global-positioning devices to guide them. Others are building ice-skating rinks and sponsoring Christmas markets and festivals. "We are aware of the fact that it will be warmer, that we have to make changes," says Angelika Nuscheler, spokeswoman for the Tourism Association of Munich and Upper Bavaria.

Building Swimming Pools

The OECD says that Germany and Austria's ski areas are the most vulnerable in Europe because they are generally at lower elevations than those in France, Switzerland, and Italy. Twelve of Germany's existing 39 resorts are already "marginal" because of reduced snow, the OECD says, and with an average temperature rise of only one degree, 16 others will fall into that category. If the temperature rises another two degrees, Germany would be left with only five resorts offering reliable conditions for a period of at least three months per year.

But higher-altitude resorts are worried, too. Adrien Duvillard, who heads Megève's tourism office, expects that the number of people on the slopes will diminish and is pushing to reposition the town of 40,000 as a year-round destination for affluent visitors. Since 2005, his office has been heavily promoting hiking, tennis, and swimming, while pitching Megève as a destination for ecologically responsible tourism. "We haven't placed all our bets on skiing," he says. "It's clear the future is in summer activities."

Others are compensating with artificial snow. Compagnie des Alpes, a Paris-based operator of 14 ski resorts across Europe, has sharply increased use of artificial snow in the past decade, to compensate for an average 20% reduction in natural snow since the 1990s. And nearly a quarter of ski surfaces at the company's resorts now have artificial cover, up from 11% in 1997. The company also removes rocks and smooths out bumps on ski runs, making them skiable with as little as 15 cm or 20 cm of snow, down from 70 cm in the past.

A Grain of Salt

Fake snow has drawbacks, though. Snow-making equipment often draws water from drinking supplies. And it consumes energy, further contributing to global warming. Artificial snow also melts as quickly as the real stuff when temperatures rise.

Not everyone buys the OECD's figures. The tourism office for Austria's Tyrol region, which includes the famed resort of Kitzbuehel, says that most ski areas in the region have as much snow cover this year as they did 50 years ago. Kitzbuehel had 30 cm. of natural snow on the ground by mid-December, says Georg Hechenberger, a board member of the company that runs Kitzbuehel. "Basically nothing has changed over the last decades," he says.

Schladming, another well-known Austrian resort, also reports good snow conditions and is preparing to host a World Cup ski competition this month. But Schladming relies heavily on artificial snowmaking, and the University of Vienna is working with local officials to assess the possible effects of rising temperatures on the region's ski industry.

Until the study is finished, "It would be the wrong decision to invest in spas or golf resorts" as an alternative to skiing, says Hermann Grüber, who heads the regional tourist agency. But if the study confirms the OECD projections, he says, "We will have to take measures."

It's still too soon to know whether Europeans will trade in their skis for golf clubs or hiking boots. But if the snow doesn't start falling soon, more and more ski resort operators will be thinking harder about ways to persuade them.

Source

1. What is the major issue facing ski resorts in the Alps?
2. How much does the Alpine tourist industry make annually?
3. Why would banks refuse to lend money to lower altitude ski resorts?
4. Why are some resorts promoting things such as ‘GPS Treks’ and building ice skating rinks?
5. Who are ‘Compagnie des Alpes’?
6. What actions has ‘Compagnie des Alpes’ taken to help their ski resorts?
7. What are the disadvantages of snow making equipment?