In the coming years Eagle County’s ski-proximate neighborhoods are again poised for continuing success, as defined by lifestyle enhancement and financial performance. This should not be confused with the ups and downs associated with primary home residential real estate. Although one might argue that the two sectors appear similar, they are actually driven by completely different forces. In order to more clearly understand these distinctions, we offer the following commentary which focuses on the demand elements for world class resort property, which by their very definition are rare and limited in terms of global supply.
Population Demographics: 78 million baby boomers, representing one out of every four Americans, are increasingly demanding more travel, leisure, recreation, and vacation home ownership in their never-ending search for lifestyle enhancement and extended family centered activities. In a prior survey of 25,000 households with incomes in excess of $200,000, American Demographics magazine listed a vacation home as the number one desired asset for the nation’s most affluent households, and as wealth continues to concentrate, these top 10% families will drive demand for best-of-the-best resort living.
Socio Economic Profile: A study by the National Association of Realtors® of the most expensive resorts in the US concluded that due to ‘price elasticity characteristics’ appreciation of world class destination resorts had outpaced the national average rates by 2:1. Affluent enthusiasts will always seek out sophisticated, diverse communities such as Vail and Beaver Creek that can satisfy their recreational passions and quality-of-life criteria in a personally safe, affluent and safe harbor for capital environments.
The Vail Renaissance: The worldwide ski industry, which really began in the 1960s, has crossed the 60-year threshold, and like any of us in middle age, it suffers from tired infrastructures and deteriorating physical improvements. The best and most desirable locations often have the oldest and most obsolete structures which is out of sync with a discriminating clientele who value new, attractive, well-designed properties not typically found within our industry.
In terms of modernizing and redeveloping its base core villages, Vail is leading the way with more than $2.5 billion ($2,500,000,000) in market improvements which is unprecedented within the industry. In relation to the inventory these capital investments have significant value-added implications and represent a staggering amount of property creation and overall community improvements which are unlikely to be replicated by any other competitor within the industry.
Vail Resorts: The operator of Vail, Breckenridge, Beaver Creek, Keystone, Park City, The Canyons, and Heavenly Valley, Vail Resorts is the recognized industry leader in both mountain operations and resort real estate development. Given the mature and consolidating nature of the industry, Vail Resorts’ long-running corporate strategy of stripping market share through massive capital expenditures on resort products, goods, and services is a proven success formula that will continue in the years ahead.
It is important to recognize that the economic engine driving most ski towns is ultimately the mountain and the successes or failures of the ski company. Therefore, if the operator is vibrant, responsive and delivers a high-quality and reliable experience, demand increases and the community at large prospers. However, if the entity hurts demand (as evidenced by the American Ski Company laying off 1,100 employees at Steamboat Springs more a decade ago) towns suffer and property values fall. Because Vail Resorts is a financially strong and a forward-thinking company, we anticipate continued success in this competitive industry, with Vail Resorts’ dominating the worldwide destination ski and mountain lifestyle business.