{"id":24394,"date":"2017-11-15T17:30:03","date_gmt":"2017-11-15T22:30:03","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/skistar-the-effect-of-climate-change-on-a-ski-resort-operator\/"},"modified":"2017-11-15T17:30:03","modified_gmt":"2017-11-15T22:30:03","slug":"skistar-the-impact-of-climate-change-on-ski-resorts","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/skistar-the-impact-of-climate-change-on-ski-resorts\/","title":{"rendered":"Skistar: the impact of climate change on ski resorts"},"content":{"rendered":"

The impact of climate change<\/strong><\/p>\n

For Skistar, an operator of ski resorts across northern Sweden (in S\u00e4len, \u00c5re and Vemdalen), Norway (in Hemsedal and Trysil) and Austria (in St Johann) [1], winter season is the busiest time of the year. The company, which ends its fiscal year in August, reported in 2017 that 54% of its annual Sales and 124% of its annual Net Income were generated during only three months: December, January and February (Skistar makes a loss during the remainder of the year) [2]. With 61% of Sales generated from ski passes, rental and school [3], Skistar is highly dependent on a steady supply of snow during the entire ski season to deliver its customer promise.<\/p>\n

Climate change poses a significant threat to Skistar: a warmer climate reduces the natural snowfall and causes snow to melt faster, leading to potentially fewer revenue-generating days for the company. For example, the number of days (per year) with snow cover in the S\u00f6dra Norrland region (where Skistar\u2019s flagship \u00c5re resort is located) has been steadily declining over time. Between the 1950s and the mid-1990s, the average days with snow cover was consistently ~160, but in recent years, this number has dropped to ~130 [4], thus narrowing the window during which Skistar is supplied with natural snow. Forecasts by the Swedish Meteorological and Hydrological Institute indicate that this number will continue to decline [5].<\/p>\n

With climate change, regional weather patterns during the winter season are also likely to become more unpredictable [6]. This poses a challenge to ski resorts, such as Skistar, which risks not only bare slopes, but also disappointed customers who are unable to change their holiday plans last minute.<\/p>\n

Responding to climate change<\/strong><\/p>\n

Skistar is adapting to climate change in several ways. In the short term, its main focus has been on supplementing natural snow supply with artificial. Continuous efforts have been made to develop the capacity of its network of snow cannons (machines that convert water into artificial snow). For example, during 2015\/2016, Skistar invested in new snow cannons at its \u00c5re resort, and upgraded the ones at its S\u00e4len resort [7].<\/p>\n

However, snow cannons require significant amounts of energy and water to function. To this end, Skistar recently sought permission from local authorities to pump higher volumes of water from rivers close to its ski resorts, in order to increase the capacity of the snow cannons. In \u00c5re, the company is aiming to increase its annual consumption from 2 million to 3.2 million cubic meters of water from the nearby \u00c5re river [8].<\/p>\n

To accommodate for the increasing unpredictability in regional weather patterns that customers face, Skistar also offers a \u201cSnow Guarantee\u201d, guaranteeing skiers a refund or re-booking if Skistar is unable to provide a satisfactory skiing experience [9].<\/p>\n

Over the medium term, Skistar is diversifying its operations to reduce the dependency on winter season in Scandinavia. In recent years, the company has upgraded its resorts and expanded their offering of summer attractions to attract visitors during off-season, for example launching adventure parks and mountain-biking trails [10]. Moreover, through the acquisition in 2016 of the St. Johann resort in Austria, Skistar has expanded its geographic presence beyond Scandinavia [11].<\/p>\n

Recommendations<\/strong><\/p>\n

In addition to the short-term actions outlined above, Skistar\u2019s management could consider alternative methods to ensure a steady supply of snow, especially since the broad use of snow cannons consumes significant amounts of water and energy, thus causing further environmental stress. Recent research has shown that large volumes of snow can be effectively stored between winter seasons by covering it with for example sawdust (of which there is plenty of supply in Northern Sweden given a sizeable forestry industry) [12].<\/p>\n

Over the medium term, Skistar should accelerate its efforts in expanding and upgrading the off-season products. Although the company has certainly begun this process, more should be done. For example, Skistar could consider other recreational activities such as running, hiking and golfing to attract additional visitors during the spring, summer and fall. Ensuring revenue streams that are diversified across all four seasons is key.<\/p>\n

Open questions<\/strong><\/p>\n