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Aspen, Vail or Mammoth?
Q: Since the acquisition of the Mountain by Starwood the buzz has been that Mammoth is destined to be the next Aspen or Vail, but Aspen and Vail, despite both being first class and world-class ski resorts, seem very different in many ways. So which one is it going to be?
A: The euphoria and exuberance of such goals and comparisons is usually the by-product of newcomers to the community and newcomers to the Mammoth real estate scene. The whole comparison concept is ridiculous. It's kind of like wanting your kids to grow up to be Michael Jackson. Sure he's rich, popular, makes plenty of headlines, but…
The real answer is neither. But like I've said many times over in this column, the opportunity is here in Mammoth to create something even better. Let's hope Barry Sternlicht (Starwood) wants to capitalize on and fulfill the opportunity. He should because Starwood and their ilk have paid a great deal of money for the opportunity.
So what should Mammoth be focusing on? The ongoing General Plan process is great but the General Plan isn't worth a hill of beans when the real decisions are being made. Pressures from developers can be incredible on decision makers. In the late 90's this community was so anxious to "get things in the ground" and had been through so many bad times that it is likely some less than desirable decisions were made. Today is different, and hopefully the decision makers understand their position of (reasonable) strength. One of the balancing acts is that today's developers have paid an enormous amount of money for the land and the cost of construction is VERY high, so getting too much from them is unreasonable. But on the other hand these developers need to get on with development–time is money, and in real estate "time is of the essence." As Rusty use to say, "their finger is in the vise."
In any Plan we need to stay focused on existing strengths. In real estate we refer to curable and incurable defects. A bad location is an incurable defect. A poor floor plan or poor management can be a curable defect. A property with incurable defects is rarely a good investment. Shrewd investors look for undervalued properties with curable defects. That is what Starwood has done. Their incentive for purchasing Mammoth is to cure the defects.
But let's take a step back and look at Mammoth's inherent strengths. This is what is so important. These are things that would be incurable but don't need to be cured. First is a truly world class ski mountain with a typically long season. Those who ski and have spent any time skiing Mammoth really don't need to know much more. Second is a relatively mild climate, especially appealing to an aging ski population. The weather can get nasty here but compared to the bitter cold of the Rockies the usual ski day in Mammoth is heaven. And lately there has even been discussion that the effects of global warming may become a competitive advantage for Mammoth. (Has Starwood figured this out?)
Next is isolation. Mammoth doesn't have any ski areas just up the highway or around the corner to compete with. And you are certainly not going to see sprawling subdivisions outside of Mammoth's four square miles of privately owned land. One of my favorite sayings about Mammoth is "Small Town, Big Playground". Another strength, one I don't see changing, is the 10 million households within a half-days drive. Talk about demand. And we know how recreational oriented southern Californians are. And there is one last thing, quite intangible, but something that will be played nationally and internationally at some point. That is "California". Despite all the drawbacks, this state has a mystique and magnetism that is paralleled by only a few places on earth.
So to capitalize on this undervalued asset, what defects need to be cured, what weaknesses need to be worked on? There are plenty. But let's not forget where we came from because we have come a long way. (I remember the days when the common complaint was the entry to town–it was a shabby collection of mobile homes and the "Shell Mart Corner" with its trash-ridden dust bowl.)
The most current and glaring dysfunction is one of the laws of economics–the law of diminishing returns, or in our case the law of diminishing enjoyment. This "resort" is a work in progress, and every work in progress is always a little behind. Right now the quality of the skiing and the convenience of Mammoth (and MVP passes) is outweighing the negative effects. But sooner or later the negative effects will catch up unless they are turned around. They sure caught up to us in the 80's ("we shall never forget.") If people are going to pay for a quality experience they expect a quality experience, not just good skiing. And for those who are struggling with the General Plan, the quality of the experience will determine the PAOTs (persons at one time) more than any Plan. Visitors who don't have a quality experience are not likely to come back.
Traffic at peak periods will be a disaster until a true comprehensive transportation system (including the airport and lifts/gondolas) is in place and people are incentivized to use it. But it will happen–it must happen. Customer service in many sectors will be marginalized until enough government sponsored/workforce housing is brought on line. But we have two major projects near completion with more coming. Quality customer service also comes from good training. Successful resorts have community-wide effective programs. We started but didn't follow-through. We're very far behind. We can build the nicest facilities in the world but we need nice (and trained) people to operate them.
The Mountain is trying to alleviate the weekend crush by trying to drive more business to the mid-week and slower periods with discounted lift ticket and lodging prices (hence January Midweek Madness.) It is slowly working. I know for me the economic value versus the enjoyment value of having a full season ski pass versus a mid-week pass will come. Expect the prices of those passes to change over time (or maybe I'll just buy a snowmobile.)
Future developments need to have better overall quality. Today's customer can see through the junk. But even more importantly the developers need to have long-term participation in the project. That is what Intrawest sold to this community, and then they dished off the "front desk" management to an underperforming subsidiary of Mammoth Mountain and sold off the commercial (retail) management to one of their (sort-of) subsidiaries and now no one has any ownership or responsibility for all of the dysfunction. We can only hope that Starwood sees it as a curable defect and an economic opportunity and can come to our rescue. Help!
Once we get all of this in place, the old money will come, the celebrities will come, the endless fur coats will come, the Town will have lots of bed tax and everything will be beautiful–just like it is in Aspen and Vail. Meanwhile, we'll just have to be stuck with sunny blue-sky days, incredible wind blown fluff and California girls.
Paul Oster is Broker/ Owner of RE/MAX of Mammoth. An archive of his past Q&A columns can be found a www.remax-mammoth.com. You can send him your real estate related questions to P.O. Box 2618, M.L. 93546-2618 or email him at pauloster@earthlink.net. All questions will be researched and presented with the greatest care but accuracy is not guaranteed. For legal, accounting, construction, etc., advice, seek out the appropriate professional.
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