I. Executive Summary
The following report summarizes the effect of current macroeconomic situation in the United States on the ski resort industry in general, the findings of market research of the Sunday River Ski Resort, strategic recommendations for implementation the expansion plan, possible risk factors and a feasibility assessment of the strategic plan conducted by the International Consulting Group.
SWOT technique is used to analyze the company. Our team evaluates the strength, weaknesses, opportunities and potential threats to the Sunday River Resort. So, we caught the exact environment which faces Sunday-river in relative to other resorts and could established several ways to fit the Sunday-river’s goal, 1 million visitor to Sunday river.
Conducting market analysis, we also recognize the segmentation of the client base and identify the most profitable client segments. The highest attention is given to the middle week skiers with low – intermediate skill level from New Hampshire and Massachusetts. Because of higher income and larger population, these areas will give Sunday-river important opportunity to acquire one million skiing customers.
Focusing on the middle week skiers will result in immediate increase in revenue and will allow to postpone any significant investment into additional capacity.
The recommended action plan outlines the necessary steps and addresses “the four Ps” Product, Price, Place and Promotion. The recommendations are divided into short-term and long- term steps
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In short term step, we strongly recommend to use geographic location as competitive factor.
Within 3 hours, Massachusetts and New Hampshire residents can reach Sunday-river and enjoy their skiing. In order to draw and boost the number of skiers, we suggest to provide them with Night program, Children service, and free ski-keeping service. These services would give benefit to Sunday-river, acquiring skiers with a little investment. Since these services are required a little investment, they will help Sunday-river increase its customers with no difficult.
In long term step, we recommend Sunday-river to alliance with amusement companies and big hotel chains. Sunday-river provides these companies only with lending space and focus on expanding lodging construction and lifts for increased customers. These strategies would change Sunday-river to amusement resort company, and help get stable income for all season with least investment.
After all, the transition from small ski company to amusement company will make Sunday-river strengthen its firm competitive position in eastern areas.
Despite little natural snowfall, the 19911992 ski season was successful for Sunday River. Even though other ski resort lost money due to economic recession, Sunday River’s lodging was so overbooked that the resort had to turn potential customers. Thus Sunday River should consider the resort’s expansion. Our recommendation is mainly on how to grow and where to target-market for Sunday River. Based on our analysis, Sunday River should focus on mid-week skier and Massachusetts region. And we strongly recommend that Sunday River transform from ski resort company to total leisure service firm through strategic alliance with amusement park industries.
III. Situation Analysis
1. Macro economic situation
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The ski resort industry is dependent not only on weather condition but also on economic circumstances. During the 19901991 season, the U.S. ski resort industry lost money due to an economic slowdown.
¡¤At least half of the ski areas in the United States lost profit during the 19901991 season
¡¤The dominant reason for not skiing was financial burden (49%)
So if the economic recession continues, Sunday River has to consider this factor in setting goals.
2. Market Analysis
The ski resort business is influenced by income, personal wealth and pursuit of leisure activities. In the United States, the industry is estimated to include from 5 million to 14 million skiers. By focusing on leisure and fitness, the number of skiers has increased. However, because of huge operating costs and slim margins, the number of the ski resorts decreased to 600 in 1991 from 1000 in 1975. Industry studies showed a strong relationship between income and skiing frequency.
¡¤Less than $ 60,000: five days or less per year
¡¤More than $ 60,000: six days or more per year
The revenue of ski resorts mainly comes from lift ticket selling (more than 80% of total revenue).
The price of a lift ticket is similar across most major eastern ski areas. ($35- $40 for an adult, one day, weekend ticket) So price is not a very important factor. And the other sources of revenue are from restaurants, bars, lodging, ski schools and other off-snow events.
The ski resort industry competes with warm weather resorts or non-active leisure, such as staying home watching television.
3. Company Analysis (SWOT)
¡¤Good reputation: SKI magazine rated Sunday River as having best snow making, best lift service, and best snow quality of the eastern area.
¡¤Location: Due to Sunday River’s location, it has less severe wind than many of its competitors, contributing to better snow quality and better trail access.
¡¤Ski development program: Sunday River has developed a customary teaching approach, targeting new skiers and intermediate and advanced skiers, including children. After leaving the ski resort, the skiers keep in contact with Sunday River through follow-up phone calls and letters.
¡¤Refund policy: Sunday River offers a full refund to customers who don’t learn to ski through ski-learning program. This policy can increase the customer loyalty and brand image.
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¡¤Geographic condition: Compared with Killington, one of its major rivals in Vermont, Sunday River has lower elevation, shorter cold spells, and less natural precipitation. The State of Maine, its main local market, has relatively low income and relatively small population.
¡¤Long distance from a high-income state: The state of Connecticut and New York City have relatively high-income levels. People who are live in these areas drive more than 5 hours to reach at Sunday River.
¡¤Insufficient lodging facilities: Sunday River has only four lodges. Insufficient lodging service could limit market expansion.
¡¤Weekend overcrowding: Due to overcrowding, the quality of service is decreased and customer dissatisfaction is increased on weekends. (Long waiting for lift line, and insufficient restaurant seating and lodging rooms)
¡¤Growth pattern: Sunday River increased skier visits by 12%, even in the current economic slow down. The economic recession and slim margins caused lots of ski resorts to shut down. This fact can work to Sunday River¡¯s advantage.
¡¤Favorable atmosphere: Sunday River has gained a reputation for best snow quality, ski development program and service. Through exercising these factors, Sunday River increase its market share and can attract customers.
¡¤Strategic alliance: Sunday River has set up very complimentary relationships with local inn and hotels. Based on this liaison, Sunday River can develop its future market.
¡¤Consortium with amusement and recreation service industry: Through developing diverse off-snow program, Sunday River could diversify its revenue sources and gain customer enjoyment. (Theme park, amusement facility, hot spring, drive in theater)
¡¤Economic slowdown: the economic recession may result in loss of customers or a shorter ski period per customer.
¡¤Injuries and accidents: A serious ski injury would create a negative image for the industry, which may reduce the size of current skiing market.
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¡¤Environmental regulation: Government environmental regulations will limit further development of the resort and increase operating costs.
¡¤Poor weather conditions: Customers will seek other activities or other ski resorts.
4. Target Market
In order to attain one million ski visits, Sunday River should increase skiers by 20% over the next five years. (Exhibit1) Sunday River should focus on target customers such as:
 Light skiers: skied 1~5 times last year
 Intermediate skill skier
 Under 34 age group
 Maine, New Hampshire, Massachusetts and multi-state region
 Mid-week skier
¡¤Light skiers are customers who are more interested in skiing than any other customer segments such as moderate skiers and heavy skiers. And light skiers under 34 will continue to ski until their skiing skill reaches a certain level. Potential customers in this segment are highly likely to bring their families to the resort.
¡¤Based on the high quality of its snow, Sunday River can attract intermediate skill skiers who will become repeat customers.
¡¤Maine and New Hampshire customers-the local market- are able to access to this resort within two hours.
¡¤Massachusetts is the highest potential market within 3 hours of the resort. And Massachusetts is a large population and high-income state.
¡¤Focusing on mid-week skiers, Sunday River can solve the capacity limit problem.
5. Goal and Action plan
A short-term goal is to attract skiers to come to the resort in the mid-week to increase sales with minimum of additional expenses and investment. And in the long run Sunday River should cooperate with amusement and recreation service industries. Through this combination Sunday River can enter new market and can provide not only ski service but also total leisure services such as camping, hiking, swimming, bowling, and amusement parks. (See Appendix 2)
Product (Diverse service)
Short-Term¡¤Night program: Sunday River should organize night events for customers under 34, such as dance parties and movies. These services will attract customers who are staying more than a day.¡¤Childcare services: This service will attract family customers, who cannot ski because of their small children.¡¤Free ski-keeping service: By providing this service, customer will be enticed to return to Sunday River, preventing them from going to another ski resort. ¡¤¡°Free coupon for first-time skier¡± for next visit: Data shows that 54% of first-time skiers did not return. With a “free coupon” strategy, we could entice first-time skiers to visit one more time. If we succeed at making them learn and enjoy skiing, they will be constant skiers
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Long-Term¡¤Alliance with amusement and recreation service industries: To provide more diverse activities and generate more profit, we recommend forming a consortium with amusement and recreation service industries. This project can generate revenue during the off-season. (See Appendix 3)¡¤Lodging facilities and skiing trails expansion: Sunday River should develop new ski trails. Also, Sunday River needs to expand its lodging facilities to serve more customers.
Short-Term¡¤Newspaper advertisement: Most of people with income levels of $60,000 or higher read newspapers. Actively advertise “Perfect turn” program to skiers whose skill level is intermediate and stagnated.
Long-Term¡¤Advertising through leading ski magazine: Ski magazine readers are highly influenced by “word-of-mouth” advertising.
TV advertising: After developing into a total leisure resort, Sunday River should focus on TV advertising to highlight its all-season leisure park.
Short-Term¡¤Target areas – Maine, New Hampshire, Massachusetts: These areas are less than 3 hours from Sunday River.¡¤Free shuttle services: We recommend free shuttle service from hotels and airports. ¡¤Strategic alliance with local hotels and lodges: We suggest building strategic alliances. By providing discount programs for longer stays, Sunday River can attract customers to stay in the resort and receive some part of the profit from the hotel and lodges.
Long-Term¡¤Strategic alliance with travel agency to attract multi-state customers: Through an alliance with a travel agency, Sunday River can attract skiers from more distant states and can provide new travel packages such as a Canada travel package.
Discounted lift pricesDiscounted lift ticket prices are for longer stays, first-time skiers, and mid-week skiers.
Discount package pricefor customers who purchase lift tickets with lodging and ski instruction program, Sunday River can offer a discount.