Resorts: Management and Operation

S N L MILL (Wiley) SECOND EDITION Resorts MANAGEMENT AND OPERATION Robert Christie Mill, Ph.D. School of Hotel, Rest...

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S N L

MILL (Wiley)

SECOND EDITION

Resorts MANAGEMENT AND OPERATION

Robert Christie Mill, Ph.D. School of Hotel, Restaurant, and Tourism Management Daniels College of Business University of Denver

John Wiley & Sons, Inc.

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SECOND EDITION


Robert Christie Mill, Ph.D. School of Hotel, Restaurant, and Tourism Management Daniels College of Business University of Denver

John Wiley & Sons, Inc.

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This book is printed on acid-free paper. 嘷 ⬁ Copyright 䉷 2008 by John Wiley & Sons, Inc. All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada Anniversary Logo Design: Richard Pacifico. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-7486011, fax 201-748-6008, or online at http: / / www.wiley.com / go / permissions. Limit of Liability / Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Mill, Robert Christie. Resorts : management and operation / Robert Christie Mill.—2nd ed. p. cm. ISBN: 978-0-471-74722-2 1. Resorts—Management. I. Title. TX911.3.M27M538 2008 647.94068—dc22 2006037901 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1

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CONTENTS FOREWORD PREFACE

xi Chapter 3 MOUNTAIN-BASED RESORTS: xv MANAGING THE OPERATION 57

Chapter 1 RESORTS: AN INTRODUCTION

1

INTRODUCTION TYPES OF RESORTS INDUSTRY TRENDS SUMMARY ENDNOTES

2 8 18 19 19

Chapter 2 MOUNTAIN-BASED RESORTS: THE IMPACT OF DEVELOPMENT ON OPERATIONS 21 INTRODUCTION THE DEVELOPMENT PROCESS DESIRABLE SITES GENERAL DESIGN GUIDELINES CAPACITY SKI RUNS SKI LIFT NETWORK BASE AREA OTHER WINTER SPORTS ACTIVITIES SUSTAINABLE DEVELOPMENT MOUNTAIN RESORT MATURATION CYCLE SUMMARY ENDNOTES

22 22 26 33 34 39 40 43 46 51 54 55 55

INTRODUCTION ECONOMICS DEMOGRAPHICS SKIOGRAPHICS TRIP CHARACTERISTICS SNOWBOARDERS SNOWTUBING EXPANDING TO MULTI-AGE VISITORS ECONOMIC FEASIBILITY ANALYZING FINANCIAL STATEMENTS OPERATING CHARACTERISTICS BALANCE SHEET INCOME STATEMENT CRITICAL RATIOS SUMMER IN THE MOUNTAINS SUMMARY ENDNOTES

58 60 64 67 72 75 77 79 79 82 83 84 86 88 95 95

Chapter 4 BEACH RESORTS AND MARINAS: THE IMPACT OF DEVELOPMENT ON OPERATIONS

96

INTRODUCTION THE DEVELOPMENT PROCESS MARINAS GENERAL DESIGN PRINCIPLES SUMMARY ENDNOTES

97 98 104 111 122 122

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Chapter 5 BEACH RESORTS AND MARINAS: MANAGING THE OPERATION INTRODUCTION BEACH RESORTS: PROFILE OF THE BEACH RESORT GUEST MANAGING THE RESOURCE DESTINATION RESORT MARINAS BOATERS MANAGING THE OPERATION BLUE FLAG SUMMARY ENDNOTES

Chapter 6 GOLF/TENNIS–BASED RESORTS: THE IMPACT OF DEVELOPMENT ON OPERATIONS INTRODUCTION GENERAL GUIDELINES PLANNING AND DEVELOPMENT GOLF COURSE TYPES DESIGN PRINCIPLES TENNIS SUMMARY ENDNOTES

124 125 125 128 134 135 135 139 144 144

PRO SHOP GOLF CART FLEET USE OF TECHNOLOGY RENOVATION PLAN SUMMARY ENDNOTES

Chapter 8 RESORT OPERATIONS: THE IMPORTANCE OF RECREATIONAL AMENITIES INTRODUCTION THE DEVELOPMENT PROCESS DEVELOPING AN AMENITY STRATEGY COMMUNITY MANAGEMENT STRUCTURES MANAGEMENT AND OPERATIONS SUMMARY ENDNOTES

200 202 208 211 211 211

215 216 216 219 223 226 231 231

145 146 147 148 155 163 174 179 179

Chapter 7 GOLF-BASED RESORTS: MANAGING THE OPERATION

182

INTRODUCTION GOLF RESORTS GOLFERS MARKET SEGMENTS OPERATING CHARACTERISTICS TOURNAMENTS AND EVENTS

183 183 183 186 190 194

Chapter 9 THE UNIQUENESS OF TIMESHARE RESORT OPERATIONS RESORT MANAGEMENT INTRODUCTION TIMESHARE GUESTS / OWNERS ACTIVITIES MARKETING MARKETING THE TIMESHARE PRODUCT OPERATIONS RESERVATIONS AND THE FRONT DESK HOUSEKEEPING MAINTENANCE AND ENGINEERING ACCOUNTING AND FINANCE FINANCING THE TIMESHARE SUMMARY ENDNOTES

233 234 234 235 240 240 241 244 247 250 253 256 256 258 258

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Chapter 10 RESORT OPERATIONS: THE IMPORTANCE OF GUEST ACTIVITIES INTRODUCTION GUESTS’ NEEDS DEFINING GOALS AND OBJECTIVES CLUSTER AND ACTIVITY ANALYSIS PROGRAM AREAS PROGRAM PLANNING PROGRAM EVALUATION SUMMARY ENDNOTES

260 261 263 266 267 273 273 281 283 283

Chapter 11 RESORT OPERATIONS: THE IMPORTANCE OF RETAIL

284

INTRODUCTION TOURIST SHOPPING RESORT RETAIL LAYOUT AND DESIGN MERCHANDISING GETTING YOUR MESSAGE NOTICED OPERATIONS CUSTOMER SEGMENTS PROFIT RATIOS SUMMARY ENDNOTES

285 285 290 291 293 296 299 300 303 305 305

Chapter 12 SPAS, POOLS, AND INDOOR WATERPARKS 307 INTRODUCTION DEVELOPMENT OF SPAS LAYOUT AND DESIGN TREATMENTS WATER THERAPY CLIENT PREPARATION ROOM SETUP: WET ROOMS

308 308 313 316 319 324 324

ROOM SETUP: DRY ROOMS COMBINATIONS MARKETING TRENDS SWIMMING POOLS WATERPARKS SUMMARY ENDNOTES RENNAISANCE CLUBSPORT: THE CONCEPT OF THE UPSCALE HOTEL / HEALTH CLUB UNIFICATION

Chapter 13 SPECIALTY RESORTS INTRODUCTION NATURE-BASED ENVIRONMENTAL ACTIVITIES ECOTOURISM ECOLODGES ADVENTURE ADVENTURE TRAVEL IN AMERICA SUMMARY ENDNOTES

Chapter 14 CRUISE SHIPS: FLOATING RESORTS INTRODUCTION MARKETING THE CRUISE PRODUCT STAFFING THE CRUISE SHIP MANAGING THE HOTEL DEPARTMENT MANAGING FOOD AND BEVERAGE MANAGING FACILITIES HEALTH, SAFETY, AND SECURITY MANAGING THE OPERATION CRUISE DESTINATIONS SUMMARY ENDNOTES

ix

326 326 326 327 328 330 334 334

335

343 344 344 347 347 350 352 364 364

367 368 372 384 387 391 393 396 400 403 411 412

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Chapter 15 CASINOS INTRODUCTION THE GAMING MARKET U.S. GAMING MARKET FROM CASINOS TO RESORTS MARKET CASINO MANAGEMENT ORGANIZATIONAL STRUCTURE STAFFING CONTROL

413 414 415 415 417 421 428 428 430 430

CASINO CAGE, CREDIT, AND COLLECTIONS SLOT MANAGEMENT TABLE GAME OPERATIONS CASINO ACCOUNTING PLAYER RATING SYSTEMS TABLE GAME HOLD AS A MANAGEMENT TOOL CASINO MARKETING SUMMARY ENDNOTES

INDEX

432 434 439 441 443 448 450 459 459

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FOREWORD I wrote the foreword to the First Edition of Bob Mill’s definitive book, Resorts: Management and Operation, almost seven years ago. Reflecting on my own lifetime of experience in the lodging and resort industries, I remember thinking at the time that a tutorial on managing and operating a resort doesn’t get any better than this. Well . . . I was wrong. With his Second Edition, Bob has enhanced an already seminal look at this unique industry. He deserves high marks for assuring that this text remains not only relevant, but cutting-edge. Resort management is a business that changes every day . . . literally. In fact, the industry is changing faster now than ever before. The elements that catalyze this change are the exact elements Bob expands on in his Second Edition. With my new position as President and CEO of Hershey Entertainment and Resorts—a company that provides family entertainment in a clean, ‘‘green,’’ familyfun format—I’m even more aware of the importance of the family to the resort business. It’s not just about mom and dad going to golf school at a resort . . . it’s about the whole family doing it together. It’s not just about mom and dad enjoying a 5-Star or 4-Diamond resort experience . . . it’s about the whole family creating memories together that will last a lifetime. Bob’s second edition includes an enhanced focus on the role of these entertainments in creating the type of reality that customers want to perceive while they are on holiday. This intense focus on the resort industry is important because, as I wrote in 2000, perhaps no word in the English language evokes the immediate and electric response of the word ‘‘resort.’’ For an over-worked, under-rested, and mega-stressed populace, a week at a resort is often seen as THE ANSWER. It is salvation. It is the key to everything that ails, exhausts, and maddens us. The mantra of our time seems to be, ‘‘I don’t have any problem that two weeks of sun and fun won’t solve!’’ This visceral response to the word resort is the product of personal experience, lavish color photographs that leap from the pages of travel magazines, and the gloating post-vacation reports from coworkers who return from ‘‘ten days in heaven.’’ Each of these sales, marketing, and public relations hits gives us a glimpse of the public face of the resort experience. And they make us yearn to be a part of it. As current and future resort industry professionals, however, we can’t be satisfied with the public facade. We have to dig deeper. To be successful, we have to be a little like Toto who pulled back the curtain and unmasked the secret of The Wizard of Oz. We, too, need to look behind the scenes to get a clear understanding of what makes a resort . . . well, a resort. We must study the sometimes

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overwhelming details, facts, figures, data, particulars, minutia, fine points, and yes, even the sweat, that produces the awesome resort experiences that the world so eagerly anticipates. It is no secret that until the First Edition of this book was published, the detailed study of the resort was not possible. There was no clear, comprehensive guide to understanding the myriad components of the modern resort. With the advent of Resorts: Management and Operation, this hole in the hotel, restaurant, and tourism management curriculum closed. Seven years ago I said, ‘‘Thank you, Bob! You have performed a great service for the entire resort management industry.’’ Now that we have a second, updated edition, I can say again . . . Thank you, Bob! After spending 13 years as general manager of commercial hotels and 24 years in resort management, I believe that hotel management and resort management are two entirely different industries. Ensuring that hotel operations run like clockwork, in a clean, carefree, and visually stunning environment, is just the beginning of resort responsibilities. As Bob’s illuminating text clearly details, the modern resort is also responsible for meeting the various and unique needs of the widest variety of vacationing guest: golfers, boaters, skiers, snowboarders, adventure travelers, climbers, gamblers, backpackers, and cruise aficionados, at the least. Golf, in particular, is an absolute must for many resorts and, potentially, creates two seasons for the winter resort. Multiple sales and marketing programs must be developed that appeal to each of these market segments; retail shops must be built to provide merchandise specific to each group; guest activity programming must be developed to appeal to each sex separately, together, and with one eye keenly focused on age and cultural differences. And don’t forget children. Children must have their own planned activities each and every day. What about spas? In my experience, a true resort offers a complete spa—not just a hot tub, tread mills, and a weight rack. A spa offers a wide variety of treatments in gracious surroundings, including exfoliation, spot and full body treatments, water therapy, massage, aromatherapy, wet rooms, dry rooms, and combinations. The list of resort ‘‘musts’’ goes on and on and on. Clearly, a comprehensive book covering the facilities, operations, and activities of the resort is long overdue. Thankfully, Resorts: Management and Operation addresses each of these subjects in detail. If you are a developer considering the construction or purchase of a resort, this text gives you a roadmap for much of what your new facility will have to encompass. If you currently manage a resort, this book is a confirmation of the thousand-and-one things you should be doing to ensure the growth and competitive position of your property. And, if you are in college—with your entire life ahead of you—this text is an excellent window into the nuts-and-bolts, workaday world you may soon join. In his Second Edition, Bob keeps the three sections that comprised his earlier edition: 1) Recreational Facilities, 2) Lodging / Food and Beverage, and 3) Guest Activities. However, the earlier chapters on marketing, operations, guest activity programming, design, and dealing with the future, are no longer separate chapters, but have been incorporated throughout other chapters so that readers can more easily see how each of these activities impact other topics.

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Other elements from the First Edition are now given greater prominence. A consistent theme is the impact of the three elements on resort operations. There is now a separate chapter on recreational amenities, guest activities, the uniqueness of resorts, and the importance of retail shopping opportunities. The chapter on spas has been expanded to include pools and indoor waterparks. Three types of resorts (mountain-based, beach, and golf / tennis) are each given two chapters. And there is a greatly expanded emphasis on sustainability issues in the chapters dealing with management—especially as it concerns mountain and beach resorts. The Second Edition also features new chapters on cruise ships, specialty resorts, and, in particular, casinos. With the advent of ‘‘racinos’’—racetracks that have been granted the opportunity to add slot machines; Native American casinos; and the continued expansion of casino gambling at resort destinations, this chapter is a welcome addition to the resort education milieu. Regardless of who you are, you are either in or entering one of the great professions of the world. Resort management is often exhilarating. It is often rewarding. It is always a lot of hard work. But, frankly (don’t tell my board of directors), even the hard work is a heck of a lot of fun! In no other service industry can a group of like-minded individuals have such a profound impact on the physical and emotional well-being of their customers. We are guides through a world of fantasy. A world that soothes rattled nerves, calms pounding hearts, and envelops weary bodies in a delicious cocoon of heightened senses. The challenge for our industry is to consistently deliver these unique experiences at a level that is beyond guest expectations. Our reward is . . . well, our reward is obvious. It is in the warm greeting from generations of the same family who return to our resorts year after year. It is in the look of absolute contentment as a guest settles in to a good book while surrounded by gardens of magnolias, begonias, and orchids . . . or a crystal blue ocean. Or both. And it is in the wideeyed excitement of a guest who regales an audience about a hole-in-one on #5 at The Hershey Country Club where Ben Hogan scored 6 aces. The Second Edition of Bob Mill’s, Resorts: Management and Operation is the first step in transforming each of these fantasies into breathtaking reality. Ted J. Kleisner President and CEO Hershey Entertainment & Resorts, Inc. Hershey, Pennsylvania February 2007

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PREFACE PURPOSE Resorts: Management and Operation, Second Edition, is the summary of over 25 years of thought, analysis, and research into the field of resort management. As I moved from teaching in a business-based hotel school into a Department of Park and Recreation Resources (both at Michigan State University), I developed a conviction that an academic program in Resort Management should be a blend of information from these two academic areas. Resorts are, in fact, a combination of three elements: Recreational attractions that draw guests to the facility Housing and food and beverage services that cater to people away from home Activities to occupy guests during their stay The traditional hotel school deals very effectively with the second element. Departments of Park and Recreation Resources have traditionally dealt with the topics of recreational facilities and guest activity programming, typically within the context of public rather than private recreation.

WHAT’S NEW IN THIS EDITION Resorts: Management and Operation, Second Edition, is written from a business viewpoint yet takes into account the unique structure of resorts. Resort managers in ski areas, for example, should know something about the mountain upon which their resort depends. They should know the process by which a virgin mountain is transformed into a viable ski area. They need to be aware of how the capacity of the mountain is determined. They are not, and this book will not turn them into, developers and planners. They do, however, need to know enough about planning and development to communicate effectively with these specialists. After an introductory chapter the text is divided into three sections. Each section has a philosophical basis for the inclusion of the subsequent principles and practices. The first section covers major types of resorts: those that are

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mountain-based, beach-based and golf / tennis based. Two chapters are devoted to each of the various resort types. The first set of chapters focus on development issues with the impact on operations noted throughout. Attention is given to the relationship between the natural resource base and the recreational facilities that are developed from that base. The belief is that it is both environmentally-conscious and business-smart to develop facilities in such a way that the integrity of the natural base is maintained. This is, after all, the major reason guests visit. Management is doing nothing more than protecting its competitive differential advantage. The second chapter in each of the three categories deals with guest profiles and management issues. There is an emphasis on sustainability issues in the chapters dealing with management—especially mountain (Chapter 3) and beach (Chapter 4). Chapter 3 has an extensive section on summer activities in the mountains. The second section highlights what makes managing a resort different from managing a ‘‘regular’’ hotel. There are separate chapters on resort operations, recreational amenities, guest activities and retail. The final section features an expanded chapter on spas, pools and indoor waterparks and new chapters on specialty resorts (Chapter 13), cruise ships (Chapter 14) and casinos (Chapter 15), reflecting the importance of these types of properties. The sidebars are an important feature throughout the book. Titled Quick Getaways, they bring the text to life with practical examples of the principles espoused in the book. Provocative questions are intended to interest readers into inserting their own points of view into the book.

INSTRUCTOR RESOURCES An Instructor’s Manual (ISBN: 978-0-470-13504-4) is available for instructors teaching this course. It contains the learning objectives for each chapter along with the corresponding major lecture points. An electronic version of the Instructor’s Manual, along with Power Point Presentations can be found on the book’s website at www.wiley.com / college.

ACKNOWLEDGMENTS I am grateful to the faculty of the Department of Park and Recreation Resources at Michigan State University for exposing me to the specialized knowledge that goes into managing resorts that depend on the natural resource base for their success. In addition they provided the foundation of the material on guest activity programming.

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The administration at the University of Denver’s Daniels College of Business in general and the School of Hotel, Restaurant and Tourism Management in particular have always been supportive of my research and writing activities. Thanks to Wiley and, in particular Melissa Oliver and Julie Kerr, who saw potential in this effort and provided guidance and encouragement throughout the entire process. This Second Edition is all the better for the detailed, helpful and insightful reviews. The following people generously took the time during the writing of this and the previous edition to provide thoughtful comments and suggestions, the vast majority of which are incorporated into the book to make it an improved text. They are: Shane C. Blum, Texas Tech University Percival Darby, Florida International University Donald Getz, University of Calgary Andrew Holdnak, University of West Florida Thomas Jones, University of Nevada—Las Vegas Felicia Lui, Vancouver Premier College Melih Madanoglu, Florida Gulf Coast University Brenda Montgomery, Arkansas Tech University Emily Burger completed most of the research for the Quick Getaways. Laura Johnson, a graduate student in English at the University of Denver, has worked with me for years. Her contributions to these projects grow with each book. In this book she is responsible for some of the research and all of the writing for the Quick Getaways. Working from my outline she completed the chapters on Mountain-Based Resorts: Managing the Operation, Cruise Ships: Floating Resorts, Golf / Tennis-Based Resorts: Managing the Operation and Casinos. I am truly thankful that this talented writer has been around to collaborate with me. Rachel Weinhouse completed most of the work for the Instructor’s Manual. I, of course, take full responsibility for any errors throughout.

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Chapter 1 RESORTS: AN INTRODUCTION INTRODUCTION Roman Empire

Setting and Primary Amenities

Europe

Residential and Lodging Properties

North America

Mixed-Use Developments

Lessons TYPES OF RESORTS Proximity to Primary Market

INDUSTRY TRENDS SUMMARY ENDNOTES

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RESORTS: AN INTRODUCTION

INTRODUCTION To understand where the resort industry is today, it is important to consider how resorts have evolved through the ages. A historical perspective leads to a picture of the modern types of resorts. HISTORY OF RESORTS1 The sole purpose of a resort, in the classic sense, is to afford its users a place for escape or restoration from the world of work and daily care. —CHUCK Y. GEE Resort Development and Management

Roman Empire Prior to the eighteenth century, pleasure travel was not available for the masses. Lack of time and money combined with poor transportation and a general lack of facilities to make travel something that one had to do rather than wanted to do. However, the roots of the resort concept can be traced to the Romans. Extending from the public baths, resorts were initially built in and around Rome before being developed for the pleasure of Roman legionnaires and consuls throughout the empire—from the coast of North Africa to Greece and Turkey, from southern Germany to St. Moritz in Switzerland, and on through England. In fact, Bath in England still has relics dating to A.D. 54, when it was known as Aquae Sulis (Waters of the Sun). The first baths, introduced in the second century B.C., were small and modestly furnished. Men were separated from women. Later, the baths became integrated, larger, and more ornate. They served both health and social purposes. The public bath allowed for relaxation, while the sale of food and drink on the premises encouraged social interaction. A typical structure consisted of an atrium surrounded by recreational and sporting amenities, restaurants, rooms, and shops. Outside the major centers of population, baths were located by mineral springs, which were known for their restorative powers. The Greeks had earlier associated mineral springs with the gods and had built holy wells and altars on the sites. Roman legions appropriated these sites for the construction of baths. The Roman Empire began to decline at the beginning of the fifth century A.D. Social life at the English resorts languished until the seventeenth century, when it was refueled by improvements in roads and the introduction of the stagecoach.

Europe In A.D. 1326, Colin le Loup, a Belgian ironmaster, was cured of a long-term illness by the iron-rich waters of a spring near Lie`ge. As thanks, he developed a shelter there to welcome others. The popularity of the area grew so much it was renamed Spa, meaning fountain.

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A Roman bath in Bath, England. Courtesy Peter Adams / Digital Vision

Back in England, King Charles II restored the monarchy in 1660 after years of Puritan rule. He spent time at the popular resorts of the day—Bath, Tunbridge Wells, and Harrogate. Thus began a long history of attractions being popularized by the rich and famous, a tradition that continues today. In other parts of the world, royalty continues to be the trendsetters, while in North America, stars of the popular culture determine the ‘‘in’’ places. There is an old saying in tourism that mass follows class. Destinations are initially made popular by a small band of influential people. This puts the place on the map. Seeking to emulate this group, others are attracted to the location. A second factor leading to the popularity of the spas was the endorsement of the medical profession. The waters of Tunbridge Wells, for example, were promoted as an aphrodisiac. Likewise, bathing in and even drinking salt water was regarded as a cure for numerous diseases and helped promote seaside resorts. Popular activities at the baths included gambling, dancing, and other forms of entertainment, including concerts, grand parades, and the pump room, where health-seekers ‘‘took the waters.’’ The rise in popularity of the spas created a demand on the part of the affluent for more private facilities. This led directly to the development of the Swiss resort industry. Before railroads were built, guests traveled long distances over poor roads

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to arrive at their destination. Having spent so much time and effort in reaching the spa, they wanted to spend a long time—up to two months—to get their money’s worth. This led to the development of facilities more extensive than those offered by a modest inn. In Zurich, the most famous resort was the Hotel Baur au Lac, opened by Johannes Baur in 1844. After several expansions, the hotel was completely rebuilt with an innovative design that still is used today. While all other hotels faced the town, Baur built the new resort facing Lake Lucerne. He became the first developer to recognize the benefit of a scenic view. In the early 1800s, Switzerland was known as a summer resort. However, in 1860, several English visitors were convinced to stay on for the winter. Skating was already a favorite activity. In Switzerland, the guests were introduced to skiing and tobogganing. While the initial attraction was the promise of health cures, the popularity of the resorts was due more to the social activities organized by management. One example was the Bains de Monaco, renamed Le Mont Charles (Monte Carlo) in 1863. Operating in the winter months when traditional summer resorts were closed, it offered guests year-round gambling. While the health spa was the overt attraction, the real source of the resort’s success was the gambling.

North America The earliest resorts in the United States were developed in the East and, as in Europe, were established around spas. Resort hotels were opened in Virginia, New York, and West Virginia in the eighteenth century. At approximately the same time, the seaside resort became popular. Examples include Long Branch, New Jersey, and Newport, Rhode Island. The latter was a commercial port where molasses was distilled into rum, which was then traded for slaves from Africa. When the slave trade was abolished at the end of the eighteenth century, the town turned to tourism for its economic future. Wealthy southerners ventured north to escape the heat and malaria of South Carolina in the summer. Amenities

Early hotels were rather barren in terms of amenities. The forerunner of many upgraded facilities to be later found in resort hotels was not a resort hotel itself. The Tremont Hotel in Boston, built in 1829, is credited with introducing a number of innovations in service, including: elegant marble carved walnut furniture in private rooms a pitcher and bowl and free cake of soap in each guestroom gaslight instead of candles French cuisine and silver table service that included forks bellboys to handle guest luggage an ‘‘annunciator’’—the forerunner of the room telephone

Civil War

The American Civil War changed the nature of many Eastern resorts. Saratoga Springs, New York, had long catered to southern gentlemen who brought their horses (and their slaves) with them to race while they took the waters. As the

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popularity of the springs declined, the resort focused on its social activities. A new racetrack was built, but ultimately it could not compete with the higher purses at Newport and Monmouth Park in Long Branch, New Jersey. The resort turned to gambling and drew some interesting and some notorious characters until the early twentieth century, when reformists took their toll. White Sulphur Springs, West Virginia, changed too after the war. A shortage of eligible men and a surplus of eligible women led the resort to position itself as a place to find a worthy husband. The addition of a railroad line through the town in 1868 gave it a leg up on the competition. Not until 1891 a spur was extended into Hot Springs, enabling The Homestead to compete successfully with the Greenbrier of White Sulphur Springs, as it does to this day. Resort Cities

America’s first resort city was Atlantic City. Developed in the late 1800s, it attracted the middle as well as the upper classes. It built the first boardwalk to accommodate those seeking the health benefits of sunshine and fresh air, the first amusement pier that extended over the Atlantic, and the Observation Roundabout—later

The Greenbrier in White Sulphur Springs, West Virginia, is a traditional resort. Courtesy The Greenbrier

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renamed the Ferris wheel. The railroad brought day trippers; other guests stayed for the season in boardinghouses and resort hotels. Today, buses bring day gamblers from New York City and other metropolitan areas. The Twentieth Century

The typical resort hotel in North America at the beginning of the twentieth century was a summer operation. Improvements in transportation changed the structure of resorts. The railroads were instrumental in opening up areas of the country that were previously inaccessible. Both railroads and resorts targeted the relatively few, very wealthy individuals who, before the enactment of a federal income tax law, had a great deal of disposable income. Winter resorts did not become popular until the development of the automobile, which provided access to areas of the country suitable for winter vacations. California, in contrast, was the first area to develop as a warm winter resort, appealing to those looking to escape the winter cold. Florida, as a warm winter resort, was developed later and more slowly. There, Henry Flagler saw the importance of transportation in opening up new destinations and was instrumental in laying railroad tracks to the south of the state. By 1920, Florida had surpassed California in popularity as a winter retreat for North Americans. The economy had barely climbed back from the stock market crash of 1929 when the Second World War erupted. Resort development was put on hold. The end of rationing after the war precipitated a period of economic prosperity. Leisure travel was available to a much broader segment of the population. The development of the interstate highway system in the 1950s gave the average American great mobility. The development of Disneyland in California in 1955 was followed by numerous other theme parks in the 1960s and 1970s. Disney World opened in 1971 in Florida and has set the standard for destination family resorts. In the mid-1950s, the development of jet travel opened up, for North Americans, areas of Europe and the Pacific that were previously inaccessible. Air travel was still costly, however, and relatively few could afford it. The early 1960s saw the development of the four-season resort. Realizing the risk involved in relying for business on one season of the year, hotels sought to develop year-round attractions. The Homestead added skiing in 1959, while resorts in Colorado extended their season by developing golf and tennis packages and summer music festivals. Others went after group business by constructing convention centers. It can be argued that the shift to conference business is the most significant economic trend in resorts in the past 20 years. In fact, for most large resorts, between 45 and 70 percent of occupancy come from group business.2 Resorts are attractive to corporate meeting planners because the resort is selfcontained. Attendees do not have to leave the premises and can enjoy various recreational activities as a break from meetings. Planned resort communities—large scale communities with a variety of accommodation options, recreational facilities, and infrastructure—like Sea Pines Plantation on Hilton Head Island in South Carolina and Costa Esmeralda on the island of Sardinia in the Mediterranean have also emerged in recent years. The past decade has seen a new type of resort entering the marketplace— mega-resorts or family resorts. These properties are not necessarily the largest of

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resorts. Rather they are properties that have upscale amenities on-site such as a spa, fitness center, shopping, recreational activities, and a fun nightlife. Examples include the Hyatt Regency Waikaloa in Hawaii and the Disney and Hyatt Grand Cypress hotels in Orlando, Florida. Because of the high cost of amenities provided and the often fantasy themes that are part of the resort experience, the properties require high room rates and occupancies to be financially viable. In contrast to the large resort hotel is the small boutique resort hotel. Targeting the high-end market and emphasizing service, quality, and privacy, these properties—such as the Ventana Inn in Big Sur, California—have a strong focus on lodging and related amenities and offer limited shopping and residential development. In Eastern Europe, Japan, and some parts of Western Europe, social tourism contributed to resort development. Social tourism involves offering employees vacations that are wholly or partially subsidized. While government and unions subsidize much of the social tourism in Eastern Europe, the equivalent in Japan is the corporate resort that is owned and operated by a major company to provide va-

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Resolving Resort Parking Problems Resorts have legendary traffic and parking problems. Managing vehicle traffic can be a very tricky business, because although the resorts often rely on motor vehicles to bring visitors and supplies, too much traffic can destroy the elements that made the resort so attractive in the first place. Fortunately, there are a few steps that can be taken to prevent a resort from becoming a vehicular disaster: Implementing total or partial prohibitions on driving in certain areas. Visitors will easily understand, especially if it is made clear that too much traffic threatens their enjoyment of the resort. Creating restrictions on times when certain types of vehicles may use certain roadways. Limiting certain lanes or roads to high occupancy vehicles to ensure that buses and other group transport vehicles don’t get caught in bad traffic.

Limiting the number of vehicles allowed in the resort area (either by metering vehicles or by letting congestion become selflimiting). Using road pricing. A charge may be levied for driving on certain roads or into an area, which discourages automobile travel. Implementing traffic calming strategies, which limit traffic speeds and volumes, particularly around pedestrian areas. Source: Litman, Todd. ‘‘First Resort: Resort Community Transportation Demand Management.’’ Victoria Transport Policy Institute, November 1999. http: / / www. vtpi.org / resort.pdf

DISCUSSION QUESTION: Do you think that resort visitors would accept a severely restricted traffic management strategy better if they were told that it was designed with their interests in mind? Do you think it’s necessary for the resort managers to explain themselves to the visitors?

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cations for white-collar workers. A common alternative in Western Europe is the holiday fund. Equal contributions are made by the employee, the company, and the government to provide funds that employees use for vacation travel.

Lessons Four things can be learned from a brief review of the history of resorts: 1. The history of transportation has, to a large extent, determined where, when, and what types of resorts have evolved. 2. The desire for pleasure travel is deep-rooted. 3. Resorts began as seasonal operations. To minimize the risk of relying on one season of the year, resorts developed year-round attractions and appealed to the group market. 4. Resorts develop through life cycles. To be successful, resorts have had to adapt to changes in transportation, consumer tastes, demographics, and competition.

TYPES OF RESORTS Resort communities work best when they are not 100 percent resort but have a mix of full- and part-time residents. Full-time residents provide customers for the doctors, the lawyers, and the restaurants year round. [This] enables the community to provide a myriad of services that would not be possible with just seasonal residents. —CHARLES E. FRASER Founder and Chair, Sea Pines Company

Resorts can be characterized in terms of: proximity to primary market setting and primary amenities mix of residential and lodging properties (2)

Proximity to Primary Market Resorts are either destination resorts or nondestination resorts. The difference depends on how far the resort is from its primary market; how visitors reach the resort; and the patterns of stay—how many times a guest visits, how long the stay is, and the quality of the setting. Destination resorts tend to be at least several hundred miles from the market. Visitors tend to fly rather than drive there and visit once a year for one to two weeks. Further, the resorts are located at places attractive enough to entice people to travel large distances to get there.

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Nondestination resorts tend to be within a two- to three-hour drive of the primary market. Guests arrive by car, visit more frequently, and stay three to four days each time. As a result, destination resorts have a higher ratio of hotel rooms to second homes than do regional resorts. Within these generalities, it should be mentioned that a resort may fit into both categories. Colorado resorts, for example, draw visitors from Denver several times over the season while also attracting people from Europe for a once-a-season experience.

Setting and Primary Amenities Visitors categorize resorts by their location and amenities. Defined thus, resorts can be either ocean resorts, lake / river resorts, mountain / ski resorts, or golf resorts.3 Ocean resorts depend on the quality and extent of their beaches, views, climate, and water sports activities. Lake / river resorts obviously rely on water but rely even more on the recreational activities that are water-oriented than do ocean resorts. They are more likely to be located several hours by auto from the resident’s home and marketed as second-home communities. Mountain / ski resorts have, in recent years, moved away from their traditional reliance on the winter season to become four-season resorts. Capitalizing on their spa heritage, many are using health as their theme. Mountain resorts in the West tend to be destination resorts, while those in the Midwest and Northeast, because of their proximity to large population bases, tend to be regional in scope. The increased popularity of golf has helped spawn an increase in the number of resort properties themed around this activity. Growth is also a function of supply. As the number of waterfront locations expanded, fewer sites associated with water were available. As a result, golf course resort developments have sprung up in Florida, North Carolina, and southern California. They are also popular in desert settings, which, lacking water, rely on scenery, climate, and golf to attract visitors. Other resorts rely on specialized amenities, including tennis, equestrian facilities, ranches, health, natural attractions, sporting expeditions, and entertainment.

Residential and Lodging Properties Real estate people like to categorize resorts based on the type and mix of residential lodging facilities. There are four specific parts to what is being called the hybrid lodging or alternative lodging sector:4 traditional lodging timeshare or vacation ownership condominium hotels destination clubs Traditional Lodging

The resort hotel is the most common form of resort development. It requires a relatively modest financial investment. The guest at a traditional hotel selects the property on the basis of convenience. For the business traveler, convenience might mean the hotel is close to the highway or to the businesses to be visited. For the leisure traveler, convenience translates into proximity to the beach or other tourist

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attractions. The resort hotel guest, on the other hand, visits the development simply for relaxation. A growing number of resort hotels, however, are seeking to attract the businessperson, usually as part of a conference or meeting. The company holding a business meeting in a self-contained resort setting keeps the outside distractions of a city to a minimum while utilizing the recuperative effects of recreation to improve business productivity. Resort hotels differ from their commercial counterparts in other ways. They are located in areas that take advantage of attractive natural features, and they offer more amenities, either on-site or with easy access to off-site facilities. They can range from as few as five rooms to as many as 1,500 or more. Facilities under 25 rooms are independently owned and managed guesthouses, bed-and-breakfasts, inns, cabins, or motel-type properties. They tend to be located in rural areas and cater to short-stay guests. Facilities in the 25- to 125-room range can include properties from the above group as well as small specialty resorts. Many are called lodges and cater to hikers, hunters, and skiers. Part of this category is the growing number of boutique resort hotels that cater to a small, upscale segment of the market. These are often located in beautiful and delicate settings that are not appropriate for larger-scale development.

Fine dining is just one attraction of many traditional resorts. Courtesy The Greenbrier

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Resort hotels ranging in size from 125 to 400 rooms tend to be affiliated with a chain and located in major resort areas. They can be either low-rise or high-rise, though they are usually more horizontal than vertical in design. They have large balconies and larger rooms than comparable commercial hotels, and offer more amenities as well. Hotels with more than 400 rooms are located in prime resort locations offering major attractions such as beach frontage (Florida, the Caribbean, and Hawaii), ski facilities (Colorado, Utah), large theme parks (Orlando), gaming (Las Vegas), and golf (Arizona, Palm Springs). Timeshare and Vacation Ownership Resorts

Timesharing began in France in the late 1960s and was first seen in the United States in the 1970s.5 Over 4,300 timeshare resorts owned by almost 10 million households are located in more than 80 countries. The U.S. and Europe account for a combined 40 percent of the total.6 The term vacation ownership is also used to mean timeshare. Timesharing is defined as ‘‘the right to accommodations at a vacation development for a specified period each year, for a specified number of years or for perpetuity.’’7 Each condominium or unit is divided into intervals by the week or as points and sold separately. Owners pay a lump sum up front (a fraction of the total ownership costs), either in full or financed over a seven- to ten-year period, in addition to an annual maintenance, management, and operations fee. Units are priced differently based on unit size, resort amenities, location, and season of the year. The purchaser owns the accommodation for the amount of time it is used. This is usually one or two weeks out of the year. Fractionals allow the purchaser to buy longer intervals—usually 4 to 12 weeks a year. They can cost as much as $600,000. Five types are available:8 The luxury product, in the $20,000 per interval range, is found in tourist destinations and is often a penthouse with 1,500 square feet. The up-market, priced between $15,000 and $25,000 per week, is also found at destination resorts and offers anywhere from 1,100 (one bedroom) to 1,800 (two bedroom) square feet. The quality unit goes for $9,000 to $17,000 and offers 800 square feet for a one bedroom unit. Value units are found at regional resorts and are priced from $7,000 to $10,000 for 800 to 1,000 square feet. Economy units, also found in regional markets, offer 600 square feet (studio) to 900 square feet (one bedroom) for $5,000 to $8,000. Annual fees cover the cost of management and maintenance of the resort. Timeshare owners can exchange weeks through membership in exchange companies like Interval International and Resort Condominium International. Entry into the field by such companies as Marriott, Hyatt, Hilton, Thomas Cook, and Disney has helped improve the image of the industry while blurring the distinction between timeshare and hotel. Expansion by these established companies also has an effect on the popularity of the concept. Forty percent of those

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interested in purchasing a timeshare prefer a branded product, while 21 percent rate it as very or extremely unimportant in their decision making.9 Timeshare Options. Several timeshare options are possible.10 The fixed week option allows consumers to buy a specific week—for example, the first week in August. Under the floating week option, consumers buy a week within a given period. For example, consumers may buy one week within weeks 6 through 12. A combination option allows weeks in high-demand periods to be fixed and those in low-demand periods to float. School holidays, for example, might be fixed at a specific week, while, for the rest of the year, people buy the right to use the resort for a nonspecific week during the off-season. Four Season Resort Club operates by selling a fee-simple deed for both floating and fixed weeks. Recently, resorts have introduced points-based memberships, which give members points that can be used to ‘‘buy’’ resort stays. Marriott Vacation Club International and Hilton Grand Vacations are both point-based programs. Times of high demand require more points than times of low demand. Guests can bank, borrow, or split up how and when they use their points. Many properties are finding that they can cut back on marketing expenses because they sell the points program to a captive audience. It is, however, initially confusing for the guest and, as such, more complex for the operating company to run. Points programs make particular sense for a company with multiple sites. To work effectively, choices must be available for the customer, and multiple sites allow for this. The keys to successful implementation of a points system are: setting the dollar-per-point ratio and sending the corresponding message to the community having a staff sophisticated enough to track point values and inventory effective communication between the marketing staff and the operator implementing the technology and a central reservation system with sufficient capital to back it up11 Finally, the club concept does not involve any ownership of real estate. Instead, consumers buy shares or points in the club; these are exchanged for accommodation or travel. Hyatt’s Hyatt Vacation Club and the Sunterra Corporation brand (Embassy Vacation Resorts, Westin Vacation Club Resorts, and Sunterra Resorts) are examples of the club-based concept. Timeshare options have evolved in recent years. They started with traditional fixed units in a set week, then added a floating week option and, most recently, the flexible points option.12 Segments tend to be region focused—based on a specific geographic region—or theme-focused such as golf, fishing, skiing. ‘‘The baby boom generation is at an age when building a custom vacation home is very complex, time-consuming and frustrating, especially if it’s in a remote location. They’d rather buy a turnkey unit, and let someone else take care of it.’’ —ROB LOWE, PRESIDENT OF DESTINATION DEVELOPMENT Wall Street Journal, February 1, 2006, D8

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In a condominium hotel, or condotel, guests buy fee-simple equity in the unit— buying a hotel guestroom. They can be used as permanent or second (sometimes third) homes. They are especially popular in hot real estate markets such as Miami, Hawaii, and Las Vegas. They have developed to meet the needs of individuals, especially baby boomers, interested in ownership of vacation real estate (approximately 1,000 baby boomers turn 60 every day in the U.S.). Owners can earn income (depending on the policy of the hotel) by renting out their units independently or through the rental program of the management company. Condo hotel salespeople cannot promise the units will generate income. To do so might mean that the Securities and Exchange Commission would classify condo hotels as securities. This would subject them to more stringent regulations. Thus, buyers can only be told that they may have the opportunity to place their units into a rental arrangement. While most developers prefer to avoid registration due to the time and paperwork involved, it means that they are unable to require that owners participate in a rental pool. This makes it difficult to project realistic income forecasts for those owners who do participate in the pool. There are also potential problems as owners react to the realities of the hotel business— seasonality, Average Daily Rates (ADR) versus rack rates, frequent renovation (and its attendant costs), etc. For the project to have the best chance for success, it must make sense from a market and economic point of view as a hotel before being considered as a condotel. Some developers feel that the capital markets will no longer finance traditional high-end hotels anymore. Rather than spending several years looking for financing, they produce a brochure, a model room and are often able to get 80 to 85 percent financing of the project by pre-selling all of the rooms as condominium residences. Individuals cannot get mortgages for hotel rooms but they can for condo apartments that have kitchens and dining areas. Owners are responsible for maintenance and operating expenses. Chicago’s Trump International Hotel and Tower pre-sold over 70 percent of its 286 units two years before it opened. Prices range from $815,000 for a studio with a small kitchen and bathroom to $3 million for a two-bedroom with a large living room, dining room, and two and a half bathrooms. In addition, if owners want their unit rented out, they must pay for upscale furniture, plasma televisions, linens, and china that cost from $45,000 to $90,000.13 Condo hotels can be:14 Ownership structure where rooms are sold to individuals as an investment. Owners stay for the minimum time required by law. Mixed-use project with a hotel and a primary residence piece. Owners live in residences similar to those sold by companies such as The RitzCarlton and Four Seasons. Mixed-use in a resort area with a hotel where the condo can be used as a second home. When the owner is not using it the unit is placed into a rental program to generate income for the owner. Typically, the first type is not a good investment while the latter two can be. There is no guarantee that resale prices will be greater than the initial cost of the condo. The latter two options offer owners the opportunity to generate income

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throughout the life of the project. Condo hotel unit owners can receive anywhere from 30 to 60 percent of the revenue when their unit is rented. Destination Clubs

This newest niche targets affluent travelers. Initiation fees can be as high as $500,000 in addition to annual fees of $25,000. Customers stay for weeks at a time in luxury residences and villas in both urban and resort locations. Exclusive Resorts, formed in 2002, has 200 homes to offer their 1,500 members. Customers join as they would a country club by paying initiation fees that range from $200,000 to $400,000 with yearly fees of between $10,000 and $25,000. Eighty percent of the initiation fee is refundable. Members stay between 15 and 25 days a year at these $3 million homes.

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The Condo Revolution Condo ‘‘villages’’ and hotels have long been popular in mountainous ski areas. This success has inspired many Florida chains to experiment with hotel-condo combinations, which have proved very popular so far. Some planners have been nervous that shifting to condos will reduce the number of available rooms at the hotel, or that the condo owners will bump groups from room blocks. In reality, neither problem is likely to be a significant issue. The disruptions would last only during the construction process, and owners are made to understand when they buy the condo that they can’t disrupt the reservations process. If their condo has been rented, then they have to stay in another condo or wait for their condo to free up. ‘‘From a consumer’s perspective they really shouldn’t know the difference. It should look like a hotel, act like a hotel, and serve like a hotel,’’ says Scott Berman, U.S. leader for the hospitality and leisure advisory group at PricewaterhouseCoopers in New York City. ‘‘I think too much is probably made of the condo hotel versus a traditional hotel. At the end of

the day there shouldn’t be much of a difference at all, aside from who the owners are. . . The bricks and mortar had better operate as a hotel to be successful.’’ ‘‘In South Florida, I think one of the concerns is that everyone is going to a condominium hotel,’’ says Tom Ireland, principal partner at The Ireland Companies. In the span of only a few years, ‘‘We went from 1,000 condo-hotel units proposed down here to 50,000.’’ John Heiser, vice president for Intrawest Placemaking says that Intrawest’s future projects will be condo-hotel based. ‘‘We’re seeing more and more of the convention / meeting / condo-hotel resort development,’’ says Heiser. ‘‘Our operators are screaming for more of that.’’ Source: ‘‘The resort marketing changing—here’s a look at what’s happening now and what’s happening next.’’ Successful Meetings (January 2006).

DISCUSSION QUESTION: Would you buy a condo at a condo hotel if you knew that it would not always be at your disposal?

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Mixed-Use Developments The majority of high-end hotel and resort properties in the U.S. now incorporate some type of residential component. According to the Lodging Industry Investment Council—an independent industry think-tank with 70 high-profile members from the lodging-investment community—this trend will increase dramatically with condo hotels and timeshare units becoming commonplace in parts of the luxury hotel market.15 Increased numbers of resorts are utilizing mixed-use developments, which feature a timeshare component.16 In the past, developers built a property, then created demand for it. Nowadays, the demand for timeshare products dictates production. Preferred configurations are: two-bedroom suite (55 percent) one-bedroom suite (27 percent) three-bedroom suite (16 percent) studio (2 percent)17 A major reason for mixed-use developments is the high cost of amenities. Because high-quality amenities cost a great deal of money, being able to spread out the use and cost of these facilities makes it cheaper for everyone. In addition to the cross-utilization of amenities, hotel guests are exposed to timeshare products and may well be induced to buy. In this way, timeshare operators can reduce their marketing costs. The timeshare component brings a steady stream of revenue into the resort; everyone benefits. It does, however, take an experienced staff to meet the differing needs of timeshare owners and hotel guests. Because of the unique nature of timeshare financing, specialized timeshare lenders have emerged. The financing of a timeshare property is different from that of a traditional hotel. Most hotel mortgages are long-term deals wherein the payback comes from the hotel’s cash flow, which is generated from daily operations. Timeshare loans, on the other hand, are shorter-term loans based on the developer’s ability to market and sell interest in the timeshare.18 In addition, the lending process is more complex because of the regulatory issues involved in timeshare. However, in many respects, timeshare financing is simpler and more predictable than hotel financing. Both revenue and expenses are more foreseeable for timeshares. Once the timeshare unit is sold, revenue is accounted for. The hotel room has to be resold each and every night, with no guarantee that it will produce revenue. Hotels incur many costs whether they are full or empty, while timeshare costs are easier to predict. High customer satisfaction with and solid growth of timeshares, together with the financial characteristics noted above, means fewer timeshare defaults compared to hotels. Second-Home Developments

A second-home development consists of a project that consists primarily of second homes and does not include a resort hotel. A second home is ‘‘a home that is owned fee simple by an individual or family that also owns or rents another home as a primary residence.’’19 In other words, the family owns both a primary and a second home. While second homes are not necessarily found in resort areas,

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Quick Getaway 1.3

Mixing Resort Options: Good or Bad Plan? Mixing up condos with rented hotel rooms can have great results, if it’s the best option for the situation. But how do you know if a mixed-use project is the right choice? Pros Every aspect in the project supports the others. The customers’ money remains in your own development. Timeshare sales provide capital for the continued expansion of the entire resort. There’s opportunity for an ongoing revenue stream through management fees after the resort is sold out. Customers attracted by retail, hotel, and other features are potential leads for a timeshare operation. A bigger project may mean bigger profits. More amenities and entertainment options allow guests a richer experience.

Cons Planning and executing the project takes more time, patience—and money. If one component fails, it can taint the whole project. There’s a greater need for capital—both equity and debt. Planning and governmental approval of larger, multiple-use projects are more complicated. There’s a need for higher levels of expertise in many areas. Large projects require more management and control of product consistency. Source: ‘‘To Mix or Not to Mix.’’ Timeshare Business (January / February 2003): 22.

DISCUSSION QUESTION: Is it advisable to mix condos with rented hotel rooms?

second-home developments are. They consist of a variety of types of properties— detached, attached, multifamily—and can be combined with other uses. The Miami region of Florida, the Phoenix region of Arizona, and the Palm Springs region of California are examples of combination retirement, primary-, and secondhome developments. Developments are one of four types: 1. Resort condominiums are usually high-rises located on oceanfronts. 2. Small, low-density residential communities are typically located close to a beach or lake. 3. Single-family developments incorporate a golf course or clubhouse. 4. Large planned communities include a variety of housing types as well as a number of amenities.20

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Compared to primary homes, second homes place more emphasis on outdoor areas, they are developed at lower densities, and their design is less formal. They are managed under a long-term arrangement by a community association rather than by a developer or resort operator. However, the latter may be involved in the management of a principal amenity, such as a golf course. Multiuse Resort Communities

A multiuse resort community combines two or more of the above categories of facilities. As such, they tend to be larger than the other types. By offering more than one type of ownership and use pattern, they can appeal to a larger variety of markets. Their amenity package is more extensive and usually consists of at least two major amenities, such as a beach and a golf course, or ski slopes and a

Quick Getaway 1.4

Which Is the Real All-Inclusive Deal? A seven-day stay at an all-inclusive resort or a seven-day all-inclusive cruise? At first glance, the only factor that seems to matter in the decision is whether you get seasick. But buyer beware! Not every all-inclusive package includes everything, and the difference between the cruise and the land stay could be more than you think. Cruises and resorts tend to include different amenities in their base prices. On a mainstream cruise, you’ll generally receive accommodations, onboard activities and entertainment, all meals and snacks, certain beverages during meal times, the use of the ship’s facilities (such as the pool, kids’ club, and fitness center), and transportation between portsof-call. However, you’ll have to fork over some extra cash for soft drinks and alcoholic beverages, gratuity, spa visits, onshore excursions, airfare, and airport transfers. Keep in mind that luxury lines sometimes include gratuity and alcohol in the base price. Of course, all-inclusive resort packages usually include accommodations, all meals and beverages, access to the resort’s facilities,

nightly entertainment, use of all non-motorized water-sports equipment (things like snorkeling gear, sailboats, and windsurfing boards) and gratuity. That’s a lot more than the cruise offers . . . land resorts just seem to include more. It appears that the decision between an allinclusive cruise and an all-inclusive resort vacation involves more than simply asking yourself ‘‘do I like boats?’’ However, it’s important to remember that if what you really want is a cruise, no amount of amenities at a land resort will make up for missing out on a vacation at sea. Source: ‘‘Are you a cruise or resort vacationer?’’ www.usatoday.com / travel / deals / inside / 2004-12-22column x.htm

DISCUSSION QUESTION: Do you think that labeling a vacation as ‘‘allinclusive’’ is deliberately misleading advertising, when it’s more than likely that the consumer will have to pay additional amounts after arriving?

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golf course in a four-season format. As the needs of the resort user change, the development offers appropriate units for rent or purchase. A resort guest may end up buying a second home for eventual retirement. The diversity of property types requires more sophisticated management.

INDUSTRY TRENDS The most significant trends in the resort industry are: Health Spas and Fitness Facilities Because more people are concerned with health, fitness facilities are

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Hotels, Resorts, and Condos Due to the current success of many condohotel properties, many hotel and resort owners are considering the ‘‘condo conversion.’’ However, owners should keep in mind that pulling off a successful and profitable condo hotel conversion can be a real challenge. Luckily, there exist suggestions that a hotel owner can use as a guideline to ensure the best result. To convert a resort or hotel property into a condo hotel, you should: Determine your target prospect Measure the demand for a product like yours Consider whether your location is one that will attract hotel guests and will also have appeal as a second or vacation home Evaluate the competition which includes other hotels and also straight condos Determine the unit mix (studios, one bedrooms, two bedrooms, etc.) Put together an amenity package that will appeal to your target market

Calculate the costs of needed property upgrades, remodeling, and furnishings Select a quality management company, preferably one with a name-brand franchise Hire a savvy sales and marketing company with a proven track record Price units to sell at a good pace, but not so low as to leave money on the table Estimate potential profits as a condo hotel versus continuing the existing operation without conversion Source: ‘‘Condo Hotel Conversions.’’ Condo Hotel Center: Condo Hotels and Fractionals. http: / / www.condohotelcenter.com / for-developers / conversions.html

DISCUSSION QUESTION: Given your knowledge of hotels, resorts, and resort hotels, do you think a resort owner or a hotel owner faces a greater challenge if they both decide to convert to condos?

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now a basic amenity for resort properties. Many resorts have on-site spas as a complement to existing fitness facilities. They offer a mixture of pampering, education, and medical programs. They require a high capital cost and highly skilled personnel that can result in high payroll costs. Soft Adventure Programs Offering a combination of adventure and fantasy, ‘‘soft’’ adventures such as white-water rafting, multiple day hikes, and wild-game hunting, need guides to provide safety to guests seeking a thrill as part of their vacation experience. Gaming Increasing numbers of states are looking to the legalization of gaming as a way to raise revenue through taxes. More than 12 states allow casino gaming on land or water. The increase in the number of resorts offering gaming may reduce its uniqueness as a draw. Ecotourism Ecotourism is increasing as a subset of the environmental movement. Examples include trips to the rain forests of the Amazon and to study the Galapagos tortoises. Because these trips involve visits to fragile environments they are best handled by smaller ‘‘boutique’’ resorts.21

SUMMARY A brief history of resorts demonstrates that transportation has, to a large extent, determined where, when, and the type of resorts that have evolved; that the desire for pleasure travel is deep-rooted; that resorts developed year-round operations to minimize the risk of relying on one season of the year; and that resorts move through life cycles. Today, resorts can be characterized in terms of their proximity to primary markets, the setting and primary amenities, and the mix of residential and lodging properties. Industry trends are identified and will be explored in detail in the remaining chapters.

ENDNOTES 1. Gee, Chuck Y. Resort Development and Management, 2nd ed. East Lansing, MI: Educational Institute of the American Hotel and Motel Association, 1988, 26–50. 2. Schwanke, Dean, et al. Urban Land Institute, Resort Development Handbook. Washington, D.C.: Urban Land Institute, 1997, 4. 3. Ibid., 5. 4. Ibid., 7. 5. The United States Timeshare Industry: Overview and Economic Impact Analysis. Washington, D.C.: American Resort Development Association, 1997, 5. 6. The Nevada Timeshare Industry: An Industry Overview and Economic Impact Analysis. Washington, D.C.: American Resort Development Association, 1997, 1; Upchurch, Randall, and Conrad

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Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England, 2006, 10, 22. 7. The United States Timeshare Industry, 5. 8. Timeshare Resort Operations: A Guide to Management Practice, 20–21. 9. Baumann, M.A. ‘‘Study Indicates Timeshare Buyers Have Carolinas on Their Minds.’’ Hotel and Motel Management (July 5, 1999): 31. 10. Sparks, Beverly, and Jo Anne Smith. ‘‘Development of Timeshare Resort Management: Educational Opportunities.’’ Journal of Hospitality and Tourism Education 11, no. 2 / 3 (1999): 54–59. 11. Baumann, M.A. ‘‘New Points System Points Industry in Right Direction.’’ Hotel and Motel Management (May 17, 1999): 22. 12. Ibid. 13. Bennett, Julie. ‘‘The Ritzy Route to Condo Ownership.’’ Wall Street Journal (February 1, 2006): D8. 14. Hayward, Philip. ‘‘Lodging’s Fourth Dimension.’’ Lodging Magazine (September 2005): 30. 15. Ibid., 27; ‘‘Survey Reveals Top 10 Trends in Hotel Industry.’’ CYN Business Journal (June 25, 2004). 16. Baumann, M.A. ‘‘Mixed-Use Projects Possess Right Ingredients.’’ Hotel and Motel Management (September 20, 1999): 10. 17. Baumann, M.A. ‘‘Exchange Companies Provide Flexibility and Expertise.’’ Hotel and Motel Management (July 19, 1999): 22. 18. Baumann, M.A. ‘‘Specialized Lenders Cater to Timeshares.’’ Hotel and Motel Management (June 3, 1999): 20. 19. Schwanke et al. Resort Development Handbook, 11. 20. Ibid., 12. 21. McElyea, J. Richard, and Gregory L. Cory. ERA Issue Paper. Resort Investment and Development. An Overview of an Evolving Market. Economics Research Associates, undated, accessed January 11, 2006, 5. http: / / www.econres.com / documents / ip.html#

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Chapter 2 MOUNTAIN-BASED RESORTS: THE IMPACT OF DEVELOPMENT ON OPERATIONS LEARNING OBJECTIVES 1. Identify the key elements in the development process that help maintain a balance between the physical capacity of a site and the economic needs of the developer. 2. Define the main factors affecting the attractiveness of a site. 3. Explain the role of general design principles in site planning and maintaining community identity. 4. Describe the process used to determine the capacity of a ski area. 5. Indicate the impact of capacity on site design, ski lift network, and the types of base area facilities.

INTRODUCTION

Access Roads

THE DEVELOPMENT PROCESS

Food Service

Balance

Accommodation

Planning Process

Maintenance

Permits

Emergency Care

DESIRABLE SITES Site Feasibility

OTHER WINTER SPORTS ACTIVITIES Cross-Country Skiing

GENERAL DESIGN GUIDELINES

Snowmobiling

CAPACITY

Tobogganing

Potential Capacity SKI RUNS Site Design SKI LIFT NETWORK Types of Lifts BASE AREA Parking

Ice Skating SUSTAINABLE DEVELOPMENT MOUNTAIN RESORT MATURATION CYCLE SUMMARY ENDNOTES

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MOUNTAIN-BASED RESORTS: THE IMPACT OF DEVELOPMENT ON OPERATIONS

INTRODUCTION Compared to other major amenities, ski areas are much likelier to be profitable business ventures that may, as a logical adjunct, also engage in real estate development. —URBAN LAND INSTITUTE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

The physical facilities of a ski area figure prominently in skiers’ evaluation of the overall quality of the resort complex. In one study, skiers at four Vermont resorts rated the most meaningful potential indicators of quality as: 1. 2. 3. 4. 5. 6.

daily lift ticket price maximum waiting time in lift lines type of food service walking time from parking lot to base lodge percentage of terrain covered by snowmaking attitudes of ski area employees1

Three of these items—2, 4, and 5—are design issues, while item 3 deals with the provision of specific services. In this chapter, the process of developing a ski resort is outlined. Care must be taken to strike a balance between the physical capacity of the site to accommodate skiers and the economic need of the developer to make a profit. Characteristics of desirable sites and general design principles are noted. The all-important order in which decisions are made is defined.

THE DEVELOPMENT PROCESS Although private land values are affected by the location of resort areas, maximizing the value of individual tracts of private land must be a secondary consideration of the Forest Service. —U.S. FOREST SERVICE

Balance The conceptual design philosophy involves a balance—a physical balance, first, between the ski area and the market, and, second, an economic balance between investment and earning power.2 Physical Balance

Physical balance means that the size of the ski area must be sufficient to meet the needs of the market without being so large that the area is underutilized. Within the resort area itself, balance is also required. The capacity of the mountain dic-

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tates the number of skiers that can be accommodated, both from a safety angle and from the viewpoint of skier enjoyment. The capacity of the mountain to handle skiers, in turn, dictates the ski lift network capacity required. In other words, the capacity of the lifts to bring people up the mountain must be in balance with the trail capacity to bring them down the mountain. Capacity, in turn, indicates the support facilities needed at the base and surrounding areas. Economic Balance

The second area of balance suggested by Ted Farwell, noted ski area consultant, brings together the amount of money invested in the project and its earning capacity. Investors put money into developing infrastructure and buildings—physical plant—which is then used to generate revenue. The quantity and quality of physical plant must be sufficient to generate enough revenue for investors to get a decent return on their investment. Revenue generation is a function of number of skiers, revenue per skier visit, and the length of the season. At the same time, to ensure a return, management must keep costs in line.

Planning Process The general process for developing a ski area is outlined in Figure 2.1. Concept and Objectives

An initial concept is created. Ski areas, because of their high cost of development, are more likely than other recreational facilities to be developed as for-profit recreational developments first and real estate opportunities second. However, the trend is toward ski areas using land development as a way of increasing the profits of the operation. Ski areas can be designated as: Type I resorts—These international destinations feature excellent mountains and a wide variety of lodging and real estate. Whistler Blackcomb in British Columbia, Canada, would be in this category. Type II resorts—These resorts are not as well known in the marketplace as Type I resorts; they offer fewer activities and appeal to a more limited market, such as ski clubs and groups. Powderhorn on the western slopes in Colorado is one such example. Type III resorts—These resorts offer high-quality skiing but little real estate development. Many operate only on weekends.3 Small, often marginal developments—These resorts operate only on weekends. For example, the typical club hill in Ontario has no snowmaking, is less than a 300-foot drop, and has a T-bar lift and a chalet without a liquor license.4 Real estate buyers at Type I resorts tend to be older, more loyal to the area, more family-oriented, and less likely to rent out their units. Those at Type II resorts are younger, ski more often and at more areas, and are more interested in their real estate as an investment rather than its use potential. The smaller weekend areas cater to families, children, and beginning skiers. Important to local residents,

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FIGURE 2.1 The development process for ski areas.

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they do not attract out-of-towners. They can, however, help develop a pool of skiers eager for bigger challenges. The specific objectives for the development are then established. A survey of the potential market and a comparison of sites, together with an examination of the likelihood of financing, produce a determination of the most desirable site. This site becomes the subject of a detailed analysis. General design guidelines are then established and the ski and base area capacities are determined. Detailed design guidelines can then be formulated and the ski runs laid out. As noted above, the ski runs determine the layout and size of the ski lift network, which will, in turn, influence the layout of the base area. At each step, the ski area capacity might have to be revised and the layouts revised. Next, the access route is laid out and a final check made to ensure that the ski runs, the ski lifts, the base area, and the access route are balanced. If necessary, the design can be revised, development phased in, and a master base area, construction, and operating plan developed. An environmental statement is then drafted, a profitability or pro-forma analysis made, and final design approval sought.

Permits Most of the largest and most visible ski areas in the United States are built, at least partially, on land managed by the U.S. Forest Service (USFS). Over 90 percent of ski areas in the Rocky Mountain and Pacific West operate under USFS permits. This compares to 35 percent of areas in the Northeast, 8 percent in the Midwest, and none in the Southeast.5 The 1960 Multiple Use Sustained Yield Act allows private ski areas on national forest land. This policy was codified by various memoranda of understanding between U.S. Skiing, the National Ski Areas Association (NSAA), and the U.S. Forest Service. U.S. Skiing is the governing body for skiing and snowboarding in the United States. The NSAA is the trade association for U.S. ski areas and represents most of the ski areas permitted to operate on lands administered by the United States Forest Service. The USFS is responsible for managing multiple activities in national forests in a way that is environmentally sustainable. Together they seek to emphasize: public / private partnerships in developing recreational facilities multiple use public land management sustainable communities viable local economies ecosystem health Because development requires a permit from the USFS, developers are expected to show that the resort development will provide a public benefit in addition to a profit benefit to the developer. The permit process has six steps: 1. identification of a potential site by both a developer and the USFS 2. issuance of a study permit by USFS to allow close physical examination of the site by the developer

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3. issuance of a development prospectus by USFS giving the developer (and others) the opportunity to bid for development rights 4. awarding of development rights by USFS to a developer 5. preparation of a master plan and environmental assessment by the selected developer 6. issuance of a special use permit by USFS. This is the legal contract and operating agreement between the USFS and the concessionaire. A term permit, usually 20 to 30 years, is issued for areas at the base of the mountain, while annual permits cover the rest of the development.6 Future development is subject to negotiation. The concessionaire is charged an annual fee for the right to use public land. The fee is based on the amount of physical improvement and on revenue generated. Three points can be made relative to operations on USFS land: 1. The USFS permit process for initial development and / or expansion can be extremely time-consuming and costly. 2. Changes in USFS policies relative to fees, long-term land ownership, and so on directly affect resort operations. 3. Resorts operating under USFS permits may be required to shut down late in the season even if late spring snow conditions are such that operations could continue.7 The point is that resorts operating under USFS jurisdiction do not have the flexibility that areas operating on private lands enjoy. In France, since the Environmental Protection Act of 1976, an impact study must be conducted for any project whose cost exceeds 6 million francs. In Germany, the political acceptability of the project is a major factor in determining whether or not it will be approved. In contrast to the United States, no ski area in France has been stopped because of environmental concerns. Skiing is not viewed as detrimental to the mountain.8 In Australia, the state of Victoria created the Victoria Alpine Commission, an agency totally independent from the Parks Service. Recognizing that skiing is very different from other activities taking place in the parks, this agency handles all of the skiable terrain in addition to a few potential sites.

DESIRABLE SITES The guiding principle is clear: wherever conflicts occur between resource protection and increased use and development, protection will take precedence. —BANFF NATIONAL PARK MANAGEMENT PLAN, 1988

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Site Feasibility The development of mountain sites is a particularly challenging endeavor. The USFS has developed an inventory form for evaluating the development potential of a site (Figure 2.2, pages 28–29). The overall physical feasibility of the site is a function of four factors: scope and attractiveness of the site access and proximity to markets environmental limitations unusual site-specific costs9 Attractiveness

The attractiveness of the site is determined by various factors. First, in terms of the environment, people look for a desirable mix of climate, snow conditions, exposure and snow retention, and forest cover.10 Extreme temperatures should be avoided and wind problems should be infrequent. The best snow is dry. A minimum of 250 inches of snow is the standard for a modern ski area.11 Machine snowmaking, in recent years, has allowed previously marginal ski areas to operate profitably. In New England and other Eastern states, the wide temperature variations followed by periods of rain and freezing weather mean that the length of the season depends on the quality of man-made snow.12 Increasingly, natural snow is being supplemented by artificial snow. Similar to the irrigation system of a golf course, a snowmaking system requires a water reservoir, a distribution network of piping and pumps, and numerous nozzles or guns to spread the snow over the slopes.13 The system works because, at certain temperature and humidity levels, water can be broken into small droplets and forced into the atmosphere under pressure provided by compressed air or large fans; the water returns to the ground as snow. It is denser and contains more water and less air than natural snow. Compressorless systems are less expensive to operate and, because they are quieter, are attractive around base areas. Compressed air systems require less maintenance and last longer. They also operate effectively under a greater range of temperatures. Compressorless systems perform best under colder temperatures, ideally 0⬚F. Snowmaking equipment requires a dependable, high-quality water supply together with easy access to utilities. Machine snowmaking, for example, requires 180,000 gallons per acre-foot of snow.14 This translates into usage of between 500 and 10,000 gallons of water per minute. Once the water is converted to snow, 78 percent of it returns to the watershed during spring melting and runoff. GROUP DELTA, a major ski resort consultant, has pioneered a method of combining low snowmaking cost and maximum attractiveness to skiers. One or more trails, 300 to 400 feet in width, are built with islands in the middle to enhance the aesthetics by breaking up the monotony of empty trail. A single set of snowmaking pipeline is buried up the center of the trail, where strategically placed hydrants, 140 feet apart, can service both sides of the run. Fully automated snowmaking systems have been available since the mid1980s. These systems mean few people are needed to handle hoses and nozzles.

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FIGURE 2.2 Inventory form—potential winter sports development sites. Source: Wingle, H. Peter. Planning Considerations for Winter Sports Resort Development. Washington, D.C.: USDA Forest Service, 1994, 3.

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FIGURE 2.2 (Continued )

This is particularly helpful in countries like France, where labor laws are strict and scheduling flexibility is restricted.15 In North America, a north and northeast exposure helps protect the terrain from the effects of sun and wind. Steep slopes and those at lower levels increase the problem of exposure. This also depends on location. At Mount Hood, Oregon, there is so much snow that even the south-facing slopes above timberline are ideal for skiing late in the season. Forest cover adds to the aesthetics of the experience while providing protection from the wind to both the skier and the slope. It adds contrast when the light is flat and challenge to experienced skiers. Terrain is the second factor affecting the attractiveness of a site. The grade of the terrain should match the ability level of the market to be served. A variety of grades and views make for an aesthetically pleasant experience. Developers must be especially aware of the following: steep and unstable slopes and rockfall zones heavy snowfall avalanches

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microclimate conditions, such as wind hazards watersheds and wetlands flooding and unstable water flows air quality problems due to inversion (the brown cloud effect caused by cold air trapping warm air close to the ground) vistas sun orientation and shadows impact of seasonal changes on the resort’s activity patterns16 The skier carrying capacity is noted in skier density per acre of terrain and takes into account that just under half of the skiers are on the ski runs at any one time. The others are riding the lifts, resting in the lodges, or waiting in lift lines. Acceptable density depends on the market being served. Vacation destination areas average 10 to 15 skiers per acre. This is a question of economics in addition to safety and attractiveness. The higher the development cost and / or the shorter the season, the higher the density needed to operate economically. New England ski areas average 20 skiers per acre while, in the Midwest, the average increases up to 100 per acre. Density is also related to snow cover, slope and trail design, and slope maintenance.17 Higher densities are acceptable when snowfall and snow retention is greater, where snow maintenance is practiced, and where the design of the slope keeps skiers on the fall line. A major constraint for ski areas, and the third factor affecting the attractiveness of a site, is lack of space at the base. This is especially true for parking facilities. The most effective way for a mountain to operate is by way of a lift system that disperses skiers across the resort. The lifts radiate from one or two points. The staging area at the base must be large enough to permit this. The density of housing units lessens the farther away they are from the base area. High-density, expensive units—typically hotels—surround the base area to meet the needs of skiers who stay a relatively short time. Farther away are mediumdensity condominium or timeshare units. Farther away still are single-family homes where premiums are paid for attractive views. Direct access to the ski slopes increases the room rate or real estate prices. Retail development is structured similarly, with restaurants, ski shops, and specialty stores located close to the slopes, convenience services farther out, and services and larger stores even farther out.18 The fourth and final factor affecting the attractiveness of a site is the potential length of the season. The typical ski season of 130 days runs from Thanksgiving to Easter, with variations depending on climate. For example, northern Ontario and northern Michigan have a season of 131 days, while in southern Quebec the season is 10 days shorter. Central and southern Michigan have a season of 100 days, from the middle of December until the third week in March. In southern Ontario, the 70-day season starts just before Christmas and lasts until the end of February.19 By adding night skiing, resorts can significantly increase the number of skiers who can be accommodated, thus making the resort area more economically viable.

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Quick Getaway 2.1

What Attracts Skiers and Riders? There are many different variables that attract skiers and riders to resorts. However, the single most important variable may be the role of snow. As long as snow cover is exceptional, skiers and riders will find ways to participate despite recessions, wars, gasoline shortages, and increases in lift ticket prices. Even in many high-snowfall regions, resorts have found that snowmaking is a requirement to attract visitors. Snowfall is not always a predictable variable, but any resort owner can tell you that a steady flow of customers is necessary for a successful season. The second variable in attracting customers to a mountain resort is the scope and diversity of the ski and snowboard terrain. A poorly developed slope can discourage visitors from returning, but never fear: a simple evaluation can identify problem areas and help you zero in on ways to improve the overall terrain. Balance is very important when designing a

slope or terrain area; the lifts, facilities, and surrounding village must support the outdoor elements to maximize the attractiveness of the resort for various demographics. Another area that resort owners should pay close attention to is the availability of outside resources and utilities to support the resort. Is there adequate water, both for potable consumption and machine snowmaking? How is wastewater handled, solid waste? Is there adequate and reasonably priced power? Source: Farwell, Ted. ‘‘What’s Your Area Worth?’’ SAM: ski area management. http: / / www.saminfo.com / issues / article.php?tid⫽3421

DISCUSSION QUESTION: Do you agree with the author when he says that snow is the most important variable in attracting customers to a mountain resort? If not, what is the most important variable? Why?

Access to Markets

The more attractive the site, the farther people will travel to get there. The flip side is that, as distance from major markets increases, the scope and attractiveness of the area must increase. Skiers are willing to travel one to two hours at most to ski at a day area aiming for a local market. Weekend ski areas targeting a regional market can expect skiers to travel up to half a day to enjoy the slopes, while the national or international market seeking a vacation destination will travel more than a half day for this option.

Environmental Limitations

In large part, skiers are attracted to a winter resort because of the opportunity to experience nature. Balancing the economics of skier numbers with the aesthetics of the outdoor experience is important for the long-term profitability of the resort. Resorts may face such environmental limitations as the presence of wildlife habitats that are home to endangered species, the existence of special cultural or archaeological sites deemed worthy of preservation, and a scarcity of natural resources. Ski areas have to be particularly sensitive to:

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minimizing impact during construction preserving wildlife patterns using storage ponds or reservoirs to minimize the impact of snowmaking on streams and rivers providing employees with public transportation and guests with shuttle service to help improve air quality developing recycling and waste management programs conserving energy20 Site Costs

The cost of the land must be balanced against the revenue an area can generate. In the West, where over three-quarters of all ski areas are on public land, an annual lease payment is made. In other regions, land cost is a major item in determining

Quick Getaway 2.2

Going Green with the World’s Largest Ski Resort For an outdoor activity, skiing can actually have a very large environmental impact. For years resort owners have simply worked around the environmental difficulties they face in the everyday operation of the area. One resort, however, has decided to address the issue. The Three Valleys, located in France, is the world’s largest ski resort. The resort operates 1,920 snow cannons, 183 ski lifts, and 67 trail groomers that use only hydro-electric power for their electricity requirements. This fully renewable energy is provided by the Gaz Electricite´ Company of Grenoble, which uses power generated by small hydropower centers in the French Alps. The Three Valleys also uses biodegradable diesel in all of its company vehicles. For snowmaking, the Three Valleys chose the Ariondaz Dam. The location is ideal because of its hilltop orientation, which has a minimal impact on the existing topography. The Ariondaz Dam area is also a good snowmaking location because of the absence of protected species in the area. A nearby lake

provides some fire protection: about a quarter of its 123,000 cubic meters are available yearround for putting out fires. The installation of the area’s new Chapalets Chair is another example of sustainable environmentally conscious development. The lift pylons are anchored directly in existing rocks to avoid the need to create new concrete tower bases, which disrupt the soil and cause erosion. Also, the lift cables are marked in order to warn birds away from the dangerous steel lines. Marking cables is not the only thing the company is doing to protect native birds: they have also created new meadows to help preserve the endangered black grouse. Source: ‘‘Three Valleys Go Green.’’ SAM: ski area management (October 2005). http: / / www.saminfo.com / news / article.php?tid⫽643

DISCUSSION QUESTION: What other environmental issues could ski areas potentially address? Why is it important that the area addresses these issues?

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the economic viability of an area. Anything more than $1,000 per acre makes the area too expensive, unless other favorable factors are present that would offset the high cost. Increasing numbers of areas have added snowmaking as a way of increasing capacity. Careful analysis must be made, as snowmaking requires a capital investment of $25,000 to $70,000 per acre. In addition, it costs $2 per hour per acre to operate the equipment. The costs of power and water must be carefully considered against the potential extra revenue.

GENERAL DESIGN GUIDELINES Good design evolves as a process that articulates goals and values, identifies design-determining forces, targets strategic priorities and concepts and facilitates change over time without the loss of community identity. —ELDON BECK AND SHERRY DORWARD RESORT DEVELOPMENT HANDBOOK

Mountain resort communities must have goals intended to meet the expectations of guests while emphasizing what is special about the local area. This link between people and the natural environment should aim at creating livable year-round communities of people who have strong emotional bonds to the area. Physical, aesthetic, and social forces help determine the design of a community. Concepts that must be taken into account include: subordination of the automobile human scale pedestrian amenities physical and visual links between the community and its natural resource base provision for the needs of a permanent population21 Certain design principles provide an umbrella for the specifics of site planning. 1. To avoid land use conflicts, it is important that the design of the ski area conform to the existing physical site. This makes for an environmentally sound project. In addition, by minimizing changes to the terrain, costs are significantly reduced. 2. The ability of skiers approximates a bell curve, with 5 percent to 15 percent on either end of the curve and approximately 70 percent in the middle. Participation at resorts tends to follow these proportions. The ideal ski area matches the difficulty of its slopes to this bell curve.

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3. Newly groomed slopes attract skiers one or two classes below the design difficulty of the slope. On the other hand, slopes with many moguls or icy conditions increase the slope difficulty. 4. A given ski area supports fewer and fewer skiers as their ability level increases. More experienced skiers are more expensive to take care of than beginners as they demand more vertical feet of skiing per day. Because of their slope demands, they ride the lifts more often and prefer to ski at the top of the mountain where development, construction, and maintenance costs are greater. Because they ski faster than less experienced skiers, fewer can be accommodated on a trail. 5. Novices and intermediate skiers bring in more money than do advanced skiers. 6. Access road design should be based on expected peak traffic where weather is not a factor. Generally speaking, skiers arrive at an area over a two-hour period in the morning. This principle means that traffic can be handled approximately 60 percent of the time. Weather can be expected to be poor 20 percent of the time during the peak season, requiring more than two hours to access the area. Additionally, another 20 percent of the time, more than two hours will be needed when crowds over capacity want to ski.22

CAPACITY Think about how to separate skiers that have different skiing abilities. They should not interfere with each other; a mixture of difficulty on a single trail may either make the entire trail too difficult for the less able, or sections that are too easy for some skiers may render the entire trail unpopular for that group. —U.S. FOREST SERVICE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

The general process of identifying capacity is to use the amount of skiable area for each skier classification to determine ski area capacity, which is used, in turn, to determine the ski lift and base area facilities necessary.

Potential Capacity The capacity of the ski area is determined by carefully following these seven steps. 1. Legal boundaries—First, identify the legal boundaries of the area and delineate them on an area map.

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2. Total skiable acres—Next, determine the total skiable acreage that is available. Terrain can be classified as unskiable, marginal, or attractive.23 Terrain may be unskiable because it is too steep, too flat, has an excess of rocks, is subject to avalanches, or is in an extremely windy area. Base and cliff areas as well as areas of excessive soil instability should be excluded. Marginal terrain is skiable but is not attractive. It might consist of narrow, flat ridges. This type of terrain can be used for access and egress to base areas or for linking attractive ski runs. It is not included as skiable acreage. 3. Skier classification—The total skiable acreage is made up of slopes of various gradients. The steeper the slope, the more advanced the skier has to be. Advanced skiers prefer less crowded conditions than are tolerated by novice skiers. Additionally, the safety factor dictates that steeper slopes have fewer skiers per acre on them. Thus, the next step is to break down the total skiable acreage by type of skier. The U.S. Forest Service suggests that beginners have a 15 to 25 percent slope gradient, intermediate skiers a 25 to 40 percent slope gradient, and advanced skiers a slope gradient greater than 40 percent. The guidelines suggested by noted industry consultant Ted Farwell are shown in Table 2.1. 4. Ideal ratios—Next, compare the actual number of acres in each gradient category to ideal ratios. The ideal takes into account that about 20 percent of skiers are beginners and advanced skiers, while approximately 60

TABLE 2.1 Ski Area Planning Terrain Capacity

Skill Class Beginner Novice Low Intermediate Intermediate High Intermediate Advanced Expert Average Daily Averageb a b

Terrain Gradients

Skier Market

10–15% 15–25% 25–35% 30–40% 35–45% 45–60% 60%⫹

5% 10% 20% 30% 20% 10% 5%

Skiers / Acre Slopes

Total

22–44 18–26 13–22 9–15 7–9 4–7 4–7 10–17

50–100 40–60 30–50 20–35 15–20 10–15 10–15 23–38

Vertical Feeta

Vertical Metersa

421 946 1,262 1,683 2,322 2,709 3,871 2,000 9,299

128 288 385 513 577 673 962 497 2,834

Vertical feet of skiing demand per hour. Based on 5 hours of skiing for beginners through intermediates and 6 hours of skiing for high intermediates through experts.

Source: Farwell, Ted. The Concept of Balance, Ski Area Design Analysis, and the Mountain Design Process. Boulder, CO: Ted Farwell & Associates, Inc., n.d., 26ff.

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percent are intermediate. The actual average distribution of terrain by skier ability is actually 24 percent beginner, 45 percent intermediate, and 31 percent advanced / expert. The tendency is toward more beginner terrain in the Southeast and Midwest and more expert terrain in the Rocky Mountains.24 Refer again to Table 2.1 for a more detailed breakdown. Additionally, note that advanced skiers spend significant time on intermediate slopes. The development ratio for any particular resort depends on the characteristics of the target market, the unique characteristics of the site, the continuity of the total ski run and lift network, and the overall concept of the ski resort. 5. Developed acres—Determine the number of acres to be developed in each category. The result should be the most desirable ski run mix rather than a maximum potential number of skiers who can fit onto the mountain. 6. Acres cleared—Next, determine the total number of acres to be cleared. Typically, ski areas leave from half to two-thirds of the mountain in its natural state.25 The goal is an approximately equal amount of trails and buffer zones. This arrangement provides shelter from winds for both the trails and the skiers while serving as a visual reference in foggy conditions. Aesthetically, the effect is pleasing, while good forest management is practiced by taking soil stability, water runoff, and environmental preservation into account. The result is the number of net skiable acres. 7. Number of skiers—Calculate the total number of skiers, which is equal to the number of net skiable acres times the appropriate skier density factor. This latter figure depends on: type of ski area—Day areas have a greater density factor than do weekend areas and both have a density factor greater than vacation resorts. planned snow grooming—The degree of slope difficulty varies with snow conditions. However, grooming the slopes accommodates more skiers per acre with, up to a point, no loss of skier experience. Grooming the run takes the terrain down to another skier level. skier preference for different types of runs extent of ski schools extent of snowmaking—Between 80 and 85 percent of U.S. ski areas require snowmaking. Making this capital investment increases the skier density factor. width of run—The wider the run, the greater the skier density. ground configuration lift network capacity Various estimates of skier density per acre are contained in Table 2.2. Vacation resorts prefer variety and lower densities, while higher densities are acceptable to areas in the Midwest, day-night places, and resorts that rely on snowmaking equipment for much of their snow cover. The wide range of figures means that the above criteria must be carefully adapted to each unique situation.

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Careful planning of ski slopes creates a safer environment for skiers of all ages. Courtesy PhotoDisc, Inc.

TABLE 2.2 Density per Acre Estimates

Beginner Novice Low Intermediate Intermediate Advanced Intermediate Advanced Expert

Ted Farwell

Aspen Corp.

Pacific NW Area

USFS

Various Ski Consultants

50–100 40–60 30–50 25–35 15–20 10–15 10–15

15

35

25

50–100

10

15

15

20–35

5

5

10

10–15

Source: Farwell, Ted. The Concept of Balance, Ski Area Design Analysis, and the Mountain Design Process. Boulder, CO: Ted Farwell & Associates, Inc., n.d., 5.

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Quick Getaway 2.3

Resort and Resort Community: Working Together Mountain resort communities must carefully balance the amount of land to use for public infrastructure against the amount reserved for private development: because of the very high price of land in mountain areas, and the pressure from developers and clients, communities often find it difficult to obtain land for necessary infrastructure systems such as schools, libraries, parks, government services, or water treatment facilities. Poorly made land decisions can create tensions between the community and the resorts. At times, poor decisions can even damage the community identity or the dependent resorts’ image. Thankfully, these resort communities don’t have to make land decisions in a vacuum. They can look to their neighbors’ previous decisions for guidance. The following are examples of successful initiatives undertaken by various mountain resorts:

1. Building regional community recreation trail systems. 2. Creating workforce or community housing. 3. Giving priority to airport expansion and hospital improvements, which benefit both the resort community and the area resorts.

Skiers at One Time (SAOT)

4. Encouraging public officials and community residents to visit other communities where space is limited and land values and pressure for lucrative private development are extreme, in order to observe the consequences of poor decision-making. 5. Thinking creatively about ways to strengthen the community or regional identity of social services. 6. Supporting activities which enhance a sense of community and membership in an interdependent regional ecosystem. Creating and sustaining a sense of community and regional identity is particularly critical in destination resort communities. It’s also particularly challenging, because community identity is continually reshaped and redefined by powerful corporate interests. Source: Morris, Lynne Clemmons. ‘‘Community Strategies for Addressing Regional Impacts of Destination Resort Development.’’ http: / / www.socwk.utah.edu / rural / pdf / 7-B2.pdf

DISCUSSION QUESTION: Why do you think it’s so difficult to make land decisions in mountain resort towns? Whose fault is this?

Within a ski resort, not all of the skiers will be on the slope at the same time. The USFS standard is that 50 percent of all skiers are on the slope at any one time. Using this guideline, the mountain can accommodate twice as many skiers as are on the runs. The skier density per acre indexes in Table 2.2 do, in fact, include this assumption. When this is the case, the skier capacity should not be adjusted.

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The number of persons at one time (PAOT) takes into account that nonskiers also visit the resort. Perhaps a parent takes the children skiing but remains in the lodge. The extent to which resort capacity must be adjusted depends on the type and extent of the facilities. USFS uses a multiplier of 1.15. PAOT ⫽ SAOT ⫻ 1.15 The resultant figure is the number of people who can be accommodated at the ski area.

Night Skiing

For a relatively small increase in cost, adding illumination can increase capacity as much as 60 percent. About 45 percent of U.S. ski areas offer night skiing. The distribution is higher in the Northeast, Southeast, and Midwest (44 percent, 89 percent, and 92 percent respectively) and lower in the Pacific West and Rocky Mountains (36 percent and 20 percent respectively).26 Because of the increased illusion of speed, slopes offer more challenge at night than during the day. Thus, even a gentle slope can be challenging to an intermediate skier.

SKI RUNS Isolated base areas should be connected to public parking or public transportation centers with ski trails when possible. —U.S. FOREST SERVICE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

Site Design Slopes that face predominantly north or northeast have less sun exposure and retain their snowfall. Wind, however, can be more destructive than snow, stripping slopes of needed powder. While snowmaking equipment has allowed ski resorts to develop in regions that would otherwise be uneconomic, certain requirements remain in effect. A combination of artificial and natural snow that allows 80 to 100 days of skiing a year is necessary. For areas that rely on snowmaking equipment, this means 800 to 1,000 hours of temperatures below 28⬚F.27 This kind of information can be obtained from local offices of the weather service. The following guidelines are useful in laying out the ski runs at a resort. Locate the runs parallel to the fall line. The fall line is the path of natural descent between two points on the mountain and is perpendicular to the contour. Following the fall line as much as possible produces efficient, high-quality trails. Using natural hollows and depressions reduces costly cutting and filling on the mountain.

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Offer a variation in gradient for a more interesting experience. At the top of the trail, skiers should be able to see enough to determine generally how difficult the run is, but they should discover some surprises as they go downhill. Widen the steeper portion of runs from a minimum of 80 feet up to 250 feet.28 Trail widths can vary from 50 to 400 feet. Mostly, they range from 100 feet to 200 feet.29 They should also be wider at the top and bottom to avoid congestion. Separate runs and lifts for purposes of safety. Increase shade and wind control to help keep snow on the slopes. Keep the cutting boundary feathered and uneven and retain trees at varying heights and at varying distances from the trail’s center line to help control wind while maintaining a pleasing aesthetic. Use tress islands to channel skiers, separate skiers of different abilities, and add visually to the experience. Avoid clearing vegetation that protects weak or shallowrooted trees from wind, which can cause them major damage. This is especially true for conifers. Groom all ski runs. Add moguls to make the slopes more interesting for the more advanced skier, but be aware that they also reduce density and safety.

SKI LIFT NETWORK Helicopters used for ski lift construction eliminate the need for roads to individual tower sites. —U.S. FOREST SERVICE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

The capacity of the lifts to bring skiers up the mountain must be balanced against the capacity of the trails to take them down. The goal is to spread skiers over the mountain while ensuring that the time spent in line is no greater than that spent riding the lift.30 The ideal ski lift system covers 1,000 to 2,000 vertical feet over a slope length of 4,000 to 5,000 feet.31 These figures take into account skier characteristics as well as ski area economics. For skiers who live at sea level, the physical exertion of skiing at high altitude means that periods of skiing have to be balanced by resting in line or in the lodge. Many skiers feel more comfortable when they can see both ends of the lift and everything in between. Because most skiers prefer consistent conditions, they prefer a vertical standard of less than 2,000 feet. Above 2,500 feet, snow conditions tend to vary. Finally, long ski lifts that are open to the elements can be cold and unattractive. From an economic viewpoint, the earning potential of the lift increases as the length increases while cost per foot decreases. Because longer lifts increase po-

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tential capacity, more skiers can be accommodated at a lower cost. Each lift requires a minimum of three operators. With longer lifts, more skiers can be accommodated while labor costs remain fixed. The hourly capacity required to service a mountain, or part thereof, is determined as follows: 1. Identify the number of skiers by ability level. 2. Multiply by the appropriate vertical transport feet (VTF) per feet requirement. 3. Add to get the total VTF / hour to service the mountain or part thereof. 4. Divide by the vertical rise of the mountain.32 The total is the hourly capacity required to service the mountain. By comparing this number to the hourly capacity of various lifts, the number of lifts required can be determined. There is an aesthetic as well as a capacity aspect to the ski lift network. To attract people in all seasons of the year, ski areas, including the ski lift network,

Chair lifts are a popular type of lift to convey skiers to the top of the mountain. Courtesy PhotoDisc / Getty Images

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must be visually attractive. It may be possible to screen lifts in critical areas. The color and reflectivity of lifts has been a concern. The international practice of galvanizing towers has helped in this regard. Light-colored anticorrosion towers installed at Copper Mountain, Colorado, were approved after it was shown that, after three to five years, they would darken adequately to blend into the surroundings.

Types of Lifts Four types of lifts are in general use today: tows, surface cable lifts, chairlifts, and gondolas or tramways.

Tows

The early rope tows dragged people up the mountain. Cheap and simple to operate, they were also uncomfortable and potentially dangerous over long distances and up even moderately steep hills. A modified version exists today, with handles fixed to a moving cable set a short distance above the ground. These so-called handle tows or cable tows are effective for distances up to 1,000 feet.

Cable Lifts

Cable lifts also use moving cables, but the cable stretches overhead while the skier remains on the surface of the ground. They go by various names—T-bars, J-bars, platter lifts, Poma lifts. Like tows, these lifts restrict skier circulation because traffic is unable to cross the path of the lift.

Chairlifts

Chairlifts—the workhorse of the industry—allow skiers to rest as they ascend the mountain. Unlike the first two categories, they do not interrupt skier traffic across the path of the lift. Chairs are either single, double, triple, or quadruple. As the size of the chairs increases, significant capacity is added at a relatively low capital cost. The development of high-speed detachable quad chairlifts has increased capacity safely. The system runs on a high-speed continuously moving cable. Thus, the chairs travel quickly up and down the mountain. When it comes to loading and unloading, however, the chair unit detaches from the cable and essentially comes to a halt. The increased speed allows the lifts to cover greater distances than tows and cable lifts. They need not travel in a straight line up the hill but can be angled up the mountain, thereby moving people over difficult terrain. Crowd problems may develop at the top of the mountain due to the ability of the lifts to move large numbers of people quickly up the hill.

Gondolas or Tramways

Where weather conditions make riding in a chairlift uncomfortable, gondolas offer an expensive and slower alternative.

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BASE AREA Building imitation Swiss chalets next to real miners’ cottages makes both look out of place. —JOHN COTTLE HAGMAN YAW ARCHITECTS

The size and number of elements in the base area is determined by the number and type of skiers on the slopes. At a minimum, base areas should offer equipment rental, a ski shop, a first aid station, a ski patrol office, a ski school with sufficient space for people to gather outside, and food and beverage services.33

Parking The major problem in base area design is reducing potential conflicts between vehicles, pedestrians, and skiers. Underground parking, while expensive, helps the separation while freeing valuable space for retail and cultural developments. Skiers arrive at the base in one of three ways: private auto and / or charter bus, public transportation and / or shuttle bus, and on foot or skis from resort accommodations.34 Locating accommodations within easy walking or skiing distance to the slopes reduces the need for parking, loading, and unloading at the base. The proportion of skiers arriving by each of these three methods must be estimated to determine the acreage required for parking and access.

Access Roads The capacity of access roads is determined by the speed of and the safe distance between vehicles. This, in turn, depends on the number and width of driving lanes, the extent and width of the shoulder, how the road surface is constructed, highway gradients, and weather conditions.35 The patterns of arrival and departure must also be considered. Most people arrive between 8:00 a.m. and 10:00 a.m. and leave between 3:30 p.m. and 4:30 p.m. At Keystone, Colorado, ski patrols install fences on the mountain at the end of the day to slow down skiers hurrying to get off the mountain. This improves safety and helps control skier egress from the resort. In addition, congestion is reduced by selling a combination day / night ticket. Of course, relatively few ski areas have night skiing to spread out demand in this manner. A final factor is the average number of persons per vehicle. This can vary from a low of 2.5 in commuter areas to a high of four per car at destination resorts. The importance of access is crucial to getting people to the resort. In California, for example, it takes a minimum of six hours to drive from San Diego to Squaw Valley. In Europe and Japan, where population densities are greater, public transportation is used. The travel time from Tokyo to a Gala resort terminal is one and

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a quarter hours. Bullet trains travel at up to 150 miles per hour to a modern terminal, where skiers can board a high-speed gondola to the top of a mountain and connect with three resorts.

Food Service Food service areas should be balanced against number of skiers to allow skiers to refuel quickly and get back on the slopes. Thus, a balance of restaurants and snack bars on the mountain as well as at the base gives options to the skiers and helps even demand. Cafeteria seating capacity ranges from 20 percent of design capacity in the West, where sunshine keeps skiers on the slopes for longer periods, to 35 percent of design capacity elsewhere. Seating capacity is a measure of customer turnover, which, in turn, is heavily influenced by the weather. Cold, windy weather brings people indoors more often.

Accommodation A variety of housing and retail opportunities exists at ski resorts. The types of housing found in many areas range from resort hotels and second homes to condominiums and timeshares. While whole-unit condominiums were the prevalent form of housing in the late 1960s and early 1970s, segmented ownership, such as one-week timeshares and quartershares, have become increasingly attractive to guests. That easy access to the slopes is important means that higher-density housing is increasingly common, as this allows more people to be housed closer to the ski runs.36 A common pattern of lodging development is that the closer to the slope, the higher the density of accommodation. The base area tends to be surrounded by high-density, expensive lodging units whose users stay a short time. Farther away are medium-density housing and timeshares. A premium is paid for direct access to the slopes. Single-family homes tend to be farther from the activity core and located on slopes with premium views. Demand Model

Midmountain lodges are difficult to build and operate but offer attractive get-awayfrom-it-all environments. Table 2.3 shows a model developed by the USFS for determining the percentage of visitors needing overnight accommodation. This percentage increases as: The vertical rise increases. The skiable area increases. The variety of terrain approaches the ideal ratio. Travel time increases. Access roads are poorer. Surrounding population density is greater. The resort draws from a larger geographic area. The attractiveness of the site increases.

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TABLE 2.3 Determining the Percentage of Visitors Needing Overnight Accommodation Method: Sum the ratings for each of the following categories to yield a numerical score to be applied to the scale at right. A. Vertical rise

B. Skiable area

C. Variety of terrain

D. Travel time

E. Accessibility

F. Population within 150 miles

G. Unique qualities other than skiing

H. Climate

I. Length of season

J. Snow conditions

1. 2. 3. 1. 2. 3. 1. 2. 3. 1. 2. 3. 1. 2. 3. 1. 2. 3. 0. 1. 2. 1. 2. 3. 1. 2. 3. 1. 2. 3.

500–1,500 feet 1,501–2,500 feet 2,501–3,500⫹ feet 0–200 acres 201–600 acres 600⫹ acres over 35% of area either advanced or novice 25–35% of area either advanced or novice ideal slope ratio: 20% beginner, 60% intermediate, 20% advanced 0–11⁄2 hours 11⁄2–3 hours 3⫹ hours easy access average access (some storm closures) poor access (frequent road closures) 0–30,000 30,001–100,000 100,000⫹ nothing unusual regional attraction national attraction cloudy, unpredictable temperatures, windy partly sunny, variable temperatures, windy sunny, predictably cold, little wind less than 115 days 115–130 days 130⫹ days dry less than 30% of the season dry 30–50% of the season dry over 50% of the season

Source: Winter Sports Base Area Study. USDA Forest Service, Region 6, Portland, OR, n.d.

The climate gets better. The length of the season increases. The snow conditions get drier.

Need for overnight accommodation:

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Rating from sum of categories

Percentage of site capacity

14 15 16 17 18 19 20 21 22 23 24 25 26 27

1 2 3 4 5 10 15 20 25 30 35 40 45 50

Maintenance Maintenance facilities should be located near the base area. They are often combined with the area’s snowmaking facilities. Grooming vehicles are the most useful and expensive maintenance tools a ski area possesses. The standard is for one vehicle per 25 acres of skiable terrain in the East and per 50 to 75 acres in the West.37

Emergency Care Ski patrol and emergency care facilities must be provided at all ski areas. Some areas can rely on local clinics for emergency care once the ski patrol has provided basic first aid. Members of the volunteer National Ski Patrol System (NSPS) are often used on weekends to supplement resort employees. Insurance companies may require qualified emergency medical technician (EMT) skills for members of the NSPS. In addition to sophisticated communications systems, heliports suitable for flight-for-life helicopter services may be needed.38

OTHER WINTER SPORTS ACTIVITIES Cross-country ski tour centers and associated activities are an important part of a resort that wants to provide full service winter recreation to its guests. —U.S. FOREST SERVICE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

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Cross-Country Skiing Fewer constraints pertain to cross-country or Nordic facilities than to downhill. For example, a greater range of terrain is suitable for cross-country skiing. Therefore, areas can be located closer to the market. Development and maintenance costs are less, lifts are not needed, and trails are narrower. Fewer regulatory permits are needed, as Nordic skiing is more compatible with the environment than is downhill skiing. Because of lower costs, cross-country facilities can break even with a season of 40 to 80 days.

Quick Getaway 2.4

In Harmony with Bears Many mountain resorts attract and dazzle visitors with their astounding wildlife. Some of the most impressive animals found in the mountains are the black bears native to North America. Unfortunately, bears are also large and dangerous creatures. When humans mingle with bears, it can be a recipe for disaster. What is a mountain resort to do? On the one hand, having a ‘‘resident bear’’ or two provides a powerful visitor draw. On the other hand, a bear who is drawn to the lodge or campground because of the garbage it can get into may become accustomed to humans, which is extremely dangerous. It’s better to play safe, and make sure that the resort area is not a bear buffet. The simplest solution is just some outdoor housekeeping. Bears are drawn to human settlements for one reason only: easy food. Keeping garbage in a garage or storage shed instead of the open is one way to prevent bears from getting into it. Even though hummingbird feeders and regular bird feeders draw local birds for visitors to marvel at, they should be taken down. Bears will be extremely attracted to the smell of the feeders, even if they are out of their reach. Containers used for storing garbage should be regularly cleaned with bleach or am-

monia, and they can be sprinkled with mothballs or other strong-smelling chemical agents to help mask the smell of organic matter. Any openings on the outside of the lodge that are used as outlets for vented kitchen air should be inspected and cleaned regularly. Outdoor grills (or any grills that are stored outdoors) should be thoroughly cleaned of grease after use, and unused kitchen equipment like refrigerators should be cleaned as well before they go into outdoor storage. Diaper pails and trash bags containing diapers should also be kept in a strong garbage shed. . .remember, nearly everything organic smells like food to a bear. Plastic sacks help mask the smell of garbage, and taking garbage to a dump right after mealtimes can help reduce odors. Above all, don’t burn garbage. It only makes the trash smell more appetizing to the bear. Source: ‘‘Preventative Measures for Black Bears.’’ New York State Department of Environmental Conservation. http: / / www.dec.state.ny.us / website / dfwmr / wildlife / bearprev.html

DISCUSSION QUESTION: Can you think of any other practices that attract bears? How can you deal with the problem practices?

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Site Selection

The most important factors for cross-country trails are the suitability of the landscape and the development of appropriate facilities.39 Technical information about the suitability of a site can be obtained from aerial photographs, topographic maps, master plans from earlier studies, and zoning maps. While aerial photos are useful for determining the location of trails, paths, roads, rivers, and vegetation masses, topographic maps are used more because they give more detailed information. Of particular interest are the contour lines, which give information on slope percentages, drainage patterns, and high and low points. Water location is critical when planning a trail system. Only frozen water is safe for skiing over. Running water, because it does not freeze completely, must be avoided. Season length can be calculated via thawing temperatures. Vegetation is important because it adds to the enjoyment of the experience. Heavy groupings of conifers reduce the snow depth and add contrast to the snow and deciduous trees.

Design Criteria

The width of a trail depends on the volume of traffic, type of trail (one-way or two-way), and steepness of the grade. Trail width can vary from 1.5 to 6 meters, depending on the above criteria. Grooming increases the speed of the trail. Skiers will pick up speed on a gradient of 10 percent or more, so trails should be wider under this condition. Run-outs at the bottom of the trail add to the safety of those coming down the hill. Wider trails are also needed on turns, especially at the end of a long downhill stretch. Finally, passing areas should be provided on long, flat areas, tight corners, and steep slopes.

Cross-country skiing is a spectacular way to view the winter landscape. Courtesy PhotoDisc / Getty Images

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Where trees are part of the trail system, care must be taken to ensure sufficient clearance between the snow line and the lowest branches. Depending on the amount of snow the trail receives, the snow line can be significantly higher than the ground line. This safety factor should not be overlooked when trail planning occurs when the ground is bare of snow. Standardized signs throughout the trail are a basic requirement. A variety of signs is common: Caution signs alert the skier to difficult areas or obstacles. Trail Closed signs should be placed at all points of access to the trail. Trail markers should be visible in a snowstorm and close enough to the trail to prevent straying. Informational signs are usually found at the trailhead and include the routing map, the trail length in distance and average time, locations of rest areas and warming shelters, trail difficulty, location of hazards, and rules and regulations. Additional distance and time signs can be strategically placed along the trails. Wind, sun, and vegetation must all be considered when planning the trail. North slopes are exposed to cold winds and drifting snow. The latter makes tracking more difficult and time-consuming. Steep, open south-facing slopes lose the snow early because of exposure to the sun. Open or running water must be avoided unless a bridge across it is planned. This is because, as noted earlier, it does not freeze completely. Variability of terrain adds to the enjoyment of the experience. A convenient rule of thumb is that one-third of the trail should be uphill, one-third downhill, and one-third flat. Downhill slopes can be categorized as easy, intermediate, or difficult. Easy slopes have a maximum drop of 10 percent and consist of short climb and descent areas. Intermediate slopes consist of a maximum drop of 20 percent, with climb areas that are short but steeper and longer down slopes with run-outs at the bottom. Difficult slopes have a maximum drop of 40 percent, with up to one-half of the trail having an uphill grade. Certain activities are incompatible with cross-country skiing. Snowmobiling is one of them. While snowmobiles can be used for grooming and track setting, the two sports should be kept separate for several reasons: Snowmobiles of the skis. Snowmobiles Snowmobiles Snowmobiles Snowmobiles

pack the snow and cause icing. This causes side slippage cause bumps and moguls. require different turning radii and wider trails. cause ridges that makes skiing difficult. are noisy.40

Snowshoes also compact the snow and create ice spots. Sledding and tobogganing both create icy runs that make skiing more difficult.

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Maintenance is necessary in both the off and the on season. The off-season is a good time to clear all rocks and woody material to the ground. Areas where erosion has taken place can be fixed, overhead branches trimmed, facilities repaired, and snow fences installed to help control drifting snow. During the season, trails should be periodically inspected for fallen branches and areas of erosion. In addition, the trails should be groomed as often as necessary—at least after every 4 to 6 inches of new snowfall. Grooming does three things: packs the snow, prepares the surface, and sets the tracks. As noted earlier, a snowmobile can be used for this purpose; however, a snow tractor is preferable. The snow tractor rakes the snow to the center of the trail and then spreads the loose snow evenly. Tracks are then set in the snow and allowed to set. Temperatures need to be cold enough to allow the tracks to set. Wet snow should be allowed to dry before grooming. The distance covered depends on the experience level of the skier. Beginners travel about 2 kilometers or 11⁄4 miles per hour; intermediate skiers are capable of 5 kilometers or 3 miles per hour; advanced skiers can cover up to 10 kilometers or 61⁄4 miles per hour. The three basic types of trails are point to point, out and back, and looped. Point-to-point trails connect villages, touring centers, and / or overnight shelters. Skiers should be able to easily cover the distance in one day. The trail should be double tracked to allow two-way movement, accommodate the skier ability level being targeted, and have sufficient trail markings to prevent wrong turns in a snowstorm. Out-and-back trails are two-way trails that use the same route for the return. They require adequate passing areas, marked distances to and from the starting point, and trail markers that can be seen from both directions. Looped trails can be stacked or satellite. Both are one-way trails that consist of a major or primary loop aimed at the beginner and additional loops meant for more advanced skiers.

Snowmobiling While snowmobiling includes both trail and no-trail experiences, the latter is difficult to plan for and manage except where a vast amount of land is available. Warm-up areas are used to check whether or not the machine is operating effectively. The maze is used for beginners or as an instructional trail. It is high-density and does not cross other trails. Many of the same criteria noted above for cross-country trails are also important to snowmobile trails. Vistas and scenic overlooks add to the enjoyment of the experience. Marking and periodic packing of trails is important for safety reasons. Trail gradient should not exceed 10 percent for long distances and 25 percent for short distances. Where trails exceed 25 miles, a series of trailheads should be developed to disperse snowmobilers over the various trails, which can be targeted toward specific groups (families, organizations) or uses (racing, recreational). Care should be taken to avoid lake and stream crossings, avalanche hazard areas, cliffs and other steep terrain, road crossings on maintained roads, and zones for crosscountry ski areas.

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TABLE 2.4 Toboggan Hill Classification Type of Slope Tot Beginner Intermediate Expert

Minimum Length of Run (feet)

Slope Area (%)

Gradient (%)

50–75 150 300 300

10 40 40 10

⬍15 15–25 25–40 ⬎40

Source: Winter Sports Base Area Study. USDA Forest Service, Region 6, Portland, OR, n.d., 259.

Tobogganing Guidelines for a typical toboggan run are shown in Table 2.4. A minimum of 5 acres is needed for even a small hill. Beginner and intermediate runs should be straight, a minimum of 150 feet wide, and well groomed. Expert runs can be narrower and longer, with longer areas for run-out at the bottom. All runs should be steeper at the top and shallower at the bottom. Return chutes allow participants to return up the hill. One chute per two runs, separated by strips of vegetation, should suffice. On a small hill, the north, east, and west gradients can be used for separate skill levels, with the south side being used as a return chute, as exposure to the sun is less important when moving up the hill. The top of the hill should be flat, with enough space to allow people to congregate.

Ice Skating A pond or small lake can be used for ice skating if enough extended periods of cold weather maintain the ice. Shading the pond from direct sunlight will help. Guidelines call for a minimum ice depth of 8 inches, although others indicate that less depth is acceptable where there is low visitor density and the ice conditions are uniform. Areas can also be flooded in stages, with sideboards used to hold the water. The sideboards should be twice the thickness of the ice to prevent surface rippling and screened to help minimize direct solar radiation to both the ice and the skaters. Lightly watering the surface in the early morning helps maintain the rink during the season.

SUSTAINABLE DEVELOPMENT Environmental education and interpretation of the natural resources and developments at a ski area can improve the public’s understanding about the relationship between ski areas

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and the environment. Programs can attract summer visitors who might otherwise not visit ski areas. Favorable summer experiences might dispel concerns by visitors that ski area development is detrimental to the environment and wildlife. —U.S. FOREST SERVICE PLANNING CONSIDERATIONS FOR WINTER SPORTS RESORT DEVELOPMENT

A ski area tends to have a major impact on the environment. This fact, combined with increased concern on the part of the general public for the environment, has led to ski areas becoming increasingly aware of and concerned about sustainable development. The Urban Land Institute refutes the mindset that says development and the environment are incompatible.41 They note certain ‘‘myths’’ and attempt to lay out the ‘‘facts.’’ Myth: Environmental protection and land development objectives are incompatible. Fact: The careful development of land can enhance environmental resources. This sustainable development uses a variety of land use practices such as innovative storm water management techniques and open space protection to improve the site while protecting water quality and improving habitat for wildlife. Myth: Development that protects and enhances the environment adds little market value. Fact: Projects that incorporate green features can result in increased sales prices. Many people are willing to pay a premium for developments or lodging units that incorporate environmental features. Myth: Green building practices are too costly and too complicated. Fact: There is increased demand that recognizes the economic competitiveness of green features. Green features include such things as the use of recycled materials, increased reliance on natural air and light, and an avoidance of building materials that emit pollutants. The result can often be better working conditions for employees that result in improved health, morale, and productivity. Myth: Developers and environmentalists are always in conflict. Fact: Both can and do work together. Increasing numbers of developers are realizing that the value of a project is increased with the use of environmentally sensitive practices while environmentalists find that working with developers can help them protect natural resources. In 2000 the National Ski Areas Association (NSAA) coordinated the development of Sustainable Slopes, a series of voluntary environmental principles to guide the planning, development, operations and outreach activities of ski areas. To date the charter has been endorsed by over 160 ski areas in the United States. The document identifies both a vision and a mission statement.

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Environmental Vision Statement: To be leaders among outdoor recreation providers by managing our businesses in a way that demonstrates our commitment to environmental protection and stewardship while meeting public expectations. Environmental Mission Statement: We are committed to improving environmental performance in all aspects of our operations and managing our areas to allow for their continued enjoyment by future generations. Principles and options for getting there have been identified in the areas of: Planning, design, and construction Operations Energy conservation and clean energy Waste management Fish and wildlife Forest and vegetative management Wetlands and riparian areas Air quality Visual quality Transportation Education and outreach The overall objective in planning and designing trails, base areas, and related facilities is to integrate operations into natural systems while considering the environmental impacts—both short- and long-term—to natural resources. Ski areas are encouraged to communicate with local communities up front before development takes place. Environmental concerns can then be determined and plans made to minimize these concerns at the local and regional level. Development can be planned in such a way that the natural setting is respected and outstanding natural resources can be protected. Water, energy, and materials efficiency can become priorities throughout development. In so doing, operational efficiencies can be achieved. High-density development will result in less sprawl while reducing the need for cars and creating an enhanced pedestrian environment.42 The Aspen Skiing Company is a prime example of how these principles can be put into operation.43 The company attracts 1.3 million winter visitors a year to ski approximately 5,000 acres of skiable terrain. During peak season they employ 1,300 people. In 1999 they created an Environmental Affairs Department. The Department has accomplished a number of things. Through its Environmental Foundation they get almost 1,000 employees to contribute annually through direct payroll deduction. In its first four years the Foundation contributed $360,000 to local environmental causes. The Foundation serves as a way for employees—who are entirely responsible for its operations—to make decisions about the communities in which they live. Eco-Star Performer awards have been created to recognize those employees who have made contributions to the environment. Recipients receive gift certificates. Hazardous waste has been reduced from 1,180 gallons in 1997 to 427 gallons in 2001. A new zero hazardous waste policy will allow it to be

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the first ski area in the country to eliminate hazardous waste entirely. After conducting an energy audit the company was able, among other things to: Reduce carbon dioxide emissions by 150 tons by retrofitting the lighting in a hotel garage. Reduce water usage for snowmaking by 3 to 4 million gallons (and saving $15,000 in electricity costs) by building an earthworks for the snowboard half-pipe. Utilizing green technology the company recycled the materials from a restaurant, lodge, and club facility, thereby keeping over 80 percent of the building’s materials from the landfill and extended the life of the landfill by three months. Using the wind to power a ski lift (it operated the only wind-powered ski-lift in the state of Colorado) has reduced CO2 emissions by 20 tons. This is not to say that there are no problems. The company initially overestimated energy savings. There were also problems with management who did not want to replace inefficient light bulbs in hotel guest rooms because the light from the more efficient light bulbs was not as flattering to the guests. Trade-offs are inevitable—weed control programs require the use of herbicides. Many people are opposed to any use of herbicides. There are costs involved. While some cost savings can be shown, other programs such as wind-power purchases and using recycled paper can be more costly than the alternatives. Finally, there are impacts over which the ski area has no control. Skiers often fly long distances to reach the resort, consuming large amounts of fuel. By initiating these practices noted above, a ski area makes the destination more attractive as a place to vacation and / or live. This puts additional pressure on housing, prices, and congestion.

MOUNTAIN RESORT MATURATION CYCLE Successful ski areas mature into year-round resorts through a series of stages.44 The ski area increases midweek use which increases the need for— Overnight accommodation. Through increased Summer business the area matures into a— Resort village that needs year-round utilization to be successful. This requires a variety of additional programs, facilities, conference activities, and sports to— Become a mature mountain resort. The operational considerations involved in this process are the subject of the next chapter.

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SUMMARY In developing a ski resort, care must be taken to strike a balance between the physical capacity of the site to accommodate skiers and the economic needs of the developer to make a profit. Desirable sites have specific characteristics that reduce construction and maintenance costs. General design principles, when adhered to, make for a better ski area. Development decisions must be made in a certain order. The capacity of the mountain is determined by its natural characteristics and the market to be served. This, in turn, indicates the number and type of ski runs, which dictates the ski lift network, which indicates the number and type of base area facilities needed. Increased concern over the environment has resulted in the development of a charter that highlights environmental principles to guide the development and operations of ski areas.

ENDNOTES 1. Ormiston, D., A. Gilbert, and R.E. Manning. ‘‘Indicators and Standards of Quality for Ski Area Management.’’ Journal of Travel Research 3, no. 3 (1998): 35–41. 2. Farwell, Ted. The Concept of Balance, Ski Area Design Analysis, and the Mountain Design Process. Boulder, CO: Ted Farwell and Associates, n.d., 2. 3. Schwanke, Dean, et al. Resort Development Handbook. Washington, D.C.: Urban Land Institute, 1977, 147. 4. Blackbourn, Anthony. ‘‘Restructuring and Growth in the Northern Ontario Ski Industry.’’ In Gill, Alison and Rudi Hartmann. Mountain Resort Development: Proceedings of the Vail Conference. Burnaby, British Columbia: Centre for Tourism Policy and Research, Simon Fraser University, 1991, 95. 5. RRC Associates. Economic Analysis of United States Ski Areas. Lakewood, CO: National Ski Areas Association, 1999, 7. 6. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 137. 7. RRC Associates. Economic Analysis, 7. 8. Lazard, Alain J. ‘‘Expanding Recreation and Conserving Beauty—Finding Solutions: European Examples and Practices.’’ In Gill, Alison and Rudi Hartmann. Mountain Resort Development: Proceedings of the Vail Conference. Burnaby, British Columbia: Centre for Tourism Policy and Research, Simon Fraser University, 1991, 221. 9. Farwell. Concept of Balance, 5. 10. Ibid. 11. Ibid., 26. 12. Wingle, H. Peter. Planning Considerations for Winter Sports Resort Development. Washington, D.C.: USDA Forest Service, 1994. 13. Phillips. Developing with Recreational Amenities, 133. 14. Farwell. Concept of Balance, 18. 15. Wingle. Planning Considerations, 66. 16. Schwanke et al. Resort Development Handbook, 117–118. 17. Farwell. Concept of Balance, 28.

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18. Phillips. Developing with Recreational Amenities, 23. 19. Gill, Alison, and Rudi Hartmann. Mountain Resort Development: Proceedings of the Vail Conference. Burnaby, British Columbia: Centre for Tourism Policy and Research, Simon Fraser University, 1991, 83. 20. Berry, Michael. ‘‘Corridor of Last Resorts: Sprawling Ski Areas, Wilderness Duel Along I-70.’’ Denver Post (December 20, 1998): 1. 21. Gill and Hartmann. Mountain Resort Development, 65. 22. Farwell. Concept of Balance, 13–14, 18. Schwanke et al. Resort Development Handbook, 149. 23. Farwell. Concept of Balance, 15–16. 24. RRC Associates. Economic Analysis, 8. 25. Farwell. Concept of Balance, 15. 26. RRC Associates. Economic Analysis, 7. 27. Schwanke et al. Resort Development Handbook, 150. 28. Ibid., 152. 29. Farwell. Concept of Balance, 15–16. 30. Ibid., 7. 31. Ibid., 34. 32. Ibid., 19–20. 33. Phillips. Developing with Recreational Amenities, 131. 34. Farwell. Concept of Balance, 23. 35. Ibid., 16–17. 36. Schwanke et al. Resort Development Handbook, 147. 37. Phillips. Developing with Recreational Amenities, 132. 38. Wingle. Planning Considerations, 32. 39. Rasmussen, Gaylan. Cross-Country Trail Design. East Lansing: Michigan State University Cooperative Extension Service, n.d., 3. 40. Ibid., 4–7. 41. O’Neill, David J. Environment and Development Myth and Fact. Washington, D.C.: ULI—Urban Land Institute, 2002, 6, 8, 18, 20. 42. Sustainable Slopes: The Environmental Charter for Ski Areas. National Ski Areas Association, 2. 43. Sanders, Ed. ‘‘Business Enterprises and Sustainable Travel Best Practices.’’ New York, The Conference Board, 2002. 44. MacDougall, Bruce, and Sauli Havas. ‘‘Pyha and Luosto Phase 111—Overview and Design Principles for Mountain Resort Villages.’’ Powerpoint presentation on company website, accessed July 22, 2005.

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Chapter 3 MOUNTAIN-BASED RESORTS: MANAGING THE OPERATION LEARNING OBJECTIVES 1. Identify the changing trends in and demographic profiles of the snowsports market. 2. Identify the critical variables in determining a mountain-based resort’s profit potential. 3. Identify potential solutions to financial problems faced by mountain-based resorts. 4. Identify the most important financial ratios relevant to mountain-based resorts. 5. Identify the challenges of a seasonal resort, along with possible solutions to stabilizing year-round revenue.

INTRODUCTION ECONOMICS

Number of Seasons of Participation

Number of Ski Areas

Ski Trips to Canada and Europe

Ranked Distribution of Ski Areas by Size

Season Pass Ownership

Ski Areas by VTF/H Number of Lifts Top States and Top Regions by Skier Visits Capital Improvements Terrain Features DEMOGRAPHICS

Age When First Tried Snowsports Method of Entry into Snowsports Lessons Night Skiing TRIP CHARACTERISTICS Day/Overnight Trip

Gender

Nights in Area

Age

Accommodations Type

Family Status

Flight

Race/Ethnicity

Rentals

SKIOGRAPHICS Equipment Type Ability Level

Lessons Participation with a Ski Club/Group Satisfaction Ratings

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MOUNTAIN-BASED RESORTS: MANAGING THE OPERATION

SNOWBOARDERS Participation by Region and Resort Size

Debt Ratio INCOME STATEMENT Revenue

Projections

Visits by Ticket Type

Attitudes

Expenses

Programs and Facilities SNOWTUBING Prevalence

CRITICAL RATIOS Debt to Cash Flow

Average Visits

Operating Profit on GFA (Gross Fixed Assets)

Ratio of Visits

Profit, Before Tax, on Equity

Day vs. Night

Capital Cost/ Capacity

Age

Total Revenue per Skier Visit

Pricing

Total Expenses per Skier Visit

EXPANDING TO MULTI-AGE VISITORS ECONOMIC FEASIBILITY Critical Variables ANALYZING FINANCIAL STATEMENTS Industry Differences OPERATING CHARACTERISTICS BALANCE SHEET Networking Capital

SUMMER IN THE MOUNTAINS Expand Summer Recreation Outdoor Waterpark Indoor Waterpark Four-Season Resort Conference Centers A New Kind of Resort SUMMARY ENDNOTES

Current Ratio

INTRODUCTION1 Skis were not widely used for recreational purposes until the mid-1800s. The first technological innovation that stimulated demand was the stiff toe-and-heel binding developed by Sondre Norheim of Telemark, Norway. The binding allowed the skier to perform long, gliding turns. By the end of the nineteenth century, skiing was growing in popularity in the United States. The Austrians, during the first three decades of the twentieth century, were responsible for developing the basic techniques of alpine or downhill skiing. By 1930, the downhill and the slalom were recognized by the International Ski Federation, the sport’s ruling body. The 1932 Olympics at Lake Placid, New York, resulted in even more American interest in the activity. By some accounts, as few as four U.S. ski areas were in operation in the early 1930s.

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In 1934, at Gilbert’s Hill in Vermont, the first ski lift was unveiled. A rope and a Model T engine dragged people up the slope for a dollar a day. Since then, innovations in technology, equipment, clothing, and instruction have resulted in skiing’s increased popularity by making it easier and more comfortable for average skiers to enjoy the sport. For example, the 1930s and 1940s brought modern bindings with steel edges, which, by giving the skiers more control, led to easier turns. The first chairlift was installed at Sun Valley in Idaho. The relative remoteness of this location led to the development of housing at the resort, thus beginning the marriage of skiing and real estate development. While development was halted during World War II, two major events occurred as a result of the war that had a tremendous impact on the future of the industry. First, the Tenth Mountain Division, the most decorated American division of the war, developed a significant reputation for its skiing activities. After the war, many of its members migrated into the industry, including the founding members of the Aspen Skiing Corporation. Second, many of Europe’s best skiers and instructors came to the United States, bringing their talent and European style. Innovations in the 1950s, such as easier-turning metal skis, buckled ski boots, step-in bindings, slope-grooming machines, stretch pants, and the inauguration of the interstate highway system, all helped popularize the sport. Television coverage of the 1960 Winter Olympic Games, held in Squaw Valley, California, continued the momentum. The condominium form of ownership was formally recognized in 1962 and helped cement the relationship between skiing and real estate development. Condos could be constructed at higher densities than single-family housing. Scarce area at the base of the mountain was used efficiently. In addition, condos were easy to rent for short periods during the ski season. These movements led to the development of Vail, Colorado, in 1962, as the first planned destination ski resort. Great growth occurred in the next decades as the number of ski areas increased to 90 by 1947, over 200 by the late 1950s, and over 600 by the late 1960s. The 1970s, however, added only an additional hundred areas to the inventory. In 1960, half of all ski sites were located in the West, with slightly less than 40 percent in the East. At the end of the growth decade of the 1960s, ski sites were more numerous in the East than in the West—50 percent in the East and approximately 33 percent in the West. Over the same period, the share of the Midwest and the South remained steady at 20 percent. Western areas, however, tend to be larger than those elsewhere and, as a consequence, account for more skier visits. Though innovations in the 1970s continued to make skiing more accessible to more people with less ability, the development of ski areas was slowed by high land prices, significant interest rates, and the time and money required to obtain development approval due to an increased concern for the environmental impact of large-scale developments. The growing popularity of cross-country skiing, which benefited from the development of waxless skis and increased concern for and appreciation of the environment, offered an opportunity to cultivate another market segment. Skiing is heavily influenced by demographics. While many skiers participate in the activity well into their golden years, the rate of participation is a function

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of age. If people do not take up the sport early in life, chances are they will not later. Demand, then, is a direct function of population numbers. The number of teenagers declined significantly in the 1980s, causing concern throughout the industry. Children of the baby boomers, however, returned to the slopes not only as downhill skiers but also as snowboarders. While concern over the flattening of the skier growth curve has been felt in most regions of the country, the rapid increase in snowboarding is cause for optimism. Overcoming initial problems when skiers and snowboarders came into contact, a growing number of resorts are developing runs specifically for snowboarders. As the sport becomes more mainstream, it is attracting people who have money to spend.

ECONOMICS2 Number of Ski Areas The total number of open and operating U.S. ski resorts decreased slightly to 492 in the 2004–2005 ski season. Over the long term, the number of operating resorts experienced a rapid decrease between the 1983–1984 season and the 1993–1994 ski season, likely because of the increasingly competitive nature of the ski industry and the difficulties associated with operating smaller ski areas, which are often undercapitalized. Between the 1993–1994 season and the 1999–2000 season, the number of operating resorts hovered in the 503 to 521 region, dropping to a lower plateau ranging between 490 to 494 for the following five seasons. This relative stability, exhibited over the five seasons after the 1999–2000 season, shows that the historic ‘‘shakedown’’ has apparently blown over. The remaining ski areas are exhibiting what can be described as robust staying power.

Ranked Distribution of Ski Areas by Size3 In the 2004–2005 ski season, the bottom quartile of resorts by size reported fewer than 38,950 visits. The second quartile hosted somewhere between 38,950 and 110,043 visits, the third quartile reported between 110,043 and 233,719 visits, and the top quartile by size hosted visits of 233,719 or greater. Additionally, the top decile of resorts by size posted visits in excess of 445,758. Apparent in this distribution is the fragmented nature of the industry—the top 20 percent of resorts control roughly 60 percent of total visits. However, no individual ski area controls even so much as 3 percent of the total skier visits; therefore, no single resort dominates the national pattern. While certain companies operate several resorts, no company in particular controls this very fragmented industry. The Midwest and the Southeast have resorts that are consistently smaller in size when compared to other regions, which is unsurprising given the areas’ climate and topography. The Rocky Mountain region has the greatest variety of resort

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sizes, from the very large to the very small. The presence of so many small ski areas is encouraging, given the region’s reputation for large destination resorts. In the Northeast, a small group of resorts host a large population of participants.

Ski Areas by VTF/H Vertical transport feet per hour (vtf / h) is a measurement of a ski area’s ability to transport skiers uphill. The vtf / h number is obtained by multiplying the vertical rise of the lift by the manufacturer’s lift capacity rating, and total vtf / h is the sum of the capacities for all of the lifts in a given ski area. Resorts with 12,000 vtf / h and above are 11.6 percent of all ski areas yet account for just under half of all skier visits. At the other end of the spectrum those resorts with less than 3,000 vtf / h are 59.6 percent of all ski areas yet account for only 16.5 percent of all skier visits. The second smallest category of ski resorts, with 3,000 to 5,999 vtf / h, accounts for 16.9 percent of skier visits and 17.7 percent of all U.S. ski resorts. The second largest category, defined by having 6,000 to 11,999 vtf / h, accounts for an impressive 19.4 percent of skier visits despite including only 11.2 percent of resorts. It is obvious that the larger ski areas draw a disproportionately large percentage of total skier visits, as can be seen in the table below.

Number of Lifts Average vtf / h has been increasing over time, since resorts have continuously added and / or upgraded their lift capacity. Resorts of all sizes have participated in this trend, but the number of lifts have increased the most among the secondlargest resort size grouping (up 9.4 percent) and least among the smallest resort size grouping (5.3 percent). Overall, the average number of lifts per resort has been gradually increasing over time on a national basis, a regional basis, and on the basis of resort size.

TABLE 3.1 Skier Visits and Number of Resorts by Size of Ski Area 2004–2005 Size (vtf / h-000s) 0–2,999 3,000–5,999 6,000–11,999 12,000 and over Total

Skier Visits

Percent of Skier Visits

Number of Ski Areas

Percent of Ski Areas

9,407,358 9,611,731 11,009,877 26,853,332 56,882,299

16.5% 16.9% 19.4% 47.2% 100.0%

293 87 55 57 492

59.6% 17.6% 11.2% 11.6% 100.0%

Source: Kottke National End of Season Survey 2004 / 2005. Lakewood, CO: National Ski Areas Association, 2005, 7.

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Top States and Top Regions by Skier Visits Nationally, skier visits declined slightly in the 2004–2005 season to 56.9 million visits. The number of ski areas in the U.S. has declined over the past 20 years from 727 in the 1984–1985 season to 492 in the 2004–2005 season. Since the beginning of the century this number seems to have stabilized.4 For the largest ski states, the estimated skier visits in the 2004–2005 season were as follows: Colorado’s skier visits increased by 4.5 percent to 11.8 million visits. California’s skier visits increased by 6 percent to 7.8 million visits. Vermont’s skier visits increased by 6.2 percent to 4.6 million visits. Utah’s skier visits increased by 13.6 percent to 4 million visits. New York’s skier visits increased by 1.7 percent to 3.9 million visits. Pennsylvania’s skier visits decreased by 3.8 percent to 3 million visits. Michigan’s skier visits decreased by 4.3 percent to 2.4 million visits. New Hampshire’s skier visits increased by 11.1 percent to 2.2 million visits. The Rocky Mountain region accounts for about one-third of all skier visits, followed by the Northeast with about one in four visits and the Pacific West with just under 20 percent of all visits.

Capital Improvements5 During the 2004–2005 ski season, total expenditures on capital improvements showed an upswing. Spending has increased most on real estate, showing some impressive jumps. Capital improvements on other on-mountain facilities and support have experienced steady spending, whereas spending on new and upgraded lifts rose and is expected to continue rising. Investigating cumulative past and planned spending over a three-year period (2003–2004 to 2005–2006) shows that the largest proportion of investment over the period was earmarked for real estate (43 percent), followed by mountain support and facilities (41 percent), and new and / or upgraded lifts (16 percent). Breaking out the industry’s new and upgraded lifts by lift type, the largest segment of lifts added or upgraded over the past season were chairlifts (48 lifts), followed by conveyors / carpets (32 lifts), and tows / surface lifts (15 lifts).

Terrain Features6 A large number of ski resorts have terrain parks. Roughly 42 percent have halfpipes, 34 percent have super-pipes, and about 11 percent boast other specialized terrain features such as quarter-pipes, rails, kickers, jibs, tabletops, box jumps, snowskate parks, kids’ terrain parks, progression parks, snowcross courses, snowdeck parks, trail features, and more.

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Quick Getaway 3.1

Artificial Snow: Worth the Expense? In the winter months, mountain resorts rely on snowfall for their income. No snow means no skiers and snowboarders, which means no revenue. With global warming increasingly being recognized as a factual phenomenon, ski resorts must find a way to compensate for the shorter winter-sports seasons that accompany climate change. One way to prevent an economic meltdown is to try to extend the snow season. To keep snow on the ground and profits soaring, ski areas are increasingly turning to artificial snowmaking. However, artificial snowmaking may not be economically viable, especially for resorts in certain regions. Snowmaking requires extremely large amounts of water—for instance, it takes 139,322 gallons of water to make an acre-foot of snow. In the real world, however, the amount of artificially made snow needed is based on the topography and the melting rate. A ‘‘typical’’ ski run, 200 feet wide with a drop of 1,500 feet, would take 3 acre-feet of water (55 tanker truck loads!) to cover it with 1 foot of snow. A review of ski areas across the nation in-

dicated that capital costs for snowmaking can run from $10,000 to $20,000 for each acre to be covered. In addition, maintenance costs can account for as much as 25 percent of the resort’s total operating costs. Ski areas whose ski season will be significantly affected by global warming may feel the need to turn to artificial snowmaking in order to remain economically viable. This is not a bad option, if the resort has affordable water available. But for those ski areas that don’t have sufficient water availability—such as resorts in the notoriously water-poor West—the future will mean dealing with shorter ski seasons. Source: ‘‘Impacts of Climate Change on the Economic Viability of Selected PNW Ski Areas.’’ Climate Impacts Group. Site accessed July 21, 2006. http: / / www. cses.washington.edu / cig / res / sd / cciskiareas.shtml

DISCUSSION QUESTION: Do you think it is environmentally acceptable to use scarce water resources in order to artificially extend the period when snow is on the ground?

Presence

Roughly 90 percent of resorts in all regions provide terrain parks, and every size category of ski area (with the exception of the smallest resorts) provides some terrain—this indicates the widespread popularity of the terrain park. Half-pipes are generally more common at medium and large resorts (45 to 51 percent) than they are at smaller resorts (19 percent). Super-pipes are very common at large resorts (70 percent), more common than in any other size category. Super-pipes are also more likely to be found at resorts in the Northeast, the Rockies, and the Pacific West than they are at resorts in the Southeast and Midwest.

Number

Among resorts with terrain parks, roughly 39 percent have one park, 38 percent have two parks, 14 percent have three parks, and 10 percent have four to six parks. The overall average number was two parks. Among resorts possessing a half-pipe,

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94 percent have one half-pipe, 3 percent have two half-pipes, and 3 percent possess three. Every resort with a super-pipe only has just one. ‘‘Skiing offered a way to personally achieve the strong sense of individual control over raw nature that American travelers craved.’’ —HAL K. ROTHMAN DEVIL’S BARGAINS

DEMOGRAPHICS7 In the 2004–2005 ski season, U.S. resorts logged approximately 56.9 million skier visits. Who was on the slopes?

Gender During the 2004–2005 season, the male-to-female ratio remained within the historical range, with 59 percent male and 41 percent female participants. These numbers are remarkably similar to the 59 to 62 percent male and 38 to 41 percent female mix seen in the previous seven seasons. The ratio is fairly uniform across all regions of the U.S., and over the past several seasons, the gender mix within each region has stayed moderately stable. When examined by equipment type, female skiers have made up between 40 and 43 percent of downhill skiers over the eight seasons prior to the 2004–2005 season. During the same time frame, females composed 31 to 33 percent of snowboarders. Males and females show markedly different characteristics in their skiing and riding profiles. Males make up the majority of participants who possess the following characteristics: People who first began skiing or riding on their own (77 percent male) Advanced / expert ability level (72 percent) Aged 65 and over (71 percent) Snowboarders (67 percent) Ski or ride 30 or more times per season (67 percent) Wear helmets (63 percent) Singles with no children (62 percent) Season pass holders (62 percent) Females, on the other hand, represent the majority who possess the following characteristics: Beginners, excluding first-time participants (58 percent female) Participants who first tried skiing / snowboarding with a school group, a ski / snowboard club, or another organized group (48 percent combined)

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First-time participants (54 percent) Lesson takers (57 percent) People who plan to ski or ride just once in the 2005–2006 season (52 percent) or two to three times (47 percent) Renters of equipment (49 percent) Participants who have dropped out of snowboarding / skiing at least one year out of the five seasons prior to the 2004–2005 season (48 percent) Participants who visit as a part of an organized group (48 percent) Couples with no children (46 percent) Participants who are aged between 35 and 44 (45 percent) Females are rather well-represented in the lower-ability, less-avid segments, but they are wholly underrepresented in the overall participant base. However, the data seems to indicate that the snowsports industry is equally effective at

Quick Getaway 3.2

Snowsport Trends and Demographics Numerous trends drive the snowsports industry. The industry’s reliance upon weather conditions is probably the most obvious trend. Every year, the growth and spending for snowsports is dependent on how much snowfall the slopes receive. The winter of 2000–2001 was a lucrative season because of high levels of snowfall. The 1998–1999 season, however, was a relatively poor season due to the warming effects of El Nino˜, which contributed to a lack of snowfall. There are other factors that drove the snowsports market in the early 2000s. One such factor is the changing demographic trends on the slopes—boomers are being replaced by echo boomers, who increasingly prefer snowboarding. Non-demographic factors include the relatively high cost of vacations that include snowsports; the changing range of services and activities desired by consumers, such as nonskiing activities; the trend toward taking more frequent, shorter vacations; the impact of September 11; and the Winter 2002 Olympics in Salt Lake City.

The changing demands of consumers regarding the snowsports industry will drive the market during the next five years. The industry will likely find itself providing nonskiing activities in order to draw a wider range of consumers. Additionally, winter sports areas will increasingly offer year-round services (such as hiking, golfing, and mountain biking) for summertime outdoor-sports enthusiasts. Fortunately, younger consumers (primarily snowboarders) are expected to rejuvenate and drive the established winter sports market. Source: ‘‘Snow Sports Vacation Market: US Report.’’ Market Research Report. http: / / www.mindbranch.com / listing / product / R560-464.html

DISCUSSION QUESTION: Do you think that the events of September 11, 2001, continue to affect the winter sports industry? If not, can you think of more recent events that might affect the industry?

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inducing first-time trial among both males and females, even though it appears rather less effective at converting females into frequent, accomplished participants. The industry also seems ineffective at retaining female participation, and at reducing female drop-out rates over time. It’s interesting to note that groups are a fairly effective method of introducing women to snowsports.

Age The median age of snowsports participants has risen from 32 (1997–1998 season) to 36 (2004–2005 season). The proportion of visitors aged 45 and over has seen steady gains, but the proportion of young adults (those between 18 and 24 years old) has been fairly static. Similarly, the proportions of children between the ages of 15 to 17 and 10 to 14 have not changed significantly. The growth of the 45⫹ age group was to be expected as the baby boomers age. However, the data also implies that the snowsports industry has been successful at retaining older participants. Those in their late 40s and older continue to drop out, though at a less extreme rate. The decline in numbers of snowsports participants aged 25 to 44 is consistent with the movement of the smaller ‘‘Generation X’’ group (also known as the ‘‘baby bust’’ generation). Clearly, it’s just as important for the industry to attract younger, new enthusiasts as it is to retain the older, more experienced participants.

Family Status On a national basis, 48 percent of skiers and snowboarders are a part of a family that has children at home. Parents with kids make up 32 percent, and kids aged 17 and under compose the other 16 percent. The second-largest segment is composed of singles with no children, and the rest of the group is roughly equally split between empty-nesters and couples with no children. Over time, the proportion of singles has decreased, while the proportion of households with children has increased somewhat. The marital status of snowsports participants varies significantly according to the size of the resort. At the smallest resorts, 33 percent of visitors are children aged 17 and under. However, at the largest resorts only 9 percent of visitors stem from this group. On the other hand, the proportions represented by the following groups is greater at larger resorts: singles with no children (20 percent at small resorts to 31 percent at large resorts), couples with no children (6 percent, moving to 14 percent), and empty-nesters (8 percent to 15 percent). The proportion of people (both singles and in couples) who have children is roughly equal across all resort sizes (31 to 33 percent on average).

Race/Ethnicity Eighty-eight percent of skiers and snowboarders in the 2004–2005 season were white, which is in the same range as the prior four seasons. This ethnic mix has been very stable over time.

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There is some moderate variability of ethnicity across regions. The Pacific West region has the greatest amount of diversity (19 percent racial / ethnic minority), followed by the Southeast (17 percent), the Midwest (12 percent), the Rocky Mountain region (8 percent), and the Northeast (6 percent). The Pacific West boasts the highest concentration of Asian skiers and snowboarders (5.6 percent) and Hispanics (4 percent). The Southeast contains the highest concentration of African Americans (2.8 percent). As a whole, ethnic minorities are far more likely than non-Hispanic whites to use twintips / snowskates (7 percent) or snowboards (45 percent) as their equipment. They are also more likely to classify their ability level as ‘‘first time / beginner’’ (31 percent, vs. 14 percent of whites) and to rent equipment (38 percent, vs. 26 percent of whites). Racial and ethnic minorities are also more likely to take a lesson (on the day that they were interviewed—16 percent vs. 8 percent of whites). Minority participants are on the whole younger than their white counterparts, with a median age of just 25. These data point to minorities’ relatively recent adoption of snowports. Whites are more likely than minorities to have started snowsport participation with their families (51 percent, vs. 39 percent of minorities). However, minorities are more likely to have started with friends (39 percent vs. 33 percent) or with a group (18 percent vs. 13 percent) than whites are. This information indicates that minorities do not have as much family history of snowsport participation as do whites. Minorities continue to be underrepresented in skiing and snowboarding, as they make up only 12 percent of visits even though they compose 33 percent of the U.S. population (as per 2005 census estimates).

SKIOGRAPHICS Equipment Type Alpine skiers compose the largest segment of ski resort visitors—in the 2004–2005 season, they accounted for 69 percent. After the alpine skiers come snowboarders with 26 percent, telemarkers with 2 percent, and other types of equipment with another 2 percent. After growing remarkably, snowboarding participation levels have plateaued over the five years prior to the 2004–2005 season. Likewise, alpine skiers has leveled off after dropping steadily for several seasons. Telemark skiing has plateaued as well, despite several years of growth, and other types of equipment (twintips, snowskates) have leveled off in popularity after a period of quick growth. Unsurprisingly, snowboarding lessons have reached a popularity plateau as well, when examined as a percentage of all lessons (fluctuating in the 23.2 to 23.7 percentage range). Among younger participants, snowboarding continues to be particularly popular. Forty-five percent of people aged 10 to 14, 55 percent of 15 to 17 year olds and 54 percent of those between the ages of 18 and 24 like snowboarding. The percentage who enjoy snowboarding in the 25 to 34 year old age group drops

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to 38 percent. When examining this trend, it appears that the flattening of snowboard growth is mostly the result of the general shift to an older visitor base, and a decrease in the rate of snowboarding’s adoption by younger participants.

Ability Level The majority of snowsports participants have an intermediate skill level (46 percent), followed by advanced / experts (41 percent), beginners (9 percent), and firsttimers (3 percent). Over time, the proportion of participants with an advanced / expert level of ability has risen, increasing from 31 percent to 41 percent over the eight seasons prior to the 2004–2005 season. This ability increase has been largely universal, without any significant differences between resort regions, resort size groupings, demographic groups, or skiographic groups. This trend appears to be driven by increasing experience levels and age, as both factors play a part in the number of years spent in snowsports. However, variability in ability levels still exists between regions. Intermediates account for the majority of participants (46 to 47 percent) in all regions except for the Pacific West, where advanced / experts lead by several percentage points (42 percent vs. 46 percent). Overall, the Pacific West accounts for the largest percent of advance / expert visitors. The Southeast, on the other hand, has a greater percentage of first-timers and beginners (26 percent) than any other region. Ability levels are strongly correlated with many skiographic, demographic, and trip characteristics. Beginners, for example, skew young and female, with a relatively high percentage of ethnic / racial minorities and a great deal of equipment rental, lesson-taking, and prior dropout from snowboarding / skiing. Beginners also ski more infrequently. On the opposite extreme, advanced / expert skiers skew male, older, and non-Hispanic white; unsurprisingly, they also have higher rates of participation days, equipment ownership, and helmet usage. Advanced / expert snowsports enthusiasts are more likely to have been introduced to their sport at a young age (ten and under) and through their family, while beginners usually start later and begin with a group or with friends.

Number of Seasons of Participation Alpine skiing demonstrates a longer history of participation than snowboarding— roughly 63 percent of alpine skiers have skied for ten or more seasons, while only 15 percent of snowboarders have done the same. Snowboarding continues to attract many more first-year participants (14 percent) than skiing (6 percent). This suggests that snowboarding has a great deal of growth potential, compared to skiing. However, in the past half-decade this growth has not materialized, leading to speculation that snowboarder retention rates are lower than skier rates.

Ski Trips to Canada and Europe In the 2004–2005 season, roughly 5 percent of U.S. resident snowsports enthusiasts said that they planned to ski in Western Canada, 3 percent were planning on skiing in Eastern Canada, and 4 percent had plans to ski in Europe. These figures were

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roughly comparable to the figures for the previous season. Residents of Pacific states (Alaska, California, Hawaii, Oregon, Washington) were more than four times more likely to ski in Western Canada than U.S. skiers overall. Residents of the Middle Atlantic were to some extent more likely to ski in Eastern Canada than overall U.S. skiers.

Season Pass Ownership Roughly 27 percent of interviewed snowsports enthusiasts reported owning a season pass to at least one resort during the 2004–2005 season. This was similar to the 26 to 28 percent levels recorded in previous seasons, but slightly below the 29.6 percent recorded by the 2004 / 05 Kottke survey. As might be expected, those who owned season passes fit the avid, experienced profile: they were mostly advanced / expert participants, and on the day they were interviewed, they were more likely than average to be spending a day trip at the resort.

Age When First Tried Snowsports In the 2004–2005 season, the median starting age reported by snowsports participants was 12 years old—identical to the previous season’s result. This strong orientation toward youth as the primary entry point only underscores how important it is to get children and teens engaged in snowsports. In general, the younger a participant starts, the more avid a participant they become. Males generally start earlier than females, and snowboarding in particular is associated with a young starting age (15 or less). Generally, the older a participant was when he or she started, the more likely it is that that participant is an alpine skier. Interestingly, ability level varies greatly with age of first trial. Of participants at the advanced / expert level, more than half started when they were five or younger (56 percent). Obviously, early learning is crucial for gaining snowsport skill levels later. Also, the younger a participant is when first trying snowsports, the more likely he or she is to frequently participate later in life.

Method of Entry into Snowsports Most snowsports participants started along with their family (50 percent), followed by those who started with friends (34 percent), with school (7 percent), a ski / snowboard club (3 percent), another type of group (4 percent), and alone (3 percent). The participant’s method of entry greatly depends on age of entry. Most participants who started at the age of ten or under started with their families. Family drops in importance for starters between the ages of 11 to 25, and gains in importance thereafter. Friends emerge as an important entry group among the 11 to 15 age group, and they remain important for beginners aged 16 to 30. Other methods of snowsports introduction fulfill relatively niche roles. School becomes important for the 11 to 15 age group, ski clubs are most important for older first-timers, and ‘‘other groups’’ are instrumental for beginners aged 41 to 60.

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Children who start snowsports at a young age are more likely to become avid participants as they get older. Courtesy Corbis Digital Stock

These figures are especially important to consider when designing age-appropriate measures to introduce snowsports to newcomers.

Lessons8 Models of skier visitation suggest that sustainable long-term growth in the industry is strongly tied to retaining entry-level snowboarders and skiers, largely through improved and upgraded lessons. In the 2004–2005 ski season, both alpine and snowboarding lessons were up. According to ability level, Level 1 lessons were slightly increased, whereas Level 2⫹ lessons were practically flat. Alpine lessons still compose a larger share of total lessons than snowboarding lessons (76.4 percent vs. 23.6 percent). Level 2⫹ lessons continue to account for a greater share of lessons than Level 1 lessons, and adult lessons were slightly more numerous than children’s lessons. During the four seasons prior to the 2004–2005 season, total kids’ lessons grew moderately in proportion to adult lessons, but the proportion of total snowboarding lessons stayed at a plateau.

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Total snowboarding lessons varied between 22.1 and 25.8 percent of total lessons across different-sized resorts, but there was no clear correlation to size. Conversely, Level 1 lessons showed a strong correlation, decreasing from 72.2 percent at smaller resorts to a mere 30 percent at the largest. Like snowboarding, children’s lessons followed a more irregular pattern, but the highest percentage of children’s lessons were given at the largest resorts, followed by the second-largest, the smallest, and finally the second-smallest. Based on these data, an estimated 8.8 percent of skier visits during the 2004– 2005 season in the U.S. included a lesson, with alpine skiers being the most likely group to take lessons. In all resort regions and across all resort sizes, snowboarders were far less likely to take lessons than skiers were, despite the fact that snow-

Quick Getaway 3.3

Setting the Ski-School Record Straight In some recent media reports, ski schools have been portrayed as unfriendly places where children are placed in groups that are far too large for their inexperienced, parent-hating instructors. However, ski resorts have reasons for the manner in which they run ski schools. Let’s examine some of the allegations: Complaint: ‘‘Ski lessons are un-familyfriendly.’’ Response: As with many other children’s activities (swim lessons, Little League baseball) parents are encouraged to watch, but not to interact with the children. It’s generally a far more positive experience for the child when she is allowed to work with instructors and her peers without a parent distracting her. And insisting parents can distract ski instructors’ attention away from where it should be focused: on the children’s safety. If there’s no way that a parent will be able to step back, he should look into family lessons where instructors work with both parents and children. Complaint: ‘‘Ski instructors are inexperienced and don’t know what they are about.’’ Response: While not all instructors are certified with the Professional Ski Instructors of

America or the American Association of Snowboard Instructors, they all must undergo required training before the season begins, and keep up with training as the winter progresses. Instructors are also required to shadow certified instructors for at least two lessons before team-teaching their first classes with more experienced instructors. Complaint: ‘‘What am I going to do with my two-year-old?’’ Response: Children two years old and younger are generally recognized as being too young to learn to ski or snowboard. Luckily, many resorts provide great day-care facilities with licensed staff. A young child can have more fun and be safer at a licensed facility than she will at a friend’s house. Before going to a resort, check out its day-care options. Source: Shinn, Peggy. ‘‘Ski schools unfairly raked over the coals.’’ MSNBC.COM (January 24, 2006). http: / / www.msnbc.msn.com / id / 11008748 /

DISCUSSION QUESTION: Do you think it’s reasonable for ski schools to set a ‘‘no-parent policy,’’ in which parents are not allowed near the lessons at all?

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boarders were much more likely to be beginners than were skiers. The gap is largest at the smallest resorts, where skiers were twice more likely to take lessons than snowboarders were. Nationally, the percentage of resort visits that include a lesson has been on the decline for four years prior to the 2004–2005 season.

Night Skiing9 Night skiing is a favorite activity, though it does not account for a large percentage of skier visits. Over the four seasons leading up to the 2004–2005 season, night skiing visits only accounted for about 6.6 to 7.3 percent of all visits. The Midwest has the largest percentage of night visits, although the Southeast is strong as well. Measuring by resort size, the percentage of night visits decreases as resort size increases, with 35.1 percent of visits at the smaller resorts and only 2.4 percent at the largest.

TRIP CHARACTERISTICS The following are based on the responses of skiers / riders, and all answers pertain to the day on which they were interviewed.

Day/Overnight Trip The majority (59 percent) of respondents said that they were on an overnight trip when they were interviewed, while the rest were visiting on a day trip. Overnight visitation varies in correlation with resort size—the smallest percentage (31 percent) of overnight visits were found at the smallest resorts while the largest percentage (71 percent) was to be found at the largest resorts. Accordingly, mid-sized resorts had between 50 and 60 percent overnight visits. These data, taken from the 2004 / 05 National Ski Areas Association (NSAA) National Demographic Study, shows a higher share of overnight visitors for the same season than does the Kottke report. The latter is probably more accurate, however, because of its larger base of participating resorts. Snowboarders are less likely than alpine skiers to stay overnight, or so the interviews for the NSAA report indicate. Overall, participants were more likely to be on an overnight trip the older they were.

Nights in Area Out of the overnight visitors, the average stay length nationally was 4.8 nights, with a median stay of 4 nights—identical with the two seasons prior to the 2004–2005 season. The longest average stays were logged at resorts in the Rocky Mountains.

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Quick Getaway 3.4

Keeping Things Profitable after the Snowmelt Summer is no longer a dead, profitless desert at Utah’s ski resorts. For example, eight of Utah’s 13 active resorts now run summer programs designed to lure visitors to the mountains for things such as thrill rides, mountain biking, disc golf, readings by famous authors, bluegrass festivals, and fly-fishing. It’s not just Utah. Resorts in the rest of the country are getting in on the summer cash as well. In its 2005 annual survey, the National Ski Areas Association (NSAA) asked member resorts to quantify the importance of the summer market to their business. Of those who responded, 75 percent said that summer operations collected revenue, but only a handful of resorts reported that summertime income exceeded 10 percent of their total. And not every resort is going four-season: a quarter of resorts nationally still close for the summer. Food and beverage service, accommodations, and golf fees provided most of the summer revenue for ski-resort operators nationally. ‘‘If you are going to stay open, it just makes sense to have summer activities. The more we can offer people by way of festivals, live music, or food, the more likely they are to want to come up (Little Cottonwood) canyon,’’ said Laura Schaffer, spokeswoman for Utah’s Snowbird Ski and Summer Resort. ‘‘Occupancy over the weekends of the bluegrass and blues festi-

vals, as well as Oktoberfest weekends, is higher than other weekends throughout the summer.’’ Becoming a year-round resort is also beneficial to good workers. With year-round operations, the company has an incentive to keep them around as full-time employees rather than seasonal workers, and four-season income provides the revenue to cover salaries. Small, resort-town businesses also share the rewards. However, small resorts can’t usually handle the losses associated with summer operations. ‘‘We tried it twice and it was just not financially feasible,’’ said Marc Paulsen of Powder Mountain Resort above the Ogden Valley, referring to failed summer programs in the 1980s and 1990s. ‘‘We didn’t draw enough people to pay the salaries. Larger resorts can afford a loss. Summer is not their primary business. But Powder Mountain is family-owned and needs to be profitable.’’ Source: Gorrell, Mike. ‘‘On many ski resorts, summer’s still a good time to chill.’’ Salt Lake Tribune (July 12, 2006).

DISCUSSION QUESTION: Can you think of any way that small resorts can use their properties in the summertime to gain revenue, since they are unable to support the events that are often hosted by larger resorts?

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The average length of stay increased steadily along with resort size, which is not terribly surprising as larger resorts tend to have more supportive infrastructure.

Accommodations Type Rented accommodations were the most popular among overnight guests, with 67 percent of visitors lodging in rentals. Seventeen percent reported staying with friends or family who lived in the area, while another 16 percent opted to stay at a vacation unit belonging to friends, family, or themselves. Those who stayed in owned vacation housing showed marked differences from the other groups: they had higher proficiency levels (50 percent advanced / expert), they were more likely to own season passes (38 percent), they stayed longer (5.5 nights on average), they were older (median age 44), and they frequently skied or snowboarded at the resort in question. Those who stayed with family or friends were generally younger than other overnight visitors.

Flight On a national basis, slightly less than half of ski vacationers flew to their destination (43 percent). This number is slightly higher than the average during the previous season, during which 41 percent of vacationers flew. In the 2004–2005 season, there was a high percentage of flight to resorts in the Rocky Mountain region, moderate flight usage to the Pacific West region, and low numbers of flights to Northeast, Southeast, and Midwest resorts. On the whole, fliers take significantly longer trips than their non-flying counterparts.

Rentals On the day that they were interviewed for the NSAA study, 27 percent of respondents replied that they were renting equipment, a number unchanged from the previous season. Today’s renters are usually distinguished by being less experienced and less avid than equipment owners. Correspondingly, renters tend to be: female infrequent skiers / riders overnight visitors first-time resort visitors lesson-takers visitors traveling with an organized group residents of the southern U.S.

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Lessons When interviewed, 9 percent of respondents replied that they were taking a lesson ‘‘today.’’ The proportion of lesson-takers is highest at the smallest resorts, and firsttime participants are especially likely to take a lesson, which only illustrates how critical lessons are for introducing newcomers to snowsports. Generally, the profile of lesson-takers tends to resemble the profile of less active, relatively inexperienced participants.

Participation with a Ski Club/Group On the day they were interviewed, 14 percent of respondents replied that they were at the resort with a ski club or another organized group. This percentage falls solidly within the 13 to 16 percent range that was recorded in the two seasons prior to the 2004–2005 season. These groups are responsible for a higher percentage of visitors to the Southeast and the Midwest. They also account for a larger proportion of guests at medium- and small-sized resorts than at the very largest resorts.

Satisfaction Ratings Visitor satisfaction tends to be highest regarding employee friendliness / helpfulness and enjoyment of the experience. Lift lines, value received for the price, and variety of trails received mediocre ratings. Visitors are consistently least satisfied with a resort’s food and beverage services. Resort satisfaction ratings are very strongly tied to the visitor’s likelihood of recommending the resort to another person. Visitors who consistently give high ratings are known in the industry as ‘‘promoters,’’ whereas ‘‘detractors’’ give low ratings. ‘‘Passive’’ visitors give ratings that are in the middle. The differentials between promoters and detractors were highest for the variety of trails, the value for the price paid, and the visitor’s overall enjoyment of the experience. This suggests that these particular categories are the most important influences on whether a visitor will recommend the resort to another.

SNOWBOARDERS In the 2004–2005 season, snowboarding represented 28.8 percent of all skier visits to U.S. ski areas. The figure did not change from the previous season. To a certain degree, this plateau effect was a result of the reduced influence of the Pacific Northwest, which has high snowboard participation. The pattern also reflects a ‘‘plateauing’’ of snowboarding in other regions of the nation, such as the Northeast, Midwest, and the Rockies.

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Participation by Region and Resort Size10 As suggested before, the Pacific West has consistently had the highest rate of snowboarder participation, followed by the Midwest, the Southeast, the Northeast, and finally the Rocky Mountains. Interestingly, resort size also affects the number of snowboarders who ride there: the smaller resorts have continually attracted the highest proportion of snowboarders, a trend that decreases steadily as the resort size grows.

Projections11 The future of snowboarding looks bright. Nationally, the proportion of visits by snowboarders is expected to rise approximately four percentage points from 2005 to 2010. This will bring the total from about 30 percent to 34 percent over five years. The Pacific West and small resorts will likely remain the areas with the largest concentration of snowboarders. The gradual slowdown in the growth of snowboarding may signal that equilibrium in the skier / rider mix may be progressively approaching, although continued slow growth in snowboarding is still expected to occur for at least five years (starting in 2005). One reason for this development may be that different regions are evolving on different trajectories, and some are not embracing (or being embraced by) snowboarding as much as others are. Distinctions between these various regions have been growing sharper in recent years. Also, participants’ preferences have been changing as they are affected by user experience and innovations in equipment. This may also affect snowboarding. Snowboarding is approaching a more mature phase of its development, following its explosion onto the winter sports scene and its rapid growth. The sport may continue to grow for some time, especially as baby boomers (who mostly ski) cease visiting the slopes and are replaced by the younger generations, who are far more likely to be snowboarders. Other new ski technologies have rapidly arrived on the winter sports scene, such as parabolics, twintips, supershort skis / snowskates, and more—these may further diversify the snow slider population. Continued growth in snowboarding, combined with the great new variety of skis, holds many opportunities for the industry.

Attitudes While snowboarders and skiers are integrated at most resorts, friction still exists. Acceptance is better at smaller resorts than at larger resorts. Most snowboarders feel that relations between the two segments are getting better. Improvements have come about because snowboarders have gotten older, more skiers have tried snowboarding or have a snowboarder in the household, skiers realize that snowboarding will not go away, and resorts have shown a commitment to snowboarding through the construction of specialized facilities. In addition, resorts have developed policies in an attempt to reduce friction. Examples include:

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treating all guests alike accepting and showing respect for snowboarders strictly enforcing rule violations from skiers and riders alike educating snowboarders about rules and safety on the mountain maintaining an active on-slope ski patrol presence determining whether it is better to separate snowboarders from skiers or to let them mix (both have worked well at different resorts)

Programs and Facilities Virtually all resorts offer separate snowboard lessons and lessons for children. The average minimum age for the latter is six, with a range from two to ten years. Almost all resorts rent snowboards, and over 90 percent offer specialized repair services. While between 70 and 80 percent of resorts have special racks, tools, and benches for snowboarders, less than 60 percent have retail shops selling snowboard equipment and less than a third offer a separate snowboard shop. Resorts that do not have separate facilities give as reasons a lack of space, insufficient demand, or that they do not wish to antagonize local ski shops. Two-thirds of all resorts have special half-pipes for snowboarders. These are more commonly found at larger rather than at smaller properties, as they require expensive grooming equipment and high maintenance. By comparison, more than 80 percent of resorts offer terrain parks. Almost 90 percent of resorts run special snowboarding events to stimulate visits. It is anticipated that more resorts will schedule more events in the future. Additionally, resorts are seeking to attract more snowboarders by upgrading mountains, improving customer relations, offering special beginner packages, designing snowboard-specific ads, and promoting frequent-rider programs and product giveaway promotions.

SNOWTUBING Prevalence Snowtubing is present at 46 percent of all U.S. ski areas (12). The activity is more likely to be found in larger resorts and, to a lesser degree, at medium-sized resorts. Snowtubing is rather prevalent at resorts in the Southeast and Northeast, where it is offered by 85 percent and 52 percent of respondents, respectively.

Average Visits In the 2004–2005 season, average snowtubing visits increased by 0.6 percent to an average of 18,271 per resort. The most snowtubing visits were reported in the Southeast region, followed by the Rocky Mountains, the Midwest, the Northeast, and the Pacific West. Visits were down by 37 percent in the Pacific West, a sig-

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nificant drop. In the Rockies, visits were up by an impressive 26 percent. In the Northeast, Midwest, and Southeast, the number of visits only fluctuated within two percentage points.

Ratio of Visits The average ratio of snowtubing visits to skier / snowboarder visits was 6.7 percent on a nationwide basis, but this is a very general piece of data as the importance of snowtubing varies wildly from resort to resort. For example, in the Midwest and the Southeast, where snowtubing is a main activity, the ratio is substantially higher (18 percent and 16.7 percent, respectively). The smaller resorts tended to place more emphasis on tubing than did the larger resorts. The smallest resorts posted an average ratio of 22.9 percent, while the largest resorts reported only 3.2 percent.

Day vs. Night The majority of snowtubing visits take place during the day, but roughly 40 percent occur at night. Night tubing visits are roughly equivalent in the Northeast, Southeast, and Midwest (38 to 45 percent), but the Rockies have a much higher ratio (60 percent), and the ratio in the Pacific West is very low (2 percent). The larger the resort, the more likely they are to have a higher night tubing ratio. However, the effect is not overwhelming.

Age Snowtubers are roughly equally divided between three different age groups: 12 and under, 13 to 17 years old, and those over 18 years old. On an overall national basis, this age distribution does not vary largely, but the average age of participants decreases slightly at larger resorts.

Pricing Three-fourths of resorts that offer snowtubing charge by the hour. One-fourth also charge depending on day or night, about one-tenth charge per ride, and onetwentieth honor snowplay lift tickets. More than half of resorts use some other means, such as charging based on one-and-a-half-, two-, three-, or four-hour blocks, or pricing differentially based on time of day and time of week. All these methods together total more than 100 percent, because some resorts price in multiple ways. The average charge per ride depends on the respondent, but the average is $5.14 with a range from $1 to $8. The average hourly charge is $9.23 (ranging from $2.50 to $20) and the charge for an entire day or night averages at $15.40 (with a range of $5 to $32).

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EXPANDING TO MULTI-AGE VISITORS Expanding winter activities to draw in more visitors from all ages has recently become a popular option among ski resorts. Results from a 2004 survey of 138 ski resorts show that 41 percent of resorts have snowtubing hills, 38 percent have crosscountry skiing, and 36 percent offer snowshoeing. Resorts are even branching out into activities that very few people think to participate in, such as sleigh rides (15 percent) and other recreational activities (10 percent) like dogsledding, air boarding, paragliding, heli-skiing, bobsledding, orienteering, and ice-climbing. One innovation is bringing real snow to the indoors. One company in the Netherlands builds large indoor winter sports domes, which are themed. The domes can be described as kids’ indoor snow and ice amusement parks.

ECONOMIC FEASIBILITY13 The objective of an economic evaluation is to express development design concepts in financial terms to visualize the economic characteristics of the project, and to assess the probability of success. —TED FARWELL A MANUAL FOR PREPARING BREAK-EVEN ANALYSES

Critical Variables Four critical variables determine whether or not a resort will make a profit: capacity, the length of the season, the amount of capital investment, and the amount of revenue per visit. Ski Area Capacity

While guidelines are given relative to ski area capacity, the number of variables that go into determining a range of figures is so great that a certain degree of subjectivity is unavoidable. It is quite common for a developer to identify the number of skiers required to break even and earn a specified return on investment and to make development and design decisions in order to achieve that financial result. Capacity can be viewed in a number of ways. Physical and ecological capacity takes into account the physical and ecological limitations of the site. Social or normal capacity is where the majority of skiers do not consider the area overcrowded. Maximum capacity is when no more visitors can be served. The upper limit for safety can occur when a single element is at maximum use; for example, the amount of parking available limits the number of people who have access to

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the ski area. Comfortable carrying capacity is ‘‘the maximum number of participants who can utilize the facility at any one time without excessive crowding and without damaging the quality of the environment.’’14 Ski area capacity is, therefore, a measure of three factors: the capacity of the terrain, the uphill capacity, and the capacity of the supporting facilities.15 Terrain capacity is affected by the steepness of the slope, the way the trail is designed, the amount and quality of the snow cover, the way the slopes are groomed, and the skill level of the skiers.16 Skier skill level also affects the safety of the slope for all. Because more advanced skiers prefer fewer other skiers on the slopes, density decreases as slope, speed, and ability increase. Uphill capacity is a measure of the number of vertical transport feet per hour needed. Skiers have a finite capacity for skiing per day. That capacity is based on their physical condition and their ability level. It might, for example, be assumed that beginners will ski for five hours a day and more advanced skiers for six hours a day. Thus, an area that targets advanced skiers will need more uphill capacity per hour than will one that targets beginners. Finally, the capacity of the supporting facilities contributes to overall capacity. Facilities in a ski area base lodge comprise: food service rest rooms first aid ski school retail sales rental shop lockers ticket sales employee lockers bar / lounge nursery storage Length of the Season

For ski areas, the main determinants of the length of the season are weather and climate.17 Ski areas measure season length in terms of skiing periods. One period is equivalent to seven hours. Thus, a resort that is open from 9:00 a.m. until 11:00 p.m. includes two skiing periods—one day and one night. Ski area capacity multiplied by the length of the ski season is equal to capacity skier visits—the maximum number of skier visits the resort can handle.

Capital Investment

The third critical variable is the amount of capital investment needed to develop the ski area. The capital budget is highly specific to design and site. Here are the major cost elements that go into a ski resort: ski lifts ski slope and trail construction

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snow maintenance equipment snowmaking equipment day use lodge building maintenance center furniture and fixtures base area equipment parking power and slope lighting water and sewer site development planning financing land access roads Revenue per Skier Visit

The final variable is the amount of revenue generated from each skier visit. Determine this figure by totaling all revenue and dividing it by the number of skier visits. Revenue is generated from ski lift tickets and supporting services. How well the resort does in maximizing these four variables ultimately determines its economic success. Importance of Total Revenue per Guest.18 Because resort hotels are a unique form of lodging, resort owners should analyze their operations through the use of some ‘‘nontraditional’’ industry measurements. Average daily rate, occupancy, and revenue per available room are still important statistics, but they are limited tools when analyzing a resort hotel. At resort hotels, seasonality may limit and skew the annual occupancy rate, and resorts are frequently dependent on other revenue sources. The importance of these other sources (golf, food and beverage, spas, and tennis are some examples) only underscores the importance of guest counts as opposed to occupied room counts. For the resort hotel, total revenue per guest is just as informative as average daily rate is to a limited-service hotelier. A recent study of 199 resort hotels showed an average of 366 rooms with an estimated occupancy of 70.6 percent. In 2005, these hotels’ average daily rate was $194.84. Rooms revenue composed a little over half (53.7 percent) of the resorts’ total revenue. In fact, rooms revenue has a lesser influence on the growth of total revenue than other revenue sources did. The relatively profitable revenue from other operated departments had a positive impact for the resort properties’ bottom lines. Bringing back properties during periods of recovery could be achieved through simply selling more rooms, but during industry-wide periods of prosperity, resort managers can increase revenue through a combination of raising guest numbers and boosting per-guest expenditures such as recreation, retail, and food and beverage.

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ANALYZING FINANCIAL STATEMENTS [A sound cost accounting system]. . .not only reveals our mistakes—it shows us who’s doing a good job! —BROR R. CARLSON MANAGING FOR PROFIT

Industry Differences The reader will note variations in the ways the financial information for ski areas, golf courses, and marinas is presented. Each industry has slightly different ways of presenting its financial information and deciding which ratios are important. Some financial problems are, however, common to all businesses. This section identifies the major potential problems and suggests appropriate causes and solutions.

Low Solvency and / or Liquidity

Solvency and liquidity are measures of the business’s ability to meet its short-term obligations. Problems with solvency are indicated by a low current ratio, while liquidity problems are identified with a low quick ratio. The causes and potential solutions are the same. Problems occur when current liabilities are too high and / or when short-term funds are used to fund long-term assets. The solution is to move some short-term liabilities to the long term or to sell and lease back some fixed assets.

High Debt to Equity

The relationship between debt and equity is a measure of how the business is financed. Businesses use the equity in the resort to secure outside debt, thereby leveraging the business. When the debt load is heavy, the business can grow in good economic times, but it is more difficult to repay the debt in an economic downturn. Net worth being too low or liabilities being too high causes a high debtto-equity ratio. Capital can be added by selling stock, or company growth can be slowed and profits used to reduce liabilities instead of buying additional assets.

Low Operating Income

Revenue less operating expenses equals operating income. Low operating income results from insufficient revenue and / or costs that are too high relative to the level of revenue. Low revenues can come from pricing the services at a level lower than the market is willing to pay or at a level that does not cover costs. The product mix may be wrong. Some departments produce a greater operating profit than others. Enhance operating income by pushing sales of the high-margin departments. Because labor costs are such a major factor in running a department, increased costs are likely the result of low employee productivity—too many employees are scheduled for the amount of revenue being generated.

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Low Revenue to Employee

The importance of controlling labor costs is noted above. The ratio of revenue to employee is a measure of how efficiently employees are scheduled relative to the volume of business being generated. When this ratio is too low, the number of employees must be reduced or revenue must be increased.

Low Pretax Profit Margin

Low profits are caused by an operating income that is too low to meet the level of overhead that must be paid. If the overhead cannot be reduced, the only other solution is to increase revenue to raise the operating income. This assumes, of course, that the level of operating expenses is appropriate for the level of sales.

Low Revenue to Assets

This ratio is a measure of how well management uses the assets under its control to generate revenues. A low ratio means that revenues are too low or assets are too high. Perhaps unused property can be sold or fixed assets can be sold and leased back. If not, attention must focus on increasing sales.

Low Return on Assets

A low return on assets means that net profits are too low and / or assets are too high. Net profits can be increased by some combination of increasing revenue and lowering costs. The strategies noted above for reducing assets might also be appropriate here.

Low Return on Investment

When the return on investment is low, the net profit is too low and / or the net worth is too high. Profit can be increased in ways noted above. Expanding the business using borrowed funds can reduce the relative net worth.

Low Accounts Receivable Turnover

This ratio is too high because accounts receivable is too high. The result can be a strain on cash flow. The solution is to reduce accounts receivable. The wise man understands equity; the small man understands only profits. —CONFUCIUS ANALECTS

OPERATING CHARACTERISTICS BALANCE SHEET The following are a few of the key ratios found on a balance sheet. The networking capital and the current ratio help determine the industry’s ability (and the ability of individual resorts) to meet short-term financial obligations such as debt service, payroll, and accounts payable. These also help measure how well each resort uses payment terms from creditors and deploys its capital resources. Because the nature of the industry is seasonal, some of the following ratios may change throughout the year. At the end of the year, the situation does not always accurately reflect the resort’s state throughout the year.

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Networking Capital During the 2004–2005 ski season, the networking capital position of the snowsports industry was positive for the first time in recent memory. This was mostly due to a better working capital balance in the Rocky Mountain region’s largest resorts. Resorts from all size classes and all regions improved their average working capital balances, even though some resorts are still negative, as they were the year before. The largest ski areas are the ones with the highest working capital balances, though the smallest resorts average a positive balance as well. The regions with the highest networking capital balances were (in order) the Rocky Mountains, the Midwest, and the Southeast, which just moved from a negative position to a positive. Networking capital balances are the least favorable in the Pacific West, followed by the Northeast.

Current Ratio The current ratio is another method of expressing the relationship between current liabilities and current assets. In the 2004–2005 season, the current ratio was above one for the first time in recent memory, which meant the current assets outweighed the current liabilities. For that season, the lowest current ratios were found in the Northeast and Pacific West regions, with the highest ratios in the Midwest and the Rocky Mountains. By resort size, the largest and smallest resorts had the highest ratios, while mid-sized resorts had ratios below one.

Debt Ratio The debt ratio, also known as percent liabilities, indicates the extent to which a company is financed through debt sources like long-term loans or bonds (as opposed to retained earnings or owner’s equity). The opposite of this measurement is percent equity, which measures the proportion of assets owned by the shareholders. Nationally, the debt ratio declined from 45 percent to 38 percent over the 2004–2005 season. The lowest debt ratio in the country was found in the Pacific West region, at only 18 percent. The rest of the country averaged above 40 percent, with the highest in the Southeast region (47 percent). As for ski area size, the smallest resorts have the highest average debt ratio, whereas larger mid-sized resorts have the lowest.

INCOME STATEMENT The income statement indicates three important variables: total revenue, visits by ticket type, and expenses.

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Revenue As mentioned earlier in the chapter, resorts tend to rely on revenue sources in addition to that generated by occupied rooms. The following is a closer look at resorts’ various sources of revenue. Ticket Yield

Obviously, the issue of actual lift ticket yield and ticket lead pricing is of especial interest to the industry. During the 2004–2005 season, weekend adult ticket prices averaged $57.82, while ticket revenues per visit settled at an average of $31.35. This ‘‘yield ratio’’ of roughly 54.3 percent is a result of promotions, discounting, children’s tickets, season passes, comps, and other price-reducing elements. Regionally, the highest yield ratio was found in the Pacific West, followed by the Southeast, Midwest, Northeast, and Rocky Mountains. Accordingly, the absolute dollar gap between effective yield and lead price was highest in the Rocky Mountains, followed by the Northeast, Southeast, Pacific West, and Midwest. Yield ratios have been on the decline in the Rocky Mountain region over the four seasons prior to the 2004–2005 season, but they have fluctuated without any general trend in other parts of the country. Interestingly, yield ratios were highest at the smallest resorts, and lowest in the largest resorts. The ratios have been declining at the largest resorts, increasing significantly at the second-smallest resorts, and the smallest resorts have seen an irregular pattern of gains and losses. Taken as a whole, these data suggest that the factors underlying the long-term yield ratio decline (such as increased purchase of reduced-price season passes; a greater usage of coupons, discounts, and other incentives; pricing pressure on resorts that don’t offer season passes; continued increases in lead ticket prices; etc.) continue, even though different parts of the country experience the decline differentially. As a result, many resorts are choosing to focus on non-lift-ticket revenues in order to diversify their cash flow and overall economic base.

Season Pass Sales

Over the past several seasons, resorts in parts of the country have expanded their sale of moderately to heavily discounted season passes. These discounted passes have frequently been designed in order to appeal to residents of the local area and larger day-skier drive markets. Customers in these markets have mostly responded positively to the reduced-price passes, as can be seen in the number of the passes sold. It’s also likely that these discounted season passes have contributed to increased skier visits and / or lower ticket revenue yields in certain markets over time. Over the four seasons prior to the 2004–2005 season, the highest percentage growth in sales was to be found in the Northeast and the Pacific West, followed by the Southeast, the Rocky Mountains, and the Midwest. Season pass sales have increased steadily by the size of the resort, as could have been expected. Every size grouping experienced season-pass-sales increases over the seasons prior to the 2004–2005 season, with the largest percentage gains at the smallest and the largest resorts.

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Visits by Ticket Type A skier visit is defined as one person visiting a ski area for any part of or all of a day (or a night) in order to ski, snowboard, or otherwise slide downhill. This includes day passes, half-day passes, night visits, complimentary visits, adult, child, season pass, and any other type of ticket that allows a skier to use the area’s facilities. Nationally, overall paid tickets were 61.4 percent of total visits in the 2004– 2005 season—a figure unchanged from the previous season. Season passes accounted for another 29.6 percent of total visits, which represented a slight increase. The remaining 9 percent of visits during the 2004–2005 season were accounted for by employee passes (2.6 percent) and complimentary and other types of non-paid tickets (6.4 percent). Overall, season pass visits were responsible for 28.9 percent of total visits. In addition, the average skier visits per pass holder was calculated to be 10.6 days. This number was arrived at by analyzing the average season pass visits and average season passes sold.

Expenses During the 2004–2005 season, a decline in total expenses for the U.S. ski industry was achieved through declines in operating lease expenses, interest, and insurance. This increased total profitability. Direct labor is generally the largest chunk of resort expenses, which reflects the service-oriented nature of the industry. The second-largest expense is the group of expenses related directly to departments or employees, also known as direct expense. That direct labor and direct expense are the largest expenses in the ski industry shows how important proper training and staffing are, especially when it comes to maintaining a low turnover. The second tier of expenses is composed primarily of depreciation, general and administrative costs, and the cost of goods sold. Of these, depreciation went down the most between the 2003–2004 season and the 2004–2005 season. The cost of goods sold went slightly up, and general and administrative costs were essentially flat over that time period. The third tier of expenses include marketing / advertising, payroll taxes, property operation, insurance, and interest. The most significant trend in this tier is the rapid shrinking of interest expense between the two seasons mentioned above. Smaller expenses are composed of property / other taxes, land use fees, amortization, operating leases, and miscellaneous expenses.

CRITICAL RATIOS The following are essential ratios to consider when financially analyzing a resort’s performance.19

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Debt to Cash Flow Debt to cash flow, or ‘‘health,’’ is an approximate measure of the years that would be needed at the current cash flow to eliminate long-term debt. The ratio is achieved by dividing long-term debt by the before-tax cash flow. This ratio is useful for comparing the leverage of various resorts and their ability to retire debt. In the 2004–2005 ski season, health measured at 1.61, a decrease (improvement) from 1.93 in 2003–2004. The result means that at current cash flow levels, the industry as a whole would be able to retire its current debt in little over a year’s time. This ratio has been fairly stable for the three years prior to the 2004– 2005 season, suggesting that the industry is in a healthy financial position.

Operating Profit on GFA (Gross Fixed Assets) Operating profit on GFA is a type of a return-on-assets ratio, which is calculated by dividing the operating profit by the gross fixed assets. Nationally, this ratio improved from 12.6 percent to 14.6 percent during the 2004–2005 season. Interestingly, the smallest and largest ski areas posted the highest returns, with an average between 15 and 17 percent. The mid-sized resorts only returned 8 to 10 percent on assets.

Profit, Before Tax, on Equity This is a measure of the stockholder’s or owner’s return on investment. The standard measure of return on equity uses profits after taxes as the numerator. In the ski industry, many areas are part of larger corporations that consolidate the tax consequences of their ski area profits with those of the parent company. In addition, a number of areas carry forward loss balances to offset current profits. By assuming combined federal and state liability of 40 percent, the after-tax return can be determined by multiplying the before-tax figure by 60 percent. In 2004–2005, operating profit on GFA increased to 14.6 percent and profit before taxes on equity nearly matched it at 14.2 percent. Resorts in the Southeast showed the largest amount of profit before taxes on equity, while the Northeast had the smallest at 6.5 percent.

Capital Cost/Capacity The capital cost / capacity ratio is a relative measure of ski area attributes. It is calculated by dividing GFA by skier capacity. This ratio increases when investments in assets do not add to capacity. Examples include investments in restaurants, lodges, and rental shops. Over the last few seasons, the industry’s capital spending has focused on capacity-related improvements like expanded terrain and trails. Thus, in 2004–2005, this ratio decreased to $5,378. The largest decrease was noted in the Rocky Mountains, normally the region with the greatest ratio, while the region with the highest ratio was in the Pacific West.

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Total Revenue per Skier Visit Total revenue per skier visit is the actual revenue generated by the ski area for each skier day. A skier day represents one skier visiting a ski area for all or part of a day. The ratio is determined by dividing total revenue from ski lift tickets and other ancillary operations by the number of skier visits. In 2004–2005, the total revenue per skier visit increased to $67.14. While most regions experienced an increase over the previous year, the improvement was felt most strongly in the Pacific West and was not felt at all in the Midwest, where revenue actually fell.

Total Expenses per Skier Visit The actual expense for each skier day is calculated by dividing all expenses, including direct expenses, depreciation, leases, and interest, by the number of skier visits. The financial health of the ski area is linked to management’s ability to budget expenses relative to forecasted revenues. Complicating the equation is the fact that ski areas are subject to factors, such as weather conditions, beyond the control of the resort. Constant monitoring of critical variables is essential to financial success. In 2004–2005, overall expenses increased to $59.19 from the previous season. The Rocky Mountain region was the only region where expenses per skier visit were not on the increase, which is unusual for the region. The greatest expenses were in the Southeast and the least were in the Midwest. The key to profits is to increase revenue while reducing expenses or keeping them steady.

SUMMER IN THE MOUNTAINS20 The majority of resorts are very seasonal, meaning that they can only generate revenue for roughly 100 days. They still have expenses for 365 days, however, which complicates the issue. The secret for financial success is to aim to become a four-season resort through adding recreational activities during non-peak seasons.

Expand Summer Recreation Forty-six percent of ski resorts have mountain biking trails that they offer their guests during the summer, and another 38 percent have hiking. Other summer recreation activities offered by U.S. ski resorts include: Scenic lift rides (33 percent) Ball courts (28 percent) Mountain bike lift service (22 percent) Fishing (19 percent) Horseback riding (16 percent) Climbing walls (15 percent)

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Disk golf (11 percent) Miniature golf (11 percent) Another summer revenue idea is the installation of an artificial slope, which allows skiers and riders to do their thing on a water-covered incline. The artificial slope allows normal equipment, which is an extra bonus.

Quick Getaway 3.5

Bouncing Back to Business in the Summer Staying open in the summer is fine, but blues festivals and wine tastings are probably not going to attract those breakneck snowboard stunt riders that crowded the resort during the winter. So what’s a resort to do? Gravity sports, including climbing walls, ropes courses, bungee towers, and giant swings offer one answer. Gravity sports appeal to the same thrill-seeker audience that rocked the half-pipe during snow season, making the sports a good option. These sports, not unlike alpine slides and ziplines, involve getting the participant off the ground. Also, they have an apparent element of danger (far more apparent than real, fortunately). Gravity sports can offer visitors a spectacle that gives them a reason to stay around. Best of all, these sports usually require only a small investment, but the return can be sizable. Gravity sport systems make good sense financially. A four-station bungee tower can serve from 60 to 100 persons an hour, and a single ropes course can do about the same. With per-ride costs between $5 and $10 a person, a $30,000 installation can produce $60,000 to $90,000 in a three- to four-month season— which more than recoups the initial capital investment. It’s not just the more ‘‘extreme’’ facilities that are profitable: on a busy weekend, the daily take per trampoline can reach $4,000.

One reason for the strong revenue stream: these are high-thrill, short-term experiences. A two-minute turn on the bungee tramp is a blast; if it goes for five minutes, jumpers can become bored. Given the low investment and high return, it’s a little surprising that many areas turn trampoline and climbing operations over to concessionaires. The reason? Many resorts are reluctant to invest even $25,000 in summer operations, especially since many of their winter ops can use the money. Turning the gravity games over to an independent operator keeps an area’s investment to zero, and still provides a (reduced) cash flow. Whether a resort brings in a concessionaire to run gravity sports facilities or decides to operate them itself, these activities can generate cash flow while they create excitement and an incentive for thrill-seekers to stick around. And the starting cost is low. Gravity sports look good, all around. Source: ‘‘Bounce into Summer.’’ Sam Ski Area Management (January 2006). http: / / www.saminfo.com / issues / article.php?tid⫽3425

DISCUSSION QUESTION: In your opinion, should a large resort hire a concessionaire or run gravity sports by themselves? What about a small resort?

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Some ski resort owners have been quick to incorporate summer revenue boosters such as alpine slides, waterparks, waterslides, summer camps, bungee trampolines, canoeing, kayaking, mountain scooters, wagon / carriage rides, ropes courses, all-terrain vehicle tours, skate parks, paintball, driving ranges, cable rides, mountain boards, rock climbing, rafting, orienteering, human mazes, go-karts, riverboat cruises, paddleboats, and skating schools.

Outdoor Waterpark Lately, the success of outdoor-indoor waterparks has been in the news. Ski resort owner Sam Newman transformed his winter resort into a highly successful summer waterpark in 1998. The resort now includes an activity pool, waterslides, and a lazy river. Camelback Ski Resort’s transformation into Camelbeach Waterpark made history as the first ski resort ever to make such a huge commitment (with a $4.2 million initial investment) simply to attract the summertime family market. Before making the additions, the resort drew only 50,000 visitors in the summer, compared to its 340,000 wintertime visitors. After incorporating Camelbeach, the resort receives over 700,000 total visitors. According to Dave Kulis, who heads the sales and marketing for the resort, summer visitors will exceed winter visitors in 2004. The waterpark creates per cap revenue of over $24, and the resort finally has a positive cash flow during the summertime. Margins are also better during the summer because ski-resort costs such as snowmaking and utilities are reduced, if not nonexistent. The resort is also more able to use its full-time staff, who now have sufficient duties during both the winter and the summer. Also, more than 550 seasonal positions are available to be filled during the summer, making it a very popular place for local high school and college students to work over the break. Obviously, the Camelbeach outdoor waterpark model is not for every ski resort. Feasibility depends heavily on whether the resort in question is a destination resort or a day-trip resort. Another key determinant is whether the resort is located near a large population center. Outdoor waterparks are able to draw customers from 50 to 75 miles away, especially if there is no on-site lodging. On the other hand, indoor waterparks can draw from 200 to 250 miles away—this is the recommended model for fly-to ski resorts that have abundant on-site lodging.

Indoor Waterpark A few years ago, Everett Kircher, an innovator in the ski resort industry, died. He left behind his children, who took over Boyne USA. Kircher’s son, Steve Kircher, runs the Boyne Mountain Resort, located in northwestern Michigan. Steve, like most of the industry, faced a variety of challenges: aging property, aging customers, new competition, and no revenue growth. In early 2001, Steve started construction on a new 200-unit condo / hotel known as the Mountain Grand. Construction was halted later in the year due to the slowing economy, 9 / 11, and Steve’s need to solidify his financing. That was when he discovered the hotel waterpark resort phenomenon that was astounding the in-

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dustry. Steve quickly hired Jeff Coy and Bill Haralson to assess the waterpark feasibility for Boyne Mountain Resort. In the following two years, Steve Kircher altered the Boyne Mountain Resort’s master strategic plan. After securing funding for the condo / hotel and resuming construction on those units, he joined forces with an equity partner to operate and own a 58,000-foot-square indoor waterpark to be known as Avalanche Bay. The waterpark was slated to be connected to the Mountain Grand Hotel, and construction started in April of 2004. Steve followed in the footsteps of his pioneering father by building the waterpark, which was the first indoor waterpark at a U.S. ski resort. As a result of the project, the resort’s lodging will increase from 304 to 524 units, and the waterpark is expected to add roughly $9.9 million to the total resort revenues.

Four-Season Resort Weather has the power to make or break a ski resort’s financial success, especially because the resorts rely on individual leisure guests (skiers and snowboarders) to contribute a great deal of revenue over a short period of time. Resorts tend not to have individual business guests, since the resorts are rarely located in the midst of business and industry. Therefore, the first strategy for becoming a four-season resort is to expand and create winter and summer facilities and activities in order to attract more individual leisure guests, whatever their age. Singles, couples, grandparents, and children of all ages should be kept in mind while designing new four-season attractors. Of course, once summer and winter are taken care of, ski resorts still have to fill the spring and fall seasons. Hence, the second strategy for becoming a four-season resort: attract groups to fill up the spring and fall seasons. Bringing in conventions and meetings will help resorts reach their full potential during the typically low seasons. Association executives and corporate conference planners have a tendency to book their meetings in the spring and in the fall, and they don’t mind coming on weekdays when resorts have the greatest number of available rooms to sell. Expenses build up all year round, so most ski resorts simply can’t afford to close down for eight months. Expanding recreation over the summer is not the only answer to the problem; building an indoor or outdoor waterpark is not the only solution. A combination of these factors, along with generous space available for conventions, will help to balance the resort financially across all seasons. Every time period and every activity has its target audience, and it needs its own marketing plan to generate sales and increase revenue for a four-season resort.

Conference Centers21 Demand continues to grow for full-service conference centers and meeting destinations and trend-setting resort concepts can easily fit that bill. The conference center is preferable to a traditional hospitality setting, because the center is already designed to hold meetings efficiently.

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Snowboarding represents more than a quarter of all skier visits. Courtesy Corbis Digital Stock

The ideal customer for a conference center is an organization or a company seeking to create a memorable, effective meeting located at a specialized venue. The conference center is truly the ultimate interactive environment, ideal for learning, and it’s adaptable to meet the needs of any industry or content. According to PKF Consulting, which runs an annual study for the International Association of Conference Centers, the most popular types of conferences tend to be focused on education, training, management planning, technical or professional topics, and sales meetings. Nonprofit organizations also use and enjoy the conference centers. Why is a conference center preferable, when there is such an abundance of event space for meeting planners and executives to consider? Simply because a conference center is tailored to meet the needs of a group meeting. The best centers can keep a meeting on-target while offering an array of attractive extracurricular options in the area. Many conference centers are now moving past basic requirements to deliver the latest in services and technology. For example, some facilities include meeting rooms that have Internet access, work-surface desks, multiple data ports, ergonomic tables and chairs, tack-on wall surfaces, and drop screens.

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Additionally, some conference centers include specialized recreational facilities such as lighted tennis courts, spa services, and even 36 holes of championship golf. This encourages meeting attendees to relax on-site. Conference centers are able to offer Complete Marketing Packages (CMPs) that can’t be touched by the competition. The CMP usually includes the facilities and amenities for one set price per person. Often included are continuous refreshment, a dedicated conference planner, three meals each day, a deluxe guestroom, audiovisual equipment, use of the fitness club, and gratuities. Eliminating hidden charges keeps the meeting on-budget. Full-service conference centers offer the best in service. Event planners can often choose to have the center itself manage recreation, teambuilding, ground transportation, and even air travel. The last benefit to having a conference center is the flexibility that it offers its clients. An independent meeting venue can write its own contracts in order to best serve its customers, and if there’s a problem during the meeting, on-site managers can quickly resolve the issue.

A New Kind of Resort22 When the ski business began to stagnate beginning in the 1980s and continuing through the 1990s, a lot of resorts took a look at developing real estate as a way of increasing profits. Base Village Resorts

Along the way, developers stumbled onto the concept of the resort community, a sort of year-round village where skiing is not always the main attraction. Nowadays, people come to resort towns in order to ride horses or mountain bikes as much as they do to ski. Shopping, dining, and strolling the streets are just as pleasurable, especially since the guest never has to leave the resort to do all these things. The village center is the key feature, as developers are well aware. Often restaurants, lodging, condominiums, and retail are clustered in near the chairlifts along with heated outdoor pools, ice skating, and other amenities. Ski resorts have in the villages a central destination, much like a town center. Vehicles are restricted within the village, giving pedestrians free rein. This in turn allows the village to become a hub of activity, with scheduled special events and features such as symphonies and conference centers. Changes in technology and the economy have made it so that mountain resorts are more attractive than ever, for permanent residents as well as short-term visitors. Some visitors initially spend only a few weeks a year at the village, but over the course of their ownership, they can end up spending six months or even a year there. Today’s technology, which allows instant connection to the rest of the world, is certainly a catalyst for this transition. The condo / hotel, typically located near the village center, is increasingly emerging as the alternative to the second home. Units in these hotels are typically purchased for a specific number of weeks during the year, usually by people who prefer to visit resorts about once a month. While the owners are not there, the resort or the owners can rent the units to other people. Even condo owners with

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full ownership are able to arrange with the resort company to rent their units while the owners are away. The resulting reduction in ‘‘cold beds’’—resort units left empty during much of the year while the owners are away—financially benefits both resorts and the surrounding municipalities. Resorts Focusing on Programming

During the summer months, a successful ski resort will not consider itself a ski resort. Smuggler’s Notch, located in northeastern Vermont, is considered remote. Guests coming from New England and the mid-Atlantic have to pass by Vermont’s more attractive and successful resorts, before spending another two to three hours simply to reach Jeffersonville. Smuggler’s Notch does not offer spectacular infrastructure or incredible amenity packages. It does offer a lot of extremely well-used (some might even say ‘‘tired’’) amenities. Why is it, then, that Smuggler’s Notch is ranked as one of the very best family resorts in the nation? And why is it busier and more profitable during the summer than in the winter? The resort bills itself as a family resort that offers skiing in the winter, not as a ski resort that offers family activities in the summer. With lodging capable of handling thousands of guests at a time, the resort’s best strategy is not to fill its rooms for just one or two nights, but to keep guests for as many as seven days at a time. The concept is simple: Smuggler’s Notch aims to keep children entertained, occupied, and engaged, which gives parents a little time for some much-needed R&R. The resort even offers a ‘‘Family Fun Guarantee,’’ whereby a family member can be reimbursed for any activity that they did not find fun. Although the concept itself is simple, the result is a time- and human-resource-intensive undertaking. Children are organized into five groups by age, and they spend their days (10:00 a.m. to 4:00 p.m.) with specially trained counselors. Often, evening programs are available too. Smuggler’s Notch has extensive programming that ensures that it’s even busier during the summer than it is in the wintertime. Utilizing existing resources and innovative planning can help practically any resort overcome the summer doldrums.

Problems

There are many benefits to converting a winter-only ski resort into a full-use fourseason resort, and base villages can add a great deal of atmosphere and revenue to an operation. However, these changes can bring negative consequences as well. Housing Crunch. Because of the real estate boom in these high country destinations, many of the resorts’ employees have been forced to seek housing far away from the resort town, which leads to traffic problems for them and for tourists. In Utah, Summit County is attempting to resolve the issue by changing the master plan of a planned development at the Canyons, over which the county has jurisdiction. The new plans will ensure that sufficient lodging is constructed to house at least one-fifth of the development’s employees. Growing Smartly. Other resorts are learning how imperative it is that they control the form and pace of their expansion. The Canyons severely restricts how many vehicles are able to get to its village area from the main access road. As a result, many visitors get to the village via a people mover, after parking their cars some-

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where else. Because so many visitors fly into Salt Lake City, which is only 40 miles away on the interstate, less than half of all visitors arrive by car. Even so, being so close to the big city creates gargantuan traffic problems for Park City and the Park City valley. The traffic issue is not a new concern, nor is it only a problem in Utah. At Crested Butte, the town is taking charge. Two new housing ordinances were recently implemented, one of which is very similar to Mt. Crested Butte’s inclusionary zoning ordinances. The other ordinance is actually a linkage fee, which applies to existing residential buildings that add square footage. The income from these fees goes into a general fund to be used for creating deed-restricted or affordable housing.

SUMMARY Over the last decade, the mountain resort industry has undergone a huge shift. As the resorts have grown, they have created—and solved—many problems. However, the changing customer demographic, increasingly new types of snowsports, and the challenge of operating a four-season resort will all test the industry in the years to come. To flourish, resorts must change from being businesses focused on skiing to enterprises with a much broader focus.

ENDNOTES 1. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: The Urban Land Institute, 1986. 2. Kottke National End of Season Survey 2004 / 2005. Lakewood, CO: National Ski Areas Association, 2005, 46–48. 3. Ibid., 60–61. 4. Ibid., 17. 5. Ibid., 47–48. 6. Ibid., 67. 7. National Ski Areas Association National Demographic Study 2004 / 2005. Lakewood, CO: National Ski Areas Association, 2005. Kottke National End of Season Survey 2004/ 2005. Lakewood, CO: National Ski Area Association, 2005, 46–48. 8. Kottke National End of Season Survey 2004 / 2005. Lakewood, CO: National Ski Area Association, 2005, 34–41. 9. Ibid., 42. 10. Ibid., 29. 11. Ibid., 30. 12. Ibid., 63–66. 13. 2004 / 05 Economic Analysis of United States Ski Areas. Lakewood, CO: National Ski Area Association, 2005.

14. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 126. 15. Farwell, Ted. A Manual for Preparing Break-Even Analyses. Boulder, CO: Ted Farwell & Associates, 1993, 3. 16. Ibid. 17. Ibid., 5. 18. Mandelbaum, Robert. ‘‘Resort Hotels.’’ Lodging Magazine (May 2006): 19–21. 19. 2004 / 05 Economic Analysis of United States Ski Areas. Lakewood, CO: National Ski Area Association, 2005, 85–91. 20. Coy, Jeff and Bill Haralson. ‘‘Ski Resorts Expand Year Round Revenues, Add Outdoor & Indoor Waterparks.’’ Hotel Online Special Report, accessed February 15, 2005. www.hotel-online.com / News / PR2004 2nd / May 04 SkiWaterPArks.html 21. Swyney, Michael. ‘‘Conference Centers: Today’s Choice for Meetings.’’ Los Angeles Business Journal (February 14, 2005). 22. Holtzman, David. ‘‘Mountain Resorts Grow Up.’’ Urban Land (April 2006): 82–87.

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Chapter 4 BEACH RESORTS AND MARINAS: THE IMPACT OF DEVELOPMENT ON OPERATIONS LEARNING OBJECTIVES 1. Identify the key elements in the development process that help maintain a balance between the physical capacity of a beach resort and the economic needs of the developer. 2. Define the main factors affecting the attractiveness of a site for a beach resort. 3. Explain the role of general design principles in site planning for a marina. 4. Describe the five developmental criteria that improve guest convenience, safety, and security. 5. Analyze the interdependencies between the four principles that guide marina design.

INTRODUCTION

Legal and Policy Context


Development Criteria

Beach Development

GENERAL DESIGN PRINCIPLES

Desirable Sites

Geography—Engineering

Evolution

Engineering—Profile

MARINAS The Development Process

Profile—Layout Layout—Architecture

Onshore/Offshore

SUMMARY

Basis for Marina Development

ENDNOTES

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INTRODUCTION George III, suffering from severe abdominal spasms, came to drink the waters there [Cheltenham] in 1788 and made it fashionable as a summer resort. —PHYLLIS HEMBRY The English Spa, 1560–1815: A Social History

A variety of recreational activities utilize water as the major attraction:

Natural beaches, which can be used for sunbathing, swimming, and beachcombing. Very popular, they may require little development, though maintenance costs can be high. Beaches allow for a variety of complementary activities, including snorkeling and scuba diving. Open space and trails, typically found around lakes and wetlands. They can be used as sites for fishing or camping or for observing wildlife, and fit well into the ecotourism movement. Golf courses, developed in Scotland, the reputed home of golf, on the coast to give participants the benefit of the invigorating sea air. Many U.S. resorts exploit oceanfront settings to highlight their golf facilities. Marinas servicing sailboats and motorized crafts as well as windsurfing and other water sports. Depending on the type of craft catered to, the amount of development can range from little to extensive. Residential development, as home sites on the waterfront generate premium prices. Care must be taken to balance preservation of the often sensitive ecology and obtaining an economic return on the investment. Commercial development, such as hotels, retail stores, and restaurants. This most intense type of waterfront development must be approached carefully because of environmental concerns. Cruise ships, which, after all, are nothing more than floating resorts. Spas, as noted in the above quote.1

Certain water-based activities are compatible with others, while some do not mix. Figure 4.1 indicates the types of activities that can and cannot take place in proximity to each other. This chapter focuses on beach resorts and marinas. The development process for both is outlined. The characteristics important for an economically successful and environmentally sensitive water-based resort are explored.

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Compatible Activities

BEACH RESORTS AND MARINAS: THE IMPACT OF DEVELOPMENT ON OPERATIONS

Angling Canoeing Rowing Sailing Sub Aqua

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FIGURE 4.1

THE DEVELOPMENT PROCESS Geologically, the Hawaiian island chain was formed when volcanoes on the floor of the Pacific Ocean spewed out molten lava, which eventually cooled off and formed large resort hotel complexes. —DAVE BARRY Dave Barry’s Only Travel Guide You’ll Ever Need

The designer should begin by considering the reasons people go to beaches. While, indeed, many people go to swim, others are primarily interested in sunbathing, socializing, people-watching, relaxing, or engaging in recreational activities. Ideally, the beach design should permit a range of uses. This means designing the facility for the different types of people who go to a beach. Some go to play in the water. Others go to play on the beach. A third group goes because their

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friends want to play in the water or on the beach. Providing tables, chairs, and shade for this third group makes their visit more enjoyable.

Beach Development Six important aspects warrant consideration with respect to beach development: the sea, seashore, beach, back beach, coastal stretch, and surrounding countryside.2 Sea

A variety of factors related to the sea affect the attractiveness of the site: Air temperature. There is a high correlation between swimming and maximum air temperature and a fairly high correlation between beach use and maximum air temperature.3 Amount and intensity of the wind and sun. There is a weak inverse relationship between both swimming and beach use and wind. There is a straight-line correlation between sunshine hours and both swimming and beach use. The correlation is higher than that of maximum air temperature for beach use and lower for swimming. Water temperatures, including the temperature range. Currents, tides, and waves, including their direction, strength, and seasonality. Wave action, and the corresponding erosion, is greater when beaches are exposed to the main channel of a lake. On the other hand, beaches developed on lakes are subject to less erosion when placed on the side of a bay or inlet. Ecology, including seaweed and fish. Pollution. In Jersey, the largest of the English Channel Islands, state-of-theart sewage treatment plants use ultraviolet light radiation to destroy bacteria and microorganisms before they pass into the surrounding waters. Clarity of water. Of the 496 coastal resorts around bathing destinations on the northwest coast of England, 89 percent passed germ tests and only 146 met standards that are above average for bathing waters.4 Possible attractions, such as islands, coral, and conditions for water recreation. At the 2001 Global Conference on Oceans and Coasts it was stated that 20 to 30 percent of coral reefs worldwide are threatened in the coming decade while current projections indicate possible losses of 50 to 60 percent in the next 25 years. Dying coral can be helped by limiting the number of people who scuba dive, improving sewage treatment and drainage in the islands, and monitoring dumping and draining into the surrounding waters.5

Seashore

The seashore consists of the surface under the water, extending out to a depth of 6 feet. A gentle, uniform slope of 7 percent to this depth is ideal.6 The makeup and stability of the bottom is important to bathers. It should consist of coarse sand or sand and pea gravel to a depth of 12 inches. Mud bottoms have to be stabilized with crushed rock as a base and a coarse sand overlay. Bathers should be able to

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Quick Getaway 4.1

Why Water Works Studies that involve today’s travel habits indicate that travelers, especially traveling families, desire water experiences as a part of their vacations. This should not be surprising, since water attractions appeal to a very broad demographic. Water features are great for the resort operator as well, because not only do they provide a secondary revenue stream, but they help increase occupancy and extend the season as well. At Hilton Waikoloa Village on Hawaii’s Big Island, water is the main attraction. The resort was planned with a revolutionary wateroriented environment in mind, such as never had been seen before. The result? A sprawling (yet intimate-feeling) property that features a 3 ⁄4-mile-long saltwater river with waterfalls, a saltwater lagoon filled with exotic fish, three major pools with cascades and waterslides,

two major freshwater bird and fish exhibits, and a ‘‘swim with the dolphins’’ experience that accounts for a great part of the hotel’s revenue and bookings. Guests at the Hilton Waikoloa Village can cruise on mahogany boats along the saltwater river that connects the whole facility. The canal system infrastructure is extremely important to the resort, as the primary means of transportation throughout the Hilton Waikoloa Village is by water taxi. Source: ‘‘Water Works at Hilton Waikoloa Village.’’ Resort ⫹ Recreation (November / December 2005).

DISCUSSION QUESTION: When it comes to beach resorts, is it more important to include water features than it might be for an inland resort?

walk into the water a sufficient distance to allow them to engage in play activities without risk of danger from tidal movement. Beach

The slope of the beach should be between 2 and 10 percent, with 5 percent being the ideal.7 Both purity and color of the material—a minimum of 12 inches of sand or a mixture of sand and pea gravel—and the stability of the beach are important. Beach erosion can result in heavy annual maintenance costs. Often, sand must be dredged from the swimming area back to the beach because the grade of the beach is too steep. While annual dredging takes care of the symptom, it does nothing to alleviate the cause of the problem. Perhaps the original slope to the water’s edge can be cut down to a grade of 2 to 3 percent, with a retaining wall behind the beach to help retard erosion. The size of the beach is a function of its depth and length. People do not want to walk too far to get to the water, neither do they want to feel too crowded (although people-watching on a busy beach is a major motivation for many). A good rule of thumb is for square feet of beach per swimmer day. The density

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varies depending on the market being sought. Some estimates are given in Table 4.1. Beaches themselves are zoned for best use. The 20 to 30 feet nearest the edge of the water should be designated as a circulation area to allow swimmers to move in and out of the water and walkers to move laterally along the beach. Lifeguard platforms are the only service facility in this zone. The next 50 to 150 feet is the general-use area for sunbathing, play, and sightseeing. Finally, a western exposure takes advantage of the afternoon sun.8 Back Beach

The back beach offers views to both the sea and inland. The geomorphology— cliffs, dunes, and flatlands—can dramatically add to the setting. Vegetation and the effect of the microclimate must be considered because of the fragile nature of the resource. Protection against degradation is a major concern as developers consider future improvements.

Coastal Stretch

The coastal stretch consists of the beach environment between 0.5 and 3 miles from the back beach. This is where service facilities and access roads are placed. Parking facilities, bathhouses for changing, comfort stations, and concessions are located here. Large beaches may require several parking areas, each capable of accommodating from 50 to 100 vehicles, in order to disperse traffic and beachgoers. Two schools of thought exist with respect to the placement of access roads. One philosophy is to place the access road between the beach and the surrounding hotels. People who drive by can view the sea, and everyone has access to the beach. However, hotel residents, to reach the beach, have to cross the road, creating safety problems. The other philosophy is to have the access road behind the hotels. Access to the beach is direct from the hotels—which, in some cases, limits

TABLE 4.1 Beach Capacity Square Feet / Person

Overdensity Public Beach Resort (Low Standard) Resort (Medium Standard) Resort (High Standard) Resort (Deluxe)

35 55 110 160 215 320

Persons / Feet of Coast Depth of Beach 65.5 ft.

110 ft.

165 ft.

6.5 4 2 1.5 1 0.7

11 6.5 3.5 2 0.5 1

16.5 10 5 3.5 2.5 1.5

Source: Baud-Bovy, Manuel and Fred Lawson. Tourism and Recreation Development. London: Architectural Press; Boston: CBI, 1977, 74. Reprinted by permission of Butterworth-Heinemann, Oxford.

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With beach property at a premium, there are underwater developments in progress. Photo courtesy Jules’ Undersea Lodge

access to their own guests. The drivers’ view is of the fronts of hotels. Access to locals is restricted. Surrounding Country

The country surrounding the beach development provides the setting for the attraction. Many people wish to combine relaxing days at the beach with more active pursuits. Natural attractions, the extent of development, surrounding infrastructure, and the opportunity for excursions all need to be considered.

Desirable Sites In selecting a site for beach development, these elements warrant particular attention: access to a permanent or transient seasonal population access to major roads minimum water temperatures in the upper 60s during the swimming season

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warm, sunny conditions before and during the season to warm the water and attract swimmers and sunbathers water quality needs to be analyzed before and after development as swimmers will add to the existing bacterial count. This latter point is of greater concern in bodies of standing water than in flowing streams and rivers. Each year, 2,000 beaches are closed due to sewage overflows, urban and agricultural runoff, and direct contamination by human waste. Restricting diaper-age children to toddler wading pools and having adult pools on separate filtration systems help prevent the spread of disease. Particular care needs to be taken to prevent runoff into the sea, as heavy rainfall flushes contaminants from city streets into the surrounding waters.9 Coastal Sites

The biggest problem facing developers of coastal resorts is shoreline and beach erosion. As a result of problems caused by development along the coastline, regulations tend to restrict building to 200 feet or so from the beach. In addition,

Quick Getaway 4.2

The Basics for a Great Beach Resort What exactly does a beach resort have to have before it can start down the road to greatness? Although there are many variables that affect the attractiveness of a resort, there are some basic elements that cannot be ignored. All the beautiful sand in the world won’t make up for an inaccessible location! That said, the first thing one should look at when considering a beach resort is its most essential element. . .the beach. According to the Clean Beaches Council, the following criteria describe a typical resort beach: It actively develops its facilities It makes an effort to encourage visitors and provide varied recreational opportunities It is located within easy access to commercial development It typically includes hotels, resorts, restaurants, shops, toilets, public transportation,

municipal supervision, first aid facilities, and public phones Remember, resort beaches can also include beaches in urban settings, such as beaches in New York City or Los Angeles. Also remember that although a beach may fit all of the above criteria, it won’t make a great resort site unless it has clean water, an interesting natural environment, and a lack of natural hazards. Source: ‘‘Management Practices and Criteria: 2004 / 05 Blue Wave Campaign.’’ Clean Beaches Council. Accessed July 24, 2006. http: / / www.cleanbeaches.org / bluewave / criteria.cfm

DISCUSSION QUESTION: Do you agree with the Clean Beaches Council’s criteria? If not, what would you add or subtract? What would the criteria be for a poor resort beach?

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building density is usually low, and laws tend to require dune preservation to help control erosion. The planting of sea grasses helps produce more stable beaches while encouraging a diverse wildlife.

Evolution One model of beach resort evolution describes the following stages. At first, no tourism is present. Some kind of settlement, however, is connected by a road to the rest of the area. Phase two—explorative tourism—begins with the visit of adventurous tourists with independent itineraries and an interest in the local culture. Contact between visitors and locals is high. Major changes begin with the development of the first hotel. Strip development along the beach occurs, with each additional property bringing in more visitors, thus creating the need for additional facilities to serve their needs. As beachfront property increases in value, residents sell or are forced out because of higher taxes. They move to new residential communities at some distance from the beach. Land next to the beach becomes built out and more hotel development takes place away from the recreational resource that attracted visitors in the first place. A second road parallel to and some distance away from the beach is built, improving access to businesses farther inland. Further development in this new area is encouraged. In the final stage of development, the resort becomes a city with a recreation business district and a commercial business district.10

MARINAS One advantage of developing marinas is that they generate water frontage where beach use is limited, which may then lead to the development of residential units. —BILL WHITNEY Arthur Andersen

The Development Process The process for developing a marina consists of five steps: 1. 2. 3. 4. 5.

Analyze the market. Develop a market strategy and marina concept. Identify the site. Perform feasibility analyses and preliminary design. Design and develop the marina.

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The first step involves an analysis of the market. Taking into account the area’s economy, analyze both demand and competitive supply to give a preliminary assessment of current market conditions. Next, develop a market strategy and a concept for the marina. Determine the services to be offered, define the size and mix of boats, specify the number of wet slips and dry storage areas, identify funding sources, calculate fees, and estimate cash flow. At this point, begin to identify a preferred site by compiling and mapping data, scrutinizing development factors, and selecting several alternative sites. Note state and federal policies controlling proposed uses of the sites and select the superior site. Take an option on the land. The next step is to perform a feasibility analysis and approve a preliminary design. This involves conducting an in-depth financial feasibility study, including an analysis of cash flow. Determine the preliminary design and technical feasibility of the site and address local zoning and building permits.

Quick Getaway 4.3

Planning a Marina Marinas, like any other construction project that significantly involves the natural environment, must be carefully planned and executed in order to avoid disrupting the ecosystem. In the case of the marina, planning and construction are often the factors that determine the success of the operation. Some rules of thumb to abide by when constructing or maintaining a marina: Piers and other structures should be placed to enhance, rather than to obstruct, water circulation. Use environmentally neutral materials; that is, materials that won’t leach hazardous chemicals into the water and won’t degrade in less than ten years. Limit shaded areas that cover the water to avoid interfering with water flora. Minimize the need for dredging by following natural canal lines and by building docks that extend to naturally deep waters.

Minimize the impact of necessary dredging by only dredging during seasons that are not essential to the reproduction and survival of local species. Control shore erosion with natural, nonconstructed methods like beach nourishment. Conserve water by fixing leaky hoses and faucets. Scrape, sand, and paint in-water and landside structures according to clean marina practices. Source: ‘‘Marina Design and Maintenance.’’ Maryland Department of Natural Resources. Accessed July 24, 2006. http: / / dnrweb.dnr.state.md.us / download / cleanmarina / 3MarinaD.pdf

DISCUSSION QUESTION: What additional procedures might be necessary when constructing a marina in a particularly sensitive area?

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Develop the final design next. Create detailed construction photos, file for and obtain permits, secure local approvals, obtain construction bids and loans, and exercise the option on the land.11

Onshore/Offshore Marinas can be sited onshore or offshore. The major concern regarding onshore facilities is ensuring enough space. The guideline is that the land space should be equal to water space. An acre of water can handle anywhere from 25 to 65 boats, depending on the size of the boats and the layout of the facility. The land on which onshore facilities will be built should be above the floodplain and have enough bearing capacity to support construction of necessary facilities. Two especially important aspects of offshore development are water depth and water level fluctuations. The minimum depth for a marina is 8 feet below the low-water datum.12 Anything less than 8 feet limits the number and type of craft that can be accommodated. Dredging to increase depth is a possibility, but it is very expensive. On the other hand, if the basin is too deep, it may not offer sufficient protection for moored boats. In addition, deep basins limit the pier designs that can be accommodated. Marinas require a stable level of water throughout the year. Differences in water levels due to tides, storms, rain, and ice flows must be noted and their impact determined. Water stagnation and pollution from fueling operations will result in water quality problems if water flow is insufficient.

Basis for Marina Development A marina can be a private, public, or joint venture. It might serve as the base for hotels and concessions; profits in such arrangements are dependent on income from concessionaires, who often manage both lodging and food and beverage facilities. Pier 66 in Florida is one such example. In Chicago, Marina City is the basis for a residential development. A multistory apartment complex has a marina in the basement. Boats are launched from forklifts into the Chicago River in less than ten minutes. Mystic Seaport, Connecticut, is one of many areas using marina development for both urban renewal and historic preservation. Marinas are also developed to stimulate boat sales, as part of a boatbuilding operation, or as the headquarters of a club or boating organization. An example of a private / public development is Marina del Rey in Los Angeles County, California. Launched with federal assistance in the 1950s, the project opened in 1965 with 5,600 boat slips on 780 acres. On a more ambitious scale, in the Languedoc-Roussillon region of France, an $800 million private / public investment involves 20 new harbors capable of berthing 40,000 boats along 120 miles of the Mediterranean.

Legal and Policy Context Even if a marina is developed privately, issues relative to access to public waters complicate the process. Developers may have to permit public access, or the project may be required to offer public benefit before permissions are given to build.

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Restrictions may be placed on the number of slips that can be developed and the maximum price that can be charged. In the United States, federal programs regulating marina development are the purview of the U.S. Army Corps of Engineers. Most fill activities, including wetlands, come under their authority. Approval is contingent on both state and local approval. However, the jurisdiction of the Corps supersedes that of state and local authorities. It can take as little as six months to obtain a federal permit, although two years is a more likely estimate. At both the state and local levels, two goals affect marina development: the provision of recreational opportunities for residents and protection of sensitive or scarce environmental resources.13 The degree to which development is favored over conservation, or vice versa, can be determined from an examination of community master plans. At the state level, 28 states, under provisions of the Coastal Zone Management Act, have coastal management plans that try to balance coastal development and resource conservation. State permits, required by most marinas, reflect the particular bias of each governing body. Local governments charged with the implementation of state requirements may impose even stricter guidelines for marina development. The environmental movement has resulted in marina projects taking longer to get approval, with additional costs to institute environmentally friendly facilities. The major environmental considerations involved in the siting and design of marinas come from the loss of habitat from dredging and the construction of shoreline structures, the impact of storm water runoff and discharge from boats on water quality, and the effects on coastal aesthetic values.14 Calm, sheltered areas are ideal spots for marinas. Because such locations usually support wetlands and submerged sea grass beds, the potential for habitat loss is great unless the marina is excavated from an upland area. The following checklist will help identify issues regarding permit approval. The more yes answers to these questions, the more problems are likely to crop up in getting a permit.

Will dredging be required for the access basin and / or the boat basin? Will filling be required on wetlands and / or in open water? Will dredged material be disposed of at locations other than currently permitted public disposal areas? Will structures such as bulkheads and revetments (sheathing that protects riverbanks) be required? Will the water body at the site be characterized by low flushing rates? Does the water body presently fail to meet state water quality standards? Is the site located within 1 mile (1.6 kilometers) of a designated wildlife refuge or wilderness area? Are any rare, threatened, or endangered aquatic or terrestrial species or their habitats present at the site? Do shellfish beds occur within 2,000 feet (600 meters) of the site or within 1,000 feet (300 meters) of access channels?

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Are grass beds located within 1,000 feet (300 meters) of the marina or access channels? Is the site in an area of historic, archaeological, or scenic value? Will the proposed activity be inconsistent with state or local coastal zone management plans or zoning requirements? Will the project obstruct public land access to navigable waters? Will the project require structures that extend into or obstruct existing channels?15 Because of issues like these, potential marina sites are fewer than they used to be, which has resulted in dramatic increases in the cost of waterfront land suitable for recreational purposes. Increased costs, together with the popularity of fiberglass, has resulted in the increased popularity of stack storage marinas, where boats are housed three high in warehouse-type buildings. The 1980s saw a dramatic increase (which has since leveled off) of facilities being developed as condominiums or dockominiums, with individual ownership of a slip space and common ownership of the rest of the facilities. In an attempt to encourage environmentally sensitive development, the National Marine Manufacturers Association (NMMA) sponsors an annual environmental award. Previous winners have instituted such practices as:

An onshore marina. Courtesy Digital Vision

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constructing wide openings between the breakwaters, docks, and shorelines to allow easy access to young salmon migrating out of Puget Sound in addition to allowing for tidal circulation using more expensive concrete pillars and floats to help sustain algae, mussels, and barnacles creating rock beaches at the ends of the marina to serve as feeding grounds for young salmon16 Carrying Capacity

In environmental terms, a site’s boat-carrying capacity depends on three factors: The volume of water available at the site to dilute waste ⫽ Q The amount of pollution generated by each boat ⫽ L Area water quality requirements ⫽ C Hence, the number of boats a site can carry ⫽ QC / L.17

Development Criteria Marinas were originally developed as an alternative to berthing in open waters for three reasons: convenience, safety, security.18 Any new marina must ensure that these criteria are met. For example, roads can improve access; breakwater can increase safety; better management can improve security. To meet these criteria, it is important that a marina offers: proximity to a population base accessibility by a main road artery sufficient water in the marina basin for development sufficient water depth and surface for the proposed activities—A minimum of 8 feet below low-water depth is ideal. Shallow sites can be dredged at a high cost. Of greater concern are deep basins, as these do not provide adequate protection from wave action and limit pier designs. natural protection from winds, storms, and flooding a stable shoreline good southerly exposure good water quality—A healthy flow of water through the marina helps wash pollutants away, while too strong a flow may make the marina unstable for boat storage. aesthetically pleasing quality surroundings reasonable fluctuation in water levels—High water levels constitute a safety threat. freedom from ice—In northern climates, boats have to be removed from the water in winter, or expensive aeration systems must be installed to keep the water moving, which prevents ice from forming.19 The water requirements vary depending on the activities to be undertaken. The water access requirements for typical boat uses are outlined in Figure 4.2.

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Deep-Sea Fishing (includes fishing on the Great Lakes and similar bodies of water) access to open water within no more than 15 miles and access to the fishing waters within 15 to 50 miles no restrictions on speed or wake, except within the immediate vicinity of the marina safe access to a port of refuge at all times easy navigation to and from the marina, with many aids minimum channel depths of 5 feet Estuaries and Freshwater Fishing (includes typical inland lake fishing) access to suitable fishing waters within no more than 5 miles easy navigation, with readily identifiable landmarks and many aids minimum channel depths of 4 feet Waterskiing and Similar Aquatic Sports access to suitable open water within 10 to 15 minutes few or no restrictions on speed or boat utilization except in the immediate vicinity of the marina minimum channel depths of 4 feet Casual Cruising—Powerboats access within 30 miles to interesting waters containing many inlets, islands, small beaches, and safe and quiet anchorages minimum channel depths of 5 feet easy navigation to and from the marina, especially at night Casual Cruising—Sailboats access within 15 miles to interesting waters containing many inlets, islands, small beaches, and safe and quiet anchorages location such that the course to and from the interesting waters is essentially at right angles to prevailing winds minimum channel depths of 5 feet easy navigation to and from the marina, especially at night Long-Distance Cruising easy access to the ocean or major lake on a course compatible with prevailing winds, easy access to an inland waterway, etc. easy access to the marina at night and under fog and storm conditions minimum access channel of 7 feet Small Sailboats access channel very short or wide enough to permit easy tacking access channel oriented essentially at right angles to prevailing winds minimum channel depths of 5 feet relatively protected waters within 1 mile of the marina open waters of at least 1 mile in diameter within 1 mile of the marina, with few shoreside obstructions that would cause variations in wind velocity and direction. (This requirement is for sailboat racing activity.)

FIGURE 4.2 Deep-Sea Fishing (includes fishing on the Great Lakes and similar bodies of water)

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Quick Getaway 4.4

Controlling Marina Losses Ted Crosby, marine surveyor and risk management specialist, led a seminar entitled ‘‘Controlling Losses in Marinas’’ at the 1997 IMTEC Marine Trade Exhibition in Chicago in which he itemized the following ten common types of marina losses:

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9. 1. Theft: Stealing something that doesn’t require breaking and entering. 2. Burglary: Breaking and entering in order to steal. 3. Slip and Fall: On docks, premises walkways, gangways, and in parking lots. 4. Fire: On boats, facility repair shops, fuel docks, kitchens, and electrical installations. 5. Boat Sinkings: Due to rain, improper mooring, and launching without the drain plug in; also caused by grounding and bottoming as a result of changes in the water level. 6. Collision Damages: Caused by re-

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stricted space and unmarked obstructions or clearances. Boat Handling: While afloat, over the road, on boat travel hoists or forklifts. Dry Storage: Characterized by improper support while ‘‘on the hard’’ and open or covered rack storage. Repairs: Losses consisting of improper hull, machinery, or mechanical repairs / servicing. Pollution: The improper use and disposal of fuel, oil, sewage, trash, and cleaning byproducts.

Source: Wortley, Allen. ‘‘Safety Aspects for Marina Design.’’ Created 1998. Accessed July 24, 2006. http: / / hudson.dl.stevens-tech.edu / personal / mdelorme / Tidewater%20Basin%20Marina / design%20research / Wortley - Safety Aspects - 1998.pdf

DISCUSSION QUESTION: Pick one of the ten loss sources as detailed above. How would you work to prevent those losses?

The development of a marina is complicated by the requirement that both land and water uses be suitable for the finished product. Usually the land uses— hotel, golf course, residential units—exert strong influences on whether or not the development is viable.

GENERAL DESIGN PRINCIPLES 1882: Indeed, if there were some places to eat and shop, working around these docks and warehouses wouldn’t be half bad.

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1992: Imagine. . .take away all the food and shops, and this marketplace pavilion easily could be a 19th-century waterfront warehouse. —CARTOONS BY ROGER K. LEWIS SATIRIZING BALTIMORE’S INNER HARBOR

Four principles guide the design of marinas: 1. 2. 3. 4.

The The The The

geography determines the engineering. engineering determines the profile. profile determines the layout. layout determines the architecture.20

Geography—Engineering The major cost in building a marina comes from dredging, locks, bulkheads, breakwaters, and piles.21 Dredging

Dredging changes the bottom profile of the basin to allow deeper-draft boats to dock in the marina. Most pleasure boats need 2 feet of clearance below the propeller at low tide. Most boats can be accommodated with a depth of 7 feet at mean low water. Dredging can cause siltation problems if not done properly. The basin bottom should slope slightly toward the entrance to encourage a natural flushing action. Deep-water marinas, especially those that are enclosed, can have severe water quality problems because of the lack of natural flow. Installation of aeration systems may be necessary. If the material being dredged has a high clay or organic silt content, it will tend to trap chemical contaminates, such as hydrocarbons and heavy metals. Bottom testing is necessary to confirm their presence. Permit granting is easier for onsite rather than off-site disposal, which must be done where the material being dredged cannot erode away or leach out.22 Material dredged from the bottom can be used as fill in the area next to the basin. Savings can accrue when only part of the marina basin is dredged. This means that larger boats are limited to the dredged parts of the marina, while the smaller-keeled boats are berthed in the undredged spots. Because of the high cost of disposal of fill material, the ideal relationship occurs when the amount of dredged material equals the amount of fill needed. In general, the degree of difficulty in getting a dredging permit increases proportionately with the amount of dredging to take place.

Locks

Locks may be the answer where a site is otherwise inaccessible. They are necessary where the tidal range is greater than 12 feet or where there is a major change in elevation between the basin and open water. Because of the expense, locks are rarely economical in marinas of fewer than 500 boats. Locks can cause problems due to excessive waits to get in or out of the marina.

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Bulkheads

A bulkhead is ‘‘a retaining wall that is backed with solid fill and erected along the water to extend the upland out to the bulkhead line; serves as protection against tidal or watercourse erection of land.’’23 Bulkheads prevent erosion of the shoreline as well as provide safe, convenient access to the water part of the marina. A less expensive alternative is revetments, made of concrete and laid at the shoreline’s natural angle of repose. Revetments provide better wave action and are more environmentally friendly to fish. In some cases, vegetation can be used as an inexpensive and attractive alternative. Creating a bulkhead precludes development of the beach area, a potentially popular amenity, and should not be done unless absolutely necessary. Bulkheads are of either sheet or gravity types. The former uses sheeting made of steel, concrete, or wood that is anchored by piles. The latter is made of precast concrete and retains the shoreline by means of weight and shape. Gravity bulkheads allow easy access to boats but, in reflecting the waves, cause greater wave turbulence at the shoreline.

Breakwaters

Breakwaters are used to shield the marina from wave action. Potential wave action is simulated by engineers to determine the extent of breakwaters needed. Improper location of breakwaters can reduce natural flushing, exacerbate erosion problems, and encourage dangerous currents. Breakwaters are commonly constructed of a long, narrow strip of rubble. Floating breakwaters are less expensive to construct, though more expensive to maintain, and do not impede water flow. They are not suitable for areas that suffer from severe weather conditions.

Piles

Piles are used to support fixed piers and bulkheads and to anchor floating piers. They need to be durable, strong, and straight, and tend to be made of timber, concrete, steel, or a combination thereof, such as PVC-jacketed concrete.24

Engineering—Profile The four basic marina types are offshore, recessed, built-in, and landlocked.25 They can be seen in Figure 4.3. Offshore Marina

Because the offshore marina requires minimum bulkhead wall, land take, and dredging, it can be the least expensive type to build. Many, however, require expensive breakwaters, the cost of which, in deep water, can negate cost savings in other areas. It is vulnerable to weather and currents and, on rivers and estuaries, is a navigation hazard. It is also subject to silting by littoral drift—the movement of sand by wave action. It offers minimum enclosure and has the least impact on the environment. The offshore marina, however, presents few opportunities to place boats directly on the land.

Recessed Marina

When conditions on the sea bottom do not allow for an offshore layout, a recessed marina may be the economical option. Dredging takes earth from the original shoreline and deposits it offshore to raise the bottom to an appropriate level. Recessed marinas constitute a navigation hazard for passing craft.

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Water Land Water Land

OFFSHORE MARINA

LAND-LOCKED MARINA

Water Water

Land

Land

RECESSED MARINA

BUILT-IN MARINA

FIGURE 4.3 Basic marina types. Source: Adie, Donald W. Marinas: A Working Guide to Their Development, 3rd ed. New York: Nichols, 1984, 95. Reprinted by permission of Butterworth-Heinemann Publishers, a division of Reed Educational & Professional Publishing, Ltd.

An offshore marina. Photo courtesy of the author

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Built-In Marina

The built-in marina offers the advantages of an uninterrupted shoreline, a large land-water interface, and considerable enclosure. Hence, it offers excellent safety and affords opportunities for many slips. However, it requires a large amount of land, a long bulkhead wall, and significant dredging. This makes it more expensive than the categories noted above. Views to the open water are maintained, as are opportunities for development located close to the boats. Water stagnation is a potential problem because of poor water flow.

Landlocked Marina

The landlocked marina is both the costliest and the safest type of marina. It offers maximum enclosure and minimum interruption of shoreline (hence the safety factor), yet requires maximum bulkhead wall and dredging (hence the cost). The distance from open water can be inconvenient. Some means of circulating the water is necessary to prevent stagnation. From a revenue-generating perspective, this layout offers maximum frontage for boat slips. No matter the type, the amount of land area required should be equal to the water area. In the water, 77 percent of the area can be used for mooring, while the remaining 23 percent is needed for clearances. Parking can take anywhere from 22 percent26 to 40 percent27 of the land area. The remaining land can be used for other purposes. The ratios of boats to cars and people to cars are highly characteristic of individual marinas and must be determined case by case to estimate the numbers of boats, cars, and people to be accommodated. As a rule of thumb, marinas plan on between one-half to two parking spaces per boat slip, with a parking density of 90 cars per acre.28 Entrances to marinas should be built taking local wave conditions into account. The entrance should be turned away from the prevailing wave direction, at least four times the width of the largest berthed boat, and perpendicular to prevailing winds if sailboats are stored in the marina. Care must be taken to minimize littoral drift at the entrance, which can impede access and require expensive dredging. Turning areas are needed when facilities such as fueling docks are part of the marina. The amount of space required will depend on the type of boat and the skill of the sailor. For example, if the marina caters to sailboats and prevailing winds are strong, the turning area should be larger than average. Generally speaking, the narrowest dimension of a turning basin should be two and a quarter times the length of the marina’s longest boat.

Profile—Layout It is, unfortunately, common for mooring circulation and layout decisions to be made after the shape of the basin is determined. The best basin shape is rectangular, which allows for the greatest density of boats with the easiest maneuvering. More effective and efficient designs occur when mooring decisions are made early in the process as part of the overall development and design strategy. The basic choice in mooring layout is whether to have fixed or floating piers.29 Which type to select depends on the degree of water level fluctuation, the amount of money available, and how important safety is to the users. Fixed piers are stronger, more stable, and easier and cheaper to maintain. Floating piers are safer

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where there are major water level fluctuations. They also permit relatively easy expansion and modification. Floating docks have frames made of wood, concrete, or metal.30 The layout is determined by the site constraints as well as the demands of the expected market. The slip or berth—the water space between two piers—is the safest way to store boats. Slips are usually reached by piers or walkways that extend from the shore or bulkhead line. The piers can be fixed or float over the water (Figure 4.4). The latter tend to be attached to piles such that they rise and fall with the water level. Smaller finger piers allow access to the boats, which are stored perpendicular to the main or header piers. Tee piers help protect boats from wave action. Slips are either single- or double-wide (for storage of two boats). Piles can be used instead of finger piers as an alternate method of storage (see Figure 4.5). Storing the boats with the stern to the quay, jetty, or pontoon with the bow tied to piles is inexpensive, though not as convenient for embarking as alongside jetties

INTERIOR CHANNEL 100´ OF NAVIGABLE WATER FAIRWAY WIDTH 1.25 TO 1.75 ⫻ LONGEST SLIP SLIP LENGTH

DOUBLE-WIDE SLIPS

HEADER PIER 8´ TEE PIER 8´

FINGER PIER 3–4´

MOORING PILES MAIN ACCESS PIER

16´

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FIGURE 4.4 Slip layout. Source: Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 160. Reproduced with permission of the Urban Land Institute.

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FIGURE 4.5 Mooring layouts. Source: Adie, Donald W. Marinas: A Working Guide to Their Development, 3rd ed. New York: Nichols, 1984, 130. Reprinted by permission of Butterworth-Heinemann Publishers, a division of Reed Educational & Professional Publishing, Ltd.

or pontoons. Alternatively, the bows can be moored to anchors or buoys. This is also economical and is particularly suitable for large yachts, where the gangway is attached to the stern. A potential problem involves propellers becoming entangled. Storing boats alongside finger piers or catwalks is convenient for embarking and disembarking. Where more than one yacht is moored per finger, flexibility in accommodating different lengths of boat is greater; however, the finger piers must

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be wider. When boats are placed in a single bank alongside the quay, they are similarly convenient for embarking and disembarking. Flexibility is offered for accommodating different lengths of boats. Boats can also be placed alongside the quay, three or four abreast. The economies of this setup are balanced by the necessity for crews from the outer yachts to climb over the inner boats. Mooring between piles is the cheapest system because of the high density involved. However, there is no access to dry land and leaving the mooring is difficult. The safest arrangement is when the long axis of the boat is parallel to the prevailing winds and when boats are secured on all four corners. Finger piers on both sides of the boat are the most convenient layout for owners. The doublewide slip arrangement saves the marina manager money and space and offers the greatest flexibility. However, because the boats are not separated by piles or piers, they are subject to damage from both wave action and other boats. Finally, star finger berths offer an interesting alternative.

Layout—Architecture Architects must take into account the circulation pattern, the social interests of the boaters, and the need for support facilities. The variety of potential services and facilities that can be part of a marina development are noted in Table 4.2. Circulation Pattern

Consideration must be given to the separation of various marina user groups. Users can be divided into social and service traffic and by destination.31 Cars with boats need to be directed to a launch area, while visitors and owners not towing boats are diverted to the clubhouse and parking. While parking should be reasonably close to the slips, many operators question the wisdom of using valuable waterfront land for parking.

Social Interests

It is often said that boaters, like tennis players, place few demands on facilities. Because of their love for the activity, they are willing to put up with and may, in fact, enjoy being around the maintenance side of marinas. However, marinas may also seek to attract nonboaters to retail outlets, hotels, and restaurants. In this case, care must be taken to separate the attractive elements of boating and the necessary but less attractive service elements. Facilities might include restaurant and store operations, hotels, clubhouse, picnicking, and camping. In resorts, marinas must be developed to serve more than the needs of boaters. Adding facilities to make the marina look more like a fishing village and less like a boatyard increases its attractiveness and provides more income opportunities. Care must be taken to avoid conflicts between the recreational uses of the facility and the more industrial aspects of boat maintenance. There are three questions to be asked in order to determine what facilities can and should be offered: 1. What is possible, given the physical characteristics and environmental limitations of the site?

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TABLE 4.2 Marina Services and Facilities Water Related MARINA SERVICES Boat launching Mooring service Water taxi service Transient boat service Waste collection Fueling Boat towing Fire and rescue services Navigation and weather information Recreational services MARINA FACILITIES Open and covered mooring Boat launch ramp Marine railway Crane lift Dry dock Fueling pier Anchorage services Marine service station Entrance and exit channels Swimming area Waterskiing course Basin flushing system Storm and wave protection

Land Related

Boat sales Boat repairs Marina supply sales General supply sales Trailer storage Parking Overnight accommodation Food service Concessions Utility services

Boat building and repair Boat dry storage Trailer storage Restaurant Hotel Picnic areas Convenience store Boat washing Parking Swimming pool Camping Beach area Club room Marine supply sales Public toilets and showers Recreational facilities Bait shop Seafood sales

Source: U.S. Environmental Protection Agency Coastal Marinas Assessment Handbook. Atlanta: U.S. Environmental Protection Agency, 1985, 3–14.

2. What is popular in terms of market demand? 3. What is profitable for the operator?32 Support Facilities

A variety of support facilities will be needed, depending on the type of marina development, including toilets / showers, boat service center, boat launching equipment, boat sewage disposal and water take-on, firefighting equipment, and boat storage facilities. Instead of using valuable waterfront land for winter storage, per-

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Quick Getaway 4.5

Integrating the Waterfront When a marina is close to (or a part of) an existing town, efforts should be made to harmonize the two. Doing so can create an aesthetically pleasing area that fosters profitable businesses and draws customers to the marina, while creating a unique spot for town citizens to call their own. But how can a town blend seamlessly with a marina, when the two are so different? It’s easier than it seems. When constructing buildings, the marina should aim to reproduce the historical character of the town. New construction in town near the marina should make an effort to bridge the styles. Waterfront buildings need not be clones of downtown styles, but they should appear more of an extension of the town than an addition to it. Streets on the waterfront should mimic the layout in the rest of the town. If the town is built on a grid system, the marina should try to extend existing streets and mirror the town’s style. This design should be reinforced through the placement of buildings, travel ways, and design elements. If the part of town near the waterfront has an urban ‘‘main street’’ feel,

then the buildings on the waterfront should try to emulate that style by placing building edges close to the street line. To foster business and a more integrated feel, marinas and other waterfront developments should create a walkable, enjoyable pedestrian environment. Avoiding large blank walls, providing frequent street-level entries, and creating sidewalk amenities like street furniture and lighting will encourage pedestrian traffic. Open spaces near the buildings should also aim to be pedestrian-friendly. Creating trails and installing outdoor benches are two ways that developers can enhance open spaces. Source: ‘‘Harbor Area Design Guidelines: Town of Cape Charles, Virginia.’’ Paradigm Design, Renaissance Planning Group, May 15, 2006.

DISCUSSION QUESTION: In what other ways could marina developers enhance open spaces in order to make them more pedestrian-friendly?

haps parking lots can serve. An increasingly popular method of storing boats is dry stack storage, wherein boats are warehoused in stacks of up to three boats and raised and lowered by forklifts. In a well-managed system of stack storage, 25 boats can be launched in an hour. This system offers advantages to both marina operator and boat owner.33 For the operator, dry stack boat storage: Maximizes storage density. Improves security by allowing employee-only access to the rack storage area. Improves profitability when water space is limited by removing from the water boats under 30 feet for dry storage, thereby catering to the larger, higher-profit-generating boats.

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Can mean easier permits than wet storage. Gives a faster return on investment than does dock storage. The boat owner, in turn, gets more protection and lower rental than in wet slips. In one study, the price elasticity of demand for wet slip storage was calculated at -0.23—that is, a 10 percent increase in the price of wet slips results in a 2.3 percent reduction in demand for wet slips. The demand for wet slips compared to dry slips increases as boat size and boater income increases.34 Guidelines for pump-out stations vary from 1 per 100 (industry consultants) to 1 per 400 (U.S. government) boats. The tendency is to provide a solitary, stationary sewage pump-out station. However, pump-out capability can be provided at each slip at a relatively low cost during new construction.35 Handicap Access

Marina operators have slowly become more conscious of the need to make their facilities accessible to people with physical disabilities. This means developing a route that offers a safe and unobstructed path to all elements of the facility.36 Of primary concern to marinas are toilet facilities, parking areas, and gangway or ramp access to dock systems. Toilet facilities must allow for the maneuvering of a wheelchair and the presence of other people in the stall at the same time. An approach 4 feet wide and a door at least 3 feet wide are required. A 5-foot diameter of clear space within each stall is needed for turning purposes. Door locks, toilet fixtures, grab bars, and cost hooks must be within easy reach.37 Parking spaces must be designated for use by people with physical disabilities when 15 or more parking spaces are developed. Here are general guidelines: Number of Parking Spaces

Spaces Required for Handicapped

15–25 26–40 41–100 101–200 210–500

One space 5 percent but 4 percent but 3 percent but 2 percent but

not not not not

fewer fewer fewer fewer

than than than than

two spaces three spaces four spaces six spaces38

The designated spaces should be those closest to the activity. If the parking spots cannot be located less than 200 feet from the activity, a drop-off area needs to be created within 100 feet of the activity. Parking spaces can be 12 feet wide for perpendicular or diagonal parking layouts or consist of 8-foot-wide spaces separated by a 5-foot-wide aisle to serve two vehicles. A curb cut at each space allows people to access the sidewalk without having to enter the vehicular traffic flow. Gangway access should be as short and direct as possible. Walkways must be a minimum of 3 feet wide—6 feet is preferred—with a slope not to exceed 1⬊20. Handrails on both sides of a ramp or stair assist people who favor one side of the body. A ramp is defined as a ‘‘pathway with a slope of greater than 1⬊20.’’39 Due to large tidal changes, the primary access to marinas is often a relatively steep

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slope. This presents the major difficulty for marinas attempting to make their facilities accessible. Commonly, regulations indicate that ramps should not be greater than 1:12. This, however, may be too steep for people in wheelchairs. A ramp 4 feet wide with rails on both sides and a landing for resting every 32 feet allows people in wheelchairs to negotiate the slope while gripping both rails to ease the way up or slow the descent.

SUMMARY The importance of water as the basis for a number of recreational developments was noted. This chapter focused on beach resorts and marinas. The development process for a beach resort needs to consider six elements: sea, seashore, beach, back beach, coastal stretch, and the surrounding country. For a marina, the market must be analyzed, a market strategy and marina concept developed, and an initial site identified. Feasibility analyses are conducted and a preliminary design sketched out. Finally, the marina is developed according to certain design principles—the geography determines the engineering, which, in turn, determines the profile, which determines the layout, which determines the architecture.

ENDNOTES 1. Schwanke, Dean, et al. Resort Development Handbook. Washington, D.C.: Urban Land Institute, 1997, 143. 2. Harrison, Lynn C., and Winston Husbands (eds.). Practicing Responsible Tourism: International Case Studies in Tourism Planning, Policy, and Development. New York: John Wiley & Sons, 1996, 74. 3. Paul, A.H. ‘‘Weather and the Daily Use of Outdoor Recreational Areas in Canada.’’ In Taylor, J.A. (ed.). Weather Forecasting for Agriculture and Industry. Newton Abbot, England: David and Charles, 1972, 132–146. 4. Brown, Amanda. ‘‘Too Many Coastal Waters Fail Germ Test, Says Minister.’’ PA News (November 19, 1998). 5. Ensuring the Sustainable Development of Oceans and Coasts. Co-Chairs Report from The Global Conference on Oceans and Coasts held at UNESCO, Paris, December 2001, 9. 6. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 235. 7. Ibid. 8. Ibid. 9. Ibid., 234–237. 10. Smith, Valene L., and William R. Eadington. Tourism Alternatives: Potentials and Problems in the Development of Tourism. Philadelphia: University of Pennsylvania Press, 1992. 11. Phillips. Developing with Recreational Amenities, 141. 12. U.S. Environmental Protection Agency Coastal Marinas Assessment Handbook. Atlanta: United States Environmental Protection Agency, 1985, 3.5.

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13. Schwanke, et al. Resort Development Handbook, 145. 14. Phillips. Developing with Recreational Amenities, 149. 15. U.S. Environmental Protection Agency Coastal Marinas Assessment Handbook, 3.2. 16. Ibid., 3.8–3.9. 17. Henschen, Doug, and Peter Shroeder. ‘‘Marinas Good Guys: Finalists for the 1994 National Marine Manufacturers Association’s Environmental Responsibility Awards.’’ Lexis-Nexus Academic Universe 57, no. 11: 25. 18. Swanson, J.C., and M.L. Spaulding. ‘‘Marina Boat Carrying Capacity: An Assessment and Comparison of Methodologies.’’ Paper presented at the 1990 National Marina Research Conference, International Marina Institute, Chicago, 1990. 19. Phillips. Developing with Recreational Amenities, 144. 20. Phillips. ‘‘Water-Based Recreation Site Complexes.’’ Developing with Recreational Amenities, 227. 21. Adie, Donald W. Marinas: A Working Guide to Their Development, 3rd ed. New York: Nichols, 1984, 95. 22. Schwanke, et al. Resort Development Handbook, 146. 23. Ross, Neil W. ‘‘Dredging Successfully.’’ Boating Industry Magazine (March 1988): 18. 24. Appraisal Institute. The Dictionary of Real Estate Appraisal, 3rd ed. Chicago: Appraisal Institute, 1993, 312. 25. Phillips. Developing with Recreational Amenities, 167. 26. Ibid., 150. 27. Adie. Marinas, 111. 28. Phillips. Developing with Recreational Amenities, 158. 29. Ibid. 30. Schwanke, et al. Resort Development Handbook, 146. 31. Appraisal Institute. Dictionary of Real Estate Appraisal, 16. 32. Adie. Marinas, 69. 33. Dodson, Paul E. ‘‘Introduction to Dry Stack Boat Storage.’’ In Marina Investment and Appraisal Course. Wickford, RI: International Marina Institute, 1990, 1–3. 34. Bell, Fred. ‘‘Demand and Marketing, Part A: Comparison of Dry Stack and Wet Slip Demand.’’ In Dry Stack Marina Handbook, 2nd ed. Wickford, RI: International Marina Institute, 1992, section 6, 4. 35. Tobiasson, Bruce O. ‘‘Marina Design and Development with an Environmental Conscience.’’ Handout at International Marina Institute FMM School, 1995, 16. 36. Tobiasson, Bruce O. ‘‘Handicapped Access in Marina Design.’’ Paper presented at the 1989 National Marina Research Conference, International Marina Institute, 1989, 107–108. 37. Ibid., 113. 38. Ibid., 108. 39. Ibid., 111.

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Chapter 5 BEACH RESORTS AND MARINAS: MANAGING THE OPERATION LEARNING OBJECTIVES 1. Identify the changing trends in and demographic profiles of the market for beach resorts and destination resort marinas. 2. Identify operational environmental standards for both beach resorts and destination resort marinas.

INTRODUCTION

BOATERS

BEACH RESORTS: PROFILE OF THE BEACH RESORT GUEST

MANAGING THE OPERATION

Beaches and Islands Scuba Travel Romance-Related MANAGING THE RESOURCE

Managing Environmental Impacts BLUE FLAG Environmental Management Safety and Services

Water Quality

Water Quality

Environmental Management

Individual Boat Owners

Safety and Services DESTINATION RESORT MARINAS

SUMMARY ENDNOTES

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INTRODUCTION By all accounts the market for beach resort vacations is increasing. The same is true for activities tied to destination resort marinas. At the same time there is increased concern about the environment on the part of tourists.

BEACH RESORTS: PROFILE OF THE BEACH RESORT GUEST Beaches and Islands1 According to the Travel Industry Association of America, people who travel to beaches on vacation take longer holidays and spend more money compared to the average vacationer. They are also more likely to bring the children along, to fly to the destination, and to rent a car when they arrive. Approximately 110 million person-trips are made annually to beaches. A person-trip is defined as one person traveling at least 50 miles one way away from home. The top states that benefit from coastal tourism, in order, are: California Florida New Jersey Hawaii

Scuba Travel2 Scuba diving is a $2.6 billion annual business in the U.S. alone. Approximately $640 million a year is spent on equipment with the remainder going to travel, dining, lodging, and boat hire. There are over three million certified scuba divers in the United States, a six-fold increase since the 1980s. About one-third are female. ‘‘Live aboards,’’ upscale dive resorts in Asia, and ‘‘big animal encounters’’ are three fast-growing trends in the business. During ‘‘live aboards’’ 10 to 20 divers travel in luxury yachts from one isolated dive site to the next. ‘‘Big animal encounters’’ involve such things as swimming with and photographing manta rays at Baja, California and dolphins in the Bahamas. The top dive areas in the United States, according to Rodale’s Scuba Diving, are: Catalina Island, California Islamorada, Florida Channel Islands, California Looe Key, Florida Key Largo, Florida

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The Caribbean is a popular destination for U.S. divers due to the warm water, good visibility, and plentiful marine life.

Romance-Related3 According to the Travel Industry Association of America more than 42 million Americans take at least one trip a year to attend a wedding, go on a honeymoon, or celebrate an anniversary. Large numbers of this market segment choose to celebrate the occasion at resorts. In Jamaica about 25 percent of all June visitors are there for a wedding or honeymoon. Romance-related travel is most common among baby boomers (those born between 1946 and 1964) and those who live in the South. The average amount spent on honeymoons is over $3,600—an annual market (estimates vary) of between $4 and $7 billion. The top honeymoon beach locations are: Hawaii Mexico

Snorkeling gives a view of a whole different kind of world. Courtesy PhotoDisc / Getty Images

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Jamaica Tahiti Cayman Islands In terms of snorkeling and diving the top five spots are: Cayman Islands Mexico Belize

Quick Getaway 5.1

Mid-Atlantic Beach Weddings Bring Resort Revenue When imagining a beach wedding, most people probably place the bride and groom on white tropical shores. However, more and more people are turning to Delaware for their nuptial ceremony. Why Delaware? Marketing efforts aimed at brides-to-be have had some success, especially those marketing campaigns that paint Delaware’s resorts as wedding destinations that are geographically well-situated, economically appealing, and even romantically engaging. In situations where the bride’s family disagrees with the groom’s family about where to hold the wedding, Delaware’s beaches can be a comfortable ‘‘neutral zone.’’ Delaware’s resorts are increasingly looking to weddings to improve their profit margins, and they are constantly seeking ways to spur the market’s growth. Tourism promoters hope that someday Delaware will be known as the best place to have a wedding in the midAtlantic. However, many merchants say that Delaware is shooting itself in the foot, marketwise, by failing to make its marriage laws

friendlier to out-of-state residents. Delaware hasn’t really promoted itself heavily on a nationwide level, either, another factor that is keeping the state’s beach-marriage market from truly booming. Truth be told, Delaware’s image in the nation’s consciousness could use a good polish. ‘‘When I think of Delaware, I don’t think of romance,’’ said Kathryn Gabriel Loving, a New Mexico author whose 100 Best U.S. Wedding Destinations never even came close to including Delaware. Source: Ruth, Eric. ‘‘Delaware beach weddings are rolling in.’’ Delaware Coast Press (July 5, 2006). http: / / www.delmarvanow.com / deweybeach / stories / 20060705 / 2303952.html

DISCUSSION QUESTION: Do you think that Delaware should build up local (contiguous state) recognition as a beach-marriage state first, or do you think that launching a national advertising campaign is the best course to ‘‘get the word out’’?

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Australia Hawaii One of the latest trends in the honeymoon segment is honeymoon registry. Instead of giving a traditional gift family and friends can contribute to the cost of the honeymoon. In 2004 Aruba became the first honeymoon registry to be sponsored by a destination.

MANAGING THE RESOURCE In 1987 the Blue Flag concept began as an eco-label ‘‘certifying’’ beaches (and later marinas) as meeting quality standards relating to water quality, safety, environmental management, and environmental education. The program began in Europe but has now expanded to other regions of the world. In 2005 there were 2,472 Blue Flag beaches and 635 Blue Flag marinas in 35 countries. At the time of writing there are no Blue Flag beaches in the United States. There are, however, Blue Flag beaches in Canada and the Caribbean. The following criteria are specified for beaches:4

Water Quality It is vital that beaches meet water quality standards for microbiological and physical-chemical parameters. For the Caribbean and the South Pacific the microbiological limit values for faecal colibacteria (E. coli) and faecal enterococci are set at 100 / 100 ml and 40 / 100 ml respectively. The standards for Canada are the same for E. Coli and slightly more stringent for faecal enterococci. In terms of physical-chemical parameters: The pH should be between 6.5 and 8.5 (Caribbean and South Pacific) or 6 to 9 (Europe). There should be no visible oil film on the water surface and no odor. The beach should be monitored for oil pollution deposits and emergency plans should be in place in the event of such pollution. Potential land sources of oil pollution should be identified and properly managed. Nothing floating on the surface (plastic articles, bottles, etc.) should be present. Water should be transparent to a depth of at least 6 feet (3.6 feet in Canada). There should be no abnormal change in the color of the water. No specific odors from phenols should be present. It is important to have at least one sampling site on a beach, ideally where the concentration of bathers is highest. Samples are taken about 1 foot below the

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surface except in the case of mineral oil samples which are taken at surface level. Typically, samples would be taken every two to three weeks. It is critical that no wastewater, industrial or urban, originating from a source within or outside the community affect the water quality of the beach. Industrial facilities in the vicinity of beaches should be carefully monitored to ensure there are no negative environmental impacts on the resource and the bathers. If such a situation develops the ideal solution is to remove the source of the pollution. If this is not possible then any waste that accumulates on the beach must be collected and removed on a regular basis. Storm water outlets must be clean at all times. Similarly, there should be no untreated sewage discharged from the local community. Coral reefs close to a beach require special attention. At least once a year a team of divers should collect data regarding a site description focusing on the extent of human imprints on the coral reef—including coral bleaching, the presence of coral disease, and the presence of trash and coral damage—as well as fish counts, invertebrate counts, and substrate type measurements. There are competing views on the presence of algae or seaweed. Some feel that, as a natural part of the littoral ecosystem, seaweed should be left to decay on the beach unless it constitutes a nuisance. Those who ascribe to this point of view consider the coastal zone as a living and natural environment and not just a recreational attraction to be kept tidy. Visitors may take a different point of view and be offended by the sight and smell of algae on the beach. Management has to be aware of the needs of visitors as well as being sensitive to the biodiversity of the natural resource. Algae should not be allowed to accumulate to the point where it is a hazard or a nuisance to beach users. Seaweed dried on the beach can be used as a fertilizer.

Environmental Management A beach management committee must be established to be in charge of instituting environmental management systems and conducting regular environmental audits of the beach facility. Such a committee would consist of all relevant stakeholders. Examples might include a representative of the local authority, local businesses such as hotels, a beach manager, and a spokesperson for the local residents. The committee helps ensure that the beach meets the environmental management criteria. It is important that the operation of the beach and its immediate surroundings comply with local and regional land-use plans including effluent discharge and regulations regarding environmental health. There are, for example, coastal zone management principles for back beach areas that include dunes, paths, and parking areas. A clean beach means that there should be no signs of litter. The beach should be inspected and cleaned on a daily basis. The people and equipment necessary for this maintenance should be planned and budgeted for. For beaches that experience high levels of use it may be necessary to periodically sieve and deep clean the sand in order to remove such things as cigarette butts.

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Waste disposal bins / receptacles must be available on / by the beach in adequate numbers, regularly maintained, and emptied. Trash containers should have covers. Some beaches have been creative in the placement of containers by sinking them part way into the sand. The containers still fulfill their function but are less intrusive than if merely planted on the beach. Trash containers can be aesthetically pleasing as well as functional if some thought goes into the selection process. The number and placement of containers will depend on the capacity of the containers, how many people use the beach, and how often the containers are emptied. The amount of maintenance and emptying of containers will vary week to week depending upon the volume of people on the beach. Facilities for receiving recyclable waste materials must be available on / by the beach. Increasing numbers of communities encourage recycling. Separate containers on the beach for glass, cans, plastic, and paper can help this effort. Adequate and clean sanitary facilities with controlled sewage disposal.

Trash containers sunk into the sand, Waikiki Beach. Photo courtesy of the author

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The number of sanitary facilities needed will depend on the average number of beach users during peak season, the length of the beach, and the number and location of beach access points. They should be cleaned several times a day and be handicap accessible. The facilities must have washbasins, soap, and either clean towels or a dryer. Sewage cannot go into the ground or sea untreated. The facilities must either be connected to the municipal sewer system or, in the case of remote beaches, employ regularly emptied holding tanks. Facilities can be designed and maintained in such a way that they complement and fit in with the natural environment. While certain beaches in Florida encourage driving on the beach as part of the attraction, such activities are detrimental to the quality of the environment. In the event that cars are allowed on the beach they should be kept at least 65 feet away from the water’s edge. In most Blue Flag beaches dogs and other pets are not allowed on the sandy part of the beach, with the exception of guide dogs for blind people. If pets are allowed owners must keep them on a leash and be responsible for picking up droppings. Special consideration should be given to the cleanness and condition of equipment. Ideally environmentally sound products will be used. Traffic congestion can be reduced through such actions as encouraging the use of public transportation and the use of bikes, designing pedestrian streets, and developing circulation plans that reduce peak traffic jams.

Safety and Services Determining the appropriate number of lifeguards and equipment requires a risk assessment of the beach. Providing information to and educating beach users about safety concerns should be additional elements of a safety strategy. The number and placement of lifeguards will vary according to the demands of the season. The internationally recognized red / yellow uniform for lifeguards helps make them easily visible on a crowded beach. The areas patrolled by guards should be outlined on maps and on the beach with markers or flags. Lifesaving equipment includes such things as life buoys, torpedo buoys, hook, life vests, life rafts, etc. There should also be access to an emergency phone. It is recommended that equipment be provided every 120 feet when no lifeguards are present. Instructions on the proper use of such equipment must be visible. Equipment must be inspected and maintained on a regular basis. First aid can be made available in several ways: a lifeguard on site an attended first-aid station with trained personnel equipment located in a shop or other beach facilities at the beach directly available to the public on the beach

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Quick Getaway 5.2

Beach Resorts Catering to Kids According to the guidebook Caribbean With Kids, the Atlantis Resort is ‘‘one of the most lavish properties in the entire Caribbean.’’ That means something, in a region peppered with high-class resorts. However, not all of these resorts are as kid-friendly as the Atlantis. Kids love sand, sun, and animals, and the Atlantis has all three in abundance. The resort has waterfalls, streams, lagoons filled with sea creatures, and underwater viewing areas where guests can enjoy what the Atlantis claims is the ‘‘largest marine habitat in the world.’’ With 11 exhibit lagoons and 11 million gallons of water, that’s a hard claim to dispute. Fish aren’t the only things that splash in the water at Atlantis. Resort guests with swimming in mind can choose from a 7-acre lagoon, multiple swimming pools, a lazy river, and a whitesand beach. Kids are especially interested in waterslides at Atlantis, the steepest of which starts atop a five-story ‘‘Mayan Temple’’ and plunges down 60 vertical feet to a clear tunnel inside of a shark-filled lagoon. Another kid hot spot is the Challenger, where two people can race each other down twin slides. The Altantis Resort is good for families with grade-school children, but the resort really stands out for the innovative way that it treats families with babies and small children. Families with babies have the option of getting a special kit complete with a nightlight, a lullaby CD, several baby care products, and a brochure about keeping baby’s routine while

traveling. The kit includes the number for a Prompt Response hotline, and several other goodies for babies. The large Ripples kiddie pool area has slides, waterfalls, and other fun features (along with roomy loungers for parents). For families with younger children, there’s a smaller kiddie pool as well. New in 2006 is the Splashers water play zone, an area designed for kids under 4 feet tall, complete with slides, dumping buckets, squirters, and more. Perhaps the most child-friendly area at the resort is the Atlantis’s Kids Clubhouse where kids of all ages can stage parades, learn how to play instruments, or visit the resort’s Fish Hospital. Other children’s areas include Discovery Kids Adventure, which was designed in conjunction with The Discovery Channel; Evening Escape, which runs movies, games, and dancing; and Club Rush for the oldest kids, which has a dance floor, movies, and video games. Source: Plowright, Teresa. ‘‘The Atlantis Resort.’’ About.com, Travel with Kids. Accessed July 25, 2006. http: / / travelwithkids.about.com / cs / sunzonesresorts / a / atlantisresort.htm

DISCUSSION QUESTION: How would you describe the difference between the terms ‘‘family-friendly’’ and ‘‘kidfriendly?’’ Do they mean the same thing, or not? If you think they don’t mean the same thing, give an example for each term.

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First-aid stations need to have stocks of basic first aid commodities such as bandages, disinfectant, Band-Aids, hot and cold water, first-aid bed, oxygen cylinder and mask, immobilizing trauma board, other location-specific equipment such as shark attack packs, etc. Where a variety of activities in and out of the water are allowed there must be a system in place that manages these multiple uses in order to minimize conflicts. Separate geographic or time zones can be set up for swimmers, surfers, wind surfers, and motorized craft. Areas can be set aside for specific uses, or certain activities might only be allowed at specific times. Zones should be clearly marked

Quick Getaway 5.3

Palapa Problems Turn to Palapa Profits Anyone familiar with the beach resort industry will no doubt have heard about resorts’ problems with palapas. Palapas, thatch-roofed beach structures designed to provide shade and privacy, are often in high demand. For many travelers, spending the day under a palapa is an integral part of their relaxing vacation experience. Because most resorts don’t have as many palapas as they have rooms, guests who feel entitled to a palapa frequently find themselves without one, and conflicts over who ‘‘claimed’’ the palapa are common. All of this can lead to guest frustration and a negative perception of the customer service at the resort. What can a beach resort do to solve the palapa problem? The best approach is to manage palapas like the resort manages rooms. Both palapas and rooms are a limited supply with high demand. Rooms are rented, so why not rent palapas? A straightforward and easily enforceable rental system would create a way for guests to ensure that they have palapa use, and those who choose not to rent a palapa do not feel as slighted as they would if they simply could not ‘‘claim’’ a palapa early enough. Palapa rental could be linked to room rental; perhaps more

expensive rooms could come packaged with a palapa. The best part about this solution is that palapa rental will bring in additional revenue for the resort. All the same, resorts should be wary of charging too much for palapa usage, as vacationers who have already paid a great deal for a resort stay may be reluctant to pay additionally for what amounts to a glorified beach umbrella. Speaking of beach umbrellas, a resort that charges for palapa use would be wise to provide free beach chairs and beach umbrellas to those who cannot or do not rent palapas. This will ease feelings of disappointment, and improve the guest’s opinion of the resort’s customer service. However, since renting a palapa implies renting privacy, there should be restrictions on the placement of beach chairs. Source: Pinchuk, Steven. ‘‘Applying Revenue Management to Palapas.’’ Cornell Hotel and Restaurant Administration Quarterly (February 2006). http: / / cqx.sagepub.com / cgi / reprint / 47 / 1 / 84

DISCUSSION QUESTION: Should palapa-rental systems continue to be utilized during the low season?

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with buoys, beacons, or signs. In general, powered boats should be kept at least 130 to 260 feet away from swimmers. The beach should be managed in a way that helps protect the environment. Some beaches are natural habitats for turtle nesting. In those places resorts often set up walking tours for their guests to view the turtles. Artificial lighting is discouraged as it adversely affects the turtles. The development of an emergency plan is an attempt to be proactive in planning for such things as oil spills, hazardous / toxic waste spills entering the beach from the sea, or hurricanes. It should identify who is to be contacted in case of pollution and which services and people have to be involved, and specify procedures for warning the public together with laying out procedures for protecting and evacuating people from the area. Ensuring safe access might involve securing steps with handrails, designating crosswalks on roads, and reserving places for disabled drivers in parking lots. Public access to beaches can be a source of friction between resort guests—who feel they have paid a large amount of money for the privilege of using the beach because they are staying at the resort—and locals who feel that natural resources are part of the community. Some resorts attempt to provide a ‘‘reserved’’ area for guests by roping off a small area in front of the resort. Trained and qualified security guards may be necessary to provide a safe environment for guests. A supply of potable drinking water must be available on the beach. A map of the beach indicating different facilities must be displayed. A map showing the location of key facilities and services should be posted showing the location of lifeguards or lifesaving equipment, first-aid equipment, telephones, toilets (including toilets for disabled people), drinking water, car and bicycle parking areas, authorized camping sites at / near the beach, larger trash receptacles, access points and access for disabled, foot paths, zoning (swimming, surfing, sailing, boating, etc.), and nearby natural sensitive areas.

DESTINATION RESORT MARINAS There is nothing—absolutely nothing—half so much worth doing as simply messing about in boats. —KENNETH GRAHAME

Marinas—the term is adapted from the Italian word for small harbor—have come to include any collection of slips for pleasure boats. Marinas have developed from facilities ‘‘long on boatyard ambience and short on creature comforts’’ to attractive, bustling waterfronts that often serve as the key recreational attraction in a variety of types of development. They have changed from being outgrowths of a

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boatyard or commercial harbor to being more like fishing villages in appearance. The close relationship between real estate, boats, and water has resulted in increased property values. The International Marina Institute, in its annual benchmark study, defines a destination resort marina as ‘‘accessible both by land and water, [including] wet slips for visitors, hotel accommodations, restaurant facilities, swimming pool and other recreational amenities that create a resort atmosphere.’’5

BOATERS The National Marine Manufacturers Association (NMMA) estimates that 69 million people participated in recreational boating in 2004 in 17.6 million boats.6 Twenty states account for approximately three-quarters of all boat registrations in the U.S.7 The major states are: Michigan Florida California Minnesota Texas The increased interest in boating is a function of a growing economy that features increases in disposable income, leisure time, and individual mobility. Technological advances also help. Polyester resins and fiberglass boats make boats essentially maintenance-free. Their development led directly to the introduction of small sailboats and outboard-powered runabouts.

MANAGING THE OPERATION Managing Environmental Impacts8 Good environmental practices are crucial to any resort operator. The resort relies upon the quality of the resource—beaches, water, and the marine environment— to attract and satisfy guests. Irresponsible activities can seriously erode the health and aesthetics of near-shore marine environments and coral reefs. There are a number of specific concerns that need to be addressed. Anchoring

The use of anchors for mooring recreational boats can cause extensive damage to near-shore marine ecosystems, especially coral reefs. Anchors can damage warm water corals by crushing them. The practice can also cloud water with disturbed sediment. It takes a coral reef a long time to recover from anchor dam-

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age. Preventing anchor damage requires little in the way of investment and few operational changes. The benefits come from the revenue from tourists who want to see reefs that are healthy and intact. Anchoring can result in: fewer fish fewer living corals fewer new corals more stressed corals more algae growth cloudy water destruction of sea grass beds The resort operator can institute several practices to minimize or even prevent damage from anchoring. The use of mooring buoys allows boaters to maintain their position without dropping anchor. Management may have to educate resort guests as to the problems associated with anchoring and to give instruction on the proper use of mooring systems. Boat Operation

Improper operation of a boat can result in accidents that crush and kill areas of coral and other reef-dwelling organisms. Increased sediment from propeller wash and wave creation tends to inhibit the photosynthetic process of symbiotic algae that live within coral tissues. Older boats and jet skis that have inefficient twostroke engines can generate significant levels of pollution. Boaters should be urged to follow proper navigation and mooring principles in regard to staying within designated channel markers and obeying all speed signs. Resorts that hire out boats are responsible for keeping them in prime condition through regular maintenance. Ideally such boats that have older two-stroke engines can have them replaced with more fuel-efficient, cleaner burning four-stroke outboards. A comprehensive maintenance program involves:9 regular inspections of areas susceptible to potential leaks of toxic substances keeping toxic-absorbent sponges in bilges using non-toxic antifouling paints on boat hulls using biodegradable cleaning agents avoiding onboard refrigeration units that use chlorofluorocarbons avoiding pumping oily bilge water or other hazardous substances into the sea A comprehensive educational program should be offered to guests prior to the renting of a boat in such areas as basic navigation, boat handling, and safety principles.

Boat Sewage and Garbage Disposal

When raw or partially treated sewage is dumped in coastal waters people and the environment are subject to risk. Plastic objects and Styrofoam debris are often consumed by turtles, seabirds, fish, and marine mammals. The result can be death.

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Boaters should be urged to use pump-out facilities on land, and—where such facilities are not provided by the resort—to treat sewage prior to its release from the vessel. Sanitation devices on the vessel need to be kept in good working order and the use of plastic and Styrofoam minimized. Snorkeling, Diving, and Snuba

Many resorts offer snorkeling, diving, and snuba as activities to attract guests to a particular property. Snuba is a relatively new water sport for non-certified divers that combines snorkeling and scuba. Divers breathe air from a standard regulator underneath the surface, but do not wear the equipment and air tank associated with traditional scuba. Instead, a tank is kept on a small raft at the surface, and air lines are fed underwater to divers. Irresponsible or inexperienced snorkelers and divers can crush and break corals and other reef-dwelling organisms with fins, equipment, and body parts. People who are unable to control their movements in the water, who stand or walk in a shallow area, or who handle, touch, and feed wildlife can cause a great deal of damage. The resort can:10

Be aware of local laws when touching marine life. Courtesy PhotoDisc, Inc.

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establish a no-contact policy for divers conduct environmental awareness briefings for guests conduct buoyancy refreshers and dive skills training discourage feeding of fish and wildlife install permanent mooring buoys at dive sites regulate carrying capacity to avoid overcrowding Seafood Consumption and Souvenir Purchasing

The near-shore environment is threatened when marine resources are overharvested for seafood and / or ornamental souvenirs such as coral and turtle shells. The Caribbean is experiencing serious declines of spiny lobsters, crabs and conchs, and fish such as groupers and snappers. Overconsumption reduces the very resources that attract tourists in the first place. Resorts can educate guests about which species should not be consumed as food or purchased as souvenirs. Gift shops should not be selling or purchasing

Quick Getaway 5.4

Sit, Stay, Surf It used to be that finding a place to stay with your pooch was the hardest part of traveling. Now, with pet-friendly hotels on the rise, your pet can join you at the hotel pool, catch a surf class, and bed down on a high-count linen animal bed. Pets are big business. According to the American Pet Products Manufacturers Association, Americans spend more than $38 billion a year on their pets. Hotels and resorts have picked up on this trend: now you can find pet massages at spas, special gourmet pet treats at fine resort restaurants, and even portable pet cabanas for the beach. Pet pampering is fine, but most owners want to interact with their pooches. Keeping this in mind, many hotels have instigated programs and activities that guests can do with their pets, such as. . .drink cocktails? Yes. The W San Diego started pet-friendly cocktail hours in the fall of 2005. In Naples, the Ritz-Carlton Golf Resort has initiated obedience classes, including a socialization class for puppies between ten weeks and five months old.

Socialization and obedience classes are only the tip of the iceberg. Loews Coronado Bay Resort in San Diego now holds dog surfing classes. That’s right. . .surfing, for dogs. The hotel started selling a $300 package in the spring of 2006 that includes one night’s accommodation, one surfing lesson for Fido (without the owner), a meal for the pet, and for smaller dogs, board shorts. ‘‘We have sold close to 40 of those packages,’’ says Anne Stephany, the public-relations manager for Loews Coronado Bay. ‘‘With a package like that, we usually sell five.’’ Source: Gunderson, Amy. ‘‘See Rover Run.’’ The New York Times (July 16, 2006). http: / / www. orlandosentinel.com / travel / printedition / orlpettravel1606jul16,0,7892310.story

DISCUSSION QUESTION: Are pooch-friendly programs fair to guests who do not like animals, or who have animal allergies? What can be done to alleviate petfree guests’ concerns?

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marine ornamental souvenirs. Restaurants on the property should not serve fish that are threatened or endangered. Recreational Fishing

Recreational fishing is a popular activity. Sport fishing charters target marlin, dorado, and wahoo. Spear fishing and pole fishing in coral reef areas have also gained in popularity in recent years, among both tourists and local people. Recreational fishing can result in the overharvesting of a number of marine species. Spiny lobsters and Hawaiian groupers are now extremely rare. Management can encourage catch-and-release fishing to help protect endangered species. Many critics think that spear fishing contributes to excessive harvesting of fish and should be avoided.

Marine Wildlife Viewing

Marine species have a greater economic value when they are viewed rather than harvested. However such viewing practices can have detrimental impacts if not properly managed. The major threat comes from improper boating practices and corralling of animals during viewing. Noise causes stress for animals while power boat propellers have been responsible for the scarring and the death of slow moving animals such as manatees and sea turtles. Resorts that offer such tours can avoid chasing marine animals, practice a no-contact policy, and avoid feeding and surrounding wild animals. This latter practice can cause a great deal of stress to the animals.

BLUE FLAG As noted in the section on beaches, Blue Flag criteria have been developed for marinas. Criteria cover environmental management, safety and services, and water quality as follows:11

Environmental Management An environmental policy and plan must be in place at the marina. The plan should cover water, waste and energy consumption, health and safety issues, and the use of environmentally sound products. The system involves several elements and is illustrated in Figure 5.1. The Environmental Policy is an effort to reduce the environmental loads from the activities of the marina. Priorities must be established in the areas of water, waste and energy consumption, health and safety issues, and the use of environmentally sound products. The starting point is to establish the actual environmental load of the marina and the boats that use the facility. This process is known as mapping and involves several steps.12 An overview of the marina and its surroundings is developed and an invisible border is drawn around the marina. Next the environmental loads—

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ENVIRONMENTAL POLICY MAPPING EVALUATION

GOALS AND OBJECTIVES

INTERNAL AUDIT

MANAGEMENT PLAN IMPLEMENTATION

FIGURE 5.1

Source: www.blueflag.ord\word\inter\bfi\criteria\marina\marinacriteriaexplanatorynotes2006.doc pp. 9-10, accessed January 21, 2006.

energy, water, materials, waste—entering this border are determined. A physical examination is then made and the environmental conditions are noted. At this point, general goals and more specific objectives need to be established for each of the environmental conditions. Suitable objectives might be:13 Changing to energy-saving lightbulbs Installing water-saving showers and / or toilets Buying and using environmentally sound products Putting the management plan together means setting priorities. In establishing priorities consider whether the positive effects outweigh the effort to be expended. The cost factor is an important consideration. Will the savings outweigh the costs involved? How long will it take to ‘‘earn back’’ the costs of the project? How will the project be financed? Implementing the plan might involve changing the behaviors of management, employees, and guests. An internal audit is a way of ensuring that the plan has been carried out successfully. Have the objectives been met? Did the expected effects materialize? The reasons for any discrepancies between what was expected and what actually happened need to be investigated. This process should be repeated annually. Hazardous wastes, such as paints and solvents, need to be handled by a licensed contractor and disposed of at a facility for such wastes. As with beaches above, the number of trash containers needed will depend on the capacity of the containers, how many people use the marina, and how often the containers are emptied. The marina should have facilities for receiving recyclable waste materials. Bilge water pumping facilities should be easily accessible and able to separate the oily bilge water or water extraction from oily residues. The marina should have toilet pumping facilities that are easily accessible for all boats.

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All buildings and equipment must be properly maintained and in compliance with national legislation. The marina must be well integrated into the surrounding natural and built environment. Adequate, clean, and well signposted sanitary facilities, including washing facilities and drinking water, should be provided. Controlled sewage disposal to a licensed sewage treatment. The sanitary facilities should include toilets, washbasins, showers, and drinking water. Washing machines would be an added service. There should be enough facilities to encourage boat owners to use the marina facilities rather than the boat toilet facilities during their stay in the marina. If the marina has boat repairing and washing areas, no pollution must enter the sewage system, marina land and water, or the natural surroundings. The boat repairing and washing should take place in a specific designated area at the marina with collection filters or equivalent systems from boat repairing and washing areas to prevent hazardous substances from entering the sewage system and the marina land / water. These filters have to be emptied regularly and the contents treated as hazardous waste. Major repair activities such as grinding, polishing, or sandblasting should take place under cover or indoors because of the resulting dust pollution. Promotion of sustainable transportation should be encouraged. No parking / driving in the marina, unless in specific designated areas.

Safety and Services Adequate and well signposted lifesaving, first-aid, and fire-fighting equipment. At a minimum, lifebuoys and ladders should be present. Other types of lifesaving equipment include boat hooks, rescue boats, and rescue stations at or near the marina. The fire-fighting equipment in the marina covers fire extinguishers and water hoses. All safety equipment should be available 24 hours a day. Emergency plan in case of pollution, fire, or other accidents must be produced for the marina, and safety precautions must be posted at the marina. There should be an emergency plan, the contents of which are known to the staff, concerning what to do in case of pollution, fire, or other possible accidents affecting the safety of the marina. At a minimum the plan should cover:14

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Identification of the people to contact in case of an accident Involvement of administration services and people necessary to intervene Procedures for the protection or evacuation of people at or near the marina Procedure of public warning and information Safety precautions should be posted in a public area and cover:15 Information about the location of telephone, lifesaving, fire-fighting, and first-aid equipment Information about how to use the above-mentioned equipment (if needed) Details on how to warn other people about an unsafe situation Information about correct storage of hazardous and inflammable waste Directions for filling gasoline / petrol tanks at the fueling station only Prohibition of open fire or fireworks at the marina (unless there is a designated area or permission from the marina) No swimming in the marina Signs for safety hazards (e.g., unprotected piers) Information about whom to contact for further information about safety at the marina Information about relevant alarm telephone numbers (police, fire department, ambulance, marina manager) Electricity and water is available at the berths, installations must be approved according to state / national regulations. The facilities for disabled people in a marina should include access to and around the marina, designated car parking spaces, and access to sanitary facilities. A map indicating the location of the different facilities should be posted at the marina clearly identifing the location of:16 Reception facilities for hazardous waste and oil waste Garbage containers and facilities for recyclable waste Toilet tank pumping / reception facilities (if present) Bilge water pumping / reception facilities (if present) Lifesaving equipment Fire-fighting equipment First-aid equipment Public telephone Sanitary facilities (toilets, showers, washing facilities, drinking facilities, etc.) Fueling station (if present) Boat repairing and washing areas Marina office / club house Facilities for disabled people (if present) Designated parking areas Boat places reserved for guest boats

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Best Beaches Every year, Stephen Leatherman, Ph.D. (a.k.a. ‘‘Dr. Beach’’), searches the United States looking for the nation’s best beaches. It’s nice work, if you can get it, but it requires a certain amount of expertise. Dr. Leatherman isn’t just wandering the shores and picking which beaches he thinks are ‘‘nice.’’ For this professor, who teaches environmental studies at Florida International University (FIU) in Miami, determining beach quality is far more science than art. What criteria does Dr. Beach look for when he’s compiling his top ten beach list, released every Memorial Day? Factors such as beach width at low tide, beach material, sand softness, and erosional variation come into play. Safety concerns, like frequency of rip tides, quality of bottom conditions, and

amount of sewage / scum also make an appearance on the list of criteria. Water color, wildlife, and even the scent of the air can make a difference. With 50 distinct criteria, Leatherman’s ranking is a truly exhaustive beach rating system. Source: Leatherman, Stephen. ‘‘Meet Dr. Beach.’’ Drbeach.org. Accessed July 27, 2006. http: / / www.drbeach.org / drbeach /

DISCUSSION QUESTION: When a beach is rated as the best beach in America, the very qualities for which it was picked (privacy, little human intervention) may be destroyed as people rush in. Is there any way to avoid this?

Water Quality In terms of water quality it is important that the water be free of oil spots, litter, sewage, or other visible signs of pollution.

Individual Boat Owners The Blue Flag designation is available for individual boat owners. Boat owners must commit to following an environmental code of conduct that involves:17 I will not throw garbage into the sea or along the coast. I will not release toilet water in the sea, in coastal waters, and in sensitive areas. I will not release poisonous or toxic waste into the sea. I will deliver these types of waste to the containers in the marina. I will promote and use recycling facilities. I will use the most environmentally friendly products among paints, detergents, etc. I will report pollution or other violation of environmental regulations to the authorities immediately.

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I will not use forbidden fishing practice and I will respect periods when fishing is prohibited. I will protect animals and plants in the sea, which includes not disturbing breeding birds. I will respect vulnerable and nature protected areas. I will avoid damage of the sea bottom, e.g., being careful when anchoring. I will avoid disturbing a fishery or fishery gear. I will not buy or use objects made from protected species or from archaeological underwater findings. I will encourage other sailors to take care of the environment also.

SUMMARY The market for beach resorts and destination marinas is large and growing. In order to attract and satisfy the resort guest seeking the experience of a water-based resort, attention must be paid to good environmental practices. Criteria laid down by the Blue Flag campaign can serve as guidelines for the effective management of a beach resort and destination resort marina.

ENDNOTES 1. Richard K. Miller & Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 309–314. 2. Ibid., 313–314. 3. Ibid., 286–293. 4. Blue Flag Beach Criteria and Explanatory Notes, 2006–2007. Accessed January 21, 2006. www.blueflag.ord \ word \ inter / bfi \ criteria / beach \ beachcriteriaexplanatorynotes2006.doc 5. International Marina Institute. 1998 Financial & Operational Benchmark Study for Marina Operators, A7. 6. National Marina Manufacturers Association. 2004 Recreational Boating Statistical Abstract. Chicago, IL, 2004. 7. Richard K. Miller & Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 471–472. 8. The Center for Environmental Leadership in Business. A Practical Guide to Good Practice: Managing Environmental Impacts in the Marine Recreation Sector. Undated. www.celb.org 9. Ibid., 7. 10. Ibid., 11. 11. Blue Flag Marina Criteria and Explanatory Notes, 2006–2007. www.blueflag.ord \/ word \ inter \ bfi \ criteria \ marina \ marinacriteriaexplanatorynotes2006.doc 12. Ibid., 10. 13. Ibid., 7–8. 14. Ibid., 16. 15. Ibid., 16. 16. Ibid., 17. 17. Ibid., 6.

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Chapter 6 GOLF/TENNIS–BASED RESORTS: THE IMPACT OF DEVELOPMENT ON OPERATIONS LEARNING OBJECTIVES 1. Identify the major planning and development elements involved in creating a golf course. 2. Differentiate between the various types of golf course design in terms of land consumption, frontage, maintenance costs, and integrity. 3. Explain the role of general design principles in site planning a golf / tennis– based resort. 4. Discuss how to balance the relationship between the integrity of the natural resources base while increasing the profit-generating capability of the recreational facility. 5. Identify the major factors affecting the overall development of tennis courts in a resort setting.

INTRODUCTION

Climate

GENERAL GUIDELINES

Maintenance

Ownership PLANNING AND DEVELOPMENT

GOLF COURSE TYPES The Regulation Golf Course

Landscape Architect

Core Golf Courses

Size of Property

Single Fairway Continuous

Shape of Property Topography

Single Fairway with Returning Nines

Natural Hazards

Double Fairway Continuous

Soil Characteristics

Double Fairway with Returning Nines

Vegetation Clearing Required Market Land Cost Water Supply

Comparing the Layouts Other Golf Hole Styles DESIGN PRINCIPLES

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Safety

TENNIS

Design for Play

Introduction

Costs

Site Selection

Aesthetics

Planning and Design

Tournament Qualities

Management

Accessibility

SUMMARY

Clubhouses

ENDNOTES

Remodeling

INTRODUCTION It looks like an excellent exercise. But what’s the little white ball for? —ULYSSES S. GRANT

Golf courses can serve many purposes. Because of their attractiveness to growing numbers of people, they may help the marketing effort in selling a resort or residential community. The design of the golf course is dependent on the strategic role it is meant to play within the resort. If the primary purpose of the course is to sell real estate, buildings should be designed to take advantage of views. There should be maximum real estate frontage on the fairways, as these sites command premium prices. By some estimates, golf course frontage can result in an 8 percent premium in the price for a home. In contrast, in one study, a home one-tenth of a mile from the golf course gate had a 3.7 percent reduction in its value compared to golf course frontage.1 Water elements should be planned as both scenic amenities and as golf hazards, and the most valuable land should be kept for uses other than golf. Courses can also be used in the marketing effort to sell homes or condominiums. An estimated 80 percent of all new and planned golf courses are associated with residential developments.2 In these kinds of cases, the course should be developed early in the development process, designed to support tournament play, and planned for photogenic and outstanding holes that take advantage of site characteristics. This, obviously, costs more to build than the typical golf course. Where the objective is to provide a high-quality amenity to the real estate target market, the course must be developed with the average golfer in mind. The integrity and playability of the course become the major design consideration. The integrity of the golf course is ‘‘the degree to which golfers perceive that surrounding land uses visually or physically impinge on their game.’’3 The course might be built in stages as real estate expands. Golf courses undoubtedly raise land values and can evolve into profit centers themselves.

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Concerns over the negative environmental impact of golf courses are increasing. The issues revolve around three concerns: land use changes and soil erosion, the use of chemical fertilizers (controlling pests requires upwards of nine pounds of pesticides per acre), and the extensive use of water. The positive environmental aspects of golf courses, on the other hand, include: Reduced runoff—Turf on golf courses helps reduce water runoff, erosion, and flooding. Groundwater recharge—A 150-acre course can recharge the water table with a net 90 million gallons of rainwater each year. Water filtration system—Water that has moved through a golf course is purer than it was before it reached the course. Effluent water—Golf courses can be irrigated with effluent water that is filtered by the soil and vegetation before returning to the aquifer. Oxygen production—A 150-acre golf course produces enough oxygen for 118,000 people per day. Temperature—The cooling effect of a course is equivalent to several hundred tons of air-conditioning. Noise abatement—Turf absorbs and deflects sound. Wildlife—Courses maintain natural habitats for wildlife. Allergy control—Turf helps trap dust and reduces pollen levels. Fire breaks—Turfgrass offers a buffer zone to help prevent the spread of wildfire. Open space—Many developments require a certain amount of open space. In some cases, golf courses can qualify as open space to help meet this requirement.4 The high cost of construction and maintenance means that development must be approached carefully.

GENERAL GUIDELINES Golf is the engine that drives most resort destinations. —DOUGLAS GEOGA President of Hyatt Hotels Corp.

In the 1960s, the cost of developing a golf course was easily recouped through the premium prices charged for fairway frontage and the general marketing appeal of the amenity. Rising interest rates and inflation in the 1970s changed that picture. The increasingly high development costs led developers to reduce construction and maintenance costs and look for sources of additional revenue. For example, more courses are being designed with water conservation in mind, reusing waste-

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water for irrigation. Courses are also being designed to speed play, thereby increasing course capacity, daily rounds, and revenue.

Ownership Golf courses can be privately or municipally owned. Private clubs are open to members only or to the public on a daily fee basis. Today, it is common for a golf course to be part of a development mix that includes various housing products: primary homes, vacation residences, a resort hotel, and condominiums. This means that the old development model is no longer appropriate. Traditionally, the course was built early in the development of the project, the cost was covered through sales of frontage home sites, and the developer operated the course for a few years before turning management and maintenance over to the residents of the project. The new model involves limiting the up-front development costs, maximizing cash flow and the marketing impact of the amenity, and transferring ownership in a planned and orderly manner.5 In Japan, where land is at a premium, most of the courses are mountainous.6 Flat land is used for growing crops, and the towns and cities are constructed on flat land because most of the people, because of spirits, do not like to live in houses in the mountains or even in the foothills. As a result, golf courses do not have house lots around them, as is common in North America. At a self-contained resort, the golf course must be more of a stand-alone attraction than when it is part of a larger community of various housing products. Frontage development becomes less important and might even be discouraged. Oceanfront holes, uneconomic in most development projects, might be constructed for a memorable guest experience. Courses can be operated in one of three ways: daily fee, nonequity private club, and membership-owned equity club.7 Even within a real estate development, developers may open the course to the general public on a daily fee basis during the early years of the project life. Cash flow helps sustain the development while helping stimulate interest in the development. An upscale daily fee facility can become a permanent part of the overall concept. In a nonequity private club, members pay an initiation fee and annual dues. The club may be open to nonmembers at a higher fee. The developer keeps control of the course and hopes to operate it at a profit. In the equity arrangement, members buy an equal share in the ownership of the club, the pricing being tied to the cost of the land and the improvements. Recreational amenities can be operated in all three ways, depending on if and when the developer transfers control to the residents of the development.

PLANNING AND DEVELOPMENT The ideal site is in a valley where the land rolls every 200 to 250 yards with grades of less than 10 percent, good sites for greens, a change in elevation of about 50 to 100 feet, well-

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drained sandy soil that dries quickly after rain, tall existing trees of a species suitable for golf and lakes already there. —DESMOND MUIRHEAD Article in Urban Land, January 1994

Landscape Architect A landscape architect is ‘‘one whose profession is to plan the decorative arrangement of outdoor features.’’8 In the development of a golf course, their responsibilities are threefold: 1. to assist the developer / client to attract visitors through design 2. to provide the visitors / users with a rich and memorable experience 3. to protect the natural resources

Size of Property Many developers underestimate the amount of land needed for a golf course.9 While 120 to 130 acres might suffice for a regulation 18-hole course on a flat site with few facilities, the same course on more difficult terrain might need upwards of 150 acres. It goes without saying that the latter alternative is more visually pleasing and recreationally challenging to the golfer.

Shape of Property Irregularly shaped pieces of land make for potentially more interesting and safer golf courses compared to square or rectangular sites. Regular developments are more likely to have a number of parallel holes. Long, narrow sites restrict the options of the developer. Road crossings also reduce the attractiveness of a site. The orientation of the course is another item to consider. A long, narrow course oriented northwest–southeast means that the holes face the morning or afternoon sun, making play more difficult. A north–south orientation is preferred.

Topography The topography of the site has the greatest impact on the quality of the finished golf experience. Gently rolling land is preferred, as flat land is boring and hilly land is tiring on players, slows play, requires numerous blind shots, and is expensive to maintain. The ideal site should have both sloping and flat areas, with tees, greens, and fairways adapted to the contours of the land. Steep slopes reduce the viability of the site. They can be graded, of course, but at significant cost. Many courses offer excavated lakes and ponds, the extracted fill being used to provide little hills. A varied topography offers large views that increase the selling price of real estate lots. Designers begin by looking at the existing contours of the land to identify suitable areas for tees, greens, and fairway landing areas where well-hit balls can

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come to rest without rolling out of bounds. According to the Urban Land Institute, ‘‘The best holes will drop in elevation from tee to landing area and landing area to green.’’10 Because the golfer can easily see the hole, play is faster and more enjoyable.

Natural Hazards Hazards such as streams, ravines, ponds, and rolling terrain make the course more interesting aesthetically and more challenging, from a golfing perspective, and reduce construction costs, as fewer artificial hazards must be constructed.

Quick Getaway 6.1

Perfect Grass When you see the flawless surface of a wellmaintained golf green, it makes you wonder: ‘‘Why can’t I do that for my yard? It can’t be that hard!’’ It turns out that there is a lot more to the golf green than meets the eye. The grass on a golf green exists in a practically hydroponic system, meaning that the plants take their nutrients solely from nutrientenhanced water. When the green is constructed, a bulldozer digs a 12- to 16-inch-deep hole in the ground that is the size of the finished green. Some green systems are very advanced: after the hole is dug, it’s lined completely with plastic, on top of which gravel, drainage pipes, and sand are placed. On a green like that, the grass lives in a sterile sand medium with perfect drainage! In the last step of green construction, the surface is shaped to allow perfect drainage, because puddles on the green after a rainstorm upset the system. The green’s location is of the utmost importance. To thrive, the grass needs a good amount of sunlight (preferably without any trees nearby to shade it) and a healthy airflow above the surface. Obviously the variety of grass is important. There are many types of grass with many different strengths; it’s best not to list them all here.

A good location and a sterile sand medium can control a huge number of variables, but such control comes with a price: the grass is totally dependent on its keepers to keep it alive. Because the grass can’t pull any nutrients from the sterile sand, it needs a blend of water and nutrients to keep it alive and healthy. Frequently a variety of herbicides (for killing invasive weeds), pesticides (for killing bugs), and fungicides (for killing disease) are added to the watering mix. This ‘‘grass cocktail’’ keeps the green flawless. Establishing the green is laborious, but the lion’s share of the work lies in green maintenance. To keep the green perfect, it must be mown every day with a precision green mower, watered, fertilized, treated, and aerated. In a word, it must be coddled. Source: ‘‘How can the grass on the greens at a golf course be so perfect?’’ HowStuffWorks, Inc. Page accessed July 31, 2006. http: / / science. howstuffworks.com / question428.htm

DISCUSSION QUESTION: Some golf courses (though not many) opt for synthetic greens made from plastic. What are the pros and cons of such a system?

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Soil Characteristics Soil fertility depends, to a large extent, on the previous use of the land. For example, a course built on a run-down farm that was intensively cultivated and poorly fed will need more frequent fertilization to bring it up to the level required for a golf course. Several types of land that cannot be used for other development can make excellent golf courses. Examples include wetlands, floodplains, drainage channels, and dry streambeds.11 The drawback is that construction costs in sites with a high drainage table are considerably higher. Insufficient attention to drainage problems can be costly. A widely quoted story in golf circles is about the superintendent who was asked what it takes to keep a golf course looking good. The reply was, ‘‘About 5 percent common sense and 95 percent drainage, and if you don’t have much common sense, then put in more drainage.’’12 Wet conditions on a site with inadequate drainage can reduce the number of rounds that can be played during the season. Revenues are reduced, the round of golf is less attractive to the players, and the course is more expensive to maintain. The drainage systems needs to take into account runoff from real estate development around the course. On the other hand, golf course water features offer biological filtering as part of a comprehensive storm water management program. It is said that a site can never have too much topsoil. Topsoil is crucial to the healthy growth of turfgrass. The best type is well-drained, sandy loam. If major grading has to take place, the topsoil should be removed first, stored nearby, then spread over the graded areas. In coastal areas, alluvial soil allows for low-cost development. Peat and many soils, on the other hand, are unstable and high in organic compounds. Clay soil reduces the cost of constructing ponds but causes problems if the rate of percolation is insufficient for proper drainage. On the other hand, high percolation rates increase the need for water and fertilizer. Rock outcroppings add visual appeal to a course, but rocky soil increases development costs.

Vegetation Next to slope, vegetation is the most important influence on the overall character of a course. Wooded areas, for example, enhance the visual and ecological appeal of a course by separating fairways. At the same time, they provide opportunities for compatible recreational uses such as walking, cross-country skiing, and bicycling. On heavily wooded sites, a new course looks more mature than it is. If the area is too heavily wooded, however, the cost of clearing it will be high.

Clearing Required Clear sites offer the advantage of lower site preparation costs and fewer environmental challenges. However, landscaping costs are higher and the site will look unfinished for several years. The cost of clearing a site is heavily dependent on the type of vegetation to be cleared and how easily it can be disposed of. Large,

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mature trees are expensive to clear. It may be possible to sell marketable trees to loggers. The remaining smaller trees and other vegetation must then be cleared. If burning is not allowed, the disposal cost can be high, as the material must be chipped and removed from the site.

Market Four important market-related items must be considered in designing a course: relationship within the project between golf and real estate ability levels and diversity of players overall level of demand for the course frequency of play by the same group of users13 For example, courses in second-home communities are typically designed with single fairways to provide maximum fairway frontage for premium lot prices. Resort hotel courses are designed to attract serious golfers. The core or parallel fairways layout helps protect the integrity of the course for these people. At resorts that do not have many repeat guests, the visibility of the green and all major hazards from the tee is important. While golfers who play the course often become aware of greens and hazards placement, the one-time-only golfer is not and needs assistance to prevent the experience from becoming too frustrating. To improve visibility, holes should drop in elevation from tee to landing area and from landing area to green. Where the resort features golf, a number of signature holes should be built to produce a memorable experience for the golfer. Where time is an issue, variety, multiple tees, and large greens take on greater importance.

Land Cost The cost of building a top-rated golf course runs between $200,000 and $400,000 a hole. This translates into between $3.6 million and $7.2 million—perhaps as much as 10 to 12 percent of the total cost of building the resort.14 These figures include clearing; grading; drainage; construction of tees, fairways, greens, sand bunkers, irrigation system, and cart paths; seeding; and grassing.

Water Supply A regulation 18-hole golf course needs between 1.5 and 3.5 million gallons of water per week.15 The amount depends on the type of turf, the irrigation system, and the climate. Water quality is another concern. The concentration of soluble salts should be less than 2,000 parts per million for grass to grow well. More and more courses are using treated wastewater for irrigation purposes. In addition, research at places like the turf management department at Colorado State University is focusing on native grass species, such as wheatgrass and blue grama, that can keep their drought-resistant characteristics on golf courses. Well water can be routed into reservoirs that are utilized as water hazards on the course. In a similar vein, streams and rivers can be tapped as a source of

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irrigation water. ‘‘The limiting factor in this type of arrangement is the period of lowest flows in the stream’s watershed.’’16 In dry periods, stream sources can be supplemented by well water. The vertical difference between the average elevation of the lake and the highest point on the course determines the extent to which costly pumping is required. Irrigation System

Irrigation systems for golf courses were introduced in the late 1800s. Since then, they have become increasingly complex. The amount of coverage has to balance the need for irrigation and the cost of the system. In desert areas, the system has to cover the entire course, from fairways to greens and tees. In other places, either a single-row or double-row fairway system is sufficient.17 A single-row system places sprinkler heads down the middle of the fairway. Less piping and fewer heads are

Quick Getaway 6.2

Thirsty Cacti Outdrink Dormant Grass Water conservationists have long advocated the use of ‘‘native’’ plants to help golf courses reduce their water usage. However, it seems that simply planting a few cacti won’t help. . .in fact, it may worsen the problem. Studies reported to have been run by the American Water Works Association Research Foundation and plant biologists at Arizona State University have both found that so-called Xeriscape or native landscapes actually receive more water than traditional-style landscapes. ASU researcher Chris Martin, Ph.D., found that desert plants such as creosote bush, brittle bush, acacia, and mesquite are able to use two to three times as much water as turfgrass or flooded alfalfa. According to the study results, the problem lies not with the plants, but with the water management practices of the establishment. Desert plants are capable of absorbing huge amounts of water in a short period of time because that is what helped them survive the infrequent rainfall of their native climate. This means that when landscape water is made available, instead of absorbing less moisture than traditional landscape plants, most desert plants

gorge themselves on water and grow at tremendous rates. Golf courses that choose to Xeriscape should research the true survival requirements for desert plants in order to manage water more efficiently. Nevertheless, golf courses don’t have to give up on grass if all they want to do is conserve water. According to the researchers, properly established turfgrass that is allowed to go dormant during hotter, dryer times of the year can survive on very limited water. This is true as long as the plant’s crown is kept hydrated, which requires as little as one-quarter inch of water per week. Source: ‘‘So-called ‘native’ plants offer no guarantee of water conservation.’’ Golf Course News (November 2001). http: / / www.findarticles.com / p / articles / mi qa4031 / is 200111 / ai n9011792

DISCUSSION QUESTION: Given the choice between native plants and turfgrass, which would you choose for a desert golf course?

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needed, making this a less expensive option than a double-row system. The decision of whether to install a single- or a double-row system depends on the width of the fairways. The amount of water used can vary from 800 gallons per minute (gpm) for a single-row system to 1,600 gpm for complete coverage of all elements of the course. Systems can be either automatic or manual. The former is more expensive to install but less costly to operate than the latter. The irrigation system for Terravita in Scottsdale, Arizona, uses an on-site weather station to measure daily evaporation and adjusts each sprinkler’s run time to replace only the amount of water that is needed.

Climate Climate affects the length of the season and the costs of maintenance. Courses in moderate climates accommodate more rounds of golf per year while incurring relatively high maintenance costs year-round. In the Palm Springs area, for example, the highest irrigation costs occur during the off-season. Northern courses have lower maintenance costs compared to those in other geographic regions during the cold season. Arid

While many critics claim that it is irresponsible to build golf courses in arid parts of the world, others argue that in places like the southwestern United States, golf courses serve two major roles: flood control and groundwater recharge.18 In Scottsdale, natural washes, called arroyos, are fairly common. While arroyos are usually dry, during summer and winter rains they can turn into raging torrents in minutes. Because any kind of development increases runoff, care has to be taken to ensure that the increased water flow does not adversely affect developments and habitats downstream. The solution is to use a golf course as a means of drainage by directing drainage channels onto the course itself and building them into its features. Because the soil in the area readily absorbs water, a number of waste bunkers are strategically built around the course. Most of the year, they act as regular hazards. However, when the rains come, they fill with runoff, which then percolates back into the groundwater or is released slowly into the arroyos. In Sun City, Arizona, the problem was that the soil was so tightly packed that runoff would take too long to be absorbed. Designers created 17 lakes on the Sun City Grand course for runoff deposit, where the water is used for groundwater recharging. In total, the lakes allow up to 4,000 acre-feet of water annually to reach the groundwater table below.

Maintenance Maintenance is the largest single cost item for a course. ‘‘Maintenance costs will depend on a wide variety of factors, including the course’s location, length of season, type, market size, and purpose.’’19 According to the American Society of Golf Course Architects, maintenance costs can run anywhere from $250,000 to $650,000 a year. This does not include operation of the clubhouse and the fleet

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of golf carts. The task is to balance the higher quality of the course with the increased maintenance costs required to produce that quality. At some point, spending more money on maintenance does not produce a corresponding increase in course quality. A major factor in maintenance costs is the type of grass selected. In northern latitudes, it is generally accepted that bent grass provides the best playing surface. This type is less practical in the South because of summer heat stress. Bluegrass is criticized for not having the color contrast or playing conditions of bent grass but it tolerates heat better and requires less pesticides, fertilizer, and water. Maintenance savings can be $80,000 a year.20 The point is that maintenance costs should be considered when designing a course. The way a course is maintained also has an impact on operations. ‘‘When greens are kept fast, fairways lush and narrow, roughs long and sand bunkers soft. . .play will be difficult and slow.’’21 The visual effect of the course also has a major impact on how enjoyable the experience is.

GOLF COURSE TYPES God created golf holes. It is up to the architect to discover them. —DONALD ROSS Golf Course Design

Five basic golf course types serve as the models for constructing a course.22 They are illustrated in Figure 6.1. Which one is used depends on the objectives of the project and the characteristics of the land available. Each model is based on the idea of the regulation course which, in turn, is based on the concept of par. Par is ‘‘the score for a given hole produced by errorfree golf, or the score an expert golfer would be expected to make.’’23 Ordinary playing conditions are assumed and two putting strokes are allowed. On a par 4 hole, for example, the golfer would reach the green in two strokes. The United States Golf Association has established the following distance standards for par: Par

Men

Women

3 4 5

up to 250 yards 251–470 yards 471 yards ⫹

up to 210 yards 211–400 yards 401 yards ⫹

The Regulation Golf Course The regulation golf course has a par between 69 and 73, with 72 considered ideal. The course probably has three sets of tees ranging from 5,200 to 7,200 yards in length for golfers of varying ability. The holes making up the course are a com-

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FIGURE 6.1 The five basic types of golf course. Source: Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 35–36. Reproduced with permission of the Urban Land Institute.

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bination of par 3s, 4s, and 5s, and generally consist of four par 3s, ten par 4s, and three par 5s. In keeping with the objective of making the course fair and enjoyable to play, the holes should be evenly spread along two circuits of nine holes each.24

Core Golf Courses In a core golf course—the oldest and most basic design—the holes are designed together and either in a continuous sequence with starting and finishing holes at the clubhouse or in returning nines with two starting and finishing holes at the clubhouse. It requires about 140 acres and gives 10,000 feet of lot frontage. It consumes the least amount of land and offers the least course frontage. The core course can offer the greatest integrity or golf experience because the emphasis is on golf rather than real estate development. This is the case because the only real estate potential is around the periphery of the course. The core course is also the most efficient layout, as play is quick and the course comparatively inexpensive to maintain.

Single Fairway Continuous The single fairway continuous 18-hole course comprises holes strung together in a long loop. It takes about 175 acres, offers 46,800 feet of lot frontage, and requires a minimum width between developed areas of 300 feet. The course takes the maximum land area, offers maximum fairway frontage, and has the least operational flexibility. Because there is only one starting point, only one foursome at a time can start the course. This means that it can take up to four hours to fill the course completely. A shorter round of nine holes is difficult or impossible to play. In addition, play is slower because golfers must avoid outof-bounds situations on both sides of the fairway. (The penalty for hitting a ball out of bounds is two strokes.) The layout does, however, allow maximum flexibility of layout because of its few fixed elements; only the clubhouse and the starting and closing holes have fixed positions. The course can, thus, be designed around difficult terrain.

Single Fairway with Returning Nines The single fairway 18-hole course with returning nines uses about 175 acres and offers 44,400 feet of lot frontage with a minimum width of 300 feet between developed areas. It is second in fairway frontage and a close second in use of land. Some savings can be gained on land use because of the concentration of holes and tees at the first, ninth, tenth, and eighteenth holes. Playing flexibility and the number of rounds that can be played each day are maximized because of the returning nines. Two parties of four can start at the same time, one group on the first hole and one on the tenth, and cross over after playing nine holes. Because of this, the entire course can be filled, with a foursome on each hole, in about two and one-half hours. Maintenance costs are moderately higher than are double fairways and core courses because tees and greens cover a larger area.

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Quick Getaway 6.3

Designing the Environmentally Friendly Golf Course The following is a summary of the eco-friendly design guidelines of the Golf Course Superintendents Association of America (GCSAA). These guidelines were specifically created for those considering an environmentally sensitive course: 1. When designing a golf course, it is important to identify existing ecosystems. Utilizing what nature has provided is both environmentally and economically wise. 2. A site analysis and feasibility study should be conducted by experienced professionals, so that a design can be achieved which carefully balances environmental factors, playability, and aesthetics. 3. Cooperative planning and informational sessions with community representatives, environmental groups, and regulatory agencies should be part of the initial design phase. This dialogue and exchange of information should continue even after the course is completed. 4. Native and / or naturalized vegetation should be retained or replanted when appropriate in areas that are not in play. In playing areas, designers should select grasses that are best adapted to the local environmental conditions. 5. Emphasis should be placed upon the design of irrigation, drainage, and retention systems that provide for efficient use of water and the protection of water quality. 6. Water reuse strategies for irrigation should be utilized when economically feasible

and environmentally acceptable. It is important that recycled water meets applicable health and environmental standards and that special consideration be given to water quality issues and adequate buffer zones. 7. Buffer zones or other protective measures should be maintained and / or created, if appropriate, to protect high quality surface water resources or environmentally sensitive areas. 8. The course should be designed with sustainable maintenance in mind. The design should incorporate integrated plant management and resource conservation strategies that are environmentally responsible, efficient, and cost effective. 9. The design of the course should enhance and protect special environmental resource areas and when present, improve or revive previously degraded areas within the site through the use of plants that are well adapted to the region. Source: ‘‘The environmental principles for golf courses in the United States.’’ Golf Course Superintendents Association of America. Accessed July 31, 2006. http: / / www.gcsaa.org / resources / facts / principles.asp

DISCUSSION QUESTION: Golf courses can be extremely environmentally friendly, but golfers may not like the consequences (occasional brown spots or fading grass, for example). What do you think are some ways that golfers can become more environmentally conscious?

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Double Fairway Continuous The double fairway continuous 18-hole course uses approximately 150 acres, offers 25,000 feet of lot frontage, and requires a minimum width of 500 feet between developed areas. It uses one-sixth less land than a single fairway course. The double fairways mean the layout is less flexible. In particular, it is more difficult to work around existing vegetation. The course is, however, well suited for long, narrow sites. Maintenance costs and time are reduced because of the double fairways. The course’s parallel nature can make it boring, so special care must be taken to design interesting holes.

Double Fairway with Returning Nines The double fairway 18-hole course with returning nines uses about 150 acres of land, with 500 feet being the minimum width between developed areas. It offers 24,200 feet of lot frontage. It uses one-sixth less land than a single fairway course and offers more integrity than a single fairway course lined with housing development. The returning nines, as before, offer the flexibility of two foursomes starting at the same time. Maintenance costs are less than for a single fairway and supervision is easier.

Comparing the Layouts In summary, continuous layouts increase frontage but decrease operational flexibility. Returning nines offer much greater flexibility at the cost of some frontage. Single fairways give the designer maximum flexibility, as far as the layout is concerned, while delivering maximum frontage. The downside is that maintenance costs are higher and the quality of play for the golfer may be lessened. Double fairways save on maintenance costs while providing golfers with a better golf experience—at the cost of frontage development.25 These comparisons are summarized in Table 6.1. Good design can make the experience better for both homeowner and golfer. When trees are placed between lots set at an angle to the fairway, both groups benefit. Golfers tend to see trees rather than houses, while homeowners, because the angle screens views of homes on the other side of the fairway, also see more vegetation. This concept is illustrated in Figure 6.2. While courses tend to follow one of the above models for most holes, they tend to incorporate elements of other designs for several of the holes to accommodate specific elements of the site.

Other Various other types of course have been developed to accommodate smaller pieces of land or to allow for completion of a round of golf in a relatively short period of time. Some of these options are nine-hole regulation (including multiple

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TABLE 6.1 Comparison of Golf Course Types Type of Course Core Single fairway continuous Single fairway with returning nines Double fairway continuous Double fairway with returning nines

Land Consumption

Frontage

Flexibility / Capacity

Maintenance Cost

Integrity

low high high medium medium


low* low high low high


high low low medium medium

* Low if continuous, high if returning nines. Source: Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 37. Reproduced with permission of the Urban Land Institute.

tees, which allow the hole to be played in different ways); 18-hole executive, which allows completion of a round in about half the usual time; the par 3, consisting entirely of par 3 holes; the 27-hole regulation laid out in three returning nines, popular in resorts where there is concentrated demand for play in the morning hours; and the 36-hole regulation, which can be an 18-hole continuous and two returning nines. These last two options require greater capital investment but offer much more course capacity for the money invested. Typically, a resort will need a challenging regulation 18- or 36-hole course with an executive or par 3 course as a supplement.

FIGURE 6.2 Placement of trees on angled lots. Source: Graves, Robert Muir, and Geoffrey S. Cornish. Golf Course Design. New York: John Wiley & Sons, Inc., 1998, 147. Reprinted by permission of John Wiley & Sons, Inc.

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Golf Hole Styles Golf holes are the essence of a course. The style of holes can be defined as penal, strategic, or heroic on the basis of type, placement, and number of hazards. These styles are illustrated in Figure 6.3. Penal

The majority of holes built early in the twentieth century were in the penal style and patterned after British courses. Hazards are scattered at random around these holes in a manner that is unfair, given the inconsistent play of the average golfer. This makes the hole relatively easy for the better golfer and difficult for beginner or older players. Long, accurate tee shots are required over hazards to land in a relatively small landing area. In short, every poorly played shot is severely penalized. As a result, play tends to be slow.

Strategic

Most holes today are designed as strategic—that is, the green may be approached in several ways, each with a different degree of risk and reward. Safer shots will cost a stroke or two, but errors are not as severely punished as in the penal style. Golfers must play position to score well. The result is a thinking-person’s course

Penal design

Strategic design

Heroic design

FIGURE 6.3 Examples of golf hole styles. Source: Cornish, Geoffrey, and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 7.

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FIGURE 6.4 The bite-off hole. Source: Cornish, Geoffrey, and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 5.

that plays faster than a penal design. The bite-off hole (Figure 6.4) is an excellent example of strategic design.

Heroic

The heroic style is a combination of the other two. Golfers must choose between alternate routes to the pin, with one much more difficult than the other. Failure is punished more severely than under the strategic model. The reward for taking the more difficult route is typically a birdie (one below par) or an eagle (two below par). The typical course today consists mainly of strategic holes with a sprinkling of heroic holes, usually around water hazards.

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DESIGN PRINCIPLES All artificial features should have so natural an appearance that a stranger is unable to distinguish them from nature itself. —DR. ALASTAIR MACKENZIE Designer, Augusta National

In order of importance, the factors to consider when designing a golf course are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

safety—to golfers and passersby flexibility—different lengths of tees to handle golfers of varying abilities shot value—variety of shots, lengths, and targets fairness—placement and severity of hazards progression—sequence of holes flow—movement of golfers around the course balance—distribution of par maintenance costs construction planning aesthetics tournament qualities 26

An item higher on the list takes precedence over one below it. For example, the primary issue is safety. The next six items, flexibility through balance, deal with designing the course for play and making the experience as pleasant as possible. Maintenance costs, because they are ongoing, are more important than the onetime cost of construction. Aesthetics, while important, is of less concern than the factors preceding it on the list. Finally, the one to two weeks of tournament play annually is of less concern than the other factors noted above.

Safety Courses should be designed with golfer (and passerby) safety in mind. Many golfers tend to slice the ball, playing it to the right of where they meant it to go. For this reason, out-of-bounds on the right can be dangerous to people and homes (Figure 6.5). Several measures, as indicated in Figure 6.6, can be taken to increase the safety of the experience: Tees can be staggered so that players on adjoining holes do not slice into the same area. Safety buffers, such as bunkers, rough, trees, and other vegetation, can be installed. A rule of thumb is that over 90 percent of all shots fall within 15 degrees of the line of the desired shot. This can be used as a guideline for the placement of double-fairway holes.

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FIGURE 6.5 Many golfers have a tendency to slice. Source: Cornish, Geoffrey, and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 8.

The risk associated with blind shots—which occur when the golfer is unable to see the likely path of the shot—can be decreased by cutting down the obstruction, raising the tee to allow the golfer sight access to the route of the shot, or installing a periscope on a pole so the player can check for people in the path of the shot. Keeping out-of-bounds areas on the hook or left side of the shot means that courses play clockwise. Having the right side of the impact area higher than the left means that sliced balls are caught by a mound and kept in play.27

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Direction of play

Trees to separate golf holes

Tree planting for safety and screening from development 50 foot building setback line

Pond to separate golf holes

Property line

Offset landing zones

Bunkers to stop balls and cause golfers to aim right

Probable zone of play is approximately 15° on either side of apparent centerline

15°

15°

150´ minimum distance allowed from golf hole centerline to property line; this will allow for adequate safety buffer

Holes routed clockwise to allow golfer to slice into property, not out of bounds

Trees to separate golf holes

FIGURE 6.6 Design safety elements. Source: Hurdzan, Michael J. Golf Course Architecture: Design, Construction, Restoration. Chelsea, MI: Sleeping Bear Press, 1996, 25.

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Design for Play Flexibility

The course should be built for all golfers. Variations in handicap can be accommodated by placing multiple tees at different distances from the hole. Tees serve as the control points for each hole. They are often as large as greens, with several starting points to handle golfers of varying strength and ability. Five sets of tees are common—the forward tee of 140 yards for novices; the intermediate tee at 175 yards for advanced female, junior, and senior players; the main tee of 210 yards for average males and advanced seniors; the back tee of 240 yards for advanced golfers and female professionals; and the pro tee of 270 yards for tour golf pros. On courses 5,000 feet above sea level, the ball will carry 10 percent farther.28 Tee placement also depends on the amount of play. The more the course is played, the larger the tees. A common rule of thumb is to build a tee area of 100 to 200 square feet per 1,000 rounds of golf per year.29 Because of practice swings on both the first and the tenth holes, these tee areas need to be larger. Similarly, on a par 3 where the tee shot is played with an iron, the playing surface is subject to more wear and tear and a larger tee area is needed.

Shot Value

The value of a shot to the golfer depends on its length, the target size, the difficulty of the hazards, and the position from which the shot is played. Difficult hazards on a short hole can counterbalance easier hazards on a longer hole. Designers can mix and match these criteria to create shots that most golfers can successfully make. Collectively, the shots taken make up the round of golf. A good layout means that every club in the bag should be used. Theoretically, the best round is played by the best all-around player rather than by the best putter or driver.

Fairness

A golf hole is said to be unfair ‘‘if there is but one route to the hole, which must carry a severe hazard, and the required shot is beyond the ability of most golfers.’’30 Various features are situated around the course to add to the strategy of play. Sand, water, trees, and rough are all used for this purpose. ‘‘The basic principle of hazards is to allow the golfer a reasonable chance of recovery.’’31 The use of sand in bunkers is a link to the past practice of locating courses on seaside links— where, it is said, livestock crouching against the dunes for shelter formed bunkers. Today, the bunkers provide a visual contrast to the predominance of green while being useful for stopping errant shots. The most aesthetically pleasing bunkers feature sand surfaces that slope upward and turf hanging over the edges. Bunkers of this sort, however, require mowing by hand. Softer slopes and curves provide good-looking bunkers that can be maintained by riding mower. Bunkers range from 1,000 to 3,000 square feet when close to the green and up to 4,000 square feet on a fairway. Water is a more punishing hazard than sand, as a shot into the water means a penalty stroke rather than ‘‘just’’ a difficult shot out of the bunker. However, apart from its aesthetics, water can speed play, as the golfer takes another shot instead of a well-thought-out difficult stroke.

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From Slag to Swings Golf courses all share certain elements: greens, roughs, holes. It’s difficult to come up with an original course idea all on your own, but it’s much easier to look to the surrounding area for inspiration. That’s what happened at Old Works in Anaconda, Montana. In 1883, an Irish immigrant named Marcus Daly bought the land on which the city of Anaconda and the Old Works copper smelters were to be built. In September of 1884 the Upper Works, capable of treating 500 tons of ore daily, began production. Remnants of the Upper Works can still be seen today when playing the front nine at Old Works. In 1886, installing more modern equipment increased the Upper Works’ capacity to 1,000 tons per day. Nevertheless, more smelting capacity was demanded from the Butte mines, so construction began on the Lower Works in 1887, which were built 1 mile east of the Upper Works. Unfortunately the Lower Works burned down shortly after they were finished. The Lower Works were quickly rebuilt, and by 1889 they were capable of processing 3,000 tons of ore daily. The ore supply kept increasing, and to keep up with it a third smelter was planned across the valley. Marcus Daly never saw these Reduction Works in operation, because he died in New York in 1900. The more modern Washoe Smelter was ca-

pable of processing all of the ore from the Butte mines. Therefore the Old Works were dismantled and closed in the early twentieth century. The location was mostly undisturbed until 1983 when the location of the Old Works became a Superfund cleanup site. In 1989, Anaconda’s citizens formed a group to promote the construction of a world-class golf course in the cleanup area. Ground was broken at the site on May 26, 1994. Designed by famed course designer and professional golfer Jack Nicklaus, Old Works’s layout incorporates many historic relics from the old copper smelter. The flue and oven remains can be found on the course, and fairways border and wind their way through slag, which is a byproduct of the copper smelting process. All of the bunkers on the course incorporate black slag instead of the usual white sand, which creates a stunning and unique vista. Source: ‘‘History.’’ Oldworks.org. Accessed July 31, 2006. http: / / www.oldworks.org / history.aspx

DISCUSSION QUESTION: Brainstorm some ideas for a historical (or cleanup-area) golf course that could be built in your state.

Trees enclose the course in addition to functioning as a safety factor by providing a vertical target for errant balls. Placed behind a green, they aid depth perception. They can also provide shade, act as a windbreak, and add to the visual appeal of a course. The rough areas on either side of the fairway are also hazards. The rough tends to get deeper the farther one moves from the fairway. This penalizes the poor shot well off the fairway. In some situations, wind can be a hazard and must

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be taken into account. To be fair to the golfer, designers avoid building consecutive holes into the prevailing wind. While hazards can add to the interest of play, their number and placement also affect the speed at which rounds can be played. Most hazards, landing areas, and putting surfaces should be visible from the tee. Seeing the layout of the hole invites the golfer to think, thereby emphasizing the strategic nature of the game. Additionally, the enjoyment of a good shot is enhanced if the golfer can see the ball land.

Progression

Progression refers to the way the holes are sequenced around the course. A satisfying golf experience means the golfer experiences as wide a number of shots and holes as possible. Holes should be located in relation to natural features. Tee areas require flat land; greens can be located at the base of slopes that provide aesthetic backdrops. Avoiding consecutive holes of the same par is preferred for the sake of variety. However, this guideline may need to be adjusted to the natural features of the course. Designers prefer not ending a round with consecutive par 3s or par 5s. Because of the fatigue factor, most golfers prefer a course that slopes downhill on the final holes. A water hazard around the clubhouse makes for a dramatic setting to end the round. The difficulty of the holes should increase slowly to culminate in challenge at holes 7, 8, and 9. Difficulty should then drop, then slowly rise again before topping out at holes 16, 17, and 18 with a par 3, 4, and 5.32 Excitement is added if players have a chance to catch up on the final few holes by taking additional chances—taking more difficult routes to the pin to cut strokes off the score.

Flow

Flow refers to the movement of golfers around the course. Speed of play is largely a function of the quality of course maintenance. However, speed can be increased by reducing the number of hazards and shortening the hole relative to par. The first holes to be designed are those around the clubhouse—holes 1, 10, and 18. To avoid slow play off the opening holes, the first and tenth holes should be of medium difficulty and maximum visibility. A par 4 or par 5 that avoids narrow fairways, water, and other traps near the green is ideal. Starting a round with a medium-length par 5 and leaving long par 3s to the middle of a round helps flow. Widening the fairway minimizes the rough, which, being more difficult to play from, slows play.

Balance

Balance refers to the ‘‘equality or distribution of par, shot value, and golf course length.’’33 Courses are generally balanced such that the first set of nine holes is equivalent to the second nine. In courses with returning nines, golfers may start on the first or the tenth hole. Even on an 18-hole course, many golfers play only the first nine. Designers therefore like to ensure that both nine-hole experiences are balanced with respect to difficulty and style.

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Costs Maintenance

Long-term maintenance is a balance between cost and quality—how much quality golfers are willing and able to pay for. Decisions made during design and construction of the course affect later maintenance costs. Consider, for example, the green. The modern green is raised above the level of the fairway. This allows air to circulate across the turf, thus helping ice melt in the spring and the green to drain faster after rain. Prior to World War II, greens averaged 5,000 square feet. Larger greens became popular, growing to 12,000 square feet.34 As a result, maintenance costs escalated while play slowed because of the increased attention paid to putting. Today’s greens are somewhere between these two extremes and allow for several pole positions to even wear and tear while reducing maintenance costs. A green serves several purposes. It acts as a target area for incoming balls on their way to the hole. It should not only receive but also hold a well-struck shot. It provides a consistent putting surface to test the putting skills of the player. It must be designed with maintenance costs in mind while being playable as many days of the year as possible.35 Greens should be located downhill from the tee although, as noted above, the green itself is deliberately elevated 1 to 3 feet from its immediate surroundings. A natural backdrop—trees or a creek—provides an excellent setting. Greens typically vary from 5,000 to 8,000 square feet, large enough for 14 hole locations. Changing the position of the pole helps ensure even wear on the green. The size of the green should also reflect the difficulty of the hole; the more difficult holes require larger greens. Likewise, the longer the approach shot called for, the larger the green. Greens tend to slope from back to front at a gradient of at least 2 percent.36 This increases visibility from the tee while helping hold the approach shot to the green. Difficult greens slow play even more, given that putting is the slowest part of the game. Overly large greens slow play in that they call for very long putts. The amount of fairway—the playable area from the tee to the green—also influences maintenance costs. The landing area on the fairway should be wide and flat enough to ensure a predictable finish to the shot. Typically, this means an area between 120 and 150 feet wide. Shorter holes have a narrower fairway. If the fairway is too narrow, balls can land in the rough and play is slowed. The lower cost of maintaining the rough has to be balanced against the higher cost of fairway maintenance and golfer frustration with slow play. Mounds are another example. Gentle mounds reflect the Scottish roots of the sport. For the golfer, mounds assist in depth perception. Steep mounds require hand mowing and result in higher maintenance costs (Figure 6.7).

Construction Planning

When the course is being planned, it is up to the designer to present cost–benefit analyses of major design features so that owners can weigh the cost of the feature (and its longer-term maintenance cost) against benefits to the players.

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Fairway Green


Raised Green

FIGURE 6.7 Gentle mounds permit machine mowing. Source: Cornish, Geoffrey, and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 13.

Aesthetics Designers are expected to use principles of art—harmony, proportion, balance, rhythm, and emphasis—in making their courses enjoyable to play.37 Figure 6.8 illustrates the application of these principles.

Tournament Qualities For a successful tournament, a course needs ‘‘at least 6800 yards for a men’s tournament and 6000 yards for a ladies’ event, [to] have relatively small but good landing areas, [to] provide at least four competitive pin positions on each green, and [to] have a large practice area.’’38 The needs of the spectators, or gallery, also must be anticipated with respect to parking, movement, seating, restrooms, first-aid stations, and television camera locations.

Accessibility Since the 1990 Americans with Disabilities Act (ADA) was passed, golf course managers are feeling increased pressure to make their courses accessible to people with physical disabilities. While federal guidelines exempt private courses, the def-

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FIGURE 6.8 Integrating art principles with golf course design. Source: Cornish, Geoffrey, and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 17–19.

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inition of private is limited. If a course ever opens its grounds to the public—for a tournament, for example—it may be regarded as coming under federal guidelines. Because golfers with physical disabilities are estimated to comprise 12 percent of the golfing population, or 10 to 15 million people, it makes economic as well as altruistic sense to open courses to this segment of the market.39 Course superintendents have two primary concerns. They fear that wheelchairs and other vehicles will damage fragile greens. They are also worried about slow play. The basic approach is to ensure that at least one tee and one route to the green on each hole be accessible to golfers with physical disabilities.

Clubhouses Many golf courses suffer because the clubhouse is too large for the membership base and so is too expensive to operate for the income generated. A resort setting may need a relatively small clubhouse of 4,000 square feet that emphasizes the pro shop and lockers. Clubhouses tend to be built on visible, centrally located sites. They should be near the first and tenth tees (the ninth and eighteenth greens), with a practice green and driving range nearby. On a hilly site, it is best to locate the clubhouse between the highest and lowest points so golfers can avoid long climbs on continuous courses on the back nine. The separation of vehicles and pedestrians, the location of maintenance facilities and storage areas, and the relationship between the course and real estate units must also be considered.40 A major concern occurs when the clubhouse is used by resort guests, homeowners, and nonresidents. Market segments can be separated spatially by assignment. Additionally, access can be managed by the user group through, for example, giving residents preference for golf starting times. One useful approach is to design the clubhouse facilities to grow as demand grows. Using a modular approach, facilities can be small at first and expand as the project matures. This conveys the impression of an active clubhouse while allowing for the phasing-in of capital expenditures at a pace consistent with revenue generation. Practice facilities can take from 4 to 6 acres. This is twice the size of an average hole. Typically, they include a driving range, putting greens, target greens for practicing approaches to the green, and practice bunkers. The driving range should not be oriented directly east–west, as the sun will get in the eyes of golfers. Several principles guide clubhouse design: To ensure that the floor plan and building functions act in concert, the clubhouse operator should be part of the design process. The clubhouse should be integrated with and complement its setting. The design should incorporate elements of the immediate surroundings, local traditions, and materials to make it unique to the area. The clubhouse should have a personality and character that gives it a sense of place and tradition that is comfortable and inviting to the members.

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Traditional architecture helps the clubhouse age gracefully without seeming out of touch with fads.41 Pro Shop

The pro shop—the area where golf clubs and bags, clothing, balls, and other accessories are sold—is a large part of the clubhouse in a resort, though likely to be smaller than in a primary-home community. In the latter case, clubs and bags, which require considerable display space, are more likely to be sold than in a resort setting. While pro shops in resorts have higher sales-per-round-played figures than those in primary-housing communities, the sales are more likely to be balls and smaller accessories.

Golf Carts

Despite the cries of protest from purists, most courses allow, and even promote, the use of golf carts, which can provide significant revenue while making the game more accessible to more people. Carts can be powered by electricity or gasoline. In addition to a secure storage area, provision has to be made for recharging or fueling the carts. Earlier courses allowed carts on the fairways and had paths only around high-traffic areas like tees and greens. Recent trends have extended the paths the entire length of the course. This helps avoid wear and tear and controls traffic on the course. Fairway damage is also reduced, and golfers can return to the course sooner after heavy rain.42 It is important that the way the course will be played should be taken into account when laying out the golf cart path. For example: As many golfers tend to slice the ball, cart paths should be on the right side of the fairway. An exception is a dogleg that plays right to left. On such a hole, the shortest distance to the hole is along the left side, and most players will shoot in that direction. If the cart path is on the longer, right-hand side of the fairway, golfers may find it so far away from their ball that they ignore the path and drive across the course. As a rule of thumb, the distance from the center of the path to the center of the fairway should be 90 feet, although this is shorter at tees and greens. A wavy path is more aesthetically pleasing than a straight line although, if the line is too wavy, drivers cut corners. Paths should cross the hole as little as possible. Parking areas are needed at tees, greens, and practice areas. While it is tempting to utilize two-directional paths down the middle of a double fairway as a way of cutting costs, holes that are too close together can act as a hazard for golfers playing out from the clubhouse; they will be forced to face balls hit by golfers playing back to the clubhouse. Low mounds can be used to camouflage paths. To comply with the ADA, paths must allow for exits every 75 yards.43

Remodeling Changes in equipment have resulted in players being able to hit balls farther and more accurately; courses that once were challenging can lose much of their original luster. Attempts to redesign the course, or parts of the course, should be made

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in the context of a master plan. To keep the course in continuous play, most plans spread the work over two to four years. Here is a typical schedule: First year—Prepare master plan. Second year—Remodel first nine holes and automate irrigation system. Clear area for new practice range and maintenance area. Third year—Open remodeled nine holes. Remodel second nine holes and automate irrigation system. Fourth year—Open second remodeled nine. Construct new maintenance building, entrance road, and parking lot.44 The remodeling should be done at a time of the year when the number of players is reduced—fall in the north and summer in the south. Specific elements might include the establishment of multiple tees, eliminating blind shots on fairways, developing gentler contours on bunkers to reduce hand mowing, installing completely automated irrigation systems, offering more variety in the greens with more pin placements and gentle undulations to make mowing less likely to scalp the grass, a long-term tree planting program, and the incorporation of cart paths.

TENNIS Good shot, bad luck and hell are the five basic words to be used in a game of tennis, though these, of course, can be slightly amplified. —VIRGINIA GRAHAM

Introduction Tennis facilities are a favorite amenity choice for a resort. From the developer’s perspective, the requirements for land and the costs of development and maintenance are relatively small, regulatory and permit issues are few or nonexistent, and tennis and golf share a complementary market. In real estate settings, tennis courts can speed sales because so many people enjoy playing the game.

Site Selection While tennis courts can be located more flexibly than other amenities, they tend to be conceived as part of the centralized core of facilities serving a large real estate project. Resident access is thus protected, while parking and clubhouse facilities can be shared with other amenities.

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Climate has a dramatic effect on usage. In desert climates, it makes sense to install lights so guests can play in the cooler evenings. Indoor facilities may be appropriate in wet or cold climates. Climate can also affect the type of court surface to be used. An acre of land can, theoretically, accommodate six single courts, each 60 by 120 feet. In reality, this crowded configuration would make for a very unpleasant experience. Three courts can be comfortably placed on an acre of land, with enough space left over for parking, seating, and landscaping. The best sites are flat, rectangular, and built to avoid direct sun in the players’ eyes. A dark background behind the players helps them see the ball. A private outdoor tennis club can handle between 30 and 60 players per court. This is a useful ratio for determining the number of courts to build in a resort setting. Capacity can be increased by one-third by adding lights. A reservation system helps push capacity closer to the upper figure of 60 players per court.45

Planning and Design Tennis courts tend to be developed in clusters. A variety of cluster options is available (Figure 6.9). Maximum efficiency in space and building costs comes when courts are developed in clusters of eight or ten. Built side by side, courts should be 12 feet apart. Each additional court adds 48 feet of width to the battery of units—36 feet for the width of a doubles court plus the 12 feet of separation. Adding courts means that the average space needed per court is reduced. Placing

Tennis courts are an asset to any resort. Courtesy Camelback Resort

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LAYOUT DESCRIPTION

IN-BOUNDS (Sq. Ft.)

OUT-BOUNDS (Sq. Ft.)

TOTAL (Sq. Ft.)

STANDARD SINGLE UNIT

2808

4392

7200

net 3´ 21´

12´ 41/4´ 1

13 /2´

36´

21´

60´

18´ 78´ 120´

2 Courts End-to-End

5616

8784

14,400

2 Courts In Battery

5616

7344

12,960

3 Courts In Battery

8424

10,296

18,720

4 Courts In Battery

11,232

13,248

24,480

2 Batteries of 2— End-to-End

11,232

14,688

25,920

2 Batteries of 3— End-to-End

16,848

20,592

37,440

6 Courts In Battery

16,848

19,152

36,000

FIGURE 6.9 Tennis court configuration options. Source: Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 92. Reproduced with permission of the Urban Land Institute.

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courts end to end is not recommended unless they are separated by screens or fences. The objective in orienting the course is to avoid players having the sun in their eyes. In northern resorts, play is concentrated in the nine nonwinter months. The sun tends to ride high in the sky and play is equally divided between morning and afternoon. The court should be oriented with the long axis aligned north and south. In southern areas, play occurs year-round. In the winter months, the lateafternoon sun can hang low in the sky. The best approach, therefore, may be to orient the court northwest–southeast at a 15- to 20-degree angle to true north to prevent players on the north side of the court from looking directly into the sun. Orientation is less of a factor in other elevations and climates. In a Rocky Mountain resort setting, for example, play tends to occur in the midmorning to midafternoon of the summer, when the sun is high in the sky and less likely to bother players. It is more of a factor when the court is to be used for a major annual event. In this case, the court should be oriented relative to the position of the sun during the one- or two-week period of the tournament.46 Surface

The original court surface in England was grass. Today, 14 types of surface are divided into two major categories: porous and nonporous. Nonporous surfaces can be cushioned or noncushioned, and can be compared on the basis of cost and play factors. The initial cost, the cost of repairs and maintenance, and time before resurfacing vary greatly. Fast-drying porous surfaces are relatively expensive, require daily and yearly care, and need to be resurfaced annually. Clay, on the other hand, is much less expensive and needs resurfacing only every five years. However, it takes longer to dry after rain and, therefore, limits play where a great deal of rain falls. Porous courts can be fast drying, clay, or grass. They all allow moisture to drain through their surfaces, and their softness makes them easy on players’ legs. Grass courts look wonderful but cost a lot to build and maintain; they need daily maintenance (watering and rolling) and are susceptible to damage. In contrast, clay courts are less expensive to build and last a long time, but they play slower than grass and have rather high maintenance requirements. Nonporous courts last a long time, are easy to maintain, and dry quickly. Noncushioned courts play fast and are hard on players’ feet, legs, and backs. Unlike on porous courts, however, players do not slide. Nonporous cushioned courts offer the maintenance advantages of nonporous surfaces and the player comfort benefits of porous courts. Synthetic turf surfaces require more maintenance than other nonporous courts but less than porous surfaces; they also offer a long-lasting finish. Player preference should be a major factor in selecting the court surface. Easterners tend to prefer clay courts, while westerners lean toward hard courts. Older players probably prefer softer surfaces to hard. Climate also plays a part. In hot areas, it is wise to select a surface that stays relatively cool, does not glare excessively, and does not crack or soften in the heat. In northern areas, the effect of frost can be a concern. Fast-drying indoor courts require watering daily, perhaps requiring the installation of extra ventilation to avoid condensation.

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Lights

As noted earlier, lighting can increase the capacity of a court by a third and is especially important in hot climates, where play may be unbearable during the day. The quality rather than the quantity of lighting is important. Lights should be placed along the length of the court and mounted between 15 and 35 feet above the surface. Lights can be either incandescent, fluorescent, or high-density discharge (HID). Incandescents are relatively inexpensive to install but expensive to maintain. The lamps have a short life and are inefficient when in use. However, they give good color and need no warm up. Fluorescent lights are efficient, last a long time, and give good color. HID lights are also efficient and last a long time, but they take several minutes to warm up to maximum brightness.

Indoor Structures

Indoor facilities today commonly offer racquetball and squash courts together with exercise and fitness areas. An indoor tennis court might complement such a facility. While most structures are made of prefabricated steel, air-supported fabric bubbles are half the cost to build—but they have shorter lives. Tension-supported fabric structures with open or closed sides are also used to cover courts.

Support Facilities

Support facilities are necessary (and profitable) as a complement to tennis courts. Areas for clinics and instructional programs in addition to practice sessions offer a full-service program to the guest. At some resorts, circular facilities have ballspraying machines serving balls to players in pie-shaped alleys. Videos can be taken of the players to help them improve their stroke. One tennis court is much like another. Differences are more likely found in the quality of the support facilities. Shading, viewing areas, landscaping, drinking fountains, and other amenities can help a resort stand out from the rest. A clubhouse overlooking the courts can be an attractive place for players to relax over a drink or meal and to watch others in action. Locker rooms should have one shower for every one and one-half to two courts and be equipped with five to seven lockers per court.47

Management In resort settings, the developer either retains ownership of tennis facilities after the project is built or sells or leases them to the operator of the resort. As with golf courses and marinas, the trend is toward contracting with management companies that specialize in the recreational activity. A tennis pro is similar to the golf pro and takes responsibility for all aspects of the operation, including maintenance, the pro shop, and instruction. Many argue that the pro is inexperienced in retailing and should be restricted to instruction. At larger resorts, the shop is usually run by experienced retailers because of the potential profits from lines of clothing. At a resort that includes residential units, dealing with two market segments— residents and resort guests—can be problematic. This situation can be handled as it is with golf—by giving residents priority scheduling and setting different fee structures for each.

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Tennis Troubles Tennis courts are popular resort additions, but unfortunately they cause some guest dissatisfaction as well. Are the guests upset with the condition of the court? Not usually. Because tennis is a game that can only be played by a handful at a time, and because of the nature of the court, guests often find themselves at odds with other guests when on the court. Reminders about basic tennis courtesy can help prevent unpleasant exchanges between guests. Some bits of tennis etiquette to remember: Show respect and courtesy by keeping your voice down when talking to your partner(s). Do not walk onto another court during a game. If you must cross a court, do so after the game is finished, and go around the court, not through the middle. Do not retrieve your ball from the other court. Wait for the players on the other court to finish the game and kindly ask for ‘‘a little help’’ to get their attention.

Always wear proper tennis shoes, because they properly support your feet, and because they do not damage the court surface. Use the tennis courts for tennis. They are not for biking or roller hockey. Close the gate behind you. It keeps the balls inside the confines of the gate so they won’t roll outside. Pick up after yourself. Leave the court cleaner than you found it. Monitor children on the courts at all times so that they aren’t disrespectful to other players or the court. Source: Coursey, Eric T. ‘‘Tennis Court Etiquette.’’ Bella Online. Accessed July 31, 2006. http: / / www. bellaonline.com / articles / art26699.asp

Discussion Question: Most guests will abide by your ‘‘etiquette reminders,’’ but some will not. How would you deal with disrespectful guests?

SUMMARY The design and layout of a golf course depends on the reason for developing the course. All courses, however, should express certain design principles so as to be environmentally sensitive while allowing the operator to make a profit. The same is true for tennis courts at a resort.

ENDNOTES 1. Asabere, Paul K., and Forrest E. Huffman. ‘‘Negative and Positive Impacts of Golf Course Proximity on Home Prices.’’ Appraisal Journal (October 1999) vol. 6414: 351–355. 2. Burgess, Dean H. ‘‘Lending to Golf Course Communities.’’ Journal of Commercial Bank Lending (March 1991) vol. 74: 19–30.

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3. Schwanke, Dean, et al. Resort Development Handbook. Washington, D.C.: Urban Land Institute, 1977, 156. 4. Osmun, Mark Hazard. ‘‘Spanish Bay: Golf Course Developers as Environmental Heroes.’’ Urban Land (July 1997) vol. 56: 40. 5. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 33. 6. Muirhead, Desmond. ‘‘Changing Times: Building Golf Courses in the 90s in Japan Is a Different Story: The Focus Is on the Bottom Line.’’ Executive Golfer (June 1997): 46–50. 7. American Society of Golf Course Architects. Handbook: Tips for Real Estate Development. Chicago: American Society of Golf Course Architects, n.d. 8. Funk and Wagnalls Standard Encyclopedic Dictionary. Chicago: J.G. Ferguson Publishing Company, 1965. 9. Schwanke, et al. Resort Development Handbook, 153. 10. Phillips. Developing with Recreational Amenities, 41. 11. Schwanke, et al. Resort Development Handbook, 153. 12. Hurdzan, Michael J. ‘‘Design and Maintenance: A Crucial Marriage: Part 1 of 2.’’ Golf Course News (September 1997): 24–25. 13. Schwanke, et al. Resort Development Handbook, 157. 14. Highley, ‘‘Tee Time: AS an Amenity or Profit Center, Golf Boosts Bottom Line,’’ Hotel and Motel Management, 7 September, 1998, 37. 15. Schwanke, et al. Resort Development Handbook, 155. 16. Phillips. Developing with Recreational Amenities, 44. 17. Ibid., 71. 18. Nash, Greg H. ‘‘Beautiful, Fun, and Functional: Desert Golf Courses Solve Flood-Control Problems in the Southwest.’’ Golf Course Management (February 1996) vol. 56: 122–124. 19. Phillips. Developing with Recreational Amenities, 79. 20. Hurdzan, Michael. ‘‘Design and Maintenance: A Crucial Marriage: Part 2 of 2.’’ Golf Course News (October 1997) vol. 73: 13–14. 21. Hurdzan. ‘‘Design and Maintenance: Part 1,’’ 24–25. 22. Phillips. Developing with Recreational Amenities, 79. 23. Ibid. 24. Schwanke, et al. Resort Development Handbook, 155. 25. Phillips. Developing with Recreational Amenities, 37. 26. Hurdzan, Michael J. Golf Course Architecture: Design, Construction, Restoration. Chelsea, MI: Sleeping Bear Press, 1996, 23–43. 27. Ibid., 25. 28. Ibid., 31. 29. Phillips. Developing with Recreational Amenities, 57. 30. Ibid., 32. 31. Ibid., 58. 32. Hurdzan. Golf Course Architecture, 33. 33. Ibid., 35. 34. Cornish, Geoffrey S., and William Grieve Robinson. Golf Course Design: An Introduction. Lawrence, KS: Golf Course Superintendents Association of America, n.d., 11. 35. Hurdzan. Golf Course Architecture, 15. 36. Phillips. Developing with Recreational Amenities, 58. 37. Cornish and Robinson. Golf Course Design, 17. 38. Hurdzan. Golf Course Architecture, 41. 39. Torsiello, John. ‘‘Access Guidelines to Ensure All Courses Are Up to Par.’’ Golfweek (June 1996) vol. 28: 21, 29.

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40. Schwanke, et al. Resort Development Handbook, 161. 41. DeReus, Mark. ‘‘Golf Clubhouse Design.’’ Developments (June 1993): 16–19. 42. Phillips. Developing with Recreational Amenities, 74. 43. Graves, Robert Muir, and Geoffrey S. Cornish. Golf Course Design. New York: John Wiley & Sons, 1998, 147. 44. American Society of Golf Course Architects. Handbook. 45. Phillips. Developing with Recreational Amenities, 91. 46. Ibid., 92. 47. Ibid., 104.

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Chapter 7 GOLF-BASED RESORTS: MANAGING THE OPERATION LEARNING OBJECTIVES 1. Identify the changing trends in and demographic profiles of the golf market. 2. Identify the critical variables in determining a golf-based resort’s profit potential. 3. Identify potential solutions to financial problems faced by golf-based resorts.

INTRODUCTION

Business Golf

GOLF RESORTS

Hole-in-One

GOLFERS

Women-Friendly

Participation

Timeline

Industry Trends

Liability

Golf Instruction and Training Aids

Banquets

MARKET SEGMENTS Golf Segments and Core Golfers Overview of Golf Travelers Selection Criteria Sources of Information Golf’s Best Customers: A Profile Golfer Loyalty Spending OPERATING CHARACTERISTICS Operations Income Statement Revenues Expenses Staffing TOURNAMENTS AND EVENTS

PRO SHOP Margin Enhancers Accessories Inventory Control Credit cards GOLF CART FLEET Lease vs. Buy Inventory Control Electric vs. Gas Maintenance Risk Management USE OF TECHNOLOGY GPS Course Management RENOVATION PLAN SUMMARY ENDNOTES

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INTRODUCTION It is important to understand changes in the market for golfing in order to maximize the profit potential at the resort. At the same time managers need to be aware of ways to minimize their costs.

GOLF RESORTS ‘‘The only thing that matters is cash flow—not the cash flows they use today, but the old cash flows that laid out the source and application of funds—where it’s coming from and where it’s going and how much is left over. No company has ever gone bankrupt because it had a loss on its P&L.’’ —WILLIAM G. MCGOVERN CHAIRMAN, MCI COMMUNICATIONS CORP., INC. MAGAZINE

GOLFERS Participation1 Adult golfers are golfers 18 years or older who have played golf at least once during the past year. In 2004, the total number of adult golfers dropped from 28.4 million to 27.3 million. Core golfers play eight or more rounds of golf annually. Over the past decade there has been a statistically significant increase in the number of core golfers although their number has remained virtually the same for the past four years. Overall, the total number of golfers has been increasing over the past decade. The ten-year growth rate is relatively stable and shows some positive growth, unlike the more volatile five-, three-, and one-year rates, which demonstrate the instability of short-term participation estimates. The increase in golfers over the past decade is mostly the result of an increase in occasional golfers (those who play from one to seven rounds a year). By comparing the growth rate of the number of core golfers to the growth rate of occasional golfers, we can see that interested non-golfers are still trying to decide if golf is the sport for them. The industry’s challenge is to take the occasional golfers and convert them into core golfers.

Industry Trends According to the 2005 Golf Industry Outlook Survey,2 95 percent of golf industry leaders said that their biggest concern was that the number of golfers in the future will decline. The industry leaders were also asked about the top issues most likely

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Quick Getaway 7.1

Golf: Quick and Fun? What’s worse than a double bogey? A person who can’t complete a round of golf in less than four hours, or so says John Gunby of Chandler, Arizona. ‘‘The longer it takes to play, the more it hurts golf,’’ says Gunby, the general manager at Shalimar Country Club in Tempe, Arizona. ‘‘Playing longer than four hours breeds an inability for a golf course to make a profit. Second of all, it inconveniences all the rest of the golfers out there trying to play the normal speed of golf, which should be under four hours.’’ Gunby, 51, is renowned for how he teaches junior golfers. His methods give them excellent golf skills, but more importantly, he teaches them to have fun. One of Gunby’s most well-received programs is the John Russell Cup, a developmental league he initiated three years ago for ‘‘kids who do not play in the JGAA (Junior Golf Association of Arizona) or in the Southwest Section PGA.’’ ‘‘Basically, we want to get the kids to meet new kids and have a good experience,’’ Gunby says. ‘‘We want to have kids celebrate all their successes and not worry about what may seem to them like failures because it’s not really failures, just experiences. We want them to be very positive even when things don’t go the way

they expect them to go. We don’t judge them on what score they shoot. We judge them on how they act and react to others. We just care that they act good and have fun.’’ Andrew Proctor is a seven-year-old graduate of the Russell Cup competition who now competes regularly in U.S. Kids Golf tournaments. He finished twenty-second at the U.S. Kids Golf World Championship last year for sixand-under golfers and is the current defending state champion in his age group. ‘‘Andrew still would rather play in the Russell Cup because he liked it so much,’’ says his father, Bernard Proctor. Gunby thinks that that’s the way things should be. ‘‘We try and stay away from too much technical advice,’’ Gunby says. ‘‘We want to teach them to play fast and safe, and also be respectful.’’ Source: Armijo, Mark. ‘‘Instructor teaches fun to young golfers.’’ The Arizona Republic (July 7, 2006). http: / / www.azcentral.com / community / tempe / articles / 0707cr-gunby0707Z10.html

DISCUSSION QUESTION: Do you think that youth competitions strip the ‘‘fun’’ out of golfing for junior golfers? Why or why not?

to impact their business in 2005. Of the respondents, 71 percent named the declining number of rounds, and 68 percent cited player retention. The results of the survey also indicated that 77 percent of respondents felt water management was the predominant environmental issue facing the industry, which explains why many courses are beginning to utilize water conservation technologies. In fact, more than half of respondents have made hefty investments

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in their irrigation systems, installed drought-resistant grass, and / or looked into water reclamation options. According to the survey results, most respondents are missing out on profit opportunities by failing to maximize their tax incentives. In 2005, only about onefifth of respondents planned to utilize conservation easements, and only half planned to take advantage of the depreciation of their tees and greens. It’s easy to see that there is a clear opportunity to educate the industry leveraging the existing tax laws.

Golf Instruction and Training Aids3 The benefits of golf lessons are clear: those who take lessons generally correct their swing errors and increase their accuracy with both irons and drivers. However, not every golfer can take lessons. The most common barriers to taking golf lessons are lesson expense and the time involved. Although club fitting is perceived as a valuable tool, only about half of the surveyed golfers had been club fitted. Of those fitted, 73 percent said that it was a valuable experience. Of those who had not been club fitted, 39 percent perceived it as valuable. The same trend can be seen among those who have used videotaping as part of their training. One-third of golfers have used videotaping and found it very useful (69 percent said so), while the two-thirds who have not used videotaping in their training responded less favorably (only 49 percent said that videotaping was ‘‘very useful’’). Although club fitting and videotaping were not perceived as valuable by every golfer, they are both rated more highly than computer instruction. Only one-tenth of golfers surveyed have used computer programs as a part of their training, and of those who have done so, only 36 percent said that it was a very valuable experience. Of those who have not used computer training, a mere 17 percent rated computer golf programs as being very valuable. On the whole, the attitude toward computer instruction is rather poor, indicating its lack of usefulness. Golfers practice for all sorts of reasons, but the top four are to improve on short irons, to work on drivers, to improve on long irons and to limber up before playing a round. Not all golfers practice, though. Of the reasons given for not practicing, the top three included not having enough time, preferring to play rather than practice, and having a dislike of hitting off of mats. Many golfers who practice make use of various training aids. The aids perceived as most useful include books, videos, exercise equipments, practice nets, distance finding devices, and putting devices. Then again, golfers don’t always use the aids they think are the most useful. The most commonly used aids include all of the above except for distance finding devices and putting devices. Ironically, these devices are among the aids that golfers are the least open to trying—that is, when they appear in the form of lasers, straps, braces, and ground apparatuses. Golfers’ attitudes towards these training devices are reflected in their purchasing habits. The most purchased aids are books, videos, exercise equipment, and training clubs, while the least purchased are swing tracks, lights, lasers, and ground apparatuses.

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MARKET SEGMENTS Golf Segments and Core Golfers The National Golf Foundation identifies seven segments of golfers: core, seniors, women, juniors, highly skilled players, private club members, and high spending golfing households. As we have already seen, core golfers are defined as those who play at least eight rounds of golf a year. Among core golfers, the average number of rounds played annually is 37. More than a third of core golfers usually play with the same group of golfers, and more than half would like to receive special offers to play golf at area courses. About one-fourth of core golfers enjoy trying different courses, even if they are a bit far away, while another fourth of the segment prefers playing at the same course most of the time. Most core golfers do not shop for the best deals when selecting a course, and few golfers in this segment would prefer to play only nine holes. Only about one in ten core golfers would golf more if it were possible to walk the course.4 These data indicate that a resort would likely attain success by utilizing direct mail to attract the core golfer segment of the market. On the other hand, it also shows that core golfers have virtually no inclination to play nine hole courses or to walk the course.

Overview of Golf Travelers5 Golfers travel. In fact, in 2002 alone, 11 million golfers reported taking an overnight trip that included golf. These golfers played an average of 5.5 rounds per trip, with an average score between 90 and 99. Of golf travelers, those with scores between 80 and 99 are responsible for 67 percent of golf travel spending. The more years a golfer has played, the more likely he or she is to go on golf trips. The majority of golf travelers have played for 20 or more years, while the second-largest segment of travelers have played golf for more than a decade. Also, even though there are more than three times more male golfers than female golfers, men spend only slightly more money than women when traveling for golf. Unsurprisingly, the golfers who spend the most on travel come from high-income households (income greater than $100,000), and it’s golfers from 30 to 64 years of age who account for the majority of golf travel spending (83 percent). Golf travelers prefer to visit the Sun Belt states. The top five visited states are Florida, South Carolina, North Carolina, California, and Arizona. The Sun Belt states are also at the front of golfers’ minds when they consider their next golf vacation: of the top six states considered for a future trip, only one (Hawaii) is not already one of the top five visited states.

Selection Criteria Why do frequent golf travelers choose a golfing vacation? They note the opportunity to combine golf with family visits and to play at quality courses. Business travel, the weather and visiting friends are also important considerations. When

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actually planning the trip they are concerned about weather / climate, quality of golf courses, and overall price. The only item common to both questions in the top three is the quality of the course. On a scale of one through ten where ‘‘10’’ is very important, the other factors are:6 Characteristic

Rating

Weather / climate Quality of golf courses in area Overall price Number of golf courses in area Location Past experience Golf packages available Resort / hotel reputation Natural surroundings / scenery Other amenities (pool, dining, etc.) Courses highly rated by golf media Family / friend recommendation Destination within one day drive of home Other area attractions Courses close to major airports Courses close to Interstate exits Family activities Shopping in area Spa Golf schools

8.8 8.7 8.1 8.0 7.9 7.9 7.5 7.4 7.4 6.5 6.5 6.4 6.1 5.8 5.0 4.9 4.8 4.5 4.3 3.8

In addition to the number and quality of courses, location, the availability of golf packages, and the reputation of the resort all score well. The destination experience as a whole is more important than the sport itself in the golf travel decision-making process. This indicates that destination marketing might be more effective if it targeted golfers with experience of other nearby destinations. Additionally, brochures that provide information on activities other than golf in addition to golf-specific information might influence a traveler’s destination decision.

Sources of Information7 Golfers use word of mouth, the Internet, and golf magazines as sources of information in choosing a golfing destination. Word of mouth and golf-related magazines are equally used across all age groups but their use increases with income. The increase in use is most dramatic for golf-related magazines in households with income of $150,000 and above. Internet use decreases with age but increases with income. Books / travel guides are used more frequently by retirees while non-golf magazines are used more by older and higher income golfers.

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In the Americas both Canada and Mexico are popular while, overseas, golfers dream of playing in Scotland and Ireland. Forty percent of frequent golfers play in the summer while 20 percent travel in the winter. September is the month when the largest proportion of golfers play.

Golf’s Best Customers: A Profile ‘‘Golf’s Best Customers’’ is defined by the NGF as the 10 million golfers who play 25 or more rounds per year or spend $1,000 or more per year on golf equipment and / or fees. Although they account for only 40 percent of all golfers they are responsible for 85 percent of rounds played and 81 percent of spending. This is their profile:8 Average Age Percent Male Highest Level of Education High School Grad Some College College Grad Post-Grad Degree Household Income Less than $50,000 $50,000–$74,999 $75,000–$99,999 $100,000–$149,999 $150,000 and above Average rounds per year Average years played Average score Percent private

50.8 94% 7% 24% 45% 23% 10% 24% 25% 27% 14% 60.2 22.4 88.4 19%

Golfer Loyalty9 There is one question that you can ask customers that has a strong correlation with a company’s growth rate: ‘‘How likely is it that you would recommend (company X) to a friend or colleague?’’ Word of mouth is the ultimate act of loyalty, and a better determinant of a given company’s success than a computer model. Customers are asked to rate on a scale of one to ten the likelihood of recommending the company to a friend. Those who answer nine or ten are labeled ‘‘promoters,’’ those who respond with a seven or eight are labeled ‘‘passives,’’ and all other respondents are called ‘‘detractors.’’ A company’s loyalty index can be found by subtracting the percentage of detractors from the percentage of promoters. The National Golf Foundation has successfully applied this loyalty index with turf-related companies and golf equipment manufacturers. Next, the Foundation applied the index to golf courses, hoping to learn if the number of rounds played

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is tied to customer loyalty. Three hundred core golfers were surveyed, revealing that the average loyalty index for public golf courses is 30 percent. The most important factor when deciding where to play golf is the course condition, followed by the quality of the course layout, the value, the quality of customer service, and amenities. In other words, the best way to increase a golfer’s likelihood of recommending a particular golf course is to improve the course’s condition and to create a more pleasing layout.

Spending10 Total spending increased by 1.2 percent from 2001 to 2002. Excluding greens fees, approximately 45 percent of golfer spending was on food and beverages, one-third was on clubs, 10 percent was on balls, and a little over 10 percent was on soft goods such as bags, gloves, and shoes. Avid golfers, who average 69 rounds per year, represent a small portion of golfers (only 23 percent), but in 2002 they accounted for 63 percent of total spending. Because avid golfers play more frequently, they spend more money on consumables such as soft goods and golf balls. Because skilled golfers generally play many rounds, those who score less than 90 points show spending patterns similar to those of avid golfers. These skilled golfers account for 39 percent of total spending, even though they form a small percentage (27 percent) of the golf community. Less skilled players, those who score 100 points or above per round, account for 39 percent of the golfer population but 26 percent of total spending. Generally, the more experienced a golfer is, the more he or she will spend. Although experience takes time to gain, beware of confusing golfer age with experience. Forty-two percent of golfers have played 20 or more years, placing them in the ‘‘experienced’’ category. These experienced golfers account for the largest portion of total spending, followed by golfers who have played for between 4 and 19 years. When examined by gender, golfer spending is roughly proportionate. Men, who account for 78 percent of all golfers, are responsible for 82 percent of fees and equipment spending. Even though the spending is roughly proportionate, male golfers spend slightly more than their female counterparts. A greater discrepancy is seen when dividing golfers into spending segments based on household income. Predictably, golfers with incomes of $100,000 or more spend between two and three times the amount of money per capita than golfers with lower incomes. The majority of private fees come from golfers with incomes that exceed $100,000, which is to be expected. Middle-aged golfers (30 to 44) form the largest segment of the golfing population, but they are not the biggest spenders. Late-middle-aged golfers (45 to 64) spend the most overall, and per capita spending on private fees increases with age. The National Golf Foundation’s ‘‘Best Customers’’ are the 8.9 million golfers who spend $1,000 or more on golf each year and play 25 or more rounds annually. Best Customers most often shop for balls and clubs at off-course specialty stores,

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A well-designed golf course can become a destination vacation for golfers. Courtesy the Four Seasons

followed by on-course specialty stores. They were least likely to buy balls and clubs from mass merchants like Wal-Mart, mail-order catalogs, the Internet, and warehouse clubs like Costco.

OPERATING CHARACTERISTICS There are over 3,100 real estate–related golf facilities and over 1,150 golf resorts in the United States. There are 353 facilities that are both real estate- and resortrelated. Resort facilities represent 7 percent of all golf facilities in the U.S. The top states for golf resorts are:11

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California Florida Michigan Texas Arizona North Carolina Pennsylvania South Carolina Wisconsin New York

191

124 facilities 118 69 62 56 54 48 44 43 41

According to the National Golf Foundation (NGF), resort golf facilities are ‘‘operations located in a setting that usually includes other amenities (such as tennis, swimming, gym facilities, etc.) and are situated in conjunction with a hotel, motel, or other type of guest lodging.’’12 Approximately 85 percent of resort golf facilities are daily fee operations.

Operations13 For the purpose of their annual report, the NGF differentiates between the Frost Belt and the Sun Belt based on the length of the operating season.14 The Sun Belt, which accounts for approximately 60 percent of all courses, covers the southern states in addition to the coastal regions of northern California, Oregon, and Washington. These courses are likely to be open year-round, while those in the Frost Belt, comprising about 40 percent of all courses and consisting of northern states in addition to the mountainous parts of southern states, usually shut down for a while during the winter. Nine-hole rounds represent a small percentage of all rounds played. Only 11 percent of the rounds played in Sun Belt resorts and 17 percent in Frost Belt resorts are rounds of nine holes. Just over 40 percent of rounds played occur on the weekend in both types of resorts. Resort guests account for 40 percent of rounds played in Sun Belt resorts and just over a third in Frost Belt resorts. Significant opportunities exist to appeal to local, non-resident golfers. Half of the resorts in the Sun Belt and three-quarters of resorts in the Frost Belt offer memberships. There are an average of 143 golf memberships in the Sun Belt and 187 in the Frost Belt. The median acreage for Sun Belt resorts is 175 while it is 220 for Frost Belt resorts. Turf acreage accounts for 80 percent of the total in the Sun Belt and only 55 percent in the Frost Belt. Seventy percent of the turf acreage is irrigated in Sun Belt resorts compared to 60 percent in Frost Belt resorts (median figures). Clubhouse and golf pro shops tend to be similar or slightly larger in terms of square footage in Sun Belt resorts. In the Sun Belt resorts, the restaurant / lounge square footage is greater in median resorts compared to Frost Belt resorts but less for top 25 and top 5 percent facilities. Sun Belt resorts also have larger cart storage areas. Two-thirds of Frost Belt resorts and just over 40 percent of Sun Belt resorts irrigate from lakes and streams while a quarter of Frost Belt resorts and a third of Sun Belt

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resorts use wells as an irrigation source. Sun Belt resorts are a much heavier user of effluent water compared to Frost Belt resorts. Though the size of the golf cart fleet is about the same in both regions, individual areas report different usage patterns. About 40 percent of Sun Belt resorts and 30 percent of Frost Belt resorts require the use of a golf cart. In fact, in the northern region, over 40 percent of courses never require a golf cart. Over threequarters of all rounds played in the Frost Belt utilize golf carts, compared to 90 percent in the Sun Belt. Frost Belt golfers prefer gas carts while Sun Belt golfers prefer electric carts. The average golf cart fleet size is just over 70. Two-thirds of Sun Belt and just under half of Frost Belt resorts lease their fleet.

Income Statement In 1999 (the last year for which data are available), U.S. golf resorts reported an average operating median (net operating income as a percentage of total revenues) of 28.9 percent for Frost Belt resorts and 25.3 percent for Sun Belt resorts.

Revenues The median revenues for U.S. golf resorts for 1999 are shown in Table 7.1. Most revenue comes from annual fees and green fees, two to three times as much as from the second most important source—golf cart rentals. Merchandise accounts for 11 percent of sales, while annual dues / passes and food and beverage each account for 14 to 15 percent of revenue. The only noticeable differences between Sun Belt and Frost Belt resorts is that, in the former, green and guest fees account for a greater percentage of total revenues while, in the latter, annual dues and passes accounts for a larger percentage of revenue. The top 5 percent of resorts by revenue differs in the distribution of revenues in a few ways. Golf cart rentals account for a smaller percentage of revenue compared to the median in both Sun Belt and Frost Belt resorts. Green and guest fees in Frost Belt resorts account for a smaller percentage of revenue while ‘‘other

TABLE 7.1 Revenues by Category / Median Category Green fees / guest fees Golf cart rentals Annual dues / passes Food and beverage sales Total merchandise sales Golf range Other revenue

Sun Belt

Frost Belt

46% 17% 8% 15% 11% 1% 2%

39% 16% 14% 14% 11% 1% 4%

Source: Operating & Financial Performance Profiles of 18-hole Golf Facilities in the U.S.: 1999 Resort Edition. Jupiter, FL: National Golf Foundation, 1999, 5.

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revenue’’ is a significantly higher percentage. The top 5 percent of resorts generate two and a half to three times as much revenue per round compared to the median.

Expenses Median non-payroll expenses for resorts for 1999 are shown in Table 7.2. Most significant in both regions is the cost of merchandise sold, followed by the cost of food and beverage. No extreme differences exist between the regions’ average expenses, but Sun Belt resorts generally spend more money on utilities and property taxes. Frost Belt resorts have more general and administrative expenses, and they pay slightly more to lease golf carts. Payroll is usually the largest expense category. The payroll dedicated to maintenance workers can run from one-third to half of total payroll, depending on the region. Unsurprisingly, Sun Belt facilities tend to allocate a greater percentage of payroll to maintenance than Frost Belt facilities do.

Staffing The staffing decisions in each climate region could not be more different. On average, Sun Belt resorts staff their facilities with 29 part-time staff and 34 full-time staff. In the Frost Belt, those numbers are 60 part-time staff and 43 full-time staff. Table 7.3 details the distribution of full- and part-time staff in the two climate regions.

TABLE 7.2 Expenses by Category / Median Climate Region

General / Administrative Irrigation Water Fertilizers / Chemicals Lease Expense / Golf Carts Lease Expense / Equipment Cost of Merchandise Sold Cost of Food and Beverage Ad / Marketing / Promotion Property Tax Facility Insurance Utilities Other Expenses

Sun Belt

Frost Belt

11% 1% 8% 7% 5% 19% 18% 6% 8% 4% 7% 5%

14% Negligible 9% 10% 5% 19% 17% 5% 6% 4% 5% 5%


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TABLE 7.3 Staffing by Category / Median Climate Region Frost Belt

Sun Belt

Course Maintenance Golf Shop Food and Beverage Administrative Other Totals

Part-time

Full-time

Part-time

Full-time

4.3 10.6 8.0 1.2 4.5 28.6

14.4 8.0 6.0 2.4 2.7 33.5

12.7 14.4 14.1 2.9 16.0 60.1

9.8 5.5 9.5 4.8 13.0 42.6


TOURNAMENTS AND EVENTS Business Golf15 Doing business on the golf course has become standard practice for many companies. There are legitimate reasons for doing so. Salespeople, who might ordinarily schedule a 30-minute meeting with a decision maker, spend several hours with that person on the course. Compared to other sporting events golf allows for more one-on-one contact, conversation, and undivided attention. Finally, it can be a great equalizer between the sexes. Businesses approach the use of golf as a business tool on a cost-benefit basis.16 The key is to compare the expected return compared to the cost of a golf outing with that of other means of doing business. A company may offer a golf incentive trip to a resort worth $800 (the cost) to any sales employee who produces $200,000 worth of business over a three-month period (a benefit). Alternatively a company may invite prospective clients to play at a resort—a cost of $250—only if there is the potential for sales from that client of, for example, $10,000 (the benefit). There are a variety of options to use golf as part of a business event.17 Four possibilities are customer-appreciation events, sales / product launches, employee outings, and fund-raising events. For customer-appreciation events the site selected should reflect the image of the company putting on the event. This is not a hard sales event but rather an opportunity to thank the customer. Foursomes should be selected carefully. Non-sales managers can be matched with customers to give background on company products and services. Prospective customers can be teamed with long-time clients. A golf tournament can be a wonderful way of launching new products or services. The rollout can occur on the course itself or at a pre- or post-event. Benefits can be unveiled at different holes with sales managers at the tee box handing out gifts or product samples.

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Ladies Learning the Business of Golf If more small-business women knew how much business gets transacted on the golf course, they’d take up the game in a heartbeat, believes Dee Sweeney, president of the Executive Women’s Golf Association’s Seattle chapter. It’s a challenge to get more women exposed to the friendly sport—and to the business dealings that happen while playing it. Currently, men take advantage of the game’s business opportunities far more frequently than women do. ‘‘It’s not in our culture yet,’’ Sweeney says. According to her, many women in business ‘‘are totally unaware of how much business is done on the golf course.’’ Although men don’t necessarily close deals and sign contracts while on the course, they do exchange business cards and establish closer personal relationships there. Plenty of men scout for potential business opportunities while on the course, but few women do so. But why don’t they? That has to do with confidence, Sweeney says. Women prefer to feel confident in their games before they tee it up with the guys, she adds, and without the necessary amount of practice beforehand, they won’t feel selfassured enough to risk embarrassing themselves.

‘‘If a woman isn’t confident in her golf game, she won’t use it for marketing. It’s a confidence thing,’’ Sweeney said. Suzanne Woo, author of On Course For Business: Women and Golf, agrees. Women don’t have to be great golfers to get respect by male co-golfers, she insists, and more women need to realize this. ‘‘It’s a powerful way to do business,’’ Woo says. If women aren’t yet comfortable with their golfing abilities, Woo thinks that they need to take the time to get confident. Although it’s a time commitment, it doesn’t have to be burdensome. With all the rules, technique and etiquette to learn, is it worth it? ‘‘If you’re playing in a golf tournament with 143 other people, you have 143 business opportunities out there,’’ Woo says. Source: Miller, Ben. ‘‘Women could profit from more tee time.’’ Puget Sound Business Journal (July 9, 2004). http: / / www.bizgolf.biz / articlespdf / PugetSoundBizJournal.pdf

DISCUSSION QUESTION: What are some ways to drum up interest in golfing among businesswomen?

Golf outings can work well for employee outings in an attempt to build internal relationships and improve morale. The accent should be on fun and informality with room and time for socializing afterwards. Players can be matched to ensure foursomes of people who do not work together on a daily basis. In this way employees gain a broader knowledge of the entire company. The key to a successful fund-raising event is to get as many sponsors as possible so that entry fees can go to the charity chosen. There are a number of sponsorship opportunities:

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Hole sponsors—a company can sponsor a specific hole and use that opportunity to showcase a product for the whole day. The sponsor pays a specific amount to cover amenities with the balance going to the charity. Traditional contests—longest drive, closest-to-the-pin, longest putt, etc. with prizes given by the sponsor. Nontraditional contests—longest marshmallow drive, best karaoke foursome, most creative photo pose, longest drive with a hockey stick, etc. Gifts / tee prizes—awarded to all players as they pass through specific holes. Hole-in-one sponsor (see below) Beverage-cart sponsor Banquet / food and beverage sponsor—the sponsor pays for the banquet and is allowed to give a short presentation and / or leave promotional materials at each place setting. Pre- or post-event golf clinic Raffles and mulligan sales—tickets are sold for various prizes. Mulligan tickets let golfers buy added tee shots for $10 to $20 when their first effort goes astray.

Hole-in-One As noted above, one popular option at a tournament is a hole-in-one contest.18 There are companies that will organize this activity for the resort, supplying prizes from cars to vacations to $1 million. For the resort the steps are relatively simple. Management decides on the prize and pays the insurance premium. Any and all golfers who shoot a hole-in-one get the prize. While many think it virtually impossible to achieve this, organizers point out that, in any given year in the U.S., there are over 40,000 holes-in-one.

Women-Friendly Although women make up only 20 percent of all golfers, 40 percent of new players are women.19 Resorts can make a tournament more woman-friendly by taking differences into account. Because shots hit by male golfers tend to have higher trajectories and travel farther than those hit by women golfers, the latter have more difficulty hitting over ravines and lakes. Varying tee locations allows the option of playing a hard course or an easier one. Women-friendly courses feature holes in the 5,600 to 5,700 yard range, holes where players do not have to carry the ball over a large number of obstacles, where the greens can be reached without getting into too much trouble, and where the forward tees are closer to the hole while giving players a better angle at the green. Other things that are important include: Locker rooms and rest room facilities on a par with those for men. Adequate rest rooms on the course. Rental sets, including left-handed ladies’ clubs, appropriate for women.

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The number of women who golf increases annually. Courtesy PhotoDisc, Inc.

Equal treatment in terms of service and attitude on the part of the staff. Women working in the pro shop that is stocked with women’s merchandise.

Timeline20 A tournament should be planned several months in advance. The format of the tournament and the number of players needs to be established and the client’s objectives determined. The types of contests are defined and a determination made as to whether or not scorecards are to be used. Food and beverage requirements are set and types of prizes and the number of sponsors needed is worked out. Transportation requirements are made known and special requests for such things as photographers and merchandise are fielded. The week of the tournament brings specific tasks. Pairings should be checked to ensure they are correct and last-minute deletions filled in or adjusted to firm the format of the tournament. The revised pairing list would be sent to the group golf director at the resort together with any changes in the tournament format.

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Staffing needs are re-confirmed and specific shift times are settled. The entire tournament staff, including volunteers, needs to be assembled and their specific duties and responsibilities agreed upon. Particular attention needs to be given to the appearance of players and VIPs. Financial obligations are completed and the availability of rental equipment confirmed. Food and beverage arrangements are set and confirmation is made that merchandise has been delivered. The rules sheets to be handed out to players are finalized and any special holes are noted. Transportation for players to and from the event is confirmed. On the day of the tournament the director should arrive at the course several hours before play is set to commence to check that the registration area is set up

Quick Getaway 7.3

Tee-Time Troubles Long rounds of golf hurt golfing, by frustrating other golfers and by harming the operation’s ability to turn a profit. Many courses try to compensate for long rounds by putting more golfers on the course, which is accomplished by decreasing tee-time intervals. Some courses have as many as eight tee-times per hour. Seven Bridges Golf Course in Woodridge, Illinois, is bucking the trend by adopting 12-minute teetime intervals, which means only five tee-times per hour. This tee-time schedule does not change during periods of peak demand. Studies show that increasing the tee-time interval from 10 minutes to 12 minutes will reduce the typical round time by as much as 15 to 20 minutes, says General Manager and Director of Golf Greg Fornoff. A simple tee-time interval adjustment of two minutes ensures that golfers will rarely run into the group ahead of them, which is frustrating even though it doesn’t significantly affect the overall round time. ‘‘Seven Bridges recognizes how valuable people’s time is to them. A lot of golfers have told us that the overall experience is diminished when their round of golf takes too long. They can’t rationalize taking the additional time to stay and enjoy the nineteenth hole and

the camaraderie that goes along with it,’’ adds Fornoff. ‘‘Our desire is to enhance the entire golf experience. Every decision we’re faced with, whether it be with respect to a group outing or a daily-fee player, we ask ourselves one question: how can we enhance our guest’s experience and make his or her time spent at the facility more rewarding?’’ The number-one reason why people leave the game of golf is because they don’t feel like they have time for 18 holes. ‘‘We would love for every golf course to adopt our tee-time plan as it would make the game faster which would, ironically, probably increase the overall health of operators,’’ Fornoff says. ‘‘Everyone would win: The golfer would have a better experience which, in turn, should increase the demand for this great game.’’ Source: ‘‘Commitment to Fast Golf.’’ Seven Bridges Golf, accessed August 1, 2006. http: / / www. sevenbridges.com / index.php?src⫽gendocs&link⫽ Committment%20to%20Fast%20GolfPEM&category ⫽Golf

DISCUSSION QUESTION: What is another way to compensate for the lack of golfer interest in playing through all 18 holes?

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properly and that tee packs are ready to be handed out. Sometimes tee packs are placed on golf carts. Name cards should be placed on the golf carts and a check made to ensure that the proper rental golf equipment is placed on each cart together with a scorecard and rules and other important information about the tournament. If box lunches are to be served and / or a beverage cart is to be set up on the course, their availability needs to be attended to. Signage at specific holes needs to be in place and awards made ready. Sponsors may need transportation to their respective holes. Players are greeted and sent off, last minute pairing problems are dealt with, and, finally, scorecards are collected as players come off the course.

Liability There are a number of liability issues involved in any kind of golf tournament.21 The first involves a spectator’s assumption of risk. Do spectators assume the risk of injury merely by attending a golfing event? Most courts hold that ‘‘assumption of risk’’ applies. However, the prevailing view is that juries should make that determination even if the injured observer is an experienced golfer who, presumably, would know the potential for errant balls. A second potential issue relates to the responsibility of both the sponsoring organization and the golf course to provide adequate security for spectators. Courts have found in favor of observers where crowd control was inadequate and marshals were not provided. Courts have found that, when a name professional golfer is involved, that it is reasonable for observers to focus attention on the celebrity to the exclusion of the actions of other golfers. Thus, the need for adequate security. A third issue relates to the need of golfers to warn spectators of a hazardous shot. The general feeling is that golfers have a duty to warn people within the ‘‘foreseeable area of danger’’ but not someone who is outside of this zone or who is aware of the upcoming shot. Finally, there is concern about the relative liabilities of the various entities involved—the player, the resort, the sponsoring organization, and the professional golf association. There have been cases where the sponsoring organization was found to share responsibility for any shortcomings. Because the organization was set to benefit financially from the tournament they have been found to have the responsibility, in addition to the resort, to ensure proper safety measures have been taken.

Banquets22 Banquets can represent an excellent way to bring additional revenue into the resort. An effective marketing plan is crucial. A pinpoint approach to marketing identifies a specific market segment that can be easily measured. The easiest tactic is to go after one or more segments that are already part of the resort’s customer base. There are several common sources of banquet business. Golf tournaments and outings represent a logical market segment. An alternative facility, such as an outdoor barbecue area, means that the primary banquet room in the resort can be used at the same time for ‘‘regular’’ functions. A variety of banquet options are appropriate—pre-game breakfasts or lunches, box lunches, post-game dinners or

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cocktail parties have proven successful. The most financially profitable segment for banquets is the social events segment. This includes weddings, bar mitzvahs, and anniversaries. Holding a wedding expo is an effective way of getting the word out. Corporate functions include group meeting and employee recognition ceremonies. These can be targeted for off-season revenue generation. Sports activity groups often have kick-off or end-of-the-season events that can generate banquet business.

PRO SHOP Margin Enhancers As noted above, merchandise sales in golf resorts account for 11 percent of total revenue. There are a number of tactics a pro shop can use to improve their margins.23 These so-called ‘‘margin enhancements’’ include: Discounts—usually tied to the volume sold or anticipated. Anticipation—this refers to a discount if the invoice is paid by a certain date. Rebates—a reward for outperforming a set goal. It may be paid as a check but is usually credited to the store’s account. Fitting fees—this fee helps offset the labor cost involved with club fitting. It is a flat fee (from $5 per club to $50 for a set) that is deducted from the cost of the goods. Demo / display discounts—the median discount of 40 percent as an incentive to demonstrate or display certain products. Markdown dollars—although not yet common in golf pro shops, this enhancement provides credits to the retailer on end-of-season markdown merchandise. Advertising co-op—this refers to a percentage of the business that is set aside for vendor-specific advertising. Freight programs—the average golf pro shop incurs 2 to 4 percent of retail sales in freight costs. Incentives range from free freight to a specific maximum allowance per box. Free product / promotional accounts—an incentive from sales representatives based on how big a customer the shop is to them.

Accessories Sales of accessories have become increasingly important to net income as the profit margin (the markup is at least 60 percent) and turnover of accessory inventory is greater than with other pro shop items.24 The key to increasing sales is in the presentation of items. Displaying accessories in showcases that are clean, accessible, and full of merchandise has been shown to increase sales. Impulse sales are greater when the displays are close to cash registers.

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Better displays of such things as soft goods items will result in increased sales. This means such things as:25 Keeping the display area neat. Shirts should be stacked neatly and price tags tucked out of sight. Using color effectively. Tie in masculine colors to complement men’s displays and vice versa for women. Develop a theme. Props can be used to accent a specific theme throughout the shop. Cross-merchandise. A complete ensemble can be sold by showcasing the entire outfit, with accessories, on a mannequin. Avoid one-level displays. Using different nesting tables creates a more interesting and accessible sales display area.

Inventory Control In addition to methods of increasing revenue, inventory needs to be controlled in order to cut down on costs. A strategic approach to inventory control involves ‘‘open-to-buy.’’26 This term refers to the amount of retail dollars set aside for the purchase of merchandise in the future. To properly determine future purchase it is first necessary to divide the merchandise in the store into groupings of like items. These ‘‘merchandise groups departments’’ might have separate categories for such things as putters, wedges, irons, branded balls, etc. A small to medium shop might have 30 to 40 departments. The purpose of such a system is to forecast the future buying needs in each department. Once the departments have been determined sales are projected in each of these areas. Inventory is then bought to support the projected level of sales.27 If the shop has been in operation for at least a year, sales figures for the past 12 months can be used as the base to project future sales, taking into account any changes in golfer volume over the past year. Sales volume is affected by such things as location, occupancy at the resort, traffic pattern, and competition. After a figure for total annual sales has been set, the amount for each department is determined using the percentage of sales in each category. If bags account for 10 percent of total sales then the departmental share of the total projected annual sales would be 10 percent. To be most effective an open-to-buy system will tweak all sales projections every 30 days based on actual sales. Sales figures would then be projected monthly as it is likely that sales volume varies throughout the season. To maintain control of the system the two important pieces used to determine beginning inventory levels are projected sales volume and the turnover rate desired by the shop.

Credit Cards The decision on what type of credit cards to accept has both revenue and cost implications.28 Accepting credit cards makes the purchase easier for the customer. Retailers pay a fee to the credit card company because they accept these cards. The cost of the fee is determined by the issuer of the card and varies depending

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on the type of card and the payment of the settlement. There are two parts to the processing fee—the discount rate (a percentage of the amount of the sale) and a per-item or transaction fee. Both are negotiable. Check cards can be accepted as credit cards or as debit cards. When cards are accepted as credit cards the fee is the same as a regular credit card. If the discount rate is 2 percent the fee on a $100 sale is $2. However, if the cardholder uses the card as a debit card, a PIN must be entered and the charge to the retailer is a set, much smaller fee.

GOLF CART FLEET Lease vs. Buy As noted above, the average golf cart fleet size at resorts is just over 70. Golf courses have tended over the past few years to lease rather than buy their golf carts.29 In 1990 only one-third of golf carts were leased. That figure is just under half in Frost Belt resorts and about two-thirds in Sun Belt resorts. This trend is expected to continue. Manufacturers actually prefer leases because courses tend to keep carts longer when they buy. A lease means more business for the manufacturer. Leasing can be attractive to the course because it reduces maintenance problems. Service is included in many leases. By the time problems begin to develop it is time to return the carts and get new ones. While buying makes long-term economic sense for a course, in the short-term the lease payment is less than the interest payments if the carts were purchased. Because of this lower payment the course does not have to sell as many rounds to make the payment. Leasing also frees up cash for other course projects. Lease payments can be adjusted to the region of the country in which the resort is located. Frost Belt resorts can negotiate payments that are higher in the summer months and less or nothing in the off-season. Similarly, for a newly opened course reduced payments can be made during the first year with higher premiums due as the resort gets established. Discussions should also take place about expanding the fleet during the term of the lease. Most cart manufacturers will allow this without re-doing the entire lease but it is best to clarify this up front. Buyout terms should also be agreed upon at the beginning of the lease. There are two standard types of leases—operating leases and conditional sales contracts. In the latter there is an option to buy the fleet at the end of the lease. Golf cart leases can be customized to meet the specific needs of the resort. One option is to customize the lease so that it ends with the end of the resort’s prime season. It would be difficult for management to have to re-negotiate the return and renewal of new carts during the height of the resort season. At the end of the busy season management can best decide whether or not to purchase carts whose lease has expired or renew a lease on additional carts. A second possibility is the Fixed Purchase Lease Option (FPLO). Unlike the Fair Market Value lease, where the decision to buy and the price of the carts is negotiated at the end of the lease, under FPLO the price of purchasing the fleet is

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Some golfers prefer to walk the course while others choose to use golf carts. Courtesy Purestock

known up front. Negotiations revolve around the trade-in value of the fleet. If the trade-in value is greater than the pre-determined purchase option, it makes sense to buy out the lease and trade the existing carts. If that is not the case, the existing fleet is returned to the leasing company and a new deal is negotiated for the next fleet. The grow-in Payment Program is appropriate for new facilities. Payments are lower than normal for the first 12 to 24 months of the lease. As the resort improves its cash flow position, payments towards the end of the lease are greater than normal. Under the Staggered Delivery Program the fleet of carts is not delivered en masse but staggered throughout the season as business builds (if this is a seasonal operation). One-third of the fleet might be delivered immediately prior to the season, another third as business begins to pick up, then the final third as business begins to peak. A final option is the Complete Package wherein golf cart leases are packaged along with other equipment leases for such things as turf maintenance equipment, irrigation materials, etc.

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The ideal golf cart lease contract is one that allows for a payment schedule that matches the cash flow of the resort, that matches a service contract with inhouse maintenance capabilities, and that allows payments to be written off as operational expenses.31 An operating lease offers lower payments compared to buying. It offers more flexibility for management because it is shorter than a purchase commitment. Payments are deducted from taxes however there is no depreciation of equipment. There is no obligation to buy at the end of the lease. At the end of the lease new terms can be negotiated and a new lease signed for a new fleet. A capital lease, or conditional sales contract, offers depreciation on the cash investment or on the interest on the loan for the resort management. Ownership of the fleet is transferred to resort management at the end of the lease when management purchases the fleet. The term of the lease is usually 75 percent or more of the estimated life of the carts. Once the carts are paid for the profit on the rental is greater than if lease payments are being made. On the other hand financing the purchase requires a down payment. The amount financed works against the resort’s line of credit. This can limit borrowing for other capital projects. A hybrid lease combines features of both of the above and lets management decide whether or not to buy at the end of the lease. Because of the uncertainty of the outcome there are difficult tax issues relative to write-offs and depreciation that require the services of a tax specialist. A rule of thumb is that purchasing is best if the operator intends to keep the fleet for six to eight years. If the plan is to replace after three to five years, then a lease is preferable. A lease program will vary depending upon:32

Term of the lease Initial payment Payment schedule Selling price Residuals Interest rates

Inventory Control Inventory turnover is the key to good fleet operation. Even rotation can be achieved by numbering each cart and, for example, send half the fleet out one day and the other half the next. Another effective management tactic is to rotate one-third or one-quarter of the carts out of the lease at a time rather than turning over the entire fleet at the same time. The average lease in the industry is for three years on a fleet that, depending on the size of the resort, is 50 to 100. A rule of thumb for a resort course is 70 to 80 carts. Assuming a three-year lease on a fleet of 75, this would mean that every year, 25 carts go out and a new set of 25 carts come into the resort.

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Quick Getaway 7.4

Rules of the Road Golf carts are a fantastic convenience, but their misuse can create problems between golfers and even cause expensive course damage. Cart usage also determines the length of a round of golf, which is a very important variable in the profitability of a golf operation. Aside from getting the cart back to the pro shop in one piece, what are the responsibilities of a golf cart driver? 1. Carts should be driven with care. 2. The driver should never make sharp turns that may damage grass. 3. Carts should keep out of bunkers and off of grass mounds. 4. Carts should be kept well away from tee decks and greens (this means at least 15 yards, not 15 feet). 5. Stay on cart path if possible and convenient. 6. Obey course rules for carts, such as the ‘‘90 degree rule’’ or ‘‘cart path only.’’ 7. Don’t drink and drive while on the course. 8. Never have more than two golfers on a single cart. 9. Don’t drive carts while others in your group are hitting.

10. The driver should always keep the cart on the path when parking at a tee deck. 11. When stopping at a tee deck, the driver should never park the cart ahead of the tee deck that the golfers will be hitting from, unless the cart path facilitates it. 12. When on the fairway, the cart should be kept behind or next to golfers who have yet to hit their ball. The cart should never be in front of them. 13. Even if the cart is a silent electronic model, it should never be moved when another golfer is making a shot. 14. Carts should be kept far away from the greens and green side bunkers. 15. Drivers should respect all roped-off areas and cart path directions. 16. When parking, station the cart near the tee that will be hit from. Source: ‘‘Etiquette: Golf Carts.’’ TheGolfExpert.com, accessed August 1, 2006. http: / / www.thegolfexpert.com / etiquette-carts.asp

DISCUSSION QUESTION: Would it be worth it for courses to hire a person or two to monitor the course and enforce golf cart etiquette?

Electric vs. Gas33 While electric carts are increasingly popular in the Sun Belt states there are some drawbacks. An enclosed storage facility is needed to protect charging systems from weather. Fifteen amp outlets are required for each charger. Electric carts must be re-charged after 36 holes while gas carts can run indefinitely. While gas carts are more expensive initially, they also have a higher re-sale value. The key seems to be the energy costs and emission laws in various parts of the country. In parts of

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the country with above-average energy costs, gas carts are popular. In areas such as California, that have strict emission standards, the choice tends to be electric.

Maintenance34 Golf cart revenue can be a high profit area in a resort. The biggest potential for failure is lack of routine maintenance. There are three parties that are involved with golf cart maintenance. First, there is the manufacturer of the golf cart. As with a car, there is information in the owner’s manual on what needs to be done when regarding routine maintenance. The golf cart servicing dealer or distributor can provide services that resort management may not want to or be able to do. Finally, the course operator has a responsibility to perform, at the very least, pre-operation, daily inspections, and periodic tasks. These inspections cover such things as inspecting for fluid leaks, battery terminals and wire connections, brakes and steering, switches and pedals, tires, gas tank, body damage, and the reverse buzzer. Maintenance can be approached in several ways. A service contract can be taken out with a local dealer such that course personnel perform the daily checks while the dealer provides monthly prescribed services. A second option is for the resort to hire staff to perform all routine and regular maintenance. A third, undesirable, action is to fix carts after they fail. A pro-active preventative maintenance program results in carts that operate longer and more efficiently. Battery wear, tear, and care are important aspects of golf cart fleet operation.35 The major reason batteries fail is sulfation. By some estimates almost 85 percent of all lead-acid batteries are discarded because of sulfation. Sulfation occurs when discharge from a battery forms an insulating film of lead sulfate over the plate. It happens when batteries are either over- or under-charged or when it is allowed to self-discharge when it is not being used. If batteries are not fully charged they will freeze at higher temperatures. This is especially important for golf carts stored outside in cold weather. The changes can be quite dramatic as noted below: When Lead-Acid Batteries Freeze State of Charge

Freezing Temperature (⬚F )

100 percent 75 50 25 0

⫺90 ⫺53 ⫺16 ⫹1 ⫹16

Problems in charging batteries can be seen from the need to add water often, acid buildup on the outside battery surfaces and / or on terminals, and / or if there are bulges in the battery. It is better to give a battery a slow charge rather than a quick charge as a sulfated battery can explode during the latter. Ideally a battery would be charged at a rate no more than 10 to 20 percent of its rated capacity.

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Thus a battery rated at 54-ampere-hours would be charged at a 5.4- to 10.8- ampere rate. Proper storage of carts in the off-season is critical to performance of the fleet. A winterizing program involves:36 General maintenance including cleaning the cart inside and out as well as performing quarterly maintenance such as lubing the front suspension and greasing the wheel bearings. Charging the batteries. Inflating all four tires to 20 psi. Turning the key to the off position and setting the forward / reverse switch to neutral. Using blocks behind the tires rather than setting the parking brake. Setting the brake stretches the brake cable all winter. Charging electric cart batteries every six to eight weeks. Some manufacturers recommend keeping the carts on charge during storage while others say to disconnect the battery. Draining gas from the fuel lines, sealing the fuel tank, oiling the spark plug opening, and installing a new spark plug. Replacing tune-up parts.

Risk Management A pro-active risk management program takes into account the following:37 How do hills affect safe golf cart operation? Are there sharp curves to negotiate? Are there intersections between golf and automobile traffic? Are there controls to prohibit intoxicated and / or underage drivers from using golf carts? Is insurance required of drivers of privately owned golf carts if they are allowed on the course? Do maintenance employees wear snug-fitting clothes and are athletic shoes banned? Do ground crews have access to adequate water and sun protection to prevent dehydration? Do ground crews police areas before they mow, removing potentially dangerous debris? Do mowing patterns ensure the safe dispersal of clippings and debris? Is outdoor electrical equipment properly grounded? Are there checks for wasps or other insect nests? Are trees inspected for dead limbs that could fall? Are herbicides and pesticides applied only during non-playing times? In the event of a golf cart accident the liability might be shared by the operator and the lessor.38 The operator of the golf cart is liable if it can be shown that he /

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she does not use due care in the operation of the vehicle. On the other hand, the lessor might be liable if the cart and / or cart paths are not properly maintained. Resorts can minimize accidents by following a few simple guidelines:39 Make sure the operational decal that come with the cart warning occupants to keep limbs inside the cart and prohibiting operation by children is still intact. Conduct routine safety inspections. Install cart path guardrails. Install warning signs ahead of potential hazards such as sharp turns and steep declines.

USE OF TECHNOLOGY GPS Increasingly, golf courses are using technology in a variety of ways. Global Positioning System–based technology (GPS) is being used to speed play, to improve the golf experience, and even in planning tree removal. The golf industry began using GPS in the early 1990s.40 GPS technology was initially set up when the Department of Defense sent 24 satellites into space to plot movements on the ground. From initial uses such as mapping golf course yardage, the tool has expanded to include course management and irrigation system design and turf care application systems to control the spraying of water, fertilizer, and pesticides. GPS is being used to help speed up play while providing a better experience for golfers.41 Golf carts can be equipped with laptop computer screens to give a picture of each hole including yardage and the placement of features such as sand traps. Golfers use the devices to track yardage and survey potential hazards. Play is faster and they tend to make better shots. Since the position of each cart is known centrally, bottlenecks can be monitored and messages sent to individual carts asking them to speed up play. GPS is especially useful at resort courses where golfers are likely to be unfamiliar with the layout of the course. GPS can also be used to ensure maximum playing conditions for the golfer while making sure the environmental integrity of the course is upheld.42 Previously courses were managed based on averages. Because there are differences in plant and soil characteristics of each course, the concept of site-specific management has come into vogue. Site-specific management is closely aligned with sustainable land management and integrated pest management. Sustainable land management is based on the idea that the environment should be managed in such a way that it is handed onto future generations in the same or enhanced condition as exists today. Integrated pest management takes a comprehensive approach to managing key pests following sound ecological principles. There is a four-step process to specific-site management. Data about the site is first collected either physically or remotely. It is then stored and read. Various environmental conditions can be

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simulated to see how a site will respond to certain conditions before they occur. Variable-rate application then uses GPS and electronic machine-control systems to apply fertilizer and pesticides in a way that targets specific areas based on the individual needs of the site. GPS can also assist with tree placement and removal.43 The major problems with trees on golf courses are selecting the wrong species, planting too many, and planting in the wrong places. This can lead to trees that are weak, poorly developed, and / or diseased. Poor locations mean that trees compete with turf for sunlight, water, and nutrients. The first step in a systematic approach is to prepare a tree inventory. Trees are identified, then checked for pests and diseases, and a plan is established to take care of any problems. The nest step is to map the golf course using a combination of Global Positioning System (GPS) and Geographic Information System (GIS) software. This gives the course superintendent a picture of how trees and turf are integrated on the golf course. Once the cataloging takes places the software can predict what is likely to happen in the future. Given that it takes more money to remove a tree than maintain it, a management program saves money for the course. Sophisticated (and expensive) sun-mapping technology can even identify

Quick Getaway 7.5

Frozen Fore What’s more difficult than trying to sink a holein-one? Trying to sink one when the entire course is made of ice—that’s right, without a blade of grass in sight. The World Ice Golf Championship, which is played on Greenland’s surreal northwestern ice fields, started in the small town of Uummannaq (Greenlandic for ‘‘heart-shaped’’). The championship has been held there during years with perfect ice conditions, starting in 1997. The Championship course is set in one of the world’s most spectacular landscapes, located more than 400 miles north of the Arctic Circle. Golfers from across the globe travel to compete in this extreme tournament for the coveted title of The World Ice Golf Championship. Slow-moving glaciers and huge icebergs frame the course. The course is so unpredicta-

ble that the ‘‘green’’ isn’t cut until literally days before the event. Playing golf on a frozen seascape is not the only task at hand. Participants must cope with extreme temperatures, which with the windchill factor can fall to –50⬚C. Special gear is absolutely essential, and the balls used must be brightly colored (remember, the ‘‘green’’ is white!). Also, this is the only golf championship in the world that comes with the unlikely danger of losing a ball to a polar bear. Source: ‘‘The next World Ice Golf Championship to be held in Uummannaq, Greenland March 22 to March 27 2007.’’ Greenland-guide.gl, accessed August 1, 2006. http: / / www.greenland-guide.gl / icegolf /

DISCUSSION QUESTION: How can you bring the thrill of ice golfing to golfers in warmer climes?

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a specific branch that requires removal on a tree to improve sunlight penetration. It can also show how shadows move on the greens and how many sunlight hours the greens are getting.

Course Management Computers are making course management easier. The major use of course management programs is to manage ground care activities including the scheduling of daily work orders, the maintenance of equipment, inventory control, budget analysis, and the tracking of labor costs.44 It has also been used to do such things as determine the amount of sand needed to replace contaminated sand in bunkers with USGA-recommended sand. By entering the square footage of the bunkers, the depth of sand desired, and the cost of sand, the amount of materials needed and the cost can easily be calculated. Irrigation is a vital component of golf course management. Computers have aided tremendously in providing a complete system that is effective and efficient. A complete irrigation system involves several elements:45 Flow-management software lets the system identify the best and most efficient way to irrigate based on flow rates of the sprinkler heads, the pump station, and the sizes of the pipes in the ground. The superintendent decides what to water and for how long and the software calculates the rest. A weather station gathers data about wind speed and direction, the amount of rainfall, temperature, relative humidity, and solar radiation to establish the evapotranspiration (ET) rate. This rate, in turn, determines how long each station has to run to replace the lost moisture. Radio control between the central computer and the field controllers means a station can be turned on from anywhere on the golf course. Sensors monitor and react to changes such as a main line break. They can also shut the system down in the event of rain. Cycle and soak allows the superintendent to set the amount of water to be applied followed by a soaking-in period to eliminate runoff or puddling. Graphical user interfaces show pictures on the computer screen together with any graphical information needed. The superintendent can then easily monitor the irrigation system. Remote access means the system can be accessed from a remote controller that can be in the office or at home. It is now possible for sprinkler systems to run off of a computerized central control system.46 Changing the run-time for sprinklers can now be done in minutes instead of hours. On a daily basis the computer calculates the run-times of each individual station based on the evapotranspiration (ET) rate for the previous 24 hours. The best and most efficient way to water the course is then determined

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based on guidelines set up by management. The ideal time to water is during a ‘‘water window’’ during the night. In the long days of summer this can be as short as eight hours. Computers help courses make maximum use of this window. Computers need to know whether or not the sprinkler is located on a slope, on sand, or on clay, whether it is in sun or shade, and if it is a half or full circle. Each of these variables influences the amount and time of water flow. Because of the importance of ET it is desirable to have a weather station on the course that can determine ET for the past 24 hours.

RENOVATION PLAN Golf courses need constant renovation and remodeling. Many operators fall into the trap of being able to only plan one year in advance. A master plan would include a review of the ages of greens, trees, bunkers, and the irrigation and drainage system; prioritizing goals and objectives; developing a visual plan for the areas of improvement; setting up phased renovation; outlining various options; and costing the alternatives. The starting point takes into account the expected life cycle of the various pieces of the course. The various parts of the course have a life span of:47 Item Greens Bunker sand Irrigation systems Irrigation control system PVC pipe (under pressure) Pump station Cart paths: asphalt

Years

Item

Years

15–20 5–7 10–30 10–15 10–30 15–30 5–10

Cart paths: concrete Practice range tees Tees Corrugated metal pipes Bunker drainage pipes Mulch Grass

15–30 5–10 15–20 15–30 5–10 1–3 varies

The best time for conducting various maintenance tasks is during the offseason as this is least disruptive to play. This can involve such things as sodding bare areas with turf, renovating bunkers, trimming and planting trees, etc.

SUMMARY Managers are responding to changes in the demand for golfing resort vacations by developing facilities and services important to the golfer in an attempt to increase revenue. At the same time savvy operators attempt to reduce costs by using technology and considering different ways to finance their fleets of golf carts.

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ENDNOTES 1. Golf Industry Overview 2005. Jupiter, FL: National Golf Foundation, 2005, 5–8. 2. www.foley.com / golf, accessed August 2, 2006. 3. Golf Instruction and Training Aids. Jupiter, FL: National Golf Foundation, 2003. 4. Inside the Ropes. Jupiter, FL: National Golf Foundation, October 6, 2005. 5. The U.S. Golf Travel Market 2003 Edition. Jupiter, FL: National Golf Foundation, 2003. 6. Ibid., 4. 7. Frequent Golf Travelers: Attitudes and Behaviors. Jupiter, FL: National Golf Foundation, 2003. 8. Ibid., 146. 9. ‘‘The One Question You Need to Ask.’’ Golf Industry Report, Volume 5 (Third Quarter 2005), 3. 10. Sizing the Golf Consumer Marketplace: The Spending Report 2003 Edition. Jupiter, FL: National Golf Foundation, 2003. 11. Marzolf, Tom. ‘‘Resources for Remodeling.’’ Golf Industry Report, Number 6 (First Quarter 2006): 12. 12. Operating & Financial Performance Profile of 18-Hole Golf Facilities in the U.S. 1999 Resort Edition. Jupiter, FL: National Golf Foundation, 1999, iii. 13. Ibid. 14. Ibid., iv. 15. Johnson, Rosemary. ‘‘Business Golf Is on the Upswing.’’ Ladies Golf Journal (September / October 1999). In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 10. 16. Anderson, Judy. ‘‘Consider the Cost-Benefit Ratio of Using Business Golf.’’ Long Island Golfer Magazine, Volume 10 (Number 1, 1999). In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 14. 17. Trost, Ed. ‘‘Why Golf?’’ Meetings and Conventions (July 1999). In Tournaments and Events— Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 59–61. 18. ‘‘Golf Marketing Incorporated.’’ In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 31–32. 19. White, Crystal Ingram. ‘‘Gender Specific.’’ Meetings and Conventions Golf Supplement (July 1998). In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 26–28. 20. Binger, Sherry. ‘‘The Week of the Tournament.’’ Meetings and Conventions (July 1999). In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 51. 21. Marks, Merton E. ‘‘Tournament Play: Water and Sand Aren’t the Only Hazards.’’ Executive Golfer (August 2000). In Tournaments and Events—Organization and Management. Jupiter, FL: National Golf Foundation, 2001, 47. 22. Zaruka, John. ‘‘Add Banquets to Boost Your Bottom Line.’’ Fairway Forum: Newsletter for NGF Member Facilities, 2000, 3rd Quarter, Volume 5, Number 3. 23. Morton, Ken. ‘‘Capitalizing on Margin Enhancements.’’ The Merchandiser: Newsletter of the Association of Golf Merchandisers (July / August 1999). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 9. 24. Wolford, Peter. ‘‘Accessories: Big Sales for Small Items.’’ Golf Product News (March 1999). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 1. 25. Pitman, Alan P. ‘‘Make Your Softgoods Displays Stand Out.’’ Golf Shop Operations (April 2000). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 34.

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26. Haaz, Mort. ‘‘Buying Right Begins with Merchandise Organization.’’ Material Matters (January / February 1999). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 8. 27. Haaz, Mort. ‘‘Plan Your Sales Dollars Before You Spend Your Dollars.’’ Material Matters (April 1999). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 41. 28. Caine, Sam. ‘‘Choosing the Right Credit Card Provider.’’ Golf Business (June 1999). In Increasing Your Pro Shop’s Bottom Line, Third Edition. Jupiter, FL: National Golf Foundation, 2002, 10. 29. Luczycki, Rebecca. ‘‘More Courses Are Turning Toward Leasing and Away From Buying.’’ Crittenden Golfer (July 1999). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 16. Johnson, E. Michael. ‘‘Don’t be Lax With Lease Language.’’ Golf Shop Operations (May 1999). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 21. 30. Murray, Troy A. ‘‘Golf Cart Leasing in the 21st Century: What Should You Expect?’’ In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 25–26. 31. Denigan, Jim. ‘‘Made to Order.’’ Club Management (September / October 1999). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 42–45. 32. Ibid., 45. 33. Musselwhite, Ronnie. ‘‘Roll On.’’ Golf Business: Publication of the National Golf Course Owners Association (July 2000). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 48–53. 34. Grigsby, Dan. ‘‘Driving Force: Daily Maintenance is the Key to Keeping Your Golf Carts Rolling.’’ In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 23–24. 35. Siuru, Bill. ‘‘Battery TLC May Not Help Your Score But it Can Improve Your Bottom Line.’’ Golf Car News Magazine (January / February 1999). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 14. 36. Bailey, Jim. ‘‘Winterizing Your Fleet.’’ Golf Business: Publication of the National Golf Owners Association (November 2000). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 66. 37. Schuster, Joe. ‘‘It’s All in the Game.’’ In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 36–40. 38. Crist, Gary. ‘‘Liability for Golf Cart Accidents: A Tricky Area.’’ Fairway Forum: Newsletter for NGF Member Facilities (3rd quarter, 1998). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 41. 39. Marks, Merton E. ‘‘Golf Carts—Not Always a Smooth Ride.’’ Executive Golfer (February 2001). In Improving Golf Cart Fleet Operations, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 32. 40. Shepard, Dan. ‘‘Companies Develop GPS-Based Technology.’’ In Computerizing Your Golf Facility. Jupiter, FL: National Golf Foundation, 2001, 8. 41. Aylward, Larry. ‘‘Far Out.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 41–44. 42. Schmidt, Mark. ‘‘Site-Specific Management: Roots of the Future.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 116–119. 43. Overbeck, Andrew. ‘‘Tree Inventory Software Eases the Pain of Tree Removal.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 141–143. 44. Goodman, Stacia. ‘‘The Computer Age.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 9–11.

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45. Ziegel, Rick. ‘‘Irrigating the Golf Course: Choosing a Computerized Central Control System.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 55–57. 46. Slack, Andy. ‘‘The Digital Age.’’ In Computerizing Your Golf Facility, Third Edition. Jupiter, FL: National Golf Foundation, 2001, 32–37. 47. Marzolf, Tom. ‘‘Resources for Remodeling.’’ Golf Industry Report, number 6 (first quarter 2006), 7.

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Chapter 8 RESORT OPERATIONS: THE IMPORTANCE OF RECREATIONAL AMENITIES LEARNING OBJECTIVES 1. Outline the stages of the recreational amenities development process. 2. Discuss the elements involved in creating an amenity strategy and the program’s impact on the overall development process. 3. Discuss the relationship between developers and managers of an amenity package in terms of successful planning and implementation. 4. Identify the role of the developer in the various types of community management structure. 5. Compare and contrast the opportunities for effectively structuring the management of a community and its amenities.

INTRODUCTION THE DEVELOPMENT PROCESS Stages in the Development Process DEVELOPING AN AMENITY STRATEGY An Amenity Strategy COMMUNITY MANAGEMENT STRUCTURES Government Bodies

Nonprofit Tax-Exempt Organizations Community Associations MANAGEMENT AND OPERATIONS Organizational Structures Comparison of Basic Options Membership Structures General Approaches SUMMARY ENDNOTES

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INTRODUCTION Staying power is the first requirement for success; without it, projects that might have been successful fail. —WILLIAM BONE Chair of the Board, Sunrise Company

The recreational amenities are a significant part of the character of any planned community. According to the Urban Land Institute, the decision to include or exclude a specific recreational amenity should be based on six factors: 1. what is being offered in similar local projects 2. the residents / users for whom these amenities are being planned 3. how much money is available for amenities and whether the costs are justified 4. how the amenity fits in with the total project physically, economically, and as part of its image 5. what quantity of the amenity should be provided and what the climate will allow 6. what the marketing benefits will be1 In this chapter, the place of the amenity program within the overall development process is identified and principles for developing an amenity strategy are laid out. Options are explored for effectively structuring the management of the community and its amenities.

THE DEVELOPMENT PROCESS Avoid personal guarantees on land acquisition and development loans. The failure to heed this advice has broken more developers than anything else. If more equity is needed to avoid the need for a guarantee, then by all means put it in or find a partner. —WILLIAM BONE Chair of the Board, Sunrise Company

The process for developing a resort is complex, time-consuming, and involves many related activities. The developer, who may also be the resort manager, must assemble a team of people who have expertise in various areas.2 The team, overseen by a project manager, brings together people with a background in: Law—attorneys and legal advisers Finance—financial and technical analysts, financiers

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Management—construction and project managers Marketing—market analysts, marketing and public relations advisers, sales managers, and real estate agents Planning and design—site planners, architects, landscape architects, engineers, and environmental scientists

Stages in the Development Process A resort development goes through three stages: (1) feasibility analysis and planning, (2) construction, and (3) operations / management.3 Feasibility Analysis and Planning

A project is usually initiated based on potential market demand. A preliminary estimate is made of the likely demand, alternative sites are investigated, one is chosen for in-depth analysis, and a development team is assembled. The development concept is then agreed upon. This means considering the buildable area, development capacity, access, and options for community governance. This is followed by a detailed feasibility analysis comprising an in-depth market and regulatory analysis, an examination of the characteristics of the site, and a determination of the financial feasibility of the project.

Construction is the second phase of resorts development, after a feasibility analysis and planning, and before operations / management. Courtesy PhotoDisc, Inc.

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At this point, the concept may have to be refined or, if the financial feasibility is unfavorable, an alternative site may have to be selected and the process begun again. Next, product programming is put into place. The type and mix of residential, timeshare, and hotel products are determined, an association structure and amenity program agreed on, and the phasing of the development set up. Preliminary planning and design is followed by approvals from necessary agencies and citizen groups, and the plan finalized in detail. Financing is then secured and marketing begun. Construction

Planning, construction, and marketing activities overlap with the plan (and the corresponding construction) being adjusted to changes in the marketplace. Large amounts of money and manpower are being spent at this stage of the development.

Operations / Management

When the first part of the resort is ready for use, the project moves into the operations stage. The various stages of development may overlap, as it can take years or even decades for a resort to be completed. A resort may consist of resident owners, periodic renters, and hotel guests who stay a few days. Specialized man-

Quick Getaway 8.1

The Changing Resort Design Trends The luxury shopper does not want to be behind the fashion curve, so luxury resorts and spas have to keep a weather eye on how design trends are moving. Resorts have already been implementing spa facilities and golf courses. Not only that, they’ve been building elaborate play equipment for clients’ children and extensive food / beverage facilities. Today’s addition to these amenities is more emphasis on sports and private fitness facilities. Imagine: a resort that focuses on various unusual sports such as fencing, archery, and maybe even polo—all sports that luxury vacationers are likely to enjoy. Luxury buyers are generally in tune with their well-being and health, but they want privacy when they pursue either. The sports and fitness private luxury facility caters to this need specifically. But what good is a private facility if it is not an attractive place? Resort owners can

keep up with the latest trends by recognizing the movement towards cleaner lines in furnishings, dynamic colorations, and more attention to lighting details. In short order, creating spaces within the units that incorporate fitness and well-being will become a standard amenity in resorts. In the 1990s bathrooms became larger and were outfitted with stone, whirlpool tubs, and specialty shower heads. Today’s resort owners can take it a step further by offering better towels and amenities, such as aromatherapy items. Source: ‘‘Design / architecture: breaking the mold in how we think about luxury.’’ Developments (September 2005).

DISCUSSION QUESTION: What are the pros and cons of adhering closely to what’s trendy in design?

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agement services may be required. At this point, developers may provide for the transfer of community management to associations of owners or members. Finally, planning has to consider renovation and repositioning of the resort.

DEVELOPING AN AMENITY STRATEGY The most common mistake is not having a superior land plan, including the appropriate recreational and other amenities. The objective is to maximize the residential lot values by creating the maximum lot premium potential. —WILLIAM BONE Chair of the Board, Sunrise Company

An amenity is ‘‘a rather broad concept that can encompass virtually any feature that is attractive to a given market and thus adds value to land.’’4 The first of two basic reasons for including amenities in a recreational development is that they increase the value of the real estate. The up-front cost of adding a golf course to a development, for example, can be recovered through the sale of premium lots that front the fairways. Amenities may be developed with the idea that they will form the basis for a profitable operation. This latter is the motivation behind resort developments, while the former is more true of primary- and second-home communities. The second reason for the inclusion of amenities within a development is to get marketing leverage. A well-designed recreational attraction adds credibility to the development and the developer and can aid in attracting guests to a property or customers to a development.5 The downside is that substantial costs are involved in providing what is often a seasonal attraction. The key is to achieve a balance between the cost of providing the amenity with the sales generated by its presence. Timing is of the essence. Plans must also be made to transfer ownership and management of the amenity to an appropriate group or body after it has achieved its purpose of bringing in guests or customers.

An Amenity Strategy An amenity strategy is a ‘‘clear understanding of the role of recreational facilities within an overall project.’’ While every project is unique, certain principles are accepted as appropriate for any recreational development. Provide what the market wants. Provide for the changing role of the amenity package over the life cycle of the development. Balance the cost of the amenities with the revenue they generate.

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Guarantee developer control in the early steps of the project. Provide for an orderly transfer of control from the developer to residents.6 Importance of the Customer

For a recreational development to be successful, it is critical that it be developed, designed, and managed to meet the needs of the customer. This means, first, that the package of amenities should be a function of the overall project. As a project progresses from single-family home to multifamily units to a resort hotel, more and better amenities become appropriate. Next, preference should be given to natural over built features. Early golf courses in Scotland, for example, relied on the natural features of the coastline. Development was less costly, impact on the environment was minimized, and the course was more difficult for competitors to copy because it was truly unique to the area. These advantages—lower costs, unique design, and less intrusion on the environment—will occur wherever natural resources can be used as the basis for amenities.7 Recognizing the risk of dependence on one season of the year, resorts have sought to reduce their investment risk by converting amenities to off-season use. Many golf courses rope off their greens and promote cross-country skiing in winter. Ski areas market mountain biking down their ski runs during the summer. A final principle is that facilities should be sufficient to meet the needs of the number of people expected to be attracted to the development.

Resorts need to respond to the amenities and activities wanted by guests and offer attractive options. Courtesy The Greenbrier

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Quick Getaway 8.2

Targeting the Lifestyle It can be hard to follow the latest trends. It can be even harder to try to find a mix of styles that works for the establishment. So how are hotels and resorts coping with this problem? Dallas-based designer Looney & Associates and Global Hyatt are pushing select-service into the next generation with the transformation of AmeriSuites into the new Hyatt Place concept. Overly detailed case goods, printed bedspreads, fussy table lamps, oversized kitchens, sleeper sofas, and ergonomic chairs are history. Instead, the hottest trends: ‘‘zones’’ that differentiate areas by usage and customizable entertainment technology. Instead of a restaurant, the concept calls for the ‘‘alone / together’’ feel of a coffeehouse that serves beverages and light fare. ‘‘Don’t target the demographics,’’ says Jim Abrahamson, Global Hyatt’s senior vice president, ‘‘target the lifestyle.’’ Targeting the lifestyle involves more emphasis on the bed: pillowtop mattresses, triple sheeting, and generous accent pillows make a real impression on the customer. Deliver a larger-than-home experience, ad-

Changing Role

vises John M. Nelson, principal, Looney & Associates. ‘‘Make sure the room has a desk unlike anything the guest has seen. Everyone is doing the granite-topped vanity with legs and a bowl above the surface. We created a dresser. It is different and it works for retrofits,’’ Nelson comments. A good strategy is to limit elements that close down space. Room dividers that stop short of the ceiling let in more light, creating the impression of a larger area. Comfort is of the utmost importance: lounge chairs, plasma televisions that swivel, sectional sofas, and ottomans are appearing in the best-appointed hotel rooms. One thing to avoid? Abrahamson says: ‘‘Don’t make it hip till it hurts.’’ Source: ‘‘Get Noticed; Hong Kong’s Landmark Mandarin Oriental, Brussels’ Royal Windsor Grand Place and Hyatt Place are making headlines with next generation design.’’ Hotels (January 2006).

DISCUSSION QUESTION: Is ‘‘targeting the demographics’’ really different from ‘‘targeting the lifestyle?’’

The developer and the users can be in conflict with respect to the type and amount of amenities developed. Developers build certain facilities because of their marketing appeal—they will help sell real estate—or because they will be heavily used, thereby becoming valuable in themselves. A championship golf course may help sell real estate, but it may be costly to maintain and difficult for retired residents to play. Meeting the needs of the residents by providing an easier course might not attract the publicity necessary to sell the project. An operational plan is needed that identifies ‘‘who will develop, own, and operate the facilities and for how long; who will use the facilities and on what terms; and precisely what the expected relationship will be between real estate and recreational amenities, in both the short term and over the long run.’’8

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Timing

Development must be timed such that the cost of constructing the amenities is balanced by the revenue generated by their presence. The rule of thumb is that recreational amenities should be developed up front and used to draw guests or stimulate real estate sales. Because of the heavy cost involved, this strategy increases the developer’s risk and produces an initial low rate of return on the project. There are several ways to reduce this risk. If recreational developments already exist in an area, it may be possible to negotiate cooperative agreements whereby residents of the newer project can use the facilities of the existing project. In this way, the recreational facilities at the newer project can be phased in gradually and their development cost spread over a number of years. Another strategy is to open amenities for use by nonresidents. Revenue is generated while prospective buyers are exposed to the project. This requires careful management. Residents may resent having outsiders use ‘‘their’’ facilities, and it may be difficult to phase out the outside members when the project is more fully developed.9

Developer Control

It is generally accepted that the developer should continue to control construction, operation, and maintenance of the amenity package as the development is being built out. If the amenities are not under the control of the developer, they may be poorly managed and maintained. This, in turn, could adversely affect future real estate sales. The developer, of course, assumes the operational burden and must have, or hire, the expertise necessary. The rule of thumb is that the developer retains control until at least 50 percent of the project is completed. Residents will probably want a role in the management of the facilities prior to this point. An advisory committee of residents can provide useful input and pave the way toward eventual transfer of control.

Orderly Transfer

If recreational areas are making money, there is no need for the developer to transfer their management to a third party. This is true of resort hotels and ski areas, for example. However, in residential developments, once the recreational amenity has served its primary purpose of selling real estate, its value to the developer declines while the carrying costs increase. The amenity is then either given away or sold to the residents of the project, who are usually represented by a property owner’s association. The developer has already received a return on the investment by charging premium prices on certain real estate units based on their proximity to the amenity. Developers have little or no leverage at the end of the build-out phase. They are incurring the costs involved in running the amenity. All the real estate has been sold. It is, therefore, a good idea for the developers to negotiate at the beginning of the project how and when the recreational amenities will be transferred to a resident group.

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COMMUNITY MANAGEMENT STRUCTURES The pitfall facing the developer revolves around the crucial point of obtaining long-range approval to develop future properties that will meet the resort’s needs years after the initial development proposal is approved. —DEAN SCHWANKE ET AL. Resort Development Handbook

The management structure of an amenity package is vital to its successful implementation. Properly designed, a community management structure helps develop a process for:

preserving common areas developing a long-term strategy for owning, maintaining, and operating the development’s amenities fulfilling the obligations taken by the developer in order to get approval for development establishing and enforcing community maintenance and design standards

No one structure is appropriate in all cases. A detailed analysis of the factors unique to each development must be completed before determining what will work best. Three types of organizational structures can be mixed and matched to provide maximum flexibility for the developer while maximizing the marketability of the community: government bodies, nonprofit tax-exempt organizations, and community associations.10

Government Bodies Communities can be managed through municipal corporations and community improvement districts. However, because of the disadvantages discussed below, they are best used in combination with other options. Municipalities have the power to tax and have the power of eminent domain—the right of the state to take private property for public use. They have access to public funds in addition to the ability to issue debt. This latter consideration can open funds for development purposes at a lower cost than the more traditional tax revenue–based options. However, government bodies must follow both state and federal laws that can increase the costs for property owners. For example, they cannot restrict public access to parks and roads. This means that they do not have the flexibility to develop private amenities for the exclusive use of the owners, tenants, and guests of a resort.

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From the developer’s viewpoint, he / she has no control. The residents of the municipality elect the governing body, which makes most operating decisions. The developer cannot be assured that the body will accept responsibility for maintenance of the amenities that are developed. The developer may or may not have initial influence or control over the election of the governing body. A municipality may decide to limit votes to those who are registered to vote. A developer who does not live in the community would have no vote. Even if he did reside in the community, he would have one vote only.

Nonprofit Tax-Exempt Organizations Like the municipality noted above, a tax-exempt organization must allow public access to the facilities. However, unlike the municipality, it can be managed by a board of directors rather than by elected members. To get tax-exempt status, the nonprofit must serve ‘‘the common good and general welfare of a community.’’11 A developer could, in essence, select and control the board indefinitely. A nonprofit organization can get involved in maintenance of public areas, architectural control, and expense assessment without losing its tax-exempt status. Because it cannot get involved in the maintenance of private property, however, a tax-exempt organization does not have the authority to enforce covenants. Covenants are usually desirable in a master-planned development. As a result, this type of organization is best used in conjunction with other types.

Community Associations A community association is a ‘‘mandatory membership association responsible for performing various functions within a planned real estate development.’’12 The association, with or without one of the options discussed above, gives most flexibility for a resort community. All property owners are members. However, various classes of membership can be designed so as to allow the developer to control the community until it can be transferred to the owners later. Voting rights and dues assessment are usually based on the benefits received rather than on property value alone. Unlike the first two types of organization discussed above, an association can own and maintain property not open to the public. In deciding on the way the association is to be structured, consideration must be given to the balance between the interests of residents and hotel and other resort operators; how absentee owners will affect the management of the development; what private services, if any, will be offered to owners; what control will be taken of public areas such as beaches; and what services will be provided to the community and how they will be paid for. The next major decision involves whether residential and nonresidential uses should be under the control of one association or whether they should be dealt with separately. A community association is set up to do two things. It acts as a business that maintains and manages private property and as a government entity in delivering services while enforcing covenants and rules.13 It can be structured in various ways,14 as discussed below.

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Single Community Associations

A single community association is simple and reduces the administrative burden of dealing with two associations while providing a body to keep community standards. However, some owners may believe they would have more autonomy if they had a separately incorporated subassociation. This is especially true if different owners have the need for varying levels of service. In addition, a single association leaves residential and nonresidential owners subject to control of one group by the other.

Single Residential Associations

A second alternative is to design an association with a neighborhood structure together with a covenant to share costs on nonresidential units. Nonresidential owners are protected from involvement in matters that primarily affect the residential community. However, residential owners are provided with no protection with respect to the use and appearance of nonresidential properties. In addition, the structure can be difficult when residential and nonresidential properties are intertwined.

Dual Associations with Joint Committee

Dual associations—one for the residential community and the other for nonresidents—is another possibility. Communitywide standards can be maintained while both resident and nonresident owners each have an appropriate level of autonomy. Joint committees comprising representatives of each group ensure communication and mediation between both sets of owners. Developers maintain

Quick Getaway 8.3

Selling the Experience Travelers don’t travel simply to find a new place to crash at night. They travel to experience new things, to learn, and to grow. At least that’s what Franz Hanning, CEO of Orlandobased Fairfield Resorts, believes to be true. Fairfield deviates from the ‘‘usual’’ tactic of selling timeshares by focusing instead on selling experiences. Special vacation packages, called Play Days, center on specific activities and themes, such as golf-themed getaways that include lessons and a round at a gorgeous course. Another Play Day is The Richard Petty Driving Experience, where participants can cruise around a racetrack in an authentic race car at speeds up to 125 miles per hour, or they can ride shotgun with a pro driver. Not all Play

Days are extreme, however: health and wellness trips generally include nature walks, tai chi sessions, and cooking classes. ‘‘Experiencing what life has to offer will continue to be a driving force for people,’’ Hanning concludes. ‘‘As long as that’s important, we’re going to be here to provide it.’’ Source: Moore, Jamie. ‘‘Fast Company: Fairfield Resorts spins rapid change into rapid growth.’’ Ventures (September 2005).

DISCUSSION QUESTION: Do you think the term ‘‘Play Day’’ accurately represents the vacation packages listed above? If not, what term would you use?

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long-term control over community standards while allowing for the transition of control of service provision to the owners. Limiting membership and the scope of the committee’s powers can control any perception that the joint committee is more administration than is needed. Dual Associations with Covenant

Having two associations to represent resident and nonresident owners with a covenant obligating nonresident owners to share certain costs offers several advantages. Each group of owners is provided a certain level of autonomy while the number of entities involved in governing the community is minimized. No single group can establish and enforce communitywide standards. Second, owners are given little or no input into the use and appearance of the other types of properties. This may become a problem where the standards for one type of residential unit differ significantly from the other and are detrimental to the appearance and standards of the entire development.

MANAGEMENT AND OPERATIONS A resort operating company is in the fantasy fulfillment business. —WILLIAM BONE Chair of the Board, Sunrise Company

The management of recreational amenities has become more sophisticated over the years. A variety of organizational structures are possible.

Organizational Structures When resort operators, particularly of ski areas, choose to own and operate amenities themselves, one of four structures is typically selected: equity club, right-touse club, convertible club, or association membership.15 Equity Club

Developers can transfer ownership of the recreational facilities to a separate nonprofit corporation while retaining the right to operate the facilities until most of the residential property is sold. This protects the developer by ensuring that the amenities will not be operated in a way that adversely affects sale of the remaining real estate units. The developer contributes the recreational amenities in return for the right to sell equity memberships to real estate owners. Once all the real estate is sold, the club is owned and controlled by the members and run by a duly elected board of directors. Club members pay annual dues for the right to use the facilities. They also benefit from any increase in the value of the amenities. It may be possible for property purchasers to inherit the equity membership of owners.

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This, obviously, increases the value of the equity membership. If all memberships are sold, new owners must wait for one to become available before they can participate in the amenity program. Right-to-Use Club

In a right-to-use club, the developer retains ownership and control of the facilities. Members buy the right to use the amenities rather than acquire an ownership interest, as above. An initial payment plus annual dues is common. The developer decides whether the initial payment is a fee or a deposit. Under a fee program, a member who resigns from the club may receive all, some, or none of the deposit back. How much, if any, is returned depends on whether or not the membership is reissued to a new member. The initial fee is treated as taxable income to the developer and as a deductible business expense when refunded to a member who resigns. Under a deposit program, members receive the full deposit when they resign, but not until 20 to 30 years after their acceptance into the program. The deposit might, thus, be characterized as a loan to the recreational amenities that is not taxable income.

Convertible Club Program

When a developer feels that a market exists for an equity club but is unsure when the club can be turned over to members, a convertible club is a viable option. The program begins as a right-to-use club, but members are made aware up front of the intention to turn it into an equity club. The one-time fee or deposit is refundable. When members pay this fee, they are told the likely timing of the switch to an equity club together with the purchase price to be paid by members for the facilities, as well as any likely additional costs to be incurred in the transition. The fee or deposit may be applied to the equity club membership.

Association (Ownership) Membership

The developer may turn over the recreational facilities to a homeowners’ association set up to represent the surrounding property units. Association members do not buy memberships but can pay off the debt through assessments and user fees. Memberships may be sold to owners who want preferential treatment. The developer recovers the cost of building the recreational amenities through means other than the sale of real estate. In this way, the return on investment for the project may increase because the profit on real estate sales does not have to take into account the construction costs of the recreational amenities. It is crucial that an association pay off the debt and maintain the facilities while keeping assessments reasonable.

Comparison of Basic Options The four options discussed above can be compared on a number of criteria.16 The choice should be based on the criteria most important to the developer and the development. The up-front cost is highest for the equity club; however, on conversion, the membership price on an initial right-to-use club is even higher. The cost, however, is reduced by the original initiation fee. There is no up-front cost

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Quick Getaway 8.4

An Architect Speaks Bill Gartz has spent the past 20 years designing some of the world’s most recognized resorts and hotels, including five-star properties that belong to high-profile companies like Starwood, Intrawest, Hilton, and the Teton Club. It’s fair to say he knows a thing or two about the hotel design process, and what makes a hotel work—it’s not all in the design. ‘‘I remind developers who want us to design a five-star property that we can design three of those stars,’’ Gartz says. ‘‘The other stars they earn by service.’’ What are five ways to stay on the cutting edge of hotel design? According to Gartz: Focusing on wellness is key. Baby boomers are looking to retire, and they may want to spend extended periods of time at your property. Plan for assisted living and health care. Creating authentic experiences. People are looking for more than just somewhere to

crash; they want to experience the location. Look into nature walks, information, or other activities. Developing a mixed-use mentality. Even if your property isn’t exactly what you’d call mixed-use friendly, you should think about incorporating retail, health, or programmed activities. Inviting everyone to the table. Get some fresh perspectives from new players! Going with the flow. You should consider incorporating places for people to gather and enhancing pathways; doing these things creates an energetic atmosphere. Source: Finnel, Shari. ‘‘Planning for Profits.’’ Ventures (December 2004).

DISCUSSION QUESTION: Which of Gartz’s five points do you feel is the most helpful? Why?

for the association ownership unless annual memberships are sold. Even then, the annual cost is relatively low. Gross proceeds from the membership program are greatest with the right-touse club, although the income is dependent on the selling of memberships. While the income is less in an equity club, the guarantee that the money will be realized is greater. The convertible program produces less gross income, while association management produces none at all unless annual memberships are sold. The initial operational cash flow is low with both association management and an equity club and moderate with the other two options. On the other hand, the sell-out operational cash flow is greatest in an equity club, slightly less in a right-to-use club, and lower in the other two options. Because association members own and operate the recreational facilities, a greater sense of community exists among them. It remains good in an equity club, less so in a right-to-use club because of the loss of owner control and uncertainty

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over the amenities, and even less in a convertible club program because owners have no control over the facilities. The developer has the greatest flexibility under a convertible club program and none with association ownership. In the other two cases, the degree of flexibility is dependent on terms of the membership plan. Litigation risk to the developer is low in both an equity club and association membership, moderate to low in a right-to-use club, and greatest when a developer sells the amenities in a convertible club program. The convertible club program is the best option where nonowner access to club facilities is important. In an equity club, access is limited to available memberships until a cap is reached. In a right-to-use club, access is good until conversion takes place. It varies in association ownership depending on the regulations set by the members themselves.

Membership Structures Memberships can be structured differently within each of the structures noted above. The type of membership structure depends on the development concept and the type of owner or guest. For example, in a resort consisting of primary residences, long-term membership options that do not expire until the member sells are made available to owners. In communities where second-home owners stay for shorter periods, they are given the option of making changes to the service package they have. Tiered Membership

A tiered membership structure offers a variety of options to members: the more services, access, and flexibility given, the greater the price charged. For example, full golf membership might allow an owner to make a tee reservation up to 30 days in advance, while a less expensive membership category might restrict reservations to five days in advance. When the number of memberships in each category is limited, owners are enticed into purchasing the more expensive options. This makes their property more valuable in the event they wish to sell. This may, in turn, create a greater demand for higher-priced memberships than would occur under a different membership structure. If owners buy the membership as an investment, golf memberships may sell out but the golf course remain underutilized because owners are not using their privileges fully. This system works best in residential communities where the number of memberships available is approximately equal to the number of units. A rule of thumb, for example, is 350 golf members per 18-hole course.17 Another structure may become necessary when the number of residential units surpasses the capacity of the amenity.

Unitary Membership

Under a unitary membership structure, all members pay a membership price and receive the same interest in the amenities. Each year, members select the membership category they wish. In one year, a member may purchase the social category, which allows access to the dining facilities, and then, in the following year,

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select a category—at a greater expense—that allows access to all the amenities. The member is assured that, if she sells, the next owner will also have an annual choice of category. A unitary membership works when the recreational amenities are insufficient to meet the demands of the residents. Unlike the tiered membership described above, artificial demand is not created for a particular level of membership. Members annually select the program that meets their needs. Imbalances in demand for specific categories of membership can be handled by adjusting the type and price of memberships available.

Add-on Membership

Convertible or add-on memberships are a combination of the above two categories. All members purchase a social membership, then are free to buy add-ons depending on the additional access they want. This type of structure works best when the developer is unsure about the level of demand for the recreational amenities.

Quick Getaway 8.5

The Emerging Waterpark Hotel First it was golf resorts. Then spas took over the resort market, garnering more than $11 billion in sales in 2003 alone. So what’s the next big thing? What attraction will be drawing crowds for the next ten years? The indoor waterpark stands ready to transform the hotel industry. Roughly ten years ago, waterpark theme hotels entered the resort scene, and have quickly grown in popularity. Unlike spa theme hotels, waterpark hotels appeal to a greater segment of the population. While spa-goers are typically females with a household income over $70,000, waterpark visitors are of both sexes and practically every economic bracket. The reason for this demographic shift is fairly obvious: a family of four can play at a waterpark all day for the same price as one person’s spa visit. Perhaps the most interesting part of the

indoor waterpark boom is its wild popularity in obscure northern towns. Places as little-known as Minot, North Dakota, Sterling Heights, Michigan, and Amana, Iowa, are developing new waterparks, which are expected to draw visitors from as far as 200 miles away. Especially for these northern towns, it seems, the extension of the high season that an indoor waterpark provides far outweighs the initial investment. Source: Anger, Ron. ‘‘Vision 2020: Emerging Trends for 2005 and Beyond.’’ Resort⫹Recreation (Winter 2005).

DISCUSSION QUESTION: Indoor waterparks are especially popular in areas where outdoor waterparks are unfeasible. What might serve as an indoor waterpark’s counterpart in warmer climes?

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General Approaches Developers tend to mix and match organizational and membership structures to accommodate both their needs and those of the members. An equity club may be organized that offers full golf membership to equity members as well as social memberships to others. In settings that have both residents and resort hotels, a club may be developed for residents but also offer access to hotel guests. Several advantages accrue to both resident and hotel guests: Both receive higher-quality services than if two lesser-quality facilities were built for each. Club members get access to hotel services, such as concierge and room service. Hotel guests add life to the facility in the early stages of real estate development.18 However, residents tend to favor exclusivity, while hotel guests desire access at will. Conflicts can be minimized by a reservation system that protects the rights of use for each group. As an example, a members-only lounge can be created. In resorts with several golf courses, a different course each day can be designated for the exclusive use of members. Members can be given a longer lead time than guests in signing up for tee times.

SUMMARY Recreational amenities are a significant part of the character of any planned community. This chapter identified the place of the amenity program within the overall development process and laid out the principles for developing an amenity strategy. Finally, the options for effectively structuring the management of the community and its amenities were explored.

ENDNOTES 1. Phillips, Patrick L. Developing with Recreational Amenities: Golf, Tennis, Skiing, Marinas. Washington, D.C.: Urban Land Institute, 1986, 1. 2. Dean Schwanke et al. Resort Development Handbook. Washington, D.C.: Urban Land Institute, 1977, 30. 3. Ibid. 4. Phillips. Developing with Recreational Amenities, 4. 5. Ibid., 2. 6. Ibid., 15–21. 7. Ibid., 15.

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8. Ibid., 16. 9. Ibid., 17. 10. Schwanke et al. Resort Development Handbook, 239. 11. Ibid., 240. 12. Ibid., 244. 13. Ibid. 14. Ibid., 242. 15. Ibid., 247–250. 16. Ibid., 248–249. 17. Phillips. Developing with Recreational Amenities, 23. 18. Schwanke et al. Resort Development Handbook, 253.

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Chapter 9 THE UNIQUENESS OF TIMESHARE RESORT OPERATIONS LEARNING OBJECTIVES 1. Explain the major differences in the way traditional resorts / hotels and condominiums operate with respect to the role of: a. Guest / Owner Characteristics b. Marketing c. Reservations d. The Front Office e. Housekeeping f. Maintenance and Engineering g. Accounting and Finance

RESORT MANAGEMENT

Direct Mail

INTRODUCTION

OPERATIONS

TIMESHARE GUESTS/OWNERS

RESERVATIONS AND THE FRONT DESK

Residence Purchase Motivation

Reservations

Hesitation About Buying

Reservationists

Dissatisfaction

Check-in

Use Patterns

Billing

Party Composition

Owner Relations

ACTIVITIES MARKETING The Timeshare Product MARKETING THE TIMESHARE PRODUCT Referrals In-House Guests Telemarketing

HOUSEKEEPING Size and Location of Units Guest Arrival and Departure Patterns Staffing Patterns Owner Relations MAINTENANCE AND ENGINEERING Role of Owners

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THE UNIQUENESS OF TIMESHARE RESORT OPERATIONS

Common Areas Major Repairs

FINANCING THE TIMESHARE Accounting

Monthly Assessments

SUMMARY

Renovations

ENDNOTES

ACCOUNTING AND FINANCE

RESORT MANAGEMENT In addition to daily operations, a general manager’s major duties and responsibilities can be divided into four broad categories: budgeting, on-site rental program responsibilities, board relations, and owner relations. —ROBERT A. GENTRY, PEDRO MANDOKI, and JACK RUSH Resort Condominium and Vacation Ownership Management

INTRODUCTION Vacation ownership resorts began in the 1970s with motel conversions and timeshare interests in existing but unsold condominium apartments. Today, these resorts are purpose-built, and their layout and design are comparable to any luxury resort. The growth of the timeshare industry is, in great part, because of the billions of dollars the major hospitality companies have poured into timeshare development over the past several years. In 1984, Marriott was the first major hotelier to enter the field while Hyatt, Hilton, Disney, Four Seasons, and Starwood followed throughout the 1990s. The hotel brands have helped improve the early negative image the industry had in the 1970s as a result of high-pressure sales tactics and unscrupulous business practices. The shift away from small-time operators is continuing. In the past five years the percentage of timeshare sales attributable to major hotel brands and well-capitalized independent developers has increased from 40 percent of the total to 60 percent. Today there are over 4,300 timeshare resorts in the world. Over two-thirds are located in the United States and Europe. Ten destinations account for almost twothirds of all timeshare vacations taken in the U.S. The top states are:1

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18 percent 10 9 5 5 5 4 3 3 2

Forty-eight percent of owners live in the U.S. and 31 percent live in Europe. In Europe 30 percent live in the U.K. and an additional 20 percent live in Germany. Thus, six out of ten owners live in three countries—the United States, the United Kingdom, and Germany.2 The major locations in Europe are: Spain, Italy, France, U.K., and Portugal.3

TIMESHARE GUESTS/OWNERS The target market for timeshare ownership is the growing masses of middle-aged baby boomers who want the advantages of owning a resort property without the headaches. They are boomer families headed by couples who range from age 40 to 59 and with incomes between $50,000 and $100,000. About half the U.S. population either falls within that prime age range today or will reach it in the next 20 years.4 According to the 2003 U.S. Membership Profile of Interval International: The ‘‘average’’ timeshare owner is 49, living in a three-person household with an average value of almost $300,000 and with annual household income over $114,000. Almost half have a college degree, 30 percent own second homes and 45 percent own more than one vacation week.5

Residence6 Most timeshare owners live in the Northeast. Florida attracts buyers from central and northeastern states, although one in eight buyers lives in Florida itself. The overwhelming number of timeshare owners in the Northeast live in that region. Most owners of southeastern units also live in that region, although a significant percentages live in the Northeast and Central regions. Three-quarters of timeshare owners in the Central region have their primary residence there as well, while one in ten lives in the Southeast. Over 40 percent of Mountain timeshare owners live in that region too, while 25 percent and over 20 percent respectively live in the

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Central and Pacific regions. While over 70 percent of Pacific owners live in that region, one in eight resides in the Central region.

Purchase Motivation Eight out of ten owners state they are satisfied with their purchase. In fact, threequarters of all owners recommend timeshares to friends. Why do people purchase timeshares? Four reasons are given:7 1. Flexibility over when, where, and how they vacation—The exchange opportunity has increased in importance over the past two decades and is the item noted most by buyers.8 2. Economics—Owners report they save money over the long term. This is the second most noted consumer motivation.9 3. Certainty about the availability and quality of popular resorts. 4. Safety and secure environments for family vacations. Motivation varies by where the timeshare is located. Owners in Florida weigh the following factors more heavily than do owners in other regions:

The reputation of a timeshare facility is just as important to owners as location and amenities. Courtesy The Four Seasons; photo by Peter Vitale

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wanting to own in that resort area location of the resort in the area liking the timeshare unit, resort amenities, or resort features confidence in the timeshare company being treated well during the sales presentation leaving property to heirs chance to profit on rental or resale10 In contrast, owners in the Central and Northeast regions place less emphasis on the factors Florida owners consider important. Their major motivations involve the opportunity to take advantage of exchanges and the diversity of locations in the region. In the Pacific, the desire to return to the same resort each year scores much higher compared to other regions.

Hesitation About Buying When timeshare owners are asked about why they hesitated before buying, three reasons are prevalent. The primary concern is financial and concerns the initial purchase and the annual maintenance fee. Note that one of the motivations for purchasing was economic—the feeling that they would save money in the long run. To purchase, the potential owner must feel that the long-term savings will outweigh the initial and continuing costs. This factor is of particular importance to owners of Florida timeshares. Hawaiian owners note the high cost of travel to the resort as a negative factor. Second, owners are concerned about using the timeshare enough to justify the expense of the purchase. This may reflect the increasing demands on people’s time at home and in the workplace. This factor is of less importance to owners in the Northeast and Southeast and of highest importance to those in the Central region. Third, owners worry that the resort experience will not meet the expectations created during the sales presentation. In fact, almost 20 percent indicated that high-pressure sales techniques caused them to hesitate before buying. The reputation of the timeshare industry has improved since the years when abuses occurred regularly. The poor image may remain in the minds of potential purchasers.11

Dissatisfaction Most owners are not interested in buying more time at any resort, either inside or outside of the United States. On the other hand, just under half are either very interested (22 percent) or somewhat interested in selling one or more of their U.S. timeshares.12 The most common reasons given are a change in lifestyle or personal situation and not using the timeshare enough to justify ownership. However, over half of all owners report they are very satisfied and another 30 percent are somewhat satisfied with their purchases. The two areas of concern to owners are the actions of their homeowners’ association and their annual maintenance fees.

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Quick Getaway 9.1

Outstanding Off-Seasons Hotels are prone to drops in occupancy levels during the winter months. However, many hoteliers have come up with innovative ways to take advantage of the free time, while others have created promotions to boost bookings. At The Boulders Resort & Golden Door Spa in Carefree, Arizona, a new e-mail program caters to guests’ needs, according to Ted Davis, area director of sales and marketing for Wyndham Luxury Resorts. The automated e-mail program goes out to guests once a reservation is confirmed to allow them to reserve resort activities in advance. One resort activity, a sweatlodge-like ceremony in a tepee with an American Indian shaman, has proved popular among The Boulders’ guests. ’’One of the reasons for our success is we spend lots of time trying to understand our customers,’’ Davis said. ‘‘The e-mail program delivers a highly personalized agenda for a vacation. Our focus is to personalize our service.’’ Sometimes a major off-season renovation can be the key to year-round success. Hotels like the Vail Cascade Resort & Spa in Vail, Colorado, count on renovations to keep them at the top of their game. Although Vail Cascade’s

makeover shut down about 60 percent of the rooms up through July, the spring and summer months brought in good business, according to Scott Gubrud, director of sales and marketing. Occupancy in September (which is part of the high season in the Rockies) jumped 30 percent from the previous year, Gubrud said. Keeping the momentum going in the slower October to November shoulder season depends a lot on holding plenty of promotions and special events. ‘‘One off-season promotion is $179 a night with a 50-minute customized massage included,’’ Gubrud said. ‘‘And there’s the ‘Ski Free, Stay Free’ deal. These packages are our consistent staple and run heaviest in November and January.’’ Source: Alisau, Patricia. ‘‘Promotions help during offseason.’’ Hotel & Motel Management (February 21, 2005). http: / / www.findarticles.com / p / articles / mi m3072 / is 3 220 / ai n13452784

DISCUSSION QUESTION: What is one danger of scheduling special events and activities during the off-season? Discuss ways of addressing this problem.

These concerns are often due to a lack of communication between the association and the owners.

Use Patterns Over 40 percent of timeshare owners report that, on average, they exchange their timeshare, while just under 40 percent report household use of the timeshare. Nine percent say their timeshare is not used at all, while smaller percentages give theirs away or rent it out. Florida owners report the highest household use, while those in the Northeast indicate the highest percentage of renting out their units. Few

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owners in the Southeast rent out their units. They also, relatively speaking, do not exchange their interest for time elsewhere. Less than one-third of Central owners actually use the timeshare they own themselves. In the Mountain region, slightly less than half, the highest percentage of all regions, exchange the timeshare for time elsewhere. Owners in the Pacific report the highest overall use and the second-highest use by the household.13

Quick Getaway 9.2

UST to the Rescue! Yearly maintenance and cleaning can be a nightmare for timeshare villas, especially when it involves working with outside contractors to get the villa shipshape in less than a week. There are many problems with working with outside contractors: they may not work to your standards, and keeping track of several work teams can be frustrating. The solution? Creating a Unit Specialist Team (UST). This in-house team works together to make the most of a villa’s maintenance week. Each member has his or her expertise, and because they are all in-house employees, they work directly with the management to ensure optimum quality. What does a typical maintenance week look like using the UST system? Big Picture Tasks Day One: Repair all cosmetic wall mars such as holes and cracks, using 20-minute joint compound. Day Two: Prep for painting including covering all floors and furniture with Visqueen. Paint all baseboards, closet doors, and walls. Day Three: Continue painting until completed. Day Four: Make wallpaper repairs and any additional touchups needed.

Day Five: Conduct a team inspection. An acceptable rating should be achieved. Replace all (FF&E) furniture, fixtures and equipment inventories to proper locations in the villa. Detailed Tasks After stripping, box and label all villa inventories (e.g. crockery, cutlery, etc.). Store in a secure area. Sweep all floors prior to beginning any cleaning. Sweep any debris onto rugs. Pull all furniture away from walls. Clean baseboards. Sweep carpet edges. Clean furniture. Spray doors and door jams with degreaser; wipe clean. Spray all windows and window trim with degreaser; wipe clean. Use a broom in hard-to-reach spaces. Clean window panes with glass cleaner. Source: ‘‘Resort Management: Maximizing Maintenance Weeks: Unit Specialist Teams Take Command.’’ Developments (August 2005).

DISCUSSION QUESTION: Do you think a UST system work as well for hotels as it would for timeshare villas? Why or why not?

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Party Composition Approximately 40 percent of all U.S. timeshare vacation groups include children. Over half of all parties include two adults, while an additional fourth include four adults.14 This explains the increased popularity of two- and three-bedroom purchases in many areas. The average length of stay in the timeshare is seven days. The European owner, in contrast, typically has no children at home.15

ACTIVITIES Timeshare owners exhibit certain differences compared to hotel guests in regards to their vacation. Skiing, golf, sightseeing, and beach / waterfront activities are more important to timeshare owners while entertainment, shopping, and dining are more important to hotel guests.16

MARKETING The Timeshare Product Resorts offer timeshares in a variety of formats. Over 90 percent sell interval interests in increments of one week of use each year or as points offerings. Under a points-based system, consumers obtain a number of points that are redeemable each year for a number of accommodation nights that vary depending upon the season, day of week, size of unit, and resort location chosen. Biennial offerings show recent growth, particularly in Hawaii; these give the buyer one week of use every two years. Fewer than 10 percent of all resorts, primarily in the Mountain and Southeast regions, sell fractional interests offering several weeks of annual use. An even smaller market overall exists for undivided interests, whereby shares are sold on a ratio of multiple members per unit. While only one in 15 resorts nationwide offers this option, it is available for sale in one in five timeshare properties in the Mountain region. Ownership

The standard type of ownership is the deeded week, offered by almost 90 percent of resorts. Customers feel more secure in their title than with other ownership options. The right-to-use form of ownership has, however, been increasing. Found mostly in Hawaii, due to the operation of many Hawaiian resorts on leased land, this form of ownership offers more flexibility to the customer. Overall, however, it is available at only one resort in ten.

Use

Timeshares can be used in a variety of ways. Most feature a fixed-week system that offers the customer the same one-week period each year. This was the industry norm until the mid-1980s, when a variety of more flexible options became avail-

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able. Floating times within seasons allow customers to book any time, subject to availability, within a particular season. This type of plan is most commonly found in the Mountain and Pacific regions. One in five resorts overall, and more in Hawaii, allows a floating time year-round without seasonal restrictions. This type of plan is suitable only in areas that do not experience variability of seasonal demand. Finally, some resorts offer a points plan whereby the customer gets a vacation credit, expressed as a number of points, that can be redeemed for a varying number of nights based on season, day of week, unit size, and resort location. The number of resorts offering this flexible arrangement has increased in the past five years to the point where it is available in over 20 percent of facilities nationwide. The plan allows customers to split their total time into smaller intervals of less than one week. The so-called split-week option is most prevalent in the Mountain and Pacific regions. It is particularly useful to those who live in the same region as the resort and who can travel there often and at minimal cost. Exchange

The vast majority of timeshare resorts are affiliated with companies that expedite exchanges to other properties. The reason is that exchange is the most important motivation that customers give for buying timeshares. The major organization of this sort is Resort Condominiums International (RCI), with which over 80 percent of properties are affiliated. Forty percent of resorts are affiliated with Interval International (II), the second-largest exchange organization. Over one-quarter of all resorts also run clubs or networks that offer owners the flexibility to vacation in other locations at different times of the year.

Bonus Time

Bonus time refers to nights that are not being used, as when the time was not sold or was not reserved by a member under a floating-time or points-based system. Bonus time is rented at a greatly reduced rate, with the net proceeds usually going to the property owners association.

Public Rentals

Units that are unsold or that are made available by owners can be rented by the public through the resort. Over half of all resorts rent unsold inventory to the public.17

MARKETING THE TIMESHARE PRODUCT The way timeshares are marketed depends on the motivation of the potential investor / guest. There are a number of different reasons for purchasing a timeshare at a resort:18 Home from home occasions—the desire for a second home. This segment of the market will typically visit the resort at the same time each year. They want to get to know the area. They value detailed information on the surrounding area on things to see and do. Relationships with the

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staff at the resort—being recognized and respected—are especially important as are opportunities to mix and mingle with other owners / guests. Swapper occasions—the desire for access to resorts worldwide by means of exchanges. This segment values transparency and equivalency. All exchange opportunities must be made known in a way that takes into account the relative value of a time period in different locations. Activity occasions—where the stay is linked to a specific activity such as golf or skiing. The most important factor for this segment of the market is accessibility to the actual activity. Family holiday occasions—where the resort serves as a venue for a family get-together. The resort needs to provide activities for all members of the family as they move through various stages of the life cycle. The most popular marketing programs for selling timeshare products are referrals (used by 87 percent of all resorts), in-house guests (used by 79 percent), telemarketing (70 percent), and direct mail (49 percent).

Referrals This is the least expensive marketing tactic. Marketing costs of timeshares range from 45 percent to 55 percent of net timeshare revenues. Major hospitality brands attempt to keep critical sales and marketing costs well below the industry average through a variety of methods. One popular program is to examine the membership of their various hotel loyalty programs for potential timeshare buyers. Another good source of referrals is from existing owners. People who have already purchased timeshare intervals are familiar with the resort. If they can be motivated to provide names and participate in the marketing process they can use their own personal experience to help make the sale. Once the names have been identified prospects are often contacted through telemarketing and invited for an on-site tour.

In-House Guests Resort guests may have booked at the resort as ‘‘regular’’ guests. If they enjoy the facilities they may be interested in purchasing a unit or interval. There are seven steps in the sales process:19 1. During greeting and prospect registration the prospects are made to feel comfortable. Names and addresses are verified. 2. Pre-tour activities involves either a group or individual overview of the resort. Typically this involves a multi-media presentation that should emphasize the benefits offered by the facilities at the resort and in the surrounding region. Resorts may sell services but people buy benefits— what the service means or will do for them. Exchange opportunities should also be stressed and the presentation tailored to the needs and wants of the specific market segment being targeted.

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3. Because a timeshare purchase can involve a great deal of money it is regarded as a high anxiety purchase. There is potential additional concern on the part of the prospect because of the often-unscrupulous tactics used by some developers in past years. Even though the actual practices may have changed, the perception can still be present that they are still manifest. Thus the need for the next stage—establishing rapport. Information gathered during the pre-tour allows the salesperson to showcase those elements of the resort that would best appeal to the prospective owner. 4. During the tour prospects have the opportunity to see first-hand and in person the various facilities that are part of the resort. The facilities and services shown should be no less than what actual owners will experience if and when they make a purchase. 5. During the tour the salesperson continually develops the relationship with the prospect. Sales presentations should be individualized based on what is important to the prospective buyer. 6. At this point the salesperson makes the offer. 7. The final stage—the trial close—is where (ideally) an agreement is made. Incentives may be offered to reach that agreement. The price may be reduced; added discounts can be given for a cash sale or the purchase of more intervals. Many states have a cooling-off period of several days that allows a purchaser to rescind the deal if they later change their mind.

Telemarketing As noted above, referrals will be called and invited to participate in a discounted holiday. Telemarketers also engaged in cold calling—calling people off purchased lists of prospects who meet the demographic profile of timeshare owners. The former will produce a greater return of interested individuals than the latter.

Direct Mail Promotional literature can be sent to people inviting them to visit the property. Direct mail marketers send mailings that include letters, glossy advertisement, samples, and foldouts to prospects on their mailing list. Direct mail offers a number of advantages. This form of advertising has a high degree of control as the manager decides to whom the message is to be sent. The number of pieces mailed can be tailored to the size of the budget available. It is highly audience selective in that the mailing lists are developed from customer lists or from lists obtained from mailing-list houses, which can provide lists of names broken down into a variety of specific segments. Direct mail is increasing in popularity because it permits high target-market selectivity. It is also highly flexible, in that the message can be personalized to different market segments. The ability to assess responses from a mailing by enclosing a coupon or a phone number allows easy measurement of the results of a campaign.

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On the other hand direct mailings tend to have a high discard rate, high total cost, and long lead time. A rule of thumb is that a direct mailing gets a 1 to 3 percent response rate. This means that for every 100 letters sent out, the operator will receive only an average 2 percent response rate to a mailing. To get 100 customers with a response rate of 2 percent would require a mailing of 5,000 pieces. The response rate can be improved by having a high-quality list and a mailing that is targeted to the needs of the potential customers being sought. To be successful a mailing piece should follow the five P’s.20 First, it should form a picture in the mind of the customer. We think in terms of pictures, not letters or words. Second, it must offer a promise and show how the promise will be fulfilled. The promise should be something that is important to the customer. Next, the message must prove to the reader that what is being promised is true. ‘‘Proof’’ might come in the form of testimonials, success stories, or statistics. Fourth, the message should push the customer to action—ask for the sale. Finally, there should be a postscript. In reading a direct mail piece, most people first read the letterhead, then check to look at the signature and to see if there is a P.S. Interest can be generated by means of a clever postscript. The effectiveness of a direct mail campaign is measured by the number of responses generated. As noted earlier, one of the advantages of direct mail is that the results are readily measurable against the costs involved.

OPERATIONS The operation of a resort differs in many significant ways from that of a traditional hotel. This chapter assumes the reader is familiar with basic hotel operations. It concentrates on what makes condominiums, vacation ownership, and timeshare properties different from traditional hotels. Managing a resort is different from managing a commercial hotel in a number of ways:21 Visitor market—No matter how different resorts are from each other, they all seek to satisfy guests who have three fundamental needs: 1. desire for a change of pace, getting away from the familiar 2. desire to satisfy recreational interests while being entertained and stimulated 3. desire to travel to interesting and attractive places22 Resorts certainly attract conventions and group business. However, the scheduling of business meetings must be coordinated with recreational activities. Facilities—Because the average length of stay at a resort is longer than at a hotel, the facilities are different. Rooms, in general, are larger. More closet space is needed. Large amounts of land are required for recrea-

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tional facilities. Guests are looking to participate in a variety of activities as part of their total resort experience. Location—Guests are attracted to many resorts because of their remote location. Many guests travel considerable distances to ‘‘get away from it all’’ or to enjoy an area of natural beauty. This means that these properties must be self-contained. Support services, such as laundry and maintenance, must be provided. Transportation may need to be provided for employees. Similarly, shuttle service to and from the airport may have to be provided for guests. Recreation—A resort, by definition, is a place where people go for recreation. Most resorts specialize in one recreational type, such as beach activities, skiing, or tennis. However, it is economic folly to rely on one season of the year. One bad snow season, for example, can ruin the entire year. To combat this, resorts have attempted to become year-round attractions. In the Colorado mountains, for example, ski lifts are used to bring mountain bikes up the mountain in summer. Seasonality—Commercial hotels operate year-round. However, some resorts, by virtue of their location, are precluded from doing so. Seasonality produces particular problems. Each season, a new group of employees must be hired, trained, and motivated. Inventory management, particularly perishables, becomes a problem as the season comes to an end. When the resort is closed, security and maintenance are constant headaches. A season of 90 to 120 days places tremendous pressure on management to cover fixed costs for the year, variable costs for the season, and still make a profit. While traditional hotels have strong occupancy during the week and seek to complement that by going after the weekend meeting or leisure getaway market segments, resorts tend to experience strong seasonal fluctuations in demand. A good property can achieve occupancy rates of 80 percent and above during much of their peak months. Personnel attitude—Resort guests have extremely high expectations of service. They expect to be pampered. In vacation ownership resorts, where units are actually bought, the guests are owners who like to be treated as such. This places great pressure on employees to perform at a high level. Managers—While all managers need to know about rooms, food and beverage, marketing, human resources management, and so on, resort managers must have additional knowledge in two areas: (1) the natural resource on which the resort is based, and (2) guest activity programming. A manager of a ski resort has to know something about the mountain. A resort specializing in golf must be managed by someone who knows the relationship between golf course layout and profitability. Rates—Traditional hotels tend to offer deep discounts on the weekends to attract the business noted above. Resorts do the opposite, charging maximum rates on the weekend and offering (often significant) discounts during off-season and the shoulder months of fall and spring.

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Amenities—Resort guests expect to participate in a number of activities. When a guest is on the property for several days or weeks, a welldesigned guest activity program is required to satisfy them. This means much more than offering a sleigh ride next Tuesday. Implementing a guest activity program involves specialized knowledge regarding leisure, recreation, and play. Programs must take into account the demographic, psychographic, and physical backgrounds of guests. Golf, for example, is a major reason why resorts have attracted business meetings. Corporate / employer responsibility—Because many resorts are large and located in remote areas, they constitute a major, if not the major, piece of the local economy. As such, management takes on a certain responsibility to the community that goes beyond the responsibility of a hotel in a metropolitan area. The community may be totally dependent on the resort for its economic future. Management has to take this into account when making decisions to lay off employees during the off-season. Employee housing—The remote location of certain properties means that the resort may have to provide housing for its employees. This raises issues of employee privacy and access to services. Labor skills—Employees at resorts tend to rotate into different jobs both during the season and in the off-season. If there is no snow at a ski area, employees may find themselves working in maintenance. This is especially true in the off season, when being employed means being flexible and having multiple skills. Commercial hotel jobs tend to be more specialized and static throughout the year. Sources of revenue—Commercial hotels derive most of their revenue from rooms, food and beverage, and various minor operating departments. At a resort, retail sales—including souvenirs, arts and crafts, and designer resort wear—are more important, as is revenue from recreational activities. Some properties derive a great deal of revenue from land sales. Resorts also get higher per capita food and beverage revenues than do traditional hotels because of menu pricing, the larger number of meals served onsite as well as the higher occupancy per room. Activity control—Accounting statements are more complex in a resort than in a commercial hotel. Every recreational activity and retail outlet is a potential profit center, with separate profit and loss statements. Balance sheet—Land and fixed asset investment is greater in a resort than in a conventional hotel, which changes the look of the balance sheet. The large amount of land means the resort has few alternate commercial uses. The payback period—the number of years needed to repay the original investment—is longer for resorts because of the large investment in land and other fixed assets. Resorts and traditions—Traditions are more important for resorts than for other types of hotels. Many resorts cater to repeat guests who are attracted by annual festivals and theme weekends. They come back to enjoy the experience year after year.

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RESERVATIONS AND THE FRONT DESK Front office procedures at whole and interval ownership resorts have much in common with those at traditional resorts. Front office personnel take reservations over the telephone; they accept transient guests; they deal with such things as computer systems, key control, and keeping accurate guest records. In other ways, the tasks are very different.

Reservations While reservations at a traditional resort might come in via a toll-free number or direct calls from prospective guests, at interval ownership resorts they can, in addition, come from an exchange company or a vacation club. In a traditional resort, the number of rooms available for rent is determined by management. In a vacation ownership resort, the number of units available is determined by the number of owners who want to rent or exchange their units. The person reserving the unit may own a specific unit, own the right to stay in an unspecified unit, be the guest of an owner, or ‘‘just’’ be a regular tourist looking to stay at a resort. In each case, the person brings a different level of knowledge and expectation to the telephone encounter. Staff need to be able to handle this variety of guest types. Typically, one-third of all incoming calls are reservations, while the remainder involve questions, confirmations, and ownerrelated questions and problems. Three types of people place reservations at whole or interval ownership resorts: owners, guests of owners, and renters. Owners may or may not have placed their units in a rental program. The former may be required to reserve their own units anywhere from 30 days to one year in advance. Advance notice allows management to determine availability on a seasonal basis. Owners who have not placed their units in the rental pool may also be required to call ahead to reserve the unit. Because they have maintenance agreements with the resort, calling ahead allows them to confirm that the unit has not been scheduled for deep cleaning and is in shape for them to take occupancy. The second type of people who place reservations are guests who have been given permission by the owner to occupy the unit. It is important that the resort accept bookings from one and only one owner contact person in order to avoid double bookings. Third, are renters—transient guests who have booked a resort stay. Rentals may come in through the resort’s reservations office or from an outside real estate agency. Few reservations come from retail travel agents (unlike traditional resorts) because few central reservation systems can link individual agents to resorts. If few units are available for rent, it may be unprofitable for the resort to operate a rental program. Many owners put their units into a rental pool in an attempt to recoup their investment. Most states prohibit developers from guaranteeing rental income. Nevertheless, when owners are in a rental pool, they may put pressure on management to keep the unit occupied and bringing in revenue all the time.

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Reservationists Employees who take reservations at vacation ownership resorts have a much more complicated task than do their counterparts at traditional resorts, which feature few room types. The task is to simply match the needs of the guest to a relatively small list of variables. Vacation ownership units vary greatly in terms of size, view, appliances, and decor. Matching individual guests to all of the units available is more complex and requires greater product knowledge on the part of the employees. Repeat renters tend to book a specific unit rather than wait to be assigned a unit at check-in, which is typical at a traditional resort. A number of computerized reservation systems specific to vacation ownership resorts have been developed by software companies. Such programs help track guest deposits, manage correspondence, and pay revenue to owners. Additional modules link reservations to the Internet and encourage revenue equalization by having units with less revenue or room nights booked to appear first on a list of available units. One example is Resort Data Processing, Inc., that has over 1,000 installations and, since 1981, has been providing support for resort management systems around the world.

Check-in Some resorts have separate check-in facilities for owners. Owners do not expect to be treated like guests—they want to be treated like owners! This places additional pressure on employees to give exceptionally high standards of service. Work patterns at interval ownership resorts differ from those at both whole ownership or traditional resorts. At the former, guests check in and out on turnover days. Typically, check-out occurs on Saturday or Sunday. Some resorts stagger these days over Friday, Saturday, and Sunday to balance employee workload. Check-in and check-out times are similar to those in hotels. Guests check out typically before noon and check-in in mid-afternoon. On turnover day, all units have to be cleaned in a matter of hours. Timeshares hire temporary or contract employees to handle the specific work patterns of timeshare units. This makes for a difficult management situation due to the constantly changing staff. The balance between nightly rentals and interval owners is an issue traditional resorts do not have to deal with.

Billing Other differences relate to overbooking and payment of the bill. Interval and whole ownership resorts rarely overbook. There is an expectation that guests show up. To encourage this, advance deposits and full payment on arrival are common at whole ownership resorts. Key control can be a problem at interval resorts. It is expected that guests turn in keys at departure. Owners may feel that it is legitimate for them not only to hang on to their keys but also to make copies of them to hand out to friends. Electronic locks, which can be programmed after each guest leaves, alleviate this problem.

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Room Key ATMs? Picture this scene from the future: a lone business traveler talking on a cell phone walks into a classy hotel. Bypassing the line at the front desk, she makes a beeline for a small ATM-like machine. With the swipe of a card, she is checked into the hotel and given her room key and number. She even prints off a boarding pass for her flight the next morning, eliminating the need to get to the airport early. The businesswoman boards an elevator and heads to her room, only minutes after entering the front door. The future is here—such a machine exists and is in operation at the 250-room Hilton in Fort Wayne, Indiana. The hotel was the first in the Fort Wayne area to install a check-in kiosk, according to Todd Medert, president of the Northeast Indiana Hospitality Association. The kiosk, which is similar to an automated teller machine at a bank, recognizes the hotel guest by scanning a credit card or some other form of identification, Evans explains. Guests can use the machines to check into the hotel or print out a boarding pass for the flight home. In the interests of protecting guest privacy, the screen never displays a customer’s room number. Instead, the number appears on the guest’s printed receipt. The kiosk is not intended as a replacement for front desk staff, but rather as an assistant. Such a system allows the front desk people to spend more time with guests who prefer the personal touch while letting the independent travelers serve themselves.

The automated check-in technology primarily appeals to business travelers, whose time is at a premium, according to Evans. Using the kiosk helps guests go from the hotel to the airport without a hitch, which is a big draw for convenience-minded business travelers. Another benefit is the kiosk’s portability, which means that the hotel staff can move it to the hotel’s Grand Wayne Center entrance for conventions. Hotels that cater to leisure travelers are unlikely to be interested in installing kiosks, says Todd Medert. Medert is the general manager of the Holiday Inn Hotel and Suites on East Washington Boulevard, which focuses more on leisure travelers. According to Medert, guests who are in search of a leisurely experience are more likely to want the personal touch of a concierge. ‘‘I think [using kiosks] kind of makes it impersonal, but there are those guests who want to check in and go straight to the room,’’ Medert says. Source: Glenn, Jenni. ‘‘Hilton unveils guest check-in kiosk.’’ The Fort Wayne Journal Gazette (July 12, 2006). http: / / www.fortwayne.com / mld / journalgazette / 15020300.htm

DISCUSSION QUESTION: Would you use a check-in kiosk? Would you use one for retrieving a boarding pass? Why or why not?

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Owner Relations Large whole ownership resorts have a separate department dedicated to owner relations. Interval ownership resorts have difficulty giving such personal attention because of the large volume of owners. This latter group of owners does not typically have the same level of feeling toward the unit as do whole owners. Service expectations, however, remain high. Exchange guests rank each property they stay at. These ratings affect the resort’s ranking by the exchange organization, which, in turn, influences the trade value of the resort to others. Thus, guest satisfaction has a direct impact on the attractiveness of the property to others.23

HOUSEKEEPING There are major differences in the way traditional resorts and ownership properties operate relative to housekeeping. The principal differences are in: size and location of units guest arrival and departure patterns staffing patterns owner relations

Size and Location of Units Most vacation ownership units have two bedrooms and two full baths and can sleep up to six people. One-bedroom units typically sleep up to four people, while studio units sleep no more than two.24 Recent designs include the lockout unit, consisting of two bedrooms and two bathrooms or three bedrooms and three bathrooms, which is designed such that the owner can occupy the living room and one or two bedrooms while renting out the remaining space. Features such as terraces, balconies, wood-burning fireplaces, hot tubs, and whirlpool baths are becoming increasingly common. Public spaces in a vacation ownership resort can include hospitality areas consisting of a check-in desk, concierge desk, and cashier, game rooms, restaurants, and stores.25 In fee-simple resorts organized as condominiums (where owners actually own the weeks they buy forever), the public spaces are common areas owned jointly by all unit owners. It is not uncommon for developers to retain ownership of some or all of the profit centers in the resort. The lobby must be able to accommodate large numbers of people and luggage during weekly arrival and departure times. Some provision must be made to store the luggage of guests who arrive prior to official check-in times. The outdoor landscape is important to creating an ambience that enhances the overall experience of the guest. Extensive use of exotic plants has given way to the use of native flora. This movement reflects an increased concern for the environment.

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While the standard hotel room measures 400 square feet and includes a sleeping area and a bathroom, the typical condominium unit has over 1,000 square feet and includes three bedrooms, two bathrooms, a kitchen, and a living / dining area. Many also include fireplaces and balconies. Thus, while a standard room can be cleaned in 30 minutes, it may take up to 90 minutes to clean a condominium unit. The daily standard for a hotel housekeeper may be 15 to 20 rooms per day; for a resort condominium housekeeper, the number may be closer to 5 units per day. The problem is not just the size but also the complexity of the cleaning task. Units may include tubs with glass enclosures rather than shower curtains, Jacuzzis enclosed with glass or mirrors, fireplaces and grills, ovens, dishwashers, and refrigerators.

Quick Getaway 9.4

The Nuts and Bolts of Successful Housekeeping The housekeeping department must successfully juggle the work of many people and thousands of items. And it must look easy. Listed below are a few of the many important aspects of good housekeeping: Staff—the majority of your staff will work a fulltime day shift. That said, there are usually part-time laborer scheduled to work specific days, and casual laborers who are called when they are needed. Compensation—there are two common payment methods for housekeeping staff, which have many variations. The first is an hourly rate with the expectation of a specific number of units cleaned. The second is a piece rate with the expectation of a specific number of units cleaned. The piece-rate method rewards good workers, which makes it ideal for incentives. Cleaning Supplies—cleaning supplies should include glass and surface cleaners, disinfectant cleaners, grease-dissolving cleaners, and carpet-spot cleaners. Having the bottles or nozzles color coded assists the room attendant if there is a language issue. Carts should also

contain batteries for the remotes. Tools for the room attendant should include rags or special cloths, glass squeegee for the showers, and scrubbers for the ranges. Housekeeping Area—Within the main housekeeping area, two types of storage are required. The first is linen storage. A resort will usually have one par in the unit (par meaning one of every towel size and quantity that is supposed to be in the unit), one par in the laundry, and a portion of a par on the shelves as a backup supply. The second type of storage is the unit inventory storage. This includes the coffee maker, toaster, silverware, dishes, cooking utensils, pots and pans, decorative pieces, silk flowers, cutting boards, and knife sets. Source: Lynn and McCrory. ‘‘Resort Management: Identifying the Nuts and Bolts of a Successful Housekeeping Operation.’’ Developments (August 2005).

DISCUSSION QUESTION: Cleaning can be dull and laborious work. What are some ways of making the job more rewarding for your employees?

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While hotel rooms are located in an enclosed building, condominium units in a resort may be spread over several acres. Problems of transporting materials and supplies over distances in all types of weather are intensified.

Guest Arrival and Departure Patterns In a traditional hotel, guests come and go during the week. In a vacation ownership resort, most guests arrive and depart on the same day. This exchange day or turnover day creates unique problems for housekeeping. All units in the property have to be cleaned in a matter of hours. It is important to have a system that choreographs activities to ensure a smooth turnover. This might mean, for example, that supplies are made up into goodie bags for easy distribution to individual condominiums. There has to be a plan for dealing with early arrivals. This might include giving tours of the property, having a welcome party, or giving beepers to guests to let them know when units are available for occupancy.

Staffing Patterns The pattern described above means that many housekeepers are needed—but for only one day a week. Even when some units are rented on a daily basis, the number of housekeepers needed is much lower than the number required on exchange day. This situation can be addressed through staggered cleaning schedules, utilization of part-time employees, or using outside contractors. Depending on the minimum stay requirement, some guests may stay for a week while others leave after three or four days. Staggering departures in this way can spread out the work for the housekeeping staff. Some resorts offer a midweek cleaning on the third or fourth day of a weeklong stay in conjunction with a ‘‘daily refresh,’’ which can include emptying the trash, straightening the bed, and delivering towels. Additional services are made available for a fee. Part-time employees can be used to supplement a small full-time staff. Using part-timers offers flexibility of schedule and lower costs through not providing benefits. Special efforts are necessary to make part-time workers feel part of the team. Their use also necessitates constant training to bring new employees up to speed on the standards of the resort. Mastercorp is an example of an outside contractor that provides housekeeping service to resorts. The company recruits and hires for and manages all housekeeping and laundry services. The resort has limited control over Mastercorp employees. This is not a problem if standards are met. Problems, however, may take longer to resolve to the satisfaction of guest and resort management because of the presence of the outside contractor. The guest, on seeing a housekeeping employee, believes that person to be an employee of the resort. The employee has to answer to the guest, resort management, and the contractor. Communication is more complex and problems more difficult to resolve.

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Owner Relations Some owners develop strong feelings toward the person taking care of their unit and want assurance that that individual will always handle their unit. The advantage of this arrangement is that a specific person becomes familiar with the layout and requirements of particular units and can be expected to do a better job than someone who rotates into the unit every other day. Difficulties arise when owners treat the housekeeper as a personal maid or give them cleaning instructions at odds with policies of the resort.26

MAINTENANCE AND ENGINEERING Role of Owners Because of the interest and involvement of owners, there is more pressure on the maintenance department of a vacation ownership resort compared to a traditional property. While hotel guests pay for the expense of repairs indirectly through their room rate, whole ownership resort owners pay directly for all maintenance and repairs on their unit and share in the expenses of the common units. The maintenance responsibilities of the owners are usually spelled out in the owner’s agreement. This might detail the standards that owners must maintain for repairs, interior decorating, and furnishing. If the standards are not met, the unit may be taken out of the rental program. As a rule of thumb, the more permanent residents there are, the less maintenance is required. Because units are not standardized, it is difficult to specify the same bedding, seating arrangements, and decor for each. However, it is possible to enforce quality standards on all items within the units. Owners either rent out their unit through resort management, do not rent out the unit because it is used as a second home, or rent out the unit themselves or through a third party. The first group tends to contract repair and maintenance services to the management company of the resort. This certainly makes sense for owners in terms of convenience and cost. The management company can respond faster with a staff familiar with the units. At the same time, they can likely offer services at a cost that is lower than that of outside contractors. The second group typically do their own work, while the latter group usually have work done by the same agency that rents the unit. Interval ownership resorts usually hold back two weeks during the year when the unit is not rented. Major repairs and heavy maintenance are done at this time. Maintenance is usually regarded as a support center that is an expensive necessity. In ownership condominiums, the maintenance function is often run as a break-even proposition. It does, however, have the potential to be a profit center. Operational costs are passed on to owners, while the department collects revenue for services rendered to owners. Management may charge an annual fee to do the following:

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Recycle ice maker. Adjust refrigerator settings. Reset breakers. Unstop garbage disposal. Plunge toilet. Adjust sink and tub stoppers. Replace faucet knobs. Desuds the dishwasher. Tighten door hinges. Inspect the heating and air-conditioning system. Replace air-conditioning filters. Replace light bulbs.

Common Areas As noted earlier, owners pay for work done on their individual units, while expenses for common areas are shared. Common areas include: land, grounds, private roads, parking areas foundations, main walls, roofs, lobbies, building entrances and exits central services such as power, light, gas, water elevators laundry and storage rooms recreational amenities Common areas may be general (such as those noted above) or limited. Limited common elements are those to which only a single owner has access. Examples include a balcony and a lock on a door. While the owner has exclusive use of each, the former can be seen by others, while the latter is included because the association may need to access the room in the event of an emergency.

Major Repairs Repairs can be expensive. The resort needs to specify priorities for determining the order in which repairs must be completed. The order of general priorities should be: 1. systems critical to life, health, and the property (asbestos removal) 2. systems critical to the property’s daily operation (furnace, airconditioning) 3. systems that would cause damage to other systems if they failed (drains, leaks, broken windows) 4. systems that would cause major inconvenience to owners (electrical system)

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5. systems that would cause minor inconvenience to owners (minor furniture scratches) 6. systems requiring replacement for cosmetic reasons (out-of-style wallpaper)

Monthly Assessments Monthly assessment fees are negotiated with the board and charged to individual owners. They are intended to support ongoing upkeep so as to increase the attractiveness of the resort and maintain the value of the property. A system has to be set up to ensure that all work is properly billed. When a repair request is received, a work order is generated that is used to schedule labor and create an invoice, which is sent to the owner as part of her statement. Many companies have a policy of calling the owner if expenses exceed an agreed-on limit.

Renovations Resorts usually undertake renovations for one or more of the following reasons: higher service expectations on the part of owners increasing levels of technological comfort keeping up with competition greater environmental awareness Prior to the actual renovation, the scope of the project must be determined. Long-term objectives must be identified, a projects list generated, costs and benefits numerated, and projects chosen. An outside expert may be brought in to prepare the design, act as an inspection agent, or act as an independent arbitrator in the event of a dispute. A decision must be made on how the project will be funded—from existing funds or via a special assessment. Reserves are funded through annual fees or as part of the regular monthly assessments. Some states mandate the collection of reserves. Permission from the owners is usually required before reserves can be spent. When a special assessment is needed to complete the work, the cost of the project is divided among and charged to the owners. Finally, a contractor is selected. During the planning phase, it is critical that a communications program be targeted toward owners to explain the costs and benefits of the project. Communication is key to getting the support of the owners, who will be more interested in what is being proposed than are guests. Employees may need to be retrained in new procedures after the renovation. If, for example, a pool has been resurfaced, maintenance procedures may be different. Owners will also expect higher standards of quality to go along with the new facilities. A festive reopening will help generate positive feelings from owners.27

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Timeshare owners have a high expectation for the overall look and maintenance of their investment. Courtesy The Four Seasons; photo by Aaron Gordon

ACCOUNTING AND FINANCE ‘‘Hotel guests are very different from timeshare owners. The challenges for our timeshare resorts are providing financial management for our 1,500 owners while tracking their personal needs and generating revenue for them in our rental pool.’’ —JIM MORASH COO, CALABOGIE PEAKS RESORT

FINANCING THE TIMESHARE Approximately 5 percent of eligible household owners actually own a timeshare. An overwhelming 70 percent are financed internally with down payments ranging anywhere from 10 to 30 percent and the remainder financed with an interest rate

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much higher—typically 14 percent—than if financed through a bank.28 Timeshares generate returns of more than 20 percent. Developers not only make money from timeshare sales they also generate revenue from interest they receive on five- to seven-year loans they make to timeshare buyers. Despite these heady returns, the uniqueness of timeshare operations serves to slow down their development. Because they tend to rely on tourists for the bulk of their guests, firms tend to concentrate on proven resort destinations that are densely developed. This can make it difficult to find a suitable piece of land. Additionally, the sales cycle can be long and drawn out. A developer can be involved in a project for ten years before all the units are sold and paid for. Customers can and do rescind their decision to buy while other buyers default on developer-provided financing.29 Timeshare developments generate revenue after the development is complete. By law, timeshare owners have a right to select their own management company. The firms that provide the management can generate 10 percent profit on annual owner fees.

Accounting Ownership properties have different needs compared to traditional hotels. Like hotels, they require reservations, interfaces, housekeeping and customer relationship management (CRM) systems. However, the essence of condominium and timeshare management is about revenue sharing rather than merely adding up posted numbers. Owners expect to receive the correct amount of rental pool income from their units on a monthly basis since they are paid based on a formula based on the percentage of their possession in the timeshare agreement. Thus hospitality systems suppliers like NORTHWIND have added Condominium Owner Management and Timeshare Owner Management modules to their applications. While hotels keep two types of accounting records—one for guests in the form of guest accounts or folios, and one for business—condominium resorts need three sets of records:30 Guest (unit-renter) accounts are similar to those in hotels. Individual folios are created for each guest who is renting a unit from an owner who is part of the resort rental program managed by the owner’s association. Charges are posted during the stay and balances are settled prior to departure. Owner accounts are unique to resort condominiums. On a monthly basis the owner’s association prepares a statement for each owner outlining any assessments that are due, rental income from the unit, and any commissions due the owner for participating in the rental pool as well as any direct expenses charged to the owner. Owner’s association accounts are used to prepare budgets and financial statements for the owner’s association.

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SUMMARY Managing a resort, condominium or timeshare property is very different from managing a ‘regular’ hotel. Understanding the unique operating characteristics of these types of properties leads to an awareness of how to become a more effective manager.

ENDNOTES 1. Miller, Richard K., & Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 369. 2. Upchurch, Randall, and Conrad Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England: Elsevier Butterworth-Heinemann, 2006, 102. 3. Ibid., 10. 4. Gose, Joe. ‘‘Capitalizing on Timeshares.’’ National Real Estate Investor (March 1, 2003). 5. Miller, Richard K., & Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 366–367. 6. Ragatz, Richard L., and John C. Crotts. ‘‘U.S. Timeshare Purchasers: Who Are They and Why Do They Buy?’’ Journal of Hospitality and Tourism Research 24, no. 1 (February 2000): 49–66. 7. Phenomenal Growth in the U.S. Timeshare Industry. Washington, D.C.: American Resort Development Association, Spring 1999, 5. 8. Ragatz and Crotts. ‘‘U.S. Timeshare Purchasers,’’ 55. 9. Ibid. 10. The United States Timeshare Industry: Overview and Economic Impact Analysis. Washington, D.C.: American Resort Development Association, 1997, 43. 11. Ibid., 44–45. 12. Ibid., 53. 13. Ibid., 47. 14. Ibid., 48. 15. Upchurch, Randall, and Conrad Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England: Elsevier Butterworth-Heinemann, 2006, 101. 16. Miller, Richard K., & Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 368–369. 17. Ibid., 23–27. 18. Upchurch, Randall, and Conrad Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England: Elsevier Butterworth-Heinemann, 2006, 104–107. 19. Upchurch, Randall, and Conrad Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England: Elsevier Butterworth-Heinemann, 2006, 141–143. 20. Abbey, James R. Hospitality Sales and Advertising. East Lansing, MI: Educational Institute of the American Hotel and Motel Association, 1989, 336–337. 21. McElyea, J. Richard, and Gregory L. Cory. ERA Issue Paper. Resort Investment and Development. An Overview of an Evolving Market. Economics Research Associates, undated, accessed January 11, 2006. http: / / www.econres.com / documents / ip.html#; Gee, Chuck Y. Resort Development and Management, 2nd ed. East Lansing, MI: Educational Institute of the American Hotel and Motel Association, 1988, 16–22.

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22. Gentry, Robert A., Pedro Manoki, and Jack Rush. Resort Condominium and Vacation Ownership Management. Lansing, MI: Educational Institute of the American Hotel and Motel Association, 1999, 49–64. 23. Simons, Arthur H., and George Leposky. AEI Resource Manual. Washington, D.C.: American Resort Development Association, 1994, 10. 24. Ibid., 11. 25. Gentry, Manoki, and Rush. Resort Condominium Management, 67–74. 26. Material for ‘‘Maintenance and Engineering’’ was drawn from Gentry, Manoki, and Rush. Resort Condominium Management, 88–103. 27. Upchurch, Randall, and Conrad Lashley. Timeshare Resort Operations: A Guide to Management Practice. Oxford, England: Elsevier Butterworth-Heinemann, 2006, 153. 28. Gose, Joe. ‘‘Capitalizing on Timeshares.’’ National Real Estate Investor (March 1, 2003). 29. Gentry, Robert A., Pedro Manoki, and Jack Rush. Resort Condominium and Vacation Ownership Management. Lansing, MI: Educational Institute of the American Hotel and Motel Association, 1999, 49–64.

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Chapter 10 RESORT OPERATIONS: THE IMPORTANCE OF GUEST ACTIVITIES LEARNING OBJECTIVES 1. Explain the guest activity programming model and its significance to successful resort operation. 2. Explain how knowledge of cultural differences and individual needs can be used by resort managers to design guest activities. 3. Identify how cluster or activity analysis can help meet the objectives of a guest activity program. 4. Describe the steps required to effectively plan a guest activity program. 5. Identify the approaches and measuring instruments used in evaluating the effectiveness of guest activity programs.

INTRODUCTION

PROGRAM PLANNING

Benefits of Guest Activity Programs

Leadership

Approach

Budgeting

Model

Scheduling

GUESTS’ NEEDS Needs Assessment DEFINING GOALS AND OBJECTIVES Goals and Objectives CLUSTER AND ACTIVITY ANALYSIS Activity Analysis

Volunteers

Facility Availability Promoting the Program PROGRAM EVALUATION Evaluating Program Effectiveness Approaches to Evaluation

Cluster Analysis

SUMMARY

Format

ENDNOTES

PROGRAM AREAS

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INTRODUCTION Good programming does not just happen; it is carefully planned for, thought about, and learned. —FARRELL and LUNDEGREN The Process of Recreation Programming: Theory and Technique

When guests are at a resort or on board ship for several days or weeks, they expect the facility to cater to their need for something to do. At resorts, this need is met by guest activity programs. What guests actually do is called recreation. Recreation is ‘‘an activity that takes place during one’s free time, is enjoyable, freely chosen, and benefits the individual emotionally, socially, physically, cognitively, and spiritually.’’1 Note that this definition contains a number of value-laden words. The activity should be fun, it is something the guest chooses to do, and the guest should receive some benefit from it. If these conditions are not adhered to, the guests will not fully enjoy the activity and their stay will be less enjoyable than it could be. For a guest to leave the resort or ship truly satisfied with the visit, it is imperative that the guest activity director take an active role in planning activities to ensure that they provide the benefits noted above. In this chapter, a model is suggested that will produce satisfied guests.

Benefits of Guest Activity Programs The impact of a recreational or guest activity can extend far beyond the immediate benefits.2 Consider a couple hiking along a trail. They may experience one or more of the following benefits: feeling good about getting exercise enjoyment of the sights and sounds of nature mental relaxation learning something about the natural environment feeling closer to their partner Many of these initial benefits can extend into the long term for the couple and even for society. Because they feel good about getting exercise, the couple may commit to a program of exercise that improves their own well-being while, in some way, lowering health care costs. Feeling relaxed mentally might lead to increased performance and higher productivity back on the job. Having learned something about the natural environment, they may return home with a greater stewardship ethic that will result in greater care for the planet. Feeling closer to one’s partner can carry over beyond the vacation to the development of better problem solving within the relationship and a more stable family. As noted above, to be satisfying, an activity must include: Freedom—Guests must be free to select the activities in which they want to participate.

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Hiking is an activity that extends beyond its immediate benefits. 䉷 Royalty-free / CORBIS

Perceived competence—Guests must be able to match their skill level to the activity such that they feel they can successfully participate. Intrinsic motivation—Truly satisfying activities are those that are chosen to satisfy an inner drive rather than to satisfy or impress others. Locus of control—Guests need to have some degree of control over the experience, be it in the selection of teammates or when or where the activity will take place. Positive effect—The result of a satisfying activity is that guests enjoy the experience after participating in it.3

Approach What are guest activity or recreation programs? ‘‘Recreation programs are purposeful interventions which are deliberately designed and constructed in order to produce certain behavioral outcomes.’’4 The program is a means to the end—a satisfied and fulfilled guest.

Model Guest activity programming involves five steps: 1. Assess needs of guests. 2. Define objectives for the activities that will meet guest needs.

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3. Perform cluster or activity analysis designed to meet the objectives. 4. Administer the activity. 5. Evaluate the experience with respect to its success in meeting guest needs.5 Evaluation of the activity might lead to a reassessment of any of the earlier steps. Development and operation of any program occurs within the context of, and is influenced by, external factors: Historical influences—the tradition and philosophy of the resort Environmental influences—time of the year, weather, etc. Cultural influences—ethnicity, age, and religion of the guests Social influences—fads, trends, news Organizational influences—values and mission of the company6 Finally, guests, staff, equipment, and facilities are brought together to deliver the guest experience. This model is illustrated in Figure 10.1 and serves as the basis for discussion in this chapter.

GUESTS’ NEEDS Needs are viewed as motivators, or factors, that influence the drives people have in making decisions about involvement in leisure programs. —DONALD DEGRAAF, DEBRA J. JORDAN, and KATHY H. DEGRAAF Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach

Activity programs could be much more meaningful to participants if the activity director knew what guests expected from the program. People participate in guest activities for a variety of reasons. They may wish to: Make friends. Belong to a group. Experience competition. Learn a new skill. Share a talent. Gain prestige. Get in shape.7 It might be argued that people pursue recreation for the same reason they pursue any goal—to satisfy needs and wants important to them. In so doing, they operate within, and are influenced by, the cultural and social environments in which they grew up and now find themselves.

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Historical Influences

Environmental Influences

Assess Guest Needs Guests

Equipment/ Resources Develop Objectives

Cluster/Activity Analysis Guest Activity Staff

Activity Experience

Facilities

Evaluation

Organizational Influences

Social Influences

Cultural Influences

FIGURE 10.1 Guest activity programming model. Adapted from: DeGraaf, Donald G., Debra J. Jordan, and Kathy H. DeGraaf. Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach. State College, PA: Venture Publishing, 1999, 52. And Farrell, Patricia, and Herberta M. Lundegren. The Process of Recreation Programming: Theory and Technique, 3rd ed. State College, PA: Venture Publishing, 1991, 25.

The key to understanding guest motivation is to see the activities they engage in as satisfiers of needs and wants. Guests do not participate in guest activity programs ‘‘just’’ to relax and have fun. They do so in the hope and belief that these activities will satisfy, either wholly or partially, needs and wants important to them. This view of guest motivation is critical. It is the difference between seeing a resort program as simply a hayride or a painting class and as a means for satisfying what is important to guests.

Needs Assessment Through the use of needs assessments we can maintain customer loyalty while at the same time work to recruit new customers.

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—DONALD DEGRAAF, DEBRA J. JORDAN, and KATHY H. DEGRAAF Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach

Needs assessment is ‘‘a systematic inquiry about needs, attitudes, behaviors, and patterns of both participants and non-participants.’’9 Its purpose is to identify what is important to guests in order to better design and deliver guest activity programs that leave guests satisfied with the program and, consequently, the resort. Constraints should be noted. First, needs are infinite. The resort cannot totally satisfy the needs of every guest. Second, conflicts between different segments of the market are inevitable. Teens want different activities than seniors. On the slopes, there are differences between skiers and snowboarders. Satisfying each segment of the market without encroaching on the satisfaction of the others is a major task. Nevertheless, this task must be executed if the staff believes in the marketing or customer concept. Several techniques can be used to conduct a needs assessment:

Existing guests are asked what interests them or what activities they currently undertake. Information may be collected to create a demographic and usage profile for use in expanding the market segment, finding new segments, or forecasting future demand for existing and proposed services. The existing services can also be evaluated. People who do not use the programs and who do not take part in the activities might also be surveyed as to their reasons. This can provide useful information on how to improve the programs to make them more guest-friendly. National figures are available on trends in recreation. Figures can be obtained from such sources as local, state, and national tourism boards, and agencies such as the Outdoor Industry Association. Noting which activities are growing in popularity can help staff identify likely future demand for specific programs.9

Resort amenities can have primary and secondary uses. As an assist in thinking about secondary uses for facilities and areas, in addition to implementing the multiple-use concept, list all of the facilities and areas on the property and note the possible activities for which they could be used.10 For example, the primary use of a golf course is to play golf. However, it could also be used for cross-country running and skiing, a jogging trail, sledding and tobogganing, orienteering, and bird-watching, to name only a few possibilities. This is, in essence, a product rather than a marketing approach to needs assessment. While not as useful as the other methods, it can be a useful complement. In this marketing model, needs assessment is the first step in providing services and programs to meet the stated and implied needs and wants of existing and future guests.

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DEFINING GOALS AND OBJECTIVES If one were to picture a staircase, objectives would be the individual steps and the goal would be at the top of the stairs. —DONALD DEGRAAF, DEBRA J. JORDAN, and KATHY H. DEGRAAF Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach

Goals and Objectives The goals and objectives of the guest activity programs nest within those set for the resort itself. Goals are broad, general, final outcomes. The overall goal of the resort might be to produce profits by satisfying guests. Within this framework, the guest activity goal might be to: Provide satisfying experiences for guests. Aid in skill development. Increase guests’ health and well-being. Encourage social interaction among guests.11 Objectives are much more specific and short-term. The resort might set objectives relative to occupancy, rate, and percentage of guests who return. Again, within this framework, the guest activity director might set specific objectives in terms of the number of people who participate in activities, targets for guest satisfaction with programs, and so on. Objectives should be set for the overall guest activity program as well as for every individual program and activity offered. Program objectives should be set before implementing an activity. A program has the guest perform or behave in a certain way, learn something, and / or receive instruction.12 For the guest activity program to be meaningful (and, therefore, satisfying, to the guest), it is important that the programmer develop some idea of what the outcome of the program should be for guests and design activities (the next step in the process) to help ensure the objectives are met. Refusing to set objectives lessens the chance that guest needs, identified above, are met. What is the expected outcome of the program? Should guests be able to ski, golf, play tennis better? Should they have a greater appreciation for the outdoors? Will they learn a new skill, make a new friend, or feel more relaxed? Setting objectives involves certain assumptions: that the programmer is able to conceptualize what will happen during the activity; that the programmer is skilled in writing performance objectives; and that the program objectives are consistent with the objectives of participants in the activity.13 The success of the program is reflected in the extent to which it realizes its objectives. Objectives, therefore, must be stated in specific terms and include some measurement to indicate whether or not the objective is met. This process is relatively sophisticated

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Quick Getaway 10.1

The Spa—To the Extreme! It’s one thing to climb up a telephone pole. It’s another to jump off of it. It’s quite a different thing to want to jump off a telephone pole, even taking the safety harness into consideration. However, jumping off telephone poles and other fear-confronting ‘‘challenge’’ activities are the centerpiece of a stay at Miraval— the anti-spa. Located in a valley north of Tucson, just west of the Santa Catalina Mountains, Miraval defines itself by the phrase ‘‘Life in Balance.’’ Miraval epitomizes the concept of the anti-spa, especially because it values exemplary service far more than it does the latest beauty treatment. There’s a definite psychotherapeutic element running through Miraval. For nearly a decade, spa-goers have been raving about programs such as ‘‘Desert Journey,’’ in which you may be called upon to balance an upright pea-

cock feather in the palm of your hand, among other things. Like the exercise in pole-climbing, it’s about executing a task that feels impossible but isn’t. The idea behind these activities is to become more aware of yourself, to relax, and to be more mindful of they way you act. Of course, the ‘‘anti-spa’’ has its share of treatments, massages, and exercise classes, but their variety and availability make it easy to schedule a day full of activities. Still, the challenge sessions are what sets Miraval apart. Source: ‘‘Balancing Act: Miraval, a destination spa that isn’t plans to take its show on the road.’’ Forbes.com. www.forbes.com / business / fyi / 1212 / 111.html

DISCUSSION QUESTION: What particular demographic do you think would be the ideal target market for this kind of spa vacation?

and holds the programmer accountable for the success of the program. The idea is to identify what the participants should think, feel, or do at the end of the program.

CLUSTER AND ACTIVITY ANALYSIS If I had no duties, and no reference to futurity, I would spend my life in driving briskly in a post-chaise with a pretty woman. —SAMUEL JOHNSON As quoted in James Boswell, Life of Samuel Johnson, 1791

The next step in the process is to identify activities that can help guests meet the stated objectives. Two ways of doing this are activity analysis and cluster analysis.

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Activity Analysis Activity analysis involves determining how each part of an activity can contribute to meeting goals and objectives. Each activity can be broken down according to the following criteria: behavioral domains—cognitive, affective, and psychomotor skill level, from low to high interaction patterns, from individual to group leadership required, from minimum to maximum equipment required, from none to required duration, from a set time through a natural end to continuous facilities required, from none to required participants, from one to any number age appropriateness 14 The primary focus of a game of basketball, for example, is psychomotor activity at a high level—passing, dribbling, shooting. The secondary domain is cognitive, also at a high level—knowing the rules and various plays as well as some strategy. The tertiary domain is affective, at an average level—sportsmanship. A high degree of group interaction comes from the need to bond as a team to compete against another team. A certain amount of leadership is required. A basketball and court and hoops are needed. Any number from two to ten can play (ranging from one-on-one to five-on-five), at any age from five years up. The activity can last for a set time or until a set number of points are scored. Activity analysis can identify the activity that will best meet identified needs.

Cluster Analysis Cluster analysis clusters activities that yield similar benefits. Each activity becomes a variable, the correlation between participation in two variables is computed, and the cluster is based on the correlation that results. Typically, the following criteria are used to determine clusters: degree of skill required level of activity nature of the group needed amount of risk or danger special facilities needed15 An example of a cluster model is shown in Figure 10.2. The implication is that people can be typed based on their choice of activity. The implications for the resort are obvious. From existing levels of participation, staff can identify which complementary activities might be popular. If demand for tenpin bowling were

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269

Group B

Group C

Group D

Rugby Netball Athletics Basketball Badminton Fitness exercises Cycling Amateur dramatics / music

Outdoor bowls Tenpin bowls Table tennis

Ice skating Roller skating Horse riding Youth club

Group F

Group G

Group H

Rowing Motorboat cruising

Hill walking Rambling

Visiting a cinema Visiting a theater or concert

Messing about in boats

Walking

Picnicking Driving in the countryside Gardening Dining out Visiting a community or church center Playing Bingo

Soccer Tennis Golf Swimming Fishing Hobbies / Do-it-yourself Other activities

Group E

Dancing

Source: Patricia Farrell and Herberta M. Lundegren, The Process of Recreation Programming: Theory and Technique, 3rd ed. (State College, Penna.: Venture Publishing, 1991), 88.

FIGURE 10.2 Burton’s eight cluster groups

great, for example, it would suggest that table tennis would also be a popular activity.

Format Guest activity staff offer various activities in different formats. Program format is ‘‘the way in which an activity is organized and structured to the customer.’’16 Guests select whichever format(s) they feel will allow them to satisfy important needs and wants (Figure 10.3). In determining which programs and activities to offer, it is useful to think of the various formats into which activities can fall. Instruction

Guests may participate in an activity for self-improvement—to learn a new skill or to develop or refine an existing one. Guests may want to achieve a specific performance goal. This format requires a high level of organization to satisfy the motivations of the participants. For best results, the guest activity staff should have specialized leadership skills. The program should be limited to a small number of participants who meet over a series of meeting times and dates. The program is

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ACTIVITIES are organized into various FORMATS Instructional Competition Social Activities Drop-in Activities

Special Events

Trips

Spectator

which guests select to satisfy NEEDS AND WANTS

FIGURE 10.3 Needs, wants, activities, and format

Important to them Physical Safety

Belonging

Esteem

Self-Actualization

Quick Getaway 10.2

New Waves in Cruises Themed cruises are making a huge impression on the cruise industry, which has seen steady growth over the past six years. The key is in the specialized and often star-studded entertainment and activities offered on these specially themed cruises. Now a cruise buyer has the option of sailing the high seas with Las Vegas–style entertainment, jam-band concerts, rock climbing, and classes that teach everything from wine tasting to financial management. This trend caters to today’s travelers who demand culturally enriching vacations, not just empty stretches of time and a few beaches. Beginning in December of 2004, cruisers could enjoy Cirque du Soleil on select Celebrity cruises. Guests on Carnival’s Triumph rocked and rolled their way across the Caribbean in

November of 2004 with Journey, REO Speedwagon, and Styx. And in early 2004, Cunard joined forces with Oxford University to create a lecture program. The strategy is to attract customers with the promise of international travel, and then to hook them with fascinating onboard activities. Source: Wright, Delores. ‘‘New Wave.’’ Ventures (December 2004): 9.

DISCUSSION QUESTION: Some detractors of the theme cruise may suggest that since the same activities are available on dry land, customers will choose to participate in the activities onshore rather than on a cruise ship. How would you respond to this problem?

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characterized by heavy programmer control, responsiveness to many ability levels, and fees for participation. Competition

Some people participate to compete. The interest in competition may be intrinsic (competing against oneself, being the best one can be) or extrinsic (looking good in front of others, the adulation of the gallery). Competition is traditionally associated with sports, although board games, drama, and music, for example, offer opportunities for competition. Having an audience is important for the extrinsically motivated guest. (This opens opportunities for a category discussed below—the participant spectator.) Tournaments are not regarded as appropriate at the preschool and early elementary school level. Little leadership is desired by the participants. Groups are usually formed by sex and stage in the life cycle. Decade age groupings are popular with adults. Guests may also be grouped by skill level. It is important that people compete with others at a similar skill level and in the proper environment to ensure a fair contest. Competitions require limited equipment and strong administrator leadership skills. They are labor intensive, especially as a variety of competitions must be provided. An alternative to competition among people at similar skill levels is the institution of some equalizing mechanism. For example, golfers with a greater degree of skill are often given a handicap to allow golfers of less skill a fairer shot at winning. In an intergenerational game of softball, the size of the bat and the ball could be changed for younger players. Participants should feel safe on both physical and emotional levels when competing. They tend to feel more in control if they are given some say in setting rules and guidelines to maintain a degree of fairness.17 Combining these concepts requires a balance between the skill level of the guest and the challenge present in the activity.35 If the challenge exceeds the guest’s skill level, he feels anxious. When the skill level exceeds the challenge inherent in the activity, he is bored. When skill level and challenge are matched, people can become totally engaged in the activity. At this point, the experience becomes satisfying to the guest.

Social Activities

Some people take part in activities primarily for social reasons. They do this because they need people. Social activities need minimal programmer involvement once the activity is developed. Social programs should be open to all but carry some guidelines and rules and operate within the philosophy of the resort. Certain singles-only Club Med activities, for example, would not be appropriate in the family atmosphere of a Disney resort.

Trips

Activities may be organized in the form of a day or overnight trip. This format is complicated in that it involves the movement of people around or away from the resort. Transportation must be arranged, increasing safety problems.

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Social activities should be resort appropriate. Courtesy The Greenbrier

Drop-in Activities

Some people prefer self-directed programs. These are the most difficult to define and manage. People sign up because they desire unstructured, unplanned, unsupervised activities. The young and the old, however, want more structure. The key concept is that self-directed programs need as much consideration as the others noted above. The following questions are appropriate: Is the facility free when people would use it for self-directed activity? Are the only unscheduled hours at times when no one is available to use the facility? What is the cost of opening earlier or closing later?18

Special Events

Resorts may organize special events, such as festivals, banquets, shows, and exhibitions, in which guests can participate. Special events tend to draw attention to the resort and, as such, can serve as excellent publicity that complements other marketing efforts. Because large special events incur problems of crowd control, parking, and sanitation, resorts may wish to partner with one or more additional organizations and use volunteer staff to supplement the paid staff.

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273

Most of the formats noted above offer opportunities for people who prefer to watch rather than to actively participate. They may look for playing tips as they ready themselves for participation, or their days of active participation may be over while their interest in the activity remains. Thus, every program should be planned with spectators in mind, bearing in mind that watching may be the only ‘‘participant option’’ for some. Spectators enhance the experience for active participants, especially those who are extrinsically motivated. Care needs to be taken from a liability viewpoint, as the resort assumes legal responsibility for people watching the event. The question of open versus designated seating needs to be addressed as a means of producing revenue for prime viewing spots. This list of formats is now combined with the program areas aimed at specific life cycle groups to form the guest activity program of the resort. The job of the recreation programmer is to combine the guests’ life stages, a variety of formats, and numerous program possibilities in order to design a guest activity program. The process for planning and evaluating programs is also discussed in this chapter.

PROGRAM AREAS A recreation programmer cube is outlined in Figure 10.4. The cube suggests a comprehensive approach to guest activity programming by bringing together three areas—the life stages of the guests, the formats previously identified, and the variety of program possibilities. A guest activity director matches the life stage of the guest with the format and the activity desired to develop a guest activity program. For example, a sidewalk craft fair might be set up to appeal to adults interested in crafts as spectators.

PROGRAM PLANNING On average, skiers ski for six hours and sleep for eight, which leaves them with ten free hours a day, every minute of which they fully intend to enjoy. —JIM FELTON VAIL RESORTS, INC., URBAN LAND

Planning a guest activity program involves five steps: 1. 2. 3. 4. 5.

leadership budgeting scheduling facility availability promoting the program19

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Sports and games Fitness/wellness Aquatics Service/volunteer Dance

Activities

Drama Music Arts and crafts Environmental activities Adventure/education

Old age Adulthood Young adulthood Adolescence School age Play age

Extreme sports Travel and tourism Social recreation Hobbies Cognition and literacy

Early childhood Spectator

Special events

Drop-in

Social trips

Competition

Infancy Instructional

Self-improvement/ education

s

ge

ta eS

Lif

Format Structure FIGURE 10.4 The programmer’s cube. Adapted from Farrell, Patricia, and Herberta M. Lundegren. The Process of Recreation Programming: Theory and Technique, 3rd ed. State College, PA: Venture Publishing, 1991, 172. And DeGraaf, Donald G.,

Debra J. Jordan, and Kathy H. DeGraaf. Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach. State College, PA: Venture Publishing, 1999, 122–123.

Leadership Often described as the most important factor in determining the success of a program, selection of the appropriate leadership is certainly crucial. The process involves three important and sequential steps: job analysis job specifications recruitment of suitable candidates

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Segmenting Resort Tourists How can we classify resort-goers in terms of selection, satisfaction, opinion, and preferences? Here’s one model, proposed by Inbakaran, Jackson, and Chhetri: Romantics—young people without families who are not interested in the resort or its activities, but in pursuing simple recreation activities. Immersers—regular visitors to the resort who rank highly all reasons for choosing this destination. This group appears to be focused on what the resort has to offer in terms of facilities and utilities. Tasters—for reason of choice, this cluster group gave the highest rank to the resort providing a good place for the family to relax and rejuvenate. Veterans—with the highest percentage of males, this is the oldest group and the least educated. The membership includes mature families, mature couples, and mature

singles who rank safety and security reasons high on their list of resort priorities. These group profiles offer an opportunity for resort owners and managers to re-examine the products they sell and to determine which group the products cater to. Since each group differs from the others in every aspect, it’s necessary to create marketing strategies that will bring customers back in the future. Source: Inbakaran, Jackson, and Chhetri. ‘‘Segmentation of Resort Tourists: a Study on Profile Differences in Selection, Satisfaction, Opinion and Preferences.’’ Paper presented at the New Zealand Tourism and Hospitality Research Conference, Victoria, New Zealand, December 2004.

DISCUSSION QUESTION: What are the dangers of categorizing resort customers and designing a marketing plan aimed only at the majority?

First, the tasks involved in the job must be identified. This analysis identifies the job functions that must be carried out together with the skill level at which they need to be performed. This results in a job description for the position. From the job description comes the knowledge, skills, and abilities necessary to perform the job. This is called a job specification and is the second step in the process. Finally, with job specification in hand, suitable candidates for the job can be recruited. It is important to consider both internal and external candidates, as both have advantages. Administrators are likely to be more familiar with the ability of an internal candidate compared to someone from the outside. No resume´ or interview can compensate for actually seeing a person in action. In addition, if the resort promotes from within, employees are likely to be more motivated than if the company regularly bypasses existing employees to hire from outside. On the other hand, external candidates can bring fresh ideas and a new approach to dealing with problems that an internal candidate may not have.20

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Volunteers Depending on the size and type of program being developed, volunteers may be an integral part of the operation. Volunteers are ‘‘people who give service of their own free will with no obligation to act.’’ The consensus in the literature is that the success of a program relying on volunteers is based on the staff’s ability to ‘‘keep volunteers motivated and to challenge them with meaningful assignment.’’ What, exactly, motivates volunteers? Where people are doing something because they want to rather than because they have to, motivation tends to be intrinsic rather than extrinsic; the individual is motivated by reasons internal to herself rather than by external factors such as money or praise. People tend to be internally motivated by achievement, affiliation, or power.21 People motivated by achievement get a thrill from meeting standards, from the accomplishment of objectives. One of these objectives might be full-time employment. People may volunteer as part of a university internship requirement or strictly as a way of getting their foot in the door. The social interaction that comes from personal relationships is what motivates those who seek affiliation. Power motivation implies that satisfaction comes from encouraging others to perform. The task of the guest activity director is to correctly identify what motivates each volunteer and structure responsibilities for each person that will challenge them while allowing them to meet the needs they consider important. Recruitment is best done one on one. However, an initial group meeting may be necessary to explain the program and its benefits to volunteers. People who are interested can be communicated with individually to determine motivation. Volunteers should be treated with the same care as paid employees. They need to be oriented to the operation, trained in their responsibilities, motivated, and evaluated.

Budgeting The process of setting a price for a guest activity program involves several steps. 1. 2. 3. 4. Program Cost

Determine costs. Set the proportion of costs to be covered. Consider the appropriateness of differential pricing. Set an initial price.22

A guest activity will incur two types of costs: indirect and direct. Indirect costs are those costs that cannot be directly associated with a particular program yet are incurred in operating the guest services program as a whole. For example, a director and staff are involved in running the entire operation; their salaries must be accounted for. Staff salaries must be paid and offices must be heated whether programs operate or not. Resorts have to decide how to allocate the indirect costs of running the guests activity department to the various programs that are offered. There are several possibilities:

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Equal share—Each program is assigned an equal share of the indirect costs involved in running the department. Percentage of budget—Each program is charged with a percentage of indirect expenses equal to its percentage of the overall department budget. Time budget study—Each program is charged for indirect expenses based on the amount of time spent on the program by the staff in developing and implementing it. Space or measurement study—Each program is charged for indirect costs based on its actual expenses.23 The objective is to determine the full cost of planning, operating, and evaluating a program. Indirect costs should be allocated equitably in a manner indicating how much of an indirect cost a program actually uses. Direct costs, on the other hand, are specific expenses related to a single item. For example, a program on fly-fishing might include the costs of an instructor and promotional brochures. Direct costs may be fixed or variable. Fixed costs stay constant during a specified time—for example, the salary of an instructor. The cost may be fixed within a particular range. For example, if a standard is set of 16 guests per instructor, within the range of 1 to 16 guests, the instructor’s salary is fixed. However, beyond 16 participants, another instructor must be hired. Thus, costs are fixed within a specific range. Variable costs vary proportionately with volume. Suppose each guest who participates in an activity receives a souvenir of the occasion. The cost of providing the souvenirs is variable. Pricing Objectives

Differential Opportunities

A decision must be made as to which costs are to be covered. Resorts may decide that certain activities are free to guests, that programs cover only the variable costs of the program, that some of the overhead costs are covered, or that all costs, both direct and indirect, are covered. It is important to note that the indirect costs of running the guest activity department must be paid whether they are allocated to the various programs or not. Management may view the department as a necessary service to the guests in order to attract them to the resort. Seen in this way, the indirect costs involved in running the department can be viewed as a way of selling rooms, with programs being expected to cover only direct costs. Different prices may be set depending on: Participants—Children generally pay less than adults. Product—One price is charged for a group lesson and another for a private lesson. Place—People pay more for better seats at a concert. Time—Prices are lower during periods of low demand (off-season). Quantity—Season passes offer a discount because guests buy in bulk. Incentives—Prices are initially set low as an incentive to get guests to try a new activity.24

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Quick Getaway 10.4

What’s Your Most Popular Amenity? —SANDRA DE MAZARIEGOS, member services

‘‘We have our own theater, where members can enjoy the latest movies and sporting events, but it’s no match in popularity for our new 18-hole minigolf course.’’ —ALAN BAZZANA, resort manager, Mariner Shores Resort, Miami, Queensland, Australia

‘‘The amenities our guests like the most are the ones that provide opportunities to socialize, such as the pool, bar, and sunbathing areas.’’

director, Villa Antigua & Villas del Pacifico, Guatemala, Mexico

‘‘Our owners have become accustomed to our complimentary valet parking and the Beach Buddies Kids’ Club, which is run like a camp. They can come for the day or pay by the hour. We also have a spa.’’ —SHERRY SMITH, general manager, Palm Beach Shores Resort and Vacation Villas, Palm Beach Shores, Florida, U.S.A.

—ERICK CE´SPEDES, member services manager, Condovac La Costa, Guanacaste, Costa Rica

‘‘Bicycles. They come back covered in mud after guests take them up to the mountains. They’re also popular with families for leisurely rides and with people who don’t have cars and want to duck down to the shops.’’

‘‘An affordable restaurant with a broad choice of meals, Internet access and entertainment for children at our Ugie Bear Club also are important. Our Forest Hills Lochside Resort is unique in offering a curling rink.’’ —MAX CONNELL, operations director, MacDonald Hotels & Resorts Bathgate, West Lothian, Scotland

—LYNLEY CHAVE, manager, The Pines Resort and The Edgewater Club, Wanaka, New Zealand

‘‘Our pool and beach are in demand because people want to relax and refresh themselves. Live entertainment also is very popular.’’

Source: ‘‘What amenities do owners and guests demand most?’’ Speak Up, Ventures (December 2004).

DISCUSSION QUESTION: If you were to choose one of the amenities mentioned above to include in a new resort, which would it be? Why?

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Development of a budget requires forecasting both revenue and costs associated with a specific program. A realistic rule of thumb for forecasting revenue is to assume that 80 percent of anticipated registrants will enroll in the program. Pricing can be based on cost, demand, or competition. Cost-based pricing involves pricing the activity so that some or all of the costs are covered. Demand-based pricing sets prices according to what the market will bear. There are, for example, certain psychological aspects to pricing. Many people believe that price and quality are directly correlated—the higher the price, the better the quality. A program may be priced at a level that more than covers the costs involved as long as guests are willing to pay and believe that the value they receive is greater than the price they are asked to pay. The costs involved in running a program set the floor for the price to be charged. The level of demand, what guests are willing to pay, sets the ceiling for how much is charged. The level of competition determines where, between the ceiling and the floor, the price is set.

Scheduling The key issue in scheduling is to offer programs that meet the time needs of resort guests. Three patterns are involved in scheduling activities. The first consideration is a seasonal one. Certain activities are season-specific. A full list of programs can be developed for each season, taking into account the constraints and appropriateness of each time of the year. A winter program, for example, would focus on activities involving snow—sleigh rides, ski lessons, etc.—while tapping trees for syrup and leaf tours would work in the spring and fall. A second aspect to scheduling involves a monthly or weekly focus. The timespan must relate to the average length of stay. If most people stay for two weeks, for example, a varied 14-day schedule of activities must be developed so that the second week is not a repeat of the first. Finally, resorts plan a daily time schedule. Depending on the pattern of activity of the guests, activities in several or all of the following time frames might be scheduled: morning early afternoon afternoon activity at lower level late afternoon early evening late evening It is important, when scheduling activities, to consider when regular maintenance can be done. The best time for maintenance is when demand for participation in the program is low. For ski areas, for example, most maintenance takes place in the so-called mud season, after the ski season ends.25

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It’s important that the schedule of activities be accessible to guests. Courtesy of the author

Facility Availability Facilities need to be convenient and accessible to the guest. They must be attractive and safe places in which to undertake the activity. The safety factor means being concerned about risk management.26 Risk management involves a proactive attempt to minimize the undesirable risks inherent in any guest activity. Risks are ‘‘managed’’ in one of four ways: Elimination—by, for example, not offering the program Acceptance—by continuing to offer the program Transfer—(through insurance) to another entity Reduction—by, for example, requiring participants to wear safety equipment 27 Resorts have a duty to offer a safe environment to their guests because a legal relationship exists between the resort and the guest. Staff are expected to offer a standard of care that is reasonable to expect from a trained professional. For a ruling of negligence, guests would have to show that an injury was a direct result of an action or a lack of action by the employee(s). Finally, there must be injury— physical, emotional, or mental—to the guest, or damage to property.

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The process of risk management involves scrutinizing every activity offered for anything that could possibly go wrong and developing procedures to prevent accidents from happening. All risks cannot, and should not, be completely eliminated. They should, however, be known, understood, manageable, and enhance or be an essential part of the activity.29 Skiing is a good example. The risks are known to skiers and managed by the resort through trail marking and activity monitoring by the ski patrol.

Promoting the Program Modern marketing calls for more than developing a good product, pricing it attractively, and making it available to target guests. Management communicates with customers—both existing and potential—through what is known as the promotional mix. The goal of promotion is behavior modification; marketers want to initiate or change the behavior of guests such that they participate in the guest activity offered by the resort. Specifically, promotion seeks to inform, persuade, and remind.

PROGRAM EVALUATION Program evaluation is a process whereby, through systematically judging, assessing, and appraising the workings of a program, one gains information that indicates whether or not they are getting results or getting where they want to go. . .whether or not the program has value. —PATRICIA FARRELL and HERBERTA M. LUNDEGREN THE PROCESS OF RECREATION PROGRAMMING: THEORY AND TECHNIQUE

Evaluating Program Effectiveness The aims of program evaluation are twofold: to determine whether or not the program has value, and to determine whether or not the program objectives are being met. Thus, to evaluate the program, actual results must be measured against predetermined objectives.

Approaches to Evaluation Programs can be evaluated in several ways—by the extent to which objectives are met, by the extent to which standards are met, and by the effect on guests. Evaluation by Objectives

The importance of setting objectives was noted earlier. In this evaluation method, the appropriateness of the objectives is determined first—both the broad program objectives and the specific behavioral objectives for the guests. If the objectives

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are found appropriate, the program is successful if they are met. This process involves using various measurement techniques, which are examined later in this chapter.29 Evaluation by Standards

A standard is defined as ‘‘a degree or level of requirement, excellence, or attainment.’’30 To the extent that a standard can be determined for an activity, the extent to which it is met can also be measured. While this method is easy to administer, it tends to measure things that can be counted rather than the impact of the activity on people.

Evaluation by Effects on Participants

The final method of evaluation is to measure the effectiveness of the program by looking at the impact on participants. Because the result of a guest activity program is related to guest satisfaction, this method seems more appropriate than the others described above. The nature of the effects of a guest activity on guests—and, therefore, the things that can be measured—can be:

Quick Getaway 10.5

Benchmarking for Guest Satisfaction The fundamental goal of destination management is to assess how well the product, facilities, services, and programs are working together to provide a memorable experience for visitors. Because of this, it’s important to periodically monitor visitor satisfaction. It’s also important to ensure that resources that are vulnerable to damage caused by excessive tourism are protected for future use. Benchmarking these important aspects of destination management is the best way to assess performance, and the best way to learn what needs to be done. Benchmarking began to gain popularity and currency in the industry in the 1990s and it continues to grow in popularity. As a quality management and improvement technique, benchmarking is defined as a standard by which a thing may be judged or measured. Benchmarking can also be explained as the search for the practices that foster excellence within the industry. Benchmarking is a contin-

uous process that compares an organization’s performance against that of the best performers in the industry, basing the comparison on the needs of consumers and what needs to be done. Although there are many different approaches to benchmarking, they are all built on performance comparisons, the identification of gaps, and change management processes. For this reason, benchmarking goes beyond traditional competition analysis. Traditional competition analysis looks only at product or service comparisons, whereas benchmarking also compares operating and management systems. Source: ‘‘Destination Benchmarking: An IndicatorSystem’s Potential for Exploring Guest Satisfaction.’’ Journal of Travel Research (February 2004).

DISCUSSION QUESTION: How can benchmarking be applied to measuring the effectiveness of guest activity programs?

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psychomotor (e.g., skill, strength, relief from stress) psychological (e.g., attitudes, need satisfaction) sociological (e.g., social behavior) educational (e.g., learning)

SUMMARY Guest activity programming requires a planned effort. The guest activity director seeks to satisfy guest needs with a staff, facilities, equipment, and other resources against a backdrop of historical, environmental, organizational, social, and cultural influences. Guest needs are assessed, objectives developed, and a cluster / activity analysis conducted. A guest activity director matches the life stage of guests with the format and activity desired to develop a guest activity program. Formats include instruction, competition, social activities, trips, drop-in activities, special events, and spectator. Programs range from sports and games to self-improvement and education. Program planning means putting leadership in place, budgeting, scheduling, checking on the availability of facilities, and promoting the program. Finally, programs must be continuously evaluated to ensure they are meeting the objectives of the resort.

ENDNOTES 1. DeGraaf, Donald G., Debra J. Jordan, and Kathy H. DeGraaf. Programming for Parks, Recreation, and Leisure Services: A Servant Leadership Approach. State College, PA: Venture Publishing, 1999, 3. 2. Ibid., 7. 3. Ibid., 3. 4. Ibid., 5. 5. Farrell, Patricia, and Herberta M. Lundegren. The Process of Recreation Programming: Theory and Technique, 3rd ed. State College, PA: Venture Publishing, 1991, 25. 6. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services, 52. 7. Farrell and Lundegren. Process of Recreation Programming, 14. 8. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services, 75. 9. Farrell and Lundegren. Process of Recreation Programming, 43. 10. Ibid., 19. 11. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services, 258. 12. Farrell and Lundegren. Process of Recreation Programming, 152. 13. Ibid., 7.

14. Ibid., 84. 15. Ibid., 86. 16. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services, 122. 17. Ibid., 124. 18. Farrell and Lundegren. Process of Recreation Programming, 114. 19. Farrell and Lundegren. Process of Recreation Programming, 123. 20. Ibid., 125. 21. Ibid., 127. 22. Ibid., 133–134. 23. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services. 182–201. 24. Ibid., 190–192. 25. Farrell and Lundegren. Process of Recreation Programming, 141–149. 26. Ibid., 150. 27. DeGraaf, Jordan, and DeGraaf. Programming for Parks, Recreation, and Leisure Services, 134. 28. Ibid., 136 29. Ibid., 239. 30. Ibid., 242.

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Chapter 11 RESORT OPERATIONS: THE IMPORTANCE OF RETAIL LEARNING OBJECTIVES 1. Identify the various motivations for tourist shopping and how they can be met. 2. Describe the role of shopping and retail in a resort operation. 3. Illustrate the impact on sales productivity of: a. Layout and design b. Merchandising c. Customer segments

INTRODUCTION TOURIST SHOPPING Reasons for Tourist Shopping

Vendors GETTING YOUR MESSAGE NOTICED Merchandise Placement

Nationality and Shopping

OPERATIONS

Types of Souvenirs

CUSTOMER SEGMENTS

Shopping Venues

How Men Shop

RESORT RETAIL

How Women Shop

LAYOUT AND DESIGN

Older Shoppers

Time

Children

Layout

Generation X

Transition Zone Basket Placement MERCHANDISING

PROFIT RATIOS Sales Analysis Price Zones

Retail Competition

SUMMARY

Merchandising Principles

ENDNOTES

Impulse Buying

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INTRODUCTION People love to shop when on vacation. Managers who apply a basic knowledge of retail layout, design and merchandising techniques can significantly increase revenue from guests staying at their property.

TOURIST SHOPPING A good store is by definition one that exposes the greatest portion of its goods to the greatest number of its shoppers for the longest period of time. —PACO UNDERHILL Why We Buy

People, including resort-goers, love to shop. In fact, the main reason for almost 20 percent of all travel journeys is to shop.1 Shopping is increasingly becoming an experience. Five things contribute to this. We are seeing that, because of more leisure time, higher standards of living, and increased sophisticated marketing by retail outlets, shopping is a leisure activity in and of itself. Further, people tend to define themselves by what they buy. Additionally, the things we buy often have symbolic meanings beyond the utilitarian value attributed to the item. An unusual salt and pepper set may remind us of a special vacation. People shop to fulfill a variety of needs and wants they may be only unconsciously aware of. Finally, shopping involves a great deal of subjectivity encompassing how individuals process images and the degree of value placed on these wants and needs.2 At this point we should note the difference between buying and shopping.3 Buying involves the actual purchase of something. Shopping can involve much more—being with other people, exercising, spending leisure time with friends and relatives, seeking novelty. In short, shopping is much more than ‘‘simply’’ seeking to buy a particular item. Tourist shopping consists of tangible items purchased for consumption at the destination (excluding food and drink) or for export back to their home region.4 Its importance is indicated by the fact that shopping is the number one vacation activity in the U.S. Approximately 40 percent is generated by international visitors.5 Even in Las Vegas more people favor shopping than gambling. In a number of ski areas summer arrivals outnumber those in winter. In part this movement is due to the popularity of shopping where it is viewed as an important part of the visitor experience, a source of revenue for the resort with the potential to surpass profits from lift tickets, an opportunity for people to meet, a way of extending visitor stays, and a way for one resort to differentiate itself from the competition.6

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Reasons for Tourist Shopping There are a number of reasons specific to tourists that account for their shopping habits.7 It can be argued that the major reason people buy souvenirs is to remind them of the places they have vacationed in. The motivation here is nostalgia. Upon returning home the purchase can, in effect, prolong the trip as purchases and postcards help keep the memory alive. For others, time on vacation may be spent watching local craftspeople. Buying an authentic piece of work by a local artisan allows tourist to show an appreciation for local workmanship while allowing them to add to their personal collections at home. It might be argued that the motivation here is prestige—the prestige of owning local and authentic crafts, materials, and designs. This motivation to buy is closely related to the desire for authenticity—people want something that is ‘‘real.’’ Tourists use a variety of criteria to judge how authentic their purchases are:8 Product uniqueness—how scarce it is or how unique it is to a particular destination. Cultural and historical integrity—is it truly representative of a place and / or time period? Aesthetics—is it visually appealing? Workmanship—quality and attention to detail. Authentic processes and materials made by the artists’ own hands. Shopping experience—communicating with the actual artisan and / or seeing the piece being made. Function and use—how utilitarian is it? Certification—verification by means of names, dates, and signatures appeals to the need for status. Labels are more important to those from New Zealand, Australia, and Asia compared to tourists from Europe and North America. The more people travel to a specific destination their purchase behavior changes from buying stereotypical souvenirs to purchasing higher quality, more authentic items. Tourists on vacation also buy functional items. Rather than carrying sunblock to the ski resort they may elect to make the purchase at the resort. If a party is staying at a condominium for an extended stay they might buy food at the destination for consumption at the resort. If prices of certain items are less at the destination than at home they may choose to buy these items while on vacation for consumption upon their return home. Examples would include cartons of cigarettes or clothing items. Tourists also buy gifts for people at home. In Asian cultures it is especially important to return home with gifts to special people who were themselves unable to take the trip. A related segment is those local people who buy items indigenous to the region to give to friends visiting from abroad. Finally there are those who make purchases that benefit people and / or places at the destination. Tourists may

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make the purchase for altruistic reasons when part of the purchase price goes to helping preserve open land or helping a local group.

Nationality and Shopping At the risk of generalization it is true that shopping patterns vary by nationality. In a study of handicraft purchases in the Gambia it was found that Germans prefer bright colors and abstract designs and buy crafts featuring elephants and other large wildlife, British tourists buy useful items such as bowls and chess sets and those with novelty or humor value, while Scandinavians prefer batik, clothing, and similar functional items such as tea towels.9 Japanese tourists spend almost three times as much money on shopping per trip compared to European or North American visitors. Japanese shopping behavior is a function of the following:10 Desire for brand name, high-quality items. Brand names and outward appearance connote prestige, social status, and sophistication which, through purchase, are transferred to the buyer. Gift giving is very important. The cultural tradition of senbetsu involves friends, relatives, and even co-workers giving a gift to the tourist prior to departure. The gift may be money or an item that can be used on the trip, such as a camera. These gifts oblige the tourist to reciprocate with gifts purchased while on vacation. The practice is termed omiyage. The gifts represent a way of salving a guilty conscience with those who were unable to go on the trip. They are also a function of the Japanese seeing themselves as part of a larger community. As such, gifts are brought to friends, neighbors (who may have taken care of children or the house), and co-workers who are part of that larger community. The gifts should be representative of the region visited and be of high value. Gift giving is also a way to curry favor. A junior manager returning from vacation after receiving a gift of money from his / her boss is expected to bring back a gift of greater value than the money given. Because of difficulties with other languages, Japanese travelers tend to travel as part of a tour group. Tour groups tend to have tight schedules. This leads to preferences for shopping at overseas branches of major Japanese stores. These stores have Japanese-speaking staff that is well acquainted with the high service expectations of Japanese travelers. High expectations carry over to the elaborate ways in which gifts are wrapped—presentation is extremely important. Travelers prefer to use left-over foreign currency at airport duty-free stores. Liquor is the most popular item purchase by Japanese tourists— especially expensive brandies, Scotch whiskey, and wines from the bestknown regions of the world.11 They also purchase brand-name cigarettes, French perfumes, American cosmetics, and Swiss watches.

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Types of Souvenirs Souvenirs are either place-bound or event-based.12 Place-bounds souvenirs may be: Pictorial images—postcards, books, posters, etc. Piece-of-the-rock—rocks, shells, fossils, etc. Symbolic shorthand—replicas of famous attractions. Markers—items marked with words and logos such as coffee mugs and shot glasses. Local products—food and drink items, clothing, handicrafts. Event-based souvenirs are tied to a specific event. Typically, they are related to wars or natural disasters. In Vietnam, for example, the cases of unused U.S. 40 mm grenades have been turned into lamps and sold as souvenirs. After Mount St. Helens erupted in 1980 merchants were quick to fill small bottles with ash from

Quick Getaway 11.1

Souvenirs to Remember Souvenirs are colorful, they’re kitschy, and they’re as much a part of American culture as the apple pie. Souvenirs are big: Americans spend roughly $1.5 billion a year on them. Why? The word itself holds the key: the English word ‘‘souvenir’’ comes directly from the French word for ‘‘to remember.’’ That’s why travelers buy them, to aid their faulty memories and to constantly remind them of the good times they had. ‘‘Travel is still this special, unique period of one’s life,’’ says Robert Thompson, a professor of pop culture and media at Syracuse University, ‘‘and there’s a very natural human tendency to bring back a trophy from someplace you’ve been, to commemorate the event.’’ Souvenirs also provide the opportunity to boast about where you’ve been—as anyone knows who’s worn a souvenir T-shirt. ‘‘Souvenirs are status symbols,’’ Thompson says of the phenomenon, ‘‘though they’re the kitschiest

status symbols I can think of.’’ In the twelfth century, when medieval Christians were making pilgrimages to assorted shrines, they purchased metal badges— complete with images of the shrine’s saint— and affixed them to their hats and clothing, just like the travelers of today who purchase patches. Today’s souvenir collectors are often people who had a pleasant trip to the area as a child, and they continue to purchase memorabilia to remind them of that time in their lives. Source: Hilgers, Laura. ‘‘Sentimental Journey.’’ Via Magazine (January 2003). http: / / www.viamagazine. com / top stories / articles / souvenirs03.asp

DISCUSSION QUESTION: Would you rather buy a beautiful souvenir with no practical value or a less attractive souvenir that you know you’ll use? Why?

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the volcano and begin distributing them all over the U.S. T-shirt manufacturers seem to specialize in the ‘‘I survived the (fill in the disaster) of (fill in the year).’’ There is a three-stage process that tourists go through when it comes to shopping.13 In the first phases, where tourists are new to the destination, visitors typically purchase inexpensive souvenirs indicative of the region—the type of purchases made by the mass tourist. As the tourist becomes more familiar with the destination he / she looks for souvenirs that are more authentic. There is a desire to visit the places where the souvenirs are made and to meet with the people who make them. More attention is paid to detail and the tourist is willing to spend more time and money looking for the perfect remembrance. During the buying process, visitors in this second stage seek to distance themselves from ‘‘tourist buyers.’’ In the third and final stage tourists are very familiar with the destination. They look to buy items that are truly local in nature and commonplace in form rather than novel or exotic. They may buy items that are functional, such as local foods, and may shop in ways and places similar to the locals.

Shopping Venues14 Tourists shop in a variety of places. Souvenir shops are popular in destinations as well as in transit locations. They usually stock items that are representative of the region. Clustered near tourist attractions, they will also often sell items that fit in with the theme of the region—for example, religious items near churches, synagogues, or cathedrals. Supermarkets cater to both locals and tourists where the latter are staying in self-catering accommodation. The importance of clothing stores can be seen from the fact that clothing is the number one item purchased by tourists in the United States.15 Malls offer a collection of stores offering a variety of merchandise and prices. Some, such as the Mall of America, have become tourist attractions in their own right. Increasingly more malls are adding recreational experiences to their offerings and bringing the concept of ‘‘entertainment retail’’ into being. We are also seeing the development of theme malls—based on countries (El Mercado mall in San Antonio, Texas) or, in the case of Park Meadows just south of Denver, nature and national parks. By some estimates over 40 percent of all tourists in the U.S. visit a discount mall annually. Traditionally located in industrial cities, these outlet centers are now spreading to smaller cities and towns. Airport shopping areas offer landside and airside locations. The former is open to all passengers and visitors and are located before security checkpoints. The latter are to be found beyond the security area and are only accessible to ticketed passengers. Airport retailing is increasingly becoming an important revenue and income center for many airport authorities. The market can be segmented into:16 Business travelers who have a high propensity to buy since they spend so much time at airports. Some retailers are even offering frequent buyer programs targeted to this segment of the market.

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Leisure travelers who, because they have to check in up to two hours prior to the flight leaving, have an opportunity to buy souvenirs and travel-related items. Meeters and greeters will often purchase welcome or departing gifts. Airport / airline employees. Airport recreationists who visit the airport to watch the planes land and take-off. Railway stations and harbors typically appeal to short-distance commuters and those making long journeys between cities. Books, magazines, newspapers, and snack and drink items sell well. About 30 percent of all spending on each trip is done in duty-free shops.17 The single best selling item is women’s perfume although wines, spirits, tobacco, candy, jewelry, and watches are also popular. Some countries are beginning to allow duty-free purchases upon arrival. This provides the added bonus for the airlines of saving storage space in the passenger cabin while reducing fuel costs because of the reduced weight of the plane when in flight. In the developing world craft villages produced specific types of handicrafts. These villages have evolved into tourist craft production centers that manufacture items for tourist consumption. Many also set up areas where tourists are invited to see the artisans at work. These craft markets have given women opportunities to expand economically. In some cases these villages have developed into large tourist shopping villages offering restaurants and other tourist-related services in addition to retail stores. These villages become tourist attractions in their own right as they are often found in parts of the region rich in natural or cultural attractions. Shopping opportunities are also possible at museums, heritage sites, wineries and distilleries, and special events and theme parks. For the latter retail revenue can exceed that of entrance fees.

RESORT RETAIL Retail sales are a significant part of most resort operations. Merchandise sales account for about 13 percent of total revenue for resort golf facilities in the United States,18 while ski clothing and equipment sales make up 6 percent of total sales at North American ski areas. Rentals account for an additional 4 percent of revenue.19 Retail stores have three distinct aspects: design (the premises) merchandising (what is put on the premises) operations (what employees do)20

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Specialty or seasons retail is an opportunity for resorts. Courtesy The Greenbrier

These three items are interdependent. Decisions regarding one affect the other two. Strengthening one area takes some pressure off the others. If one is weakened, it shifts more burden onto the remaining two. Consider, for example, a store selling bottles of sunscreen. It is time-consuming for employees to stock all those bottles in perfectly straight rows. If the store were to replace the shelves with bins, a clerk could just roll a trolley of merchandise to the aisle, open the bin, and dump in the goods. This strategy would have to be considered in light of the overall impression the store wishes to give. Management would have to ensure that customers did not perceive the bins as indicative of lower quality.

LAYOUT AND DESIGN Time The most important factor in determining how much people will buy is the amount of time they spend in the store (assuming they are buying and not waiting in line). The store should not be set up so that customers can scan the entire layout quickly.

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They should be set up in a way that leads customers from one part of the store to another in what is called a ‘‘voyage of discovery.’’21 Another crucial element is the interception rate—the percentage of customers who have some contact with an employee. The more shopper–employee contacts that take place, the greater the average sale. On the other hand, the most important factor in determining customer satisfaction is waiting time. The longer shoppers wait in line, the lower their impression of overall service.

Layout Retail space should take the physical characteristics of customers into account when designing the physical layout of the store. Consider the following:22 Most people have two hands that, at rest, are approximately 3 feet off the floor. People focus on what is directly in front of them. This means that displays should be offset to one side so that they can be more easily seen from an angle. Endcap refers to the display of merchandise on the end of store aisles. To fully appreciate the displays, customers need to walk sideways! Placing shelves or racks at an angle—chevroning—positions the shelves at a 45-degree angle rather than a 90-degree angle to the aisle. The problem is that chevroning shelves takes up about one-fifth more floor space than the usual configuration. As a result, a store can show only 80 percent of its merchandise. Peripheral vision is determined, in part, by environmental factors. Sight lines should be taken into consideration; merchandise should not be placed so it cuts them off. The capture rate refers to how much of what is on display is seen by shoppers. The reliable zone, that placement area in which shoppers will probably see the merchandise, extends from slightly above eye level down to about the knee level. Large items are the only merchandise that should be displayed above or below the reliable zone. Tipping the bottom shelf up slightly helps visibility. People would rather look at people than objects. The number-one thing people look at is other people. The most effective signs in fast-food restaurants are those that sit on top of the cash registers—more or less at the level of the cashier’s face. People go in predictable paths, speed up, slow down, and stop in response to their surroundings. People in North America tend to walk to the right immediately on entering a store, so this is an area of prominence in which to place products. This right-moving tendency is linked to the side of the road on which people drive. In Great Britain and Australia, on the other hand, people tend to walk to the left. Customer flow is also important. In museums, for example, visitor flow should take tourists through souvenir shops. They should be clustered to-

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gether and near other services such as cafeterias and rest rooms. There will be more sales—especially of larger items—if shops are located close to the exit gate. In this way, visitors can make the purchase and immediately load it into the family car rather than contemplate carrying it throughout the museum during the visit.23

Transition Zone When people cross the threshold of a store, they do not come to an immediate stop. Their momentum carries them into the store through a transition zone. Getting them to pay attention to displays at the entrance requires some thought on the part of the retailer. A slightly creaky door, a squeaky hinge, or special lighting on the doorway can clearly mark the division between the store and its outside environment. Merchandisers are advised to avoid trying to accomplish anything important there and to take steps to keep the transition zone as small as possible. Several opportunities are presented in the transition zone. An employee can greet customers and acknowledge their presence. Shoplifting can be discouraged. The easiest way to do this is to make sure employees acknowledge the presence of every shopper with a simple hello.

Basket Placement Baskets are usually placed immediately inside the store entrance. In many cases, customers rush through the transition zone, bypassing the baskets. At one store, employees were trained to offer baskets to any customer holding three or more items. Most gratefully accepted this gesture and took the basket. As more people used baskets, the average sale increased. Baskets, in fact, should be scattered throughout the store where they are most needed by customers. The stack should be at least 5 feet high to ensure visibility and prevent shoppers from having to bend to get one. Shoppers hate to bend, especially when their hands are full.24

MERCHANDISING Retail Competition Resort retailers have to compete with major retail stores and chains for their guests’ business. Golf pro shops, for example, rank first in only one consumer category— gloves—where they are the outlet of choice of 21 percent of all golfers. When it comes to other purchase categories (balls, clubs, bags, apparel, and shoes), their market share slips to between 9 and 14 percent.25 Resort retailers have to compete with department stores, which are devoting more and more space to golf-specific clothing. As retail companies come out with casual lines, they intensify the struggle to find shelf space in the pro shop and resort retail store. Liz Claiborne has already

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taken the lead from Ralph Lauren—whose Polo line went from department store to pro shop favorite—by placing its LizSport line at private clubs and resorts around the country. Department stores are looking to delve further into weekend casual sportswear. Callaway is one of only a handful of companies, including Brooks Brothers, creating golf lines exclusively for department stores. Years ago, golf discount stores took a chunk out of the pro’s hard goods business but did not compete in the apparel area. Now, the department stores and specialty stores are threatening to cut into that business as well. Many pro shop owners and buyers feel betrayed by the defection of golf apparel companies and are sometimes less apt to do business with them. Department stores get greater variety than do resorts because of the volume they deal with. Resort shops do have one major edge: cresting. Logoed apparel comprises 90 percent of menswear. On the other hand, there is not much logoing in womenswear. As a result, this is where the competition is. The resort retailer must compete on the basis of service, attention, and experience while emphasizing their potential to provide consumers with immediate gratification in their stores.

Merchandising Principles Merchandise can be laid out in one of two ways—large numbers of items can be brought out for self-service or a small number of items can be showcased. The more expensive the item, the fewer are put out on the floor. Merchandise can be

Shopping venues become tourist destinations by offering something extra. The Mall of America includes an aquarium for visitors. Courtesy Underwater Adventures Aquarium

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displayed in ways that will stimulate sales if the following principles are adhered to.26 The product is the focus—the display should not overwhelm or take away from the product. The surrounding environment should take into account the product’s final use. This might mean having electric outlets available to let consumers try out the electrical product. Themes can be created to establish mini-environments within the larger store. Cowboy-related products can benefit from a Western-themed area. Creative merchandising stimulates all five senses. Sight can be stimulated by vibrant colors; touch by allowing shoppers to feel the products; smell and taste by displays of various food items; and sound by means of background music. Selling zones can be arranged whereby similar items are grouped together to create ambience or to make buying more efficient for the shoppers. T-shirts, swimwear, and related clothing items sell better when grouped together.

Impulse Buying Leisure shoppers are more inclined to make impulse purchases compared to ‘‘regular’’ shoppers. A variety of factors promote impulse buying:27 Low prices. The degree to which consumers ‘‘need’’ the item. Mass distribution of specific items. Self-service operations mean faster buying and more freedom. The amount of advertising. Large displays in the store. Items with short product lives. Small, lightweight, and easy to store items are easy to buy and carry.

Vendors Carrying all the major lines is impossible, so resort retailers have to be selective in their choice of vendors and items they carry. The average number of lines carried in golf resort stores ranges from two (gloves and rainwear) to seven (men’s shirts). Most carry three to four brand names in clubs.28 In choosing vendors, resorts should consider the following: Marketing and pull-through—Has a line been nationally advertised? Does it have adequate consumer awareness? Is the name recognizable? Pricing policy—How willing is the company to work with the resort store on pricing, closeouts, dating, and terms?

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Execution—How easy is it to do business with the company? Does the paperwork match what’s in the box? Does the company ship completely and on time? Customer service—Are the customer service people talented, aware, and able to answer questions? Customer service can make or break a company. Sales staff—How talented is the sales staff in advising the buyer how to invest? Does the representative have an awareness and understanding of the resort retail business? Logos—Does the company logo in-house or out? This may seem a minor point, but when a good portion of your business depends on selling your name, excellent logo service is critical. Commitment—What is the company’s commitment to the industry? Does it understand the needs and problems of the resort retailer? Is it willing to work with you? Vendors have to understand the personal nature of the resort business, where smaller orders and more exact deliveries are the norm.29

GETTING YOUR MESSAGE NOTICED The key to getting your message across is, first, to attract the attention of the audience. Once that is accomplished, the message has to be presented in a way that is clear and logical; it must have a beginning, a middle, and an ending.30 People absorb information a little at a time. If they are told too much too fast, the result is information overload. If customers are confused, they will miss the message altogether. By walking through the store as a customer, retailers can see what shoppers will do and what they will look at in different places in the store. Where people are walking fast, the message has to be short and have immediate impact. Where people are browsing, on the other hand, more detail can be given. At the cash register, where they stand still, there is an opportunity for a longer message. For example, the shoe department offers an opportunity to promote other products. When the clerk goes off to find a particular shoe, the customer is left (usually shoeless) with nothing to do. The customer could be given promotional reading materials. Research has shown that 25 percent of the diners in fast-food restaurants read table tents, compared to only 2 percent of diners in family restaurants.31 The reason is that, in family restaurants, most parties are groups of two, three, or four. They are too busy talking to read. Many fast-food customers, on the other hand, are on their own and looking for a distraction. Signs should interrupt the existing natural sight lines in any given area. Retailers should put themselves in the shoes of the customer and identify where they are looking—that is the perfect spot for a sign. The principles of good design are as follows:

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Hot, Hot, Hot: One Tub Store’s Cool Design When industry veteran Nils Erickson moved to Daytona, Florida, he wasn’t planning on entering the local market. However, he just couldn’t resist the demographics. ‘‘This area is just busting out with retirees with disposable income, and I really wanted to offer them something great to look at and purchase,’’ Erickson says. ‘‘I painted a picture in my head of a hot tub showroom like nobody else had done before.’’ What were the key elements to making his new showroom a success? Mood: The store’s mood draws its inspiration from the company’s motto, ‘‘Fun Family Paradise.’’ Touches like sand-andsky-themed paint blend with calypso background music to create a tropical mood. ‘‘It sets a feel. It’s all about emotion,’’ Erickson says. Accessibility: The store, which is small with a narrow footprint, might make other retailers cram inventory in sideways. That’s not Erickson’s approach. Too much inventory cuts down ease of movement, which discourages lingering. ‘‘The longer we can get the customer to linger and look, the better chance we have to hit the home run,’’ he says. ‘‘Even a wheelchair can get through my store, no problem, including every inch of the pool display.’’

Easy Checkout: The large center-island cash / wrap station, designed to look like an open-air cabana, is the focal point of the store. Its wide granite counters were designed with both busy employees and overburdened customers in mind, and the shelves at its base are a great place to display impulse items. Attractive Displays: ‘‘Nobody wants to buy the box on top of the ground,’’ Erickson says of his hot tubs. Instead of displaying the ‘‘boxes’’ lined up like soldiers, Erickson shows them off in interesting settings. Some tubs are recessed, while others are surrounded by luxurious extras like planters, steps, and bars. There’s also a tastefully decorated ‘‘mood room,’’ complete with electric fireplace, where customers can soak in three different tubs. Source: Edry, Sharon. ‘‘Life’s a beach: Florida dealer turns his hot retail showroom into a cool customer experience.’’ Pool & Spa News (June 4, 2004).

DISCUSSION QUESTION: Erickson deliberately makes sure his showroom is fully wheelchair-accessible, which makes sense given the area demographics. What other things would you do to cater to a senior-citizen market?

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no extra words the right sign at the right place enough signs that customers don’t feel ignored or underinformed not so many signs that there’s clutter or confusion32

Merchandise Placement Because North American shoppers search right and most are right-handed, merchandise should be displayed just slightly to the right of where customers stand. The most popular brand should go dead center, the brand the store is trying to build just to the right of it.33 Positioning the most popular items halfway down the aisle encourages shoppers to pass other items on the way to their purchase. Similarly, a large graphic or hanging on a rear wall seems to pull shoppers toward it.34 According to Underhill, author of Why We Buy: The Science of Shopping, ‘‘almost all unplanned buying is a result of touching, hearing, smelling, or tasting.’’35 Let people know that it is all right for them to touch. Many people, for example, are reluctant to mess up a neat display of sweaters. When sweaters are displayed in several shades, it is wise to place the lightest one on the bottom and the darker ones on top, as these will be touched most. When selling merchandise that will be used at various times of the day, provide several settings of illumination so customers can see what the color will look like when it is likely to be worn. Here are some practical ideas from stores specializing in golf: Add a display coordinator with an extensive background in the retail fashion industry. To blur the line between soft goods and hard goods, incorporate clubs and bags with apparel displays and boutiques. Use antique props to create a pro shop atmosphere. The most worn piece of carpet on your shop floor reveals where most of the foot traffic goes. Place slow-moving items in that spot to see if sales increase because of the location. Everyone moves to the right. Place most impulse items to the right, inside the shop entrance. People buy items placed between 3 and 5 feet off the floor. Tell a story with merchandise by placing apparel, shoes, and equipment together in a space. Trade-ins are a way to discount without really offering a discount. Give the customer a dollar for their old glove if they buy a new one. Package a box of balls, a glove, and a hat together. Rotate stock. Built-in cabinets can be beautiful, but modular fixtures are more practical. Halogen lights are more efficient than standard light bulbs; they last longer, emit less heat, and are more cost-efficient. New colored halogen lights give a warm look.

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The presentation of merchandise is as important as the merchandise itself. Courtesy M. Keith Dykes, KCAB

Appeal to all the senses. Use videotapes with banks of video monitors. Play audiotapes of, for example, the sound of a tennis ball popping off a racket. Use pellets with scents like leather or tobacco in men’s clothing boutiques. Use lights to highlight high-ticket merchandise. Supply coloring books, crayons, and cookies for children so parents can shop more easily. Provide special services such as in-shop alterations, spike and grip replacement, club demos, shipping, gift wrapping, and gift certificates.36

OPERATIONS The importance of employees in increasing sales cannot be overestimated. Resort retail staff in golf resorts estimate that a whopping 54 percent of their time is spent dealing with customers.37 This completely overwhelms time spent in giving lessons

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(13 percent) and dealing with recordkeeping and product displays (10 percent). Research indicates that any contact initiated by a store employee increases the likelihood that a shopper will buy something. Shopper conversion rate—the percentage of shoppers who actually buy—increases by half when there is a staffinitiated contact and jumps by 100 percent when there is staff-initiated contact and the use of the dressing room.38 The dressing room, in fact, may be the most important part of any apparel-selling store. Shoppers want to experience merchandise before buying it. When shoppers are in a dressing room, they are captive. Additionally, they have one thing on their mind: the desire to buy something. Thus, it is important to make the dressing room as conducive to buying as possible by ensuring that clothes are displayed in their best possible light. There should be plenty of large, high-quality mirrors. A little anteroom outside the dressing rooms can be a good place for shoppers to inspect the merchandise closely. Fresh flowers are a nice touch. Customers hate to wait. The single most important factor in determining a shopper’s opinion of the service he receives is waiting time.39 When people wait up to about a minute and a half, their sense of how much time has passed is fairly accurate. Anything over this length distorts their sense of time. If they wait two minutes, they say it has been three or four. Waiting becomes a full-fledged activity of its own. Measures can be taken to make waiting time seem less. Any interaction, human or otherwise, makes a wait seem shorter. For example, the time a shopper spends waiting after an employee has initiated contact seems to go faster than time spent waiting before that interaction takes place.40 Simply acknowledging that the shopper is waiting and offering some explanation for the delay automatically relieves time anxiety. The cash register / merchandise wrapping area is where customers are separated from their money, which is a source of shopper anxiety. Most retail stores do not make this zone exciting. Adding sound, light, and color can do much to ease any anxiety felt in the financial transaction.

CUSTOMER SEGMENTS How Men Shop Men shop differently than do women. Here are some of the differences: Men always move faster through store aisles. Men spend less time looking. In one study reported by Underhill, 65 percent of male shoppers who tried something on bought it, as opposed to 25 percent of female shoppers. Men’s dressing rooms should be clearly marked. If male shoppers have to search for dressing rooms, they may decide it is not worth it. Eighty-six percent of women look at price tags when they shop—only 72 percent of men do. Men are more easily upgraded to a more expensive

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item. It is almost as if they are so anxious to get out of the store that they will agree to anything. Conventional wisdom says, ‘‘Sell to the woman, close to the man.’’ Men do not especially like the shopping experience, but they get a definite thrill from the experience of paying. Men hate to ask directions (just like when they drive!). They prefer to get information firsthand from written materials, instructional videos, or computer screens. Women, on the other hand, ask questions of employees.41 As noted earlier, how much customers buy is a direct result of how much time they spend in the store. When a woman is in a store with a man, she’ll spend less time than when she is alone, with another woman, or with children.

How Women Shop Compared to men, more women see shopping as a social activity.42 They like to shop with friends. When two women shop together, they typically spend more time and money than women shopping alone. They also feel more comfortable being waited on by a woman.43 On the golf course, women need to dress conservatively for business while still maintaining an active look. Manufacturers are creating separates that women can wear on and off the course and get more value out of each piece. For the next few seasons, women’s clothes will be characterized by: Classic design—Prep school, corporate, country club—the look is retro in feel but modern in design. Brighter color—Golfwear was dominated by earth tones coming into the 1990s. Some of the best new color pairings are the classics—navy and white, black and white, brights with neutrals, an overall neutral tone-ontone. High-tech fabrics—Two fabrics dominate: microfiber and Tencel. Texture—The design is in the details. A subtle pattern may be woven into the fabric. Pricing—Price is still a sensitive issue in the golf market.44 What can a retail outlet do to take advantage of these characteristics? Here are some ideas: Customers can bring a friend to get a discount. Have a Women’s Department label. Go narrow and deep with product selection. Stock specialty items such as gold earrings, necklaces, golf lapel pins, and mini golf balls for impulse sales and for holidays. Design a merchandising program around the store’s spring fashion show. Describe the lines to be presented and list each date-of-purchase availability.

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Employ an apparel consultant to cultivate and build the shop’s ladies’ apparel business. Create exciting, well-organized, and visual displays. Offer seating areas just outside dressing rooms to allow for more relaxed try-ons and assessments. Have a cafe´ on the premises that allows customers to shop, then take a break without leaving sight of the selling floor. (Be sure that everything in the cafe´ is for sale.)45 Women are more demanding of the shopping environment than are men. For example, women do not like to examine merchandise displayed below waist level. Lowering previously elevated sets of clubs to waist level makes for easier access. Sales will increase because women can now see better and reach the merchandise. If they can stand at the corner of a counter, where they can wrap themselves around the angle and nestle a bit, women are more likely to buy than if they have

Quick Getaway 11.3

Finding and Keeping Your Best Customers Being consumer-centric is the key to becoming a successful retailer, yet it’s often difficult to pinpoint exactly what the consumer wants. To best find and retain the best customers, give the Ten Commandments of Customer Insight a try: 1. Start small—think big. 2. Set up a team tasked with this area. . .and give them money. 3. Begin with understanding your key customer groups. . .that is, segments. 4. Link the segments to how they buy your products. 5. Understand segments’ needs and wants. . .and your performance gaps. 6. Prioritize your actions to close the gaps—cost vs. benefit. 7. Develop go-to-market strategies linked to marketing and merchandising tactics.

8. Performance metrics must be tied to target customer segments. 9. Measure category managers on volume, profit, and customer equity. 10. Learn from each initiative and progressively invest in increasing capabilities. Source: ‘‘Finding and Keeping Your Best Customer Through ‘Customer-Centric’ Retailing.’’ Merchant News and Views. http: / / www.visaasia.com / ap / sea / merchants / whyvisa / includes / uploads / final 16dec.pdf

DISCUSSION QUESTION: When dealing in the number-crunching business world, sometimes it is hard to remember that customers are real, breathing human beings. What are some strategies to overcome this?

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to stand just a few feet away along the main stretch of the counter. Nooks and crannies and cul-de-sacs are good for uninterrupted shopping. The narrower the quarters, the less time a woman will spend shopping. Almost two-thirds of women who buy something read at least one product package. Reading takes time; time requires space.46

Older Shoppers The graying of America has implications for retailers. Reading is more difficult for older shoppers. Type must be larger for them to read easily. As the cornea yellows with age, the difference between blue and green becomes harder to see. Yellow should be avoided, as everything looks a little yellow. Older people see a lot more black, white, and red and a lot less of other colors. The typical 50-year-old’s retinas receive about one-quarter less light than the average 20-year-old’s. Stores must be more brightly lit than they are now.

Children If a store is set up to be unwelcoming to children, parents will get the message and stay away. Consider the needs of the child: Put merchandise where they can see it and reach it. Childproof the store the same way as a home. If the parent’s sustained attention is required, someone must find a way to divert the attention of a restless child. Design a good area for children. Sight lines must allow parents to see their children at all times.47

Generation X One segment of the golf market that might surprise some is Generation X. These young people are playing golf because so many of their role models—from Michael Jordan to Eddie Van Halen—are seen on the links. They are a ‘‘mix of antiestablishment rebels, country-club legacies, beginners, hackers and sandbaggers— low handicappers in baggy pants, t-shirts and goatees.’’48 Although their look is logo-driven, they do not want to appear as if they have just walked off a golf course. They like the specialty-store environment if it is merchandised in an up-to-date manner.

PROFIT RATIOS Sales Analysis The two measures of sales analysis are productivity and merchandise.49 Productivity analysis measures sales relative to the space allocated to the goods. Retailers can measure the sales productivity of the entire shop, separate product categories,

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or individual items. Merchandise analysis, on the other hand, measures sales across departments or product categories without regard to floor space. It might, for example, compare product movement in golf shoes versus shirts. Sales productivity starts with a measurement of the sales area used to sell goods. This is defined as the ‘‘open floor area that is devoted to the sale of goods, including all areas that are open to the customer.’’50 The total sales area is then divided into the sales areas of each department. This yields the measure of sales per square foot. Comparing these data to those of other stores is useful when repeated over time. Various comparisons are possible: this month’s sales to last month’s this month’s sales to the same month’s last year sales on a rolling basis the most recent 12 months’ sales to the 12 months prior to that51 Another useful figure is gross margin dollars per square foot. Gross margin is the difference between what was paid for the merchandise and its selling price.52 High retail prices result in a higher sales volume per square foot. Lower-priced items may, however, cost less. Compare, for example, $50 in gross margin on a $200 retail price for one item and $55 in gross margin on a $100 item. If both items sell at the same rate and take up roughly the same space, the first item has higher sales per square foot, while the other yields higher gross margin dollars per square foot. Another comparison involves share of space versus share of business. This measurement determines which items are and are not pulling their weight. The sales of one department are calculated as a percentage of total store sales and compared with the department’s square footage as a percentage of the total store space. If a department has a significantly lower share of sales than share of space, it may be time to consider a space reallocation.

Price zones Price zones can also be analyzed. Each product category carried has several ranges of price points, each one of which is designed to appeal to a particular segment of a store’s customers: promotion zone—low-end merchandise at low prices volume zone—middle price range prestige zone—high-status, high-end merchandise53 Many golf shops offer only one price zone in each product category. As such, selection becomes a crucial decision. The goal is to meet the needs of each customer who walks into the shop. The key is to match what the customer wants to spend with the price zones offered.

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Dynamic Pricing: A Raw Deal? Did you know that it’s legal for one company to charge two different people two different prices for the same product, bought at the same time on the same day? Based on the results of one study, the majority of shoppers don’t know that. Yet the practice—called dynamic pricing—is completely commonplace. The reason behind dynamic pricing is deceptively simple: some people will pay more for a product than others will. At first glance, this pricing practice seems discriminatory and unethical, but upon closer consideration it makes sense. It’s easy for us to understand senior discounts and student discounts, which are a part of dynamic pricing. We can also understand why a phone company might offer certain profitable customers more money to

change companies than they would offer to others. Not all pricing strategies are allowable, of course; collusion by competitors in order to fix prices is illegal, as is using race or gender to target people for different prices or other discriminatory treatment. Nevertheless, dynamic pricing is a tool that, when used effectively, can ensure that a transaction is the most profitable it can be for both the customer and the vendor. Source: ‘‘What Consumers—and Retailers—Should Know about Dynamic Pricing.’’ Hotel News Resource.

DISCUSSION QUESTION: Do you think dynamic pricing is underhanded or unethical? Why?

SUMMARY Guests who stay at a resort are a captive audience. Managers who understand why and how people buy can provide retail options for their guests that can significantly increase the revenue generated at the resort.

ENDNOTES 1. Timothy, Dallen J. Shopping Tourism, Retailing and Leisure. Clevenden, England: Channel View Publications, 2005, 11. 2. Ibid., 11. 3. Ibid., 23. 4. Ibid., 69. 5. Ibid., 70. 6. Ibid., 71. 7. Ibid., 76–85.

8. Ibid., 79–81. 9. Ibid., 85. 10. Ibid., 87–91. 11. Ibid., 97. 12. Ibid., 100–101. 13. Ibid., 105. 14. Ibid., 118–145. 15. Ibid., 120. 16. Ibid., 129–130.

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17. Ibid., 135. 18. National Golf Foundation. Operating and Financial Profiles of 18-hole Golf Facilities in the U.S.: Resort Facilities. Jupiter, FL: National Golf Foundation, 1995, 5. 19. Adapted from National Ski Areas Association. Economic Analysis of United States Ski Areas. Englewood, CO: National Ski Areas Association, 1999, 34–35. 20. Underhill, Paco. Why We Buy: The Science of Shopping. New York: Simon & Schuster, 1999, 184. 21. Timothy, 154. 22. Underhill, Paco. Why We Buy: 187. 23. Timothy, 155. 24. Underhill. Why We Buy, 37–80. 25. ‘‘New Consumer Spending Study Offers Multitude of Insights.’’ Golf Market Today (May / June 1995): 1ff. 26. Timothy, 158. 27. Ibid., 26–27. 28. Pike, Steve. ‘‘Competition Heating Up.’’ Golf Shop Operations (May 1996): 35ff. 29. Broderick, Eileen Rafferty. ‘‘A Very Fine Line: How to Strike the Balance Between Golfwear, Retail.’’ Golf Shop Operations (March 1994). 30. Underhill, Why We Buy, 62. 31. Ibid., 66. 32. Ibid., 70. 33. Ibid., 79. 34. Ibid., 84. 35. Ibid., 158.

36. National Golf Foundation. The Retail Side of Golf: Trends and Techniques. Jupiter, FL: National Golf Foundation, 53– 68. 37. Pike. ‘‘Getting the Message,’’ The Retail Side of Golf: Trends and Techniques. (Jupiter, FL: National Golf Foundation), 27ff. 38. Underhill. Why We Buy, 184. 39. Ibid., 189. 40. Ibid., 190. 41. Ibid., 98–111. 42. Ibid., 115. 43. Seligman, Bob. ‘‘More Than an Afterthought.’’ Golf Product News (October 1995): 16ff. 44. Broderick, Eileen Rafferty. ‘‘Golfwear Goes Classic.’’ Golf World (September 29, 1995), 32–34. 45. Underhill. Why We Buy, 116. 46. Ibid., 118. 47. Ibid., 143–150. 48. Lippincott, Liz. ‘‘Fishing for the New Breed.’’ Golf Pro (July 1995): 24. 49. Russell, Michael L. ‘‘How Sales Analysis Can Help Maximize Retail Profitability.’’ Golf Market Today (March / April 1993): 10–12. 50. Ibid. 51. Ibid. 52. Seligman. ‘‘More Than an Afterthought,’’ 16ff. 53. Ibid.

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Chapter 12 SPAS, POOLS, AND INDOOR WATERPARKS LEARNING OBJECTIVES 1. Identify the economic benefits of developing a spa within the resort operation. 2. Determine the equipment needs of the luxury market in terms of layout and design. 3. Identify the various treatment types and benefits of spa facilities. 4. Discuss how the room set-up guidelines impact guest safety. 5. Identify guidelines for the effective development and operation of swimming pools and / or waterparks at a property.

INTRODUCTION

MARKETING

DEVELOPMENT OF SPAS

TRENDS

Benefits

SWIMMING POOLS

Developing the Concept

Maintenance

Operating the Spa

Safety

LAYOUT AND DESIGN Purchase Criteria TREATMENTS Exfoliation Full-Body Treatment WATER THERAPY The Tub Showers Massage CLIENT PREPARATION ROOM SETUP: WET ROOMS ROOM SETUP: DRY ROOMS COMBINATIONS

WATERPARKS SUMMARY ENDNOTES RENAISSANCE CLUBSPORT: THE CONCEPT OF THE UPSCALE HOTEL/HEALTH CLUB UNIFICATION The Evolution of the Renaissance ClubSport Concept The Premise Behind the Renaissance ClubSport Concept Economic Benefits of the Renaissance ClubSport Concept

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INTRODUCTION People are looking for other ways to take care of themselves through massage, exercise and education about how to live healthier lives. —LAURA CRANDALL Spa Director, Top Notch, Stowe Resort, Vermont

The market segments attracted to spas are outlined in this chapter, and criteria are given for the efficient layout of a spa operation. Treatments are noted and suggestions given for marketing the operation.1

DEVELOPMENT OF SPAS The original spa was a mineral hot springs place in Belgium in a village called Spau. ‘‘Taking the waters’’ became popular with the upper classes for reasons of health. Visits to spas included bathing and drinking the mineral waters in addition to mandatory social events. While European spas focus on cures and health, American operations concentrate on the promotion of a healthy lifestyle based on a combination of exercise, weight loss, and pampering. The following definitions are widely used: Resort spa—The resort spa is located on the property of a hotel, normally in a resort where other sports and activities are offered besides the spa program itself. Spa guests and hotel guests intermingle. Amenity spa—Similar to the resort spa, the amenity spa is added as an amenity to a hotel. The distinction is its unimportance as a profit center compared to the resort spa. Destination spa—The destination spa is a hotel property targeted to the spa guest and focusing on specific health and fitness programs. Outside guests are not part of the program. Additional activities such as golf and tennis are available. There are over 12,000 spas in the United States. The vast majority—almost three-quarters—are day spas. Resort / hotel spas are the second largest category with almost 1,700 reported in 2004. Day spas are of interest to us only to the extent that a visit might encourage individuals to seek an extended spa experience at a resort. Over 90 percent of resorts have spas while over 50 percent of upscale hotels have such facilities. There are over 100 major destination spas in the U.S.2 The fastest growing sector of the spa industry is medical spas or medi-spas. According to the International Medical Spa Association there are over 500 medical spas in

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the United States. An offshoot of comprehensive care facilities, medi-spas focus on fitness, nutrition, stress management, and other medical topics with an overall focus on behavior modification. A recent trend has been the development of medical spas with an emphasis on cosmetic dermatology. Guests stay at a resort to recharge and relax. A spa offers guests the facilities that allow this to occur. Today, a resort spa can expect to attract 15 to 25 percent of the in-house resort guests. For resorts that attract a leisure market the spas utilization can exceed 50 percent of their guests. It should be remembered that the principal business of a resort is selling rooms. The presence of a spa should help the resort increase occupancy and / or average room rate. The starting point is to develop a guest profile of the resort guest market. Guests may be individuals, those on incentive trips (e.g., the top salespeople who are given the resort trip as a reward for increased sales), groups, families, or couples. Each segment will be

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Goof-Proof Spas In today’s spa-conscious world, adding a spa onto an existing resort can be a great way to boost sales and increase customer satisfaction. However, new spa owners and veterans alike frequently make mistakes that are easy to prevent. Melinda Minton, a spa consultant and health and beauty professional, offers her best advice on what NOT to do: Go for looks over comfort. ‘‘Many resorts have large, opulent, beautifully designed and appointed spas. I liken them to the Taj Mahal. Have you been in the Taj Mahal? I have, and all of that marble gets cold on one’s feet after awhile!’’ Favor the latest treatments over time-tried favorites. ‘‘Entertaining the client is fine, but sometimes there is a real disconnect; if the therapist doesn’t understand the therapeutic origins of a treatment the client is bound to also be confused.’’ Forget to check up on how your spa is doing, from a customer’s point of view.

‘‘Hire trained professionals to receive treatments and offer a report on their experience.’’ Cultivate an exclusive image. ‘‘Welcoming guests into the spa as a given part of their retreat at the resort needs to be a more individualized invitation that is anything but intimidating.’’ Resort spas can be a great addition to the facility, but adding a spa is not a decision that should be undertaken lightly. If you are going to include a spa in your resort, you will want to make it the best it can possibly be. Source: ‘‘Speaking of Spa.’’ Resort & Recreation (November / December 2005): 18.

DISCUSSION QUESTION: One way to increase bookings at a resort spa is to book visitors’ next visits when they first arrive. What are other ways you can think of?

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looking for slightly different experiences. For a group in meetings all day it would make sense to extend the hours of operation to accommodate them. A survey of existing guests asking their preferences can be a useful guide as to what additional activities might be added to the mix.

Benefits Having a spa at a resort seems to have economic advantages for the property. Resort general managers indicate that the spa enhances the following aspects of their business: room rate (57 percent) perceived value for money (70 percent) occupancy (73 percent) length of stay (43 percent) marketing advantage (97 percent) revenue per occupied room (83 percent) number of people per occupied room (27 percent)3 The spa market overwhelmingly—70 percent—caters to women although there is an increasing interest in spas on the part of men.4 In 1987 less than 10 percent of all spa visitors was a man. That percentage is now close to 30 percent. Over 80 percent of resort guests indicate they would choose a property because of the presence of a spa. In a 2005 survey5 more than a third of respondents indicated they spend more in hotels on spa therapies than they do on fine dining and wines. The main motivations, in order of importance, are: stress reduction and relaxation to look good / appear younger to feel more sexy and attractive pursuing a spa lifestyle The top ten most commonly booked spa services are identified (in ranking order) as aromatherapy massages, facials, local ‘‘signature’’ therapies, manicures, pedicures, more ‘‘creative treatments,’’ Ayurvedic massages, reflexology, body wraps, and hydrotherapy programs. Spa regulars also indicate what they dislike: having to appear naked for treatments, or to use a mixed sauna without bathing suits or being bathed by strangers receiving hard-sell tactics to spend more on spa or beauty products treatments derived from chocolate or other dessert ingredients any evidence of lack of cleanliness or poor hygiene being ushered out speedily once their treatment is over

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pretentious spas which seem to prefer clients with perfect bodies having to make small talk with over-familiar staff on arrival, finding the hotel spa fully booked with locals

Developing the Concept In developing the spa concept, the facility should be planned after the program has been agreed upon. Spas can reflect a geographic or historic sense of place while others may take a theme—such as Asian—and plan and develop the facilities around this. Themes should be developed around experiences that engage the senses, induce feelings, and create memories. Themes might focus on wellness, medical well-being, or luxury. As in all marketing, the key is to develop something the market wants which the spa can do a better job of providing compared to the competition. As noted above, the objective of a resort is to sell rooms. It has been shown that the presence of a spa at a resort can help sell more rooms and at a higher room rate. In addition a spa can be useful in:6 generating additional room nights in the off and shoulder seasons expanding the shoulder season / shortening the off-season generating additional revenue per occupied room during the peak season being more competitive with other resorts that have spas giving group guests another reason to return as leisure guests encouraging group guests to arrive a day early or to depart a day later providing an opportunity to market the resort as an ‘‘incentive’’ destination for corporate award programs enhancing spouse / companion programs for convention delegates providing an indoor activity during inclement weather A feasibility study must be conducted to determine the economic viability of the spa. Costs of construction, capital expenditures, start-up costs, furniture, fixtures and equipment (FF&E), and operating costs once the spa is open have to be compared to the expected revenues from spa services, membership dues, and retail sales before construction can proceed. A turnkey, four-star quality spa can cost between $350 and $500 per square foot, excluding land.7 The impact of the spa on other resort departments can be major—especially for laundry, housekeeping, and maintenance. It may be that the existing laundry department is not large enough to handle the increased demands of massages and facial treatments and body wraps. Housekeeping may well be assigned to do the night cleaning of the spa. Standards must be developed and training undertaken to ensure high quality cleanliness. The use of water and chemicals places a great strain on maintenance needs.

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Operating the Spa A spa can itself be a profit center for the resort. A PFK (consulting firm) study of 35 spas in resort properties established some guidelines for spa profitability.8 The study indicated a high correlation between treatment rooms and total spa revenue—the greater the number of rooms, the more revenue is generated. Because demand is variable there have to be enough rooms during times of peak demand to offset operational costs during times of slow demand. Obviously the demand must be great enough to justify the number of treatment rooms present. To date there has not been a uniform accounting system for spas. However, at the time of writing, the International Spa Association (ISPA) is in the process of developing such a system. Resort spas have been looking at the profitability of spas by calculating spa revenue as a percentage of total hotel revenue. PKF has found that hotel spas generating more than $1 million in revenue contribute an average of 5.3 percent of the total revenue for their properties while spas with less than $500,000 in revenue only account for less than one-half of 1 percent in total revenue.9 A better ratio might be the amount of spa revenue per available treatment room per day (RevPAT). In this study the average is $367 with a range of $241 to $443. Although this seems high relative to the ‘‘standard’’ Revenue per Available Room (RevPAR) for hotels, it is important to remember that treatment rooms can be rented out numerous times a day. In fact, some spas have reduced treatment times to 50 or 80 minutes rather than 60 to 90 minutes to increase the number of daily treatments per room. A difference between spa treatment rooms and hotel rooms is that there is a greater fixed cost associated with treatment rooms in the form of therapist labor. The survey of RevPAT reports that spas with between six and ten rooms and the mega-spas with more than 21 rooms perform better than spas with 11 to 15 rooms. The author speculates that this middle category may have overbuilt the number of rooms relative to guest demand. Overall, it does appear that spas operate like mini-hotels. Both:10 have check-in and check-out processes have a service orientation that is labor intensive with resultant high labor costs are in the business of renting rooms for a specified time need extensive laundry and housekeeping services have high fixed costs On the revenue side most spa users prefer a´ la carte services compared to being on a spa package. PFK finds the following revenue breakdown for the hotel spa department:11 44 percent massage 22 percent spa treatment 11 percent club and membership dues

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10 percent salon treatments 7 percent clothing / merchandise Club and membership dues account for a much smaller percent of revenue at a resort (compared to a hotel) property while revenue from spa treatments, salon services, and clothing and merchandise are more. In this analysis food and beverage revenue are subsumed under the food and beverage department of the hotel. Other studies show that a healthy snack bar or full service operation can produce up to 10 percent of total spa revenue. Many resorts charge facility or daily membership fees for guests. The fee is sometimes waived in full or in part. A careful study of this decision must be made as the revenue is often important to the resort since it can cover fixed operational overhead. Many spas could do more to increase revenue from retail. It should be possible for a spa to achieve 15 percent of gross revenue from retail sales.12 There are a number of ways to train and motivate employees to increase retail sales:13 Train all staff to give a great treatment so guests will want to buy the products used and create their own ‘‘home spa’’ Give the staff an incentive by offering them a percentage of their retail sales (this can be a sliding scale, based on volume) Provide ‘‘prescription pads’’ (retail forms usually provided by the product companies) so the service provider can check off what products were used during the treatment Offer products that are sold only in fine salons and spas and can only be purchased from a spa and not department stores, the Internet, etc. By some estimates14 the cost structure of a spa, as a percentage of revenue, can be: payroll: 35 to 45 percent payroll with benefits: 55 to 65 percent operating expenses: 13 to 20 percent net operating income (NOI) when spa is responsible for all expenses, excluding rent: 15 to 25 percent NOI when the spa is responsible for payroll and products only: 30 to 40 percent

LAYOUT AND DESIGN Quality, durability and warranties vary greatly and must be carefully evaluated. —ERICA MILLER Day Spa Operations

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The basic components of a spa include:15 Reception area and lounge Separate men’s and women’s locker rooms and facilities Men’s and women’s steam rooms, sauna Whirlpool, cool-dip pool Lounge which can include a juice bar and small cafe´ Dry treatment rooms for massage and facials Wet treatment rooms for body wraps and scrubs Hydrotherapy rooms for baths and hydro-massage therapies Staffed fitness studio with exercise machines Exercise studio for classes Retail store Salon for hair, nails, and makeup The following equipment in a spa is desirable: facial equipment—full complement of facial devices and a comfortable facial bed or chair for each room. The devices include a magnifying lamp, steamer, full machine with high-frequency brush, and vacuum / spray. Additional accessories include paraffin heaters, depilatory wax heaters, wood lamps for analysis, electric masks, mittens, booties, and blankets. basic body treatment—massage tables. Tables should be sturdy and, for wet rooms, waterproof. Accessories include electric bed-warmer pads and hydroculators for linen herbal wraps. hydrotherapy—hydrotherapy tub, steam shower or steam cabinet, Scotch hose, Vichy shower, Swiss shower. The greater the number of air and water jets, the better. A power draining system should be included to speed turnover. A manual massage hose should also be included. Surfaces must be nonstaining. A Scotch hose needs a room 8 to 12 feet long and equipped with a quick drain. Both the Vichy and Swiss showers benefit from water-conserving heads and quick drains. The cost of constructing a wet room can be as high as $150 per square foot. The two main issues in a wet room are towels and hygiene. Two to ten towels per visitor are necessary, depending on the treatment. Body treatments and hydrotherapy double or triple towel use. The tub and room must be cleaned, disinfected, and dried between guests; this takes at least 15 minutes. In addition, wet employee uniforms must be changed. Tubs without a power drain can take up to 30 minutes to drain, clean, and drain again. Finally, products must be safe to go down the drain. Employee responsibilities must be carefully thought out so guests are not kept waiting. Attention must be given to retail opportunities.

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It is advisable to have separate check-in and check-out areas, if possible. Check-in areas can be noisy and rather hectic. A quiet, relaxed atmosphere makes retailing easier.

Purchase Criteria Concerns regarding the purchase of spa equipment are similar to those relative to the purchase of any other specialized equipment. Most equipment is delivered directly from the manufacturer. There are advantages to working with a full-service distributor who can either repair the equipment at once or provide replacements while repairs are being made. Because equipment is both specialized and expensive, employees must be trained in its use. Who provides the training, and at what cost, is the subject of negotiation between spa management and the equipment manufacturer or distributor. Timely support and service from the distributor is crucial to ensure continuity of the spa operation.

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Breaking the Fifth Wall When designing a spa, it’s easy to remember to decorate and install lighting fixtures on the four walls of each room. It’s harder to remember the ‘‘fifth wall,’’ the ceiling. Most people don’t give much thought to the ceiling in everyday life. However, the ceiling is very much in focus for spa clients who spend a good deal of their time lying down in treatment rooms. Spa design must target the senses. Even if every other element in the room provides a soothing visual, auditory, olfactory, and tactile experience, a bland or ugly ceiling can ruin the whole effect. Therefore, it’s important to consider painting, light fixtures, and other decorating elements when designing a room’s ceilings. One option comes from The Sky Factory, a frontrunner in introducing nature into interior environments. The Sky Factory offers wall and ceiling installations that mimic the effect of ly-

ing on one’s back and looking up at the sky. The panels are designed in a photorealistic manner, with elements such as clouds and tree branches to add interest. The sky-like ceiling triggers both psychological and physiological responses of relief and well-being. ‘‘It’s no surprise that this works,’’ says Bill Witherspoon, founder of The Sky Factory. ‘‘The sky is the most universal and powerful experience of nature available to us.’’ Source: Weisner, Sara, and Deane Erpelding. ‘‘Your Fifth Wall.’’ Resort⫹Recreation (Summer 2004).

DISCUSSION QUESTION: Besides installing The Sky Factory’s ceiling panels, what are other ways of incorporating nature and natural light into a spa’s ceilings?

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Retail selling can be a lucrative profit center. Rather than discounting a special package, for example, the spa can offer a product as a gift. This ‘‘gift with purchase,’’ or GWP, is common in the retail sector. It offers the advantage of getting the product into the hands of the guest. If the product does what it advertises it will do, additional retail sales may result.

TREATMENTS Men used to think spas were only for women, but now they are looking to take advantage of the pampering and the stress-free environment. They are learning to take care of themselves. —TANYA VASSELL Spa Director, Elysium Spa at Ciboney Ocho Rios, Jamaica

Spas typically offer three types of treatment: exfoliation, full-body treatment, and spot treatment.

Exfoliation Exfoliation involves rubbing, polishing, or scrubbing the skin, or using enzymes on it, to remove dead skin and dirt. Removing dead cells allows the skin to more easily accept moisturizers and other skin treatments. Exfoliation can be accomplished in several ways. A dry brush technique uses a loofah, brush, washcloth, or sponge to rub the dry skin away. A ten-minute exfoliation treatment is normally given prior to a body treatment and is not chargeable unless it is part of a 30-minute session involving a finishing lotion. A salt glow is a popular destination spa treatment. It consists of rubbing special salt mixed with an oil or liquid soap on all or part of the body. It is chargeable when done on the full body and followed by a lotion application. When it is part of a spot treatment—for example, a spa pedicure—it is usually included in the price of that treatment. A body polish uses salt or other abrasives in rubbing the body. It exfoliates and softens the skin at the same time. Treatments usually take 30 to 45 minutes for the entire body and five to ten minutes for spot treatments. Enzymes and alphahydroxy acids (AHAs) can also be used to dissolve dead cells. Treatment times determine appropriate booking times, which are important for the financial success of the operation. Treatments take 30 minutes when given alone or five to ten minutes when given as part of an additional treatment. Cleanup and selling take an additional five to ten minutes for a total booking time of 45 minutes. More time is needed for additional treatments.

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Full-Body Treatment Full-body treatments deal with and are intended to help the entire body. The face is usually excluded, as numerous procedures are intended for the face alone. Treatments are intended to condition the skin or for detoxification purposes. The former seeks to improve skin texture, color, and elasticity, while the latter seeks to help the body function better. This is achieved through stimulating circulation, which helps the body rid itself of wastes and toxins. Full-body treatments include: Full-body mud mask—Mud is warmed, applied thickly, and the body wrapped in plastic or foil for 20 to 30 minutes. A full treatment takes 60 minutes. Fifteen minutes should be allowed between clients for cleanup and retail selling. Herbal body wrap—Linen or muslin sheets are heated and soaked in a machine in which herbal pouches or oils have been placed. The body is then covered with towels or rubber sheets, followed by the linen or muslin sheet. Additional sheets and blankets are laid over and the body allowed to rest for 20 minutes. Wet cloths need to be constantly placed on the guests’ forehead. Due to the weight of the sheets, technicians can do no more than four to six wraps a day. Paraffin body wrap—Paraffin wraps generate heat that helps the body perspire, thereby allowing moisture and previously applied nutrients to be absorbed from the skin surface into the body. The paraffin may be used alone or in conjunction with mud or seaweed. Large strips of gauze, cut to fit the body, are dipped in the paraffin and molded to the body. The more layers (typically three to five) are applied, the greater the heat and the longer the effect. After wrapping the body in plastic or foil, it rests for 15 to 20 minutes. Body massage—These range from the basic Swedish massage to sports, deep tissue, Shiatsu, aromatherapy, and reflexology massages. They are booked for half an hour or a full hour. Full-body facial—Similar to a facial (hence, the seemingly selfcontradictory name), this treatment involves cleaning, exfoliation, steam, massage, mask, and finishing lotion, and is booked for 60 to 90 minutes. Body tanning / bronzing—Exfoliation is followed by the application of a tanning emulsion. Full-body treatments range from 30 minutes for a herbal wrap, body massage, or body tanning, to one and a half hours for a body facial. Most of the other treatments take 45 minutes. Wrap or mask waiting times take anywhere from 10 to 30 minutes, depending on the procedure. A body facial can be completely applied in ten minutes, while a full-body seaweed or mud wrap takes 30 minutes. Wrap or mask waiting time is usually 20 to 30 minutes. Adding in 15 minutes for

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cleanup and selling pushes booking times anywhere from 45 minutes for a herbal wrap to one and three-quarter hours for a body facial. Spot Treatment

Spot treatments work on a specific part of the body. They include spa manicures and pedicures; hand and foot treatments; scalp treatments; cellulite, antistress, and bust-firming treatments; back treatments; and facials. Adding exfoliation, oils, wraps, or massage qualifies the treatment as a spa treatment. Cellulite treatments involve exfoliation, application of a material that stimulates circulation, and massage followed by a mud or seaweed mask. Conditioning and moisturizing takes place after 20 minutes under wraps. Most procedures take 30 minutes and wrap or mask time is 20 minutes. Adding 15 minutes for cleanup and selling pushes most booking times to 45 minutes. However, a spa facial can last one and a half hours.

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Holistic Design for Spa Industry Health A spa’s main purpose is to heal and nourish mind, body, and spirit, so it should come as no surprise that the adoption of holistic spa principles will ensure the long-term success of the spa industry. Some key principles of holistic resort and spa design include: Regenerative Spa Design. Spas are designed in harmony with their natural and cultural environments, by using local resources, and creating systems that continue to evolve and self-replicate. Water, the core essence of both ancient and modern spas, is recognized as the most precious resource, and ways are developed to ensure that it retains its purity and integrity over the long-term. Local Holistic Treatments. These treatments should be based on the principle of sacred healing of mind, body, and spirit. The use of healing and soothing techniques sourced from the local area is ideal, as well as the avoidance of ‘‘gimmicky’’

imported treatments that local staff are not always trained to administer. Restorative Interior Designs. Designs should reflect the environment and use natural materials such as raw silk, linen, and wool. Natural Settings. The spa’s setting should allow visitors to experience nature and reconnect with its power and beauty. Wellness Programs. These programs include information on how to create and maintain a long-term healthy and balanced lifestyle. Source: Zimmer, Robert, and Angela Clarke. ‘‘Balancing mind, body and spirit: Why the current spa explosion is still the tip of the iceberg.’’ Hotel News Resource. http: / / www.hotelnewsresource.com / article20893.html

DISCUSSION QUESTION: Do you think adopting holistic design principles is the most important element in ensuring the long-term success of the spa industry? Why or why not?

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WATER THERAPY Hydrotherapy has become the term for treatments using water for professional purposes. Water has been used as a treatment for various diseases since the times of the ancient Greeks. Hippocrates himself used both fresh water and seawater for bathing and drinking as part of his treatment procedures. In England, Dr. Erasmus Darwin, father of Charles Darwin, utilized water to treat his own son, among others. It is commonly believed that clean surface water contains great amounts of oxygen and nitrogen and little carbon dioxide. As such, it can be used to activate the body’s own mechanisms. The therapeutic use of water extends to drinking it. Some people feel that, because of the saline content of water in the body, drinking small quantities of salt water is beneficial. Water—either warm or cold—affects blood circulation to specific areas of the body. Warm or hot water dilates capillaries to improve the distribution of nutrients and oxygen to organs and tissues. Cool or cold water has the opposite effect of constricting capillaries, thus reducing swelling. Warm to hot water: Has a strong anti-inflammatory and anti-infectious action. Relaxes the body. Increases blood flow. Eliminates toxins by inducing perspiration. Reduces pain and discomfort. Induces fatigue through muscle relaxation. Makes product penetration more effective by increasing circulation. Cool to cold water, on the other hand: Is invigorating and stimulating, and adds tone. Helps reduce swelling through capillary contraction. Has a short-time tonic effect but a long-time depressing effect. Increases the body’s resistance to disease. Can reduce pain. Stimulates the maintenance of skin elasticity. Can reduce allergic reaction tendencies. Can relieve headaches. Improves the absorption of applied substances by stimulating nerve endings, which results in improved circulation. Because the human body is relatively dense in water, resistance or friction is greater than on land. As a result, exercising in water can accomplish more than the same effort made on land. Here are some forms of water therapy: Hydrotherapy refers to the use of water for well-being. Balneotherapy uses baths for beauty and therapeutic purposes.

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Thalassotherapy refers to the use of seaweed or seawater for beauty and therapeutic reasons. Seawater is close to blood plasma in composition. The mineral salts in seawater help skin cells take in more oxygen and draw toxins out of the body. Herbal baths use natural herbs or essences in baths for therapeutic purposes. Aromatherapy baths utilize oils for the same purpose as herbal baths. Whirlpool baths use water or air jets to give a bubbling effect. One type of whirlpool bath is the Jacuzzi, introduced in 1968 by Roy Jacuzzi and manufactured by the company that bears his name. Hydrotherapy tubs have between 30 and 150 jets that can be operated at different pressures for therapeutic underwater massages. They are designed to be used by one person at a time. For best hydrotherapy results: Clients should wait 30 minutes to an hour after eating and 15 to 20 minutes after vigorous exercise and should not have recently consumed any alcohol. Clients should use the rest room and have a warm shower prior to the session. The shower warms and relaxes muscles, which helps reduce tension. Treatment is more effective if the client is in the nude. After treatment, clients should be given water or juice, preferably orange juice, to replace lost potassium. During treatment, a cool, not cold, cloth can be applied to the head. Cool, not cold, water can be offered as well. Clients should never be left alone during treatment lest they fall asleep or faint.

The Tub The tub itself should drain quickly. Temperatures range from 50⬚ to 70⬚F for a cold bath to 98⬚ to 105⬚F for a hot bath. Anything over 105⬚F causes the blood pressure to fall dramatically and consequent heart stress. Water and air flow in the tub increases water temperature. Treatments usually start at 15 minutes and work up to 30 minutes maximum. Rest times between sessions should equal the time in the tub. A 30-minute session in the tub should be followed by 30 minutes of rest before commencing another tub treatment. Typically, however, a slimming or anticellulite hydrotherapy program involves treatment two to three times a week. A typical 30-minute treatment consists of ten minutes of water jets working from the feet to the back of the neck, ten minutes of underwater massage or additives, and ten minutes of relaxation with gentle bubbling.

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Underwater massage is accomplished by way of a hose, which is kept underwater and through which air is forced. Movements begin at the feet and work toward the heart. Three types of tub treatment are typical: plain water baths, which involve no additives but may include underwater massage thalassotherapy baths, which add seaweed, seawater, sea salts, or sea mud aromatherapy or herbal baths, which add herbs or oils Most baths are based on relaxation, stimulation, and invigoration. The following oils are recognized for each of these: relaxing—lavender, chamomile stimulating—rosemary, thyme, pine contouring—pine, thyme, juniper Alternating warm and cold baths is a recognized form of therapy. Warm baths relax; cold baths stimulate. More time should be spent in warm water than in cold.

A tub treatment in an outdoor setting is an additional luxury to a spa treatment. Courtesy the Four Seasons Hotel and Resort; photo 䉷 Matthew Plexman Photography

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For example, five minutes of warm water followed by one minute of very cold water is recommended.

Showers A variety of shower treatments exist: Warm-ups and rinses—initial shower, shampoo, and rinse for cleansing purposes. Cold shower—taken after a warm shower for the purpose of invigorating the body. Rinsing—one-minute showers between treatment steps. Swiss shower—surrounds the guest with 8 to 16 streams of water that can be concentrated to specific body areas from the upper torso to the thighs. This mild form of water pressure therapy uses alternating warm and cold water. Vichy shower—used in a wet room that is tiled floor to ceiling. Several showerheads direct water to guests as they lie on a bed or table. Hot and cold water pulse alternately. This shower is usually used after a salt, mud, or seaweed treatment in the same room. Steam room, shower, or cabinet—causes the body to perspire, helping eliminate toxins, stimulate circulation, and increase respiration. Should be followed by a cool shower or product application. Scotch hose or shower—a strong stream of water targeted at specific areas of the body to increase circulation and break up fat deposits. The guest stands at a wall, holding onto handles, while a technician shoots water from a device like a fire hose from a distance of 8 to 10 feet. Products that are available for sale in the spa can be placed in the shower. As guests use the products, they can see, smell, and feel for themselves their benefits.

Massage Massage offers a number of benefits to guests. It causes an increase in blood circulation that helps improve nutritional exchanges and eliminate wastes and toxins. Soreness and discomfort in the muscles is relieved. Massage has a sedative effect on the nervous system. Stress is reduced as the body relaxes. Skin texture and softness is improved. Finally, it just feels good! Effleurage Massage. The classic Swedish effleurage massage consists of a gentle touch and a soft stroke that is directed toward the heart. Typically, the massage begins on the front of the guest, then proceeds to the back. Movements go from the foot to the thigh of one leg, then are repeated on the other foot and leg. Attention is then given to the arms, moving from the hand to the upper arm on

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one side, then the other. The head is then massaged down to the chest and the movements repeated on the guest’s back. Special care should be taken when having masseurs / masseuses perform massages on guests of the opposite sex. Because of potential liability, the resort may wish to offer only same-sex massages or have someone of the same sex as the guest in the room during the massage.

Aromatherapy. Aromatherapy refers to the ‘‘therapeutic use of aromatic essences from plants in treatment for beauty and well-being.’’ These essences can come from flowers, stems, leaves, roots, bark, or an entire plant and are extracted by various means to produce a pure, aromatic essence. It takes, for example, 60,000 petals to produce an ounce of Bulgarian rose oil. Oils affect the body in two ways: physiologically and psychologically. Physiologically, oils enter the body by infusion (through a room diffuser), by bathing with compresses, and through massage of the skin. Essential oils easily penetrate the skin and, as a result, are used as curatives in holistic medicine. They affect various bodily systems as follows:

Skin—Dissolve dead surface cells, increase cell turnover, stimulate metabolism, improve texture. Glands—Soothe and tone. Muscles—Relieve fatigue, reduce soreness, improve elasticity. Blood and lymph—Facilitate smooth flow, increase waste elimination.

The psychological impact of aromatherapy comes from the sense of smell being controlled by the olfactory system, which has the capacity to produce an immediate effect on the nervous system. Any stimulation affects the limbic system, which is the part of the brain that controls emotions and personality. Essences may also play a part in producing neurochemicals like endorphins and enkephalins, which act as the body’s painkillers and relaxants. It is normal for oils to be diluted with a carrier oil, usually vegetable based. Oils are chosen depending on the characteristics of the skin. For example, dry skin might benefit from sweet almond, olive, or palm kernel oil. Oily skin, on the other hand, utilizes grapeseed, hazelnut, or sunflower oil. The degree of dilution depends on the application method. For massage purposes, the ratio is 25 drops of the essential oil to two ounces of the carrier oil, while a bath uses 10 to 30 drops of the essence on its own or ten drops per tablespoon carrier oil when used as a combination. Infusions require seven to ten drops per quart of water. Compresses need two to three drops per 6 inches of wet gauze or linen squares. Guests should be advised to stay out of the sun, saunas, and baths for five hours after treatment. Alcohol should not be consumed but lots of water should be in the ensuing 24 hours.

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CLIENT PREPARATION While some guests may be familiar with spa techniques, it is likely that many will be unaware of basic spa practices. One area that is particularly sensitive is the need to undress prior to treatments. The vast majority of spa treatments involve the technician seeing only that part of the body being immediately worked on. However, guests may not be aware of this and will probably need reassurance. As noted earlier, this issue is particularly important when the employee and guest are of the opposite sex. First-time visitors to the spa should fill out a form indicating basic demographic information together with a brief medical history, what products are presently being used on the body and face, and a section on lifestyle habits. A technical analysis is appropriate in the following areas: skin type skin conditions nails: type and conditions massage: areas of stress; types of massage; result skin texture / color Finally, a history should be kept for each guest indicating the procedures and equipment used and body work done.

ROOM SETUP: WET ROOMS The two basic setups are wet and dry rooms. Wet rooms are built so that they can get wet without damaging the room. Most are tile all the way to the ceiling and have floor drains. Floors are sloped to allow fast drainage. Ceilings are also made of waterproof materials. Rooms are typically 9 by 12 feet (10 by 14 if a Scotch hose is included) and have both a shower for guest use and a hand-held hose for easy cleaning of the room. Indirect waterproof lighting and a dimmer switch for ambience complete the package. The following treatments are best administered in a wet room: hydrotherapy tub treatments Vichy and other shower treatments Scotch hose treatments salt glows, mud masks, and seaweed wraps Rooms should be cleaned, sanitized, and dried between guests. Because seaweed and mud can stain tiles, rooms must be cleaned immediately after use.

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Proper maintenance is essential to any spa. Courtesy The Greenbrier

Quick Getaway 12.4

Safety: Thinking Like a Guest The number one cause of insured loss within the resort industry is not fire, theft, or any other activity-related incident. It’s from slip and fall incidents. Although these losses are usually not costly, they are so numerous that they become a problem. The good news is that most slip and fall incidents are preventable. The best strategy for inspecting the property for potential slip and fall hazards is to think like a guest. The large towel bar next to the bathtub, designed to hold three large cotton towels? A guest may think it’s a grab rail instead. Remember the small change in elevation between the foyer and the front desk? Do you think your guests will see it when they first en-

ter, with heads up and luggage in tow? Asking employees to ‘‘think like a guest’’ and keep an eye out for potential hazards is one easy way to minimize insured losses. Turns out that finding and fixing these fall hazards is far simpler than it first appears! Source: Boynton, Barney. ‘‘Your Biggest Insurance Loss Could Be Right Under Your Feet.’’ Resort⫹Recreation (November / December 2005).

DISCUSSION QUESTION: Look around the room you’re in right now. What easy-to-fix slip and fall hazards can you see?

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ROOM SETUP: DRY ROOMS Dry rooms tend to be 8 by 10 feet and, typically, untiled. As a result, they are quieter and more relaxing. A sink in the room is useful for preparing treatment bowls. A shower should be available nearby. Dry rooms are best used for massages. Wiring the room for music and installing dimmers on the lights permit variation of the ambience. The overall experience demands sheets and towels that are clean and fresh. The same is true for bottles of massage oil. Taupes, beiges, and grays are the best colors for a mixed clientele, and the lighting is best subdued. Employee uniforms must be clean, dry, and fresh. Several uniform changes may be required daily. A wall clock helps the employee keep track of time, while soft music adds significantly to the experience.

COMBINATIONS Treatments can be combined with hydrotherapy and massage. Sample combinations include: massage, facial, manicure, pedicure hydrotherapy tub treatment, full-body seaweed mask salt glow tub, Vichy shower, full-body mud treatment deep cleansing facial, antistress body massage, spa pedicure aromatherapy body massage, facial, mud body wrap, spa manicure and pedicure, scalp treatment, hairstyle, makeup for men: anti-aging facial treatment, muscle-relaxing massage, aromatherapy scalp treatment, cleansing manicure and pedicure

MARKETING The spa menu should be thought of just like a restaurant menu when it comes to marketing. —ERICA MILLER Day Spa Techniques

Combining treatments under a specific name can make them more marketable. For example, the Spa at Camelback Inn in Scottsdale, Arizona, features the Adobe Clay Purification Treatment inspired by the ancient healing rituals of Native Americans and involving a total body exfoliation, a clay application, an aromatherapy cleansing and application, and a sauna session. The Golfer’s Massage at the Son-

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oran Spa, also in Scottsdale, concentrates on muscle groups in the neck, shoulders, lower back, and hamstrings, while the Hot Rocks Massage uses heated river stones to work away stress. Instead of simply listing the treatments and the prices, descriptive words can be used to paint a picture and promote the treatment. For example: Body Massage $55.00 A full hour of relaxing massage, designed to relieve stress and tension according to your body’s own condition. Salt Glow Rub $55.00 Special salts from the Dead Sea are mixed with moisturizing and conditioning lotions to slough off dead cells and hydrate while leaving your body feeling smooth and sleek. You’ll enjoy the comfortable Vichy shower rinse along with this treatment. Additional services that can be marketed are food and activities that focus on the mind. The Hyatt Regency Gainey Ranch in Scottsdale, Arizona, offers Cuisine Naturelle, nutritious gourmet food with moderate calories, and the Waterfall juice bar. The Phoenician Resort in Scottsdale has a Meditation Atrium where guests learn meditation techniques in one-on-one and small group sessions. Alternatively, consider the following body treatments at the J.W. Marriott Las Vegas Resort & Spa: Lost in Paradise Mandarin Orange Wild Lavender

TRENDS A number of ongoing trends can be seen in the spa industry:16 Spa Design—Over recent years, spas have increased, sometimes dramatically, the quality of their interior design. Hydro-therapeutic showers and tubs, mosaic and glass tiling are combining with everything from ‘‘spa’’ apparel to ‘‘spa’’ luggage. Live at the Spa—Emerging ‘‘spa communities’’ will provide baby boomers with important lifestyle requirements focusing on health and fitness centered around spa-going that will become compelling marketing features for real estate ventures. Luxury Becomes Ultra-Luxury—The luxury end of the market will become even more luxurious offering such things as daily private spiritual and wellness counseling, ruby / diamond / emerald / sapphire massage oils, four-

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hour massages, three-therapist treatments, underwater spas, private hotel / spa rooms, and a slate of ultra-chic big-name designer spas. Spa-Goers Become Spa ‘‘Goal-ers’’—Travelers will hit destination and resort spas to achieve increasingly focused personal goals, such as quitting smoking, grief recovery, or spiritual awareness. Spas will ramp up their education programs and workshops. Spa Rx—Medical spas will continue to thrive as they blend traditional medical expertise with spa luxury and innovation. Spa Cuisine Served up for Mass Consumption—Spa-inspired food will become everyday fare with an increase in spa cookbooks, spa cooking classes, and spa chefs. Eco-Spas Thrive—Eco-spas will provide guests with environmentally friendly destinations offering spa products (all organic ingredients), wash dishes (vinegar instead of soap), room lighting (solar panels and fluorescent bulbs).

SWIMMING POOLS There are a number of different types of pools that can be part of the resort amenities:17 Lap pools with lanes for swimmers Sports pool of consistent depth for exercise and games Reflecting pool to complement picturesque landscaping Traditional diving pool with a deep end for safe diving Splash pool for wading and family fun Fitness centers are the number one most important amenity when traveling for business.18 Resorts that appeal to business travelers can turn their pools into a profit center by offering fitness classes—low-impact aquatics—to their guests. While a soak in the pool might make guests feel better, a low-impact workout can invigorate guests, relieving them of the fatigue of travel, increase the blood flow, and increase endorphins. In-pool exercise equipment can be purchased for $1,200 per unit. Aquatic exercise is performed in a vertical manner in either shallow or deep water. Because water buffers the body from gravity a person seems weightless when totally submerged. Exercising in the water provides a cushion not available outside the pool. The negative impact on the body is reduced. At the same time toning is improved. To get muscles into shape the body has to work against something. Because the water limits the impact of gravity on the body the muscle tones without feeling the strain that might occur on dry land.

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The pool setting should be inviting to guests. Courtesy Camelback Resort

Maintenance According to some experts, an attractive pool is one of the most visible and costeffective resort amenities. Keeping the pool attractive requires constant maintenance.19 Know your chemistry—The single most important factor in extending the life of the pool and reducing repairs is keeping the water chemistry in balance. An automated water chemistry control system measures chlorine and pH levels every three seconds and automatically dispenses the right amount of chemicals into the pool. These systems cost between $3,000 and $5,000 but pay for themselves after two years due to savings on chemicals and manpower. Renovations—Exposed-aggregate pool finishes, such as Diamond Bright and Krystal Krete, cost 15 percent more than regular finishes but last longer and are easier to maintain. Decks can be spruced up with emulsions or concrete pavers in different shapes, textures, and colors. Adding lighting for evening ambience completes the effect. Starting over—There comes a time when it is cheaper to tear out the pool and start over rather than to repair it. If your pool is over 30 years old, this be may the better strategy. During pool replacement is a good time to integrate changes in construction such as larger multipurpose

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decks, dramatic architectural elements such as waterfalls, shallow wet decks for kids, and access for seniors and people in wheelchairs.

Safety Because of liability concerns the presence of pools represents a difficult challenge for management. Management has to be particularly concerned with:20 Responsible adult supervision—many resorts post signs indicating that guests swim at their own risk and have no lifeguard. This is no substitute for having responsible adult supervision in the pool, spa, or hot tub areas. Drains, suction fittings, and jets—grates and covers help prevent body or hair entrapment. Covers must meet specific safety standards. Safety doors should be installed in all pool cleaner wall suction lines. Diving—all diving boards, platforms, or slides must be consistently inspected to ensure compliance with industry standards. Electrical hazards—all equipment should be inspected by a licensed electrician to ensure everything is properly grounded, bonded, and protected. Ladders, steps, and handrails—there should be adequate safe-entry and safe-exit methods at both ends of a pool and two sides of a hot tub or spa. Drowning prevention—routinely inspect all gates; have staff trained in CPR. Water clarity—ensure that circulation and filtration systems are working properly to provide clear water. Water chemistry—pools need regular sanitizing and chemical balancing. Heaters—heaters must be properly bonded and ventilated with features to prevent overheating.

WATERPARKS21 A recent trend has been the development of the waterpark resort. Most are outdoor waterparks located in the Sun Belt states. Originally owners have built hotels adjacent to their parks. But now, there is a growing trend of building hotels with indoor waterparks—a movement that is predominant in the Wisconsin Dells. The Dells is a region of natural beauty that has become known as a summer family resort destination. It owes much of its success to its location near three major metropolitan areas—Chicago, Milwaukee, and Minneapolis. In the mid-1990s, five major resort families changed Wisconsin Dells from a summer resort to a year-round resort destination by building mega-resort hotels with indoor waterparks. Hotels with indoor waterparks have been shown to pro-

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duce higher occupancies and room rates compared to hotels with ordinary swimming pools. This is especially true of the shoulder months when occupancy drops from that of the peak summer weeks. The major reasons for resort success are:22 Seasonal resorts gain year-round appeal Elimination of weather-related vacation risks Wide appeal of water-based recreation Increasing demand for short drive-to getaway vacation Themes with varying levels of appeal Location proximate to customer base and within established family vacation market An indoor waterpark resort can be defined as ‘‘a lodging establishment containing an aquatic facility with a minimum of 10,000 square feet of indoor waterpark space and inclusive of such amenities as slide, tubes, and a variety of indoor water features.’’23 A waterpark with less than 10,000 square feet of indoor waterpark space is considered to be a hotel with water features. At the end of 2004 there were 63 indoor waterpark resorts in the United States. Forty-four percent are located in Wisconsin while an additional 22 percent are in Minnesota. In Canada, there are over 100 hotels with indoor waterparks that are open and operating with most located in the western provinces. Mexico boasts at least 11 properties that have a combination of hotel rooms, indoor waterparks, and outdoor waterparks while there are an additional 13 in the rest of the world that have a combination of hotel rooms, indoor waterparks, and outdoor waterparks. The size of the indoor waterpark will be dictated by the results of a market and feasibility study. An industry rule of thumb indicates that a 100- to 150-room hotel may be able to generate enough additional income to support the investment of a 15,000- to 20,000-square-foot indoor waterpark. Hotels ranging in size from 150 to 250 rooms may be able to support a 30,000- to 40,000-square-foot waterpark. Hotels with waterparks over 50,000 square feet have a ratio of 273 square feet of waterpark per guestroom. This ratio decelerates as waterparks get smaller. The ratios are as follows:24 Size of Waterpark

Number of Square Feet

In Square Feet 50,000 ⫹ 40,000–49,000 30,000–39,000 20,000–29,000 10,000–19,000

Per Guest Room 273 183 130 98 100

These figures do not include such things as arcades, gift shops, mechanical rooms, and offices. The type of attraction developed is a function of the demo-

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Quick Getaway 12.5

Waterplay Structures: What to Look For Private clubs that install waterplay structures (which can include slides, sprinklers, showers, and other elements) find increased use of the overall facilities. This is because members spend more time there as a family than as individuals, which of course leads to increased revenue for the club. Installing waterplay structures can be a great idea to bring in new revenue. So, what should you look for when selecting a waterplay structure manufacturer? Expandability. Can the system be installed in different phases to accommodate your budget? Flexibility. Can the interactive components be interchanged to update the structure or replace faulty parts? Installation. Will the entire structure—no

matter how it grows—operate from a single water line and fit any pool? Interactive Play. Does the system promote interactivity, teamwork, discovery, and imagination? Accessibility. Does the system comply with the American Disabilities Act (ADA)? Safety. Is the system an environment where families will feel safe and comfortable as well as exhilarated? Can the resort support daily inspections to insure equipment safety? Source: ‘‘Waterplay Wows Guests.’’ Resort⫹Recreation (Summer 2004).

DISCUSSION QUESTION: How can you design a waterplay structure so that it appeals to different child age groups?

graphics of the market sought, including the age of children as well as the size of the available space. Indoor waterparks with 10,000 to 30,000 square feet might feature such things as multiple slides, a tree house with slides, spray guns, tipping buckets, Jacuzzi, a number of pools, and a lazy river. With a capacity of 250 to 740 people, the waterpark would require a minimum of three lifeguards. For a small waterpark, up to 15,000 square feet, the Kiddie Pool is the major element. Typically ranging from 3 to 18 inches in depth, the pool covers an area of 2,000 square feet. A play element offers such things as spraying components, tilting buckets, and slides ranging from 2 to 6 feet in height. A second element consists of an activity pool to accommodate guests ranging in age from eight to adult. This conventional swimming pool is approximately 25 feet wide by 50 feet long with depths of 3 to 5 feet. The size of this pool depends on the number and type of activities. It might, for example, have several movable water basketball hoops and a volleyball net. The third element is a whirlpool. A favorite gathering area for adults, they should be located away from the Kiddie Pool and the activity area as possible. This allows for a relatively quiet conversation area. A game room and snack bar offers the

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opportunity to generate additional income and should be located in a highly visible area. The objective is to create an activity-filled environment that families can enjoy over a four to six hour period of time. Once a waterpark increases beyond 15,000 square feet the appeal moves to families with children up to about 14 years of age. In addition to the elements mentioned above, a larger waterpark has waterslides with splashdown pools and for the larger amenities in this category, a leisure river might be added. Waterslides are very important elements. Waterparks above 40,000 square feet can be developed to include action rivers, wave pools, and waterslides. At this point it is probably necessary to include the public to make the investment financially viable. The number of outside users should be limited as hotel guests are likely paying a premium of anywhere from $20 to $150 for the room because of the presence of the waterpark and are likely to be upset if they perceive there are too many non-guests at the facility. For indoor waterparks of between 10,000 and 30,000 square feet of indoor waterpark space the waterpark is considered a hotel amenity. When the size goes beyond 30,000 square feet the waterpark is a true destination resort that families visit primarily because of the waterpark. In addition to the elements noted above, such a facility might include a wave pool, water coaster, surfing opportunities, and additional outdoor waterpark features. With a capacity anywhere from 750 to 5,000 people, this facility requires a minimum of ten lifeguards. Construction costs for an indoor waterpark will be a minimum of $300 per square foot. The budget for a 300-room upscale resort with a 40,000-square-foot indoor waterpark is typically:25 The operation of an indoor waterpark will result in additional costs in certain areas—primarily lifeguard and other staff wages, utility costs, and repairs and maintenance. A typical waterpark is open from 9:00 a.m. until 10:00 p.m. and must be

TABLE 12.1 Waterpark Construction Costs Category Land Design Development Construction FF&E Construction management Pre-opening Working capital Financing Contingency Total Project

Per Room $14,400 3,500 10,800 119,000 14,600 1,600 4,800 2,000 8,300 2,500 $166,700

Amount

% of Total

$4,320,000 1,050,000 3,240,000 35,700,000 4,380,000 480,000 1,440,000 600,000 2,490,000 750,000 $54,450,000

7.9 1.9 6.0 65.6 8.0 0.9 2.6 1.1 4.6 1.4 100.0

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staffed accordingly. It tends to be kept at a constant 85⬚F year-round. While the overall utility costs mirror those of a full-service hotel (4 to 6 percent of revenue), the dollar amount increases. Because most kiddie play elements spray a great deal of water in high levels of humidity evaporation results. This, in turn, causes the spread of chloramines and other compounds, which can result in excessive corrosion and deterioration of HVAC systems and other equipment. They can also act as a health hazard because of poor air quality. Thus, the best water purification system should include not only a chlorine or bromine system, but also an ozone system to reduce the chloramines formation and improve air quality. Waterborne pathogens need to be eliminated from the water, circulation system, HVAC system, and the air.

SUMMARY People go to spas because they are stressed or because they want a small indulgence. A full-service spa contains a full complement of facial devices and a comfortable facial bed or chair for each room, massage table for full-body treatment, and a range of hydrotherapy treatment options. Treatments themselves consist of exfoliation, full-body treatments, and spot treatments conducted in wet and dry rooms following strict guidelines to ensure a safe and enjoyable experience for guests. Pools and, increasingly, waterparks offer amenities that attract guests and can produce additional revenue for the resort.

ENDNOTES 1. This chapter draws heavily from two books by Erica Miller: Miller, Erica. Day Spa Techniques. Albany, NY: Milady Publishing, 1996. Miller, Erica. Day Spa Operations. Albany, NY: Milady Publishing, 1996. Readers interested in finding out more about this subject are referred to these excellent publications. 2. Miller, Richard K., & Associates. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 434–435. 3. Singer, Judy. ‘‘Studies Show Resort Spas Find Their Stride.’’ Hotel and Motel Management (June 14, 1999): 10. 4. Scholz, Kimberly. ‘‘More Men to Be Found at Spas.’’ Travel Weekly (April 5, 1999): 16. Licata, Paula. ‘‘Men are Discovering the Salon & Spa.’’ The New York Times (October 5, 2003), accessed February 20, 2006. http: / / www.paulalicata.com / men-n-spas.htm 5. Ibid. 6. Monteson, Patricia A., and Judith L. Singer. ‘‘Planning and Operating a Resort-Based Spa.’’ Journal of Leisure Property (December 2002). 7. Ibid. 8. Foster, Andrea, and Adam Wohlberg. ‘‘Hotel Spas as Independent Profit Centers.’’ March 7, 2006, accessed March 8, 2006. www.hotelnewsresources.com / news print.php?sid⫽21255

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9. Foster, Andrea, and Robert Mandelbaum. ‘‘Hotel Spas: The New Recreational Vehicle for Hotel Profits.’’ Lodging Magazine (October 2005). 10. Foster, Andrea, and Adam Wohlberg. ‘‘Hotel Spas as Independent Profit Centers.’’ March 7, 2006, accessed March 8, 2006. www.hotelnewsresources.com / news print.php?sid⫽21255 11. Foster, Andrea, and Robert Mandelbaum. ‘‘Hotel Spas: The New Recreational Vehicle for Hotel Profits.’’ Lodging Magazine (October 2005): 17. 12. Monteson, Patricia A., and Judith L. Singer. ‘‘Planning and Operating a Resort-Based Spa.’’ Journal of Leisure Property (December 2002). 13. Ibid. 14. Ibid. 15. Ibid., 2. 16. ‘‘Spa Finder Offers Sneak Preview of Spa Trends to Watch in 2005.’’ PR Newswire, December 13, 2004. http: / / hotel-online.com / News / PR2005 2nd / Apr05 SpaTrend.html 17. Pool and Spa Living Buyer’s Guide 2005. March 2005, 34. 18. Velinsky, Milton, and Steve Belmonte. ‘‘Pooling Your Assets.’’ Lodging Magazine (April 2006): 66–68. 19. Ibid. 20. ‘‘Important Safety Information’’ leaflet, The Association of Pool & Spa Professionals, undated. 21. Accessed January 18, 2006. http: / / www.hotel-online.com / News / PR2002 1st / Jan02 WaterParks.html U C: \ Documents and Settings \ rmill \ Local Settings \ Temporary Internet Files \ OLKAD \ Hotel Waterpark Resort Industry Report—2003 14 New Hotel Waterpark Resorts Open—October 2003 (3).htm 22. Sangree, David J. ‘‘Indoor Waterparks and Hotels—Year End 2005 Overview,’’ 3. Accessed March 23, 2006. http: / / www.hotel-online.com / News / PR2006 1st / Feb06 SangreeWaterparkReport.html 23. Ibid., 1. 24. Hotel Waterpark Resort Research & Consulting: Jeff Coy and Bill Haralson, 1. Accessed January 18, 2006. http: / / www.hotel-online.com / News / PR2003 2nd / May03 HotelWaterParkStudy.html 25. Accessed January 18, 2006. http: / / www.hotel-online.com / News / PR2002 1st / Jan02 WaterParks.html U C: \ Documents and Settings \ rmill \ Local Settings \ Temporary Internet Files \ OLKAD \ Hotel Waterpark Resort Industry Report—2003 14 New Hotel Waterpark Resorts Open—October 2003 (3).htm

RENAISSANCE CLUBSPORT: THE CONCEPT OF THE UPSCALE HOTEL/ HEALTH CLUB UNIFICATION By: Kevin Patel Assistant Vice President, HVS International San Francisco Business travelers in recent times have expressed a greater desire to maintain their health during business trips by exercising and eating healthier on the road. The

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development of new fitness initiatives by various hotel companies in the past decade have focused on the fitness facility as an amenity to the hotel guest. While these companies focused on improving their fitness facilities, Leisure Sports International (L SI), an operator of high-end sports clubs under the ClubSport brand since 1978, pioneered the concept of the ‘‘hotel and fitness resort.’’ This groundbreaking concept combines the features of an upscale, boutique hotel with a luxurious, Ⳳ70,000-square-foot fitness complex. The facility generates revenues from hotel guests as well as health club members from the local community. The premise of the Renaissance ClubSport concept is that operating expense and construction cost efficiencies, as well as prospective marketing synergies, result from the combined hotel and health club operations. This article will provide an introduction to the history, premise, and economic benefits of the Renaissance ClubSport concept.

The Evolution of the Renaissance ClubSport Concept The concept has its roots in Pleasanton, California, the headquarters of L SI. Steven Gilmour founded L SI in 1978 with the intention of developing the ‘‘fitness resort’’ concept. This concept, under the ClubSport brand name, entailed the creation of a luxurious fitness complex that now includes the following: five to six group exercise studios; three swimming pools; five to seven racquetball and squash courts; an NCAA-regulation gymnasium; expansive cardiovascular, circuit-training, and free-weight areas; a full-service spa and salon; a pro shop; and a child-care facility. This facility would target a high-income residential population and workers in corporations in the local community who were looking for a resort-like experience in a suburban or urban area. L SI’s first facility, the ClubSport Pleasanton, opened in 1981. During this time, L SI also noticed a shortage of hotel supply in the Pleasanton area. Mr. Gilmour’s idea: if a hotel were attached to the existing club, a number of objectives could be achieved, such as a larger amenity package for hotel guests. Furthermore, the club’s numerous corporate clients would be able to access the hotel’s room accommodations and meeting space. The idea resulted in the development of a $25 million, 300-room Hilton hotel next to the Pleasanton ClubSport in 1985. This development, a partnership between L SI and Travelers Insurance Company, became the root of L SI’s mixed-use, hotel / health club concept. While L SI developed five stand-alone ClubSport health clubs around California, Oregon, and Nevada in the 1980s and 1990s, L SI was refining the premise and potential economic benefits of the hotel / health club concept. In addition, L SI was also looking for a strong hotel brand as a partner to create and grow a brand for

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this new concept. Marriott International, which purchased the Renaissance brand in the late 1990s, was looking to grow Renaissance as an upscale, boutique hotel brand in numerous markets. The attributes of the Renaissance brand seemed like a good fit with the ClubSport brand, and in the late 1990s, the Renaissance ClubSport brand was created under a franchise / co-branding agreement with Marriott International. The concept turned into reality when the first Renaissance ClubSport development, in Walnut Creek, California, opened to the public in October 2002. This facility has been a resounding success. The health club has reached its capacity of 4,500 members with initiation fees averaging between $400 and $450, and monthly dues of approximately $150. Additionally, the hotel has achieved annual occupancy levels in the low-to-mid-70s percent range with average rates in the low$140 range, easily outperforming its competitors in the market. The success of the Walnut Creek facility has spurred significant interest in the concept, and new developments are planned in Aliso Viejo, California (Orange County); Chandler, Arizona (Phoenix); and Rockville, Maryland (Washington, D.C.). Other areas that are currently being considered for development are Milwaukee, Wisconsin; Weehawken, New Jersey; Oak Brook, Illinois; and Portland, Oregon. Moreover, Marriott International launched a strong initiative to develop the Renaissance ClubSport concept by acquiring the ClubSport brand name and intellectual property rights from L SI in September 2005. L SI will receive payments based on future developments. The company will also provide various design, operating, and marketing services for the health club component of each new development. Marriott International plans to develop and open 15 Renaissance ClubSport facilities in the next five to seven years.

The Premise Behind the Renaissance ClubSport Concept The premise of the Renaissance ClubSport concept is that operating expense and construction cost efficiencies, as well as prospective marketing synergies, result from the combined hotel and health club operations. In addition, the stable cash flow of the health club would complement the more seasonal and cyclical cash flow of the hotel. The Renaissance hotel and ClubSport health club, when jointly developed and operated, feature common lobbies and food and beverage facilities, integrated management, and extensive indoor and outdoor recreational and fitness facilities for the use of club members and hotel guests. Hotel guests do not incur an extra charge for use of the health club facilities; the costs are reflected in the regular hotel room tariff. On the other hand, club members receive discounts for hotel accommodations as well as the use of the hotel’s meeting facilities. The marketing synergies are based on the premise that hotel guests perceive higher value due to the hotel’s integration with a first-class athletic club, as well as the inverse: higher perceived value in the club membership due to the club’s attachment to a first-class hotel. For example, hotel guests would increase the utilization of the club and spend more on a greater variety of ancillary facilities (than those typically available in a stand-alone Renaissance hotel). Members of

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the club would increase the utilization of the property’s food and beverage facilities and meeting rooms, as well as become a marketing tool to sell the hotel to the members’ friends, family, or colleagues. The stated efficiencies allow for the creation of a resort-like, full-service hotel with a number of amenities and facilities that would not be feasible in a comparable freestanding hotel. Some key advantages and efficiencies related to the concept are summarized as follows: Construction costs and ongoing energy and maintenance expenses are economized as a result of the shared physical plant and building systems (e.g., HVAC, laundry, etc.); Integrated management would result in economized staffing levels, as various positions in general management, human resources, accounting, sales and catering, and engineering are expected to be shared, eliminating some ongoing operating expenses; The health club provides a more stable and predictable cash flow, which complements the hotel’s more seasonal and cyclical cash flow; In the property’s initial years of operation, the health club generates cash flow from the pre-sale of club memberships and the collection of monthly dues from this membership base. The initial cash flow from the club helps cover expenses for the entire facility while the hotel builds up its operation and cash flow; From the standpoint of corporate hotel visitation, the provision of an attached first-class athletic club is consistent with today’s trends toward corporate wellness programs, and would provide added appeal for the property as a corporate conference destination; The integrated first-class hotel would increase the athletic club’s prestige and provide both the hotel and the club with a more resort-like image; Club memberships and hotel rooms can be jointly marketed to nearby corporate employers, reducing marketing expenses; With two major sources of restaurant, lounge, and banquet demand (hotel guests and club members), the shared food and beverage operation would experience higher sales volume and greater efficiency; The facility’s parking facilities can be utilized more efficiently since local residents use the health club during the morning and afternoon, while hotel guests, especially commercial transient guests, use the parking facilities overnight. The concept is designed to provide a suburban hotel product as an alternative option in business markets and areas with high household income levels and populations with health-conscious individuals. Most Renaissance ClubSport developments are currently planned in suburban locations that are similar to Walnut Creek, California, although the concept can be easily adapted to urban locations.

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Economic Benefits of the Renaissance ClubSport Concept The economic benefits of the Renaissance ClubSport concept can be quantified in the following ways: 1. Construction cost savings from developing the hotel and health club in one facility; 2. Combination of revenues from the hotel and health club; 3. Potential increases in ancillary revenues from hotel guests and club members; 4. Ongoing energy and maintenance cost savings from the shared physical plant; and 5. Cost savings from the integration of property management and economized staffing. The methodology for the illustration of the concept’s economic benefits can be best described by analyzing the construction costs and income streams for two stand-alone business entities (the hotel and health club); the savings associated with the construction and operation of the integrated development; and the impact on the integrated development’s construction cost, cash flow, and economic value added to the joint facility. This methodology has been employed due to the unique nature of the Renaissance ClubSport concept and the lack of actual operating statements for an integrated facility. In addition, this methodology will also provide an indication of the value of each stand-alone operation as well as the added economic value of the integrated operation. The following hypothetical example will provide a basis for the economic benefits of the Renaissance ClubSport concept. The following table provides an indication of the hard construction cost savings from the development of the integrated facility.

TABLE 12.1 Hard Construction Cost Savings (as of January 2006) Square Footage

Cost per Square Foot

Total Cost

Stand-Alone Hotel Stand-Alone ClubSport

125,000 75,000

$170.00 230.00

$21,250,000 17,250,000

Total of the Stand-Alone Facilities Less: Savings from Common Lobbies / Food and Beverage / Back-of-the-House

200,000 15,000

192.50 192.50

38,500,000 2,887,500

Hard Construction Cost of Integrated Hotel and Health Club

185,000

$192.50

$35,612,500

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As shown in the preceding table, the integration of the facility resulted in a cost savings of approximately $3 million. The total square footage of the integrated development typically contains an atrium joining the hotel and health club structures that measures approximately 8,000 square feet, and contains a common lobby, food and beverage facilities, and separate reception areas for the hotel and the health club. Back-of-the-house areas such as the administrative offices and laundry facilities are also shared between the hotel and health club. The integration of the two facilities eliminates approximately 15,000 square feet of usable space necessary to operate the integrated development. In addition to savings on hard construction costs, the economies of scale of developing this integrated facility also result in savings on indirect costs, yard costs, and pre-opening costs. The estimated savings of the integrated facility is approximately 7 percent of the cost to develop the two stand-alone facilities. The following table provides an outline of these savings. In addition to cost savings during the development and construction of the integrated development, the subsequent operation of the integrated facility also provides opportunities to utilize various operational and marketing synergies in order to lower operational expenses. An estimate of the integrated development’s net income potential must include a quantification of savings resulting from shared-space and integrated-staff efficiencies. Due to the shared building space and common building systems of the integrated building, some savings can be foreseen in the energy department. In addition, joint operating savings would result from integrated staffing in the general management, human resources, accounting, sales and catering, front-desk, housekeeping, and engineering departments. The following chart provides an indication of the positive impact of the integrated development’s operational synergies on the facility’s stabilized net income levels, as well as the economic value added from the integration of the hotel and health club into one entity. As shown in the preceding table, the integration of the hotel and health club results in an additional $1 million in net income for the integrated facility, as opposed to the combined net income stream from two stand-alone facilities. In addition, the stable cash flow of the health club complements the more seasonal and cyclical cash flow of the hotel. Therefore, the integration of the two facilities also results in a more feasible development with the potential for a significantly

TABLE 12.2 Development Cost Savings (as of January 2006)

Stand-Alone Hotel Stand-Alone ClubSport Total of the Stand-Alone facilities Less: Savings from Integrated Development Total Development Cost for Integrated Development (SAY)

Units

Cost per Unit

Total Cost

175 75,000

$225,000 $400.00

$39,375,000 30,000,000 69,375,000 4,856,250 64,518,750 64,500,000

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TABLE 12.3 Stabilized Net Income and Valuation Analysis (Revenues and Expenses in [‘]000s) (as of January 2006) 75,000 Square Foot Stand-

Total Stand-

from Integrated

Integrated

Stand-Alone

Alone Health

Alone

Development

Development

Operation

Operation

Hotel Occupancy Average Rate

Less: Savings

175 Room %

Club

%

Facilities

%

75%

75%

$175.00

$175.00

Memberships

4,400

4,400

Initiation Fees

$350.00

$350.00

Monthly Dues

$175.00

$150.00

Revenues Rooms Food and Beverage

$8,300 3,800

Health Club Other

65.4% 29.9 —

32.2%

—

300

$0

2.3

—%

$8,300 4,100

15.9

—

$8,300 4,100

12,400

94.7

12,400

48.1

—

12,400

600

4.7

400

3.1

1,000

3.9

—

1,000

12,700

100.0

13,100

100.0

25,800

100.0

—

25,800

Rooms

2,158

26.0

0

2,158

26.0

($83)

2,075

Food and Beverage

2,964

78.0

270

90.0

3,234

78.9

(159)

3,075

4,464

36.0

4,464

36.0

(124)

4,340

270

27.0

—

270

Total Revenue Departmental Expenses

Health Club Other Total Departmental

0

—

—

270

45.0

0

—

5,392

42.5

4,734

36.1

10.126

39.2

—

9.760

7,308

57.5

8,366

63.9

15,674

60.8

—

16,040

Expenses Departmental Profit Undistributed Operating Expenses Admin / General

1,016

8.0

1,585

12.1

2,601

10.1

(331)

2,270

Marketing

686

5.4

812

6.2

1,498

5.8

(105)

1,393

Maintenance

470

3.7

419

3.2

889

3.4

(89)

800

Utilities

330

2.6

563

4.3

894

3.5

(94)

800

Management Fee

508

4.0

524

4.0

1.032

4.0

—

1,032

Total Undistributed

3,010

23.7

3,904

29.8

6,914

26.8

—

6,295

4,298

33.8

4,462

34.1

8,760

34.0

—

9,745

Property Taxes

350

2.8

400

3.1

750

2.9

—

750

Insurance

250

2.0

160

1.2

410

1.6

—

410

Reserve for

508

4.0

524

4.0

1,032

4.0

—

1,032

1,108

8.7

1,084

8.3

2,192

8.5

—

2,192

NET INCOME

$3,190

25.1%

$3,378

25.8%

$6,568

25.5%

—

$7,553

Stabilized Capitalization

10.0%

10.0%

10.0%

10.0%

$31,901

$33,782

$65,683

$75,528

Operating Expenses Income Before Fixed Changes Fixed Expenses

Replacement Total Fixed Expenses

Rate Stabilized Valuation

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TABLE 12.4 Feasibility Analysis of Integrated Development (as of January 2006) Stand-Alone Hotel

Stand-Alone Health Club

Integrated Hotel / Health Club

Stabilized Valuation Construction Cost

$31,901,000 39,375,000

$33,782,000 30,000,000

$75,528,000 64,518,750

Feasibility Gap

($7,474,000)

$3,782,000

$11,009,250

higher return on investment. The following table provides an indication of the feasibility gap or development profit for the two stand-alone facilities and the integrated development. The preceding table indicates that a stand-alone hotel would not be feasible. In addition, the development of a stand-alone health club would provide a moderate return on investment upon stabilization of operations. On the other hand, the development and operation of the integrated facility result in a development profit of approximately 15 percent of the total development cost. This hypothetical example illustrates the economic value that is added to the integrated development due to the savings from constructing and operating the facility under one roof. Courtesy of: Real Estate Finance Journal

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Chapter 13 SPECIALTY RESORTS LEARNING OBJECTIVES 1. Identify the changing trends in and demographic profiles of the market for specialty resorts. 2. Compare and contrast traditional lodges and ecolodges.

INTRODUCTION NATURE-BASED ENVIRONMENTAL ACTIVITIES

ADVENTURE Market Profile ADVENTURE TRAVEL IN AMERICA

Trails

Wilderness Tours

ECOTOURISM

Hard Adventurers

ECOLODGES

Soft Adventurers

Traditional Lodges vs. Ecolodges Ecotourism Design Operations Trends

Activities SUMMARY ENDNOTES

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INTRODUCTION One way to describe tourism is to see it as mass tourism or alternative tourism. Mass tourism—the subject of most of the previous chapters—involves large numbers looking to imitate their home culture in corporate-type settings involving little or no interaction with the local culture and / or environment. Alternative tourism, on the other hand involves activities that are consonant with the local physical and / or social environment and often involving contact between host and guest.1 Alternative tourism can be divided into cultural, event, and natural tourism. The latter can further be subdivided into nature-based and adventure tourism. Because natural tourism is physical-recreation-based this chapter will focus on the important elements of nature-based and adventure tourism.

NATURE-BASED ENVIRONMENTAL ACTIVITIES Typically, the goal of environmental activities is to learn about the interdependence of living organisms or to learn how to behave in the environment. Programs can include camping, environmental education, nature-oriented activities, outdoor living skills, conservation skills, and bird watching. Rapid growth in this area has meant that programs are increasingly taking on more complex issues, covering economic as well as technological aspects and their impact. Emphasis on biological characteristics and the environment as a resource base has increased. As noted in the Outdoor Recreation Participation Study for 2004, ‘‘The lure of nature as a place to recreate is attracting more of all Americans:. . .Increasingly, Americans are re-discovering that reality as experienced in places less trampled provides a better antidote to noise, confusion, impersonal computers and machines and the sameness of conventional lives and places to live.’’2

Trails Trails are an effective way of transporting people and their machines around recreational areas while enhancing the natural experience. Parks Canada classifies trails as follows: Class 1: Primitive Trails—marked but unimproved except for clearing and some work on dangerous areas. Class 2: Minor Trails—signed and improved to accommodate foot or horse traffic, or both. Class 3: Major Trails—as for class 2 but, in addition, reaches many of the main visitor attractions and serves as a terminus for minor and primitive trails.

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Class 4: Walks—including boardwalks and bituminous trails that connect developed areas or serve as short scenic walks. Class 5: Special-Purpose Trails—including bicycle, cross-country ski, and accessible trails for people with disabilities.3 Design standards have been developed for each of these trail types. Three elements are important in the development of a trail: 1. function of the trail 2. relation of the trail to others in the area 3. relation of the trail to other facilities4 Figure 13.1 shows a tree diagram to assist in determining the appropriate trail function. Note that the primary function of the trail can be single-purpose or multipurpose. A single-purpose trail might be used for interpretation, hiking, motorized, or horseback riding. Examples of multipurpose uses are hiking and biking, hiking and horseback, fitness / jogging, and hiking and skiing. Secondary uses include

Trail Function

Primary

Secondary

Access

Controlled Access

Multi-Purpose

Hike ’n Bike

Hike FitnessJogging ’n Horseback

Connection

Open Access

Circulation

Foot Only

Foot & Bicycle

Single-Purpose

Interpretive

Hike ’n Ski

Historical

SelfGuided

Audio

Nature

Hiking

Long Distance

Motorized

Loop ORV

ATV

Horseback

4 Mini- SnowWheel Bike mobiles

Guided

Signed Brochure

FIGURE 13.1 Trail function tree diagram. Source: Hultsman, John, Richard L. Cottrell, and Wendy Z. Hultsman. Planning Parks for People, 2nd ed. State College, PA: Venture Publishing, 1998, 49.

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access, connection, and circulation. The important point is that the primary function of the trail should be identified and every subsequent design decision should be tied to that function. A trail designed to serve too many or conflicting purposes will disappoint users. Once the function is determined, the relation of this trail to others must be determined. Some trails conflict with each other, while others complement their neighbors. Hiking and interpretation do not mix, as do not horseback and offhighway vehicles. On the other hand, dirt bike and four-wheel trails can be complementary. The final consideration is the relationship of the trail to other facilities. Again, compatibility is the issue. Motorized trails should be separated from such quiet venues as campsites. Several important design considerations pertain to trails: A circular loop is preferable to a linear design. A loop eliminates backtracking and seeing the same views twice. A linear trail means traffic moves two ways on the trail. The result is more congestion. Use a single entry / exit point. Administration and control is easier, and visitors have less chance of being disoriented by exiting the trail and not knowing where they are. The trail entrance is particularly important. The entrance should be designed to funnel people into the trail in an inviting manner. The trail should be rather wide initially and gradually get narrower. This allows participants to get used to the trail. Trails that begin by going uphill represent an unfriendly barrier to many people. Trails that go downhill at first are much more user-friendly. Preferably, the trail should be designed so that, after the entrance, the first half of the trail has a gradual upward incline (when participants are more energized) and the latter half slopes downward (when people are more tired). The natural tendency for people is to move to the right. This tendency can be reinforced through proper design. A barrier to the left discourages movement that way, while a gentle curve to the right reinforces that natural movement (most people are more comfortable moving to the right). The need for variety is particularly important if the primary function of the trail is as a foot trail. Because people move rather slowly over such trails, a great deal of visual variety is necessary to guard against boredom. The use of curves and different kinds of scenery can enhance the experience. Consider orientation to sun, wind, etc.5 The site can be defined in terms of its positives and negatives. A picnic area is inappropriate where there are no trees for shelter; stable soil bases are necessary for the construction of buildings; roads should not be constructed where snow loads are heaviest. Additionally, use areas should be examined relative to their compatibility with each other. For example, nature walks, canoeing, and areas for contemplation demand a certain level of peace and quiet. Tennis courts, basketball courts, and

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other physically active sports areas create noise as part of the enjoyment of the activity. The quiet activities and the loud activities should each be clustered together and buffered from the other. Similar activities usually require similar maintenance—another reason for the clustering. Another consideration is the grouping of areas into zones by type of user. Dayuse activities may be zoned together, away from overnight-use activities. Hultsman et al., in their book Planning Parks for People, suggest the development of ‘‘neutral zones,’’ where primary attractions such as shorelines, scenic vistas, and overlooks are designed such that all visitors have equal access to them.6 Thus, for example, individual-use areas such as picnic and camp units would be kept a minimum of 75 feet away from such attractions.

ECOTOURISM An enthusiastic form of nature-based tourism is ecotourism. The Ecotourism Society, in its Definition and Ecotourism Statistical Fact Sheet, defines ecotourism as ‘‘purposeful travel to natural areas to understand the cultural and natural history of the environment, taking care not to alter the integrity of the ecosystem, while producing economic opportunities that make the conservation of natural resources financially beneficial to local citizens.’’7 Ecotourism areas should be respected as the abode of local residents with their own traditions and customs. Ecotourism use should minimize negative effects on the local and natural environment as well as on local inhabitants. Ecotourism should contribute to the management of protected areas and improve the links between local communities and managers of protected areas. Ecotourism should procure economic as well as other social benefits for local inhabitants and maximize their participation in deciding what type of tourism and how much tourism should develop. Ecotourism should promote genuine interaction between hosts and guests as well as a real interest in the sustainable development and protection of natural areas. Ecotourism should supplement and complement traditional activities of the area without marginalizing them or attempting to replace them.

ECOLODGES From the very beginning, I believed that ecotourism development was a pure art form, where the designer arranged all

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the indigenous cultural and natural assets into a guest experience. —STANLEY SELENGUT The Ecolodge Sourcebook

A specialized form of resort lodge is the ecolodge. An ecolodge or nature-based lodge is defined as a ‘‘nature-dependent tourist lodge that meets the philosophy and principles of ecotourism.’’8

Traditional Lodges vs. Ecolodges The following table illustrates some of the differences between traditional lodges and ecolodges: Ecolodges tend to be found in places such as Belize, Costa Rica, Ecuador, Peru, Brazil, Australia, Kenya, and South Africa. Ideally, they are designed using natural sustainable materials that are collected on the site. The objective is for ecolodges to generate their own energy from renewable sources and manage their own waste. Ecolodges blend in with the natural surroundings and build on and accentuate the local culture.

Ecotourism Design Here are some ecotourism design practices:9 Use local construction techniques, materials, and cultural images. Provide building forms and images in harmony with the natural environment.

TABLE 13.1 Differences Between Lodges and Ecolodges Traditional Luxury Generic style Relaxation focus Facility-based activities Enclave development Group / consortium ownership common Profit maximization based on high guest capacity, services, and prices High investment Key attractions are facility and surroundings Gourmet meals, service, and presentation Marketed within chain Guides and nature interpreters minor feature or nonexistent

Ecolodge Comfortable basic needs Unique character style Activity / educational focus Nature / recreation-based activities Development integrated with local environment Individual ownership common Profit maximization based on strategic design, location, low capacity, services, and prices Moderate / low investment Key attractions are surroundings and facility Good / hearty meals and service, cultural influence Marketed independently Guides and interpreters focus of operation

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Use canopies to cover high-use trails between structures to minimize erosion. Avoid energy-intensive products and hazardous materials. Use low-tech design solutions. Prominently post an environmental code of conduct for visitors and staff. Select interior furnishings and equipment to represent local resources. Design trail systems to respect travel patterns and wildlife habitats. Minimize trail crossing points at rivers and streams. Space buildings to allow for wildlife travel patterns and forest growth. Discreetly label plant / tree types around the immediate lodging facilities to acquaint visitors with species they may encounter. Limit and control site lighting to avoid disruption of wildlife diurnal cycles.

Quick Getaway 13.1

Silk Sheets in the Savannah Travel used to be divided into two sections: allout luxury and roughing it. Luxury meant traveling first-class, dining on choice dishes at world-class restaurants, and relaxing in decadence; roughing it meant backpacking out to some of the world’s most remote and beautiful locations, but living on hot dogs cooked over a campfire. Now travelers can enjoy fine wines and see the wildlife too, because luxury and nature are no longer mutually exclusive. Cutting-edge hoteliers are beginning to combine the timeless luxuries of solitude and nature with the more modern ones of butlers and silk sheets. In the jungles of India’s Ranthambore Tiger Reserve, the Oberoi Group has erected magical air-conditioned tents complete with marble bathrooms, while the Gulf hospitality group Jumeirah has the Bab Al Shams Desert Resort in Dubai, a study in comfort and Arab opulence. Rich travelers’ quest for isolation and decadent comfort means that these camp-style re-

sorts are cropping up in increasingly remote areas, according to author Martin Nicholas Kunz, whose latest book on luxurious lodgings covers Africa and the Middle East. ‘‘The new nomads will help drive a market for many more exciting hotels to visit in the deserts, jungles, mountains, forests and even underwater,’’ Kunz says. Atlanta-based travel agent Betty Jo Currie explains that once news of these remote gems reaches civilization, it’s practically impossible to get reservations. The exclusivity of the resort ‘‘drives the price skyhigh. It’s supply and demand.’’ Source: Power, Carla. ‘‘Rustic Luxury.’’ Newsweek International (July 25, 2005). http: / / www.msnbc.msn.com / id / 8597678 / site / newsweek /

DISCUSSION QUESTION: What might be some moral issues connected with traveling in five-star luxury to areas plagued by poverty?

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Operations In one survey of 28 ecolodges in nine countries, management indicated the key to success was being located in an area of outstanding natural beauty. Cultural attractions, while important, took second stage to nature. Most ecolodges feature a lodge and cottage facilities. A restaurant and bar are located in the lodge. In many cases, a patio is featured as a key attraction. Cottages are private and designed so as to encourage air flow in order to reduce the need for electricity and cooling. Ecolodges are the equivalent of a oneor two-star urban hotel. Typically, they are small, with a capacity of around 24 guests. This provides for a 15-person group with a guide and a few places left over for independent travelers. Meals, often included in the package price, are home-style and reflective of the local culture. The atmosphere is friendly and relaxed. Educational opportunities are often stressed, although, as one New Zealand operator noted, ‘‘We still make more money out of beer sales than we do out of guided walks.’’10

Trends Operators tend to specialize in order to remain distinctive. Some ecolodge operators are improving their educational activities; others are emphasizing guest activities that relate to the natural environment. While ownership has traditionally been independent and small scale, corporate ownership is becoming more common. The P&O line is getting involved in Australia and Hilton in Kenya.

ADVENTURE An adventure can be thought of as consisting of some combination of the following:11 freedom to choose rewards that are internal to the individual ingredient of uncertainty personal challenge controlled risk excitement

Market Profile Who are Adventure Travelers? A 2004 study published in the Journal of Travel Research found that adventure travelers can be classified into six groups:12

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Quick Getaway 13.2

Sea Suites The first Poseidon Undersea Resort will take the phrase ‘‘a vacation to the sea’’ to a new level. This resort, located under 30 to 60 feet of water, will feature suites with clear acrylic walls for underwater viewing. Unlike existing underwater habitats, the interior of the resort will be at one atmosphere of pressure (the same as onshore). Poseidon was conceived and developed by L. Bruce Jones, the president of U.S. Submarines, Inc., and will be engineered by the tremendously experienced staff at U.S. Submarines. The underwater resort will be linked to land through two tunnels, one for guest access and one for service access. The five-star luxury resort property will consist of: Main Unit #1 an underwater restaurant and bar lounge of approximately 3,000 square feet kitchen foyer and reception area Luxury Suites and Service Areas 20 luxury suites of 550 square feet each with private coral gardens and underwater lights, fish feeders, and safety pod a service area for storage and equipment a diver–lock out chamber and submarine dry transfer lock Poseidon’s Lair, a two bedroom undersea

bungalow cantilevered off the wall at 1,000 square feet and accessible only by submarine (depends on final site selection) Main Unit #2 the Grand Poseidon Suite of 1,600 square feet the themed Nautilus Suite of 800 square feet library / conference room of 800 square feet Shore Facilities reception area technical service area swimming pool bar / cafe´ tennis courts dive shop / water sports center luxury spa and hydrotherapy center Source: ‘‘Welcome to Poseidon Undersea Resorts.’’ Poseidonresorts.com, accessed August 2, 2006. http: / / www.poseidonresorts.com / overview.html

DISCUSSION QUESTION: Sleeping in a depressurized pod underwater may make some guests feel unsafe. What steps would you take (design steps and human resource steps) to make them feel safe?

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General Enthusiasts. These are usually men with some college education and no children under the age of 12. The general enthusiast is the most likely to take adventure trips, preferring hard adventure like sea kayaking or mountain climbing to soft adventure like camping. He is also likely to want to arrange his own trip, and to travel to non-American destinations like the South Pacific. Budget Youngsters. These travelers are generally young (19 to 34) and single, with a fairly low income. They prefer to organize their own trips, though they also like to have partially inclusive trips to get professional expertise. The budget youngster prefers to travel with friends to areas around America, perhaps because travel in-country is cheap. Soft Moderates. This is a small group composed mostly of middle-aged women who had been highly educated but nevertheless have a low income, because there is only one wage earner in the house. The soft moderate is unlikely to have children under the age of 12. She prefers soft adventure, like hiking and nature trips in American destinations. The soft moderate would rather not arrange her own trips, and she desires familiarity, not risk-taking. Upper High Naturalists. Members of this group are mostly middle-aged, married, and earn high wages. They usually have a dual-income household, but no children under 12. They prefer both soft and rugged adventures, like hiking or backpacking, and they like to travel with family members and friends. The upper high naturalist seeks novelty trips and exotic destinations like Africa, where she generally spends more than a week and more than $1,000. Family Vacationers. These travelers, married males, are usually not very excited about their vacations. Family vacationers have generally completed some college and have two incomes in the household to support their children, at least one of which is under age 12. Favorite travel destinations for the family vacationer include America and South America. This group likes to have some help in planning their vacations. Active Soloists. This group is composed mostly of well-educated middleincome-earners without children under 12. The active soloist distinctly prefers high-risk high-adventure activities like hang gliding, and they prefer to travel alone or in an organized group. Of all the groups, this group seems to rely on tourist infrastructure the most when making travel arrangements.

ADVENTURE TRAVEL IN AMERICA ‘‘Trails need to be reconstructed. Please avoid building trails that go uphill.’’ —Actual comment on a comment card at a Forest Service trailhead

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According to the Travel Industry Association of America (TIA) one-half of U.S. adults, 98 million people, took an adventure vacation during the last five years of the twentieth century. Adventure travel can consist of either hard or soft activities. Hard adventure includes such things as:13 Backpacking across rugged terrain Hot air ballooning Off-road biking or mountain biking Parachuting or sky diving Roller hockey, bungee jumping Snorkeling or scuba diving

Whitewater rafting or kayaking Rock climbing or mountain climbing Hang gliding, parasailing, or windsurfing Skateboarding or snowboarding Spelunking or cave exploring Survival games (e.g. paintball)

Soft adventure encompasses such things as:14 Camping Animal watching Water skiing

Biking Sailing Canoeing

‘‘Gentle’’ hiking Horseback riding Visit to a cattle / dude ranch

Bird watching Snow skiing Photo safari

Wilderness Tours Of the 98 million people who take adventure vacation trips, 67 million, two-thirds, take soft adventure trips exclusively, 6 million take only hard adventure trips while the remaining 25 million, one-quarter, take both soft and hard adventure vacations. One-quarter of those who have not taken an adventure trip in recent years indicate that they are very or somewhat likely to do so in the next five years.15 The most popular soft adventure activities are camping, hiking on gradually changing terrain, and biking while, for hard adventure trips, the most popular choices are whitewater rafting / kayaking, snorkeling / scuba diving, and mountain biking.16 While men and women are equally likely to participate in adventure travel, men are more likely than women to participate in hard adventure. Participation is also related to age. Two-thirds of 18 to 34 year olds), half of the 35 to 54 year old age group and a quarter of those 55 or over have taken a recent adventure vacation. While the South, because of the large population base, generates the largest number of adventure travelers, the greatest proportion of residents who take such trips are to be found in the Western states.17 Over two-thirds of adventure travelers enjoy it periodically while one in ten describe themselves as a fanatic. Another 10 percent did not enjoy the experience.

Hard Adventurers The average hard adventure traveler is 35 years old with some college education who is employed full-time. They are more likely to be men, single, belong to

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A new environment is a big attraction for those who take wilderness tours. Courtesy Corbis Digital Stock

Generation X, and work in a professional or managerial job. Seventy percent of soft adventurers have attended some college while two-thirds are married.18 Both soft and hard adventure travelers take an average of three adventure trips every five years. The former are likely to participate in several different types of activities while the latter are likely to engage in only one activity. Compared to hard adventurers, soft adventurers are more likely to take a spouse, child, or grandchild and less likely to take a friend with them on a trip. Hard adventure travelers tend to spend more on trips than soft adventurers.

Soft Adventurers As noted above, the most popular soft adventure activities are camping, hiking on gradually changing terrain, and biking. Other popular pursuits are bird and animal

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Quick Getaway 13.3

Aged Aventurers Soft adventure tours’ popularity has risen startlingly in the last decade. However, although the tours are labeled as ‘‘soft,’’ that doesn’t mean easy. The ‘‘soft’’ in the name means that the effort and risk levels are toned down. Soft-adventure tours are a sub-category of the adventure tour market that typically involves a combination of physical effort, basic accommodations, and some occasional risk. These tours are usually aimed at younger travelers, and occasionally at 40- or 50-plus adventurers who are in exceptional physical condition. Even so, soft adventure tours often include extensive hiking, walking, and bicycling, frequently with considerable uphill and downhill components. So far, the physical capabilities necessary for participating in soft adventure travel have kept most senior citizens out of the game. That is, until now. 50-plus Expeditions caters solely to travelers age 50 or older, as its name suggests. The company specializes in taking its clients to remote areas (the 50-plus website currently lists 20 destinations). Not one of these locations is in the United States, and very few are in North America. Compare that with eight destinations

in South America and five in Asia. 50-plus gives all of its tours a grade, ranging from easy to demanding, which allows the traveler to choose a tour geared toward her capabilities. Most trips last from 8 to 20 days, and the groups always number fewer than 16 people. Pricing ranges from a little under $100 a day to as much as $200 a day (both prices are per person). Unsurprisingly, the price depends on what’s included. Base tours include meals, accommodations, local transportation (if any is required), and all admission fees. Pricier tours, such as those to the Galapagos, include cruise ship fares and air trips. Of course, tour prices do not include airfare from the adventurer’s home to the tour area. Source: Perkins, Ed. ‘‘Special tour options allow seniors adventurous travel.’’ San Francisco Chronicle (September 21, 2003). http: / / www.sfgate.com / cgi-bin / article.cgi?f⫽ / c / a / 2003 / 09 / 21 / TR220290.DTL

DISCUSSION QUESTION: Do you think there’s a comparable market for soft adventure tours aimed at children under 18? Why or why not?

watching, horseback riding, canoeing, and water skiing. Boomers are more likely to go hiking while mature adults are more likely to go bird and animal watching or on a photo safari. This latter segment is less likely to go biking, canoeing, horseback riding, snow skiing, and sailing. Generation Xers are most likely to go water skiing. Compared to men, women are more likely to go horseback riding or sailing.19 Boomers are most likely to bring along spouse and children on a trip while Generation Xers typically travel with friends or parents / grandparents. The popularity of various activities is linked to regional geography. The Northeast is popular for biking, sailing, and photo safaris, the South for horseback riding, and the West for skiing. Westerners are most likely to list adventure as the primary motivator for a trip. Participation in high cost activities such as sailing and skiing is proportional to household income.

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Activities20 Camping

One in four of those who camp also participate in hard adventure activities. The most popular of these are rafting, snorkeling / scuba, and off-road biking. Campers tend to be married with children at home and have attended some college. Campers have the lowest percentage that have attended college and are also the lowest income group. About one-half also hikes while a third each also bike and canoe.21

Hiking

About 30 percent of all hikers participate in hard adventure activities also. The favorites are rafting, snorkeling / scuba, and backpacking. This group is the most likely segment to be married. Three-quarters of them also take camping trips while 40 percent each participate in biking and bird watching.22

Biking

About 40 percent of those who take a biking vacation also participate in hard adventure activities. The favored activities are off-road biking or mountain biking, snorkeling or scuba diving, and whitewater rafting or hike kayaking. This segment of the market is young and relatively prosperous. Approximately one-half are Generation Xers while the same percentage are professionals or managers while one

Camping is a popular family activity. 䉷 IT Stock

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third, second only to snow skiers, are single. Over 80 percent of bikers also camp, 70 percent also hike, while almost 40 percent also canoe. Watching Birds and Animals

One-quarter of those who watch birds or animals also take hard adventure vacations. The top activities are whitewater rafting or kayaking, snorkeling or scuba diving, and backpacking across rugged terrain. This segment of the market has the highest proportion of all soft adventure vacationers aged 55 or older as well as the highest percentage with postgraduate college education. They also participate in soft adventure travel. Three-quarters of them also camp; 70 percent hike while almost 40 percent also bike.

Horseback Riding

Thirty-three percent of those who horseback ride also take hard adventure vacations. Preferred activities are rafting, snorkeling / scuba, and off-road biking. This segment has the highest percentage of women—57 percent. This is a young group that tends to have children at home. Equestrians also camp, hike, and bike.

Quick Getaway 13.4

Women in the Wild What’s fueling the growth in the $100 billion-ayear adventure travel economy? Estrogen, perhaps? Women are the new adventure travelers, driving women-only outfitter numbers up from a handful back in the mid-1990s to more than 75 today. Another surprise: it’s not just 25-year-old buff mountain babes signing up for outdoor adventures with U.S. outfitters. The typical woman adventure traveler profile: Age 47 Wears a size 12 Prefers to leave hubby and the kids at home to travel in small groups of 10 to 12 like-minded women ‘‘Women today want to push their limits,’’ said Marybeth Bond, guidebook author, longtime adventure traveler, and adventure editor for Travelgirl magazine. ‘‘And they want to do it in a sharing, nurturing, all-woman environ-

ment. One man in the group changes that dynamic, which is why we’re also seeing an increase in women outfitters.’’ Shannon Stowell, president of the Adventure Travel Trade Association, agrees. Stowell says that according to a survey of tour operators, adventure clients are increasingly women, with significant increases in single women and women older than 40. ‘‘This doesn’t mean the niche is getting older, or that men are no longer a major part of it,’’ Stowell says. ‘‘It means that the niche is getting broader.’’ Source: Hobart, Sue. ‘‘Women now ride adventure travel wave.’’ The Oregonian (October 24, 2004). http: / / www.oregonlive.com / travel / oregonian / index.ssf? / travel / oregonian / 041024women 2.html

DISCUSSION QUESTION: How can a specialty resort be designed in order to take advantage of this demographic shift?

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Canoeing

Those who canoe also participate in rafting, backpacking, and off-road biking. Almost 40 percent of those who canoe also participate in other hard adventure vacations. They tend to be young and have attended, though not necessarily graduated from, college. Mostly, the segment consists of households with only one wage earner. Canoeists also camp, hike, and bike.

Water Skiing

Water skiers have a high participation rate in other hard adventure activities. They tend also to snorkel / scuba, raft, and off-road bike. They are young and affluent. Fifty-six percent are male. They also camp, hike, and bike.

Snow Skiing

Snow skiers have the highest participation rate in other hard adventure activities. Forty-five percent undertake other activities, notably rafting, off-road biking, and snorkeling / scuba. They are young and affluent. Fifty-four percent are male while over half have completed college, the best educated group of hard adventure vacationers. As with the previous segment, they also camp, hike, and bike.

Adventure Education

The popularity of rock climbing is due, in part, to a recent boom in indoor climbing walls. Although resorts are concerned about risk management, research indicates that climbing on a traverse wall produces fewer injuries than playing on the playground.23 Adventure education, which encompasses backcountry travel, ropes courses, initiative activities, team building, and rock climbing, is concerned with two types of relationship: interpersonal and intrapersonal.24 The former refers to how people get along in a group. Issues that are explored include communication, cooperation, trust, conflict resolution, problem solving, and leadership. Intrapersonal relationships deal with how an individual gets along with himself. The basic idea is that change can take place when individuals and groups are exposed to challenge, high adventure, and new growth experiences. Climbing activities help young people develop interpersonal skills (cooperation and communication), personal strengths (self-esteem and self-confidence), cognitive skills (decision making and problem solving), and physical abilities (fitness and motor skill development). Adventure education programs aimed at children and teens can be offered in one or more of the following ways: cooperative games and sports self-challenging activities resident camps25 When a sports unit is offered, the emphasis is on the team aspect of the activity. Students learn the skills involved in the game or sport, but team building is the primary objective.

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During self-challenging activities, participants learn to compete against themselves rather than others. Examples include scaling an indoor climbing wall and outdoor rock climbing. For participants in grades four through six, an indoor wall has blocks of different sizes and types that are bolted to a wall at heights ranging from a few inches to 5 feet. The children climb the wall using a variety of handand footholds, never getting higher than the height of a balance beam. From this traverse wall, participants graduate to a vertical climbing wall that reaches to 20 feet. At the top, they can sign their names to demonstrate their mastery. Another option is a five-day adventure camp. Camps tend to have central themes such as ‘‘Knights, Castles, and Dragons’’ and ‘‘Pirates, Rafts, and Treasures.’’ In the former, participants get involved in building a real castle with drawbridge, walls, cardboard armor, shields, water balloon catapults, medieval feasts, and tournaments. In the latter, participants build a homemade raft out of 100 milk jugs and PVC pipe and float out of camp on the last day.26 Extreme Sports

Participation in extreme sports has increased dramatically in recent years. Snowboarding, mountain biking, skateboarding, and scuba diving are examples of activities that have shown growth in recent years.27

Travel and Tourism

Travel and tourism can range from trips, tours, and travelogues to adventure tourism and field trips. The range of adventure tourism possibilities is illustrated in Figure 13.2. Opportunities vary from soft to high adventure and involve low to high risk. Market segments can be targeted depending on the degree of risk the guest wants to undertake. Soft adventure activities involve the perception of risk and excitement without actual danger. Theme park rides or floats down the Grand Canyon on huge rafts fit this category. They are suitable for people with physical restrictions or who are just beginning to explore adventure possibilities. Adventure activities offer more risk than soft adventure and include treks in the Himalayas and two- to six-person raft trips in the western United States. Highrisk activities involve real risks, so participants may have to master specialized skills before being allowed to participate. Differences have been found between whitewater rafters who have prior experience and those who do not.28 The former are more relaxed while concentrating on the secondary benefits of the experience—being with friends; enjoying the natural environment. The latter tend to concentrate on the action involved in the adventure experience. There are obvious marketing implications in terms of the message promoted to rafters. The adventure would be the primary message to those with no prior experience while the enjoyment of sharing the experience with others in an attractive environment would be the message for those who had rafted before. Developers of orbital tourism see space travel as a possibility by 2025.29 Visitors would arrive at their Hilton (currently being designed) having traveled through space at 30 times the speed of jetliners. Arthur Frommer, the travel book publisher, already has issued The Moon: A Guide for First-Time Visitors.30 Civilians currently pay $15,000 for a weeklong program at Moscow’s Star City Gagarin Cosmonaut

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South Pole ski touring

High

Shark baiting Sea kayaking Raft trip Himalayas trip

RISK

360

Mexico volcano climb

Grand Canyon float trip Mule trip to Grand Canyon bottom Low Soft Adventure

Adventure

High Adventure

ADVENTURE LEVEL FIGURE 13.2 Tour packages and levels of risk. Source: Christiansen, Dale R. ‘‘Adventure Tourism.’’ In Miles, John C., and Simon Priest (eds.). Adventure Education. State College, PA: Venture Publishing, 1990, 436.

Training Center to experience weightlessness during a parabolic flight, a spin in a giant centrifuge, and a scuba dive in a neutral buoyancy tank to simulate spacewalking. Other forecasted opportunities include deep-sea safaris to 12,000 feet below the surface. At the moment, guests at the two-room Jules’ Undersea Lodge in Key Largo, Florida, must dive 21 feet to enter. A Honolulu architectural firm is designing an 80-room underwater hotel and observatory, to be built at an as-yet undisclosed location. Cybersafaris will satisfy those who hear the call of the wild but do not want to undergo the hassles involved in actually traveling to the location. As remote areas become tourist sites, rare animals become extinct, and isolated cultures are assimilated, demand may emerge for nostalgia tours to world capitals and former wildlife zones to re-create the days of gondolas, Galapagos turtles, rain forests, or reef life. History enthusiasts might time-travel through virtual trips to California’s hippie days, Paris’ Cafe´ Society of the 1930s, or the Roaring Twenties in Manhattan.

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Are underwater resorts the wave of the future? Courtesy Jules’ Undersea Lodge

Sports and Games

Sports and games encompass field and team sports, individual and dual sports, recreational games, and fitness activities. While the tendency is to concentrate on competition, many people are increasingly emphasizing developing a lifetime sports orientation—that is, learning activities that they can participate in throughout their lives. The National Sporting Goods Association (NSGA) surveys people currently taking part in various sports, asking how many anticipate increasing their participation. Sports showing high positive change in terms of future participation include:31

exercise walking fishing exercising with equipment bicycling camping

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Fitness / Wellness Activities

SPECIALTY RESORTS

Interest in fitness and wellness continues to increase. Guest interests include fitness activities, nutrition education, aerobic activities, and even weight lifting. According to the American Council on Exercise (ACE), we will see growth in the following:32

Individualized exercise programs coached by a human or electronic personal trainer. Internet-based personal training sites will allow individuals to work directly with a personal trainer to design programs, track progress, and learn online. A sharp increase in mindful exercises like tai chi and yoga. Yoga is popular, in part, because of its acceptance by such public figures as Madonna, Courtney Love, and Ricky Martin. Some brand-name clothing companies have come out with a trendy line of yoga outfits. An increase in exercise programs geared to older adults (the graying baby boomers). A prime example is yoga, which appeals to the need to do something about stiffening joints. Goal-oriented exercise training. Smart fitness machines designed to accept a computer disk or palm-size scanner containing a personalized exercise program. Adventure workouts that enhance body and spirit, such as rock climbing, hiking, and mountain biking. More people seeking fitness for health reasons instead of solely for appearance. Sport-specific personal training for such activities as golf and tennis. For example, people are doing the Salute to the Setting Sun yoga position to improve their golf game. Lifestyle exercises, incorporating fitness into everyday life.

Many observers of leisure trends believe that exercise will become a way of life for increasing numbers of Americans and that this trend will become even more pronounced with each succeeding generation. Sports programs that build skills in soccer, softball, and basketball are aimed at kids who start playing at an earlier age. As children grow older, they need more diversified options, such as mountain biking and whitewater rafting, that are part of a high-adventure program. Options exist to contract out a fitness program. Jazzercise is a successful example of this in the public sector. This dance-exercise program offers over 2,000 classes weekly at 430 parks and recreation facilities across the United States. The operator pays either a percentage of the gross or an hourly rate for use of the facilities during a specific time.33 A special category of fitness and wellness involves rehabilitation programs for people with disabilities. While most rehabilitation programs focus on assisting participants in regaining physical strength and range of motion, sports programs seek

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to rehabilitate a person both physically and emotionally. When people with physical disabilities learn to ski, for example, it increases their self-confidence while gaining the respect of others. A forerunner in the field of sports programs for the handicapped is the National Sports Center for the Disabled at Winter Park, Colorado. Begun in 1970, it is the largest and best-known skiing program for people with disabilities. Summer activities have been added over the years and include rafting on the Colorado river, hiking, backpacking, overnight camping, nature walks, chairlift rides, dance movement, adaptive swimming, rock climbing (for the visually impaired), and tennis. Teaching methods are adapted from the American Teaching System (ATS). The four fundamental skills taught are:34 Balancing movements, required to keep the body in equilibrium when acted upon by external forces.

Quick Getaway 13.5

Green Gold Vail Mountain Resort in Vail, Colorado, knows that what is best for the environment is best for it. After all, the resort’s success depends heavily on its pristine mountain locale. The management also knows that it’s saving money—BIG money—through Vail’s Natural Step ecofriendly program. The resort saves $50,000 a year through recycling, $15,000 through compact fluorescent bulbs, and the water bill has gone down too, thanks to the 1.73 million gallons of potable water saved by low-flow bathroom fixtures. So what exactly is Vail doing that’s reaping such huge benefits? Environmentally, Vail provides coupons for $20 of on-mountain food to car-poolers, which has reduced vehicle numbers by 37 percent, leading to an increase in air quality. Up on the slopes, photovoltaic panels are used to power self-composting remote rest rooms. As for conservation, Vail is a leader in windpowered energy: one high-speed chair lift is

powered by wind energy, and there are plans in the works for adding turbines to form a genuine wind farm. There’s also a solar-powered trash compactor and a compost program. On the cultural side of things, the resort offers skiing-with-a-naturalist tours and hands out wildflower seeds as a part of its educational programs. ‘‘These stops make our area a better place for everyone,’’ says Bill Jensen, the COO for Vail Mountain. Visitors agree with him: the resort has been rated the number one ski destination in North America for the thirteenth time since SKI Magazine began the poll in 1988. Source: Kenninger, Judy. ‘‘Gold in Green.’’ RCI Ventures (November / December 2004).

DISCUSSION QUESTION: What type of specialty resort do you think would benefit most from ‘‘going green?’’ Why?

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Rotary movements, of the body as a whole or parts of it. It is desirable to use the lower body for rotary movements. Edge-control movements, that affect the way the edges of the skis come into contact with the snow surface. Pressure-control movements, used to control the pressure the skis exert on the snow as they move. Maneuvers that are taught seek to provide building blocks for one or more of these skills.

It is possible to teach individuals with a variety of disabilities. The three track method is used for teaching people who have one good leg and two arms. The adaptive equipment required consists of one ski and two outriggers. With the addition of a prosthesis, the method can also be used with a double amputee. The four track method uses four separate ski sources to maneuver down the slope. Two outriggers complement the two skis. This method is used for skiers with such things as an aneurism, cerebral palsy, spina bifida, muscular dystrophy, or multiple sclerosis. Reins or a bungee cord can be added to help control speed. Monoboards or snowboards can be substituted for those individuals who cannot risk independent leg action such as those with severe hip problems or with full leg braces. For those with severe disabilities sit skiing gives the experience of speed and motion. Students sit in a sled-type device controlled by the upper body and short handheld pole. An able-bodied skier skis behind the sled holding an attached rope. The sit ski is gradually being replaced with bi skis. The shell of the sit ski is replaced by a sled that consists of a ‘‘bucket’’ that rests on two skis. The equipment for the future for most paraplegics is the mono ski which allows students to ski in a three track fashion. It is similar to the bi ski expect for the fact that it has one rather than two skis under the bucket.

SUMMARY As the market for nature-based and adventure tourism continues to grow, there will be a market niche for specialty resorts catering to these tourists.

ENDNOTES 1. Fluker, Martin R., and Lindsay W. Turner. ‘‘Needs, Motivations, and Expectations of a Commercial Whitewater Rafting Experience.’’ Journal of Travel Research, vol. 38 (May 2000): 380.

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2. Outdoor Recreation Participation Study, Seventh Edition. Boulder, CO: Leisure Trends Group, 2005. 3. Data from the Parks Canada website, obtained June 1999. http: / / parkscanada.pch.gc.ca / library / trails / english / trailce.html 4. : Hultsman, John, Richard L. Cottrell, and Wendy Z. Hultsman. Planning Parks for People, 2nd ed. State College, PA: Venture Publishing, 1998, 49–52. 5. Ibid., 52–55. 6. Ibid., 24. 7. Source: National Ecotourism Strategy. Mexican Secretariat of Tourism in cooperation with the World Conservation Union, 1994. 8. Hawkins, Donald E., Megan Epler Wood, and Sam Bittman (eds.). The Ecolodge Sourcebook for Planners and Developers. North Bennington, VT: Ecotourism Society, 1995, x–xii. 9. Lindberg, Kreg, and Donald E. Hawkins (eds.). Ecotourism: A Guide for Planners and Managers. North Bennington, VT: Ecotourism Society, 1993, 124–129. 10. Ibid. 11. Fluker, Martin R., and Lindsay W. Turner. ‘‘Needs, Motivations, and Expectations of a Commercial Whitewater Rafting Experience.’’ Journal of Travel Research, vol. 38 (May 2000): 380. 12. Sung, Heidi H. ‘‘Classification of Adventure Travelers; Behavior, Decision Making and Target Markets.’’ Journal of Travel Research (May 2004), V. 42, No. 4: 343–357. 13. Adventure Travel: Special Report. Washington, D.C.: Travel Industry Association of America, 1998, 1. 14. Ibid. 15. Ibid., 4. 16. Ibid., 8–9. 17. Ibid., 11. 18. Ibid., 31, 34. 19. Ibid., 41. 20. Ibid., 55–72. 21. Ibid., 58–59. 22. Ibid., 59–60. 23. Hyder, Martha A. ‘‘Have Your Students Climbing the Walls: The Growth of Indoor Climbing.’’ Journal of Physical Education, Recreation, and Dance 70, no. 9 (November 1999): 3233. 24. Priest, Simon. ‘‘The Semantics of Adventure Education.’’ In Miles, John C., and Simon Priest (eds.). Adventure Education. State College, PA: Venture Publishing, 1990, 114. 25. Ibid., 376–378. 26. ‘‘Life on the Edge: Is Everyday Life Too Dull?’’ Time 154, no. 10 (September 6, 1999): 28–29. 27. Fluker, Martin R., and Lindsay W. Turner. ‘‘Needs, Motivations, and Expectations of a Commercial Whitewater Rafting Experience.’’ Journal of Travel Research, vol. 38 (May 2000): 380–389. 28. Dash, Judi. ‘‘The New Millennium May Offer Travel Surprises Sooner Than You Think as Adventure Outfitters Embark on Future Treks.’’ Denver Post (January 2, 2000): T1. 29. Frommer’s The Moon: A Guide for First-Time Visitors. Wemer Kum / Ustenmacher (trans.). New York: IDG Books Worldwide, 1998. 30. Sung, Heidi H. ‘‘Classification of Adventure Travelers; Behavior, Decision Making and Target Markets.’’ Journal of Travel Research (May 2004), V. 42, No. 4: 343–357. 31. Journal of Physical Education, Recreation & Dance, vol. 70, no. 3, 1998.

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32. Martin, Claire. ‘‘Toughen up exercise styles being reduced to boot camp.’’ The Denver Post (January 2, 2000): F 04. Krucoff, Carol. ‘‘Fitness trends for the next millennium.’’ The Washington Post (January 4, 2000): Z 15. 33. Unold, Ginny. ‘‘Inside Looking Out.’’ Parks and Recreation (August 1999): 52–55. 34. Bold Tracks: Teaching Adaptive Skiing, Third Edition. Boulder, CO: Johnson Books, 1994, 168.

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Chapter 14 CRUISE SHIPS: FLOATING RESORTS LEARNING OBJECTIVES 1. Identify market. 2. Identify 3. Identify 4. Identify

the changing trends in and demographic profiles of the cruise ship the critical variables in determining a cruise ship’s profit potential. potential solutions to financial rations relevant to cruise ships. the most important financial ratios relevant to cruise ships.

INTRODUCTION

MANAGING FACILITIES

Travel by Ship

Yield Management

The Cruise Experience

Accommodation

Major Players

Environment

Ship Classifications MARKETING THE CRUISE PRODUCT

HEALTH, SAFETY, AND SECURITY Centers for Disease Control

The Distribution System

Sanitation Program Inspection

The Cruise Product

Safety

STAFFING THE CRUISE SHIP Responsibilities MANAGING THE HOTEL DEPARTMENT

MANAGING THE OPERATION CRUISE DESTINATIONS Introduction Definition

Managing Service

Port of Call

Role of Tipping

Itinerary

MANAGING FOOD AND BEVERAGE Introduction Supplies and Services

SUMMARY ENDNOTES

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INTRODUCTION ‘‘My experience of ships is that on them one makes an interesting discovery about the world. One finds one can do without it completely.’’ —MALCOLM BRADBURY

Travel by Ship1 Cruise ships represent a specialized type of resort—for cruise ships are nothing more than floating resorts! The steamship era had its beginnings in the 1840s. Sir Samuel Cunard pioneered the first transatlantic scheduled liner trips at that time. Just as the automobile led to the demise of the train, the introduction of intercontinental commercial airline service precipitated the rapid decline in the use of ships as a scheduled passenger transportation mode. In 1957, transatlantic ship traffic reached a new post–World War II high as some 1,000,000 passengers were transported on ocean liners. Although travel by ship remained strong for several years thereafter, the aircraft had by 1958 eclipsed it in terms of volume of transatlantic passengers. Transatlantic scheduled passenger ship traffic declined rapidly. Passenger departures from New York fell from approximately 500,000 in 1960 to 50,000 in 1975. So great has been the decline in scheduled liner passenger transport volumes that it has almost completely disappeared in this modern-day era. Cruising has taken the place of scheduled liner services. Ships originally built for ocean crossings do not make the best cruise ships. Ocean liners were large and heavy—built to withstand the rigors of the Atlantic Ocean. As a result the fuel costs were great. As cruising took off, the lines built ships specifically for cruising. These ships were smaller—800 to 850 passengers and 20,000 tons—lighter, with smaller cabins, larger deck space and public areas, and a smaller ratio of staff to passengers. Fuel costs were also reduced by spending time in more ports, a move that satisfied passengers.

The Cruise Experience2 Many tourists who choose to cruise perceive cruising as safe, social, serviceoriented, and customer friendly. Although it’s mobile, the ship provides a consistent ‘‘home away from home’’ easily accessible to the tourist even at the remotest of ports. Life aboard the ship consists of comforting routine broken up by carefully planned activities both aboard the ship and on land. Cruise ships are popular because they combine familiarity with the excitement of travel; the ship is simply a crime-free mobile resort that offers its passengers a variety of destinations in the space of a few days. Despite its popularity, the idea of cruising also generates negative opinions. For some travelers, cruising is perceived as expensive, claustrophobic, elitist,

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seasickness-inducing, and reserved for older couples only. The best way to counter these common misperceptions is to advertise cruising as cost-effective and high in value, and to highlight that the cruise experience can be exclusive and inclusive— many cruises now cater to specialty groups such as families with small children, single travelers, and active travelers. Although a cruise vacation appeals greatly to older groups, it’s worth noting that nowadays the average age of first-time cruisers is well below 40.

Major Players3 Cruising is a changing industry. Although most analysts predict a profitable future, the industry has seen a lot of upheaval over the last decade. A chain of acquisitions and mergers makes the industry appear unstable and the market subject to constant disruption. It’s tempting to look at the industry and predict more upheaval in the near future. However, that would be an incorrect assumption, because it ignores some relevant issues that have come to the fore. Firstly, the major companies in the field (Royal Caribbean Cruise Line, Carnival Corporation, Star Cruises / NCL) possess among themselves considerable purchasing power. Secondly, the construction of

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Close to Home In this economy, vacations are becoming more and more expensive. Cruise lovers don’t want to sacrifice their trips, but they don’t want to waste money on expensive plane tickets to faraway ports, either. Enter homeland cruising. Cruise lines, ever aware of their customers’ wishes, are bringing the ships closer to the tourists. Now coastal cities are playing host to more cruises than ever, some of which stay in the area, and others which set sail for faraway shores. New Orleans hosts ships bound for the Caribbean, while in Texas, ships drop anchor and sail for weeklong trips between Galveston and Houston. Seattle has four large ships that sail for Alaska, and Los Angeles hosts ships that sail for voyages along the Mexican Riviera and cruise liners that take longer trips to Hawaii.

For timeshare resorts, this means that they should be checking the yearly cruise itineraries. If the timeshare’s city shows up on the list, its employees should prepare themselves for a great deal of attention, because the profile of those who cruise closely approximates the profile of those with timeshares. Source: McArthur, Stacey. ‘‘Homeland Cruising.’’ RCI Ventures (March / April 2003).

DISCUSSION QUESTION: Homeland cruising may encourage those who live in coastal cities to try cruising, but those inland will still have to fly to the coast to cruise. How can cruise companies compensate for this and encourage midcontinent customers to try cruising?

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new liners creates a ripple effect in the industry, making older ships available for new cruise lines or smaller companies. Thirdly, cruise companies have learned to keep a weather eye on the market and to prepare for unforeseen events. Variables such as public opinion of globalization, worldwide health threats such as avian flu, and the threat of terrorism can influence customers’ decisions. Cruise brands like Costa Cruises, Orient Lines, Princess Cruises, Celebrity Cruises, Norwegian Cruise Lines, and Saga Cruises take great care when it comes to their reputations. For customers, a brand name implies a certain standard of cruise, so it’s understandable that the different companies guard their reputations with a great deal of care. The brand is more than a name; often symbols are included which imply professionalism or safety, such as P&O Cruises’ nautical flag. Interestingly, the ship itself lends itself very well to the process of branding. The customers engage with the liner on a very personal level. This engagement is a process that begins with the first glossy brochure and does not end until disembarkation. The customer associates the impressive size of the vessel, the comfort of life onboard, and the palette of new experiences with the brand. Branding is essential for garnering new business, encouraging repeat customers, creating brand recognition, defining the company’s approach to operations and marketing, and most importantly, establishing customer loyalty. The major cruise corporations are at an advantage in this regard, because with their larger budgets and increased spending power, they can afford to launch massive, powerful advertising campaigns that target the correct market.

Ship Classifications4 The most important factor in determining a cruise’s amenities is the size of the ship. Larger ships often have multiple swimming pools, spas, casinos, and a variety of dining options. They often have space for features such as waterslides, rock walls, and theaters, and because of their size, they can support a wide variety of activities. Smaller ships forego many amenities but focus instead on guest comfort and the destination, which creates a different sort of cruise ambience. Those who classify cruise ships use criteria such as the number of passengers; the quality of food, drink, and accommodations; and a measurement of the overall cruising experience. Many cruise companies choose to operate cruises of different sizes so as to maximize the possible customer pool. The different cruises are designed with different itineraries that complement the ship size and the interests of the passengers. One scheme of classification that has been adopted by several industry observers divides cruises into five categories: Luxury, Premium, Resort / Contemporary, Niche / Specialty, and Value / Traditional. Luxury ships are generally small liners with few passengers who enjoy fivestar-level accommodations. Public areas are generally finely appointed, and the passengers’ suites are palatial. Service may include a private butler, and food is absolutely top-notch. These cruises fall into the highest price range. Premium brands have above-average service, food, and amenities. Like the luxury lines, there are many cabins with balconies, and there is a large amount of

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Biggest and Smallest The Queen Mary II—a floating city The ship cost $1.19 billion to build, and it is the biggest and most luxurious passenger ship ever built. The liner accommodates 1,250 crew members and 2,600 passengers. The power it generates would be enough to provide electricity for a city of about 300,000 people. The ship has a 1,000-seat theater, 2,000 bathrooms, 3,000 telephones, a spa, a ballroom, five swimming pools, a planetarium, 4,500 steps, and hundreds of works of art. Maiden voyage prices ranged from $5,300 for a view-less interior cabin to $70,000 for a 209-square-meter duplex. The Hebridean Princess—the smallest luxury liner

The ship is nicknamed a ‘‘floating country house.’’ The liner’s cabins are few, so they have names instead of numbers. The Princess can accommodate 49 guests. The tariffs are all-inclusive; tipping is discouraged. The guest / crew ratio is nearly 1⬊1. The luxury liner was a vehicle ferry in its former life. Source: Schmidt, Christophe. ‘‘As tall as a 23-story building, world’s biggest liner sets sail.’’ The Sun-Herald (September 28, 2003). ‘‘Why Choose Hebridean Princess.’’ Hebridian International Cruises, accessed July 28, 2006. http: / / www.hebridean.co.uk / whychoose / whychoose princess.html

DISCUSSION QUESTION: Which boat do you believe would provide a more luxurious experience, judging simply from the information above?

space per passenger. The premium ship offers a diversity of attractions, with the aim of providing entertainment for a wide variety of passengers. Contemporary ships are the modern ‘‘floating resorts’’ complete with swimming pools, golf ranges, and climbing walls. Contemporary cruise ships range from mid-sized vessels to the biggest megaliners. On-board style is generally casual, but opportunities exist for guests to dress in more formal attire. Niche or specialty cruises rely on specialization to attract their clientele. The cruise itself usually emphasizes one or more aspects of the cruising experience, such as cultural interaction, soft adventure, or language enrichment. The companies who run niche cruises usually target the more experienced traveler. Budget or value cruising involves mid-sized, older cruise ships with fewer facilities than the newest megaships. There is usually a lower staff-to-customer ratio on budget cruises, and dining options generally include self-service. This form of vacation is attractive to first-time cruisers and those who are still relatively new to cruising.

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Not an Ordinary Cruise What is a cruise? Most of the time, it’s a lot of people relaxing in luxury aboard a fashionably appointed liner. But not always. For example, eco-cruises like the Costa Rica and Panama Canal itinerary aboard the Pacific Explorer far outstrip the ordinary. On this cruise, there’s no ‘‘fashion parade’’ in the dining room; in fact, passengers are far more likely to dine in T-shirts and bare feet. Those who get too much of structure and rules in their everyday life appreciate the laid-back atmosphere of the eco-cruise. The Pacific Explorer is a 100-passenger, shallow-draft vessel purposely designed for slipping into remote pockets of water that are out of reach of the average traveler. Activities offered with the cruise include hiking, kayaking, bird watching, snorkeling, water skiing, and great lectures. Passengers can hike through oldgrowth rain forest, explore jungle rivers, search out exotic birds and wildlife, and snorkel along some of the most pristine reefs in the Americas. In addition, they can learn about the natural

environment, thanks to the experienced naturalists onboard. For some, the pinnacle of the eco-cruise is its transit of the Panama Canal. The ship itself is a pleasant surprise. Even though it eschews some of the ‘‘luxury’’ aspects of its larger brethren, the ship’s cabins are surprisingly comfortable. The accommodations are almost identical to those found on larger ships, with one notable exception: no televisions. There is, however, one big-screen satellite TV in the Tucan Lounge, but it’s universally ignored by the passengers. Source: Petrie, Glenn. ‘‘Eco-cruising in Central America: Cruise West’s natural voyages of exploration in Costa Rica and through the Panama Canal.’’ Cruise Travel (September–October, 2002). http: / / findarticles.com / p / articles / mi m0FCP / is 2 24 / ai 91397615

DISCUSSION QUESTION: What areas do you think would be good eco-tour destinations?

MARKETING THE CRUISE PRODUCT The Distribution System5 A market system can be described as having two sides: supply and demand. The cruise market, however, can be divided three ways: focused on the product, on customer identity, and on satisfying a need. Cruises that are product-focused have the advantage when it comes to developing economies of scale, but they may fail at accounting for incremental changes in the market. Need-satisfaction-focused companies are phenomenal at understanding their customers, but they may find strategic decision-making problematic. Passenger-identity cruises are excellent at targeting certain groups of customers. Most companies incorporate elements from all three of these strategies, utilizing their strengths and fortifying their weaknesses.

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World events such as the 2001 terrorist attacks on the East Coast, the Gulf War that followed, and the economic conditions of the United States and other major countries of the world are vital in shaping the tourist economy. After factoring in continued international unease in the face of terrorist attacks and cruise companies’ decision to create safe itineraries, it becomes clear that the industry is acting to compensate for negative influences on the market. Cruise Operators

Cruise operators or brands dominate the market. They either lease or own cruise ships, for which they create itineraries and products. One way to think of cruise operators is to imagine them as wholesalers, with travel agents as their retailers, or brokers. All cruise companies work hard to ensure that the brand is perceived favorably. Customer surveys, market research, and the studies of anthropologists help companies understand how to improve the brand’s perception. The products developed by cruise operators are a combination of services and facilities, some of which generate revenue and some of which are included at no additional cost to the customer. Cruises therefore have a variety of fixed costs, such as fuel, port administration, and customs. To increase profits, the cruise operators seek to reduce these costs without adversely affecting quality. Larger companies can negotiate for such items as fuel and consumables much more easily than smaller companies. Through negotiations, costs can be effectively reduced, often by quite a bit. Traditionally, cruise companies have relied on travel agents to help them book cruises. Despite the ever-increasing popularity of the Internet and the ease of online booking, cruise operators continue to rely on printed brochures to sell their cruises. The ratio of brochures to sales is roughly 10 to 30 brochures per sale. The brochures are carefully designed to encourage advance booking, through such strategies as making off-season prices look dramatically lower than their on-season counterparts, and promising discounts for booking early. Because the brochures are produced well ahead of the actual cruise, there exists the additional challenge of setting prices based on rates that fluctuate frequently. Because of common changes, such as rates of exchange and port fees, it’s not at all uncommon for cruise operators to produce new brochures periodically to replace the older, less-accurate ones. Right now the Internet is used mostly as a complement to the printed brochures. Online, potential customers can read the ratings of previous customers, check on health concerns in destination ports, and even book the cruise (eliminating an agent’s fees).

Market Segments6

Six segments are easily identifiable within the recent cruiser market: Restless Baby Boomers, Enthusiastic Baby Boomers, Luxury Seekers, Consummate Shoppers, Explorers, and Ship Buffs. Restless Baby Boomers are generally the newest to cruising. They represent 33 percent of total cruisers. They’ve enjoyed their cruise experiences in the past, and they’d like to cruise again, but they might find the cost prohibitive. They are also

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Quick Getaway 14.4

Home, Home on the Boat Fact or fiction: retirees are opting to live out the rest of their lives on cruise ships rather than retirement homes, because the cruise ships cost less and the staff treats them better. Fact, at least for one retiree. At first this account seems fictional, especially since it has been circulating on the Internet for at least five years. However, one octogenarian from Florida is living the cruise ship dream: Bea Muller has been living full-time aboard Cunard’s Queen Elizabeth 2 since January 5, 2000. Eleven months earlier, Muller’s husband had passed away while the couple was on a world cruise. Instead of heading for a retirement home, Mrs. Muller decided to sell everything and book herself onto the ship. In 2001 Muller was reportedly paying as she went, booking one cruise after another, instead of submitting a monthly or yearly fee. Thanks to her frequent-traveler discounts, her overall costs were only about $5,000 a month. For those thinking of following in her footsteps, some things should be kept in mind: cruise prices have increased in the past few years, and the accommodations are likely going to be small and windowless. Muller lives in a 10-by-10-foot cabin that barely fits a bed,

radio, and television, and her bathroom is smaller than the average shore-side closet. Those who are close to their families or communities would not likely do well on a cruise ship, where long-term relationships are difficult to form and maintain. The cramped quarters aside, Muller is happy with her seafaring life. ‘‘I’ve got full-time maid service, great dining rooms, doctors, medical center [where she volunteers], a spa, beauty salon, computer center, entertainment, cultural activities, and, best of all, dancing and bridge.’’ Bea Muller is not the first retirement-plan cruiser: Clair MacBeth lived aboard a Cunard cruise ship for 14 years. Source: Mikkelson, Barbara and David. ‘‘My Retirement Plan.’’ Snopes.com, March 15, 2005. http: / / www.snopes.com / travel / trap / retire.asp

DISCUSSION QUESTION: Would you retire to a cruise ship? Why or why not? Do you think cruise ships should start promoting themselves as ‘‘floating retirement houses’’?

open to different vacation options. Marketing aimed at this segment should emphasize the affordability and superiority of cruising. Enthusiastic Baby Boomers already know how exciting and affordable cruising is. They represent 20 percent of the market; they choose to cruise in order to escape their hectic and extremely busy lives. Successful marketing aimed at this segment will emphasize how cruising helps you ‘‘get away from it all.’’ Luxury Seekers represent 14 percent of cruisers. These travelers can afford pricey accommodations, and they are willing to spend money to ensure that they have an extremely lavish experience onboard. Marketing messages aimed at this

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segment need to address their need for luxury and extravagance, emphasizing that they are sophisticated travelers with highly developed tastes. Consummate Shoppers are not cheapskates; they are simply looking for the best value. This segment consists of very committed cruisers, who have tried other vacations but returned to cruising nonetheless. This segment, which represents 16 percent of cruisers, looks for a marketing message that highlights a cruise’s value and its special promotions. Explorers are well-traveled, well-educated people with a genuine intellectual interest and curiosity about new destinations. Explorers represent 11 percent of those who cruise, and respond to marketing messages that emphasize novel, interesting ports. The last segment consists of Ship Buffs, who represent 6 percent of all cruisers. This segment represents the most senior cruise vacationers. Ship Buffs cruise frequently because they have enjoyed cruising in the past, and they consider cruising comfortable, fun, and interesting. Only minimal marketing efforts need to be directed at this group, as they already want to cruise. It doesn’t hurt to remind them that the ship experience is one that they know and already enjoy. Travel Agents

The only purpose of the travel agent is selling tourism products, for a commission. Because of the uncertain nature of their work, most agents belong to professional organizations that guarantee to support them in the case of serious financial hardship. Two examples of these associations are the American Society of Travel Agents (ASTA) and the Association of British Travel Agents (ABTA). Travel agents’ services generally include booking tickets and packages, and they can frequently arrange travel insurance, car rentals, and accommodations. Unfortunately for agents, the booking scene is rapidly changing. With increasing competition from sites on the Internet, travel agents are finding the marketplace far more volatile than it has been in the past. Many airlines have cut down commission fees, and everywhere in the travel industry providers are attempting to sell directly to their customers, which cuts out the agent altogether. Agents who try to fight the changes invariably fail; the best option for travel agents in the rapidly changing market is to stay ‘‘on top of the game’’ and become extremely efficient at what they do. Customers can make their own purchases online, but it takes them time to figure out the system and to coordinate their hotel, travel, and entertainment options. A practiced travel agent can do the same in a fraction of the time, which appeals to customers. Some agents decide to specialize in order to deal with the changes in the travel market. Travel agents who specialize in arranging cruises often form strong alliances with cruise companies, who frequently support ‘‘their agents’’ through training, sales events, and customized marketing materials.

Alliances7

Cruise operators may decide to form alliances with other vacation service providers in order to create a more attractive package, or to create additional reasons for customer loyalty. One such alliance is the Luxury alliance, which includes Orient-Express Trains and Cruises, Silverseas Cruises, Relais and Chaˆteaux, and

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Leading Hotels of the World (Luxury Alliance, 2005). Carnival Cruises, Cunard Line, Costa Cruises, Holland America, Seabourne, Princess Cruises, and Windstar form the ‘‘World’s Leading Cruise Lines’’ alliance, which provides incentives for customer loyalty within these brands.

The Cruise Product8 Cruises have three different economic features: inelasticity (a cruise product is ‘‘perishable’’ because it can’t be stored if it’s not sold), heterogeneity (the product consists of a variety of components that make the cruise experience different for each customer), and complementarity (the cruise is not one single experience but a host of elements that combine to form the cruise experience). A cruise is a defined product that may include travel to the port of embarkation, an itinerary including activities that spans a defined period of time, some inclusive facilities and services (such as leisure areas and onboard entertainment), accommodations to a specified standard, and other services for which there is a charge. Some operators offer a special deal where cruisers can finish their experience off with a tour of the area at the last port of call—or alternately, a stay at a local resort. Accommodation

Accommodations aboard a ship are generally referred to as ‘‘cabins,’’ but many cruise companies have different terms for their guests’ rooms. Some still refer to the lodgings as cabins, but with additional terms, such as ‘‘stateroom cabin’’ or ‘‘minisuite cabin.’’ Other companies forego the term ‘‘cabin’’ altogether, using more landlocked terms like ‘‘suite’’ and ‘‘penthouse’’ to describe the range of accommodations. Penthouse suites tend to be the most luxurious, largest, and most expensive options aboard a cruise ship. Even though cabins can vary in size from 120 square feet to over 900 square feet, the average cabin is around 200 to 250 square feet. Even the smallest cabin is designed efficiently, though—it’s not uncommon for a cabin of 150 square feet to have four berths. The upper berths can usually be folded away to provide more headroom during the day, or to accommodate two people instead of the usual four. It may also be possible to reconfigure the lower two bunks to create a fullor queen-sized bed. Larger cabins generally include a lounge area, and nearly all cabins nowadays are ensuite; that is, they have a shower, toilet, and room or a shower, bath, and toilet. Cruise ship cabins are essentially more compact versions of their hotel-room counterparts. Because space is at a premium aboard a ship, storage areas within the cabin are meticulously designed so as to give the impression of a very efficient, ‘‘shipshape’’ space, and the vessel is built to maximize the revenue-generating area. Because designers can’t afford to be picky about where they place cabins, some cabins will inevitably be preferable to others for reasons of noise or view. To help customers decide which cabin will be right for them during their cruise, cruise companies’ websites usually provide overhead blueprints of the various types of cabins that are drawn to reflect three dimensions. Photos, 360-degree

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scanning views (on websites only), and blueprints help give potential cruisers a better idea of where they will be staying. Customers usually use deck plans to identify their cabin’s location. When viewed in conjunction with cross-section plans, deck plans can pinpoint the exact location of a particular cabin. The plans are usually color-coded by cabin type (and therefore, by cabin cost). Generally, cabins on the lower decks that are nearer to the inside of the ship cost less, but that is not always the case. By using a deck plan, it’s possible to identify the following properties of a cabin: Whether it’s an inside or outside cabin (that is, whether it’s buried within the ship or along the hull). Whether the cabin has a porthole, window, or balcony. If the cabin has additional beds (berths), connected staterooms, or handicapped-friendly facilities. Where the cabin is located—is it near elevators or other facilities? Nowadays it seems that cruise customers expect more from their cabin accommodations than was previously the case. Fortunately, today’s cruises tend to be larger, more complicated ventures that can provide a wider variety of cabin layouts and amenities to satisfy the expectations of every customer. Customers can use deck plans to pick exactly the cabin they wish to have. However, one issue that needs to be addressed is the mistaken impression that travel agents often give their customers regarding upgrading cabins. The errant philosophy is that the best way to upgrade is to buy a cheap cabin, and then complain once onboard in order to receive a free upgrade. This is not so: cruise companies strive for 100 percent occupancy and frequently cannot accommodate passengers who wish to be moved once on board. Cabin decor usually reflects the standards associated with the cruise brand. Artwork is chosen to coordinate with soft furnishings and carpeting in order to create a certain ambience, and colors are chosen to complement the cabin lighting. Especially in inside cabins, lights and mirrors are strategically placed so as to give the illusion of greater brightness and space. Cabin stewards monitor the general condition of the cabins, and they perform routine service and cleaning duties such as arranging complementary bathroom supplies in an attractive display and ensuring that the minibar is kept stocked. Housekeeping supervisors or managers check in on the rooms to ensure that the proper standards are maintained. Many larger cruise ships have something called a bell box, where a group of room service stewards and chefs deal with requests for food and drink to passenger lodgings as required. Additionally, some cruise ships provide passengers in larger suites with personal butlers, who can assist them with parties and can perform other services requested by the passenger. Dining

The perception of a cruise as a place to enjoy fine dining and good company is just as true today as it was in the heyday of traditional cruising. A guest’s meals are typically included in the cruise price, but meals at onboard specialty restau-

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rants usually carry a supplementary charge. Cruise ships often try to diversify and create unique culinary experiences for their guests by creating themed restaurants, such as Asian-themed eateries that serve Japanese food. Cruises can be highly caloric affairs, but chefs do take care to try to meet specific dietary needs when they design menus. Traditionally, breakfasts and lunches were conducted as open-seated affairs, with two separate sittings for dinner. Recently though, large cruises have begun offering two large 500-plus-seat restaurants located on either side of a gallery with a double-ended hotplate or servery. This arrangement is ideal for serving large numbers of guests in a short amount of time. Additionally, dinner service sittings are linked to performance schedules, which ensures that passengers are not upset by having to attend one sitting or another to see the performance they want. Dinner tends to be more of an organizational hassle than the two earlier meals, since guests often order room service and the breakfast is generally a buffet. Additionally, the ship frequently spends time in port during the daytime, which means fewer passengers will be taking lunch aboard. The Buffet. The buffet is a 24-hour, efficient option on the cruise ship. It’s often located on the upper deck, and it’s frequently designed to run from one side of the ship to the other, with a mirrored layout on either side of the ship. This is especially efficient between mealtimes, as one buffet can be kept open while the other is cleaned or replenished. The buffet is kept supplied by a small team of chefs under the supervision of a sous chef. Galley assistants and supervisors help customers, serve drinks, and clear tables after they are vacated. The buffet is designed with equipment incorporated which keeps each food item at the desired temperature while it waits for the guests. Some items, such as bread, appear every day, while others change to provide variety. While the ship is in port, the food served generally incorporates a bit of local flavor to enhance the experience of being in a new place. Serving food via buffet service is an extremely efficient and passenger-friendly option. The layout options inherent in buffet design simplify the dining room and allow customers to take their food to tables along the windows, and it gives them a great deal of choice and flexibility. Very few staff are required to operate and maintain a buffet service, and it creates extremely little waste, as food options can be adjusted based on prevailing consumption patterns. Tables are efficiently cleared by staff, who use carts to transport the used dishes from the buffet galley to the main galley for washing. Main Restaurants. On a cruise ship, passengers may eat as much or as little as they want, and nowhere is this reflected more clearly than in the main dining restaurant or restaurants. Food is brought out to the diner as often as it is requested. This appeals to diners who prefer to eat large quantities, but who may be concerned about the impression that carrying a loaded buffet tray might give to other guests. In the restaurant, the heavy eaters believe, their consumption is obscured by the routine of service.

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Frequent cruisers may receive an invitation to dine with the captain. Courtesy Digital Vision

Food in the main restaurant is created to differentiate and distinguish the brand. The menu is often configured to appeal to customers who are used to eating out in the United States, Europe, or the United Kingdom. This extends to the courses offered, the foods in the courses, and the language used to describe each course. The main restaurant is as much an experience as it is a dining establishment. Decor tends towards the more formal experience, with sparkling crystal and cutlery complemented by carefully chosen colors in the linens, walls, and carpeting. The lighting is subdued, and an array of uniformed serving staff, headed by the maıˆtre d’ (an abbreviation of the French term maıˆtre d’hoˆtel, meaning the restaurant manager). Aside from the maıˆtre d’, the main restaurant is staffed by head waiters, waiters, commis waiters or assistant waiters, and professional wine waiters

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known as sommeliers. Music, sometimes live, helps to heighten the theatricality of the dinner event. Styles of service vary with the brand, from full silver service to a combination of plated and buffet service. Each style correlates to the skill of the staff and the ratio of staff to guests—in full silver service, the ratio must be much lower than in other types of service. Whatever the service level, the staff must be able to relate interpersonally with passengers at the appropriate level. Table sizes may vary from two to eight seats, with the larger sizes more common in multiple-sitting dining arrangements. Some cruise brands are beginning to implement free dining situations in which customers are able to prebook tables for a certain time. Guests can also choose whether to dine privately or to join a group. Formal dining is featured on many cruises, although many newer brands place an emphasis on informality. The formal dining experience allows customers to dress to impress every few days, which helps alleviate the boredom of longer stretches between ports and adds to the cruise experience. Other Options. Although all-you-can-eat dining is an integral part of the cruise experience, many brands are catering to the passengers’ desire for more variety by creating an assortment of restaurants where they can dine for a small supplementary charge (which increases cruise revenue). On the Star Princess passengers can choose from several different restaurants, including an upscale Italian eatery and a Tex-Mex grill. Aboard the Ocean Village, guests can choose to dine at the Bistro, a restaurant that serves food produced to the specifications of one of the U.K.’s leading chefs. Other cruises offer alfresco dining, where patrons can enjoy their meals under the stars. For younger children, hot dog stands, pizzerias, and burger counters offer a change from the formal dining that may not suit their tastes. Ice cream carts by the pool, afternoon teas (in some cases, high tea), and room service round out passengers’ additional dining options. Bars

As a rule, most of the onboard bars tend to get busy after 10:00 in the evening, although they are relatively popular beginning after dinner. However, there are many opportunities for guests to purchase drinks in different places. On sailing day, drinks are readily available on the upper decks as the ship leaves port. Live music enhances the atmosphere, and waiters working from key bars on the upper decks serve cocktails to celebrate the departure of the cruise. Before dinnertime, a wine preordering point is made available to guests so they can ensure that they get the wine they prefer with their dinner. During the dinner service, drinks are available from the galley’s bar. Lists for liqueur, wine, cognac, and fine whiskeys are made available to guests, and liqueur trolleys and merchandising displays aid the sales initiative. Additionally, sommeliers and wine waiters are at hand to help the passengers. In every entertainment venue, table service is available. Special promotions and cocktails of the day help highlight all possible drink options. The bars onboard may each have a different theme to draw different customer groups. Sports bars and traditional lounge bars are at the forefront of this trend.

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Champagne and caviar appeals to a certain cruising set who value exclusivity and luxury. Piano bars that serve such ‘‘upper-crust’’ indulgences combine relaxed intimacy with amiable atmosphere. Nightclubs usually have table service and a distinct cocktail menu, depending on the clientele aboard the cruise. Cocktails are generally popular on liners, and the majority of bars use pre-blended mixes that have to be combined with spirits, ice, and / or garnishes before being served. During the daytime drinks can be purchased from several places including indoor bars and poolside bars. Drinks are also made available from certain mobile points in the buffet line and in the restaurant during mealtimes. In lounges where customers congregate for relaxation, bar service is usually available although tea and coffee are more likely to be requested. The ship generally has a variety of themed lounges (library, card room, observation lounge) which can be used for small group meetings, wine tastings, and competitions. The bars are also ideal places to hold art auctions, fashion shows, dance classes, and other activities. The staff at the bar work through a rotation system within the ship that ensures an equitable work schedule for all involved. Entertainment

The entertainment staff report to the cruise director, who reports in turn to the passenger services or hotel services director. Entertainment generally does not produce additional revenue for the cruise, but small sales can be made indirectly. Theaters, which are usually the largest gathering point aboard the cruise liner, are used for a variety of purposes. Comedy shows, musical presentations, cabaret, and magic shows are routinely held in the theater, but the area can also be used for emergency drills and as a meeting point for shore excursions. The performances and shows operate on a rotating schedule, with two or three presentations each night. This arrangement ensures that each program appears exciting, new, and fresh. Daytime activities are also handled by the entertainment staff. Events for the day are usually published and circulated in the onboard newspaper. The entertainment team responsible for activities frequently includes special members such as dance instructors, lecturers for cyber cafes, and port lecturers. Working with other staff onboard, the entertainment staff can arrange arts and crafts demonstrations, fashion shows, wine tastings, and other culinary demonstrations. Various musicians are hired to support theatrical productions, sailing days, show bars and bar areas, piano bars, and deck parties. For movies, cinema support, stage support and lighting, special effects, and sound work, a technical team is necessary. The musicians may also require the help of the tech team in a pinch. For more active entertainment, cruise ships usually hire a leisure staff. They arrange for onboard golf and various water-based activities, such as scuba diving, windsurfing, and water skiing. Some vessels rent bicycles for their passengers to take ashore with them. Within the fitness suites various classes are offered, often including Pilates and yoga. A team separate from the main leisure staff generally arranges age-appropriate activities for children.

Shore Excursions

Shore excursions are sold to passengers both before and during the cruise. Alone, they generate revenue, but the shore excursion’s true purpose is to add value to the cruise experience. Due to time constraints, tours or excursions ashore are

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Many cruise lines offer a variety of nighttime entertainment. Courtesy Digital Vision

efficiently designed so the passenger can do and see as much as possible. Depending on the port of call, a wide variety of transportation options may be available, such as launches, bicycles, coaches, helicopters, and horse-drawn buggies. For passengers, booking excursions through the cruise provider means a greater amount of comfort and security, because if something goes wrong, it is the cruise’s responsibility to see it fixed, not the passenger’s. Shore excursions frequently make use of third-party shore trip operators in addition to an established network of contacts. Some cruise companies also own tour companies, which makes the excursion-arrangement process even easier for them. Like military operations, passenger shore excursions require crowd control, planning, efficient communication, and precise timing. Beauty and Therapy

This is another revenue-generating area. There are cruise brands that contract concessionaires to provide the service (the operator comes to a business agreement with the line to work onboard), while other brands have their own staff. Many well-known hair and beauty brands operate aboard cruise ships and some brands (Lotus Spa is one such) are created by the cruise company itself to reflect the style of the line. ‘‘Well-being’’ and ‘‘spa’’ are words that are heard more frequently

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aboard cruise ships as the industry becomes more aware of modern lifestyle choices. Services offered aboard can include body wraps, thalassotherapy, foot massage, chakra stone therapy, pedicures and manicures, oxygenating facials, hair styling, and health and nutrition lectures. Shopping

Because guests are aboard a ship does not mean that they do not wish to shop. Indeed, shopping on a cruise line can be more rewarding than shopping on land, since stores in international waters don’t usually pay duty. Items of luxury and necessity can be found in a variety of onboard stores run by concessionaires, the staff purser administration, or by someone of like rank. The shops generally include fashion stores for both sexes, a gift shop, a general store, and a jeweler. Onboard shops are usually situated in one central area, much like a shopping mall. The tendency to build large atriums on the bigger cruise liners suits this arrangement, and it creates the opportunity for shops to set up additional marketing stalls at a distance from their main location, which creates a bustling, marketlike ‘‘feel.’’ Some companies that operate shops under concession include Harding Brothers Duty Free, Miami Cruiseline Holdings, Flagship Retail Services Incorporated, and Nuance Global Ships.

Photography

Photographers aboard the ship are kept busy constantly, as there is hardly a moment aboard that isn’t magical enough to capture. Photos are taken during important moments such as embarkation, departure, and arrivals at various ports of call. The presence of the photographers ensure that passengers can purchase professionally taken pictures, some of which are available in special presentation packs. The most technologically advanced cruise lines have adopted an all-digital system that enables customers to look at photographs on special screens as they move through the corridors. Guests can hardly resist looking at (or arranging to purchase) the constantly updated images, and the digital technology enables photographers to include scenes from the port of call into more mundane backgrounds, creating a unique keepsake. Sometimes, photographers are employed directly by the cruise brand, but often they are contracted through concessionary companies such as Image Photo Services, Inc., Ocean Images, Ltd., the Cruise Ship Picture Company, and Digital Seas Internet Cafes.

Casinos

The glamour and glitz of Las Vegas casinos makes its way onto many cruise ships, where passengers head to the onboard casino for a bit of action and excitement. Gambling is frequently perceived as an activity for winners, and the cruise that has a casino is therefore more alluring to people who want to see themselves in that light. Cashless ships are becoming more popular within the cruise industry, with special cards for passengers to use that credit purchases to their account. Onboard casinos also use this mode of transaction to sell tokens or chips. Casinos are usually allowed to open upon sailing, although depending on the port of call, they may need to shut down once within a certain distance of the shore. Passengers over the age of 18 are allowed to gamble in the casinos, which

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usually have a dress code. Minimum and maximum bets are generally posted clearly at the gaming tables, which typically offer such games as craps, blackjack, roulette, three-card poker, Caribbean stud poker, video poker, and baccarat. Celebrations

Passengers sometimes cruise to commemorate a special event, and on some vessels, they can even get married. Marriages aboard cruise ships are not uncommon, but they can be complicated due to national laws (which may or may not affect the ship, depending on its flag and registration). Nevertheless, where the law allows, the cruise liner’s captain can perform marriages. In response to this possibility, many brands have developed special, inclusive wedding packages. These packages can include photographs, champagne, flowers, the reception, the ceremony, souvenir items, and the wedding cake. Passengers who are already married can purchase similar packages to renew their vows. Other celebrations can be catered to as part of a package, such as honeymoons, birthdays, and anniversaries.

STAFFING THE CRUISE SHIP9 For cruise operators, crewing is a complex issue. When first forming a crew, particular attention is necessary for the support mechanisms that exist to assist the staff development, the management of hotel services crew, and the sourcing of unskilled, semiskilled, and skilled labor for the department of hotel services. Cruise ships are almost exclusively heterogeneous, with a crew composed of people of various ages, nationalities, backgrounds, and prior learning. This poses the additional challenge of coordinating a diverse, multicultural crew and dealing with its unique difficulties while maintaining a smoothly functioning ship.

Responsibilities Today, large cruise ships with an array of amenities need virtually an army to remain in operation. These floating ‘‘resorts’’ traditionally employed both officers and ratings (non-officers). Ratings are the crewmembers who operate within a hierarchical system, and who are responsible for performing tasks that relate to the ship’s safe passage and commercial activity. In days past, seafaring vessels absolutely had to have a 24-hour watch schedule, but with the advent of automation that timetable has shifted slightly. Nevertheless, the ship’s operational crew still maintains traditional four-hour-long watches under ‘‘officers of the watch,’’ with a typical deck officer serving for two watches in a 24-hour period. On cruise ships, the same hierarchical structure remains, but unlike on cargo ships or tankers, the majority of the crew are employed in customer services. Onboard today’s cruise ships, employees are typically grouped into officers, crew, and staff. Officers hold official authority and are divided among four departments: deck, radio, engineering, and hotel services. The crew, the largest group in number, is likewise divided among the aforementioned departments. The last group,

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the staff, is composed of employees such as shop managers, hairdressers, lecturers, casino staff, entertainers, and beauticians. They may be hired directly by the line or brought onboard by a concessionaire. The ‘‘ship’s company’’ that results is an extremely diverse group, over which the ship’s master has absolute authority. The master, acting as a stand-in for the owner, makes decisions that relate to the safety of the ship, including the people and things aboard it. The captain’s job differs slightly from that of the ship’s master, although frequently the post of captain and the post of master are occupied by the same person. Aboard a cruise ship there may be more than one officer with the rank of captain, such as the staff captain who oversees all things relating to the crew, staff, and customers. Deck Department. This department oversees the navigation and care of the liner. On an everyday basis, the chief officer or first mate is responsible for running the deck. Unsurprisingly, larger vessels require more crew members in this department, who are called second, third, and fourth officers (the actual number is dependent on the ship’s size). The position of safety officer is filled by one of the senior officers in the deck department, and the officer’s complement is often composed of junior officers-in-training, known as cadets. There are many different types of employees who fill out the deck crew. The chief petty officer (deck) and the petty officers (deck) supervise the deck crew under the supervision and direction of deck officers; the deck carpenter attends departure and berthing; the quartermaster (also known as the coxswain, with senior rating) is responsible for steering. On deck are also junior seamen, seamen grade two, and seamen grade one (the last two share steering and lookout duties with the deck officers); the Bosun (boatswain), who serves as foreman for the deck hands; and day workers who handle general tasks. Those crew employed in the department who are not officers are rated as ordinary seamen (OS), who are classified as unskilled, or as able-bodied seamen (AB), who are deemed skilled. Other, specific posts exist within the deck department, such as security. Deck officers wear plain gold stripes, the number and configuration of which identify their rank. Captains and masters wear four stripes, chief officers wear three, first officers have two-and-a-half stripes, second officers wear two stripes, third officers wear one-and-a-half, and fourth officers have one stripe. Cadets usually wear half a stripe, or one stripe. The deck officers can be immediately identified as such because they wear a diamond. Security wears brown stripes and a capital letter ‘‘S.’’ The majority of cruise ships also employ an environmental officer, who can be recognized by his or her green and gold stripes. The environmental officer is answerable directly to the ship’s captain. The Engine Department. The chief engineer, who is responsible to the master, oversees the engine room. The chief engineer is in charge of maintaining the ship’s steering, propulsion, and power for systems such as heating, ventilation, lighting, air-conditioning, and refrigeration. Other responsibilities include maintenance, fuel, and repairs. Depending on the system of propulsion and the size of the ship,

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additional crew may be needed, such as engineering officers, cadets, and electrical engineers. Crew positions within the engine department include the chief petty officer (motorman) and petty officer (motorman), who (under the direction of engineer officers) supervise the engine room. Other posts include junior motorman, motorman grade two, and motorman grade one, and the occasional specific post such as electrician. The chief engineers wear four stripes in alternating gold and purple. Chief electricians wear three stripes, first engineers two-and-a-half stripes, and second engineers two stripes. As for symbols, the engine department has two: a propeller for technical and engineering, and an electric current logo for electrical officers. Radio Officers. The radio office supports all the ship’s communication, including telex, radio, telegraph, Internet, telephone, and satellite communications. Within the office, there is usually a chief radio officer, who may have additional radio officers working for him, depending on the ship’s requirements. The officers and their assistants (who are ratings who assist the officers) are affiliated with engineering, but as they work closely with the navigators, the radio room is usually nearer to the bridge than the engine room. The chief radio officer (or chief communication officer) wears three gold and green stripes, while the officers under him follow the same pattern as deck and engineering officers. The symbol worn by those in the radio department is a radio signal emblem. This post is something of a holdover from the past, and is now fast vanishing. Modern electronics mean that the technical job is more likely to be handled by an electrical officer instead of a radio officer. Medical Department. The principal medical officer (PMO) is supported by a team whose size depends on the size of the onboard community. The PMO’s staff includes medical officers (doctors) and frequently a few nurses, who are usually recognized as officers. Some ships also employ orderlies, who are pulled from the ratings. The largest cruise liners may keep physical therapists, dentists, and a medical dispenser aboard. Some vessels even have morgues. The medical officer can be identified by three gold and red stripes and the department’s symbol, the caduceus (staff of Hermes). Besides being a necessity, the medical staff can also generate revenue through the provision of specialty services. For this reason, cruise companies place the medical team under the management of the department of hotel services. Entertainment Department. This department is led by the cruise director, who is usually an experienced professional from the entertainment industry. Any entertainment of guests and staff is managed through the entertainment department, which means that it employs a wide variety of staff. Stage technicians, sound and lighting crew, social hosts, dancers, comedians, actors, musicians, port lecturers, singers, guest lecturers, and children’s staff are just some examples of the entertainment employees of a typical vessel.

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The cruise director is often assisted by the deputy cruise director, and is usually regarded as having authority equivalent to three stripes. The entertainment department is linked by association with the department of hotel services. Hotel Department. Although the number of people in this department is governed mostly by the size of the operation, the hotel department usually dominates the others in terms of staff. This department is managed by a person with the title of hotel manager, passenger services director (PSD), director of hotel services, or executive purser. The term ‘‘purser’’ traditionally refers to an employee in charge of finances, hence the root ‘‘purse.’’ Nevertheless, the term is used in different ways on different cruise lines. The senior officer responsible for hotel services wears four gold and white stripes. The food and beverage manager, the executive chef, and the deputy purser each wear three. The assistant food and beverage manager, accommodation manager (housekeeper), senior assistant purser, and bar manager all wear two-and-ahalf stripes. The second purser wears two stripes, and all in the hotel department wear the cloverleaf, which is its symbol. Depending on the cruise brand and the particular passenger experience desired, the hotel services department may resemble a contemporary on-shore hotel or something more traditional and nautical.

MANAGING THE HOTEL DEPARTMENT10 The senior role of managing the hotel goes to the executive purser on lines where tradition is deemed an essential selling point, and to the passenger services director or the hotel director when adhering to tradition is unnecessary. Hotel services are generally line managed by two or three senior managers, who may go by the title of deputy purser. These managers usually focus on passenger services (including accommodations), food and drink, and finance. Each deputy, in addition to these tasks, leads a specific team. Some of these teams: Food and drink, including chefs, bartenders, sommeliers, maıˆtres d’hoˆtel, head waiters, stewards, and many more. Passenger services, including accommodation administration, public area supervisors, cabin stewards, butlers, laundry masters, etc. Administration and personnel, including purser front offices, receptionists, assistant administration manager, shore excursion manager, and more. Additional areas, including florists, shops, print shops, art auctions, administration stores, beauty centers, etc. Often duties are reassigned to junior staff members when it is strategically necessary.

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Quick Getaway 14.5

Working the Cruise Cruise ships are like small floating cities, and like cities, there are thousands of jobs that need to be done to keep the whole thing operating smoothly. These thousands of jobs are filled by thousands of applicants, but most do not stay on. In fact, cruise lines have very high employee turnover levels, mostly because new employees don’t understand what they are signing up for! Although living and working on a liner seems romantic and exciting, in reality it’s a lot of work. Fortunately, most cruise companies promote from within, so if you are looking for a career in cruising, starting at the bottom is probably a good plan. So what are the pros and cons of a job aboard a cruise ship? Negative factors of working on a cruise ship: Do you get sea sick? Are you claustrophobic or feel badly in small, confined spaces? If you answered yes to either of these questions, then a cruise line job is probably not for you. You can forget the 40-hour week at sea. Most cruise ship employees are required to sign a contract for four to six months, and are expected to work seven days a week. All days off come at the end of the contract. Employees are usually paid in U.S. dollars while working, but do not receive any pay

between contracts. Positive factors of working on a cruise ship: Working on a cruise ship gives you the opportunity to travel the world and to meet many interesting people. You usually work with a team of people who are eager to help you learn to do your job well. Although you are working every day, there are some opportunities to go ashore and see the sights. Free room and board, and you don’t have to pay any utility bills! In addition, since you are working so much, you don’t have much opportunity to spend your paycheck, so many employees are able to save money while working on a ship. Cruise lines try to have a comfortable work environment for their employees. Happy employees are effective employees! Source: Garrison, Linda. ‘‘Pros and Cons of Working Onboard.’’ About.com—Cruises, accessed July 28, 2006. http: / / cruises.about.com / cs / cruisejobs / a / cruisejobs.htm

DISCUSSION QUESTION: Would you consider taking a job on a cruise ship? Why or why not?

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Providing food, drink, and accommodation is a very demanding task from a human resource (HR) perspective, especially because the perceived quality of a cruise depends so heavily on the performance of its waiters, sommeliers, stewards, and other crew. On today’s megaliners, staffing can be an enormous challenge, as the necessary crew can number more than 1,000 people. The patterns of contracts and the obligations agreed to therein must be taken into consideration when hiring new crew members, and any influx of untrained employees will dampen the service level onboard as experienced employees devote some of their time to training the newcomers. In the galley, organization of members generally follows the more traditional ‘‘hotelerie’’-style lineup of chefs. The executive chef, who oversees the entire operation, is supported by a small team of sous chefs who control the hot plate (also known as the ‘‘hot press’’) where the service occurs in the galley. Depending on the ship and its restaurants, the sous chefs may be required at satellite restaurants as well. The different areas of the galley are controlled by their respective chefs de partie, such as the butcher, sauce chef, grill chef, larder chef, fish chef, and pastry chef, each with their own assistants. Additional members of the team may include breakfast chefs and bell box chefs, the latter of which work to produce room-service food from pantry galleys close to the cabins. Last but not least, the chefs in charge of the messes (the term for the eating areas of officers and crew) provide food for the cruise employees, a complex task in and of itself. Restaurants on larger cruise ships make use of a supervising maıˆtre d’hoˆtel, who oversees a team of restaurant managers. Within each restaurant, there’s a host to coordinate seating and make guests feel welcome and head waiters to oversee the waiters, who work with an assistant or ‘‘busboy’’ to serve between 16 and 18 covers. Large restaurants in particular often employ a head sommelier along with a team of assistant sommeliers to serve alcoholic beverages. On the largest cruisers there are frequently a variety of fast food outlets along with a buffet service area, which is operated by a team of assistant buffet stewards overseen by head waiters or assistant head waiters. Bars onboard are handled by a bar manager who coordinates a multibar operation, which can include the following: show bars, cocktail bars, dispense bars, deck / pool bars, lounge bars, champagne and caviar bars, and crew bars. Each bar is managed by bar supervisors who coordinate the bar stewards and their assistants. The food and beverage managers work with assistant pursers / managers in order to coordinate operations. Stores managers deal with supply and demand, receiving, storing, and issuing consumable goods to the various outlets around the ship.

Managing Service Reputation is one of the most important factors when it comes to a cruise’s new and repeat business. It’s important to bear in mind that no matter what standards a brand may set, it’s the customer who ultimately sets the standard for what service is appropriate.

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Understandably, many cruise companies are eager to address customers’ concerns and to improve service. However, there is often a massive gap between the changes made in the boardroom and the service offered on a personal level. Hazards such as unhappy employees, production problems, and unexpected itinerary changes can ruin the customer’s perceived service quality and reduce the chances that that person will return. Five elements must be consistently maintained without fail in order to provide the best customer experience: Officers, managers, crew, and staff must all be sufficiently trained Employees should be instinctively customer-oriented in their thinking Crew at every level should be empowered to solve customers’ problems Employees should be aware of company standards Employees should be capable of exceeding said standards This can prove a daunting challenge, as employees nine months into their contracts must be as dedicated and fresh as if they just arrived. Customer service at sea presents serious challenges for a number of reasons. First, on a luxury cruise, the ratio of staff to passengers is nearly one to one, meaning that a greater percentage of staff will come into contact with the passengers and therefore must be customer-focused. The passengers are often from a variety of nations and backgrounds, which means that their expectations may vary wildly. Also, contemporary customers can be demanding, as the rights of the customer are highlighted and defended greatly in our culture, especially when it comes to the benefits of complaining. On the other hand, customer service at sea has many advantages. As a ship is a confined environment, there is next to no risk of employees unexpectedly quitting and disappearing. Bad performance is more difficult to hide from supervisors, and because the passengers and crew are in close contact over a protracted period of time, there are many more opportunities for crew members to turn the passenger’s experience into something truly magical. There remains one element that is especially worthy of consideration. Onboard a cruise ship, there are occupations that require much more labor than others. Food service and food production are seen as examples of such high-labor areas, especially when compared to their counterparts ashore. Part of the high labor needed aboard the ship is a result of the desire for greater food diversity and service quality, but cruise staff numbers are frequently affected by safety regulations as well. The job of operations management in a cruise setting is to optimize passengercrew interactions. When a job does not require the personal touch, or when it’s more efficient to set up a ‘‘self-service’’ option, operations management steps in. One example is online booking and reservations, which can prevent long lines and customer aggravation. However, the perception of care and contact should not be diminished, and by designing specific interaction instances (such as a captain’s cocktail party or a welcome meeting), the crew’s perceived attention

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level increases in the passenger’s mind without actually affecting operational demands. Levels of interaction between customer and crew can vary in a cruise ship. The encounters can often be rather personal, such as the waiter-passenger interaction or the friendly contact between passengers and officers at a nightclub. Most passengers view these personal encounters as very important to the quality of their experience. However, it’s necessary to bear in mind that crew and officers need time away from passengers in order to ‘‘recharge their batteries’’ and to remain focused on customer needs during their shifts.

Role of Tipping Tipping is an ancient practice, and any service personnel who are regularly in contact with passengers are likely to be given tips of varying amounts. However, it’s also an awkward practice that can lead to misunderstandings and embarrassment. Therefore, cruise companies tend to regulate the practice, because no one wants to feel awkward while on vacation—but employees don’t want to feel unappreciated, either. Some cruise lines choose to enact a ‘‘no-tipping’’ policy, while others provide a helpful brochure which suggests tipping in a very formulaic and orderly system. Other lines automatically levy a daily service charge ($10 is not unusual) which is then split among crew members according to a hierarchical system of division (known as the ‘‘tronc’’). Another method to regulate tipping is to automatically levy a 15 percent charge on every bar bill. The tip in this case isn’t mandatory; rather, guests are told that they may act to remove the charge if they feel that it truly isn’t warranted.

MANAGING FOOD AND BEVERAGE11 Few food and beverage operations are as demanding or as complex as those aboard cruise ships. Still, when compared to its cost-cutting, deskilling, centralizing counterpart ashore, the cruise ship restaurant veritably shines as a beacon of distinction.

Introduction The first transatlantic liners were designed to be perfectly self-contained vessels. Because they were away from ports for so long, they were essentially cargo carriers in addition to passenger carriers. Oftentimes ships would drop anchor in a foreign port, load up on indigenous goods, and then sail back to the home port in order to distribute the goods among the fleet’s various ships. The storage areas in these ships were designed accordingly; for example, a ship that frequented Argentina

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for its fine steaks would have cavernous freezers and refrigerators located on the lower decks, near loading areas.

Supplies and Services Today’s cruise ships are different from their forebears. Unlike the heavy transatlantic cruisers of the past, today’s ships are not designed to sail in difficult waters, so instead as much space as possible is devoted to revenue-generating space, such as passenger cabins and restaurants. Because the ship is designed to bring in profits for the company, storage space is planned accordingly. For example, if the ship is to be used primarily for ten-day cruises, there will be just enough storage for ten days’ worth of supplies. Unsurprisingly, managing the food and beverage supplies for an entire cruise ship can be a highly specialized and difficult job. The acquisition process usually starts at the head office with a consultation involving key professionals, both from aboard the ship and onshore. Planning relies on analyzing prior consumption patterns, planning menus for different types of passengers, forecasting needed quantities, and identifying expected changes to routine. Contracts are then offered based on the ability to supply, price, and quality. Because supplying large cruise ships is a lucrative business, it’s attractive to suppliers; however, many suppliers can’t meet the requirements for the contract tender. Onboard, the head storekeeper or stores manager, often aided by an assistant and an administrator, is in charge of managing supplies. Larger ships often have a cellar master who is responsible for beverages. The head storekeeper, cellar master, and their assistants report to the food and beverage manager (or the equivalent), and they work in close contact with the bar manager and head chef. The routine process of acquiring and storing goods usually begins upon arrival at the port of departure. Oftentimes this is the home port, but it can also be a port that has been chosen for the embarkation and disembarkation of passengers for many cruises. Before being loaded, goods are kept in a container on the dock that has been sealed by the supplier. It’s also be checked out by the customs officer before the arrival of the ship. Once the ship ties up and has been cleared by the port or customs officials, supplies may be loaded. Forklifts and pallets are usually used to load the goods onto the ship, although conveyor belts are sometimes employed onboard. Loading usually occurs at doors located at the level of the quay, which are frequently called ‘‘gun port doors,’’ which is the historical nautical term. Stevedores supervise the dockside laborers who deliver supplies to the ship, and onboard, general assistants are used to make sure that everything is stored in the proper manner. Stores managers are responsible for checking item quality and accuracy, for goods may be rejected if they do not meet the pre-set specifications. Most cruise companies nowadays make use of a computerized stock management system, which helps with the accurate control of goods. Using this computerbased system, bartenders and chefs can make requisitions without using up valuable manpower or wasting time, and supplies on hand can be checked against the computer log to ensure that no discrepancies occur.

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Stores managers must take care that goods are stored and moved safely and accurately. The large volume of supplies may make some workers feel compelled to load quickly, but the store manager must ensure that workers load with care. Workers should be considerate of their health and lift things safely, and items should be handled in an appropriately safe and hygienic fashion. Goods should also be loaded properly and restrained so that they do not get damaged or cause accidents in the case of any sudden movement on the part of the ship, or in case of storage area inadequacy. Perishable goods must be rotated so that waste is minimized and to ensure that only the highest quality produce is supplied. Prestige goods, such as caviar and vintage wine, must be treated with special care and stored more securely than other goods. Items such as fresh produce may be ripened in storage—for example, the supplier may be given specifications that request near-ripe fruit instead of fully ripe fruit. Once requisitioned, items from storage go to the next stage for preparation (galley, bar, bell box, etc.).

MANAGING FACILITIES12 One of the main challenges of operating a cruise ship can be dealing with space, or rather the lack of it. Passengers bring aboard large quantities of luggage, and moving and storing it all can pose daunting. Also difficult is helping passengers to readjust their expectations; although most passengers acknowledge the difficulty of dealing with space aboard a ship, they often arrive with unrealistic expectations about the size, look, and feel of their cabin. Because cruise ships lack alternative accommodations, it can be a challenge indeed to provide passengers with new accommodations.

Yield Management Yield management is defined by offering the proper type of inventory (in the case of cruises, cabins / staterooms) at the correct price to maximize revenue. Yield management is utilized by a number of industries to effectively manage the time and selling strategy. The perishability of the product (a cruise cabin unsold on a particular cruise can never be resold) drives the yield management policy. Generally, yield management is utilized when the organization in question has a fixed capacity (like the cabins on a cruise ship), and when failure or success depends on exactly how that capacity is used. Organizations like this generally have high fixed costs; however, these are covered after a certain sales level is reached. Sales in addition to this break-even point barely affect costs, but they have a large impact on revenue. Revenue and Costs. Because cruise companies are naturally investment-heavy in terms of equipment, labor, and provisions, it is difficult to adjust the capacity of a ship once it is in service. Therefore, it is in the company’s best interest to sell inventory as rapidly as possible, because then they can:

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Understand the demand at an early stage and therefore decide on the optimum yield-maximizing strategy Obtain early access to passenger’s money Make relevant decisions to decrease demand-related time uncertainty Since early sales clearly benefit the company, it is a wise strategy to encourage early booking. Some initiatives used by cruise companies include free upgrades for early bookers, time-constrained discounts, loyalty club membership (with access to early notice of advance booking benefits), and other incentives such as free transportation to port. In order to make the vital decisions regarding yield management, the cruise company must be aware of: Historical booking patterns and demands Which markets should be specifically targeted for different vacations Knowledge of competitors’ pricing Consumer buying behavior and market segments It’s becoming increasingly possible for cruises to be overbooked. Cruises overbook because there are always some customers who cancel at the last minute or do not show up at departure, and overbooking ensures that the ship is at capacity. However, if the ship remains overbooked at departure, the cruise line will find itself with some unhappy customers. The overbooking policy is designed to deal with this situation, and it details specific actions to be taken in case of overbooking, such as offering the unhappy customers compensation. Another element that should be considered when calculating possible yield management is the multiplier effect. This effect suggests that revenue can be made after the booking is already made, and therefore the yield management system needs to concern itself with attracting sales once onboard. Of course, this model depends heavily on what ‘‘package’’ is being offered. In recent years, the trend has been to maximize occupancy through reduced prices while increasing yield by combining volume sales of cruise-type vacations and increasing onboard revenue. Sales figures are representative of the number of lower berths that have been sold. To increase occupancy and therefore revenue, many operators offer fourberth cabins to family groups or single travelers who aren’t averse to sharing. In combination with the policy of overbooking, this practice can generate occupancy rates that are actually greater than 100 percent.

Accommodation Because capacity may exceed 100 percent, accommodation management must be extremely efficient, thorough, and above all, flexible. Inflexibility leads to the inability to deal with accidents or onboard problems, which can cause passenger disillusionment and harm to the brand’s image. Most of the time, issues are dealt with by reception or the purser’s desk, but the ship’s manager / officer must be

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able to make accommodation decisions in a pinch. To do this, the officer must be aware of the options, and he or she must know how to choose the best option for both the customer and the company. When the purser’s desk or reception settles a problem, communication is the most important issue. The department must have accurate information regarding cabins and passengers. This information, which is supplied by the sales office ashore, is absolutely essential because it provides information about the passengers that may help management more fully assess the issue. Additionally, it provides data about surplus inventory that can be used in the case that a cabin change is unavoidable. Communication is also essential to the purser’s office in that the department must not only be aware of the appropriate policy but it must be empowered to act on it. Lastly, the manager must be able to communicate effectively with all parties in order to seek advice or access information when necessary. For this reason, a channel of continuous communication should be maintained between the accommodation manager and the purser’s office. It’s critical that the information database remain updated so that accurate passenger accounts or folios can be generated, management can administer the accommodation department, and passengers’ information can be quickly accessed for the convenience of port authorities. As for the accommodations themselves, the passenger is likely to scrutinize them more heavily than any other area of the ship, simply because more time is spent in the cabin than anywhere else. Therefore, clean and comfortable cabins are essential to the cruise’s success in the eyes of its customers. Although personnel who work in the accommodations department appear to have similar jobs to hotel staff onshore, the work is really quite different, as the ship’s employees have a higher profile and far more contact with the customer. Therefore, it is imperative that the cabin steward leave a favorable impression on the guest. There is some overlap between the housekeeping department and other departments on the ship. Even though housekeeping is in charge of general cleaning duties such as cleansing and servicing rooms, providing laundry services and uniforms, and maintaining decorating standards, other departments typically handle the more intensive cleaning and servicing tasks. For example, the housekeeping staff doesn’t clean the galley—that duty is managed internally. Servicing cabins requires a certain sort of employee because it is both physically demanding and detail-oriented. Cabin stewards serve a different number of cabins depending on the type of ship, the type of cabin, and the type of passenger. For example, on the Queen Mary 2, the most experienced stewards typically service the high-end cabins, while less-experienced stewards handle the rest. On some ships, stewards are required to provide room service duties, while on others they do not have to. Generally, a steward handles 12 cabins, but that number can vary as larger cabins take more time to service than their smaller counterparts. One of the most important factors in the functioning of an efficient housekeeping department is the teamwork of its members. Although servicing cabins can be an independent activity, some tasks are better done with a partner. Addi-

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tionally, housekeeping staff members can assist each other when one of them is tackling a particularly challenging cleaning task, and teams are usually better able to handle large jobs like cleansing common areas. A word on the laundry: it is very important for the proper functioning of the cruise ship that its laundry department performs flawlessly. The laundry is under the direction of the laundry master, who is supported by a team.

Environment Traditionally, the hospitality industry has not been terribly environmentally friendly, and cruise ships can be included in this statement. The industry as a whole uses immense volumes of energy, water, consumer goods, and rare luxury items while seemingly ignoring the environmental consequences of its consumerdriven product. Cruises in particular must take care that they are operating in a more ecologically friendly manner, simply because they operate in the ocean. Waste management especially must be carefully planned. Cruise companies should bear in mind that, to an extent, they can help control both the ‘‘upstream’’ and ‘‘downstream’’ waste; that is, they can contribute by demanding that their suppliers operate in an environmentally conscious manner, and the cruise company can educate its customers about their ecological impact.

HEALTH, SAFETY, AND SECURITY13 Cruise brands are careful to cultivate the image that a cruise is the utopian vacation experience: no worries, no stress, and no danger. However, like most travel, cruising has its share of peril. Onboard diseases, such as the norovirus, tend to garner a lot of media attention, but they are in no way the only threats. Security is also a significant concern, especially because cruises have recently begun marketing themselves as a very secure vacation option. Naturally, health, safety, and security are extremely complicated subjects, and this issue is complicated further by the fact that many ship security procedures are understandably confidential. However, some procedures are almost universal. Although this section covers the basics of onboard security, additional research is recommended to fully comprehend the issue.

Centers for Disease Control In the 1970s, the U.S. Health Service’s Centers for Disease Control and Protection (CDC) introduced the vessel sanitation program (VSP) as a reaction to several severe disease outbreaks aboard cruise ships. The VSP, which focuses mostly on gastrointestinal disease, has experienced a great deal of success. Over time, as the cruise industry’s relationship with the CDC has matured, the role of the latter has

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evolved in the direction of assisting and training. However, the agency remains a powerful force in regulation and control. The CDC is primarily known for its 100-point vessel sanitation inspections. Vessels that score 86 or more points are considered sanitary, while those who do not score highly enough are declared unsatisfactory and are given 30 to 45 days in which to improve before re-inspection. Although the ships with lower scores have lower levels of sanitation, the low score does not necessarily mean that the ship’s passengers are at immediate risk of contracting gastrointestinal illness (GI). However, the CDC states that since the inception of the VSP, there have been fewer disease outbreaks aboard cruise ships—even though the number of passengers carried has significantly increased. The VSP functions by undertaking specifically targeted surveys in order to identify possible GI-related problems. If 2 percent or more of crew and / or passengers aboard the ship report GI-type symptoms, the attention of the VSP is triggered. However, an investigation may also be initiated if an unusual GI pattern emerges, even if less than 2 percent of the people aboard report symptoms. The first and perhaps most essential part of the process consists of keeping accurate records of anyone who has reported GI symptoms or has requested medication to treat diarrhea. If any of the data shows cause for concern, the VSP would kick into action, analyzing the risk of an outbreak, reviewing onboard practices, identifying infectious agents (if possible), developing a control and prevention program, and evaluating the response once implemented. In essence, the VSP acts to identify and deal with disease-related problems and to insure that they do not reoccur. When a new vessel is in the planning or construction stages, the CDC can assist the designers so that the finished vessel is optimally suited for meeting public health standards. Such things as the correct location of hand-washing facilities, the proper design of food storage and preparation areas, and the installation of efficient food-storage temperature control mechanisms are all elements that the CDC prefers to assist with. At the CDC’s facilities in Florida, training classes are offered for cruise staff that detail the existing standards and the how and why of enforcing them. The training program covers the following: water sanitation, food safety, employee practices and hygiene, general cleanliness, safe repair practices, contamination prevention, and vector control (a vector is any rodent, insect, or arthropod that is capable of hosting or transmitting disease-causing elements to humans).

Sanitation Program Inspection Vessels that have a foreign itinerary, carry more than 13 people, and call into the United States must undergo a twice-yearly environmental health inspection as per the orders of the CDC. The VSP operations manual (which was revised in 2005 to account for changes in technology, hygiene, and disease-causing agents) includes the details of the required inspection. Aside from aiding the CDC with its inspection procedures, the VSP manual also help to educate ship operators and crew. The following are some points, summarized from the manual:

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Water: drinking water is referred to as potable water. Pumping water aboard the ship from the shore is a process known as bunkering (the same term can be applied to pumping fuel aboard). Drinking water must meet the standard of the World Health Organization. To ensure this, water should be sampled every 30 days or less to check for microbes. The ship should retain records of the microbial reports for 12 months after testing. Water should not be produced on the ship (through distillation, reverse osmosis, or other methods) while the ship is at anchor, in a harbor, or in polluted waters. Swimming pools: flow-through seawater swimming pools may only operate once the ship is under way and at least 12 kilometers from land. The pool must be drained prior to arriving at the port and must stay empty while in port; however, in some cases it may be permissible for the pool to remain filled, as long as the filling system can be disconnected and the pool remains properly filtered and halogenated. The water must pass safety tests before guests can be allowed to swim, and recirculating pools must be filtered as per the instructions of the filtration manufacturer. The quality of the water must be monitored, and it must always exceed the minimum expectations. The water in whirlpools must be filtered, with filters inspected frequently and changed twice yearly. Whirlpool water must be changed daily, and all pools must have safety signs and depth markings prominently displayed. The temperature in the whirlpool must not exceed 40⬚C, and the pool area should be adequately supplied with safety equipment. Babies, young children, children wearing diapers, and children who are not toilet-trained may not enter any of the pools. Food safety: the person responsible for food safety and food production on board must be sufficiently knowledgeable about the prevention of food-borne diseases, Hazard Analysis Critical Control Point (HACCP) principles, and the food safety guidelines of the VSP. Observing the individual’s practices while onboard, as well as his or her ability to answer questions satisfactorily, may be considered sufficient evidence of proficiency. Also considered acceptable: appropriate certification from the United States or overseas. Managers must ensure that their staff adopts hygienic and safe practices as outlined in the manual. Generally, food must be unadulterated, safe, and sourced adequately. Foods that may be hazardous must be received at an appropriate temperature (7⬚C or less). Edible supplies must be stored in clean, dry locations, at least 15 cm above the level of the deck. Food must not be stored in places such as toilets, dressing rooms, locker rooms, garbage rooms, open stairwells, and mechanical rooms. Even food on display must be protected from contamination.

Safety After the terrorist attacks of September 11, 2001, terrorism has become an increasing concern for travelers, especially travelers from the wealthier parts of the world. Border security and vigilance has increased around the world in the past few years,

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With so many people on a cruise ship, sanitation practices are imperative. Courtesy Digital Vision

which has actually helped the cruise industry, which is able to capitalize on flexible itinerary planning (a necessity as the risk level in different regions of the world fluctuates). There are a few downsides to the increase in security: more bureaucracy, longer lines for passengers and crew to wait in, less privacy, increased costs, and a higher level of complexity when planning. Fortunately, cruise passengers have been very understanding and accommodating as security procedures change, as they see the hassles as a necessary evil. Shipping security standards in the last decade have truly raised the bar for the safe operation of all vessels. In December 2002, representatives from 108 governments—along with observers from the International Maritime Organization (IMO)—gathered at a conference with the intent of strengthening maritime security. The goal was specifically to prevent and suppress terrorist attacks against shipping, and by the end of the conference, a set of measures was agreed upon by all. The code resulting from this decision was added as an amendment to the Safety of Life at Sea (SOLAS) agreement, and is known as the International Ship and Port Facility Security (ISPS). ISPS defines specific security requirements for port authorities, governments, and shipping companies in a mandatory section. The second, non-mandatory section provides a series of guidelines designed to help the aforementioned parties meet the standards of the first section.

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Originally, the target date for full ISPS compliance was July 1, 2004. Not all contracting states met the deadline, but the majority did. For a ship that visits a non-ISPS-complying port, the implications can be serious upon reaching an ISPSparticipatory port—from a security point of view, the ship may be viewed as contaminated. For the ship, this could result in additional security measures or (in the worst case) refusal of entry. It is up to the contracting government to set the risk level appropriate for a particular port facility or for an arriving ship. The levels are designed to be easily understood by all parties—a low-probability hazard is a low risk, and a highprobability hazard is a high risk. Both the port and the ship are responsible for controlling and monitoring access, ensuring that security communications are readily available, and monitoring the activity of both cargo and people. The ship’s master is kept apprised of security concerns by the Ship’s Security Officer (SSO); this fact highlights that the ship’s master is ultimately the one responsible for the security of the vessel. However, the SSO tackles more mundane security concerns with the aid of a team of security professionals, who are often sourced from the police or the armed forces. For additional security, ships are required to establish a special security alert communication system that once activated from the bridge (or another location onboard) sends out an alert—without any alarm sounding on board the ship. Ships are also required to carry an International Ship Security Certificate at all times. In an interesting twist, not all ports have decided to sign onto ISPS. For example, Porto Cervo on the island of Sardinia has refused, becoming the first Italian port to do so. This decision has effectively removed the port from being a cruise destination. Some have suggested that Porto Cervo refused ISPS in order to retain its exclusivity. Interestingly, security equipment such as X-ray machines and scanners are not as effective at preventing security issues as is creating a ‘‘security philosophy and mindset’’ among the staff, crew, and officers. This observation suggests that human observation and deduction are extremely useful tools, and that relying too much on automated sensors can be dangerous.

MANAGING THE OPERATION14 Managing an operation as complex and self-contained as a cruise ship can be a daunting task. One key to successful management is understanding the attitudes and behaviors of the crew—that is, knowing the employees. The following information is taken from the results of a research project undertaken in order to plan for work placements or graduate internships aboard cruise ships (because of the nature of the project, most of the time was spent on interviewing junior and assistant pursers or managers). Originally, the case subjects were attracted to working aboard a cruise ship for a variety of reasons. The glamour associated with working in a luxury environ-

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ment, the ability to travel all over the world, the desirable income, and the lifestyle associated with working on a cruise ship were the primary factors. Interestingly, few subjects stated simplistic reasons for wanting to work onboard; in fact, the answers were all surprisingly complex and individualized. Over time, the subjects’ reasons for staying aboard changed from the reasons that first attracted them. The social aspect is the number one reason why crew members choose to continue living the cruise lifestyle: the community on board becomes very important to them. Working at sea creates a strong social context that, for whatever reason, becomes increasingly important to cruise employees. On the research project’s ship, the crew turned out to be far more diverse than initially expected. Fifty-four different nationalities were represented, the malefemale ratio was 2⬊1, and the average age of the crew was in the early 30s. Despite its diverse nature, the crew’s interactions were very harmonious, with disputes and personal grievances very rarely posing an issue. The subjects of the project emphasized the agreeable nature of the onboard community, citing it as proof that diversity is not an obstacle to peaceful coexistence. The community apparently operated at a number of levels. At the professional level, individuals took on their role and worked with passengers, supervisors, subordinates, and managers. Subjects typically enhanced their professional skills through training sessions, supervisor feedback, observations of colleagues, and practice. Throughout the research study, there was a sense that the professional environment had been changed by the advent of electronic communications such as e-mail and the Internet, since these new methods of communication made the ship less isolated (and more prone to external observation) than it had been in years past. The subjects of the study viewed their ship as more than a vessel on which they were employed; for them, the ship was more like a village or town. Employees expressed a sense of ownership and pride in their ship, saying things like ‘‘it’s the best ship to be on, or at least better than any other.’’ The crew’s lives onboard were divided into two main segments: on duty and off duty. Some personnel had special privileges, in that there was some time allowed for socialization while in uniform. Put another way, they were still considered on duty, but in a more laid-back mode. Generally, staff, crew, and officers were not allowed in passenger areas of the ship while out of uniform, but in some cases simply wearing a name badge was considered acceptable. Working hours were rather long, which is consistent with the operation and its need to provide continuous service. The manner in which managers managed directly affected the functioning of the professional community. On a somewhat subjective level, the ‘‘mood’’ on the ship was a product of the crew’s professional communication style, which was patterned after the practices of their lead managers. Although managers set standards about how to communicate and how to treat members of their teams, they appeared to conform to their own norms. Also, there was evidence of two-way learning; while junior crew members learned from their superiors and peers, their superiors were learning from them. It was suggested that individuals onboard were very sensitive to cultural differences, and as a coping mechanism, most chose to

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subsume deeply entrenched cultural beliefs in favor of maintaining a harmonious work environment. Patterns of off-duty social behavior showed specific structure. Generally social alliances and networks were formed along national, hierarchical, or cultural similarities. The previously mentioned tensions, infrequent as they were, were often the result of someone crossing what seemed to be territorial boundaries. Also of note was the fact that early contacts, formed when an individual first joined the ship, were very important for helping the new crewmember settle in and orient him- or herself. Among the subjects, there was a sense that the ship’s community was very self-aware. This self-awareness was the key to maintaining harmony, because although the hierarchy onboard was understood, it was not very strict—on American cruises, the nautical is generally subsumed in favor of the vocational. Naturally, rules and regulations were necessary for establishing societal parameters, but the ship operated effectively because the rules had been internalized. The crew had a collective desire to ensure that each individual’s personal and professional needs were being met, because they all understood that they were being paid to do a job that, if not performed successfully, would disappear. Therefore, it was in every employee’s best interests to help maintain a harmonious environment. Those who didn’t comply or who caused a disturbance were very quickly identified and repatriated. The ship seemed to be an excellent model of a self-regulating population. Since there were twice as many males as females aboard, there were some expected issues which are nevertheless worth noting. Any new female employee quickly found herself the subject of a great deal of male attention, which was described as alternately exasperating, annoying, flattering, or irritating. Female subjects enumerated a number of techniques they used to ward off unwanted attention, and they said that after a while, the advances became much less of an issue. It was not unusual for couples to work aboard, either married or in very close partnerships. The cruise line was described as being good about meeting the needs of the couples and arranging cabins. Overall, social conditions were described favorably—although crew are not allowed in passenger areas when they are not working, they find the crew areas very pleasant and they enjoy spending time with their friends. Subjects also spoke of the speed with which they re-accustomed themselves to shipboard life after a period of leave. Because of the nature of employment and contractual patterns, employees inevitably met people they had worked with before, and friendships were easy to re-establish. The social environment on board the vessel was often described in a manner similar to that of a college campus, where individuals work and live in an environment with high communication and interaction levels. It’s harder for individuals to become isolated, and in such a small community, problems are impossible to ignore. The success of the professional community was seen as a direct result of the success of the social community. Although the social communities aboard different ships share some qualities, there was a firm belief among subjects that each ship is unique. This is essentially

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true, since the social atmosphere in each individual ship relies on the people who populate it on any given cruise.

CRUISE DESTINATIONS Introduction15 For cruises from the U.S., the most important cruise destinations are Alaska, the Caribbean, and the Mexican Riviera. Seventy percent of U.S. cruisers visit these locations, and the majority of cruises to the Mexican Riviera and the Caribbean leave from Florida. Cruising’s popularity in the Caribbean is based on several factors: warm water temperature, the ability to visit a number of varied ports, smooth sailing conditions, and Miami International Airport’s ability to provide customer access. The popularity of cruising in the Caribbean has grown since the 1978 U.S. deregulation of airlines, which allows cruise operators to offer joint cruise-airfare packages. Cruises to the Mediterranean are dominated by Germany and the United Kingdom. The industry is operated in a very different way in each country, however. In Germany tour operators dominate the booking market, while in the U.K. tour operators are challenged by selling such a sophisticated travel product through retail travel agents. Despite cruising’s popularity in regions such as the Caribbean and the Mediterranean, smaller cruises to less typical vacation spots (the Great Lakes, the English Channel) have gained in popularity. These smaller cruises often serve the double purpose of luxury and transportation, acting as ferries between two points.

Definition16 At first glance, ‘‘cruise destination’’ seems like a fairly easy term to describe. In reality it’s a fairly complex idea, especially in the cruise industry. As the cruise industry has grown, so has its ships. Today’s ships are more like floating luxury resorts than a means of transportation, so it’s safe to say that the cruise ship itself can be interpreted as the destination. For many travelers, the lure of foreign travel is the main draw of a cruise vacation, so for them the cruise ship is not the ultimate destination. Rather, it plays an important role in connecting the generating region (the place the tourist is from) and the tour destination regions. In fact, over the course of the cruise the ship functions as a center for interpretation—a safe, secure haven from which to plan, sample, and engage in new experiences. Some passengers prefer the familiarity of the ship, and will choose to stay aboard during a port day. These cruisers choose to experience the new destination as filtered through the experience onboard the ship. Even though they don’t go

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ashore, they learn about the destination from others, and this information travels back with them when they return to the generating region. Those who prefer staying on the ship to visiting new destinations may be interested in those companies that are experimenting with selling cruises to nowhere.

Port of Call Ports of call, or destinations, offer a mix of elements that attract and entertain customers. Because cruise companies rely so heavily on customer satisfaction, at the end of the cruise passengers are encouraged to fill out a survey that rates their experience. This feedback indicates that passengers prefer a port to be culturally stimulating, non-threatening, interesting, accessible, friendly, and user-friendly. In reality, few ports fulfill all of these wishes, so cruise ships simply seek the best-fit ports. Compromise, and the difference between expectation and reality, can often lead to positive reflection. The ports themselves obtain significant income from the presence of the cruise, and popular destinations are known for selling themselves very aggressively in the hopes of attracting more cruise tourism. Destination Evaluation. Many methods can be used to measure the value of a port. For an experienced cruise brand, building on experience and basing decisions on the so-called ‘‘reliability factor’’ of a port can reap huge rewards. This reliability factor refers to the cruise company’s past experiences with the port in question—the more a cruise visits a particular port, the more knowledge is gained about that port. Relationships are formed between the cruise employees and port officials, agents, tourist organizations, contractors, and of course the local population. Often, a broad group of stakeholders are invited to help compose the cruise’s itinerary. The itinerary-composing team generally includes sales teams, captains, and passengers. World events and passenger survey results help to advise the team. Itinerary planning is frequently approached in an eclectic fashion, for many reasons. Clients’ wants and needs change frequently, and cruises try to accommodate passengers with special requests, such as those clients with a fear of flying. New ports are added to the itinerary so the cruise is not seen as boring and staid; new programs, land-based activities, and cruise-and-stay options are added; and passenger-expectation related details are incorporated to the new itinerary. The length of the cruise and the level of luxury may be adjusted as per passenger request. Tendering—ferrying passengers from ship to shore through use of the ship’s tenders—is just one of the practical matters that may cause problems with an itinerary. Tendering can be unpopular among passengers for a variety of reasons. For some, it means that they spend more time in a boat and less time on shore, and for others, the experience of riding in a smaller vessel is alarming. However, tendering is popular among other passengers for similar reasons. These customers enjoy moving from the massive cruise ship to a more human-scale vessel, which

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can create excitement about the destination. Traveling by tender also offers a different perspective of the port (outbound) and the cruise ship (inbound). Care should be taken when planning which ports to visit and how to visit them. Some ports have a reputation for their dealings with cruise ships. Reportedly, some ports raise their port costs with no prior notice, while others levy costly landing taxes that may include a charge for the use of tugs, which are more compulsory than necessary. Destination analysis is most frequently used by cruise companies for strategic purposes, in order to further long-term corporate goals through creating a distinct, sustainable competitive advantage through itinerary planning. Approaching destination analysis from this angle is slightly more scientific, as it involves analyzing research data and identifying the destination’s appropriateness for the target market. Destination analysis is as useful for planning in the medium term as it is for the long term, as it can inform tactical decisions based on emerging risks or heightened threats. Analysis originates in different areas, coming from tourist agencies, cruise operators, tour operators, and others. When considering the source of a destination’s analysis, it can be said that it originated either internally or externally. Internal analyses highlights the strengths, weaknesses, and ‘‘core competencies’’ (the distinctive qualities that a company prides itself on). An internal analysis also investigates financial aspects and both tangible and intangible resources, such as skills, brand names, buildings, and / or stock. External analyses focus more on the view from outside the area in question, but they are still important to the overall evaluation, as they can perceive threats and opportunities that an internal analysis might miss. Overall, an analysis of a destination can consider sociological variables as well as business issues. Analyses which primarily focus on the sociology of the destination can provide valuable and insightful information, but they can also be somewhat esoteric. A business evaluation, on the other hand, focuses more clearly on profitable opportunities and defined threats to commerce in a pragmatic manner.

Itinerary17 Cruise providers aim to create itineraries that maintain the cruise experience and ensure its continued quality, even while ashore. Although many cruise brands attempt to break the mold when they design their itineraries, most cruises conform to the following criteria: They leave from a port of embarkation and they return to a port of disembarkation, which may or may not be the same port. They last for 7, 10, or 14 days. This corresponds to customer expectations and availability. Some cruises are cyclical (they repeat the itinerary for a defined period of time) or bi-cyclical (they alternate between two co-located programs over a set period).

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The ship is generally designed to hold only enough supplies for the duration of one cruise pattern. The itinerary may be designed to allow for a port arrival time in the morning and a departure in the mid- to late afternoon. Cruises may plan to stop at ports where they can receive fuel (known as ‘‘bunkers’’), supplies, and stores; offload waste from trash compactors and rubbish collection; and access technical support services. Cruises generally minimize the number of days at sea and maximize days spent in port. Port costs are carefully examined to insure a favorable cost-benefit ratio. Ports of arrival and departure are chosen with special consideration for their infrastructure as regards onward travel, terminal facilities, and security. Additionally, some cruise companies choose to define their lines by offering distinct itineraries which may include: Exotic, seldom-visited ports; ports with more complex procedures; and ports frequented by fewer people. Schedules that may include short break or ‘‘taster’’ cruises, cruises without specific destinations, sector cruises (may be constructed from a world cruise), unique cruising (with different itineraries for each cruise), or world cruising (including circumnavigation of the globe). Ports that can provide locations and connections for tours and cruise vacations. Some itinerary-planning issues are more critical than others. For example, border and passport control, documentation, and immigration can cause huge headaches for the cruise operator if they are not carefully considered beforehand. Also important to the itinerary-planning process is the issue of disease. Some countries may have a greater prevalence of water- or insect-borne disease. Immunization can help as a preventative agent, but customers should be informed of the potential health risks even if they are immunized. Cruise companies generally advise their customers to visit a doctor before leaving on the cruise, and to ask the medical professional any additional questions they may have regarding potential health threats. As for ports where the water may be unsafe to drink, passengers should be advised to buy bottled water and avoid foods which may have been washed. Some ports are inaccessible to cruise ships because they are too shallow. These ports are declared ‘‘boat ports’’ because the passengers will have to travel in the ship’s smaller boats, or tenders, in order to reach the shore. The cruise ship itself will anchor safely offshore. Without exception, visiting boat ports reduces the amount of time that passengers are able to spend onshore, and they pose the additional requirement of setting up a control point where cruise personnel can coordinate the arrival and return process. As stated earlier, returning to a specific port time after time is beneficial in that the cruise company creates contacts in the area that can help smooth the

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whole docking experience. Generally, cruise ships use a port agent (an onshore agent who acts on behalf of the cruise) to facilitate bureaucratic and logistical transactions. Familiarity with the port is also good for the cruise’s customer service. Crew who know the area can recommend sights to see and tour operators. Often, the town center is far from the actual port, so the cruise may need to arrange for transport for passengers so they can more readily reach local points of interest. Regulations

Often, a destination nation’s tourism policies can mean that the cruise and its passengers will have to deal with a great deal of regulation upon arrival. Cruise companies specialize in the recreational transfer of people, goods, and capital, and because of this, they may experience issues pertaining to visa and passport controls, financial exchange, customs, and the passage of passengers as they arrive to and depart from a particular destination. A ship approaches a foreign port. Before any passengers may disembark, the ship must be cleared for arrival by the port authorities. The process will likely involve the ship presenting a declaration about the passengers, goods, and crew on board along with information concerning the itinerary of the cruise. Any goods and passengers permanently transferring from ship to shore or vice versa will be noted as a part of the routine. Depending on the country, port officials may inspect the vessel for sanitation and hygiene. In recent years, ports have increasingly begun requesting declarations confirming that no health risks are aboard and that the vessel poses no security risk. Due to heightened security in the face of terrorist activity and health threats such as SARS, cruise ships and the travelers they carry are subject to increased security measures. Cruise ships in U.S. ports must submit to the following measures: Screening of all passenger baggage including carry-ons More thorough inspections of passenger lists and passenger identities Restricted access to sensitive terminal or vessel areas Strict measures designed to prevent illegal activity and unauthorized entry Notice must be given to the U.S. Coast Guard 96 hours before entering U.S. ports, and crew and passenger identification information must be submitted to the proper federal authorities Coast Guard establishes security zones around cruise ships Different challenges await in Europe. In 1985, an agreement known as the ‘‘Schengen Treaty’’ was introduced. The Schengen Treaty facilitates the passage of citizens between the 15 member states (Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Italy, Greece, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden). This affects cruises because while some of their passengers may not need to pass through border controls, passengers from non–Schengen Treaty member nations will have to do so. Health regulations (discussed earlier in the chapter) may result in a visit from officials who will inspect the ship for safe and hygienic practices. Unsurprisingly,

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the galley is often the focus of such investigations, as an unsafe galley can be a far greater health risk than an unclean ballroom. Logistics

Logistical planning focuses on a number of different areas. Supplies and services must be procured, schedules must be planned, and efficiency must be maximized—even when dealing with large numbers of people. When planning schedules, fuel consumption must be kept in mind. Cruise ships are usually capable of speeds up to 25 knots. At 25 knots, the ship consumes more fuel, but it can travel a greater distance. Itineraries are planned so that: Fuel is consumed at an economically optimal rate Arrival times and departure times conform to the schedule Destinations are mixed appropriately to fulfill customer needs Regulations are adequately met For a seven-day itinerary, cruises generally include four to five ports of call. On a longer 14-day itinerary, eight to ten ports are the norm. As the industry grows larger, there is an increasing need to incorporate new embarkation ports in order to access new markets.

Shore Excursions18

Cruise companies offer their customers shore excursions for many reasons. Without a doubt, these activities provide the company with a source of revenue, but they also add to the vacation experience as a whole. Offering passengers a pre-planned tour only reinforces the ‘‘no-hassles’’ vacation image that cruises want to sell. Tours are fairly easy to organize, they are relatively safe, and they offer guests the opportunity to engage in a novel activity or to interact with a different culture. Guests who would otherwise feel uneasy about venturing ashore feel safer with a tour guide as their chaperone / mentor. Because shore excursions are entirely optional, sales and marketing are essential to establishing a successful shore excursion program. While some excursions are sold to passengers once they are onboard, many are sold before the cruise even arrives at the port of embarkation. The cruise brochure is an ideal place to promote guided tours; even if the customer does not purchase one with the cruise ticket, he or she becomes aware of the possibility. Even though selling shore excursions is in the best interests of the company, care has to be taken that the sales technique is not overbearing. A high-pressure sales pitch is unlikely to have any success in the social, community-oriented cruise environment, but a subtle sales approach may do the trick. Elements. Shore excursions should be designed with the port’s attractive elements in mind. What about the destination draws passengers’ interest? The most successful tours are likely to capitalize on not only the interests of the passenger, but on the interests of different groups of passengers (elderly, young, single, etc.). Arranging different tours for different interest groups will likely meet with greater enthusiasm than will a single one-size-fits-all tour.

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The shore excursion must fulfill certain requirements: it must enhance the cruise brand, fit the ship’s itinerary, and meet the expectations of the ship and its passengers. At the same time, the tour operator on shore must assure passengers’ safety, health, and security. Again, the benefits of returning to the same port affect shore excursions. Good relationships with tour operators on shore will benefit the cruise in the long run, as will paying attention to which tours are the most popular with passengers. Promotion. As stated above, the cruise brochure is the first place where the company markets shore excursions to its customers. In the itinerary, emphasis is placed on interesting things to do and see once on shore at the ports of call. These components are frequently highlighted in the available tours. Some brochures caution travelers that tours are the best way to experience a new location with minimal risk, and follow that warning up with instructions for booking tours before joining the ship. This message almost invariably advises the customer to book as soon as possible in order to avoid the disappointment of not reserving a slot. When cruise tickets are sent to the passenger, another shore excursion brochure is included. This brochure is the primary vehicle for promoting sales right before departure and during the cruise. It must be carefully worded, in order to form a bond of trust and intellectual camaraderie with its reader. Almost every cruise company today maintains a website, which is used primarily for marketing and distribution purposes. Customers can use the site to make bookings, find out more, make comparisons, communicate with the company, and (in some cases) communicate with passengers. The website, when used properly, can be a powerful tool for promoting shore excursions. The itinerary of the ship and the tour on shore can affect sales, as many tours need to know how many people to expect ahead of time. On board the cruise, there are many vehicles for selling tours: advertisements in the ship’s newsletter, on the ship’s television program (if one exists), direct sales, promotions held near the tour office, and connections made by the port lecturers can all be a part of the marketing plan. However, nothing beats a strong performance at the first port of call, as additional sales may be generated through word-of-mouth. Most passengers realize that the most efficient, safest way to see the sights at the port of call is through the cruise’s tours. Tours offered through the cruise line imply a guaranteed experience—for example, if the tour is delayed or cancelled, the passenger knows that he or she can expect some form of compensation, something that would probably not happen in a non-cruise tour. Because the ship often arrives in port at 8:00 a.m. and departs by 5:00 p.m., there exists the possibility of selling both whole- and half-day tours. These may appeal to passengers who would like the convenience of a cruise-affiliated tour, but who would also like to explore on their own. The following are drivers for tour sales: Security aspect Best choice promotion Scarcity value Natural choice option

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Tour Design. Without a cohesive plan, a tour is likely to fail. The following section details the different areas of planning that need to occur for a successful tour. Tours are designed to have both a minimum and maximum number. Upon leaving port, the shore excursion office would have an exact tally of the numbers sold and the remaining quantity. The shore excursion team would then be briefed on the tour content, the tours that are likely to become oversubscribed, any special features, the best alternatives to overbooked tours, and tours that might best suit particular groups of passengers (such as those with walking difficulties). Passengers often like to talk to a member of the shore excursion team to get a better idea of the types of tours offered, and it helps if the shore excursion team has experience with a wide variety of tours. Port lecturers play a huge part in the shore excursion process. They work with the shore excursion office by helping passengers understand the content of different tours, and they often participate as guides while ashore. The lecturers help with the feedback process as well, telling the shore excursion manager about their experience and that of the passengers. Roughly a day before arriving, the shore excursion manager will be in contact with the tour operators in order to inform them of final numbers. Before the cruise ship even sails, the tour operators have an idea of how many people to expect. When the shore excursion manager gets in touch with the tour manager, the latter will inform the former if any last-minute sales can be made. If a tour attracts little attention, it’s up to the shore excursion manager to decide whether the cost-benefit ratio favors canceling the tour. If a tour does not meet minimum sales early on, last minute sales might cancel the loss. Sales of tours generate a receipt and a ticket for the customer. Tickets that include the name of the passenger are preferable, because they offer additional security in the event that they are lost. Advice about dietary requirements and recommended wear (walking shoes, long-sleeved clothing, clothing appropriate for the region’s religion) should be communicated at the time of the ticket’s sale. Customarily, after a ship has arrived at port, followed due process, and docked, the shore excursion personnel are among the first to disembark. They must contact tour operators, ensure that everything is operating on schedule, and help to coordinate the disembarkation of passengers—a tricky operation. Passengers must leave the ship in an organized fashion, and those who bought tours must find their way to the right place at the right time. Passengers are usually instructed to meet at an area near the disembarkation point, where they receive color-coded adhesive badges. The ship’s staff remains in radio communication, which allows them to assist disembarkation and coordinate the tours. Most cruise companies encourage their employees to attend tours and act as escorts. This ensures that a representative of the company accompanies the tour—the crewmember can act on behalf of the company, and upon returning, can report as to the quality of the tour. Escorts are usually fully briefed before going ashore and are given a specific checklist. Tours are marked by clear, visual codes based on the colors of the badges that the passengers are wearing. A shore excursions officer registers the return of the passengers to the vessel and meets the returning tours. The tour operator speaks with the shore excursions

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officer and they agree on the number of passengers who took tours, so that the cruise company can pay the operator. In addition to organizing tours in ports of call, the shore excursion office functions as a tour agency. Passengers frequently ask the staff about the destination, including distances, customs, and other basic information. Most shore excursion offices keep files relating to the various ports of call, and can use these files to help passengers answer their questions. Nevertheless, members of the staff frequently use their own knowledge and experience to help the customers. As a travel agency, the shore excursion office generates revenue through booking hotels, onward travel arrangements, train tickets, flight tickets, and often through arranging ferries or taxis. Some cruise companies decide to operate a separate travel agency ashore in order to deal with passengers who request these services. Tour Guides. A good tour guide is essential to the success of any tour. The guide’s job is to entertain, inform, and organize the activity, depending on the passengers’ needs. The ideal guide is highly knowledgeable about his or her field and excels at communication. Fluency in various languages, a well-developed but tactfully applied sense of humor, and the ability to empathize with a wide range of people are assets in this line of work. Guides may also have basic first-aid skills, and they should be able to assert themselves when necessary. There are many tourist organizations that offer accreditation schemes for tour guides, which ensure that they are adequately qualified for the job. Frequently, tour guides seem over-qualified, with higher-level degrees pertaining to their field. Maturity can be a beneficial asset, because greater life experience has a way of lending itself to the job. Additionally, all guides must be in solid physical condition, since the work demands it. Tour operators, coach companies, attractions, and other tourist venues frequently employ guides. Some are self-employed, others work through agencies. Guides are frequently used within notable buildings or sites, on walking tours, on coach tours, on trails, as sports guides, or as interpreters. In certain ports, one or two particular tours become very popular and the guide may need to work with the tour manager to ensure that every passenger gets the best experience possible. Guides frequently form strong working relationships with the tour operator or with the people at a site they frequently tour. The guide may need to identify any escort for the tour, who is normally employed by the cruise company.

SUMMARY Although cruising sells itself as a flawless, carefree vacation, in reality it takes a great deal of work and orchestration to create that image. From the equipment to the crew to the international nature of this form of travel, organization is an imperative element. As the industry grows and ships become ever larger, the chal-

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lenges—and the rewards—of working in the cruise industry will surely only increase.

ENDNOTES 1. Mill, Robert Christie, and Morrison, Alastair M. The Tourism System. Dubuque, IA: Kendall / Hunt, 2006, 397–399. 2. Gibson, Philip. Cruise Operations Management. Oxford, England: Elsevier Inc., 2006, 2–3. 3. Ibid., 12–14. 4. Ibid., 30–31. 5. Ibid., 17–18. 6. Mill, Robert Christie, and Morrison, Alastair M. The Tourism System. Dubuque, IA: Kendall / Hunt, 2006, 399–400. Gibson, Philip. Cruise Operations Management. Oxford, England: Elsevier Inc., 2006, 17. 7. Gibson, Philip. Cruise Operations Management. Oxford, England: Elsevier Inc., 2006, 19–20. 8. Ibid., 20–26.

9. Ibid., 91–93. 10. Ibid., 94–107. 11. Ibid., 114–115. 12. Ibid., 128–133. 13. Ibid., 138–146. 14. Ibid., 164–166. 15. Mill, Robert Christie, and Morrison, Alastair M. The Tourism System. Dubuque, IA: Kendall / Hunt, 2006, 400–403. 16. Gibson, Philip. Cruise Operations Management. Oxford, England: Elsevier Inc., 2006, 70–73. 17. Ibid., 78–81. 18. Ibid., 81–87.

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the changing trends in and demographic profiles of the casino marthe critical variables in determining a casino’s profit potential. potential solutions to financial problems faced by casinos. the most important financial ratios relevant to casinos.

INTRODUCTION THE GAMING MARKET U.S. GAMING MARKET United States

Number of Dealers Needed CONTROL History

State by State

Front Money and Safekeeping Deposits

Major Companies

Reporting in Non-Gaming Areas

Native American (Tribal) Gaming FROM CASINOS TO RESORTS

CASINO CAGE, CREDIT, AND COLLECTIONS Casino Cage

First Phase: Casino Serving a Local Market

Casino Credit

Second Phase: Increased Competition from Other Locations

Procedures

Third Phase: Entertainment Convergence Objectives MARKET Casino Gamblers: A Profile CASINO MANAGEMENT ORGANIZATIONAL STRUCTURE President or General Manager Vice Presidents STAFFING

Types of Casino Credit Classes of Customers Credit Decision SLOT MANAGEMENT Slots Themed Slots Bonus Games Cashless Casino Participation Games Types of Slots Model Mix Mechanical Configuration

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Floor Configuration

Game Speed

Philosophies

Procedures

Slot Layout and Guest Behaviors

Establishing Guidelines Rating Systems

Successful Slot Servicescape

TABLE GAME HOLD AS A MANAGEMENT TOOL

TABLE GAME OPERATIONS Revenue and Profit per Square Foot CASINO ACCOUNTING Table Drop and Count

Uses High Table Occupancy CASINO MARKETING

Slot Drop and Count

Match Plays and Nonnegotiables

Internal Audit

Gambler’s Spree

Casino Audit

Dead Chips and Chip Warrants

Statistical Reports

General Slot Marketing

PLAYER RATING SYSTEMS

Consumer Choice Factors

Quantifying the Disadvantage

Rebates on Losses

Importance

Player Action Criteria

Actual vs. Theoretical Win

Premium Player Segment

Average Bet and Time Played

Discounting Rationale

Estimating the Casino Advantage

Discounting Dangers SUMMARY ENDNOTES

INTRODUCTION ‘‘If you aim to leave Las Vegas with a small fortune, go there with a large one.’’ —ANON. AMERICAN SAYING

The gaming industry is an increasingly significant part of the resort business. This chapter profiles the market for gamin and identifies how to plan, staff, manage and control a casino for maximum profitability.

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THE GAMING MARKET By 2003 the U.S. gaming market of $72.9 billion was distributed in this way1 $28.6 billion $19.9 $16.8 $3.78 $2.7 $851 million $128 million

Commercial casinos Lotteries Indian casinos Pari-mutuel wagering Charitable games and bingo Card rooms Legal bookmaking

U.S. GAMING MARKET United States2 In 2002, gross gaming revenue in the United States peaked at over $68.7 billion, which was a 226 percent increase from only a decade prior. Nevada continued to dominate the gaming market in 2003, not only in terms of overall volume but in revenue growth. In that year, Nevada generated over $9.6 billion in gross gaming revenue, which was more than Mississippi, New Jersey, and Indiana combined. Casino gambling continues to grow in popularity among the American public, which correlates with the industry’s expansion and the growing presence of gambling as a theme of network television shows. The World Series of Poker, The Celebrity Poker Tour, Las Vegas, The Apprentice, Casino, and The World Series of Black Jack are just some of the shows that have enhanced gambling’s mainstream popularity. On the whole, the global gaming environment is in the midst of a rapid growth period. In the U.S. in 2002, the gaming industry experienced more than 297 million visits to casinos. According to the 2002 U.S. Census Bureau’s Census Data & Gaming Participation Study, the total U.S. population is 290.8 million. Out of that population, the adult population (21 or older) is 197.2 million, and from that population, only 51.2 million are casino gamblers. This makes the casino gaming participation rate about 26 percent. Trip frequency averages at about 5.8 trips per year, since casinos logged 297.2 million casino trips in 2002. The largest feeder markets are New York City (21.4 million trips), Los Angeles (18.7 million trips), Chicago (13.4 million trips), Las Vegas (13.1 million trips), and Philadelphia (13.1 million trips).

State by State3 Different states allow different types of gaming. Of all the states, only Utah and Hawaii ban gaming entirely—every other state allows some form of gambling. The three most pertinent forms of gambling are:

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Land-based gaming. Allowed by Louisiana, Michigan, Nevada, and New Jersey. Riverboat-based gambling. Allowed by Illinois, Indiana, Iowa, Louisiana, Mississippi, and Missouri. Native American gambling. Allowed in most states, excepting Alabama, Arkansas, Delaware, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, D.C., and West Virginia. The gross gambling revenue of the Las Vegas Strip has risen from $1,505 million in 1986 to $4,806 million in 2003. Over the same time period, Atlantic City’s gross gambling revenue has gone up from $2,273 million to $4,480 million.

Quick Getaway 15.1

The Biggest U.S. Casino Las Vegas is the unofficial gaming capital of the world. It’s estimated that more than 25 million people visit Las Vegas every year. The desert gaming oasis is also one of the fastest-growing cities in the U.S. The ‘‘main street’’ of the Las Vegas gaming empire is the Las Vegas Strip. Once it was nothing more than a highway through the Mojave Desert that connected Las Vegas to Los Angeles. Today the Las Vegas Strip is an oasis of the most extravagant gaming palaces ever known to mankind, like the Egyptian-themed Luxor, the medieval-themed Excalibur, and the Tropicana, to name a few. On the Las Vegas Strip, the casino-resorts compete with each other to see who can build the biggest and most extravagantly themed casino. So, if bigger is better in Las Vegas, the biggest casino in the U.S. must be on the Strip, right? Wrong. Surprisingly, the biggest and most profitable casino in the U.S. isn’t located in Las Vegas at all. The biggest casino in the U.S. is Foxwoods Resort, in Ledyard, Connecticut!

New England’s Foxwoods Resort and Casino was opened in 1992 by the Mashantucket Pequot tribe at a cost of $60 million. After its initial success, another $300 million was invested into the resort to make Foxwoods the largest casino worldwide. The resort operates 6,400 slot machines and employs more than 2,000 dealers. Its gaming rooms alone cover 315,000 square feet, making the Foxwoods Resort about three times as big as an average casino on the Las Vegas Strip. More than 40,000 guests visit Foxwoods every day. The annual revenues of Foxwoods are estimated to exceed $1 billion, making the resort truly the biggest and most profitable casino in the U.S. Source: ‘‘Bigger is Better?—The biggest casino in the US is. . .’’ Optimalgambling.com, accessed August 4, 2006. http: / / www.optimalgambling.com / articles / biggest-casino.htm

DISCUSSION QUESTION: Are you surprised that the largest and most profitable casino in the U.S. is not in Las Vegas? Why or why not?

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Major Companies4 The top four large cap gaming operators of 2004, as measured by revenue (trailing 12 months), are Caesars Entertainment ($4,560 million), Harrah’s Entertainment ($4,370 million), Mandalay Resort ($2,600 million), and MGM Mirage ($4,020 million). Mandalay Bay has since been acquired by MGM Mirage.

Native American (Tribal) Gaming5 When the U.S. Congress passed the Indian Gaming Regulatory Act of 1988, Native American gaming facilities began to proliferate in earnest. Currently, tribes operate 203 Class 3 (casino) and 72 Class 2 (bingo) gaming operations in 29 different states. Eighty-four percent of the roughly 225 federally recognized lower-48-state tribes had Class 3 operations in 2000, according to the National Indian Gambling Association. Economic development strategies have aimed to stimulate depressed regions, cities, and communities by utilizing the rise of gambling activity as a tourism policy. States that want to maximize the fiscal benefits of gaming should attract a good number of customers from outside the casino’s home state. If casino gambling is prohibited in surrounding states, then the casino’s home state will be able to optimize the competitive advantage. Also, states with no casinos will likely find that their residents may have contributed significantly to tribal and state coffers in neighboring states. Today, roughly 330 casinos are run by more than 200 tribes across 28 U.S. states. In the five fiscal years from 1998 to 2002, the Native American gaming sector underwent an impressive 71 percent increase in gross gaming revenue, growing from $8,500 million to $14,500 million. Gross gaming revenue from operational Native American casinos in 2002 was roughly $14.5 billion. Approximately 40 Native American casino properties generate over $100 million annually in gross gaming revenue, while about 90 casinos generate less than $3 million each year. Southeastern Connecticut is the home of the largest Native American casino market.

FROM CASINOS TO RESORTS6 Even though casinos and gambling have a very long history, only recently have they become a part of entertainment convergence. Entertainment convergence is the phenomenon of integrating multiple entertainment elements in order to create a destination with broader appeal. To this end, there are two general objectives: extending the length of stay for on-site guests, and broadening the appeal in order to increase the potential market. The paradigm shift that is fundamental for this change to occur is the move from focusing on competition within an entertainment product line (such as gaming or shopping) to competition for customer’s leisure time.

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First Phase: Casino Serving a Local Market Las Vegas, more than many other gambling areas, needed to become a destination simply because it had virtually no local market to rely on. In its first growth stage, Las Vegas attracted local customers simply because of the legalized gambling, but that was not enough to promote additional growth.

Second Phase: Increased Competition from Other Locations After the legalization of tribal gambling and gambling in other states, Las Vegas lost its virtual monopoly on the gambling industry, and it was forced to make changes in order to keep growing. Las Vegas entered its second major growth phase by tapping into the mass market by offering 99 cent buffets and inexpensive lodging. This made traveling to Las Vegas to gamble a more feasible option for many casino-goers.

Third Phase: Entertainment Convergence The current growth phase of Las Vegas has been spurred on by entertainment convergence. The development of full-service themed resorts, integrated with retail, restaurants, and entertainment, has led to some interesting trends. This third phase of development created in Las Vegas a full-fledged national resort destination, which created a tremendous buffer to offset the competition it now receives from other gambling centers. Attributes. The attributes of Las Vegas, or any gambling center in the third phase of development, are as follows: The area experiences a greater increase in the total visitor revenue per capita. Elements of entertainment and hospitality transition from marketing costs to centers of profit. The average length of stay for guests extends. The area experiences a slight decrease in per-capita gaming revenue.

Objectives In moving from a casino to a resort casino, consider whether the objective is to attract new visitors or to extend the length of stay of existing visitors. Objectives of Resort Casino Development7

Transforming a casino into a national resort destination seems like an obvious step, but the ultimate objective for evolving to a regional destination is in order to increase the operation’s profits and revenues. There are numerous ways of accomplishing this:

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Casino resorts must consider the market, competition, and other entertainments in order to be competitive. Courtesy Digital Vision

Increase revenue by attracting a new type of guest demographic Increase revenue by extending guest stay Increase revenue by attracting guests from a wider market area Increase revenue through direct revenue through new elements Arrest market-share erosion from competitive casino-resorts Figure 15.1 is a high-level diagram detailing the land use relationships between typical resort-casino entertainment elements:

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Casino

Restaurants (Casino)

M

Accommodations

A

Conference Hotel

R K

Alternative Activities (Primary Usage)

Retail/Entertainment

Live Music Venue

Family Attractions

Nightclubs

Outdoor Adventure

E T

Resort Hotel

RV Park

Alternative Activities (Resort Support) Spa Meeting Facilities

Resort Residential

Golf

FIGURE 15.1 Land-use relationship model of prototypical casino resort development. Source: Dvorchak, Mark E. Casino to Resort: Understanding the Entertainment Hierarchy. Los Angeles, CA: Economics Research Associates, July 2002, 4.

As the casino element is the core, it is at the top of the diagram. Accommodations are considered a separate group from the rest, because they are typically supportive of the casino. Casino accommodations are rarely targeted at guests who won’t use the casino. Entertainment activities represent a wide variety of elements that offer guests many entertaining options. Activities, on the other hand, fall neatly into two subcategories. The first subcategory includes elements that do not require the casino or the accommodations in order to function. The second group consists of land uses that usually support the demand for accommodations. As an example, consider the meeting facilities used to drive up a hotel’s overnight stays. Resort residential products can be offered in many different forms, such as vacation homes, retirement homes, fractional ownership, vacation rental units, and timeshare. Resort residential development is clearly distinct from the others, since it is driven not by attraction economics, but rather by real estate economics. However, there exists significant synergy between the casino resort and the resort residential element. The synergy functions because the casino (along with its entertainment amenities) directly drives the desirability of the resort residential location. In turn, the resort residential creates an on-site market for all of the resort’s activities. Depend-

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ing on the particulars of the resort residential product, the resort’s accommodations can be used in order to support real estate sales. Residential units can also be added to the accommodations inventory, and as a result, they can increase the daily rental inventory. A given state’s tourism policy is a reflection of the desire to induce other states’ residents to cross into the first state and buy its goods and services. Encouraging cross-border economic activity allows states to build their tax base, which helps them garner a fiscal advantage as compared to neighboring states. One possible reaction to this fiscal outflow is for the non-gaming state to legalize casinos. Everything else being equal, casino-goers are more likely to visit the nearest gaming operation. States that do not allow casinos leave themselves financially vulnerable to neighboring states that have embraced the emerging gaming tourism policy. Role of Specific Elements8

An entertainment retail center is the element that has the greatest potential impact on casino resort development. In a typical situation, the casino resort operator does not operate the stores or restaurants, instead becoming a landlord for the ‘‘best of class’’ tenants. Therefore, the casino operator’s impact will come in the form of rents, which usually run about 6 to 10 percent of gross sales revenues. Also, potential revenue from a residential resort development can have an impressive impact. Even though casino revenue impacts are usually small, a resort hotel can have a moderate overall revenue impact. The additional entertainment elements mostly have smaller direct revenue impacts, but they can be absolutely essential to indirect revenue impacts. These entertainment elements can provide diversity and critical mass, which is needed to extend drawing power to bigger market areas and to create a competitive advantage for the property.

MARKET9 Although tribal gaming is present in more states, corporate casino gambling has been traditionally seen as a more appropriate way to foster economic development via increased employment and the revenue from taxes. This is mainly because Indian casinos are not bound to the state—they are sovereign entities. Therefore, the state cannot tax them. In 1931, Nevada became the first state to legalize casino gambling, and it currently has the largest gambling market in the country. During 2001, the 210 casinos in Nevada were able to generate more than $9.5 billion in revenue. Of course, the largest concentration of casinos in Nevada is in Las Vegas, with its downtown casinos (14) and the casinos on the Strip (47 casinos), which amass roughly $5.3 billion dollars while attracting approximately 35 million visitors each year, who fill more than 100,000 hotel rooms. Hotels on the strip and downtown have electronic gambling devices (EGDs) numbering more than 75,000 along with

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3,300 table games, which take up 3.3 million square feet of floor space. Some of the other major Nevada markets include Reno ($1 billion in revenue), Laughlin ($500 million in revenue), and Lake Tahoe ($330 million in revenue). The second state to legalize gaming was New Jersey. In 1976, gambling was legalized there, but only in Atlantic City. Nowadays, 13 casinos in Atlantic City generate roughly $4.3 billion annually, and they received 32 million visits. This makes Atlantic City the second-largest gambling market in the entirety of the United States. Atlantic City’s market is described as a day-trip destination, while Las Vegas is generally considered a vacation destination. Atlantic City’s casinos

Quick Getaway 15.2

Who Goes to Casinos? When surveying the slot machine room at a casino, it’s easy to simplify and categorize—it seems that many players are people who are too poor to gamble, people who are spending money they don’t have in the hopes of achieving an impossible dream. Don’t casinos prey on the poor, after all? Not necessarily. In a casino you can certainly find customers who could be making a much better use of their money. You’ll find these people, especially if you go looking for them. But what if instead you went to a casino and stopped every tenth person coming through the turnstiles, sampling customers at different times of day and on different days of the week? What kind of profile would emerge then? The above example is an oversimplification, but for years Harrah’s has commissioned surveys by independent polling groups. These surveys have always shown that the typical casino customer is slightly older, slightly bettereducated, and slightly wealthier than the average American adult. Conducted for Harrah’s by the NFO World Group, one survey finds that a slightly higher percent of casino-goers have had at least some college compared with the general population

over age 25. Furthermore, employment for casino customers breaks down as follows: 44 percent have white-collar jobs, 25 percent hold blue-collar jobs, 17 percent are retired, and 13 percent place themselves in ‘‘other.’’ Compare that with 41 percent white-collar, 27 percent blue-collar, 17 percent retired, and 15 percent other in the overall population. Additionally, the median age of casino-goers is about that of all U.S. adults who are over age 21. Most of these differences are not earthshattering. Essentially, one could make the claim that casino-goers reflect the general U.S. population. If you walk into a casino looking for people who don’t really have the means to be gambling, you’ll find them there, but set in a group that reflects the population of the U.S. at large. Source: Grochowski, John. ‘‘Casino Customers: Who Are They?’’ The Detroit News (October 14, 2004).

DISCUSSION QUESTION: Do you think poor people who gamble with their disposable income are judged more harshly than rich people who do the same? Why or why not?

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have 12,000 hotel rooms and 37,000 EGDs, along with 1,200 table games and at least 1.3 million square feet of casino floor space. In the 1990s, there was a remarkable increase in the number of states that decided to legalize casino gambling. Riverboat casinos began in Illinois and Iowa in 1991 and they quickly spread across the Midwest. Indiana, Mississippi, and Missouri all allow riverboat casino gambling as well. Michigan and Louisiana both chose to legalize land-based casino gambling within the last decade. The greatest perceived benefits from legalizing casino gambling are increased employment, greater tax revenue to local and state budgets, and growth in local retail. During the 1990–1991 recession, increased pressure on state budgets caused a fear of losing revenue to the casinos of neighboring states. This, combined with the public’s increasingly positive attitude toward gambling, increased the acceptance and appeal of casinos. Besides Nevada and New Jersey, only two states have legalized land-based casinos: Louisiana and Michigan. Lousiana’s 15 riverboat casinos and one landbased casino generated $1.9 billion during 2001 while attracting nearly 38 million visits. The major Louisianan markets include New Orleans, Baton Rouge, Shreveport, and Lake Charles. Michigan hosts three land-based casinos, all of which are in the Detroit area, with the first opening in 1999. These casinos brought in a total of $1 billion in 2001.

Casino Gamblers: A Profile10 Who are casino gamblers? A recent survey conducted by Harrah’s in 2002 (entitled ‘‘Profile of the American Casino Gambler’’) reveals some interesting statistics. Over 51 million Americans participate in casino gambling. This figure is equal to about 26 percent of the 21-and-over population. Gamblers’ median age is 46, compared to the U.S. population’s median of 45. Nonetheless, gambling is most popular in the 51 to 60 age group. Casino gamblers have a male / female ratio of 45 / 55, compared to 48 / 52 for the general U.S. population. Of the gamblers, 46 percent graduated or attended college, compared to only 43 percent of the population at large. The states that generate the most casino trips are California, Illinois, Nevada, New York, and Michigan. One of casino gambling’s most controversial issues is the perception that casino revenue comes mostly from low-income gamblers, which places an unfair financial burden on the poor. Examining this perception, it becomes clear that there are really two separate issues at state: (1) as a percent of their income, do lower-income gamblers bear a greater financial burden from casino gaming than do their upper-income peers? And (2) from which income bracket do casinos generate the majority of their income? As regards the second issue, casino gamblers have a median household income of $50,000, compared to $41,000 for the general U.S. population. Therefore, the income level of gamblers is on average higher than the rest of the populations. Regarding the first issue, the important factor is the percentage of income spent. So, if two gamblers having annual incomes of $20,000 and $100,000 respectively

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each spend $1,000 on gambling each year, then the first gambler bears a larger financial burden, since she spent 5 percent of her income while the second lost only 1 percent of hers. Regarding the financial burden of gambling, the evidence is mixed. An early study that used a national survey found that high-income gamblers spend a greater percentage of their incomes on gambling than lower-income gamblers do— making higher-income gamblers the ones who bear the financial burden of casino gambling. However, a study of Las Vegas gamblers pointed to the opposite. Lowerincome gamblers living in the city spent more of their income on gambling than the wealthier Las Vegas–dwelling gamblers. Yet for visitors to Las Vegas, the burden on lower-income gamblers was lessened. In order to determine which of the income groups contributes most to casinos’ revenue, it’s only necessary to look at the income level of each player. Because the median income of casino gamblers is higher than the median income of the U.S. population, it’s possible to assume that casinos generate most of their income from wealthier gamblers than they do from lower-income gamblers. Nevertheless, it might be true that lower-income gamblers bear the greater financial burden of casino gambling. Even though the evidence is clear that the average casino patron does not hail from the lower income bracket, the financial burden of gambling at casinos likely differs from location to location and should be analyzed on a more individual basis. The Games People Play. The following illustrates which games casino visitors play:11 Slots / Video Poker (74 percent overall) one cent to two cents (1 percent) 5 cents to 10 cents (16 percent) 25 cents to 50 cents (46 percent) $1 to $2 (10 percent) $5 and up (1 percent) Table Games (14 percent overall) Blackjack (9 percent) Roulette (2 percent) Craps (2 percent) Other (4 percent) Don’t know (8 percent) Looking at these game preferences, it should be no surprise that casinos choose to allocate roughly 80 percent of their floor space to slot machines and other EGDs. Denominations on slot machines may range from five cents to $1,000 per play, with the option to insert multiple coins each play. Slot machines that work with denominations of $100 or greater are usually only found in Las Vegas and Atlantic City. Approximately half of all slot players prefer 25-cent and 50-cent machines. Some machines also offer progressive jackpots, which means that the jackpot increases with each play until someone hits the winning combination of

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symbols. In the majority of cases, many machines are hooked together for the progressive jackpot, such as in the MegaBucks system. This progressive jackpot system is the most popular, regularly posting jackpots that average from $5 million to $10 million. State laws stipulate that the minimum machine payout must average about 85 percent. Nevertheless, casino slot machines often pay back at 95 or even 98 percent, for competitive reasons. A payback rate of 95 percent means that the house advantage is 5 percent. Of course, this doesn’t mean that every player will have 95 percent of his money returned, but over the long term the machine returns 95 percent of the money wagered back to players, as winnings. Nowadays, slot machine payouts are regulated by a computerized random number generator. Essentially, every combination of possible reel outcomes on the slot machine has certain numbers that are associated with it. After the player makes a wager, the slot machine generates a combination of random numbers. Then the reels spin, landing on a particular combination that has been preassigned to the combination of random numbers. Obviously, higher-paying symbols have fewer numbers mapped to them as do lower-paying symbols (if this weren’t the case, the odds of winning any prize would be equal). If the certain combination of random numbers corresponds to that of any prize, the machine then pays out. The symbols on each reel are completely irrelevant—they are only for show. The outcome is determined at the moment the bet is played, not after the symbol wheels stop spinning. Also, the idea of a ‘‘hot machine’’ or a ‘‘cold machine’’ is pure myth, because slot machines have no memory. Each spin on the machine is totally independent of past outcomes, so the odds of winning the jackpot is the same no matter if the jackpot was won on the previous play or ten years ago. EGDs provide a different gambling experience than that of table games. While the electronic slot machines are mostly non-interactive, table games require a certain amount of skill and knowledge regarding the game. Players actively participate, whether by rolling the dice in craps or holding cards in poker or blackjack. Generally, the minimum bet at a table is $5, but $3 tables are sometimes present. On table games, the house advantage averages about 3 percent, but craps and blackjack have a house advantage of only 1 percent. Blackjack is by far the most popular table game, followed by roulette and craps. Baccarat traditionally found more favor with high-income gamblers, but it is now being adopted by low-income gamblers as well. New table games are continually being adopted and created by casinos around the country. Newer games available at most casinos include Let It Ride, Caribbean Stud Poker, Double Down Stud, Boston 5, Three Card Poker, and Pai Gow Poker. Out of these games, several allow players to make side wagers of $1 in order to win progressive jackpots given for top hands such as a royal flush or a straight flush. Promotional Strategies.12 In order to keep existing patrons gambling longer, and to attract new players, many casinos offer complimentary services and goods (known as ‘‘comps’’). Comps can include things such as caps, T-shirts, and buffets for the low-end players, up to dinners, transportation, and hotel rooms for the higher-end players. There also exists a type of gambler called the ‘‘whale’’ by the

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casino industry. A whale generally wagers $50,000 or more per hand and can easily wager $10 million in only a weekend. Big wins by whales can even influence a casino’s quarterly financial statement. Atlantic City and Las Vegas casinos do whatever they can to attract whales, which number only a few hundred in the world. Whales never pay for any part of their trip: they stay in a penthouse hotel room for free (which could rent for more than $10,000 a night) and they will be provided with just about anything they request, completely free of charge. Casinos spend an average of 21 percent of their adjusted gross revenue on comps (compare that to 18 percent on payroll), which only highlights the importance of comps in generating casino revenue. Casino comps are computed like so: The average bet of the player is multiplied by the hours that player plays, the number of pulls or hands dealt in an hour, and the casino advantage for that particular game. The resulting figure represents the player’s theoretical loss. For example, if a player spends two hours on a $3-per-play slot machine with a house advantage of 5 percent, and that player pulls the handle 120 times per hour, the comp would come out to be $36. Some casinos base actual comps on about 30 to 50 percent of the computed comp. Since slot odds are less in favor of the player, a slot player will probably get slightly more comp per dollar than his or her counterpart at a table game. There are techniques a player can use in order to increase comps received. If playing video poker or a slot machine, the player should make sure to get a club card. The club card looks like a credit card, and it’s issued by the casino for use in that casino only. When the player chooses to play a machine, she simply inserts the card and it accumulates points based on how long the patron plays and how much is wagered. It’s possible to still receive comps with no club card, but this would mean playing for a long time and / or wagering larger denominations (likely $5 and more) in order to get the attention of the slot host or slot manager. Depending on the level of their play, patrons may not receive any comps while at a casino, but they might receive coupons for gifts, free meals, and more in the mail several days after leaving the casino. These coupons of course are only good at the casino, which requires a return visit. In other instances, a slot host may visit a player while still playing on the casino floor. A patron playing at a table game can increase the odds of receiving more comps by betting more whenever the pit boss (the table game manager) comes by to observe the game. The pit boss floats around the floor, moving from table to table and casually (but accurately) counting up how much each player wagers. Additionally, a player can request that the pit boss records the amount of his buyin (trading cash for chips) and also tell the pit boss when he changes tables. It’s best to play at a table with as many players as possible, and then bet more when the pit boss arrives to watch. At a table with many players, the number of hands dealt per hour is less than average, meaning that a player’s loss is also less each hour. Impact of Heavy Spenders.13 A large number of heavy-spending tourists have no interest in gambling, but in the other tourism products available at the destination. It seems that the region’s tourism assets are very important for enhancing casino visitation; therefore, promoting the casino as a part of the tourist attractions

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in the area may be beneficial for both the casino and related businesses located in the surrounding community. As stated earlier, there exists a small population of casino gamblers known as whales or high rollers. Theses gamblers account for the bulk of casino wins. Roughly 13 percent of casino player club members generate about 84 percent of total tracked revenue that is associated with loyalty club members. About 2 percent of this larger group is actually responsible for generating roughly 52 percent of the total tracked casino revenue. Conclusions. One promising way of segmenting the gaming travel market is to segment patrons based on expenditure. Heavy spenders have significantly higher expenditure levels than their counterparts when it comes to non-gaming expenditures. Also, contrary to what other volume segmentation indicates, substantial differences were found between segments in terms of household income and age distribution. Heavy spenders are relatively more affluent and younger than their counterparts. They are often first-time visitors to the casino where they were intercepted, and they engage in several recreational pursuits beyond gambling. They do not travel on charter bus trips, but they do travel with others, and they stay longer in the region. The vast majority of heavy spenders stay at hotels or motels, and the primary purpose of the trip was not gambling, but visiting friends and relatives, business, recreation, or some type of sporting activity. Heavy spenders are not usually attracted to the area because of the casinos, unlike non-heavy-spenders. Nevertheless, they were more likely to stop at and patronize several different casinos. About a quarter of heavy spenders investigate the community before their trip. More than three-fourths of heavy spenders typically reside outside of the gaming state, roughly one-third were from a neighboring state, and the rest were from other states. Most medium and light spenders are from within the gaming state. Heavy spenders are a viable market segment. They are accessible, actionable, substantial, and measurable. Heavy spenders can be measured because they represent a significant number of casino tourists. Heavy spenders are actionable because they differ from the other two segments in their trip behavior and socioeconomic characteristics. The heavy spender group is also far more accessible than their counterparts, because heavy spenders are more likely to seek information about the community before departing on the trip. They also patronize community-related tourist attractions while on the trip. Disseminating informational literature regarding the community may attract heavy spenders’ attention. Additionally, repeat visits may be encouraged by way of direct mail advertisements sent to anyone registered at facilities such as hotels, sports arenas, shopping venues, museums, and halls of fame. It’s widely recognized that tourists are attracted to urban destinations by the variety and combination of attractions, services, and other events that they offer, and casino visitors are no exception to the rule. The challenge for tourism operators is not only to highlight the services offered, but to package them for the convenience of the visitor. Packaging entails linking with other sources and services in an effort to offer the desired experience to targeted groups. The gaming

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community in particular can put together trip packages that include stops at several casinos (since heavy spenders appear to prefer casino variety). Rather than creating competition, tourism providers create harmony that benefits the gaming market as a whole and highlights secondary casinos that are often overlooked. Put briefly, a combination of activities will likely bring heavy spenders into the community, and including casinos in the inventory will ensure they have the opportunity to benefit that industry.

CASINO MANAGEMENT One of the keys to a casino’s success is the effectiveness of the management team. The organization and experience of the team has a direct impact on the casino operation’s profitability, so it’s only fitting to examine management and how it is organized in a casino.

ORGANIZATIONAL STRUCTURE President or General Manager14 This person is responsible for the casino’s operations overall, which includes any related properties or hotels. Strategic and day-to-day responsibilities are inherent to the position, and all personnel report ultimately to the president. The person in this position reports to the owners’ representatives.

Vice Presidents The Vice President of Finance is responsible for all the financial activities of the organization. The VP of Finance’s direct reports usually include cage, credit, accounting, collections, information system (IS), and purchasing. The Vice President of Casino Operations handles the casino’s overall operation, including table games, slots, and other gaming operations (such as keno, race and sports, and poker). Gaming compliance and gaming are two critical responsibility areas for this individual. The Vice President of Human Resources oversees compensation, benefits, employment, labor relations, training, and workers’ compensation functions. The VP of Human Resources must also ensure compliance with any applicable local, state, and federal requirements that pertain to these areas. The Vice President of Security is responsible for security, surveillance, investigations, risk management, and safety. This includes handling insurance issues and the loss complaints of guests.

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Games or Casino Manager. The responsibilities of the Games or Casino Manager include table games operation, personnel, and supervising the shift managers. Shift managers operate game tables, and manage the associated personnel during a given shift. Supervising the pit managers and every other table games employee during the shift is also in the job description.

Pit manager: This person is accountable for overseeing the table games’ operation in a particular pit. The pit manager also supervises floorpersons and dealers within his or her pit. Additionally, the person in this position is responsible for games protection and customer relations. Floorperson: A floorperson is responsible for supervising the operation of a specific group of games within a certain pit. This person also supervises the dealers at the assigned tables, rates player actions, and ensures compliance with the house rules. Dealers: Dealers are responsible for the operation of one particular table game. Dealers are required to comply with house rules for conducting the game in play. Pit clerk: This individual completes pit transactions including fills, markers, and credits either manually or by using the casino computer system. This person may report to either casino or cage supervisory personnel. Slot manager: This individual is in charge of the operation of the slot department, from selection of machines and determination of the floor configuration to machine operation and maintenance. The slot manager also supervises the head slot mechanic and the shift managers. Shift manager: The slots shift manager oversees the slot department, which includes overseeing all personnel during a given shift. Other responsibilities include verification of large jackpot payouts and customer relations. Head slot mechanic: This employee is responsible for the repair and maintenance of all the slot machines. The head slot mechanic also maintains records that pertain to the slot machines, including par sheets, location, and any changes made to the machine. Additionally, this individual trains and supervises all the slot mechanics. The director of casino marketing: This individual is responsible for all of the aspects concerning the casino’s marketing, which includes the development and maintenance of a database of customers. Another task the director of casino marketing carries out is designing and implementing programs that seek to attract repeat and new customer visits. This person also oversees the operation of the slot club, branch offices, casino hosts, special events, and tournaments. Hosts: Hosts are put in charge of identifying and attracting new casino visitors, in addition to serving the needs of those who are already customers.

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STAFFING15 The adequacy of customer service and the overall profitability of a casino operation are directly affected by proper staffing. Management requires the ability to forecast the anticipated number of customers and staff accordingly. Understaffing and overstaffing can both damage the casino’s bottom line. Overstaffing unnecessarily increases the casino’s labor costs, while understaffing can lose revenue as unsatisfied customers leave to find a casino that can meet their service needs.

Number of Dealers Needed What is the process of calculating the number of people needed to staff a casino on a given day? The following must be taken into consideration before arriving at a final figure. Number of Stations

First, the casino manager must determine the number of stations that must be manned for each day of the week in question. A station is a position that must be staffed for an entire shift. In craps, there exist three stations: the two base dealers and the stickman. In blackjack, there is only one station per game.

Number of Dealers

Next, the casino manager must consider how many dealers will be necessary to keep the stations open yet still allow for scheduled breaks. This method of calculation must be applied to every day of the week in order to arrive at the correct numbers.

Each Game and Every Day

As mentioned above, every game type must be accounted for, and every day of the week must be analyzed separately (because demand is going to be different for each day). Since dealers don’t normally work seven days a week, there will need to be enough dealers on the casino’s payroll to account for those dealers who are on their days off or on vacation. To determine how many additional dealers will be necessary, one must simply figure out how many days employees work per week and the average vacation time per employee each year.

Floorpersons

The casino manager must also determine the number of floorpersons necessary. Floorperson numbers are calculated in roughly the same way as dealer numbers are, though the different shift lengths and break times for each position must be accounted for.

CONTROL16 History In 1985, the Secretary of the Treasury determined that the definition of a financial institution would need to be expanded in order to include casinos. There were many ramifications that stemmed from the announcement, but the most important

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is that a casino must report any transactions that involve greater than $10,000 in cash that occur during any 24-hour period. However, each jurisdiction (if it desired) was allowed to develop its own method for the implementation of these controls and reporting procedures. Nevada’s regulators had the support of the Nevadan gaming industry to develop their own regulatory system. Later, casinos in other jurisdictions have commenced operations that comply with the currency reporting requirements of the federal government.

Front Money and Safekeeping Deposits17 There exist unique methods for handling player deposits for front money or safekeeping. Two options in particular stand out: Physical segregation of the cash deposited; placing the cash in a designated location and returning the same cash to the patron Recording the number of bills of each denomination in a given cash deposit. The deposit, when returned to the player, is returned in the same denomination and number of bills that were in the original deposit. 24-Hour Window

Each casino may choose when its 24-hour period begins and ends. This allowance is extremely beneficial for reducing the effect on individual players. As an example, if a casino’s 24-hour window begins at midnight, one night of gaming on the patron’s part could actually overlap two days. That is, if the player bought-in or lost $10,000 before midnight, and then did the same after midnight, no reporting is necessary.

Customer Identification

It’s difficult for an employee of the casino to approach a player who has just lost a bet that took him over the $10,000 and ask for a driver’s license. The player may be in no mood to cooperate with the employee. However, if the casino already has the necessary information on file, the customer needn’t be bothered. There is no need to inform the customer that the report is being prepared, but it is necessary to approach players that the casino does not know and ask for identification.

Reporting in Non-Gaming Areas18 There rarely exists a similar focus on reporting currency transactions that do not pertain to gaming areas of the establishment, such as banquets, retail, catering, the hotel, or restaurants. The point of the federal regulations regarding large cash transactions exists solely to identify transactions that may have resulted from illegal activities. Therefore, the aggregations requirements pertain to a 12-month period instead of a 24-hour period. This means that any lump sum payment of $10,000 or more, or related payments over a year that sum to more than $10,000, must be reported by the institution.

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CASINO CAGE, CREDIT, AND COLLECTIONS19 Casino Cage The area known as the casino cage functions as the financial center of the operation. It maintains an accountability of the chips, tokens, and cash that are used in order to fund the casino’s operations. The cage has many elements; one such is its customer windows. These are usually established based on an imprest basis (that is, they are funded at a predetermined, constant dollar amount) and they are operated by cage cashiers. Windows can range from $25,000 to $100,000 or more. The cage also has a fill bank, which maintains a large inventory of tokens and chips. It’s also frequently responsible for accounting for the coin room and slot cashier bank inventories. Located within the main bank, the marker bank is responsible for maintaining inventories of the issued markers that are transferred in from the gaming tables, safekeeping deposits, front money, and other items such as airfare disbursements and returned checks. The cage itself operates on a 24-hour basis, and an inventory is performed during every shift. All transactions are recorded on a shift summary.

Casino Credit Casino credit is used primarily as a marketing tool. Casinos don’t charge any interest for the use of their funds, but credit is usually only given to players who the casino believes will take full advantage of the line by gambling with the new funds. If the player does not make use of the credit, it will be taken away. Gambling in this instance serves the purpose of charging interest. Credit, therefore, is granted only to increase play. Those customers who gamble on credit are usually upscale clientele who insist on amenities like upscale accommodations and gourmet restaurants. Therefore the physical facilities become crucial for the casino that plans to market to such upscale customers.

Types of Casino Credit Check-cashing privileges are one form of casino credit. This permits the client to cash either business or personal checks at the casino cage. The primary risk is from a customer attempting to cash a check for which there are insufficient funds. Recently casinos have been receiving increasing amounts of forged and counterfeit checks, which has led to many casinos adopting check-approval programs such as Telecheck. An exception to the typical check-cashing situation is seen when a casino agrees to hold the check for a number of days before depositing it. This courtesy usually is not extended to any but premium customers, and depending on policy, the check may be held anywhere from 30 to 45 days.

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The total amount a given casino is willing to extend to a customer is known as the credit line. The term ‘‘front line’’ corresponds to players who bring cash to the cage to deposit. For the purposes of gaming, this is known as front money. Otherwise, if the player only desires that the cage hold the funds for security and convenience reasons, the procedure is known as safekeeping.

Procedures A player who wishes to establish credit with the casino must first fill out an application.

Classes of Customers Roughly 75 percent of those who apply for casino credit have casino credit somewhere else. Fortunately, there exists an agency whose specialty is providing credit information on casino credit holders. However, one-quarter of those applying for casino credit have no such record on hold. For them, bank information serves as the primary source. Central Credit is also available to report whether an applicant is considered ‘‘4 in 14.’’ Any person who has applied for casino credit at four or more establishments during a two-week time span is labeled ‘‘4 in 14.’’ According to casino research, 80 percent of these applicants will write a bad check sometime in the next six months.

Credit Decision Those applying for consumer credit are required to prove that they deserve the loan. Applicants who are denied casino credit usually have something in their report that shows that they are undeserving of a loan. If nothing appears in the applicant’s record to suggest that he or she should not receive a loan, then it’s reasonable to expect that that applicant will be granted casino credit. Ability / Willingness to Pay. An applicant’s willingness and ability to pay are usually determined based on the appearance of the applicant’s bank account and a report from Central Credit. Other factors that influence this attribute are: The length of time the applicant has been in business The applicant’s position within his or her company The applicant’s age Interestingly, although the applicant’s business information informs the credit decision, very few casinos actually verify the applicant’s statements.

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Propensity to Play. Casinos are also concerned with whether the applicant will play. Because the client is expected to gamble, the casino will refuse to grant credit that is not warranted by the gambling behaviors of the player. There are two main sources of intelligence on the player’s gambling propensities: the history of play, as recorded by the casino prior to the application, and Central Credit. A casino credit applicant is likely to have records in the computer, verifying whether he or she has been a frequent player. This information is used to gauge an applicant’s expected level of play. If the credit applicant has a record with Central Credit, then the gaming report will list the last and highest action at every gambling establishment where the applicant has credit. Of course, neither the last action nor the highest action gives any indication of gambling frequency, but it’s all the casino has to go on if no inhouse record exists. In fact, high action better indicates the applicant’s borrowing tendencies. Setting Limits. When the application is prepared, the applicant is asked how much credit he or she wishes to obtain. There are three options for the credit executive once the application has been reviewed: the application can be approved, the amount can be reduced, or it can be denied altogether. Setting appropriate credit limits protects not only the casino but also the applicant.

SLOT MANAGEMENT20 Slots In the past, table games were king of the casino. Nowadays, slots are the dominating force. Roughly 50 percent of the total casino win comes from slot machines, and in Nevada, slots are responsible for generating more than 67 percent of the total casino win.

Themed Slots Today’s electronic slots have long since replaced the mechanical slots of the past. Over the past 30 years, one of the most fundamental changes was the proliferation of themed slot machines.

Bonus Games With the advent of computerized, electronic machines came the ‘‘game within a game,’’ one of today’s most innovative slot features. If the player hits on a specific combination of symbols, he or she is invited to play the ‘‘game within a game.’’ Although the form of this ‘‘inner game’’ changes with each machine, the concept of giving the player an opportunity to physically interact with the game by touching the video monitor remains the same.

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Slot machines typically generate the most revenue for casinos. Courtesy PhotoDisc / Getty Images

Cashless Casino Slot operations are moving toward creating a ‘‘cashless casino.’’ Cashless slots are configurable to return bar-coded tickets or coins. The slot player who receives a ticket has the option of cashing it at the change booth or taking it to another machine. Some gaming technology allows the player to deposit money with the casino, then use a magnetically imprinted card to access the money from slot machines.

Participation Games Back in the early 1990s, a typical slot machine had a ‘‘shelf life’’ of roughly eight to ten years. Now the typical machine lasts only two to three years, with video reels that experience shelf lives only six to nine months long in some markets. This decrease in shelf life is a result of decrease in demand. Traditionally, casinos buy most of their machines directly from the slot manufacturer. A typical video or reel-spinning slot can cost from $7,000 to $10,000. Game conversion kits run from $250 to $2,000 and can be used to transform an existing machine into a brand-new title (machine type).

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Casinos can use the lease / purchase system to acquire new slots. In this system, the amount of the lease / purchase payment is used toward the ultimate purchase of the machine. A daily-fee option on licensed titles allows the operator to pay the manufacturer a daily fee (perhaps $25 per game per day) in addition to the up-front charge for the machine. Under a participation agreement arrangement, the casino pays nothing up front for the slots. The manufacturer and the casino then share in the revenue the machine generates, based on a predetermined percentage division. Frequently 80 percent will go to the casino and 20 percent to the manufacturer. A good number of participation games are offered to casinos as participation games only. For the casino, this arrangement makes certain machines easier to acquire on more favorable terms.

Types of Slots The three main slot categories are multipliers, line games, and buy-a-pays. In line games, the player can ‘‘activate’’ additional lines by inserting more coins. In a multiplier game, only the center horizontal line pays. With the insertion of more coins, the player multiplies the payout per coin. Buy-a-play games also only pay on the center line, but the player can choose to ‘‘buy’’ additional jackpot symbols.

Model Mix The casinos that cater to Las Vegas locals offer mostly video poker machines, though the Strip casinos (which cater to tourists) predominantly offer reel-type slots. Local customers appear to be more astute gamblers, who are aware that video poker machines are likely to have a lower casino average. Additionally, in video poker the player must use thought and make decisions, unlike in slots, where the only decisions are which machine to play and how much money to insert.

Mechanical Configuration The elements that make up mechanical configuration include payoff schedule / reel strip combination, coin denomination, casino advantage, and hit frequency. It is up to the slot manager to decide how many machines of each denomination should be offered and where these denominations should be placed. When planning a new casino, management should first determine the customer base in order to determine the initial slot mix. Typically, analyzing competitors’ mechanical configuration is helpful in reaching the targeted customer base. If a certain competitor is clearly successful at reaching the targeted base, management may consider replicating the competitor’s mix, at least initially. After the casino opens, the slot data should be analyzed and used to better adjust the machine mix.

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Casino Advantage. Slot machines usually average 0.5 percent up to 25 percent casino advantage. A number of casinos choose to advertise their low-advantage machines, believing that the decrease in the house’s advantage will be more than adequately set off by the increase in volume of play. In several gaming jurisdictions, minimum levels of payback have been established. In Atlantic City, required payback is at least 83 percent. In Nevada, payback is required to meet or exceed 75 percent. Hit Frequency. Hit frequency refers to the percentage of trials during which the machine pays something back to the player. Theoretically, high hit frequency stimulates play. Usually, hit frequencies range from single digits to a high 30 percent.

Floor Configuration After the needed number of slot machines has been determined by the slot manager, the machine placement on the casino floor must be decided. This is known as floor configuration, which provides both specific and general placement information. General placement indicates where the coin booths and slot banks (groupings of slot machines) should be placed. When considering general placement, the slot cabinets themselves must be seen as empty boxes. These can be used in order to create traffic patterns or to impede them. The most important consideration is to place the slots so that the maximum number will be viewed by slot players. Enticements such as the bingo parlor or the showroom can be used to create traffic. These enticements (also known as anchors) will influence slot placement. For example, slot machines should be arranged at the entrance and the exit of anchors in such a way that customers will be exposed to the maximum number of machines upon passing through the doorway. Aisle Width. Slot aisles are usually between five-and-a-half and seven feet wide. Too-narrow aisles can cramp customers, leading to a negative impact on profit. However, too-wide aisles provide less room for machines, which is undesirable. For 40 years, operators did not pay much attention to slot players’ desire to sit. Nowadays, the availability of seating at the slots is crucial to the operation’s success. In Atlantic City, regulations state that all aisles must be seven feet wide and that all seating must be fixed. This arises from the concern that mobile seats could topple and impair customers from exiting safely in the event of a fire. In Nevada, however, using fixed or movable seating is left to the managers’ discretion. Fixed seating also carries with it some liabilities—improperly affixed seats have toppled and injured customers. Graveyard shift workers remove the seats to clean around the machine base, and sometimes they are improperly reaffixed. Other benefits of movable seating include requiring less aisle width, giving the manager more flexibility, and allowing the customer to stand if desired.

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Philosophies21 Several philosophies inform the placement of different slot models, depending on coin denomination and the specific models: Loose slots should be placed on busy walkways, giving an air of activity. Loose machines should be placed both at the beginning and end of traffic patterns. The most popular machines need to be near the entrance, where they can attract customers unsure of entering the casino. High hit frequency machines placed around the casino’s pit area creates an atmosphere of slot activity. ‘‘Garbage machines’’ (machines popular with players that do not provide a high return to the casino) are usually placed in less attractive areas, such as near rest rooms. Machines should be located near compatible enticements. . .for example, poker machines should be located by the poker tables, keno next to keno, etc. Test machines and high earners should be placed in high-traffic areas. Gimmick machines (where the top prize is a trip around the world or a new car) should be placed in high traffic areas or near entrances. Machines where a play costs a dollar or more should be placed around the pit area, while nickel machines should be placed around the perimeter. The machines located in accessible, visible areas near the pit consistently outperform their counterparts in other areas. Hypothetical Layout

The following diagram showcases a theoretical casino floor layout, designed to maximize the number of ideal slot machine locations. The diagonal aisles are designed in the hopes of accommodating foot traffic moving to and from the anchors (located at the corners of the floor). Possible anchors might be restaurants, hotel towers, or garages.

Slot Layout and Guest Behaviors22 Servicescape satisfaction ratings are influenced by overall cleanliness, interior decor, and seating comfort. The ability to navigate the casino floor, particularly the slot floor, is also an issue that receives a lot of interest. Satisfaction with the slot experience overall is correlated positively with such important consumer behavior statistics as willingness to recommend and return. Satisfaction with the casino floor’s navigational aspects is part of the overall process that leads to vital consumer behavior intentions.

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1. Slot areas 2. Major Aisles 3. Table Games

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FIGURE 15.2 Hypothetical layout. Source: Kilby, Jim, Jim Fox, and Anthony F. Lucas. Casino Operations Management, 2nd edition. Hoboken, NJ: John Wiley & Sons, Inc., 2005, 132.

Successful Slot Servicescape Ambient variables are those that stimulate the five senses. In a casino setting, the ambience may be judged according to cigarette smoke levels, overall lighting levels, sounds of excitement (clanking sound of coins or dinging of slot bells), and air temperature. A successful slot servicescape adjusts these to the optimum levels for customer enjoyment.

TABLE GAME OPERATIONS Revenue and Profit per Square Foot In real estate, the concept of highest and best use is described as ‘‘that reasonable and probable use that will support the highest present value.’’ In a casino, however, highest and best use of floor space describes that which generates the maximum profit. Profit, rather than revenue, should be the maximized value. Table 15.1 charts reasonable expected profit margins from various casino areas:23

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TABLE 15.1 Department

Margin Percentage

Slots Table games Keno Race and sports Poker

60–70 15–20 25–30 15–25 20–30

Revenue and Profit

The casino manager needs to utilize the space available to the best advantage, balancing the amount of square footage needed for different games in order to achieve the highest profit per square foot. The daily revenue per square foot per game and the daily profit per square foot per game should be kept track of and analyzed in order to better arrange the casino floor for maximum profit. Table 15.2 is a sample revenue / profit per square foot chart that could be used for better floor planning:24 New games are introduced constantly, often on a monthly basis. Many of these carry a license fee, and they all require floor space. The ‘‘old’’ use of the given floor space represents displaced revenue, and management should be sure to quantify the difference between total revenue generated by the new configuration and the revenue generated by the previous configuration. Put differently, a new game should be judged not by its total revenue but by the incremental gain or loss generated.

Maximizing Profit per Available Room

One must estimate profit from activities such as casino gaming, dining, retail shopping, and entertainment activities in order to properly value a particular occupancy segment. In this case, direct contributions are tracked by automatically recorded purchases, such as carded slot play. Indirect contributions, on the other hand, refer to purchasing activities that lie outside the scope of the automated tracking system’s abilities. A great deal of untracked spending appears to occur in hotel segments including Group Business, Free Independent Travelers, and Wholesale. Estimating

TABLE 15.2 Revenue / Profit Per Square Foot Game Craps Twenty-One Roulette Slots

Revenue per Unit / Day / Sq. Ft.

Profit per Unit / Day / Sq. Ft.

19.67 12.50 17.13 12.30

2.95–3.93 1.88–2.5 2.73–3.43 7.38–8.61

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these purchases helps the casino to better rank and understand the value of hotel segments, which can be assigned an occupancy priority once they have been assessed. Once the system is understood, it’s easy to see that a dollar of slot win is actually worth more than a dollar of table win, since the profit margin of the slot department is probably significantly greater than that belonging to the table games department.

CASINO ACCOUNTING25 Table Drop and Count Depending on the preferences of management and the requirements established by the gaming jurisdictions, drop boxes can be removed from the table games either after each shift or once a day. Casinos, unlike most businesses today, do not record transactions at the point of sale. The proceeds of the shift of the day are unknown until the count is performed. As a result, the drop and count processes must maintain their integrity. The key that accesses the boxes’ contents is controlled separately from the key that removes the boxes from the table. After removal, the count team reports as an organization to the finance department so that the revenues being counted are independent of the employees. Currency counting machines are used in most casinos today to count and recount currency, because they easily determine the number of bills from each denomination and the total for each individual table. These counting machines can be integrated with the main computer system so that they report the count results directly to the master game report, eliminating the need for any manual input. During the count, all activities are monitored by surveillance cameras, positioned to record every corner of the room. Most count-room surveillance systems also include audio capabilities.

Slot Drop and Count The drop from the slots is different from table games drop because the amount removed from the slot machines is known. Slot machines each contain a mechanical and / or computerized meter that records the amount that should be present within the machine. Two drop and count processes occur for slot machines: coins and tokens (hard drop) and the bills (currency acceptor drop). Currency Acceptor Drop and Count. As with the hard drop, currency acceptor drop removal is performed by the drop team, accompanied by security officers. The rise of currency acceptors has meant that the hard drop has fallen, as people use bills more frequently. Bills have in fact become the preferred play method for

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most customers, which has resulted in labor savings for the casinos, since the hard drop is more difficult to drop than the currency acceptors. Key Control. Key controls play an essential part of the drop and count process. No one individual or department ever has access to full drop containers in storage.

Internal Audit The Nevada Gaming Control Board has established Minimum Internal Control Standards (MICS) for use in internal audit functions. The MICS declare that all internal audits must be independent of the department subject to audit. Additionally, internal audit must report to the management officials or owner representatives who are separated from the management of the casino. The MICS state that the internal audit must review the following areas: Table games, with audits carried out semiannually. The slot department, also audited semiannually. Keno, audited annually. Card games, also annually. Bingo, annually. Entertainment, annually. Race and sports book, annually. Cage and credit, annually. Cage accountability. Electronic data processing (EDP) functions, annually. Pari-mutuel wagering, annually. Reconciliation of gross revenue, annually.

Casino Audit Casino audit must report to the finance department, verifying the integrity of compliance and control procedures. A daily review of documentation prepared by the areas listed above is documented through completing a checklist.

Statistical Reports Key performance statistics are prepared and presented on a daily basis. Many different jurisdictions also require that the prior year’s information be compared with the current year’s statistical information. This is done to determine significant fluctuations. In Nevada, any fluctuations totaling plus or minus 3 percent from the base level (the statistical win to statistical drop percentage for the previous business year) must be investigated. The results of this investigation are documented and retained.

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PLAYER RATING SYSTEMS26 Quantifying the Disadvantage Quantifying a particular player’s disadvantage is one of the greatest challenges that faces casino management today. The profitability of any one character can be determined by how the game is played, the player’s skill level, the bets played, the total amount wagered, and the speed with which the game is played. The following games are the most common in U.S. casinos: Craps Roulette Blackjack Pai Gow Bacarrat Pai Gow Poker Caribbean Stud Mini Baccarat

Importance Marketing casinos often depends heavily on complimentaries. If a casino is to use the system to its full advantage, it must develop a strategy by which comps are awarded at certain levels that will encourage the player to continue playing while still allowing for an acceptable casino profit. In order to maximize profit yet still deliver comps to the players, management must be able to determine a player’s theoretical value to the casino. Expenses are easy to identify, but quantifying revenues is a more difficult task. This is complicated in part because the casino frequently calculates two separate revenue (win) figures: actual win and theoretical win. Actual win is easier to quantify than theoretical win, yet the latter is the better representation of a given player’s ultimate value. Today, player rating systems are used for awarding comps and identifying certain customers for the casino’s marketing department to target with direct mailing or other strategies.

Actual vs. Theoretical Win The formula for theoretical win is as follows: Average bet ⫻ hours played ⫻ decisions per hour ⫻ house advantage Hours played and estimated average bet are documented by the casino supervisory personnel observing the play on a player rating card. The other two factors are part of a formula housed within the computer software.

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This process is usually applied consistently to all entries. If the house’s advantage in roulette is 5.26 percent, then this percentage will be used for all roulette players. Assuming the player rating system is working on 60 decisions per hour with the previously mentioned house advantage, and the casino supervisor estimates the average bet at $150 for play lasting 2 hours and 15 minutes, then the system would come up with a theoretical win of $1,065.15.

Average Bet and Time Played To generate a more accurate theoretical win, an accurate estimate of time played and the player’s bets are essential. Strangely, few casinos actually provide training or written guidelines to help the casino personnel gauge these two elements. The most popular player rating software in use today asks for the following inputs: Player’s average bet Game played Player’s skill level Speed of the game When the casino supervisor rates the player, he or she indicates what game is in play, the player’s type (Hard, Average, or Soft), the game’s speed (Slow, Medium, or Fast), the total time played, and the estimated average bet. The game speed should also indicate how many spins per hour in roulette, hands per hour in card games, or decisions per hour in dice games.

Estimating the Casino Advantage An individual players’ skill level can only be determined through an accurate statistical analysis. Blackjack. In blackjack, casino marketing rarely focuses on players who do not bet at least $50 per hand. A customer who plays alone at a table will be dealt roughly four times as many hands per hour as the same customer who plays at a full table. Craps. Craps is more difficult than any other game when it comes to determining a player’s percent disadvantage and average bet. An average craps player is more difficult to handicap because his bets must be placed along with the amount that will be bet on proposition wagers. Roulette. On a zero (or double-zero) roulette wheel, the player disadvantage on every bet (except one) is 5.26 percent. The bet with a larger disadvantage (7.89 percent) is the bet with a six-to-one payoff (betting zero, double zero, one, two, or three).

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The craps table. Courtesy PhotoDisc, Inc.

Baccarat. As a general rule, the casino employee should choose the most conservative skill level if doubt exists. For rating purposes, a conservative skill level will provide the lowest house advantage.

Game Speed No industry standards exist concerning game speed, so management should perform some in-house research in order to determine the proper slow, medium, and fast criteria to be used by a floorperson making this determination.

Procedures To create and maintain an effective, accurate player rating system, the following should be utilized:27 In-house research should be performed to determine game speed factors. Current factors should be compared against recommended game house advantages and necessary adjustments should be made.

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Quick Getaway 15.3

Discovering Card Counters Card counting, the method of using mathematical formulae to determine the advantageous move in a card game, is not illegal. However, since a good card counter can make around a 2 percent profit over time in a game of blackjack, it may be to the casino’s advantage to prevent these people from participating in highstakes games. But how can a casino employee quickly and easily determine if a player is counting cards? There are three indicators that help a floor supervisor distinguish the counter from the average player: 1. The counter must use a betting spread. 2. The counter must deviate from Basic Strategy (the way a typical player would play the game), especially when the count is in the high plus range. 3. The counter will only take insurance when the deck is rich, with a high plus count.

As noted above, card counting is not cheating. Backing players off of a game based only on one person’s suspicion of card counting may lose the casino a good deal of money in the long run, so the decision to prevent a player from participating should not be taken lightly. Just because a player can count does not mean that that player is going to beat the house. Many card counters do not use the Basic Strategy variations, or they use them badly. Source: ‘‘Bigger is Better?—The biggest casino in the US is. . .’’ Optimalgambling.com, accessed August 4 2006. http: / / www.optimalgambling.com / articles / biggest-casino.htm

DISCUSSION QUESTION: Card counting is not legally considered cheating. Do you consider it cheating? Why or why not?

Ratings cards should be changed so that number of players (one to two, three to four, etc.) replaces slow, medium, and fast as an estimate of game speed. Written guidelines should be established for determining the average player type, bet, and game speed. Casino floorpersons should be formally trained in these guidelines. Periodic refresher courses should be scheduled and implemented. The accuracy of player ratings should be periodically audited. The accuracy of the casino employees’ ratings should be communicated back to them through feedback. High levels of rating accuracy could be rewarded by incentives and recognition. Because few floorpersons ever see the results of their ratings, few take ratings as seriously as they might if the importance of the ratings were communicated to them.

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Establishing Guidelines Complimentary policies should be put in place with two particular objectives kept in mind: maximizing customer satisfaction and ensuring that the casino’s profit margin is acceptable. Customer satisfaction may not be maximized by policies that base comps solely on theoretical win, although such a system would create an acceptable profit margin for the casino.

Rating Systems Slot Systems. Tracking individual play, summarizing the gaming activity at the player level, and storing demographic player data can all be achieved by a slot player rating system. Most casinos choose to use two separate systems. The first is primarily responsible for gathering data from the machines on the floor, and interfacing with the second system. This second system is made up of an accounting module and a marketing module, which is separate. The first module stores an individual machine’s performance data, allowing for analysis and aggregate levels. The second module presents data which management can view and sort. This data pertains to demographics, visitation, gaming history, and individual player performance. How is it possible for a casino to obtain all this information? Through players who enroll in the casino’s slot club or the player tracking program. How does management ensure that players use their tracking cards? A reward system, in which the player’s gaming volume determines the magnitude of the award, is the most common incentive. At many casinos, points are accumulated as a function of the money wagered (coin-in). However, at least one major casino company computes its rewards as a result of coin-out. Incentives may be based on theoretical win, but most casinos base their incentives on a function of some particular gaming volume. Points awarded to players can be converted to shopping dollars. At some casinos, points are not used, but rather a cash-back refund is employed. This refund is also a predetermined function of either a gaming value measure or a gaming activity. A number of casinos now offer a system under which the simultaneous accumulation of points may be redeemed at retail outlets and as a cashback award. Naturally, casinos with a coin-in reward system will encourage their players to choose low-house-advantage games. The benefits of rewards programs are easily communicated, which improves the customers’ understanding of the process and its benefits. Simpler is better, which is why a reward system based on theoretical win may seem abstract. Credit Card Issues. Because it is sometimes a challenge to encourage players to use their cards, most casinos suffer from low card usage. It’s not unheard of for a Las Vegas casino to experience a usage rate of only 30 to 35 percent of total play.

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Technology may be used to increase the amount of tracked play. Biometric facial recognition technology employs a small camera inside each machine, which records the player’s image. Once this has been done, no card need be used to identify a player. Nevertheless, an original record must be submitted in the form of a photograph at some point. This image may be captured during the slot club enrollment procedure or at hotel registration. Unsurprisingly, use of this technology raises issues about privacy concerns and the intrusiveness of being filmed. A good compromise for a casino involves telling infrequent visitors about the random bonus awards, and saving the cash-back, point-accumulation, nonmonetary-privilege spiel for frequent visitors.

TABLE GAME HOLD AS A MANAGEMENT TOOL28 Uses In the past, there were only two primary uses for table game hold: to identify theft, and to identify good or bad casino management. Even today, casino management uses hold when making decisions on employee honesty and productivity. Simply, table game hold represents the percentage of chips bought at the table by the customer that the house wins back. Written mathematically, this formula appears as: Win ⫽ Hold Drop

High Table Occupancy Casino profit is equal to wins less expenses. Decreasing expenses is one way to increase profit. Since the table games department’s payroll encompasses 25 to 50 percent of the game’s win, comprising the largest line item on the profit and loss statement of the casino, it only makes sense to begin cutting here. The casino’s two main types of expenses are: payroll expenses, which are indirectly correlated to the number of customers, but directly related to the number of open games; and expenses that directly relate to customers (gaming taxes, complimentary beverages, etc.). Will having fewer open games with the same number of players lead to maximum profit? To address this query, some assumptions must be made: One dealer works each table for 50 minutes before taking 30 minutes off. There is one floorperson for every five games (0.2 floorpersons per game), who receive one 50-minute and two 30-minute breaks each shift.

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Each dealer is paid $60 for an eight-hour shift. Each floorperson is paid $175 per shift. Taxes and benefits make up another 40 percent of labor costs. The number of games open causes the payroll costs to vary, and the number of actual players affects costs such as complimentary beverages. Using the previous assumptions, the following formulae demonstrate the cost of staffing each table for eight hours: Dealer 80 ⫻ 60 ⫻ 1.40 ⫽ 134.40 50 Floorperson 480 ⫻ 0.20 ⫻ 175 ⫻ 1.40 ⫽ 63.57 370 Total per table ⫽ 197.97 Table 15.3 below compares two theoretical scenarios: in one, there is one player per table at 25 tables; in the other, five players at five tables. First we must assume an average bet and house advantage. An average bet of $100 per hand and a 1 percent house advantage will do. However, the house advantage does not affect the conclusions that these scenarios support. In this comparison, margin increases as the occupancy increases. However, profit decreases. It’s safe to say that the following illustrates the correlation between profit, occupancy, margin, and hold:

TABLE 15.3 Costs of Table Staffing

Tables open Players per table House advantage Bet per hand per player Hands per hour Win per hour per table Win per table per shift Gross win (all tables) Labor cost per table Total labor cost of all tables Contribution Margin (percentage)

Scenario 1

Scenario 2

25 1 1 percent $100 209 $209 $1,672 $41,800 $197.97 $4,949.25 $36,850.75 88

5 5 1 percent $100 70 $350 $2,880 $14,400 $197.97 $989.85 $13,410.15 93

Source: Adapted from Kilby, Jim, Jim Fox, and Anthony F. Lucas. Casino Operations Management, 2nd edition. Hoboken, NJ, 2005, 252.

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Occupancy

Hold

Margin

Profit

When management attempts to increase occupancy by putting the same number of players at fewer games, the return on labor is increased successfully, but the maximization of profit is not achieved. That is, efforts to increase game occupancy reduce profit. Management frequently determines for declining the hold percentage. Increasing occupancy from 3 to 3.8 players will in and of itself decrease the hold percentage. The increase in occupancy will usher in an increase in the margin of the table games department, but it will come at the expense of the profit. For labor costs to be covered, a casino must have high table occupancy with players betting a certain amount. In order to break even, a table must be near maximum capacity if the players are making smaller average bets. As the average bet increases, having fewer players per game will help to increase profit. So how can a casino go about decreasing occupancy? More games can be opened, but this may not work because the casino is unable to control where a player decides to play. A second method (applicable to blackjack) is to decrease the number of spots in the layout. Over the past few years, many casinos have increased the number of seats at tables from six to seven. A different strategy would be to decrease these seats, or the spots at a table, on the higher minimum bet games. Why would a casino choose to increase the player spots located at a given table? There are two reasons: emphasis has traditionally been placed on increasing the return on every labor dollar spent, and the relationship between emptier tables and higher profits has not been fully considered before. When every game is open and filled, the only way to increase profit is to increase the minimum bet—but it’s rare that every game is open and filled.

CASINO MARKETING In recent years, casino marketing has become increasingly emphasized. Marketing costs have continually risen as competition between casinos has risen. Innovative and new ways of differentiating oneself from the competitors are difficult to come by, although spending on marketing has significantly increased. Marketing is now more than ever crucial to a given casino’s success.

Match Plays and Nonnegotiables Match play coupons and nonnegotiable chips (like promotional chips) are increasingly being used as a marketing strategy, both in Nevada and around the world. At first, coupons were only issued in denominations of $1 or $2 and then only to the customers who didn’t mind cashing their paychecks at the casino. Back then, the match play coupons were known as game starters.

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Nowadays, match play coupons and nonnegotiable chips are given away in much larger increments—at times, hundreds of dollars. What used to be only a nominal amount now can total several thousand dollars each day. Therefore, management must closely review these programs and the large costs they incur to ensure that the program is achieving its overall objective in the most cost-effective way possible. Basically, a match play requires a cash ‘‘match,’’ while a nonnegotiable can be played on its own. Often the match play does not require an equal cash ‘‘match’’. . .a $1 match play may require a $2 bet to go along with it, with winners taking away $3. Match plays or nonnegotiables can also be styled in a manner so that the player only forfeits the item when he or she loses, or when the bet is won by exchanging the match play for a live chip of equivalent value. Coupons placed in the table’s drop box by the dealer after a bet has won are referred to as ‘‘with exchange,’’ and those forfeited after a bet is lost are referred to as being ‘‘without exchange.’’ Casinos often offer several different types of nonnegotiables and / or match plays at the same time. Only the imagination of the casino’s management can limit the restrictions placed on these coupons. The cost of a nonnegotiable or match play is actually a function of the house advantage, as the cost of the match plays to the casino is less when the game has a greater house advantage. The casino’s marketing director must possess the ability to identify and maintain profitable programs, and to eliminate those that do not turn a satisfactory profit. Although a casino may be profitable, it should not be assumed that all of its marketing programs are successful. Constant scrutiny ensures that each program is reaching its goals. Systems should be put into place to track programs’ performance values, helping the marketing director to evaluate each program individually and as compared to other programs. Match play coupons are one of the most common ways of marketing to an individual customer. Because the assumption exists that these serve as effective game starters, and because they are somewhat costly to the casino, it would be helpful to find evidence that supports a positive relationship between table games drop and coupon redemptions. At the very least, it would justify the continuation of this somewhat leap-of-faith marketing strategy.

Gambler’s Spree At today’s casinos, one justification for implementing a particular program or policy is that a competitor is offering the same thing. If a well-known casino is offering a certain program, it is more likely to be adopted by a competing casino— regardless of its actual merits. One example of this phenomenon is the proliferation of $5 table game programs that are known as ‘‘gambler’s spree.’’ These programs are designed by independent casino representatives in order to attract gamblers to the casinos that they work for. The programs are styled in many, many different ways, but the gist is:

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1. The representative works with the casino-hotel to offer gamblers a discounted room rate, some food and beverage credit (or a discount), and some type of match play or nonnegotiable must be given to a player if a certain bet and / or time requirement is met. 2. These items are assembled by the representative, who adds some airfare and transfers to and from the casino. Then the rep sells the package to players at a price that usually nets the representative a profit of roughly $60 to $100 per player. Before management agrees to allow a gambler’s spree like the above example, four questions should be carefully considered: 1. What would be the profit / loss if only the minimum requirements are met? 2. What is the minimum action required for the program to break even? 3. Can the casino reasonably expect players to gamble in excess of that required to break even, which would assure the casino a profit? 4. Do any reasons exist to justify the program, even if management does not believe there will be sufficient action for it to break even?

Dead Chips and Chip Warrants A chip warrant is a voucher, generated and controlled by the casino. The player presents it at the table, receiving an equal amount of nonnegotiable chips known as dead chips. A player may purchase a chip warrant for $100,000 at the casino cage. The casino agrees to rebate the player somewhere around 1 to 3 percent of the purchase, after the dead chips are lost. The dead chips can be wagered just like live chips, and winning bets are paid in live chips. Once all the dead chips have been wagered out, the live chips that the player possesses represent actual cash, which then can be exchanged for at the casino cage. A version of this program, called the dead chip program, appeared in Las Vegas. In this version, a player representative promises to deliver players (usually from Asia, where dead chips are popular) who will each bring $100,000 in cash to the casino. These players agree to make $1,000-per-hand wagers in baccarat, as long as the casino picks up their room, food, and beverage expenses, along with airfare. The player representative also expects a commission from the casino in return for delivering the players. The player who presents $100,000 in cash receives $103,000 in dead chips. After that is gone, the player can purchase $102,000 in dead chips for $100,000. For the third purchase, and all purchases following, the player gets $101,000 in dead chips for every $100,000 spent. Determining the merits of such a program means calculating how much the program will cost and how long it will take to ‘‘wash’’ (exchange dead chips for live chips) the chips. Wash time is important because if too much play time is required, the casino can’t expect much of a profit.

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Dead Chip Commission. The dead chip bonus can be awarded after the end of play, rather than at the beginning. The player will pay all of the face value of the dead chips, and after they are lost, he or she will receive a cash refund equal to the dead chip bonus.

General Slot Marketing The majority of slot marketing is driven by databases. However, casinos also offer promotions in the hopes of bringing in new customers and hopefully adding them to the slot club. An important issue for marketers is whether belonging to a slot club builds loyalty, or just acts as an elaborate discount device. Is the most common form of slot club appropriate for every casino? Learning about customer behaviors through their slot club card is already understood, but casinos need to learn more about the actual club card holders. Are they simply bargain-hunters attracted to the deal, but not the casino? Many customers belong to several casinos’ slot clubs. Reverse buying in this market can cause profit erosion, so care must be taken to ensure that the incremental effects of all offers are constantly scrutinized. Drawing-based promotions rarely pay for themselves, and direct mail programs aren’t much better (though it depends on the market). Since direct mail experiences mixed results, casino managers would be well-advised to keep a sharp eye on any such program and its success rate. Cash Mail. Cash mail (direct mail) promotions consist of cash incentives in tiered offerings. The value of these offerings is usually determined as a function of the player’s average daily theoretical (ADT), which is obtained from slot databases. Since this requires previous experience with the casino, cash mail is usually geared at generating repeat visits. Using cash mail too much can lead to customers perceiving it as an entitlement rather than a promotion. Some casinos have compensated by requiring players to wager the promotional bonus at least once. This requirement prevents ‘‘walkouts,’’ players who redeem offers and do not game on the same day. In the short term, this new strategy may damage customer relations as they realize cash mail is not an entitlement. Restaurants and Slots. The notion that restaurant operations can successfully generate slot play is popular especially among markets characterized by repeat clientele (Las Vegas, riverboat markets). This has been proved incorrect—the success of this strategy varies between properties. Any casino that decides to use this strategy should closely monitor its success, by comparing cash covers (restaurant head counts) to coin-ins. Covers that result from comps will likely skew the data. Food Loss Leaders. Many casinos lose millions annually through operating food outlets. If a restaurant is casino-operated, it’s more likely to incur substantial losses. The aforementioned theory is the justification for these losses. Given this situation, knowing how casino volume is affected by restaurant cover would be extremely

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helpful. Does casino volume offset food losses? If food is discounted just enough, will that simply attract bargain-hunters with no interest in gaming? Contracting outside restaurant companies to operate food service is one option. This eliminates the loss factor, but it reduces the casino’s control over food quality and hours of operation, since many private contractors are unwilling to run a 24-hour operation. Working with an outside restaurant company also complicates the issue of food comps. For these reasons, a hybrid approach may be the best solution. Drawing-Based Promotions. These promotions are very popular in repeater markets. There exist infinite variations on the drawing theme, so only the basic form will be discussed here. Customers acquire tickets though winning top award jackpots on specific slot machines. The two-part, numbered ticket is torn and half is thrown into a drawing drum, with the remaining half going to the customer. Cash prizes for these drawings can reach up to $1 million. Despite the huge cash prizes, drawings’ effects on property cash flows are unknown. Only one study has addressed the issue, and it did not support a positive cash contribution to the casino. Acquire, Retain, Recover. Slot marketing can be divided into three categories: customer acquisition, customer retention, and customer recovery. Mass mailings, database analysis, general advertising, and drawing-based promotions are all aimed at acquiring new customers. Direct mail campaigns, bonus promotions, event promotions (such as a slot tournament), and slot club membership drives are all strategies designed to retain customers. Recovering lost customers may involve increasing the value of incentives, or conducting customer interviews to establish the cause for lost business.

Consumer Choice Factors What are the properties of a casino that cause consumers to choose it over another? This is especially important to repeat-clientele markets with a competitive atmosphere. The answer to this question varies by market, but some answers are nearly universal. General convenience of location is a major draw; in fact, across three different repeater markets (Las Vegas, Chicago-based riverboats, and Mississippi locals) it was the only common answer.

Rebates on Losses Premium players are often offered a rebate on their losses by casinos who want to retain their patronage. This strategy can be wildly successful, but a casino that doesn’t thoroughly understand how it works may be courting disaster. Only when the theoretical casino win equals the losses of the player does a 10 percent rebate actually cost the casino 10 percent. Until this equilibrium is attained, the costs are actually greater. The casino will lose revenue if the player

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Quick Getaway 15.4

Vegas vs. Video Games ‘‘Tom Clancy’s Rainbow Six Vegas,’’ which has players fighting against terrorists on the Vegas Strip, has Las Vegas marketers worried about the image it portrays. ‘‘It could be harmful economically, and it may be something that’s not entitled to free speech [protection],’’ Las Vegas Mayor Oscar Goodman says of the game’s gruesomely realistic scenes, which he had not viewed personally. According to Goodman, the game is ‘‘based on a false premise,’’ because federal and state leaders have repeatedly assured him that Las Vegas is ‘‘the safest place imaginable’’ five years after the terror attacks on the East Coast on September 11, 2001. ’’I will ask. . .whether or not we can stop it,’’ Goodman says of the video game’s planned release.. Las Vegas Sheriff Bill Young questions the wisdom of showcasing terrorists in this city’s bustling tourist corridor, saying ‘‘it’s unfortunate that we’re the backdrop for a lot of stuff because of our profile. I’m not a big believer on pushing violence on young people anymore, particularly the more-realistic stuff that’s coming out today.’’ Las Vegas’s high-profile status has long drawn attention from the media. The city is often used as a backdrop for dangerous action scenes, such as those in Frank Sinatra’s 1960 film Ocean’s Eleven, which was based on robbing casinos. There are many other movies that

showcase ‘‘Sin City’’ in an unfavorable light: the 1970s’ James Bond flick Diamonds Are Forever included a perilous Fremont Street car chase, and in 1997, moviegoers watched a plane crash into the Hard Rock Hotel in Con Air. Currently, CBS’s popular series CSI: Crime Scene Investigation dishes out a new Las Vegas murder every week, and the Stratosphere tower exploded in Domino, a Keira Knightley film which was released in the fall of 2005. Liping Cai, director of the tourism and hospitality research center at Purdue University, says that tourism will probably not be affected by the virtual violence portrayed in the Tom Clancy video game. ‘‘However, if that video game becomes so popular that a whole generation is educated on that image, it will affect people’s perception of the safety of Las Vegas,’’ Cai says. Source: Jones, Chris. ‘‘Terror On The Strip: Video game depicting attacks in LV makes some officials wince.’’ Las Vegas Review-Journal (July 8, 2006). http: / / www.reviewjournal.com / lvrj home / 2006 / Jul-08-Sat2006 / news / 8367726.html

DISCUSSION QUESTION: Should the media be held accountable for portraying certain places as dangerous through unfavorable depictions in movies and video games? Should those who live in the area have a say in whether the game or movie is released?

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plays small total hands, which is a serious concern since the casino cannot predict what will happen in the short term. Therefore, a long-term program designed to ensure profitability is advised.

Player Action Criteria Premium table game players are ‘‘courted’’ by casinos, who will give out huge amounts of comps just to attract them. Some casinos contract independent representatives to find and attract these players. Schedules should be developed, using player action criteria, to ensure that the player is given adequate comps while maximizing casino profit. Identifying the true cost of the complimentaries to the casino is very important, as is tracking to associate the cost of the comps to the individual players with which they relate. A schedule of this sort can be established which determines the average bet based on all games played, instead of by a per-game basis. However, a per-game schedule is recommended, as a roulette player (for example) can lose roughly three times more per hour than a blackjack player.

Premium Player Segment Marketing to premium players is threefold. One part of the equation is the amenities offered by the property. The second part involves the hosts, who serve as communicators between the high roller and management. The third part is defined by the deals that are offered to the premium player. If any one of these elements is missing, the casino will find it more difficult to attract the high rollers it wants. The premium-player segment is thought to produce a disproportionate amount of casino profit, with good reason. These players make up only 5 percent of Las Vegas gamblers, yet they produce 40 percent of the gross gaming win. It has been suggested that premium players are necessary for producing the cash flow that is required for a mega-resort. The gross gaming win does not consider the costs of player acquisition, however. Expanded play incentives can be very expensive for the casino, if they are not managed properly. Definition. There are many different definitions of a ‘‘premium player,’’ but a three-tier framework can be used to describe this demographic. Tier-1 players have a maximum credit line of $20,000. Tier-2 players’ credit lines range from $100,000 to $500,000, and tier-3 players have credit from $1 to $5 million. Although this basic framework works relatively well, it contains some gaps, and there is no classification for those with credit exceeding $5 million. Acquisition Costs. Individually, premium players appear to justify their acquisition costs. Before discounts, players usually received free lodging and food, with the occasional airfare reimbursement. Back in those days, acquisition costs were fairly modest. Now that competition has increased between casinos, premium players can negotiate much greater play incentives. As mentioned earlier, discounts on losses

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are a large cost to the casinos. Spiraling play incentives, especially discounts, have led to recent cuts in marketing efforts aimed at premium players. At least 12 Las Vegas casinos actively offer a priori discounts to premium players. Nearly all of these offer discounts on losses to some degree. Casinos that rely more on premium players offer greater discounts on losses. The costs associated with attracting high rollers have a deleterious effect on premium-play profits. Costs have become so high that some casino owners are questioning the profitability of this segment. If this segment is not as profitable as was once believed, what can be done to remedy the situation? True Cost. The true costs associated with discounting can be enormous. The face value of any a priori discount is likely to be understated in its effect on the game’s earning potential. In some cases (in baccarat especially), an a priori discount can turn the house’s advantage into the player’s advantage. Hidden Cost. A guaranteed 20 percent refund of losses in a game of baccarat is capable of totally dissolving the casino’s usual advantage, and actually creating a player advantage. Additionally, most astute players are aware that when it comes to the number of hands played, less is more. The truth is that if a player is allowed to negotiate a priori loss discounts, the casino simply cannot allow that player to determine the number of hands played. Quick-Loss Rebates. Nearly all Las Vegas casinos that pursue the premiumplayer segment offer quick-loss rebates. These are structured to award a player the greater of 15 percent of a player’s actual loss or 45 percent of theoretical win, in order to cover airfare and room, food, and beverage costs. This is usually offered in addition to any other loss rebates. This rebate may exist because management believes that short-term losses will be kept by the casino. However, this strategy only encourages players to play few hands with large wagers. The addition of this policy to rebate-on-loss marketing gives players an even greater incentive to curtail their play. As such, this rebate can be far more costly than it is beneficial. Costs of Competing. Casino managers give premium players free rooms and expensive food, which obviously have costs associated with them. The rule of thumb at most casinos states that comps of as much as 35 to 50 percent of a player’s theoretical loss may be awarded. However, these guidelines were not altered after a player was given a rebate on losses. This failure only decreases the premium-player segment’s profitability for the casino. The profit of bringing in high rollers should more than compensate for the costs associated with providing incentives such as classy limousines, lavish hotel rooms, and gourmet restaurants. The costs for these amenities can be insanely high; for example, the MGM spent $180 million in 1999 on its new high-roller villa. These incentives are not the end of the story. High rollers are also frequently given free chips, ‘‘walk-in’’ money, and airfare allowance. . .despite the fact that the casino’s jet flew them to and from the casino. Yet casinos do not set any minimum-play criteria for these players, endangering their profit potential.

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Quick Getaway 15.5

Gaming from Abroad Online gambling is at an all-time high. What’s in store for gaming sites in the next five years? Perhaps the traditional games will take on a more Eastern flavor. Right now the world goes to Las Vegas to gamble, the biggest poker tournaments are held in Europe and the U.S., and the biggest online gambling sites have mainly American gambling themes. After Las Vegas’s legalization of gambling on March 19, 1931, the city exploded into a gambling mecca, a title that it has unofficially held for almost 75 years. However, a great shift in the world of gambling looks like it’s ready to take place: Las Vegas’s current top contender is a small city that wouldn’t have been a blip on its radar only five years ago—Macau. Macau is a small territory on the southern coast of China that has grown from roughly 9 million arrivals in the year 2000 to 19 million in 2005. Over half of these arrivals come from mainland China. Macau’s amazing growth has been primarily driven by gambling and tourism. In 2004, Macau made a splash by overtaking Las Vegas in its individual casinos’ gambling revenue (roughly US$5 billion per casino). The key to understanding Macau’s success is realizing that Macau is the only city in the Greater China Region where casinos are

legal. With a Chinese population of 1.3 billion people, Macau is sitting on a tremendous opportunity. What does this mean for online gambling? Eric with MacauTexasHoldem.com says, ‘‘With the growing popularity in world poker tournaments you can expect that Macau will have tournaments for traditional Vegas games and many culture specific games that are new to most Americans. This is a very exciting time for Macau and its growing popularity as a premier travel destination for casino gambling, resort and meetings ensures it will be a dominant force. . .’’ Online gamblers may see a major shift in online gambling trends soon. Popular online gambling games like poker may start to give way to traditional Chinese gambling games. Or perhaps Vegas-style games like poker will simply take on a more Eastern flavor. Source: ‘‘Macau vs. Las Vegas.’’ PRWEB, May 16, 2006. http: / / www.prwebdirect.com / releases / 2006 / 5 / prweb386127.htm

DISCUSSION QUESTION: Do you think that American gamblers will be drawn to traditional Chinese games?

Discounting Rationale If discounting is as expensive and damaging as all this indicates, then why is it such a popular practice? Why are their harmful effects not detected? To begin with, the process of discounting and rebating is fairly young, having first appeared in the 1990s. They probably began with high rollers losing huge amounts of money and being unable to pay the full amount. Initially, a casino executive may have tried a payment plan. After that failed, a discount was offered, on the theory that collecting something is better than collecting nothing at all.

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Eventually, this discount turned into an incentive, to be used in bidding wars. Players benefited. Although casinos may recognize the damaging effects of their discounts, they are loath to part from them, because they still want the high-roller visits. Some casino executives may see the segment as simply inherently profitable. Combined with poor game mathematics, these discounts can have a catastrophic effect on profit. The thrill of ‘‘stealing’’ a whale, or big high roller, from another casino may blind executives to the unprofitable position they have put the casino in, through offering unreasonable discounts. Conceding the game advantage, even to a whale, is not a wise strategy.

Discounting Dangers Before casino executives decide to go ahead with a new discount, they should carefully examine the mathematics involved. In the case of loss rebates, players must be asked to play a minimum number of hands to ensure that the casino does not lose money. Discounting policies should also prevent players from pooling their actual losses from different games, because the house advantage varies from game to game. In skill-based games such as twenty-one, a player’s abilities and not historical performance should be used to determine discounts. Although discounting in and of itself is not inherently dangerous, when misapplied by people who do not understand the math, it can be truly disastrous. Additionally, with the way premium players are being handled in the industry right now, constructing a new casino that is designed to pull most of its profits from premium players is a questionable move.

SUMMARY As gaming continues to grow there will be an increased need for managers to learn and apply specialized knowledge of the market, the regulatory framework within which casinos operate and the techniques of management and control unique to this type of operation.

ENDNOTES 1. Miller, Richard K., and Associates, Inc. The 2005 Travel & Leisure Market Research Handbook. Loganville, GA, 2005, 379. 2. Ernst & Young. 2004 United States Gaming Bulletin. 3. Ibid., 1–2; 17. 4. Ibid., 12. 5. Ibid., 31. Dense, Jeff, and Clyde W. Barrow. ‘‘Estimating Casino Expenditures by Out-of-State Patrons: Native American Gaming in Connecticut.’’ Journal of Travel Research, volume 41 (May 2003): 410–415.

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6. Dvorchak, Mark E. From Casino to Resort: Understanding the Entertainment Hierarchy. Los Angeles, CA: Economics Research Associates, July 2002. 7. Ibid., 9. 8. Ibid., 10. 9. Garrett, Thomas A. Casino Gambling In America and its Economic Impacts. St. Louis, MO: Federal Reserve Bank, 2003. 10. Ibid., 6. 11. Ibid., 6–7. 12. Ibid., 7–9. 13. Moufakkir, Omar, A.J. Singh, Afke Moufakkir-van der Woud, and Donald F. Holecek. ‘‘Impact of Light, Medium and Heavy Spenders on Casino Destinations: Segmenting Gaming Visitors Based on Amount of Non-Gaming Expenditures.’’ UNLV Gaming Research & Review Journal, Volume 8, Number 1 (2002): 59–71. 14. Kilby, Jim, Jim Fox, and Anthony F. Lucas. Casino Operations Management, 2nd edition. Hoboken, NJ, 2005, 43. 15. Ibid., 53–59. 16. Ibid., 61. 17. Ibid., 71. 18. Ibid., 81. 19. Ibid., 83. 20. Ibid., 107. 21. Ibid., 130–133. 22. Ibid., 133. 23. Ibid., 179. 24. Ibid., 182. 25. Ibid., 193. 26. Ibid., 219. 27. Ibid., 232. 28. Ibid., 241.

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INDEX A Add-on membership, 230 Activity analysis, 268 Activity programs, see Guest activity programs Adventure travel, 351–365 adventure education, 359–360 activities, 357–365 hard adventure, 354–356 market profile, 351–352 miravel anti-spa, 367 and older customers, 356 soft adventure, 19, 356–357 and tourism, 360–361 wilderness tours, 354 and women, 358 Air Travel, 6 All Inclusive Packages, 17 Amenity(ies), 4, 9, see also Recreational amenities golf courses, 146 most popular, 278 spa, 308 swimming pools, 328 tennis facilities, 174 Anchoring, 135–136 Aromatherapy, 323 Association (ownership) membership, 228 Atlantic City, 5, 422 B Back beach, 101 Barry, Dave, 98 Balance Sheet, 83–84 And timesharing, 245 Base Areas, 43–46, 93–94 access roads, 43–44 accommodation, 44–46

demand model for, 44–46 demographics, 74 base village resorts, 93–94 emergency care, 46 food service, 44 maintenance, 46 parking, 43 trends in, 93–94 Beaches, 99–104 Blue-Flag Certification, 128–131 environmental management, 129– 131 waste disposal, 129–131 water quality, 128–129 capacity, 101 density of, 100–101 material, 100 slope of, 100 surrounding area, 102 zoning, 101 Beach-based resorts, 97–104 basics for, 103 catering to kids, 132 criteria for certification, 128–134 guest profile, 125–128 beaches and islands, 125 scuba travel, 125–126 romance-related, 126–128 and local community, 134 managing the resource, 128–134 environmental management, 129– 131 committee, 129 pets, 131 sanitary facilities, 130–131 waste disposal, 129–130 safety and services, 131–134 access, 134 activity zones, 133–134

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Beach-based resorts (continued ) emergency plan, 134 first aid, 131–133 lifeguards and equipment, 131 maps, 134 palapas, 133 weddings, 127 Beach development, 99–104 back beach, 101 beach, 100–101 beach capacity, 101 costal sites, 103–104 desirable sites, 102–104 evolution of, 104 Benchmarking, 282 Biking, 358 Bird and animal watching, 358 Blue Flag Certification, 128–131, 139– 144 Boating, 135–137 and environmental code of conduct, 143–144 Bone, William, 216, 226 Bradbury, Malcolm, 368 Breakwaters, 113 Budgeting for activity programs, 276– 277, 279 Built-in marina, 114–115 Bulkheads, 113 Business travel, 9, see also conference business and golf, 194–196 health and fitness, 334–335 meeting / recreation balance, 244 and most important amenity, 328

C Camping, 357 Canoeing, 359 Carlson, Bror R., 82 Casinos, 414–459 accounting, 441–442 casino audit, 442 internal audit, 442 Minimum Internal Control Standards (MICS), 442 slot drop and count, 441–442

currency acceptor drop and count, 441–442 key control, 442 statistical reports, 442 table drop and count, 441 currency counting machines, 441–442 baccarat, 425, 443, 445 blackjack, 425, 430, 443, 444 cage, credit, and collections, 432– 434 casino cage, 432 casino credit, 432 types of, 432–433 classes of customers, 433 credit decision, 433–434 and ability / willingness to pay, 433–434 propensity to play, 343 setting limits, 434 procedures, 433 card counting, 446 comps, 426 control, 430–431 front money and safekeeping deposits, 431 24-hour window, 431 customer identification, 431 options for, 431 history, 430–431 reporting in non-gaming areas, 431 and cruises, 383 dealers, 430 demographics of casino customers, 422–428 heavy spenders, 426–428 and income range, 422–423 premium player segment, 456–457 promotional strategies, 425–426 and types of games played, 424– 425 whales, 425–426 development as resorts, 417–421 land-use relationship model, 420 objectives, 418 of development, 418–419 revenue, 419–421 phases of becoming, 417–418

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competition from other locations, 418 entertainment convergence, 418 serving local market, 418 roles of specific elements, 421 entertainment, 420 gambling, 19 average bets, 426 types of games, 424 legalization of, 416, 421–423 online, 458 player rating systems, 443–448 profile of gamblers, 422–428 gaming market, 415–417 distribution of, 415 major companies, 417 Native American (tribal), 417, 421 state by state, 415–416 United States, 415 heavy spenders, 426–428 land-based gambling, 416 largest in US, 416 Las Vegas and Nevada, 415–416, 421–422, 442, 455, 458 legal issues: casino legalization, 416, 421–423, 458 and machine output, 425 Macau, 458 Machine output, 425 computerized, 425 laws for, 425 management, 428–429 president or general manager, 428–429 games or casino manager, 429–430 other managers, 429 and table game holds, 448–450 vice presidents, 428–429 market, 421–428 marketing, 450–459 and accommodations, 420 consumer choice factors, 454 dead chips and chip warrants, 452–453 dead chip commission, 453 and entertainment, 420 dangers of discounting, 459

463

discounting rationale, 458–459 general slot marketing, 453–454 acquire, retain, recover, 454 cash mail, 453 drawing-based promotions, 454 food loss leaders, 453–454 restaurants and slots, 453 gambler’s spree, 451–452 match plays and nonnegotiables, 450 and media images, 455 player action criteria, 456 premium player segment, 456–457 acquisition costs, 456–457 costs of competing, 457 definition, 456 hidden cost, 457 quick-loss rebates, 457 true cost, 457 rebates on losses, 454, 456 Native American (tribal) gambling, 416–417 organizational structure, 428–429 player rating systems, 443–448 actual versus theoretical win, 443 average bet and time played, 444 establishing guidelines, 447 estimating the casino advantage, 444–445 baccarat, 445 blackjack, 444 craps, 444 roulette, 444 game speed, 445 importance, 443 procedures, 445–446 rating systems, 447–448 credit card issues, 447–448 slot systems, 447 quantifying the disadvantage, 443 and technology, 448 and popular culture, 415, 455 riverboat-based gambling, 416, 423 slot management, 434–434 bonus games, 434 cashless casino, 435 comps, 426 floor configuration, 437

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Casinos (continued ) aisle width, 437 general placement, 437 mechanical configuration, 436–437 casino advantage, 437 hit frequency, 437 layout of slots and guest behaviors, 438 model mix, 436 participation games, 435–436 philosophies, 438 hypothetical layout, 438–439 servicescape, 438–439 themed slots, 434 types of slots, 436 table game operations, 439–441 maximizing profit per available room, 440–441 revenue and profit, 440 table game holds, 448–450 high table occupancy, 448–450 management tool, 448–450 and staffing costs, 449 uses, 448 types of games, 424 most popular games, 443 staffing, 430 costs of, 449 floorpersons, 430 and rating, 446 number of dealers needed, 430 each game and every day, 430 number of stations, 430 Center for Disease Control, 396–397 Children, see family-based resorts Clubhouses, 172–173, 178 Cluster analysis, 268–269 Combination option, 12 Community associations, 225–226 Condominium hotels, 13–14 mountain-based, 93–94 options for owners, 13 water-based, 108 Conference business, 6, 10 conference / convention centers, 6, 91–93 Convertible club program, 227 Corporate resort, 7

Costal sites, 103–104 Costal stretch, 101–102 access roads, 101–102 facilities, 101 Cottle, John, 43 Crandall, Laura, 308 Credit cards, 101–102 And casinos, 447–448 Crosby, Ted, 111 Cross-Country Skiing, 47–50 design criteria, 49–50 and golf courses, 151 maintenance, 50 signs, 49 site selection, 48 trail types, 50 Cruise ships, 368–412 biggest and smallest, 371 case study, 400–403 cruise experience, 368–369 appeal of, 268 negative opinions of, 368–369 cruise product, 376–384 accommodation, 376–377 cabin de´cor, 377 cabin sizes, 376 cabin stewards, 377 deck plans, 377 choosing, 376–377 management of, 394–396 terms for, 376 bars, 380–381 management of, 389 beauty and therapy, 382–383 casinos, 383–384 celebrations, 384 dining, 377–380 buffet, 378 and children, 380 formal versus informal, 380 main restaurants, 378–380 and de´cor, 379 styles of service, 380 other options, 380 and performance schedules, 378 staffing for, 389 with the captain, 379 entertainment, 381

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musicians, 381 staffing, 381, 386 theatres, 381 photography, 383 shopping, 383 shore excursions, 381–382 destinations, 403–411 definition of, 403–404 itinerary, 405–411 port of call, 404–407 destination analysis / evaluation, 404–405 and stakeholders, 404 tendering, 404 eco-cruises, 372 health, safety, and security, 396–400, 407–408 Centers for Disease Control, 396– 397 regulations, 407–408 SARS, 407 screening, 407 safety, 398–400 equipment, 400 International Ship and Port Facility Agreement (ISPS), 399–400 security standards, 399–400 ship’s security officer (SSO), 400 and terrorism, 398–399 Vessel Sanitation Program, 396–398 food safety, 398 and inspection, 397–398 swimming pools, 398 water, 398 Hebridean Princess, 371 homeland cruising, 369 itinerary, 405–411 criteria for, 405–406 issues in planning, 406–407 logistics, 408 and regulations, 407–408 health, 407–408 in Europe, 407 in US, 407 shore excursions, 408–411 elements of, 408–409 promotion, 409

465

tour sales, 409 tour design, 410 tour guides, 411 major players, 369–370 importance of brand, 369–370 management, 387–396 accommodation, 394–396 housekeeping, 385–396 importance of, 395 and occupancy, 394–395 staffing, 395–396 customer service, 389–391 advantages, 381 difficulty of, 389 most important elements, 390 and manager of operations, 390–391 self-service options, 390 facilities, 393–396 environment, 396 yield management, 393–394 revenue and costs, 393–394 food and beverage 391–393 hotel department, 387, 389–391 purser, 394–395 store, 393 supplies and services, 392–393 and bookings, 394 computerized stock management, 393–394 head storekeeper, 391 storage, 392 yield management, 394 teams for, 389 tipping, 391 the operation, 400–403 case study of staffing, 400–401 marketing the cruise product, 372– 384 customer identity, 372 customer need, 372 impact of negative influences, 373 distribution system, 372–376 alliances, 375–376 cruise operators, 373 market segments, 373–375 enthusiastic baby boomers, 374 explorers, 375

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Cruise ships (continued ) consummate shoppers, 375 luxury seekers, 374–375 restless baby boomers, 373–374 ship buffs, 375 maximizing occupancy, 394 online booking, 373 packaging, 394 product focused, 372 promotion, 409 travel agents, 373, 375 associations for, 375 changes in booking scene, 375 retirement on, 374 ship classifications, 370–371 and amenities, 370 budget or value, 370–371 luxury, 370 and customer service, 390 niche or specialty, 371 premium, 370–371 resort / contemporary, 370–371 shore excursions, 408–411 staffing, 384–387 case study, 400–401 community of crew, 401–402 deck department, 385 engine department, 385–386 groupings, 384–385 hotel department, 387 entertainment department, 386–387 medical department, 386 radio officers, 386 responsibilities, 384–385 themed, 270, 370–371 travel by ship, 368 history of, 368 trends in, 368 Queen Mary II, 371, 395 working on, 388 D Degraff, Donald and Kathy, 263 Demographics: of skiers, 64–67 of snowboarders, 64–67 of golfers, 188–190, 196

Desirable sites: and mountain-based resorts, 26–33 and beach resorts, 102–104 Destination clubs, 14 Destination spa, 308 Destinations, making them popular, 3 Developments, types of, 16 Direct mailing, 243–244 5 p’s of success, 244 advantages of, 243 disadvantages of, 244 Disney, 6, 7, 11, 234 Dredging, 112 E Ecotourism, 19, 97, 347–351 and cruises, 372 design practices, 328–350 and luxury elements, 350 wilderness tours, 354 Ecolodges, 347–351 operations, 351 trends, 351 versus traditional lodges, 348 Ecosystem of costal zones, 129 Effleurage massage, 322 Environmental concerns: beaches, 128–131 blue-flag certification, 128–131 cruise ships, 396 waste control, 396 golf courses, 147 environmentally-friendly courses, 158 and GPS, 208–209 natural features, 220 and timeshare renovations, 255 water management, 184 marinas, 107–109 carrying capacity, 109 facilities, 118 guidelines, 105 impact of environmentalism, 107 offshore marinas, 113 resource conservation, 107 water levels, 105 mountain-based resorts, 31–32, 52–54

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environmental mission statements, 53 and global warming, 63, 65 water-based resorts, 135–139 anchoring, 135–136 back beaches, 101 boat operation, 136 boat sewage and garbage disposal, 136–137 coral, 99, 129, 135–136 erosion, 99, 100 pollution, 99, 128–129, 136–137 snorkeling, diving, and snuba, 137–138 turtles, 134 water quality, 103, 128–129 waterparks, 334 Environmental tourism, see Ecotourism; Trails Equity club, 227 Erosion, 99, 100, 103–104, 105 Exfoliation, 316 Extreme sports, 360 F Family-based travel: beach based, 132 mountain based, 94 and timeshares, 242 Farrel, Patrica, 261, 281 Farwell, Ted, 79 Ferris wheel, 6 Financial statements, 82–83 First aid, 131, 133 Fitness facilities, 18, 218, 314 and adventure travel, 362–365 pools, 328 Renaissance ClubSport concept, 336– 342 Fixed week option, 2 Floating resorts, see Cruise ships Floating week option, 12 Four season resorts, 6, 9 mountain based, 73, 91 and indoor waterparks, 330–331 off-season promotions, 238 timeshares, 240

467

Fraser, Charles E., 8 Full-body facial, 317 Full-body mud mask, 317 Full-body treatment, 317 G Gambling, see Casinos Gaming market, 415–417, see also Casinos Gee, Chuck, 4 Gentry, Robert A., 234 Golf, 9 distance standards for par, 155, 157 and fun, 184 hole styles, 161–162 heroic, 162 penal, 161 strategic, 162 bite-off holes, 162 ice golf, 209 instruction and training aids, 185 club fitting, 185 other training aids, 185 practice, 185 videotaping, 185 resorts, 183 tees, 166 and tee times, 198 and traveling, 186–187 selection of location, 187 Golf-based resorts, 146–174, 183–211 climate, 154 costs: construction planning, 169 and greens, 169 land, 152 and layout, 159 maintenance 154–155, 169 design principles, 163–174 accessibility, 170, 172 aesthetics, 170–171 balance, 168 carts, 173 clubhouses, 172–173 construction planning, 169 costs, 169 factors to consider, 163

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INDEX

Golf-based resorts (continued ) fairness, 166–168 flexibility, 166 flow, 168 for play, 166–168 layouts, 173 maintenance, 169 natural hazards, 166–168 progression, 168 remodeling, 173–174 schedule of, 174 safety, 163–165 diagrams, 164–165 shot value, 166 tournament qualities, 170 Frost Belt resorts, 191–194, 204 general guidelines, 147–148 golf cart fleet, 202–208 electric versus gas, 205–206 and four-season resorts, 220 inventory control, 204 lease versus buy, 202–204 maintenance, 206–207 and operations, 192 responsibilities of drivers, 205 risk management, 207–208 types of leases, 202–204 golf courses: and average golfers, 146 early, 220 environmentally friendly, 158 irrigation system, 153–154 land cost, 152 maintenance, 154–155, 169 negative environmental impact, 147 positive environmental impact, 147 purpose of, 146 and real estate, 146 and residential communities, 148 tree placement, 160 types, 155–162 Old Works, 167 water supply, 152–154 Xeriscape, 153 golf course types, 155–162 comparing layouts, 159–160 core golf courses, 157

double fairway continuous, 159 double fairway with returning nines, 159 diagrams of, 156 other, 159–160 regulation, 155–157 single fairway continuous, 157 single fairway continuous with returning nines, 157 golf hole styles, 161–162 heroic, 162 penal, 161 strategic, 162 bite-off holes, 162 golf shops, 173, 200–202 accessories, 200–201 credit cards, 201–202 displays, 201 inventory control, 201 layout, 298–299 margin enhancements, 200 pro shops, 293 retail revenue, 290 sales figures, 201 trends in women’s clothing, 301 golfers, 183–185 best customers, 188 core, 186 information sources of, 187–188 and loyalty, 188–189 participation, 183 growth rate of, 183 preferences, 168 spending, 189–190 grass, 150 industry trends, 183–185 future of, 183–184 tax incentives, 185 in Japan, 148 market segments, 186–190 and core golfers, 186 golf’s best customers, 188 golf travelers, 186 golfer loyalty, 188–189 selection criteria, 186–187 sources of information, 187–188 spending, 189–190 operation characteristics, 190–193

S N L

MILL (Wiley)

INDEX

expenses, 193 operations, 191–192 season length, 191–192 statistics of, 191–192 revenues, 192–193 and golf carts, 206 and golf shops, 200–202, 290 staffing, 193–194 ownership types, 148 daily fee, 148 membership-owner equity club, 148 non-equity private club, 148 planning and development, 148–155 clearing required, 151–152 landscape architect, 149 natural hazards, 150 and fairness, 166–168 shape of property, 149 size of property, 149 soil characteristics, 151 topography, 149–150 vegetation, 151 renovation plan, 211 Sun Belt resorts, 191–194, 202 top states for, 190–191 tournaments and events, 194–199 banquets, 199–200 benefits of, 194 business golf, 194–196 hole-in-one, 196 liability, 199 golfers, 199 security, 199 spectators, 199 sponsorship options, 196 timeline, 197–199 women and, 197 use of technology, 208–211 and course management, 210–211 computers, 210–211 computerized irrigation system, 210–211 GPS, 208–210 environment, 208–209 speeding play, 208 tree inventory, 209–210

469

tree placement and removal, 209 GPS, 208–210 Guest activity programming, 261–283 approach, 262 benefits of, 261–262 cluster and activities analysis, 267– 269 activities analysis, 268 cluster analysis, 268–269 external factors, 263 format, 269–273 competition, 271 drop-in activities, 272 instruction, 271 social activities, 271 special events, 272 spectators, 273 trips, 271 goals and objectives, 266–267 and guest needs, 263–265, 270 assessment of, 264–265 techniques for, 265 reasons for activity participation, 263–264 model, 264 program areas, 273 program evaluation, 281–283 approaches to, 281–283 and effect on participants, 282–283 evaluating program effectiveness, 281 and objectives, 281–282 and standards, 282 program planning, 272–281 allocation of funding, 276–277 facility availability, 280–281 budgeting, 276 leadership, 274–275 pricing, 277, 279 differential pricing, 277 initial price, 279 pricing objectives, 277 program cost, 276 promoting the program, 281 scheduling, 279 steps in, 273 volunteers, 276

S N L

MILL (Wiley)

470

INDEX

Guest activity programming (continued ) recreation, 261 risk management, 280–281 satisfaction, 261–262 steps in, 262–263 Graham, Virginia, 174 Grahame, Kenneth, 134 Gravity sports, 89 Greeks, 2

H Handicap Access, 121–122 beach, 134 and marinas, 121–122 sports programs for the disabled, 363–365 Hard adventure, 354–356 Herbal body wrap, 317–318 Hiking, 357 Horseback riding, 359 Hydrotherapy, see Water therapy

I Ice skating, 51 Indoor waterparks, see Waterpark(s) International Ship and Port Facility Agreement (ISPS), 399–400

J Japanese shopping behavior, 287 Johnson, Samuel, 267 Jordan, Debra J.

L Lake / river resorts, 9 Landlocked marina, 114–115 Las Vegas and Nevada, 415–416, 421– 422, 442, 455, 458 Leisure travel, availability, 9 Lifeguards, 131 Location, 8–9 Locks, 112 Lowe, Rob, 12 Lundegren, Herberta M., 261, 281

M Marinas, 104–122 Blue Flag certification, 139–144 environmental management, 139– 141 management, 140 objectives, 140 sanitary facilities, 141 waste disposal, 140 regulations for individual boat owners, 143–144 safety and services, 141–142 emergency plan, 141–142 maps, 142 posted safety precautions, 142 water quality, 143 boat capacity, 106, 109 boats and boaters, 135 boat operation, 136 boat sewage and garbage disposal, 136–137 regulations for owners, 143–144 controlling losses, 11 destination resort marinas, 134–135 development process of, 104–11 criteria for, 109–11 environmental guidelines, 105 onshore / offshore, 106 water levels, 106 steps in, 104 general design principles, 111–122 geography-engineering, 112–113 bulkheads, 113 breakwaters, 113 cost, 112–113 locks, 112 piles, 113 layout, 115–122 boat storage, 120–121 circulation pattern, 118 handicap access, 121–122 mooring layout, 115–118 parking, 118 piers, 115–117 profile of, 115–118 social interests, 118–119 support facilities, 119–121 types of marinas, 113–115

S N L

MILL (Wiley)

INDEX

built in, 114–115 landlocked, 114–115 offshore, 113–114 recessed, 113–114 integration with local area, 120 legal and policy context, 106–109 goals affecting, 107 permits, 107–108 approval checklist, 107 and dredging, 112 managing the operation, 135–144 anchoring, 135–136 boats, 136–137 environmental impacts, 135–144 marine wildlife viewing, 139 recreational fishing, 139 seafood consumption, 138–139 snorkeling, diving, and snuba, 137–138 souvenir purchasing, 138–139 Mackenzie, Dr. Alastair, 103 Management: of cruise ships, 387–396 Mandock, Pedro, 234 Marine wildlife viewing, 139 Massage(s), 238, 317, 322–323 Effleurage, 322–323 Mastercorp, 252 McGovern, William, 183 Merchandising, 293–299 displays, 294–295 getting message noticed, 296–298 impulse buying, 295 merchandise analysis, 304 retail competition, 293–294 principles, 294–295 placement, 298–299 vendors, 295–296 Miller, Erica, 313 Mixed-use developments, 15–17 pros and cons, 16 Morash, Jim, 256 Mountain-based resorts, 22–55, 58–95, see also ski areas attractiveness, 27–30 length of season, 30 major constraint of, 30 of ski lifts, 41–42

471

snowmaking, 27 terrain, 29–30 balance sheet, 83–84 current ratio, 84 debt ratio, 84 networking capital, 84 base areas, 43–46, see also base areas bears, 47 capacity of, 30, 34–39, 79–80 nightskiing, 39 persons at one time, (PAOT), 39 potential, 34–35 skiers at one time, (SAOT), 38 of ski lifts, 40 of terrain, 35 community of, 38 conference centers, 91–93 critical ratios, 87–89 critical variables, 79–81 capital investment, 80 length of season, 80 revenue per skier visit, 81 ski area capacity, 79–80 design guidelines, 33–34 of ski runs, 39–40 desirable sites, 26–33 site feasibility, 27–33 access to markets, 31 attracting customers, 31 attractiveness, 27, 29–30 criterion for, 28–29 environmental limitations, 31–32 major constraint of, 30 terrain, 29–30 development process of, 22–26 concept and objectives, 23 economic balance, 23 physical balance, 22–23 planning process, 23–26 economic feasibility, 79–81 economics of, 60–64 capital improvements, 62 distribution by size, 60–61 lift numbers, 61 number of ski areas, 60 top states / regions, 62 vertical transport feet / hour, 61

S N L

MILL (Wiley)

472

INDEX

Mountain-based resorts (continued ) environmental concerns, 31–32, 52– 54 expenses, 86 financial statements, 82–83 four-season, 91 income statements, 84–86 indicators of quality, 22 maturation cycle, 54 multi-age visitors, 79 permits, 26–27 problems, 94–95 expansion, 94–95 housing, 94 real estate, 30, 62, 93 retail development of, 30 revenue, 85 safety, 37, 40, 79 season passes, 69, 85 ski lift network, 40–42 capacity of, 40–41 types of, 42 upgrades to, 62 and ski runs, 39–40 snowboarders, 75–77, see also Snowboarding snowtubing, 77–78 summer season, 73, 88–95 summer activities, 88–89 waterparks, 90–91 sustainable development, 51–54 terrain features, 62–64 trends, 9, 59 trip characteristics, 72–75 visits by ticket type, 86 winter sports activities, 46–51 cross-country skiing, 47–50 ice skating, 51 snowmobiling, 50 snowtubing, 77–78 tobogganing, 51 other, 79 Muirhead, Desmond, 149 Multiuse resort community, 17 N Native American (tribal) gaming, 417, 421 Nature-based activities, see Trails

O Ocean resort, 9 Onshore marinas, 106 Offshore Marinas, 106, 113–114 P Paraffin body wrap, 317 Patel, Kevin, 335 Permits: marinas, 107–108, 112 mountain-based, 26–27 Piles, 113 Points-based membership option, 12 Pools, see Swimming pools Pollution, 99, 106, 128, 136–137, 141 R Railroad, 5–6 Recessed marina, 113–114 Recreational amenities, 216–232 community management structures, 223–226 community associations, 225–226 considerations for, 225 membership, 225 structure options, 225–226 dual associations with covenant, 226 dual associations with joint committee, 225–226 single community associations, 225 single residential associations, 225 developers: community management, 224 control, 222–223 organization structures, 227–229 role of, 221 factors in, 223 government bodies, 224 power, 224 public access, 224 taxes, 224 nonprofit tax-exempt organizations, 224 covenants, 224

S N L

MILL (Wiley)

INDEX

public access, 224 definition of, 219 developing an amenity strategy, 219– 223 changing role, 221 balancing real estate and amenities, 221 downside of, 219 importance of the customer, 220 natural features, 220 reasons for, 219 timing, 222 cost-revenue balance, 222 non-resident amenity use, 222 development process, 216–219 stages in, 217–219 construction, 218 feasibility analysis and planning, 217 operations / management, 218– 219 team for, 216 factors in, 216 management and operations, 226– 231 general approaches, 230–231 accommodating both residential and resort guests, 230–231 exclusivity, 231 membership structures, 229–230 add-on membership, 230 tiered membership, 229–230 unitary membership, 230 organizational structures, 227–228 association (ownership) membership, 228 and community sense, 229 and control, 229 comparison of options, 228–229 convertible club program, 227 and costs, 228–229 equity club, 227 right-to-use club, 227 primary and secondary uses, 265 public access, 224–225 residential areas, 219, 222–223, 230– 231

473

and membership, 229–230, 225– 226 and timesharing, 246 trends in, 218 waterparks, 231 Recreational fishing, 139 Renaissance Clubsport, 335–342 advantages of, 338 economic benefits, 339–342 evolution of concept, 336–337 premise, 337–338 Residential Lodging, 9–18 condominium hotels, 13–14 destination clubs, 14 mixed-use developments, 15–17 multi-use communities, 17 second-home developments, 15–17 and timeshares, 11–12, 15 traditional, 9–11 trends in, 15 Resort(s): activity programming for, 261–283, see Guest activity programming amenities, 4, 9, see also Amenities and Recreational amenities and beach, see Beach-based resorts, 97–104 balance sheet, 83–84 and businesses, see Business travel and casinos, 414–459, see also Casinos check in, 248 automated, 249 communities, 6 design trends, 218, 228 destination(s), 8–9 and cruises, 403–411 economic trends, 6 fantasy, 7 floating, 368–412, see also Cruise ships and golf, 146–174, 183–211, see also Golf-based resorts handicap access, 121–122 beach, 134 golf courses, 170–172 sports programs, 363–365

S N L

MILL (Wiley)

474

INDEX

Resort(s) (continued ) history of, 2–8 hotels, 9–11 chains, 11 chains and timesharing, 234 standard rooms, 251 housekeeping, 251–252 at spas, 311 indoor water parks, 330–334 and marinas, 104, 122, see also Marinas mountain-based, 22–55, 58–95 non-destination, 9 parking, 7 beaches, 101 handicap access, 121 marinas, 118 mountain-based resorts, 43, 79–80 pets, 138 popularity, 3 preferred configurations of, 15 retail, 290–305 golf, seasonality, 6 and timesharing, 245 selling the experience, 226 social tourism, 7–8 sole purpose of, 2 spa, 308–309 specialty, 344–365 and tennis, 174–179, see also Tennisbased resorts timesharing, 11–13, 15, 234–257 Resort industry, 4–8 Atlantic City, 5–6 Civil War, 4–5 European, 2–4, 8 future, introduction to, 2–8 North American, 4–8 railroads, 5–6 trends in, 18–19 Retail, 290–305, see also Merchandising and cruises, 383 customer segments, 300–303 best, 302 children, 303 Generation X, 303

men, 300–301 older shoppers, 303 women, 301–303 dynamic pricing, 304 layout and design, 291–293 basket placement, 293 example of, 297 layout, 292–293 time, 291–292 transition zone, 293 operations, 299–300 and shopper conversion rate, 300 staffing, 299–300 waiting time, 300 profit ratios, 303–304 sales analysis, 303 price zones, 304 and spas, 313 Right-to-use club, 227 Risk management, 280–281 Romance-related travel, 126–128 honeymoons, 126–128 weddings, 126–127 Romans, 2 baths, 2 Ross, Donald, 155 Rush, Jack, 234 S Scheduling activity programs, 279 Schwanke, Dean, 223 Scotch hose or shower, 322 Scuba travel, 125–126 top dive areas, 125–126 Sea, 99 air temperature, 99 attractions, 99 attractiveness of, 99 currents / waves, 99 ecology, 99 water clarity, 99 water temperature, 99 wind and sun, 99 Seafood, 138–139 Seashore, 99–100 depth of, 100 Second-home developments, 15–17 And amenities, 219

S N L

MILL (Wiley)

INDEX

Selengut, Stanley, 348 Shopping, see Tourist shopping Shore excursions, 381–382, 408–411 elements, 408–409 promotion, 409 tour design, 410–411 tour guides, 411 Showers, 322 Site design: of ski areas, 33–34 Ski areas, see also Mountain-based resorts characteristics of buyers, 23 development of, 23–24 environmental considerations, 32–33 merchandise revenue, 290 number of, 60 types of, 23 Skiers at one time (SAOT), 38 Skiing: and adventure travel, 359 demographics of, 33–36, 64–69 history of, 58–59 length of season, 30 night skiing, 30, 39, 72 and risk management, 281 Telemark, 67 water, 359 Ski lift network, 40–42 Ski runs, 39–40 Snowboarding, 75–77 attitudes, 76–77 demographics, 64–72 future of, 76 participation in, 76 programs and facilities, 77 Snowtubing, 77–78 Snowmaking system, 27–29 pros and cons, 32, 36, 39, 63 Snowmobiling, 50 Social tourism, 7 Soft adventure, 19, 356–357 Souvenirs, 138–139, 288–289 authenticity of, 287 Spa development and operations, 308– 328 and cruises, 383–383 client preparation, 324

475

customer motivations and dislikes, 310 development, 308–313 of the concept, 311 definitions, 308 benefits, 310–311 dry rooms, 314, 326 early spas, 2–3, 308 European, 308 layout and design, 313–316 equipment, 314 holistic designs, 318 purchase criteria, 315, 316 marketing, 326–327 operations, 312–313 accounting, 312 retail sales, 313 revenue, 312–313 safety, 325 specialized ceilings, 315 tips for owners, 309 treatments, 316–318 aromatherapy, 323 combinations of, 326 exfoliation, 316 full-body treatment, 317 massage, 322–323 spot treatment, 318 water therapy, 319–323, see also Water therapy trends, 327–328 wet rooms, 314, 324 Specialty resorts, 344–365 Sports and games, 361–362 Staffing, 274–275 and casinos, 430 external candidates, 275 internal candidates, 275 job analysis, 274–275 job specification, 274–275 and program planning, 274–276 retail operations, 299–300 Steam room, 322 Stowell, Shannon, 358 Summer resorts, 6 mountain-based, 88–95 Sustainable development: of mountain-based resorts, 51–54

S N L

MILL (Wiley)

476

INDEX

Swimming pools, 328–330 and fitness, 328 maintenance, 329–330 safety, 330 types of, 328 Swiss resorts industry, 3–4 Swiss shower, 322

T Tanning / bronzing, 317 Tiered membership, 229–230 Telemark skiing, 67 Tennis-based resorts, 174–179 management, 178 ownership and, 178 planning and design, 175–178 configurations, 175–176 clubhouses, 178 indoor structures, 178 lights, 178 surfaces, 177 nonporous courts, 177 and player preference, 177 porous courts, 177 and real estate, 174 and residential areas, 178 site selection, 174–175 and climate, 175 tennis etiquette, 179 Theme parks, 6 Thompson, Robert, 288 Timesharing, 11–4, 15, 234–257, see also Timeshare owners bonus types, 241 changes in, 12 costs, 11 marketing, 242 definition of, 11 exchange, 241 financing, 15, 256–257 accounting, 257 records, 257 revenue sharing, 257 sales cycles, 257 statistics of, 256–257 history of, 11, 234 housekeeping, 250, 253

guest arrival and departure patterns, 252 size and location of units, 250 owner relations, 253 staffing patterns, 252 Mastercorp, 252 Part-time employees, 252 and hotel chains, 234 image of, 11 and keys, 248–249 maintenance and engineering, 253– 255 common areas, 254 major repairs, 254–255 priority order, 254–255 monthly assessment, 255 roles of owners, 253–254 and expenses, 252 management fees for, 254 renovations, 255 reasons for, 255 marketing the product, 241–244 direct mailing, 243 5 p’s of success, 244 advantages of, 243 disadvantages of, 244 in-house guests, 242–243 steps for the sales process, 242– 243 and purchase motivations, 241–242 referrals, 242 telemarketing, 243 operations, 244–246 activity control, 246 amenities, 246 balance sheet, 246 corporate / employer responsibility, 246 differences from traditional hotels, 244–246 employee housing, 246 facilities, 244–245 labor skills, 246 location, 245 managers, 245 personnel attitude, 245 rates, 245 recreation, 245

S N L

MILL (Wiley)

INDEX

resorts and traditions, 246 seasonality, 245 sources of revenue, 246 visitor market, 244 mixed use developments, 15 mountain resorts, 44 off seasons, 238 other terms for, 11 plan types, 240–241 public rentals, 241 reservations and the front desk, 247– 248, 250 billing, 248 check-in, 248 owner relations, 250 reservationists, 248 complications, 248 computerized systems, 248 reservations, 247 guests of owner, 247 owners, 247 rental pools, 247 renters, 247 size and location of units, 250 cleaning, 251 outdoor landscape, 250 public spaces, 250 typical unit, 251 unit design, 250 top states for, 234–235 use, 240 Timeshare owners, 235–240 accounts, 257 and revenue, 257 check-in for, 248 demographics of, 235 dissatisfaction, 237–238 and expenses, 253 hesitation about buying, 237 amount of use, 237 expectations, 237 financial concerns, 237 management fees for, 254 part compositions, 240 preferences, 11–12 purchase motivation, 236–237, 241, 242 factors in, 236

477

Florida owners, 236–237 reservations, 247 residence, 235–236 and second-home ownership, 241– 242 and maintenance, 283 use patterns, 238–239 Tipping: and cruises, 391 Tobogganing, 51 Tourist shopping, 285–290 airports, 289–290 authenticity, 287 craft villages, 290 duty-free shopping, 289 malls, 289 nationality and shopping, 287 Japanese shopping behavior, 287 reasons for, 285–287 shopping venues, 289–290 stages of, 289 types of souvenirs, 288–289 Tourists, segmenting, 275 Traditional lodging, 9–11 Trail(s), 344–347 classification of, 344–345 cross-country skiing, 151 design considerations, 346–347 development elements, 345 function, 345 Transportation: problems, 3–4 improvement, 6 Travel agents, 373, 375 associations for, 375 changes in booking scene, 375 Tubs, 320–321 oils, 321 treatment types, 321

U Underhill, Paco, 285 Underwater resort, 352 Unitary membership, 230 US Forest Service, 25–26, 34–35, 38, 40, 44, 46, 52 goals of, 25

S N L

MILL (Wiley)

478

INDEX

V Vacation ownership, 11 Vessel Sanitation Program, 396–398 Vichy shower, 322 W Waste disposal: and beach resorts, 129–131 and boats, 136–137 recycling, 130 Water-based resorts, see also Marinas; Beach development activities, 97–98 attraction of, 100 Water skiing, 359 Waterpark(s), 90–91, 231, 330–334 and children, 332–334

construction costs, 333 indoor, 330–334 size of, 331 success of, 330–341 Waterplay structures, 332 Water therapy, 319–322 best results, 320 cool water, 319 forms of, 319–320 showers, 322 tubs, 320–322 warm water, 319 Wilderness tours, 354 Winter resorts, 6 X Xeriscape, 153

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Operation Mauser

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