How to run a profitable ski resort? Think summer, too

The Sugar Loaf ski resort closed in 2000, but other northern Michigan ski resorts have succeeded in staying open, remaining popular, and turning a profit by diversifying their offerings.

Just down M-22 in Glen Arbor, The Homestead resort boasts a small ski operation, but one that rivals Sugar Loaf in vistas. The main hill at The Homestead, small compared to Sugar Loaf’s “Awful Awful” run and tiny compared to resorts in Colorado, nevertheless offers incredible views of Lake Michigan’s Sleeping Bear Bay and the Manitou Islands in the distance.

Paramount to The Homestead’s success is that winter sports are only part of what the resort offers guests. The Homestead has year-round amenities including golf, tennis, a beach, fine dining and weddings.

The same is true of other successful northern Michigan ski resorts, including Boyne Mountain near Petoskey, Shanty Creek near Bellaire and Crystal Mountain in rural Benzie County.

“Our philosophy is to make money year-round,” says Crystal Mountain CEO Jim MacInnes. “For an Up North destination resort, that’s important.” During his tenure, Crystal Mountain has spent $75 million to upgrade its facilities and become an all-season resort and destination for weddings and corporate events.

Running a ski resort is decidedly expensive, particularly if warm winters force the resort to make its own snow. In the case of Sugar Loaf, which hasn’t operated in 14 years, a new owner would need to purchase new chairlifts, and then go through the laborious process of getting them certified by the Department of Licensing and Regulatory Affairs.

Crystal Mountain recently purchased a new chairlift for $800,000 and, MacInnes estimates, spent another $200,000 to install it. He and others assume that Sugar Loaf would have to replace all five of its lifts, to the tune of $5 million. Snowmaking equipment and high-efficiency snow guns are additional expenses that would be particularly crucial for Sugar Loaf because of its proximity to Lake Michigan.

Some within the industry have estimated that it could take $20-$30 million to reopen Sugar Loaf. That’s a daunting figure, especially if the buyer didn’t also own the golf course, which would generate income during the summer and fall.

“By the time you invest all that money in chairlifts and snowmaking, you’d need a lot of skiers to visit before you could pay the bills,” adds MacInnes, who warns that the regional market isn’t that big. A resort needs to pull skiers from all over the state. “Once you lose momentum in the marketplace, like Sugar Loaf has, it would take five years or more to rebuild that market.”

Mickey MacWilliams, executive director of the Michigan Snowsports Industries Association, agrees that Sugar Loaf would face an uphill battle regaining its share of the winter sports market, and an expensive one at that, but she does not think the market is oversaturated.

“The location is great and it’s beautiful,” says MacWilliams, who worked at Sugar Loaf during its heyday. “They’re the closest resort to Traverse City, so they could pick up local business. There’s enough of a market out there for Sugar Loaf to open and be able to fill their slopes. …Whether or not the cost of bringing it up to standards is affordable is another matter altogether.”

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Fri, 02/28/2014 - 9:35pm
I agree that Sugar Loaf is a beautiful site. I would not agree that the location is great, except for locals. To get to Sugar Loaf from the larger population centers in the south, one has to travel many miles from major roads which can be difficult in the winter (especially this winter!). Crystal Mountain, Boyne Mountain, Boyne Falls, and Shanty Creek are all located on or very near to state or US highways. Yes, Sugar Loaf is on M-22, but it is not easily accessible from I-75 or US-131. Adding to the problem is that the ski resort has been separated from the golf course and housing development, making it improbable financially to resurrect the resort.