Uncertain Future for Ski Stations in Pyrenees
Tuesday 03 March 2015
Most ski resorts in the Pyrenees are too small and too dependent on local visitors to have a sustainable future, says the French National Audit Office.In their recent annual report, the Cour de Comptes paints a grim future for most ski resorts in the Pyrenees* unless they make radical changes in the way they operate.
They state that a large number of the resorts are in severe financial difficulties and are only able to stay in operation due to substantial public sector funding from the local councils.
According to the auditors: "Les contrôles budgétaires et les examens de gestion ont confirmé la situation financière très fragile des stations avec des niveaux de déficit et de dette importants. Ces déficits présentent un caractère structurel."
The cost of subsidising the resorts is also impacting on local rate levels, a problem the auditors say will become greater as the level of debt in the resorts increases. In some instances the debt outstanding is 300% to 400% of the turnover of the resort.
The broader economic benefits of having ski resorts in this mountain region are acknowledged by the auditors, but they consider these benefits do not justify "systématiquement une aide publique."
There are also questions raised about the accounting practices adopted by the managing bodies in order to obtain some kind of financial solvency for the resorts. One such practice is the failure to depreciate assets in the accounts, thereby inflating the net result.
The only bright light that emerges is the large skiing domain of Grand Tourmalet, which does turn in a profit, and where the impact of climate change is less severe, due to the height of the resort, up to 2,500 metres. The auditors infer that there are other equally successful resorts, but do not name them.
All of the 30 stations in the Pyrenees are controlled by the local councils, either alone or jointly, with private companies sometimes engaged to run the operations day-to-day basis.
The resorts are often small, some with two-thirds having less than €5 million turnover a year.
The number of visitors to the resorts has remained stagnant since 2006, and the global turnover of around €100 million has similarly only remained stable due to the increase in prices that have been imposed over this period.
However, despite the price increases, the auditors consider that tariffs have been kept artificially low in order to attract visitors.
One of the major market weaknesses highlighted by the auditors is that most of the skiers who frequent the Pyrenees are locals on short trips from within the region.
They also consider that a great deal of the accommodation in the resorts is of a standard not adapted to international tourists and that services at the foot of the slopes were not adequate.
The problem for the resorts is that visitor numbers are likely to fall in the future due mainly to climate change. Some resorts have had several difficult years of late, due to the lack of snow cover.
According to Météo-France, temperatures will rise between 1 and 1.4 degrees by 2030, and up to 3.5 degrees up to 2080.
The audtiors state that operators need to manage the effects of climate change better: "l’instabilité climatique constitue une menace sérieuse qu’il convient pour les stations d’anticiper au mieux."
However, few resorts have the resources to make any significant investment. The auditors point out that whereas the total level of investment in the Pyrenees between 2009 and 2013 was €31 million, in the Alps it was €618 million. In the past two years 2012/13 the level of investment in the Pyrenees sank to only €1.2 million.
Yet the auditors consider the investment requirements of the resorts to be substantial, both at resort level and in the highway infrastructure providing access to them.
Unfortunately, the challenges facing the resort operators are not only financial, but environmental, for although many resorts need to expand the size of their domaines to increase skiing areas and construct new accommodation, there is frequently an environmental cost to pay.
In some cases, where development plans have been promoted strong local opposition from residents and environmental groups has meant they have had to be abandoned.
Although they do not name names, the auditors state that some of the stations need to be closed.
As for the rest, the solution for the auditors is not one that is easily evident, but an increase in scale and some diversification of activities were considered to be key priorities.
The auditors also say it was time the localised operational structures were abolished: "la Cour estime que l’intercommunalité est un échelon insuffisant pour promouvoir l’activité des stations de ski et organiser la solidarité sur un territoire."
They stop short of saying that the resorts should be managed by a single unitary authority, referring instead to a 'mutualisation des moyens', with the suggestion that there should be at least be some consolidation in the operational structures.
They consider a solution needs to be found quickly: "Seule une meilleure anticipation des mutations en cours peut permettre d’éviter une fermeture brutale des stations les plus vulnérables et l’effondrement d’un pan entier de l’économie des territoires de montagne."
* The resorts included in the study were: Midi-Pyrénées : Ascou-Pailhères, Ax 3 domaines (Ariège), Superbagnères (Haute-Garonne), Gavarnie-Gèdre, Luz-Ardiden, Peyragudes, Tourmalet, Val-Louron (Hautes-Pyrénées) ; Languedoc-Roussillon : Camurac (Aude), Cambre d’Aze, Les Angles, Font-Romeu Pyrénées 2000, Formiguères, Porté-Puymorens, Puigmal, Puyvalador-Rieutort. Three resorts in the Pyrénées-Atlantiques - Artouste, Gourette, La Pierre Saint-Martin - were not included in the study.
This article was featured in our Newsletter dated 03/03/2015