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New Eaglecrest plan prioritizes winter operations, incurs big annual deficits despite Assembly warnings
Caution in near-term expansion of summer operations urged by consultant after gondola failure; ski area’s leaders hope new 1% seasonal sales tax aids requests for city funding
By Mark Sabbatini
Juneau Independent
Eaglecrest Ski Area leaders are considering gradual improvements over several years to stabilize and improve operations following the collapse of a grand-scale gondola plan, but the new multi-year strategy incurs large annual deficits Juneau Assembly members have previously said they’re no longer willing to support.
A two-volume strategic business plan detailing operational and financial options was discussed by Eaglecrest’s board of directors and administrative leaders during a work session Thursday night at City Hall. The strategy suggested in the plan by SE Group, a Utah-based mountain resort planning firm, is to improve existing ski area operations before considering summer activities to achieve financial stability.
"A central premise of this plan is that Eaglecrest must first stabilize and strengthen its core winter business before making significant capital commitments for summer operations," the plan states. "This does not preclude pursuing summer opportunities in the near term, but recognizes that expansion should be approached deliberately, with investments informed by realistic market potential, financial feasibility, and Eaglecrest's organizational and operational capacity. Strengthening the existing business provides a more stable foundation from which to pursue longer-term growth and diversification."
That approach "does not, however, materially reduce the annual deficit within five years," with deficits projected to continue exceeding $2 million a year during that period, according to SE Group. The plan suggests improvements to the ski area’s aging infrastructure, operational efficiencies, and targeted expansion of activities and marketing will improve Eaglecrest’s financial situation over time.
The study notes Eaglecrest’s revenue dropped from covering 67% of its expenses in 2021 to 43% during the past fiscal year. It envisions a return to 60% by the fifth year of the plan.
Among the many possibilities suggested to lure more local and tourist dollars are better food service and event space at Fish Creek Lodge, a retail store in downtown Juneau, and mountain activities such as summer tours on all-terrain shuttles and an elevated canopy walk in a forested area. Various internal measures to improve employee retention, data tracking and other administrative matters are also suggested.
The strategic plan bases its summer assessment on an estimate of 10,000 to 30,000 of Juneau’s 1.7 million annual cruise passengers being potential visitors to Eaglecrest under existing market conditions.
"Taken together, the market characteristics and competitive environment suggest that Eaglecrest’s clearest near-term position is a cruise-compatible mountain and rainforest experience that complements rather than directly replicates Juneau’s established excursion categories," the plan notes. "Potential products can benefit from avoiding constrained Mendenhall commercial access and categories already receiving substantial community attention, while taking advantage of Eaglecrest’s existing mountain setting and recreation infrastructure."
The strategic plan notes large-scale changes and benefits may be possible with a fundamental change in Eaglecrest’s potential customer base, citing as an example Goldbelt Inc.’s proposed private cruise dock on Douglas Island that could see 500,000 passengers a year.
"The Goldbelt Aaní development is significant to Eaglecrest because it could materially change the ski area’s access to the cruise market," the plan notes. "Passengers arriving on western Douglas Island would be substantially closer to Eaglecrest than those arriving downtown, reducing a current competitive disadvantage. A larger and more proximate visitor market could broaden the range of summer activities that are economically viable, particularly those requiring higher visitation and throughput, such as summer chairlift operations."
Eaglecrest leaders also said Thursday voter passage of a 1% seasonal sales tax in the Oct. 6 municipal election may make the Assembly more willing to provide higher subsidies. Assembly members this spring approved a one-time $1.7 million allocation for the current fiscal year, rather than a $930,000 subsidy from earlier years, when ski area officials said it was needed to maintain minimally acceptable operations.
Eaglecrest board member Jim Calvin said the new tax means it’s worth asking the Assembly to continue the $1.7 million funding in future years.
"I think that puts us back in a position where we can consider that as our basic ask," he said.
Calvin, during a break in the meeting, told the Juneau Independent that implementing some aspects of the plan that either cut costs or increase revenues can help patch the difference that remains between Assembly funding and the deficits projected. Board members and administrative leaders at the ski area plan to spend the next several weeks assessing various options suggested in the strategic plan to determine which are worthy of further study and implementation before engaging in discussions about it with the Assembly.
An additional factor in seeking Assembly support is two newly elected members — Mila Cosgrove and Joyce Niven — are respectively replacing Alicia Hughes-Skandijs and Christine Woll, who were the dissenters in a 7-2 vote to increase Eaglecrest’s funding at a May 13 Finance Committee meeting. Both Niven and Cosgrove told the Juneau Independent on Friday they are open to considering the strategic plan and funding it seeks.
"I'm not opposed to additional funding, or at least considering funding for Eaglecrest in light of the seasonal 1% tax," Cosgrove said. "But I would also say that it needs to be considered in the totality of all of the budget needs."
The 50-year-old city-owned ski area has consistently operated at a loss and relied on city funding to balance its books over the years, but those deficits have grown significantly the past few years. The strategic plan notes Eaglecrest’s expenses grew 58.6% over six years while revenue essentially remained flat, in part due to maintenance on long-neglected lifts and other infrastructure.
Assembly members continued to provide funds largely on the premise the installation of a gondola purchased in 2022 would result in profitable year-round operations by attracting cruise ship passengers.
But that was abandoned this spring due to costs far exceeding projections. That decision meant a multimillion-dollar loss for the city due to expenses involved in purchasing the gondola as well as repaying with interest a $10 million payment from Goldbelt to help with installation costs.
"Confidence in the ski area’s management has been damaged," the strategic plan notes. "The pulse gondola outcome is the most frequently cited cause. Participants also identified inconsistent communication, limited public outreach, and the ski area’s past practice on social media, including blocking local accounts that were critical of the operation, as contributing factors."
While the gondola’s failure is cause for caution in considering further large-scale visitor projects for the ski area, the strategic plan doesn’t rule them out — if local officials believe the Goldbelt dock or other market conditions indicate there are enough people to make them viable. Among the high-end potential projects are a gravity-driven mountain coaster and a "chondola" — a hybrid lift that can switch between chairlift and gondola fittings — although the latter’s projected cost is more than $20 million.
The ski area’s problems, along with turnover in top leadership, promoted drastic suggestions from Assembly members this year such as stripping Eaglecrest’s board of its governing authority in favor of direct management by the city. Another proposal was turning over the ski area’s operations to Goldbelt or another third-party entity. Some members questioned if the ski area could remain open unless major changes to its status quo occurred.
But Juneau Assembly members in September opted to hold off on any such actions while awaiting completion of the strategic plan initiated by Eaglecrest after the cancellation of the gondola project.
Assembly Member Paul Kelly, who was at Thursday’s workshop as the liaison to Eaglecrest’s board, told the Juneau Independent that not enough details about what parts of the plan might be implemented are known to assess if city leaders might be willing to continue large annual subsidies. Mayor Beth Weldon, who in January proposed reducing the ski area’s board to advisory status, stated in a text message Thursday night she has not yet seen the plan.
The Assembly is scheduled to consider all aspects of its budget for the coming year, including Eaglecrest, during a day-long retreat on Nov. 21.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
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