With vote on hold, Targhee presses financial viability

Wednesday, October 03, 2007

By Ben Cannon

The absence of a county commissioner at last Wednesday’s special Grand Targhee Resort meeting meant there was no vote on the resort’s bid for expansion. In the meantime, resort principals began to contest the board’s conditions, saying the sum of their parts did not equal a successful business formula.

“My hope was that this could have potentially been the last day,” Board Chairman Andy Schwartz began, at the Sept. 26 meeting in an auditorium at the Teton County Library. “In deference to Commissioner [Bill] Paddleford”- who was out due to illness - “we cannot vote either on issues outstanding or the final vote.”

For the first time in a years-long application process Targhee owner Geordie Gillett and his consulting team began to shed some light on the financial viability of the resort, saying the commissioners’ efforts to cut their expansion proposal from 592 dwelling units to 450 does not allow for a viable business – especially with proposed mitigations scaled to a larger project.

Targhee spokesman Richard Shaw of Designs Workshop said the commissioners had, so far, conditioned a motion that amounted to “a shell of approval that’s crippled, that will not succeed and which will not be followed through.”

Shaw presented to the board a vague indicator of a resort’s financial viability based on the “utilization” of recreational resources and amenities. Grand Targhee, by that measure, has been running at about 40 percent utilization, whereas “successful Colorado resorts” and Jackson Hole Mountain Resort are running above 50 percent, Shaw said.
During the winter of ’05-’06  – a banner season for snow conditions and skier visits – the resort lost 90 cents per skier, Shaw explained.

He added that the resort as it has operated over at least the last few winter seasons is “financially unsustainable.”

The crux of his argument was with much of the resort potential underutilized, Grand Targhee currently only lures skiers in significant numbers during “episodic” periods, e.g. on weekends and holidays.

He showed the board a complex graph that took into account “cost threshold” and “unused capacity,” saying these two factors together do not allow for a sustainable business.

Shaw also argued the amount of capital currently needed to simply operate and maintain the resort during the winter season created a net loss with regard to skier revenue. Also, with families looking to publications like “Ski” magazine to learn about amenities and extras at a resort – what the experience is like, food and beverage options, etc. – a Grand Targhee Resort expansion as the board had conditioned it could not be successful.

“At 450 units, we would have so low a number of people at the resort we could not make the project work”, Shaw contended.

Commissioner Hank Phibbs wanted more transparency and a better look at the business model and viability thresholds. Gillett suggested that perhaps a third party could audit his plan, but he said he would not reveal his numbers to the public.

“That’s my business,” he said, before expressing his frustrations to the board for not crediting him with objectivity or trust.

“Not to say trust or not trust,” Phibbs responded. “It makes it difficult as a public decision maker to not know more about the business model”, he said.

Gillett told the board he would want to review the impact that concessions Targhee had previously offered or agreed to, including a $500,000 grant to the county and a transportation plan to provide a transit system to the resort from Driggs, Idaho, might have on the master plan on a concession-by-concession basis.

“When the conversation reaches a round where we don’t think the resort will work … [there are] a number of different issues I believe we’ve compromised on I would like to revisit,” he said.

Jackson Hole Conservation Alliance Executive Director Franz Camenzind said during a public comment period at the meeting that he too would like to see more information on Gillette’s business model. “Clearly the applicant is basing their proposal on financial needs,” he said. “We only saw a very narrow window of that today.”

Camenzind added he would like to know how summertime business at the resort figures into Grand Targhee’s year-round business equation.

“If we can’t work this out, maybe they’re just asking too much,” Camenzind suggested gravely.

The next meeting is scheduled for Oct. 16 at 9 a.m., although it is not clear if Paddleford will be well enough to attend the meeting when he returns from treatment in Salt Lake City this week.


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With vote on hold, Targhee presses financial viability | Planet JH News Article: Development

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