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Resort sales skepticism

International resort developer: ACR expectations are unrealistic

June 8, 2011
By JESSICA COLLIER - Staff Writer (jcollier@adirondackdailyenterprise.com) , Adirondack Daily Enterprise

TUPPER LAKE - An international resort developer testified Tuesday that Adirondack Club and Resort developers are unlikely to get anywhere near what they project for property sale prices and volume.

David Norden runs a development company out of Stowe, Vt. and has worked on resorts in Japan, Korea, Stowe and Aspen, Colo. He said Tuesday that the Big Tupper Ski Area is lacking when compared with other ski resorts and won't be able to draw the kind of customer base developers expect.

He argued that a 2006 study on which developers based many of their projections is irrelevant because it's out of date. Norden presented a series of studies he performed through 2010 that he said represents more accurately the realities of today's resort real estate market in the wake of the housing bubble crash.

Article Photos

International resort developer David Norden, left, answers questions from John Caffry, attorney for Protect the Adirondacks, about sales projections for the Adirondack Club and Resort during an adjudicatory hearing session Tuesday at the Tupper Lake Train Depot.
(Enterprise photo — Jessica Collier)

Along with colleague Chris Kelsey, Norden studied the market from 2009 to 2010, surveying about 300 industry specialists and more than 6,000 customers of top-brand resorts like Okemo, Stratton and Mont Tremblant Ski Resort, assessing customers' sentiments about the market, their intentions to buy, and key motivating factors that would influence them to buy resort properties.

Based on his statistical findings in the study, as well conversations he's had with colleagues in the area, Norden said ACR developers have failed to perform their due diligence in preparing for the development.

Big Tupper is too far and hard to get to from key areas like New York City when compared with other ski areas the ACR would compete with, Norden said. It also ranks lower on a ski facility index based on vertical rise, uphill capacity and skiable acreage.

Fact Box

The Adirondack Club and Resort is a proposed project that would overhaul the Big Tupper Ski Area and build out the land around it with 651 luxury housing units and various amenities including an inn, a marina and an equestrian center. The project is under review with the state Adirondack Park Agency, and as part of that review process, it is now being studied in an adjudicatory hearing.

The eight-week hearing is broken up into three blocks based on groups of issues.

The Enterprise is live-blogging at the hearings. The blog can be seen at http://www.adirondackdailyenterprise.com/page/blogs.listAll/display/34/Jessica-Collier.html.

In this market, brand recognition is important, and Norden said that in addition to Big Tupper not being a well-known name throughout the Northeast, the mountain has already failed several times, so people who are familiar with it don't necessarily trust the brand.

Plus, the type of ski lifts proposed are not on the cutting edge of technology. The used, fixed-grip lift that ACR developers want to install to overhaul the ski area is behind the times when compared with gondolas and other high-tech lifts at other regional ski areas.

"I don't think it compares well at all with the competition," Norden said.

The ACR will have to compete with ski areas all over New York, New England and even Pennsylvania, not just locally, especially if it's going to attract the high-end clientele developers say they want, Norden testified.

"I believe that Tupper Lake will need to compete regionally, not just locally," Norden said.

He argued that the cities within a five-hour driving distance, which ACR witness and resort marketer Terry Elsemore testified last week would be the main market area for most of the smaller properties on the site, are either too small or have too much competition. Syracuse and Albany have a limited number of buyers who can afford seasonal homes like the ACR wants to produce. In Montreal, a bigger market with more wealthy people, there are a number of better ski areas that are closer, like Mont Tremblant, Jay Peak Resort and Mount Snow.

It's a buyers' market right now, Norden said. People are spending a lot of time researching their decisions, and they're asking every question possible.

Because of that, Norden said, the ACR plan to sell lots and then build single-family homes and townhouses won't fly.

"In 2006 through 2008, financial institutions broke down, promises were broken, people lost trust," Norden said. "The notion that you can sell on promise is gone. People want to see it to believe it."

Also in light of that reality, Norden said ACR plans to wait until the third year of development to invest in the ski area will mean resort properties will be less marketable.

Because of all this, Norden said he doesn't expect developers will be able to get anywhere close to the revenues they're projecting.

"As proposed, $38 million in revenue annually for 15 years is very, very difficult to achieve," Norden said. "I can't find a ski area of this scale that has produced the type of results that are being proposed."

ACR attorney Thomas Ulasewicz is scheduled to cross-examine Norden today.

 
 

 

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