Overview of the Japan Ski Market

It can be stated that global interest in snow resorts is on the rise. Furthermore, Japanese ski resorts must not overlook the increasing interest in winter sports among Chinese individuals, sparked by the large winter event held in Beijing in February 2022. This study provides an overview of the domestic and international snow resort market environment, as well as customer trends, in order to contemplate the measures that domestic ski resort operators should undertake in the future.

Global Trends

An overview of global trends in snow resorts reveals a heightened interest.

According to "THE SKI REPORT," a report by the London-based international real estate provider "Savills," the demand for mountain resorts (snow resorts) that offer both the green season and the white season, avoiding the effects of the COVID-19 pandemic and urban warming, is increasing. The prices of luxury resort properties targeting the affluent are expected to rise globally. In recent years, Niseko in Hokkaido has gained popularity among foreign skiers, with a succession of luxury brand entries by foreign hotel operators. An environment is believed to be forming to attract the world's affluent individuals. However, global awareness is still not sufficient, and compared to snow resorts worldwide, real estate prices in Japan remain relatively affordable.

Furthermore, in neighboring China, the large winter event held in Beijing in February 2022 generated numerous spectacular moments and concluded successfully. In 2015, China announced a plan to expand the winter sports population to 300 million people as a commitment when successfully attracting events. As a result of promotional efforts across the country, by October 2021, it is said that China's winter sports population had exceeded 346 million people, surpassing 24% of the national population. China's winter sports industry has grown from 270 billion yuan in 2015 to 600 billion yuan in 2020, and it is projected to reach 1 trillion yuan by 2025. According to Savills' report, the majority of participants are under the age of 40, with around 80% being beginners, and it analyzes that by 2027, the group with a 59% increase in income will grow. With the ongoing development of winter sports in China, it is expected that the demand for snow resorts will naturally increase. Japanese ski resorts could initially capitalize on this demand. In the medium to long term, the trend might extend to the more luxurious ski experiences offered in Europe and North America, but for now, the focus will likely shift to snow resorts within Asia.

Based mainly on the above two points, global investors are paying attention to Japanese snow resorts.

Domestic Trends

According to the "Leisure White Paper 2020" published by the Japan Productivity Headquarters, the size of the Japanese ski and snowboard market for the fiscal year 2019 is estimated to be approximately 53 billion yen, which is less than half compared to the late 1990s during the end of the economic bubble era. Over the past decade, there has been relatively little fluctuation, with the market size remaining in the range of 50 to 60 billion yen, indicating a stagnant situation.

Demand

One of the major factors contributing to the contraction of the market size is the decline in the domestic ski and snowboard population in Japan. For the fiscal year 2019, this population was estimated to be around 5.1 million people, which is less than 30% of the number in the late 1990s. In terms of Japan's total population, the proportion engaged in these activities has decreased significantly, from around 14% to about 4%. This decrease can be attributed to the increase in the "interruption group," which consists of individuals who enjoyed skiing during the bubble period but then moved away from winter sports due to factors such as raising children. Another factor is the decline in participation among individuals in their 20s and 30s. The latter group faces economic barriers from the preparation stage for skiing or snowboarding, such as the high cost of sports gear and the need for snow tires for personal vehicles.

On the other hand, the number of foreign visitors engaging in skiing and snowboarding within Japan has been increasing year by year. It was estimated that there were approximately one million foreign skiers and snowboarders in 2019, potentially reaching a scale of about one-sixth of the domestic Japanese population engaged in these activities. The nationalities of these visitors primarily comprise individuals from Asian countries where there is limited snowfall or underdeveloped ski resort facilities. Europeans, Americans, and Australians constitute around 20% of this group. Foreign skiers and snowboarders visiting Japan not only enjoy snow resorts but also exhibit strong demand for Japanese cuisine, nature and scenic spot tourism, and hot spring bathing. Some visitors even divide their 10-day stay in Japan, dedicating three days to urban sightseeing including nightlife and seven days to enjoying snow resorts.

Supply

About half of the management entities for domestic ski resorts are private, while the remaining half involve public entities. Many of these facilities are small-scale with less than five ski lifts (gondolas and chairlifts). These lifts were mostly installed during the late 1990s, a peak period for the domestic skiing population. While maintenance for safety is ongoing, there has been a lack of investment in updates, leading to issues of aging infrastructure that require attention.

Given this operational environment, statistical data indicates that businesses diversifying their offerings tend to have a higher proportion of profitability on an operating income basis compared to those solely involved in ski lift operations. These diversified businesses are focusing on innovations that allow non-skiers to enjoy snow resorts, as well as enhancing their offerings during the green season. This diversification strategy is aimed at attracting a wider range of customers.

Case Study (Vail Ski Resort, USA)

Vail is a world-renowned ski resort located approximately 2.5 hours away from Denver International Airport via shuttle bus. With a base elevation of 2,454 meters and a summit elevation of 3,527 meters, it boasts dry snow conditions ideal for powder skiing. The resort is divided into three main areas: Front Side, Back Bowls, and Blue Sky Basin. Its total skiable area covers around 2,140 hectares, which is approximately 15 times the size of the Naeba Ski Resort in Japan.

Vail benefits from favorable physical conditions, and there are many operational strategies that can be learned from its approach.

Firstly, the implementation of the "EPIC PASS," a card-type ticket system, stands out. By purchasing a season pass, customers can not only access Vail but also approximately 40 other ski resorts across the United States and several locations in Europe (France, Italy, Switzerland, Austria), as well as partner resorts in Japan (Hakuba and Rusutsu), where they can ski for up to 5 days. This system not only enhances customer convenience but also gathers customer behavior data. It's not only used to improve in-resort consumption but also for disseminating information about discounted lift ticket pre-sales, thereby retaining customer loyalty. Additionally, since the passes are sold during the off-season, a significant portion of the annual lift ticket revenue is secured before the season begins, minimizing the impact of uncertain factors like bad weather or snow shortages. These funds are then invested in upgrading facilities and employment, leading to a planned enhancement of the ski resort's appeal.

Apart from the ticketing system, Vail has implemented soft-side strategies that encourage visitors to view it as a winter mountain resort rather than just a ski resort. These include upgrading slope-side restaurants and creating photo spots designed for visitors' social media sharing.

Looking Ahead

When considering the potential for growth in the future domestic ski and snowboard market or identifying ski resorts that can endure, the key lies in targeting specific demographics and employing appropriate strategies. Given macro trends like Japan's population decline, effectively catering to the growing inbound tourist market becomes essential.

Visitors from China and Southeast Asia generally express a strong interest in experiencing skiing and snowboarding in Japan. This demographic tends to consist of younger, relatively inexperienced individuals. On the other hand, visitors from Europe, the United States, and Australia, where skiing is a well-established travel pursuit, often have intermediate to advanced skills and prefer longer stays of a week or more to enjoy Japan's renowned powder snow ("JAPOW"). These international visitors also share a common desire for Japanese cuisine, shopping, hot springs, historical and cultural experiences, and nightlife, indicating that they're seeking a holistic travel experience beyond skiing and snowboarding.

To capture this diverse market, ski resorts in Japan can focus on diversification and creating tailored "ski tourism" experiences for different target groups based on the unique characteristics of each resort. It's possible that Asian visitors, who can't easily enjoy skiing in their home countries, might become ski and snowboard enthusiasts in Japan, potentially leading to repeat visits.

For the domestic ski and snowboard market, two key points are vital for sustainability: "re-engaging ski discontinuers" and "retaining existing ski enthusiasts aged under 30." With individuals who started skiing during the bubble era now being over 50 years old, it's challenging to reignite their interest in physically demanding skiing activities. Moreover, attracting younger demographics and stimulating demand won't be enough to counter Japan's accelerating aging and declining population. Discontinuers, however, represent a latent market. These individuals have likely passed the phase of raising children and are financially stable. The reasons for their hiatus often stem from diminished interest or time constraints, rather than financial or physical limitations. By providing innovative ways of experiencing skiing, such as resorts that are tourist destinations or convenient vacation spots for remote work (workations), or year-round mountain resorts with scenic views and excellent restaurants, ski resorts can recapture the attention of these discontinuers.

For areas with convenient access from urban centers, like those connected by shinkansen (bullet train), the potential to offer high-quality residences or hotel-branded-residences is considerable. These areas could attract urban migrants by offering comprehensive education and healthcare facilities.

In terms of dining, ski resorts could provide high-quality restaurants that appeal not only to skiers and snowboarders but also to people seeking a top-notch dining experience, similar to environments like the one in Chamonix, France, where diners can access a restaurant at an elevation of 2,500 meters while wearing high heels.

For younger demographics and existing ski enthusiasts, affordability is a crucial factor. Lowering the barriers to entry for skiing by offering convenient and affordable ski resorts can foster loyalty and repeated visits. For example, offering a subscription-based rental model for snow gear might be appealing. In locations with limited access from urban centers, targeting intermediate to advanced skiers and providing professional support could contribute to attracting customers. By offering year-round gear maintenance, storage, and personalized advice from professionals, ski resorts could attract repeat visitors.