Federal PPP loans could help small, mid-sized ski resorts stay afloat
Hundreds of ski areas are breathing a sigh of relief after the federal government adjusted rules to its Paycheck Protection Program earlier this month to make loan forgiveness more attainable for winter resorts.
The ski industry rallied to get governors and congressional delegations in ski states to lobby the U.S. Treasury Department to expand the pay periods that can be used to determine compliance with PPP requirements. The initial rules didn’t let ski areas use the periods when they were open. Many resorts were forced to close in mid-March as the pandemic struck.
The National Ski Areas Association, based in Lakewood, helped lead the effort to change the rules. NSAA officials said the program was important to numerous resorts after the economic blow in March.
“Some ski areas have reported losing up to or over 20 percent of their revenues due to early closures,” said Adrienne Saia Isaac, director of marketing and communications for NSAA. “With significantly altered spring and summer operations, the Paycheck Protection Program could be vital for many across the nation.”
NSAA estimated that about 75% of the ski areas across the country were eligible. There are about 475 ski areas in the United States. The PPP program benefited small and mid-sized resorts — those most likely to be struggling with the economic blow.
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Many resorts, especially in the West, had their ski seasons shortened, said Dave Byrd, NSAA’s director of risk and regulatory affairs. Now, nearly all resorts will have summer business such as concerts and weddings cut short, postponed or canceled.
“These loans will allow ski areas to retain critical, year-round employees and keep them off unemployment and continue with some of their capital projects and begin the reopening process for maintenance and some limited guest operations,” Byrd said.
Aspen Skiing Co. didn’t apply for a PPP loan, according to Jeff Hanle, vice president of communications. The much smaller Sunlight Mountain Resort outside of Glenwood Springs was able to secure a loan, according to Tom Hayes, general manager.
“We did receive PPP funding in mid-April,” Hayes said. “At the time, the ski industry recognized that the look back period for payroll expense forgiveness did not favor winter seasonal businesses.”
He credited NSAA, Colorado Ski Country USA and other state ski area associations with scrambling to get the Treasury Department to allow winter seasonal employers to use a period that more accurately reflected their payrolls.
“This will greatly improve the ability for lenders to calculate the amount of the PPP loan funds that will be forgiven,” Hays said. “With this change, I’m confident that our PPP loan will be mostly, if not fully, forgiven.”
A key part of the lobbying effort was getting 16 governors of states with ski areas, including Colorado Gov. Jared Polis, to send a letter to the Treasury Department and Small Business Administration outlining the problem with the initial loan forgiveness provisions. That letter was delivered May 13. Two other governors penned their own letters.
“Winter seasonal employers meet the eligibility requirements for PPP loans, but they will be unfairly penalized by the forgiveness provisions,” the letter said.
The Treasury Department notified the ski industry May 15 that the employment periods examined for PPP implementation would be adjusted.
“That governors’ letter was hand-delivered to the White House 48 hours before this improved guidance form the SBA was released,” Byrd said. “It shows that when businesses actively engage with their elected representatives, positive, sensible change can still happen.”
NSAA estimated that under the initial legislation, only about 20% of ski areas that received a PPP loan would achieve loan forgiveness, according to Byrd. The Small Business Administration’s modeling indicated year-round businesses would achieve 80% to 90% loan forgiveness. With the new rules, ski areas will be able to maximize their forgiveness, he said.
It remains to be seen if the forgiven loans will be enough to save all the smaller ski areas that needed help. The U.S. ski industry logged its fourth-best season in 2018-19. Skier visits hit 59.34 million.
Saia Isaac said no data is available yet for last season.
“That analysis has been delayed to give our areas time to focus on getting back to work,” she said.
Aspen Skiing Co. hasn’t announced its skier visits percentage change for 2019-20. It logged 1.55 million visits in 2018-19.
Lodging occupancy in Aspen and Snowmass Village was down 22.5% for the winter. If skier visits followed suit, Skico lost about 350,000 visits.
A national decline of 22.5%, purely hypothetical, would place the season’s skier visits at around 46 million.