This Swiss Ski Station Makes More Money When No Snow Falls

  • India visits offset China slowdown, strong franc and poor snow
  • Titlisbahnen’s annual returns have averaged 28% since 2009

A skier sits on a cable car by Mount Titlis.

Photographer: Fabrice Coffrini/AFP via Getty Images

After three snowless Christmases, some Swiss ski resorts are making more money in July than in December -- and Hans Grueter doesn’t have a problem with that.

Grueter, a retired bank executive, owns almost 11 percent of Bergbahnen Engelberg-Truebsee-Titlis AG, which operates one of Switzerland’s few publicly traded ski resorts at the foot of 3,238 meter-high (10,620 feet) Mount Titlis.

Over the past 18 months, the stock has looked anything but a winning bet as profit was eroded by a strong Swiss franc, tighter visa restrictions on Chinese visitors and a lack of snow over the New Year. But Grueter -- who has a holiday chalet in the area -- takes the long view, a strategy that has paid off as the stock has tripled since he first bought shares in 2009, lifting the value of his holding to about 23 million Swiss francs ($23 million).

“I bought the stock the first time almost out of a sense of goodwill, and since then it’s increased many times over,” he said. “Running a winter sports station is expensive, summer is more profitable.”

It’s a sentiment echoed by Norbert Patt, Titlisbahnen’s chief executive officer. While winter activities make up a little over half of total revenue, they contribute only about 35 percent of the resort’s profit. The remainder stems from overseas summer tourists, hikers and other non-skiers spending on hotel accommodation, meals, lift tickets, mountain-biking and treetop-climbing.

That shift over time has helped insulate the ski station from the vagaries of unreliable early-season snow. Investing in snow-making technology and embracing four-season tourism from China and India have also helped compensate.

Four-Season Tourism

Titlisbahnen’s stock rose 465 percent from the end of 2009 through Jan. 31, 2017, including dividends, producing an average annual return of 28 percent.

The shares rose 2.8 percent, the most in three weeks, to 330 Swiss francs in Zurich trading on Wednesday.

The company can hold its own against much bigger U.S. peer Vail Resorts Inc., whose shares have enjoyed a similar triple-digit surge but which have been supercharged by a string of snowy North American winters and acquisitions, including that of Whistler Blackcomb Holdings Inc., host of the 2010 Winter Olympics alpine skiing events.

European rival Compagnie des Alpes, which owns French resorts la Plagne and Meribel as well as ski stations in Russia and East Asia, has had a more mixed performance, gaining 10 percent over the past 18 months but down 2 percent this decade on a total return basis.

A major snowfall in November followed by an investment in artificial snow kept the pistes open over Christmas when other resorts struggled with the lack of “white gold,” said Patt. That pushed visits between opening day and Jan. 24 to 238,000, an increase of about 5% on the year earlier and on a par with the 2014-2015 season, its best year on record, he said.

Fresh Snow

A cold January and fresh snow should extend the season through April into May, Patt said.

Bookings at Titlisbahnen’s two hotels and apartment complex for May and June -- the peak month for visitors from India -- are “very good” and better than in 2016, he said. July through September are the busiest months for Chinese tourists, with demand from that country appearing to have stabilized, he said.

Grueter and his wife have steadily increased their stake in Titlisbahnen as other chalet owners in the area grew frustrated with unreliable snow cover and sold out. The opportunity to buy the stock doesn’t arise often, he said. Grueter snapped up an additional 3,000 shares last year, a step he’d definitely repeat at the next opportunity.

Grueter likes the fact the mountain’s management team keeps a “very, very long-term outlook” on the business. “You need that. Short term doesn’t work.”

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