Operator of North Island ski areas placed in voluntary administration, experts say skiing could be ‘unsustainable’

Ruapehu Alpine Lifts Limited (RAL) has gone into voluntary administration after three years of disastrous ski seasons due to lack of snow and the Covid-19 pandemic.

The company, which currently employs 196 people, owns and operates the Whakapapa and Tūroa ski areas.

The Turoa ski area closed for the season last week, three weeks ahead of schedule.

A wet winter has seen rain wash away snow on several occasions this year, and the ski area’s 50 snow guns have not withstood the mild temperatures. Climate change appears to be a big factor after New Zealand experienced its warmest winter on record – for the third year in a row.

The disastrous snow season comes after the previous two seasons were severely disrupted by Covid-19, leaving Tūroa and its sister Whakapapa ski area on the brink of bankruptcy.

Last year, the company lost nearly $6 million and its total debt soared to over $30 million. The company has been looking for a major new investor, so far without success.

The two ski areas, which are among the largest in New Zealand, are owned by the same company and are located on either side of Mount Ruapehu. If they were forced to close permanently, it would leave the North Island without major ski areas.

PwC’s John Fisk and Richard Nacey were appointed as volunteer administrators of RAL today to try to remedy this.

“The company has had a very difficult past three years, with the impact of Covid-19 restrictions, coupled with bad weather this season, meaning the business has been placed under significant cash pressure,” said Fisk.

Fisk also said the directors of RAL explored a number of options, including a capital raise and seeking additional Crown funding, but were unable to secure the level of funding required. .

“Our job as volunteer directors is to consider a plan that can achieve a better recovery or a better outcome than the company that has just gone into liquidation.”

Fisk maintained that RAL is an important part of the central board, so it’s important that they try to retain some of its value.

“RAL can have up to 700 employees and they can bring about $100 million a year in economic benefit to the region,” Fisk said.

Ruapehu’s newly elected mayor, Weston Kirton, said he felt deeply for everyone involved at all levels, from bosses to workers on the ski slopes and around the district. He said tourists will now also miss one of the North Island’s gems.

“The community will be in shock,” said Kirton, who also served as the district’s mayor two decades ago. “I can only assume how traumatic this is going to be for the community and we are going to do our best to ease this pain.”

After all the energy and time the district has put into efforts to establish a destination in the North Island, Kirton said the past three seasons have been very disappointing.

As mayor, Kirton said he was doing his best to engage with central government to see if they could help help the business survive, which he thinks they should be doing already.

“I think the government needs to invest in districts like Ruapehu because it’s in the national interest that we have visitors in New Zealand,” Kirton said.

“I think the government has a responsibility to step up and support areas like ours to make sure these businesses survive, because it’s now a jewel in our crown, not just for the district but for the whole community. country.”

Tūroa ski area manager Johan Bergman said the season had been difficult.

“We had pretty decent snowfall, but it was usually followed by bouts of rain, which washed away a lot of the snow,” he said. “And it’s been a bit warm this winter too, across the country, so we’re really running out of snow this year.”

He looked behind him at the arid mountain.

“It should be white for now,” he said.

Bergman said he believes climate change is a background factor, but this season has been more of a case of bad luck. And he is optimistic about the future of the sport at Ruapehu.

“I still see skiing here in the North Island of New Zealand,” he said.

But the bad season exerts strong financial pressure on RAL, owner of the two ski areas. Created 70 years ago by ski enthusiasts, the company operates as a non-profit association. It is exempt from corporation tax and must reinvest its profits in the improvement of ski areas.

Even ahead of this year’s arid snow season, company auditors noted there was significant doubt about whether the company could continue to stay afloat. This week, Chief Executive Jono Dean did not immediately respond to written questions about the company’s future.

The company seems to have underestimated the threat posed by global warming. It does not mention climate change once in its latest 54-page annual report, instead listing major threats to its business as further Covid-19 disruptions and borrowing restrictions.

The National Institute for Water and Atmospheric Research (Niwa) found that New Zealand’s average winter temperature hit a new record high this year of almost 10C. It was also the wettest winter on record. Niwa concluded that climate change was a major contributor to both additional heat and rain.

Professor James Renwick, a climatologist at Victoria University of Wellington, said that as temperatures rise in New Zealand, skiing will become more untenable.

“I’ve told North Island ski operators more than once that things are going to get marginal pretty quickly,” Renwick said.

He said there would always be changes from season to season, but the trend was towards warmer winters. He said it was difficult to predict how long an individual ski area might survive.

“The further south you are and the higher you are in the mountains, the colder it gets, so the longer you can go on,” he said.

Some ski areas could even benefit, at least initially, from additional rainfall brought about by climate change if it gets cold enough to fall as snow, Renwick added.

Ski areas in some countries have increased their revenue by opening their chairlifts to mountain bikers during the summer. But the Mount Ruapehu ski areas cannot because they are in a national park and do not have authorization.

Ruapehu is stunning, an active volcano that director Peter Jackson used as a backdrop in The Lord of the Rings movies. The fertile volcanic soil at its base has allowed market gardening to thrive, including in the village of Ohakune, affectionately known as the nation’s carrot capital.

But Ohakune also counts on skiing.

Phil Jackson, who built the Hobbit Motorlodge in Ohakune nearly 40 years ago, said this year had been the worst ski season since 1983, when the mountain was covered in ice. Normally he would ski in Tūroa, he said, but this year he only skied four days on the South Island. And his RV business has been terrible.

“A shock,” Jackson said. “Two years of Covid and now another disastrous ski season. We will survive, but there will be people who cannot survive.”

Others hope the increase in summer activity could make up for the lack of skiing.

Ben Wiggins, general manager of the TCB Ski, Board and Bike store, said that while fewer people came to Ohakune for skiing and snowboarding, they saw more visitors who want to golf, fish, camp and mountain biking.

“The facilities here like bars, cafes and restaurants are wonderful, and everyone loves the small town,” he said.

Nearby restaurant Osteria, manager Teresa Mochan said diner numbers were lower this year than pre-Covid levels, but she was still busy as staff were hard to find.

“There are people who are a bit depressed I guess because they haven’t been able to go skiing,” she said.

But Mochan said she liked living in Ohakune and planned to stay.

“I have my fingers crossed that next year we bounce back and have an amazing winter season and the city can really start to show its full potential again,” she said.

– Additional reporting by Associated Press