The Investment Competition among Swiss Ski Areas

Pascal Troxler, Marcus Roller, Monika Bandi Tanner

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft - CRED

Abstract: In recent years, ski area operators in Switzerland have faced a decreasing demand due to climate change, exchange rate pressure and demographical changes among other factors. At the same time, ski lift and snowmaking capabilities have increased – partly with financial aid from public funds. It is therefore crucial to find out how much ski area investments retain demand and affect the competition for the remaining guests. We link firm-level data from ski areas to natural snowpack data and use Two-Way Fixed Effect (TWFE) estimators to study (i) how ski areas lower their dependency on natural snow by investing in snowmaking facilities, (ii) the effect of ski lift investments on skiing demand and revenue and (iii) the impact of lift investments on the spatial competition between neighboring ski areas. We find that ski areas with above-median snowmaking capabilities lower their dependency on natural snow by two-thirds. Ski lift investments induce a one-time positive average effect of 4.1% on demand and 1.9% on revenue in the winter following the construction. Finally, we document negative effects of ski lift expansions of neighboring areas within a road distance of up to 50 kilometers on demand.

Keywords: : Ski area operators; investment competition; ski area expansion; ski lift replacement; snowmaking; spatial competition; tourism (search for similar items in EconPapers)
JEL-codes: L83 L88 R41 Z32 (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-com and nep-ure
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