Report on current infrastructure and programming of the Kinosoo Ridge Resort completed

A report was recently prepared for the Municipal District of Bonnyville (M.D.) to comprehensively address a request from the Municipal District of Bonnyville Kinosoo Ridge management team for the Legacy Tourism Group to evaluate the current infrastructure and programming of the Kinosoo Ridge Resort.

A feasibility study was then completed to investigate the opportunity to expand and enhance the Kinosoo offering into a four-season resort, followed by a business plan to support this initiative.

The Legacy Group team would like to acknowledge the support and timely responses to information requests and questions regarding past and current operations at the facility, particularly Bowen Clausen, Kaylee Pollock, and Philip Crampton.

Legacy Group CEO Rod Taylor, COO Jim DeHart, and Legacy Ski Operation specialist Sam Oettli visited the resort from November 5 to 7, 2021.

The team met with M.D. and key leadership members of the resort, toured the facilities, and walked much of the surrounding Alberta crown lands surrounding the current leased property.

The report’s first section reviewed the current infrastructure and programming with assessments and recommendations to improve the existing facilities.

The assessment builds upon the original, detailed Operational Review conducted by Kinosoo management in February of 2021.

“In general, the current state of the infrastructure is mixed,” Legacy Tourism Group wrote in the report. “There are some major issues to be addressed, such as replacing the green chairlift. On the other hand, while there are some deficiencies in many of the buildings, such as drainage around the lodge, and congestion and poor flow in the main floor common area, overall, the facilities and equipment are appropriate for a hill of this size and all the deficiencies should be able to be addressed effectively.”

Potential operating model options for Kinosoo Ridge Resort

The second section of the report addressed possible operating model options for Kinosoo Ridge Resort.

Of all the options reviewed, the Municipal Controlled Corporation (MCC) is recommended as providing the best chance to manage and develop the Kinosoo operation as a stand-alone four-season business,” Legacy Tourism Group said. “It also allows to formally include Cold Lake and other entities to participate in the operation and share in the potential risks and rewards.”

However, the report detailed costs associated with setting up the MCC to comply with provincial regulatory requirements, but the ongoing reporting and filing are similar to any other private operation.

“The MCC still allows for full control of the operation through a board; however, it separates the legal liability from the municipality and allows for its staffing policies, wage levels, hours of work agreements, and other significant adjustments to the operation that can result in significant savings,” Legacy Tourism Group explained in the report to M.D. Council.

The most significant potential negative impact outlined in the report would be the loss of the ability to borrow directly from the Alberta Capital Finance Authority. However, MCCs may sometimes receive financial assistance at start-up and preferential access to municipal assets to provide services to residents. This can include financial, capital, or asset support for a set period during the start-up and transition period and support for access to capital in future years.

Market demand and feasibility

The report’s third section provided a detailed market demand and feasibility analysis for a potential four-season resort. Provincial and regional demographics, market segmentation, and competitive comparators were reviewed. The primary market was determined to be the catchment area within a two-hour drive of the resort and the secondary market within a four-hour drive.

The report showed that the primary market for the resort is the potential guests who may visit the spa for a day-trip experience and the secondary market are the guests who may travel to the resort for a multi-day experience.

“This research resulted in the findings that the catchment areas and corresponding cohorts qualified by geography, age, and income provide enough potential guests to support a four-season resort at Kinosoo,” Legacy Tourism Group said. “Using Environics Analytics detailed PRIZM data, the two-hour catchment area includes 43,764 households with 116,605 residents. Approximately 94,000 are qualified by age, and 77.3 percent of all households are qualified by social group (i.e., school-aged families).”

Legacy Tourism Group explained to Council that the four-hour catchment area includes 704,645 households with 1,898,811 residents.

“Approximately 1.5M are qualified by age, and 77.1 percent of all households are qualified by social group,” Legacy Tourism Group said. “The reality is that although Cold Lake is in a relatively isolated location, the surrounding region has no real competitor to an enhanced Kinosoo product.”

The report explained how The Snow Valley resort located in Edmonton is the leading competitive product. It is still possible to envision a family wishing to travel out of town to a new area for a weekend getaway at a resort such as the enhanced Kinosoo resort.

“Guests who reside between the two facilities are likely to visit Kinosoo. Legacy Tourism Group said that the recommended, enhanced Kinosoo guest experience should be significantly more attractive than Snow Valley’s offering, accessed by less congested roadways,” Legacy Tourism Group said.

Once the positive market feasibility and potential market segments were identified, the final section of the report provided recommendations for the new infrastructure and activities that would compete with Snow Valley and create the critical mass necessary to create a guest experience compelling enough to entice a family to drive four hours or more to stay for a multi-day vacation.

“This concept of critical mass is perhaps the most important finding of the entire report,” Legacy Tourism Group said. “While the Kristallturm Aerial Park was the best choice for this type of attraction, alone it is a stranded asset, that is an attraction that by itself is not enough to be a compelling reason for guests to travel even two hours for a day-trip experience.”

The Legacy Tourism Group told Council, “What is required is a mix of activities that will attract a diverse market segment from singles to couples to families, children to parents to grandparents.”

The report also determined that to monetize the added activities, additional accommodation is required to allow guests to stay on the property in both the winter and summer seasons.

“The addition of twenty yurts has been recommended and a significant expansion to the French Bay MD Campground to provide this necessary infrastructure,” Legacy Tourism Group said.

The report recommends winter and summer activities.

The report presented to Council on April 20 also recommended winter and summer activities be chosen based on the following criteria:

• Cost. Some activities could be relatively expensive, such as a catered long table dinner combined with a musical performance and a night’s accommodation. Others are deficient or have no cost, such as an unguided fitness hike or a game of disc golf or horseshoes.
• Guided vs. Unguided. Activities include both unguided and guided experiences to ensure that both types of visitors are accommodated.
• Physical vs. Sedentary. Some market segments are not looking to exert themselves so much (i.e., Rejuvenators), while others are likely up for a challenge. (i.e., Adventure/Fitness Seekers) The activity menu offered must accommodate all five segments.
• Age-Specific Activities. Most of the activities can be tailored to a specific audience. A guided hike, mountain bike rides, ecological workshop, musical performance, etc., can be created for kids and seniors.
• Indoors/Outdoors. The reality is that some activities are easier to stage indoors than outdoors, and some specific audiences will prefer the indoor domain. Inclement weather can also force an outdoor activity indoors. The educational space within the multi-activity facility (lodge) should allow this to happen as required, particularly for seniors and school programs.
•  Scheduling Flexibility. The range of activities allows for daily, weekly, and monthly programs, one-off events, and annual events to address the needs of the broadest market possible.
• Environmental Appropriateness. All the activities listed have been chosen as it is believed that there is a way to offer these activities sensitive to the Kinosoo natural environment. Where the activities are located is a big part of this equation.
• Seasonality. For over 20 years, ski hills worldwide have been transitioning into year-round destinations. Kinosoo is no different, and transitioning to a four-season model is advantageous, from increasing profitability to providing year-round employment, making the recruitment and retention of key staff easier.

A profitable enterprise that is financially sustainable

Lastly, each major activity outlined pro forma financials in the report. Based upon very conservative sales/visitation projections, all accommodations are provided that demonstrate that Kinosoo can be a profitable, financially sustainable enterprise requiring much fewer subsidies for the M.D. than are currently needed.

“Once the additional pillar enhancements are in operation, the projected EBITDA for the new experiences by 2025/2026 covers the current operating losses. By 2028 totals $2,992 million, which covers the current operating losses and returns a profit,” Legacy Tourism Group said. “Recognizing the significant capital required ($12.668M) to achieve these revenue numbers, a timeline for implementing the business plan and subsequent construction that amortizes these costs is included.”

The report noted that a commitment to excellence is a key factor in the resort realizing the opportunity before it.

“The execution of this business plan needs to be done in its entirety and done well,” Legacy Tourism Group said. “In the absence of this commitment, it is unlikely that the financial projections in the report will be realized.”