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BRIEF OVERVIEW OF BUDGET BOOK
Summary:
The next two years is going to be full of challenges and opportunities as we start down the path to financial sustainability with the installation of the Gondola and expansion of operations into a year around revenue generating enterprise. Eaglecrest plays a very critical role in the overall health and ecosystem of Juneau as one of the most important tools to attract families and outdoor enthusiasts to take up residency in Juneau. We are very blessed to have such a gem of a ski area in a town with such a small population of 30,000 residents. Typically, it would take a much larger metro area to support such a quality facility. Costs of operating a ski area in the last decade have skyrocketed especially for a 47 year old facility. Thanks to the CBJ Assembly and residents of Juneau we have not only sustained operations over the last 5 years, but we have been on a growth trajectory, seeing an increase of $853,919 in total revenue. Unfortunately, expenses have been outpacing revenue growth.
As we look back over the last five years there are five main cost centers that have driven this increase in total expenses with the cost of labor being the number one driver. The chart below provides a quick snapshot of these expense centers and their impact on total operating costs of the ski area. As you can see, just these five cost centers have outpaced revenue growth.
Financial Needs and Increment Requests:
Eaglecrest will require additional investment to maintain its status quo slow growth trajectory and will have additional short term financial needs as we grow from a 6 month a year revenue generating venture into a 12 month per year revenue generating facility. The chart below will summarize the various financial needs separated by status quo base budget and expansion expenses for both FY25 and FY26. Also shown in the chart is our anticipated new revenue from the start of summer operations in the spring of 2026.
Pressures in the Labor Market have created a major burden on Eaglecrest’s ability to retain mid-level and senior-level staff. For the 2023-2024 season Eaglecrest was able to experiment with hiring J1 visa student workers and currently have 22 students making up the core of the lower-level front line staff in many departments. The Eaglecrest Foundation posted a $200,000 bond to cover the increased risk exposure to allow the J1 visa student workers and other out-of-town workers to have affordable housing in the UAS dormitory. The Assembly will need to address how they will cover this increased risk exposure to support Eaglecrest’s staffing needs. Without this affordable housing option and J1 visa student workers, a much more aggressive pay scale correction will be needed to provide the staff necessary to keep the ski area operating at the current level of service.
Our recent third-party wage analysis from Sierra Research Associates (SRA) compared Eaglecrest to 83 ski areas with similar attributes in size, employee count, visitation and proximity to metro areas. The study found that Eaglecrest currently pays on average 14% below market rate before considering the higher cost of living in Juneau compared to the average CPI (Consumer Price Index) found at the comparable ski areas. In their analysis SRA used Cost of Living data to create an estimate for each ski area using data from Council for Community and Economic Research. This data showed that if Eaglecrest were to be truly wage competitive with other similar sized ski areas not only would Eaglecrest need to close the 14% wage gap, but we would also need to close the 25% gap for the higher cost of living in Juneau verses the control group. You will see that we are proposing a very modest 3% cost of living increase to the wage scale in both FY25 and FY26. Once the new Gondola revenues are realized, larger increases to make Eaglecrest more wage competitive will be possible.
Much of the increased FTE count is tied to the fact that we have experienced a high rate of turnover in some of our middle and senior management positions, which have made our general workforce less efficient. The small number of dedicated staff have been working beyond sustainable levels to constantly train in new staff and meet the demands of a growing ski area. If we are successfully able to recruit all of these FTE’s we will be able to run each department efficiently and will be able to realize our full revenue potential by being able to meet all of our customers’ expectations.
The list below shows all non-personnel related increases and decreases from FY24 with the corresponding explanation below.
FY25 EXPANSION COMMODITIES AND SERVICES INCREMENT