News of luxury chalet company Descent International going into voluntary liquidation has sent skiers into a frenzy of speculation about the coming season. As the first snow falls over the Alps, predictions of industry meltdown reverberate around the blogosphere, prophesying the end of ski civilisation as we know it. But does the demise of a small, high-profile company doom skiers to a winter of discontent?
Descent International was founded in 1997 and took chalet holidays into another realm. As famous for its clientele as its high-spec properties and attentive service, it was seen by many as the ultimate company to stay with, promising a team of professional staff on hand to cater for your every whim. The failure of such a strong brand has exacerbated fears that other companies may follow suit, leaving little protection for clients as many companies at the top-end of the market are more exposed to financial risk. Although bonding scheme exist to protect bookings, few smaller companies include flights in the package, which would offer protection through the Air Travel Organiser License (ATOL) or Association of British Travel Agents (ABTA).
Mark Gibbins, director of luxury agency The Oxford Ski Company, has noticed a certain amount of hesitancy this season. “Levels of enquiries are as busy as ever but there’s a massive hole in consumer confidence. When a big brand like Descent goes under and there’s a lot of bad press, people are very concerned about booking with smaller operators. Whereas before we would have four or five enquiries a year about bonding and ABTA, now every other booking is asking that question.”
In spite of the negative publicity steady, a pick up in booking suggest that people still want to go skiing. However there has been a subtle shift in attitude away from conspicuous consumption – few people want to be seen spending frivolous sums of money at a time of economic retrenchment. But trimming the budget doesn’t necessarily mean forgoing high standards. Luxury chalets tend to come with a professional chef, dedicated nannying services, and a round-the-clock driver as standard, with many offering a private ski guide or instructor, a well-stocked cellar and the very latest technical wizardry. “Five years ago one of the must-haves was a hot tub; now it is a private indoor pool," reflects Gibbins.
"We’re finding that people are happy to spend money but want to make sure they are getting the best value they can,” he says. "People are generally looking to broaden their horizons and realising that they can get more for their money if they look outside their usual resort. Ultimately though, they still want the standard they are used to."
This has started a fundamental shift in the way that the industry operates. While some operators have cut back the operations in order to consolidate their bookings, others are looking to see where their business models can be improved, providing a wake-up to chalets owners as much as to the ski companies themselves
“For years owners have been demanding astronomical amounts of rent for their properties and the only way for a company like Descent International to make a profit was to charge very high prices. Many companies have gone back to renegotiate with the chalet owners and as a result, companies can create more of a margin and offer their clients greater value,” said Gibbins.
It is the smaller companies at the top end of the market that are currently leading the way, entering partnerships and sharing the risks with the owners. Brambleski Verbier is one company that adopted this model several years ago. Director Duncan Robertson explains how this works. “Many businesses are simply looking to hammer down the owners on the rental price but we have tried to compensate by offering owners increased rental potential for increased risk sharing. I do think there is going to be a shift towards owners taking on increased involvement in the business models. We only pay rent for the weeks that we sell at our chalets rather than being locked into longer-term annual guaranteed rents. With a far lower fixed cost base than some of our competitors, we can weather the recent financial crisis better.
“Partnerships reduce the risk of the chalet operator going under and increase the safety of their rental income in the longer term. Chalet operators may have to accept reduced margins on individual weeks sold but this will be offset by reducing losses from discounting or voids. Ultimately it’ll give them increased financial stability.” says Robertson.
Gibbins agrees: “There are so many private properties and small companies out there that offer the same level of service as Descent and a bit more personality. Previously people just wouldn’t consider because them because they didn’t have that brand strength behind them.”
However brand-strength has proved no more of a guarantee of safety than anything else and increasingly, chalet owners are being temped away from the easy chalet company model to go it alone. Out of the 14 Descent chalets, the Oxford Ski Company is still able to offer nine to its clients this season, working directly with the owners.
“Although the bad press has been detrimental, everyone I’m speaking to is very positive," says Gibbins “This news has made everyone think about they are offering, which in turn provides more choice for the consumer. After a cautious summer, confidence in the economy is improving. The current climate has benefited my clients – they are getting more for their money than they have in the last two years."
So, as long as the snow is good and you can throw in a little flexibility, the prognosis for skiers this season seems far from gloomy.
