Skiers on the Whakapapa skifield on Mt Ruapaehu. Photo / Supplied
Ruapehu Alpine Lifts Limited (RAL) has gone into voluntary administration after three years of disastrous ski seasons due to the lack of snow and the Covid-19 pandemic.
The company, which currently employs 196 staff, owns and operates the Whakapapa and Tūroa ski areas.
Turoa ski area closed its gates for the season last week, three weeks earlier than planned.
A wet winter saw rain repeatedly wash away the snow this year, and the ski area's 50 snowmaking machines proved no match against balmy temperatures. Climate change appears to be a significant 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 ski area Whakapapa on the brink of bankruptcy.
Last year, the company lost nearly $6 million and its total debt climbed to over $30m. The company has been seeking a major new investor, so far without success.
The two ski areas, which are among New Zealand's largest, are owned by the same company and located on opposite sides of Mount Ruapehu. Should they be forced to close permanently, it would leave the North Island without any major ski areas.
John Fisk and Richard Nacey, of PwC, were appointed voluntary administrators of RAL today to try and remedy this.
"The Company has had a very difficult last three years, with the impact of Covid-19 restrictions, paired with poor weather this season, meaning that the business has been placed under significant cash flow pressure," Fisk said.
Fisk also said that the directors of RAL have explored a number of options, including a capital raise and a request for additional Crown funding, but have not been able to secure the required level of money.
"Our job as voluntary administrators is to consider a plan that can get a better recovery or better outcome than the company just going into liquidation."
Fisk maintained that RAL is a significant part of the central plateau, so it's important they try to retain some of its value.
"RAL can have up to 700 employees and they can bring an economic benefit of about $100 million a year to the region," Fisk said.
Newly elected Ruapehu mayor Weston Kirton said he feels deeply for all involved on every level, from the bosses to the workers on the ski fields and around the district. He said the tourists will now also miss out on one of the jewels of the North Island.
"The community will be shell-shocked," Kirton, who also served as mayor for the district two decades ago, said. "I can only assume how traumatic this going to be for the community and we're going to do our best to ease that pain."
After all the energy and time the district has put into the efforts to establish a destination in the North Island, Kirton said the last three seasons have been majorly disappointing.
As mayor, Kirton said he is doing his best to engage with central government to see if they can assist in helping the business survive, something he thinks they should already 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 come to New Zealand," Kirton said.
"I think there is a government responsibility from Government to actually step up and actually support areas like ours to make sure these companies survive because it's now a jewel in our crown, not only for the district but also the whole country."
Johan Bergman, the ski area manager at Tūroa, said it had been a tough season.
"We've had some pretty decent snowfalls, but they've generally been followed by rain events, which has washed a lot of the snow away," he said. "And it's been a bit warm this winter, too, over the whole country, so we're really lacking that snow this year."
He looked behind him at the barren mountain.
"This should be white at the moment," he said.
Bergman said that in his view, climate change is a background factor but this season has been more a case of bad luck. And he's bullish on the sport's future at Ruapehu.
"I always see skiing up here in the North Island of New Zealand," he said.
But the poor season is putting severe financial pressure on RAL, which owns both ski areas. Set up 70 years ago by ski enthusiasts, the company operates as a nonprofit. It's exempt from paying company tax and is required to put any profits back into enhancing the ski areas.
Even before this year's barren snow season, the company's auditors noted there was significant doubt about whether the company could continue to stay afloat. Chief Executive Jono Dean this week 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 doesn't mention climate change once in its most recent 54-page annual report, instead listing the major threats to its business as further Covid-19 disruptions and borrowing restrictions.
The National Institute of Water and Atmospheric Research (Niwa) found New Zealand's average winter temperature hit a new record this year of almost 10C. It was also the wettest winter on record. Niwa concluded that climate change was a major contributor to both the extra warmth and the rain.
Professor James Renwick, a climate scientist at the Victoria University of Wellington, said that as temperatures increase in New Zealand, skiing will become more untenable.
"I've told the North Island ski operators more than once that things are going to become marginal fairly quickly," Renwick said.
He said there would always be changes from season to season but the trend was for warmer winters. He said it was hard to predict how long any individual ski area could survive.
"The further south you are and the higher up the mountains you are, the colder it is, so the longer you can keep going," he said.
Some ski areas may even benefit, at least initially, from the extra precipitation driven by climate change if it's cold enough to fall as snow, Renwick added.
Ski areas in some countries have increased revenues by opening their chairlifts to mountain bikers during the summer. But the ski areas on Mount Ruapehu can't because they are in a national park and don't have permission.
Ruapehu is stunning, an active volcano that film 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 flourish, including in the village of Ohakune, which is affectionately known as the nation's carrot capital.
But Ohakune also relies on the ski business.
Phil Jackson, who built the Hobbit Motorlodge in Ohakune nearly 40 years ago, said this year has been the worst ski season since 1983 when the mountain was covered in ice. Normally he would ski at Tūroa, he said, but this year his only skiing has been four days on the South Island. And business at his motor lodge has been terrible.
"A shocker," Jackson said. "Two years of Covid and now another disaster ski season. We'll survive, but there will be people who won't be able to survive."
Others are hoping increased summer activity might make up for the skiing shortfall.
Ben Wiggins, the managing director of the TCB Ski, Board and Bike shop, said that while fewer people were coming to Ohakune for skiing and snowboarding, they've seen more visitors who want to go golfing, fishing, camping and mountain biking.
"The facilities down here like bars, cafes and restaurants are beautiful, and everybody loves the little town," he said.
Nearby at the Osteria restaurant, manager Teresa Mochan said diner numbers were lower this year from pre-Covid levels but she was still busy because the staff were hard to find.
"There are people that are a little bit down, I guess because they haven't been able to go skiing," she said.
But Mochan said she loves living in Ohakune and plans to stay.
"Fingers crossed that next year we bounce back and have an amazing winter season and the town can really start to show its full potential again," she said.
- Additional reporting by Associated Press
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