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Lutsen’s $40M expansion is about more than just adding more ski runs

Lutsen’s competing against some big players from states with real mountains.

Competition is fierce among U.S. ski resorts as consolidation continues to sweep the industry. And small resorts, including those in the Midwest, are feeling increasing pressure to keep up with the few top players dominating the market.

“It’s a very dynamic and competitive marketplace,” says Charles Skinner, co-president and co-owner of Lutsen-based Lutsen Mountains Corp., “but [the number of] ski areas are shrinking.”

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In the past five years, Colorado-based Vail Resorts Inc., one of the largest ski resorts in the world, purchased three ski resorts in Wisconsin, Minnesota and Michigan, spending about $40 million total. “They are [using the expansion] to draw skiers to their larger Western resorts, which is the opposite of what we are trying to do. We want to keep skiers in the Midwest,” says Skinner. “There’s a lot of pressure to stay ahead and make large investments to do so.”

So Lutsen’s planned $40 million expansion is essential if it wants to remain relevant to the next generation of skiers, says Skinner. (The ski area is unrelated to Lutsen Resort, which recently put itself up for sale for $9.95 million.)

Since the proposed expansion would extend onto Superior National Forest land, the resort must obtain a special use permit from the U.S. Forest Service (USFS) before it can begin development. The permit is common among destination ski resorts, but it can take years to complete because environmental analysis and review is required.

If approved, the 550-acre expansion will nearly double the size of skiable terrain, and include a number of beginner and intermediate runs, cross-country trails, additional services and more parking. Lutsen’s operations currently encompass 1,000 acres.

Twin Cities Business“The process is time-consuming, and it isn’t a process that we want to undergo again,” says Skinner. If approved, the growth will happen quite gradually, as Lutsen is not taking on debt to fast-track it, he says. “Our expansions are funded out of operations. It could take anywhere from 12 to 24 years before everything is complete.”

Skinner expects the ski resort’s economic contribution to Cook County to increase from about $29 million to $60 million after the expansion is complete. The expansion would double Lutsen’s employment to at least 600 — more than a quarter of the county’s workforce.

“We hope to bring winter occupancy and tourism activity level closer to the level of summer’s, as well as extend our ski season — one that’s less dominated by weekends and holidays,” says Skinner. “We want to be on the right side of history, so it’s really important that we move forward aggressively.”

This article is reprinted in partnership with Twin Cities Business.