Boyne Ski Resorts President Steve Kircher talks Michigan skiing in the past, present and future. We went out to Boyne Falls near Boyne City, Michigan and got the story.
When Northern Michigan Boyne Ski Resort founder Everett Kircher passed in 2002, his sons took over a company wounded by warm winters, a bad economy and outdated management structure. Things changed. Today, Boyne is the second largest ski resort company in the nation, and profitable. We ask Steve Kircher, president, to reflect on next gen Boyne.
Back in 1947, Everett Kircher bought 40 acres of a Northern Michigan ridge for $1, built a little lodge and christened it Boyne Ski Club. Then, fueled by a love of snow, a Sun Valley–in-Michigan dream, unflagging drive and a near-mythical parsimoniousness, he set about building the most recognized name in Midwest skiing. He also assembled an impressive network of ski resorts, which included the sprawling Big Sky Resort in Montana, acquired in 1976. The patriarch passed away in 2002, and since then a management team led by son Steve as president of Eastern Operations, and son John as president of Western Operations, has achieved even more growth. This year Boyne Resorts became the second largest ski resort company in North America and now counts 8,000 people on its payroll. The year also saw Boyne buy two resort complexes adjacent to Big Sky, which, taken together, makes the resort the single largest ski resort in the United States by total acreage.
In early November, on the eve of a Northern Michigan ski season that will see Boyne Highlands celebrate its 50th birthday, Steve Kircher walked to the top of that first hill, Boyne Mountain, and reflected on Boyne Resort’s transition to a second generation of family leadership. The days were not always easy. Internally, the company had to move away from a management structure in which Everett still made the decisions, big and small. “The pyramid was very pointy and Everett was at the peak,” one insider said. Externally, the new team had to deal with the same challenges every business in Northern Michigan had to deal with: a decade that saw 9/11, the Great Recession and a Michigan economy pushed to the breaking point.
Growing up, do you remember when you first thought about working at the family company?
Today’s modern family thinking says kids should follow their interests and pursue whatever career they want. But that is not the way it was in our house. In our family it was, “You will work in the ski industry and you will work for Boyne.” So, it was just in the air.
When children grow up in a family company like that, they often have something of a master’s degree by the time they are 18 just by being immersed in the business. Do you have any memories along those lines?
The first connection I really remember is when I was 10. We were looking at Telluride, deciding to buy it or not. The family had gone out and looked at it, and Dad wanted us to give him critical feedback. It was a board meeting if you will. He was reviewing our thinking and the pros and cons of Telluride. Then we voted on it, and we voted it down. I remember feeling fully empowered and involved and that was a first spark. He made us think at least that we made the decision with him.
People like to talk about how closely Everett watched the dollar. What is one of your favorite examples?
Maintenance vehicles. You’d see all these golf carts and trucks used by maintenance people with the right seat taken out of the vehicle. He did that to focus on efficiency—he didn’t want anybody talking instead of working.
Share some of the biggest differences in the pre- and post-Everett Boyne.
We came from a culture where all things ran through the founder, a real mom and pop approach. He was involved in everything. He didn’t even give managers budgets. He felt that if you gave somebody a budget they’d spend it. And he definitely didn’t want that. If you wanted something you had to go argue about it, and if you were passionate about it and were really willing to go to the mat for it, you might win. But it wasn’t really a strategic process. He could make decent decisions by being close to customers. But that doesn’t translate to a growing company. You can’t be close to customers at every location. And how do you execute business when you aren’t there to say yes or no to every expenditure? And you have to monitor to make sure you are on course. So that’s the biggest change, setting up systems that just weren’t there before. I credit our relationship with Marriott with helping us figure that out. We became a franchisee of a Marriott brand at The Inn at Bay Harbor. In the 90s and early 2000s, we were good, but not great. Marriott helped us learn how to measure, how to create accountability, execute across geographical locations, achieve quality control across our entire footprint that now stretches across America. We also instituted better communication and accountability processes. And we even created budgets!
Growth by acquisition has often ended in financial disaster for ski resort companies, but Boyne has a history of succeeding there—starting under your dad and continuing with your team. What are some guiding principles?
A big one is we respect the DNA of a resort. We understand that every resort is different. Each has its own culture, its own set of qualities, and every community is different, too. We want to showcase that DNA, the things that make it different. That is in great contrast to others who have tried a cookie cutter approach, tried to make them all the same. Best practices are important, but to make all your ski resorts manila is detrimental, and it led to the demise of resorts. Sunday River and Sugar Loaf in Maine are perfect examples. Those are iconic brands in the East, and we’ve taken care to nurture their DNA. The previous owner really stepped on their rake there, did things to make them the same. But like most good brands, it’s hard to corral and push a ski resort in another direction. It’s better to take what’s there and propel it with the things that people really love and enjoy about the resort.
How does that translate to your two big Michigan ski resorts, Boyne Mountain and Boyne Highlands?
Yes. Well, we felt that we had two resorts that we didn’t have absolute clarity on what their positions really are, what their differences are. We got into a bit of, “If there’s zip-lining here, we have to have it there; if there’s golf there, we have to have it here.” But you need to change that. You need to define the amenities by the feeling you have at a resort, by the DNA of the resort. My wife Molly is really heading this up in Michigan, but we began using ideas about story character archetypes developed by Joseph Campbell, a mythological historian. There are maybe a dozen foundation archetypes in stories around the globe, like say, an explorer, or a nurturer. And we decided which archetype is naturally reflected at each resort. We did surveys, interviews, thinking really hard about the DNA of the places, and from that we gained a clarity about what we do and don’t do at each resort.
So it turns out that some of the most dramatic and challenging events in the transition of leadership happened at Everett’s first resort, Boyne Mountain itself, set in motion when Everett was still alive. Tell the story of how Boyne Mountain was brought into the 21st century.
People don’t realize this, but Boyne Mountain lost money for 23 straight years, from 1980 to 2003, about 1.5 million dollars a year, near as I can estimate. And part of the problem is it had an unprofitable business model. The mountain catered to the expert skier, but that advanced skier becomes a very small percentage of skiers who end up hanging out in the Midwest, because people who are good skiers go West, especially groups of guys who we really catered to back in the 70s. Catering to the extreme skier, we couldn’t also cater well to the family skier, the way that, say, Crystal Mountain did such a great job with. In the mid-90s we reconfigured the experience for the family and beginner skier—made it much easier and more comfortable to get started—and that was a very important step, but it still wasn’t enough.
Video Bonus: Boyne Highlands Skiing and Snowboarding
So back about 1998 we had a family meeting. We discussed closing Boyne Mountain or turning it into a day area only. We decided to move forward and begin to redevelop the bed base and reinvent the resort. We had recently solved one of the critical issues holding the resort back by linking the resort to Boyne City’s sewage treatment facility. Dad realized, however, that to really turn the corner Boyne Mountain needed a first-class resort hotel. He pounded the table with his cane and said, “We need to build this hotel before I die.” At the time, we were in the middle of the two largest construction projects in the company’s history—the Inn at Bay Harbor and Bay Harbor Golf Club, and we had a $56 million hotel going up at Big Sky Resort—both of which I had oversight responsibility for. And we had just acquired Cypress Mountain in Vancouver. Dad hauled me into his office and, paraphrasing here, said, “You haven’t been doing anything, just been screwing off, and we need a hotel at Boyne Mountain. Make it happen.” And I’m thinking, holy crap, we’ve got Bay Harbor and Big Sky—pretty time- and capital-consuming endeavors—not to mention keeping the operation going at eight resort locations and managing all that growth. But Dad says he wants the hotel done before he dies. He obviously doesn’t know when he’s going to die, but he knows he won’t live forever and he’s in his 80s. So we moved forward with the design and sales effort to make his dream come true.
How involved was Everett in the specifics of the Mountain Grand Hotel?
One day I remember there was a pile of sand where the lobby of the Mountain Grand Hotel is today, and he drove his 20-year-old S10 Blazer up on top of it and said, “This is the elevation I want the floor to be. I want to see the clock tower, and I want to see the mountain from this angle and the windows need to be this big.” He’s explaining his vision, and he’s going to make this happen. And he’s gonna write a check to the company for $5 million to make it happen. And we’re gonna do this.
It’s probably tough to talk about, but how did the project stall?
About late 2000 we met with the bank, and Dad said, “I want this started.” And they said, “We will get it financed.” They shake Dad’s hand. So, I think we burned through Dad’s $5 million by January of 2001, and we are committed to like $7 million of steel, and the bank still hasn’t gotten the financing done yet. But they haven’t told us they can’t, either. But then in April 2001, the bank tells us they can’t get it done. We had just had two bad winters back to back, and our numbers are looking bad, especially in the Midwest. So not only do we have less cash, we have bad numbers, which means we can’t do the underwriting to support it. And even though we had two-thirds of it pre-sold [condo hotel rooms] and had 25 percent down, we still couldn’t get it over the hump.
Well, we shut the project down in July 2001 and by then we had about 80 percent of the steel frame up. And then 9/11 happened. And then Dad passes in January 2002. And for two winters, people would drive in and look at that big metal rusting steel frame of a hotel. And what had begun as a symbol of the renaissance of Boyne Mountain and a symbol of the future became a big eyesore and a symbol of what was rumored to be the bankruptcy and end of Boyne.
Would you call it a fight for survival?
As a company we were not near bankruptcy, but we were certainly weakened and wounded. I guess I’d say it was a step away from a fight for survival. We were faced with decisions like do we sell off assets, do we bring in equity investors?
So where did the solution for the Mountain come from?
One of our best real-estate salespeople ran into a guy from Gerry Forsythe’s company. [Forsythe is best known as an owner of race car teams and invests in steam generation projects. His company also owns Garland Resort in Lewiston.] The Forsythe Group was very interested in the waterpark movement, so our salesperson said, “You really ought to talk to Steve Kircher because there might be an opportunity there.” And Forsythe did see this as an opportunity. We cut a deal to have them become partners in the hotel project and waterpark. They helped back a Wells Fargo construction loan, and that restarted construction in spring of 2003. It opened in 2005.
Meanwhile, too, other things had been happening. I mentioned we reconfigured the resort to be more family friendly. Also, other condos had been built here. The Village at Disciples Ridge and the Bluegreen condos. And so when the hotel opened, we had grown our bed base from 700 beds in 1998 to over 2,500 beds after 2005. And we had a lot more families committed to the resort because they owned condos here. So, back to the big picture, we took a resort that had been losing $1.5 million a year for 23 years to one that is now very profitable.
It’s really a poster child for how you can go from a broken business model to something that is viable. You can reinvent yourself when you really look fundamentally at how you are approaching things. And we did all of that when Michigan was in a 12-year recession, was losing population, and annual GDP was going down. Snow trumps economy every time if you get the rest of it right.