Traverse City commissioners will review a proposed business plan for Hickory Hills Ski Area tonight (Monday) – one that could make the city park self-sustaining and even revenue-generating within a short number of years.

Members of the Hickory Hills Advisory Committee (HHAC) will present the proposal, which provides a detailed financial analysis of operations and new revenue opportunities at the park. An estimated $3.9 million in improvements are set to take place at Hickory Hills between now and 2020, a major capital project that will “provide a significant upgrade in facilities, infrastructure, and expanded recreational opportunities,” according to the committee.

Phase 1 of the project is already funded, with nonprofit Preserve Hickory raising $1.8 million in donations and triggering the release of a $1.5 million match from the city’s Brown Bridge Trust Parks Improvement Fund. The combined $3.3 million will pay for a new two-level, 7,200 square-foot lodge, a 3,200 square-foot maintenance building, a 192-space parking lot, expanded snowmaking capacity, trail and disc golf expansion, and infrastructure upgrades. Phase 1 improvements are set to begin this year, with the majority of construction slated for 2018.

Preserve Hickory is also continuing to fundraise for Phase 2 of the project, almost $600,000 in improvements including a climbing wall, challenge/ropes course, fitness stations, picnic area, children’s play space, and alpine, Nordic and snowshoe rentals.

The expanded amenities will present several new revenue streams that could not only fund a full-time facility manager position at Hickory Hills but make the park self-sustaining in as few as five years, HHAC estimates. As with other city parks, Hickory Hills has historically been subsidized by the city’s general fund. Between 2008 and 2015, the average allocation for the park was nearly $100,000. City Director of Public Services Dave Green notes that as part of the proposed park business plan, “even with the addition of the full-time Hickory Hills Facility Manager…the general fund allocation is projected to be reduced significantly over time, and potentially eliminated in five years, with significant expansion in recreational and community opportunities.”

One crucial revenue stream is expected to come from Hickory Hill’s new park lodge, which will feature concessions and food service, equipment rentals, a dining area, restrooms, ski patrol/office facilities, and a large outdoor deck offering expansive views of the park. Hickory's existing lodge currently closes in the off-season, but the new lodge is proposed to be open March through September for events and rentals, including weddings, community gatherings and private functions. The business plan assumes 30 rentals annually at $750 per rental for revenues of $22,500 – “very conservative estimates,” according to HHAC.

The plan also estimates $13,000 in annual food and beverage sales, a model that assumes $3 in spending per day per winter visitor (the industry average is $6.33-$7.68) and $2 per day per summer visitor. “Again, a very conservative estimate which does not include any food and beverage revenues from rental or special events,” HHAC states. Should the city decide to eventually stop contracting with outside vendors and instead manage concessions in-house, it could “keep the profits as a large revenue generator.”

Other revenue opportunities include introducing an annual park pass (similar to those in use at state parks), expanding equipment rental options, implementing fees for new facilities like the climbing wall and ropes course, and hosting special events. The park’s expanded trail network will include 3.4 kilometers of new cross country, hiking and biking trails, while skiing and snowboarding terrain is set to expand by 60 percent, including three new slopes on the north side of the valley and two new slopes on the south side. The park’s expanded terrain and facilities will make it “an ideal spot for outdoor recreation events,” HHAC predicts, including “special ski races, freestyle ski and snowboard events, and disc golf tournaments.”

HHAC cautions, however, that special events “tend to require most if not all of the facility” and that “strong consideration of the balance of special events and non-organized recreation will be necessary" at Hickory Hills. Accordingly, the plan budgets conservatively for three annual events attracting a total of 1,000 people, generating $5,000 in event fees and $5,000 in concessions sales.

With all revenue streams combined, HHAC estimates Hickory Hills will begin generating more than $200,000 annually starting in 2019 (the park averaged $90,000 annually from 2008 to 2015). With nearly $274,000 in expenses, Hickory Hills will still require a city general fund subsidy in the early years of its expansion. But by 2023, HHAC’s model predicts the park will be in the black, pulling in nearly $300,000 per year. Marketing campaigns to promote the park and a potential increase in visitors due to Hickory’s new amenities could accelerate that timetable.

“The model assumes that there will not be a significant increase in winter skier/snowboarder visits – which appears likely with the lodge and slope improvements – and assumes a facility rental and food and beverage approach that minimizes direct involvement by the city and subsequently minimizes available revenues,” the plan notes.

Traverse City commissioners will discuss the proposed Hickory Hills business plan at 7pm tonight (Monday) at the Governmental Center. Because the meeting is a study session, commissioners will only review and not vote on the proposal. To view the business plan in its entirety, click here.