Tahoe developments seek shift from weekend to destination skiers

OLYMPIC VALLEY, Calif. - Gliding down the mountain above the ski runs in the Squaw Valley cable car, it's easy to imagine the snow-covered buildings nestled below as a tiny village under the Christmas tree.

A few miles to the south, the gondola at Heavenly Mountain Resorts overlooks perhaps the most picturesque alpine lake in America as it slips past the hotel-casinos at Lake Tahoe's south shore.

The ski runs haven't changed all that much, but the surroundings have. Sierra resorts don't just want to be a place people want to go to. They intend to be a place people don't want to leave.

"The owners of these resorts are trying to position them as not just weekend resorts, but as destination resorts where guests are more likely to stay for longer periods of time," said Will Marks, an analyst with JMP Securities.

Heavenly, which was bought in 2002 by Vail Resorts Inc. from American Skiing Co., has teamed with Marriott International Inc. to transform the once tawdry south shore of Tahoe into a blend of time shares and upscale shopping and dining.

Some 30 miles to the north, Intrawest Corp. has joined with privately held Squaw Valley to develop a growing village of condos, shops and restaurants.

While other resorts in the Tahoe Basin are expanding their lodging and upgrading their facilities, Heavenly and Squaw have emerged as the region's leaders, according to Marks, who researches all three of the public companies.

"I think Intrawest and Vail have proven over the last several years that by investing capital in their resorts they are increasing their market share," he said.

The developers take different approaches to achieve the same goal.

At South Lake Tahoe, Marriott had to build amid crisscrossing city streets, including U.S. 50, which bisects the town. Intrawest had the base area at Squaw to play with and developed a more European village, with pedestrian-only cobblestone streets meandering amid the shops and condos.

A study is underway to analyze the effects of redevelopment on the economy of South Lake Tahoe, but numbers are mixed. The Lake Tahoe Visitors Authority says the Tahoe basin attracts 2.2 million visitors a year, 1.3 million of them to the south shore. The South Lake Tahoe room tax collection in June was up 5 percent, while rooms rented were down 3.3 percent from the previous June.

Adam Aron, chairman and chief executive officer of Vail Resorts, said that two years ago, just before his company bought Heavenly, the resort sold 830,000 lift tickets. This past year, the number was up to 965,000.

"That's a big growth and that's showing that the people who visit Lake Tahoe, who live in a 3-4 hour radius of here really are responding to the quality improvements that we're making," he said. "What we said was we were going to bring Colorado-style skiing to Lake Tahoe, and so far, we have been rewarded."

Vail, Marriott and a coalition of local government groups have committed $250 million to replacing the T-shirt shops, tattoo parlors and mom-and-pop motels on the California side of the state line with resorts, upscale boutiques and restaurants and a multiplex cinema. All are centered on Heavenly's centerpiece gondola, which whisks skiers and sightseers 2.4 miles from the Marriott lodges at the base close to the 10,082-foot top of the mountain in 12 minutes.

Intrawest also plans to invest a quarter of a billion dollars in its four-phase development of condos, shops and restaurants, offering resident skiers lifts a few steps from their doors at the site of the 1960 Winter Olympics. Squaw has invested $30 million over the past decade on its lifts, restaurants and other amenities.

At Tahoe's south shore, the gondola has replaced the dreary bus ride from the motels to Heavenly's rustic base station, where ski boots clumped on wooden floors and the restaurant menu was heavy on burgers, fries and chili.

"If one were a dispassionate observer of Heavenly only two years ago, you'd have to say that the lift network was antiquated, the restaurants were uninspired, the bathrooms on the mountain were nauseating and just in the two years, we've already invested $25 million to clean up and improve Heavenly," Aron said.

Now, at the base, it's Wolfgang Puck, Kalanis Restaurant (Hawaiian for Heavenly), the improvisational grill of FiRE + iCE, with its European outdoor cafes surrounding the wintertime fire pits - and the ubiquitous Starbucks.

Squaw has one of those, too, along with outdoor shops, a mixture of restaurants, a wine store and even a hardware shop for do-it-yourself condo owners.

If tourists at the south shore don't choose the lodgings on the California side of the line, there are the hotel-casinos on the Nevada side, a two-block walk from the gondola.

At Heavenly, with runs on both sides of the state line, chief operating officer Blaise Carrig said the resorts and the hotel-casinos have joined to aggressively market Tahoe as both a summertime destination and a skier's Mecca.

"We're probably about equally challenged," Carrig said. "Them with Indian gaming and us with just the competition for skiers that we see within the resort area. I think the casinos see that they really have to be marketing all of Tahoe."

Nineteen ski resorts surround the Lake Tahoe area, all offering attractions for skiers and riders - location, price, challenge. Heavenly and Squaw aim to appeal to more than the daytrippers from the Bay area or Reno by offering a second home on the hill.

Both The Village at Squaw Valley and Marriott's two properties at the south shore - Marriott Grand Residence Club and Marriott's Timber Lodge - emphasize stone, wood and fireplaces. The theme is alpine rather than casino kitsch.

Pamela Fowers, a chiropractor from the Sacramento, Calif., area fell in love with Grand Residence when she and her husband stayed there with her sister and her family.

She and her husband now own two 13-week interests, one a single bedroom and the other a two-bedroom when they have guests or their teenage children bring a friend.

"Lake Tahoe is my heaven on earth. We love to ski, the kids snowboard. We ski during the day, we're in the village at night. We like to eat and shop and I'm looking forward to more stores."