The Prague Post
http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2
October 6th, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation
Prague Art & Antiques Prague Art Prague Antiques
Prague Real Estate
Shuttle Bus to/from Prague Airport

Home » Archives » Business

Ski-lift operators ask for state bailout

Association hopes to secure 230 million Kč in loans

By František Bouc
Staff Writer, The Prague Post
March 14th, 2007 issue

Following the warmest winter in 85 years — and one of the driest — many ski lift companies are now looking to the state for help.

With a season that lasted only weeks at many ski resorts, some lift operators wound things up as early as late February.
“There was nothing to wait for,” said Jiří Bělunek, chairman of the Association of Funicular and Ski Lift Operators (SPVL), who runs a ski lift in Dolní Lomná ski resort in the Beskydy mountains.
Like many lift companies in the Czech Republic, Bělunek’s firm manages only chairlifts and ski slopes, while others run the surrounding accommodation and hospitality services for skiers. Only the largest Czech resorts own and manage the entire package.
In contrast to the 2005–06 season, which lasted from late November until the end of March, weather conditions this year caused losses in the tens of thousands of crowns per day for small lift companies, Bělunek said, and in the hundreds of thousands for larger ones.
“Overall, ski lift operators’ revenues this season reached on average no more than 40 percent of the usual levels, and so we lost tens of millions of crowns,” Bělunek added.
With revenues failing to cover expenses, and development bank loans due for lift companies that have expanded and upgraded, the SPVL has turned to the government with a plea for help.
In an open letter sent to the Regional Development Ministry in late February, SPVL called for the launch of a new fund to serve as a backup resource.
“We’re appealing to the government to start a fund from which ski lift operators could draw 230 million Kč ($11 million) in noncommercial loans with low interest rates,” Bělunek said. “Otherwise, a substantial number of operators could soon be on the verge of bankruptcy.”
Regional Development Minister Jiří Čunek said in late February that the state will consider the proposal.
But, soon after, the Anti-Monopoly Office (ÚOHS) warned that such subsidies could be considered public support under European Union rules, making them subject to European Commission (EC) consent.
“In this situation,” ÚOHS vice-chairman Kamil Rudolecký said, “an approval from Brussels would be needed.”
As a result, said Deputy Regional Development Minister Jiří Vačkář, who met with SPVL representatives in early March, the government is considering a different form of support: negotiating with banks for loan extensions for lift firms.
Controversial support
When deciding what form support will take, the state will have to thoroughly consider not only EC rules, but scrutiny from other service providers in the leisure industry.
Some travel companies and major ski resorts are already expressing concern over the prospect of state help for only some businesses.
The Association of Tour Operators and Travel Agencies has declared that it will not consider such a compensation plan. Association chairman Tomio Okamura pointed out that sales revenues on ski trips also dropped 800 million Kč this season and that travel companies will not be seeing any state aid.
Meanwhile, Karel Vacek, the head of Snowhill company, which operates six resorts in north Bohemia, has threatened to sue if the state provides the subsidies.
“Any such support would be a breach of free market competition,” Vacek said. Snowhill invested some 400 million Kč into upgrading its ski facilities before the season.
Vacek argued that financial woes of smaller operators could lead to market consolidation, with only financially stable resorts surviving — in other words, those capable of competing against other European ski destinations.
Meanwhile, Bělunek has warned that the financial collapse of small resorts could drive them into the hands of foreign investors. “It would not be good,” he said, “because revenues would hardly be reinvested into the resort; instead they would be taken outside this country.”
He added that SPVL is ready to further negotiate with the government, focusing on guarantees and development programs.
Vačkář said the Regional Development Ministry will makes its decision by the end of March. Meanwhile, Vačkář said, ski resorts should also be eligible for subsidies from EU regional development funds.

František Bouc can be reached at fbouc@praguepost.com


Other articles in Business (14/03/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.