The Money Trail
A hidden economy thrives where you'd least expect it--along the thousands of miles of snowmobile trails that blaze through the northern United States
We pull onto route 85 in Shirley, Maine, heading north. Signs tick off the distances to Canada and New Hampshire, as well as to gas stations, restaurants, and cocktail lounges. Traffic is light; going 60, we pass a few slowpokes, and we're passed by one guy doing at least 90. Everywhere I look there's snow--including two feet of it on the road beneath me.
Route 85 is a snowmobile trail, one of a vast network of high-speed snow boulevards that snake across Maine and much of the northern part of the United States, through regions that often lack so much as a single blue highway on maps. For the next two days I'll be looping through a modest-size patch of the state, most of it inaccessible to cars during the winter. And yet everywhere I go, I'll be close to thriving businesses, some of them so constantly packed with free-spending customers that the owners would gladly trade some of their profits for a little break from the action.
Welcome to the snowmobile economy.
Though the snowmobile boom hasn't made it onto the radar screen of the rest of the country, it's rippling through the northern states' economies like a shaved-ice tsunami. Maine alone has established some 12,000 miles of actively maintained trails, many of them following logging roads and railroad tracks.
The heart of the trail network is the Interstate Trail System (ITS), a web of broad, straight, well-groomed trails that allow snowmobilers, often called sledders, to cruise at up to 100 miles an hour not only through northern Maine but also as far west as Michigan, and well into Canada. The ability to travel large distances at high speeds on the ITS has in effect extended the potential market for every sled-oriented lodge and restaurant.
In Maine that change has created an unexpected windfall for some entrepreneurs in the "snow travel" industry, which has evolved over the past three years or so; others are scrambling to redraw their business plans. But some business owners wonder if the opportunities are worth the sacrifices required to take advantage of them. All in all, it's a case study in how even the sleepiest industries can suddenly find themselves in a cauldron of change.
MONDAY EVENING: Arrival
It's a little after 6 when I leave the Bangor airport in my rental car, under a canopy of luminous clouds and an implied moon. A few blocks away, as I ponder the complete absence of rush-hour traffic here in one of Maine's largest cities, I'm startled by the headlight beams of two snowmobiles that have suddenly emerged at my side, as if disgorged from the ground, just five feet away. They are moving parallel to me but a lot faster. The machines are almost eerily quiet, and in seconds their taillights disappear in a swirl of snow ahead of me on a path that apparently runs alongside the highway for some hundred yards.
The 90-minute ride to the southern tip of Moosehead Lake takes me past fairly standard Maine secondary-highway scenery--namely, an endless stream of small Cape houses broken up by patches of small construction-contracting and industrial-service companies. Every driveway seems to have either an old sport-utility vehicle or a pickup truck, and maybe half of those driveways have anywhere from one to four snowmobiles.
In Shirley, I'm welcomed to the Evergreen Lodge by owners Bruce and Sonda Hamilton. Bruce is going to be my guide for the next two days. He and Sonda show off the elegantly woodsy facilities--the Caribou Room, the Bobcat Room, the Coyote Room, and so forth--with good-humored pride.
The Evergreen had been run as a bed-and-breakfast for 12 years before Bruce and Sonda bought it, 2 years ago. Like almost every other lodge in the region, it had stayed open only from June through the end of the foliage season, in early October. "When the last leaves fell, everyone was out of here," says Bruce Hamilton. There had been a small winter trade in the area in the 1970s, when the ski resort at nearby Big Squaw Mountain was in its heyday and snowmobiles became briefly popular. But the resort lost most of its business to better-heeled competitors closer to Boston and New York City, and the snowmobile fad petered out as most riders became disenchanted with the noisy, breakdown-prone machines. By the 1980s the region had once again come to think of itself as an almost entirely summer-oriented economy--a place where tourists could hike the mountains that ring the lake, spend the day sailing, or drift into the woods and catch sight of a moose or two. From the owners' point of view, winter was for relaxing, repairing, and, for the minority who could afford it, heading south for a vacation break from the cold.
Hamilton owned and was managing the largest boat-rental business in Ocean City, Md., when he married Sonda, and the pair decided to try to find a more relaxing way to make a living. "Two hundred and fifty thousand people would pour into town on every weekend between Memorial Day and Labor Day," he recalls. "You'd kill yourself working 100-hour weeks." Sonda convinced her husband that a lodge owner's life in her home state of Maine would be just the ticket, and so in February 1996 the couple came to check out the Evergreen as prospective buyers. Hamilton had intended to evaluate the place strictly on the strength of its summer business, but he couldn't help noticing that there was close to five feet of snow on the ground and that everywhere he looked there were snowmobiles. Even better, he quickly ascertained that the nearest place to rent snowmobiles was an hour away--and the recreational-vehicle-rental business was one he understood completely. "When I crunched the numbers," he says, "I assumed that we'd be mostly filled for the entire summer, half filled for winter weekends, and empty the rest of the time. It was that extra winter business that made the numbers work."
But Bruce Hamilton's summer calculations turned out to be way off. The lodge attracted almost no repeat business during the couple's first summer as owners, even though they had sent mailings to former guests. Advertising in the AAA guidebook and some regional publications helped a bit, but it was slow going.
Fortunately, Hamilton's winter calculations turned out to be way off, too. The first winter saw the lodge one-third full during the week, and with 75% occupancy almost every weekend, at an average of $85 per room per night. "We'd have people pulling up at night on their snowmobiles, begging for a place to stay," says Hamilton. A group of guys would show up one week, and then they'd come back with their wives a few weeks later. Most guests took dinners there, too, spending maybe another $35 or so per couple. The four snowmobiles were usually all out, at $150 a day; the Hamiltons quickly bought six more. They placed one $50 ad in a snowmobile magazine that pulled in $5,000 worth of business. Putting up a Web site increased their inquiry rate by 50%. Some visitors drove up from as far away as Pennsylvania. By last March, the lodge had already been booked for most weekends this winter; Valentine's Day weekend 1999 was sold out a year in advance.
Nearly 85,000 snowmobiles were registered in Maine last season--about one for every 10 people. But in the northern two-thirds of the state, where there are fewer people and far more prime snowmobiling territory, locals say the ratio may be closer to one out of 5. The numbers are similar in New Hampshire, Vermont, upstate New York, Michigan, Wisconsin, Minnesota, North Dakota, and Wyoming.
What's caused the snowmobile boom? The primary factor that everyone points to is the change in snowmobiles themselves. Today, in contrast to the 1970s, "sleds," while not exactly cushy, are quiet, clean, reliable, nimble, and stable. Windshields keep the chilling air off your head and body, electrically heated handlebars keep your hands warm, and ducts from the engine direct a stream of hot air over your boots. In two full days and one evening of hard riding on- and off-trail, I was never cold or tired, never skidded out of a turn, and never tipped, and I got slightly stuck only once on a heavily treed, extremely steep off-trail slope that probably would have challenged a tank. Most owners say their machines go about three years before they need their first repair.
TUESDAY: On the trails
Hamilton has put me on a bottom-of-the-line machine, but it seems like plenty of sled to me. We head out onto a curving trail and are quickly going about 40 miles per hour, which seems fast for the conditions but not frighteningly so. When we pass other riders heading in the opposite direction, they all raise their arms and make various gestures at me with their black-gloved hands, ranging from holding up one or more fingers to a revolutionary-style fist salute. I'm not sure what to make of any of this, but later I find out that the number of fingers you hold up is meant to indicate how many riders are behind you, and the fist means you're the last rider.
Our first rendezvous is with Jim Young, a burly, friendly fellow who is widely acknowledged in the area to be a snowmobiler's snowmobiler. Young, who lives in a log cabin on a pond with his wife, Millie, leads us off the main routes onto smaller trails that head off toward the mountains and eventually disappear altogether, so we're blazing our own trails as we head up, down, and around tall, windswept slopes dotted with new-growth pine. The views of the surrounding mountains and the lakes below are extraordinary. Young identifies ubiquitous patterns in the snow as, variously, moose tracks, a coyote napping spot, and the marks made by otters sliding on their bellies.
Later we'll head back down to the trails and then across a small section of Moosehead Lake to pull onto the shore that abuts Greenville, a tiny town that's the closest thing in this region to a commercial center. Across the street from the lake is Flatlander's, the restaurant owned by Jim and Millie Young. "We used to save up money from the summers and then go through it all to get through the winter," says Jim Young. "This year we haven't had to touch our savings."
Young's only complaint is that he doesn't have the snowmobile action largely to himself the way he used to. Two new restaurants have opened in Greenville, and another one moved from a prime location on the main street to a spot across the street from Flatlander's--making it the first thing that snowmobilers see when they pull up from the lake. In addition, gas and food are now available at a trail junction two miles outside the town, where many prime customers are intercepted before they make it into Greenville. Young has put up signs along some of the snowmobile trails, and he advertises in tourist publications. The crowds have kept coming.
After riding for a short while on a major trail and then for a longer while on smaller trails, we come to a cluster of cabins at the edge of Second Roach Pond. This is Medawisla, a picturesque resort camp owned and operated by a youngish, rugged-looking couple named Larry and Shannon LeRoy. Medawisla is 27 miles from the nearest town, the last 7 miles of which are traversed by an unpaved logging road. During the winter the road is difficult to navigate, and the last 4 miles to Medawisla are accessible only by skis, snowmobile, or the LeRoys' shuttle. The camp generates its own electricity in a small shack the couple refers to as Medawisla Power & Light, and phone service is by solar-powered radio phones. "We can send faxes," says Larry, "but our connection is too slow for the Internet right now."
The LeRoys still consider Medawisla primarily a summer resort, with a strong fall business among the hunting and fishing crowd. They get $60 to $90 a night for their pleasantly spartan cabins, but most guests sign up for the hearty fare offered on the American plan for an all-inclusive $65 per person. Two years ago the LeRoys decided to try keeping two cabins open for the winter. They sold out quickly. On one of the snowmobile trails they put up a sign advertising lunch, and sleds starting pulling in within an hour. They stocked 900 gallons of gas at the end of the fall and by January had sold it all at $2 a gallon. "We can do as much business as we want in the winter," says Shannon.
But that's the rub: they're not sure they want to do very much. "We work hard May through November," says Shannon. "We don't want to try to keep that pace up all year long." Still, the couple have decided to open three more cabins for winter business, hoping that the extra work won't push them over the edge.
Shannon says she and Larry have gotten a lot of unsolicited offers for the camp in the past year. It turns out that entrepreneurs who get the idea of starting up their own lodge from scratch quickly discover that the costs of meeting state environmental and other licensing requirements near lakes and forests have become astronomical. That has them eyeing existing resorts like Medawisla, raising the value of such operations. So far, though, the LeRoys plan to stay put.
In a few hours, we're gassing up outside a restaurant and general store in the tiny town of Kokadjo. Inside, behind the counter and surrounded by a vast array of replacement snowmobile-engine belts hanging from hooks, are owner-operators Fred and Marie Candeloro. Though there are a handful of cabins for rent here, this establishment, known as Kokadjo's, is famous for the lunches and dinners that it dispenses to sledders--more than a thousand in a typical week. The diners take about 1,200 gallons of gas with them each day, too. By midmorning, customers quickly overwhelm the eight tables covered with green-checked tablecloths, and they crowd five and six deep around the counter, spilling out into the sled-packed parking lot.
It's not a coincidence that almost everyone who snowmobiles in the region ends up here. For one thing, two major trails cross in Kokadjo. But more important, the trails are kept in great shape. Fred Candeloro sees to it; a few years ago he shelled out $50,000 for a grooming machine, and he's out on the trail smoothing it down as it needs it, which during busy times means every night.
At Kokadjo's and other sledder hangouts, the talk almost always immediately runs to trail conditions, with riders comparing notes on which routes are "soft" (powdery), "whoop-de-doo" (bumpy), or "ballistic" (well-groomed). In addition to the improvement in snowmobiles, sledders all point to the development of an extensive, well-maintained system of trails as the other major change behind the explosion of snowmobiling in recent years.
The confluence of well-groomed trails around Kokadjo has made it a magnet for sledders. But Candeloro complains that he could take much better advantage of the traffic if he could find enough people willing to put in a hard day's work. "I'm disgusted by the labor situation around here," he says. "People don't want to get ahead. They want to be independent, get along, and be happy. It adds up to businesses' staying small." It's a notion echoed by many company owners in the area, especially those who have come from out of state. Later, Sonda Hamilton will tell me that Maine natives often regard hard-driving entrepreneurs as mildly demented.
Hamilton and I push on, finally stopping for a country gourmet dinner at the Northern Pride Lodge, a comfortable, upscalishly rustic bed-and-breakfast. Owners Jeff and Barbara Lucas used to operate two medical-equipment-supply companies in Cleveland, but they sold out to pursue what they expected to be a quieter life. That idea seems a little quaint to them now. They turn away a lot of business. "We try to limit how much we take on," says Barbara. "We worry about burning out."
According to a study by the University of Maine at Orono, the most recent figures indicate that snowmobilers spend about $12 million in Maine on lodges and restaurants during the season. Direct costs--snowmobiles and related equipment--amounted to some $175 million in the 1997-1998 season. Observers wonder how large a multiplier to apply to such direct spending in order to calculate the ultimate impact of snowmobiles on Maine's economy. How much more, for example, is spent on warm clothes? Food for the road? Liquor? Tools? Maps? And how much money is loosened up simply by the fact that more people are out and about and more businesses are staying open and active, creating a generally more bustling economy? To calculate the indirect spending, the study assigns a multiplier of 1.5 times the direct spending of $175 million, which comes out to about $263 million. But almost everyone, including the authors of the study, believes that figure is probably low. Some argue that a multiplier of 7 is more like it.
We've spent the night at the Birches, a villagelike conglomeration of 18 cabins that stretches out along Moosehead Lake, culminating in a large lodge whose interior is dominated by a massive four-sided fireplace in its center. John Willard, the owner, joins us for breakfast. His father bought the business in 1969, he explains, but was never able to make much money from it. It was only when John took it over, in 1980, and began to expand and improve it that things began to take off. He saw the winter potential right away. He catered mostly to cross-country skiers, but just as snowmobiling began to mushroom, he was ready with grooming equipment. Now, he says, he grosses as much in February as he does in August.
The surge in winter business has carried an important bonus: it allows Willard to offer people full-time, year-round jobs with standard benefits. That, in turn, has attracted more-reliable, more-skilled employees. "I still have trouble finding high-level managers," he says, "but I'm thinking about offering equity."
He has a lot to offer, as it turns out. Willard says that like most of the nonpublic forest land in northern Maine, the area around the Birches was owned by a paper company. Normally, paper companies prefer to lease rather than sell land to developers and other businesses. But Willard, who had majored in forestry in college, managed to talk the company into selling him 11,000 acres of woods for $5 million, which he financed largely by selling his timber, which he logged himself, by contract to the company. Now he talks about expansion. His goal is not just to get bigger, he insists, but also to try to attract a more upscale sledder, to get more revenues per guest. He's already built one high-end cabin complete with a fireplace, a dishwasher, and a TV, and he plans to add more. Plus he's added a fleet of 15 rental snowmobiles.
That afternoon we pull our sleds into Pittston Farm. This will be our last major stop of the trip, as is the case for many sledders in the region. Indeed, out-of-state snowmobilers often plan their entire trip around this destination.
It's not easy to see why, at least at first. Like Kokadjo's, Pittston Farm includes a lodging business, but most customers come for the restaurant, which is augmented by an entirely sled-oriented general store. The main attraction is the buffet--an unusually satisfying array of stews and soups and the like, for which the restaurant charges $9.95. By noon the huge parking lot is jammed with snowmobiles, and the buffet line snakes through the store and out the door. It gets much, much busier, I'm assured.
The owner, Ken Twitchell, is down at the barn shuffling steer around. Pittston Farm is a working farm; almost everything served at the restaurant is raised or grown here. He takes a few minutes off between chores to talk to me. Standing in an amalgam of hay and manure, he looks like a big, sixtyish homeless man with a dead hedgehog strapped to his chin. But his pale blue eyes soften the look, and he speaks in a gentle voice.
I ask him how the snowmobile boom has affected his winter trade, and he looks surprised, as if he hadn't realized that it had. "Well, gosh, that's a good question," he says. "I'm really not sure." I put it to him differently: How many customers did he have on a typical winter weekend four years ago, and how many now? He reflects some more, and offers these estimates: 50 and 600, respectively. The man's business has increased by more than a factor of 10, and it seems to have made little impression on him.
Twitchell is starting to fidget now, and I sense he wants to get back to the steer. I ask him one last question: Is he going to expand his services or do anything else to take advantage of the snowmobile boom? "Gosh, no," he says. "We've just finished fixing the place up. I think we'll leave it the way it is for a while."
Back on the trail, as we approach Shirley on ITS 85, Hamilton pulls over and indicates a short, unremarkable-looking stretch of nearby woods. It's for sale, he tells me--six acres for $16,000. He was thinking of buying it and opening up a second business aimed at snowmobilers. "The state had people out here one day counting the sleds that came through," he says. "There were 500 in four hours."
Hamilton is surprised that the price for the land is so low; he'd have expected other entrepreneurs to have forced the bidding price up, considering its prime location next to the trail. The next gas station heading south is 16 miles away. But most people around here still don't get it, he says, shaking his head. "It's like seeing something glittering at the bottom of the river and saying, 'Say, isn't that gold?' And then just walking on."
David H. Freedman is a contributor to Inc. @Large: The Strange Case of the World's Biggest Internet Invasion, which he cowrote with Charles C. Mann,is now available in paperback from Touchstone Books.
|Economic impact of snowmobiling in--|
|New Hampshire (1995-1996)||$367 million|
|Wyoming (1995)||$190 million|
|Vermont (1995)||$165 million|
|Pennsylvania (1996-1997)||$96 million|
|Quebec (1997)||$1.5 billion|
Source: International Snowmobile Manufacturers Association
Maine snowmobile market: 1997-1998
Number of snowmobiles registered in Maine: 83,000
Number of miles ridden: 54 million
Amount spent on snowmobiles and directly related products and services, other than lodges and restaurants: $175 million
Amount spent on lodging and restaurants during snowmobile trips: $12 million
Average amount spent in Maine on lodging and restaurants per Maine-resident-owned snowmobile: $101.73
Average amount spent in Maine on lodging and restaurants per non-Maine-resident-owned snowmobile: $375.92
Total impact on Maine economy: $263 million (doesn't include, among other things, real estate or trucks for hauling snowmobiles)
Estimated growth rate of snowmobile spending per year since 1995-1996: 10%
Sources: An Economic Evaluation of Snowmobiling in Maine, 1998, the Maine Snowmobile Association; and additional calculations from the Maine Snowmobile Association.
North American snowmobile market
Number of snowmobiles registered in North America: 2.3 million
Number of snowmobiles sold annually in the United States: 162,826
Average snowmobile retail price: $5,800
Average amount spent by snowmobile purchasers on accessories: $1,100
Average household income for snow-mobile owners: $54,000
Percentage of snowmobile-owning households that own two snowmobiles: 64%
Average number of miles a snowmobiler rides in a year: 1,520
Amount spent annually on snowmobiling in the United States: $6 billion
Average number of nights per season spent in motels and resorts while snowmobiling: 7.2
Number of miles of groomed, marked trails in North America: 230,000
Average annual percentage increase in snowmobile sales from 1993 to 1997: 14%
Note: All data except as noted are for 1997. Source: The International Snowmobile Manufacturers Association, 1998.