Former king of the hill struggles with identity : Once a premier celebrity ski destination, Sun Valley now must battle tough regional competition and a changing economy.

The night the Sun Valley Lodge opened with an elegant banquet in December of 1936, producer David O. Selznick, for reasons now lost in history, knocked a Chicago banker cold even before the glitterati had finished their caviar and tournedos saute chatelaine. In a dither, someone called public relations man Steve Hannigan, who had the Sun Valley account but who hated cold weather and had stayed home in New York. “What do you mean your party’s ruined?” Hannigan demanded. “No editor in the world can resist this story!” He sat down and typed out a release headlined: “Sun Valley Opens With Bang.”

Sure enough, the story was played everywhere, and Sun Valley--the nation’s first destination ski resort and the site of the nation’s first chairlift--soon became known as one of the world’s most glamorous resorts. Thus was born an industry in which Americans now spend $5.5 billion annually at ski resorts from California to Maine.

Today, Sun Valley is struggling to re-establish an identity. Celebrities head for Aspen and Vail in Colorado, Utah promotes the proximity of its mountains to the Salt Lake City airport, and resorts everywhere are finding that skiing has become a no-growth industry after the boom of the ‘60s and ‘70s; to prosper they must offer more than a good mountain and a bunch of art galleries.

“The industry is so young, I get a little nervous talking about its health,” said Sun Valley general manager Wally Huffman. “It’s like a child going through adolescence. The child could be having growing pains or he could be sick. It’s really too early to tell which. But a lot of things seem to have combined to make the market a little soft.” Among the factors: the expense of skiing, the growth of warm-weather resorts, the absence of a new skiing generation.

Some merchants in nearby Ketchum--whose streets and shops are strangely quiet for a resort town--complain that both the state of Idaho and Sun Valley’s conservative Utah ownership need to be more assertive marketing the resort that Life magazine put on its cover in 1937 with an article titled: “Society’s Newest Winter Playground.”

Key West, Fla., for example, turned Ernest Hemingway into a mini-industry while Sun Valley acts as though it were still protecting his privacy, even though he wrote most of “For Whom the Bell Tolls” here and is buried in Ketchum’s town cemetery. “It’s like the place has rested on its merits since Sonja Henie’s ‘Sun Valley Serenade’ (a movie made in 1941),” said the owner of one gallery. “Fifteen years ago this gallery would be jammed every afternoon and people would be buying. Now I get almost no walk-ins. I do my business over the phone, with out-of-state customers.”

Last season, after five years of drought, Sun Valley invested $8 million in installing the world’s largest snow-making system. This year, of the 93 inches of snow at the top of Bald Mountain, 40 inches were man-made. Despite the resort’s heavy reliance on the recession-plagued California market, this season is expected to be one of the best in Sun Valley’s history, although a healthy percentage of the skiers are part-time residents who spend only a week or two each year in their condos here--and less in restaurants and shops than skiers at hotels and lodges would.

Sun Valley retains a cadre of loyalists who would ski nowhere else and still look on the grand Lodge as a shrine. But the resort remains remote, 90 miles east of Boise, with its little airport at Hailey served primarily by prop commuter flights. Huffman says his top priority is to get Delta Airlines to schedule a daily flight from Los Angeles.

That, of course, was not a concern when Averell Harriman, chairman of the Union Pacific Railroad, opened Sun Valley and skiers arrived daily on a train called the “City of Los Angeles.” In those early days, Lowell Thomas, traveling with a Western Union telegraph operator from Kansas City, used to broadcast from the Lodge’s dining room. Gary Cooper was a regular, Saks Fifth Avenue ran the ski shop and Glenn Miller captured the nation’s imagination with a new theme song, “It Happened in Sun Valley.”