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Muleski

Muleski

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Sugarloaf is home, so I might be biased. Skied there a week a year as a young kid, as while we had a home in Stowe, my dad had friends involved in Sugarloaf. Almost 60 years ago. I raced there a lot through college, and 30 years ago we returned, shifting our ski home. There were a number of years when we spent every weekend of the year, September through May up there. I'm probably a bit biased.

I think that Boyne is a good operator, but keep in mind that every one of these properties has their own President/GM, and their own teams who run the place. So the only place they connect is at the very top. Steve Kircher's management team and a few people at each resort. Now saying that, I do think these folks understand the ski buisness, and in decent years have done pretty well with minimal capital expenditures. They have invested money in snowmaking, and they do a pretty solid job with putting down a good surface. They also groom a ton of that mountain, which some folks dump on, but is pretty essential.

I think that Boyne's made some smart moves at Sugarloaf. The Brackett Basin side country was one. They have turned Bullwinkle's, which was once a tiny log cabin coffee and lunch spot, into a big money maker. The lift systems are OLD, for the most part. Of course, in my first days, the mountain was covered with nothing but T-Bars, so old is relative.

The main lift, the "Super Quad" is not so super, but does the job. Lots of finger pointing, and much or most of it uniformed as to the derailment of the old Spillway chair. Sugarloaf gets pretty extreme weather, and things can go wrong. I can guarantee that you will get an equal number of people to stay that it was freak accident, and that the chair was properly maintained and inspected {frequently}as you will find people who say it was neglected. My friends who all ski there every weekend never stopped riding the "other side" of the lift after the derailment.

The second accident, on the King Pine lift, was also really unfortunate, as clearly many folks jumped to the conclusion of "WTF is going on with lifts there?" Another freak deal. I hear could not have been foreseen, and would not show up with inspections. Still.....NOT good. The two accidents resulted in a new lift in the middle of the hill, Skyway, which has done a great job. They also replaced the bottom terminal, and most of the running and wear equipment on King Pine. Think they are good. KP is basically a new/old lift.

I haven't heard anybody in the business "lay blame" at Boyne's feet for those two. I will say that to be transparent, Sugarloaf created a section of their Webpage to keep people abreast of all of their lift maintenance, and plans.

I feel a LOT more comfortable on those lifts than on many others on this continent. Many in New England. Old infrastructure is a big issue, everywhere.

We'll see what happens with Boyne re-buying these properties. I think there is more to this than many suspect. Bet there will be some moving chairs. I LOVE Sugarloaf, but it's a tough business proposition. I'll be curious to see what the price was. Does Boyne need two properties in Maine? Sunday River needs a lot of investment, as well.

Think about this Boyne deal this way. CNL spent close to three years trying to sell their portfolio, and I hear that a huge hangup were the Boyne leases, and their right to match any offers. Hence selling the whole thing to Och-Ziff. Pretty strong rumors that O-Z began to think about how to break this all up, and do so with a nice return, as soon as the ink was dry. Boyne buying the hard assets means that they do need a source of capital, but they call all of the shots.....so no lobbying for the allocation of where to spend money. I hear that Boyne might be more concerned with improving the skiing, while O-Z would obviously be singularly focused on increasing asset value. In some cases, it could be the same.

Yes, I like Boyne. But I am guessing that they may unload some properties, perhaps buy some, etc. Rearrange things.

I also thing that almost every property in this business is always for sale at the right price. Some are obviously not. Others that people swear will never sell entertain offers ALL the time.

I said when the formation of Alterra took place, actually when KSL and the Crowns bought Intrawest, that this was early stage, just the start. BOOM a week later, they bought Mammoth, etc. Then shortly thereafter they bought Deer Valley. I assume that a lot more is underway.....in both directions. And once again, it's not about the passes. For them. I suspect that Boyne will be aligned with them more so that Vail Resorts. But I would not be surprised at all to see Boyne sell a property or two to Vail.

Vail wants to hit that magic 1 million pass number. It's only happening with acquisitions.

Strange business these days.
 
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Jully

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Does Boyne need two properties in Maine? Sunday River needs a lot of investment, as well.

This is a huge point. Lots of Loafers and SR regulars I know often gripe that the lack of competition between the two has hurt the mountains. While I don't think that is necessarily true, I think the amount of investment needed at each mountain to 'modernize' makes the idea of Boyne modernizing and investing in both very unlikely.

Of the two, Sugarloaf is the obvious one to sell as well, IMO.
 
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Muleski

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I think the issue has been trying to allocate pretty limited capital between the two, when both were in a pool of areas owned by a REIT, then a giant hedge fund. Not enough funding, lots of complaining. I get it.

From a business, with the skier days in Maine, it's essentially impossible to grow one without taking away from the other. Always been the case in recent years. Sunday Rivers growth in the ASC years did NOT come from SL.

The last three times that SL has sold, it's been packaged with SR. Basically to "get" SR, you had to "take" SL.

Now in terms of whether Boyne chooses to sell one, which I think is logical, it depends on a lot of factors. Price they paid, price they can fetch, etc. For example, if somebody else will pay a big premium for SR, and the market is lean for SL, perhaps they keep SL. They can do pretty well with it.

Long standing rumor that Les Otten wants, badly, to acquire Sunday River. Now's his chance. He does live 20 minutes away. Has never moved......
 

Jully

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Long standing rumor that Les Otten wants, badly, to acquire Sunday River. Now's his chance. He does live 20 minutes away. Has never moved......

I had always assumed he had moved on since beginning his latest project. If he had the funds and the time, he would probably be willing to pay a hefty premium for SR for sure.

I'd like to see Boyne keep SL, personally. I like them and know what they are and how they treat SL.
 

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[QUOTE="Muleski, post: 222695, actually when KSL and the Crowns bought Intrawest, that this was early stage, just the start. BOOM a week later, they bought Mammoth, etc. Then shortly thereafter they bought Deer Valley. I assume that a lot more is underway.....in both directions. And once again, it's not about the passes. For them. I suspect that Boyne will be aligned with them more so that Vail Resorts. But I would not be surprised at all to see Boyne sell a property or two to Vail.

Vail wants to hit that magic 1 million pass number. It's only happening with acquisitions.

Strange business these days.[/QUOTE]

@Muleski, curious if you can expand on what you mean it's not all about the passes when referring to Alterra relative to Vail.

Everything to me about IKON so far seems to be structured as a direct competitor to Epic and to replicate Vail's success here. IKON price points are essentially identical to Epic (can't be by accident), IKON's advertising on Google, structure, etc. Not sure I understand how/where you see the big difference in strategy at this point?
 
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Muleski

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It's about their plan to pull together a large group of "iconic resorts". High end resorts with high end experiences. They have not swayed on that. Their ultimate roster of what they will own through acquisition and sales will possibly look very different that what they assembled quickly with Squaw, Intrawest, Mammoth, Deer Valley, and the Aspen SkiCo partnership. Consider a few more, perhaps many more, acquisitions, and "unloading" a number of others. The current lineup probably isn't final. There may be cuts, trades, signings, drafts...think of it that way.

Also assume that they are doing some experimenting as they go with this. The partnership deals on the pass enables them to work a bit, on some level with those organizations. It's some additional revenue.
Their own property passes are priced all over the map. Deer Valley is at $2300. They gutted the Steamboat pass price.

They just announced $555 Million of improvements to resorts they currently own. It's "probably" about improving things, and increasing asset value. That's a staggering commitment. As they add more properties, I would bet that number increases. KSL has always owned "high quality" assets. And increased their value.

MTN, if you follow the stock, and the various analysts, has been ALL about the number of Epic Passes sold. No doubt they are earning a bundle in their business, but the number one metric, the one they always lead with and tout as being so revolutionary is the Epic pass. And when they reach 1Million sold, it will be huge. Those who attach recommendations like "Buy" to the stock are fixated on that number. MTN has done a great job there.

Meanwhile, Alterra is not a public company. Not yet. At some point it could be. The investors are not in this to make ski area operating kind of profit. Smart people, with deep ski experience. This is a different deal. A different opportunity.

This has been about iconic resorts and clients willing to spend for great experiences since it was first contemplated, and it is early on in the process. Think of the Pareto rule. 80/20.

Cheap passes are now the current industry norm, and lord knows there are hundreds of posts on PugSki trying to arrive at the personal magic formula of areas, number of days and lowest possible cost. Some are irritated because they want to ski 50 plus days at their home area, and take a trip or two, and it might end up costing $20 a day!

Meanwhile there are people in this sport who buy USSA gold passes for their family and friends, at $10K each. Only 450 sold. 250 areas. No blackouts! Completely transferable.
That's the other end of the spectrum.

Right now, in March, this DOES look to 99% of the Pugski world to be about passes. I get it. Long term, might not be. I can assure you that not one organization, or family invested in Alterra has the opinion that this is about Ikon versus Epic Passes.

Can't get into any more.

You key words in your post are "SO FAR."
They have raised a fortune in their funds, they are hiring a lot of serious talent, and this is not a plan to be "famous by Friday."

Yep, right now all sorts of things are likely going on. And just starting.

Vail naming their new "product" Emma kind of cracks me up. Name of the KSL CEO's youngest daughter.

Some IN this business actually are feeling that Vail is hitting a number of panic buttons, BTW. Meanwhile we, and a lot of clueless people in the mainstream press think this is all about passes.

Note that there is no pass deal at CMH. In fact you might see a menu of options there at even higher price points. All about the experience.

Look at the list of properties, toss six, and pick six others that really are Icons. Don't get hung up on what chatter is out there that "they will never sell". They might not all. But most will. Think of acquisitions, not just pass partners.

I think you'll see this transform "a fair amount."

Right now, sure, they want revenue, and if the public buys passes, they'll sell passes.....while they tweak the product and really target their customer.

They didn't buy struggling Intrawest to keep as is, at lower prices. Nobody thinks that. Why did they buy DV. How did this list of partners come about? It's not "just" passes.

Just my $.02. Nothing proprietary here. Consider this guesswork, and mine. No more.

Might well be about passes. And all of KSL's investors have it wrong.
 
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mdf

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One question I am really curious about: how did Boyne make out financially by selling the hard assets and buying them back years later, versus just hanging on to them?
 

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One question I am really curious about: how did Boyne make out financially by selling the hard assets and buying them back years later, versus just hanging on to them?

Impossible to know - unless you work for either Oz or Boyne.

For all we know, they had an option to purchase when they did the long-term lease contract.
 

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A few details...not all the newly purchased properties were previously owned by Boyne. The Summit at Snoqualmie (Snoqualmie Pass to all Seattleites) had different ownership that sold to CNL, and CNL brought in Boyne to operate it. There may be others. This one is at the lowest elevation of ski areas in Washington and has a hard time opening if the winter starts out warm or dry.

Another Washington state ski area, Stevens Pass, acquired by CNL, then OZ, not managed by Boyne, hasn't been mentioned yet. The original management stayed on to manage it under CNL/OZ. We'll have to wait and see who takes over next.

Crystal Mountain in Washington State was bought from Boyne by John Kircher in March, 2017. Neither Crystal nor John Kircher are part of Boyne after that date.

Vail Resorts owns 75% of WhistlerBlackcomb. Nippon Cable owns the other 25%.
 
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Muleski

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CNL never was part of the plan with Boyne and Big Sky either. Boyne basically made deals on a resort by resort basis, and from all that I have heard did a very good job negotiating the terms, and I particular the leases. The leases, I'm told did all include the right to match any other offers. It was described to me as "checkmate" in terms of CNL trying to sell any of these properties to people in the ski business, who would have wanted to operate them. Makes the market much smaller.

The CNL deals were drive by CNL being on a shopping binge to put together the REIT. Not like CNL has been looking to "sell", though this, I'm told, came up as a very attractive and effective use of capital. Looked like a win for CNL. One of the GM's that I know was almost giddy about it at first, until he realized that being owned by a REIT was no bargain.

I'm kind of surprised to see them buy Snoqualmie. Maybe this was again a package deal, and it was essentially a throw-in. Remarkable how little real value some ski areas have, more so after tough years.

Crystal was never part of the assets that Boyne sold to CNL, correct? I also believe that John's buying it, and separating from Boyne {and Steve} was a separate "thing" as well. I assume that Crystal is just fine. Hope so. Great place.
 

Wasatchman

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It's about their plan to pull together a large group of "iconic resorts". High end resorts with high end experiences. They have not swayed on that. Their ultimate roster of what they will own through acquisition and sales will possibly look very different that what they assembled quickly with Squaw, Intrawest, Mammoth, Deer Valley, and the Aspen SkiCo partnership. Consider a few more, perhaps many more, acquisitions, and "unloading" a number of others. The current lineup probably isn't final. There may be cuts, trades, signings, drafts...think of it that way.

Also assume that they are doing some experimenting as they go with this. The partnership deals on the pass enables them to work a bit, on some level with those organizations. It's some additional revenue.
Their own property passes are priced all over the map. Deer Valley is at $2300. They gutted the Steamboat pass price.

They just announced $555 Million of improvements to resorts they currently own. It's "probably" about improving things, and increasing asset value. That's a staggering commitment. As they add more properties, I would bet that number increases. KSL has always owned "high quality" assets. And increased their value.

MTN, if you follow the stock, and the various analysts, has been ALL about the number of Epic Passes sold. No doubt they are earning a bundle in their business, but the number one metric, the one they always lead with and tout as being so revolutionary is the Epic pass. And when they reach 1Million sold, it will be huge. Those who attach recommendations like "Buy" to the stock are fixated on that number. MTN has done a great job there.

Meanwhile, Alterra is not a public company. Not yet. At some point it could be. The investors are not in this to make ski area operating kind of profit. Smart people, with deep ski experience. This is a different deal. A different opportunity.

This has been about iconic resorts and clients willing to spend for great experiences since it was first contemplated, and it is early on in the process. Think of the Pareto rule. 80/20.

Cheap passes are now the current industry norm, and lord knows there are hundreds of posts on PugSki trying to arrive at the personal magic formula of areas, number of days and lowest possible cost. Some are irritated because they want to ski 50 plus days at their home area, and take a trip or two, and it might end up costing $20 a day!

Meanwhile there are people in this sport who buy USSA gold passes for their family and friends, at $10K each. Only 450 sold. 250 areas. No blackouts! Completely transferable.
That's the other end of the spectrum.

Right now, in March, this DOES look to 99% of the Pugski world to be about passes. I get it. Long term, might not be. I can assure you that not one organization, or family invested in Alterra has the opinion that this is about Ikon versus Epic Passes.

Can't get into any more.

You key words in your post are "SO FAR."
They have raised a fortune in their funds, they are hiring a lot of serious talent, and this is not a plan to be "famous by Friday."

Yep, right now all sorts of things are likely going on. And just starting.

Vail naming their new "product" Emma kind of cracks me up. Name of the KSL CEO's youngest daughter.

Some IN this business actually are feeling that Vail is hitting a number of panic buttons, BTW. Meanwhile we, and a lot of clueless people in the mainstream press think this is all about passes.

Note that there is no pass deal at CMH. In fact you might see a menu of options there at even higher price points. All about the experience.

Look at the list of properties, toss six, and pick six others that really are Icons. Don't get hung up on what chatter is out there that "they will never sell". They might not all. But most will. Think of acquisitions, not just pass partners.

I think you'll see this transform "a fair amount."

Right now, sure, they want revenue, and if the public buys passes, they'll sell passes.....while they tweak the product and really target their customer.

They didn't buy struggling Intrawest to keep as is, at lower prices. Nobody thinks that. Why did they buy DV. How did this list of partners come about? It's not "just" passes.

Just my $.02. Nothing proprietary here. Consider this guesswork, and mine. No more.

Might well be about passes. And all of KSL's investors have it wrong.

Good debate and dialogue here. I also have friends in the ski business with a little different view than yours. The counter argument is there is absolutely no value created in owning several different ski resorts unless their is some sort of synergy in operating them together. Cost synergies of owning several different resorts are minimal, suggesting Alterra has to make this work on the revenue side. That would seem to have to come from season pass sales and market share gains.

Sure, DV pass is $2300, but they are including days at DV on IKON pass. That is where the synergies are. As smart as KSL might be, hard to believe they could pay a huge premium for DV and operate it standalone much better than it was before.
 

RJS

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Good debate and dialogue here. I also have friends in the ski business with a little different view than yours. The counter argument is there is absolutely no value created in owning several different ski resorts unless their is some sort of synergy in operating them together. Cost synergies of owning several different resorts are minimal, suggesting Alterra has to make this work on the revenue side. That would seem to have to come from season pass sales and market share gains.

Sure, DV pass is $2300, but they are including days at DV on IKON pass. That is where the synergies are. As smart as KSL might be, hard to believe they could pay a huge premium for DV and operate it standalone much better than it was before.

I could be wrong, but I've been reading a lot of @Muleski's thoughtful commentary on all of this, and I think the answer is that yes, they do want to encourage cross-pollination of skiers between Alterra (or partner) resorts, but the real money doesn't come from the pass sales. It comes from things like lodging, ski lessons, on-mountain food, and other high-end experiences.

If I mostly ski Tahoe and own the Ikon Pass and decide to do a week long trip to Deer Valley, the incremental revenue for Alterra comes from staying on the mountain (assuming Alterra owns or gets a cut from the property), eating the wonderful food for lunch at the lodges, taking a couple of lessons, and more.

The Ikon Pass's primary function is to entice you to choose Deer Valley over some other resort such as Sun Valley, because 1) the marginal cost to ski at Deer Valley for you is $0, and 2) you've been skiing Squaw and know it's high quality, so you assume that other resorts on the Ikon Pass are of equally high quality. The pass isn't just a source of revenue but also a signal or an enticement.
 

Wasatchman

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I could be wrong, but I've been reading a lot of @Muleski's thoughtful commentary on all of this, and I think the answer is that yes, they do want to encourage cross-pollination of skiers between Alterra (or partner) resorts, but the real money doesn't come from the pass sales. It comes from things like lodging, ski lessons, on-mountain food, and other high-end experiences.

If I mostly ski Tahoe and own the Ikon Pass and decide to do a week long trip to Deer Valley, the incremental revenue for Alterra comes from staying on the mountain (assuming Alterra owns or gets a cut from the property), eating the wonderful food for lunch at the lodges, taking a couple of lessons, and more.

The Ikon Pass's primary function is to entice you to choose Deer Valley over some other resort such as Sun Valley, because 1) the marginal cost to ski at Deer Valley for you is $0, and 2) you've been skiing Squaw and know it's high quality, so you assume that other resorts on the Ikon Pass are of equally high quality. The pass isn't just a source of revenue but also a signal or an enticement.

But what you describe is exactly what Vail does! In fact, the strategy Vail is using to be so successful is to provide a cheap season pass and then make a lot of money on food, ski lessons and lodging, as well as take market share from other resorts.
 
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Muleski

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The difference may be in what a lot is, and in whether Vail may be at risk of losing some of their most profitable customers. Or many. It all depends, for us in the peanut gallery, as to what you think "high end" means, and how that market moves, spends, reacts.

You can't even discuss it on a place like this as you'll insult people, insult their home mountains, get people feeling like this is some grossly elitist play, etc.

It's NOT about day skiers. It not about how much you can ski for how little cost. Not in the end game.

It is about destination skiers who want the best. If you feel that VR's properties are best in class, discussion is over. If you think that Alterra might assemble a better roster, in time. then perhaps there is room for discussion.

No question that everybody would like the most profitable sliver of any market, even batter if they can avoid the most demanding and high maintenance among them.

I think you might be surprised if you actually pulled back the covers on MTN.

And nobody seems to realize, or acknowledge Alterra's away chest and the experience they are bringing on board.

I agree they sound very similar at first glance, when you zero in on passes. And the you read the PR form VR. They aren't, and will be less so as time moves on. Can't say any more. Seriously. I just can't. I'm not able to. I can't take what I'm told in confidence and post it here. Sorry. And I'm not going to be that lone voice, so I think I need to back out on this topic.

Best
 

Wasatchman

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I'd argue the opposite. The affiliation between Alterra and other owner/operators (Boyne/Powdr/independent operators) actually provides for better competition against the Vail Resorts conglomeration where without the Ikonpass/Mountain Collective/MAX Pass there is no other major multi-mountain pass to compete. I think it's a brilliant move for the individual resorts that simply couldn't compete against it on their own.

Disagree. Amazon in their quest for online retail domination partners with a number of different sellers all the time. This seems to have all the makings of a duopoly to me.
The difference may be in what a lot is, and in whether Vail may be at risk of losing some of their most profitable customers. Or many. It all depends, for us in the peanut gallery, as to what you think "high end" means, and how that market moves, spends, reacts.

You can't even discuss it on a place like this as you'll insult people, insult their home mountains, get people feeling like this is some grossly elitist play, etc.

It's NOT about day skiers. It not about how much you can ski for how little cost. Not in the end game.

It is about destination skiers who want the best. If you feel that VR's properties are best in class, discussion is over. If you think that Alterra might assemble a better roster, in time. then perhaps there is room for discussion.

No question that everybody would like the most profitable sliver of any market, even batter if they can avoid the most demanding and high maintenance among them.

I think you might be surprised if you actually pulled back the covers on MTN.

And nobody seems to realize, or acknowledge Alterra's away chest and the experience they are bringing on board.

I agree they sound very similar at first glance, when you zero in on passes. And the you read the PR form VR. They aren't, and will be less so as time moves on. Can't say any more. Seriously. I just can't. I'm not able to. I can't take what I'm told in confidence and post it here. Sorry. And I'm not going to be that lone voice, so I think I need to back out on this topic.

Best
My biggest concern is that Vail and Alterra both "win". And by a wide margin. Then the ski industry ultimately becomes a duopoly significantly controlled by two players. Unfortunately, I think that is the way this is heading.
 

wutangclan

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I'm more interested to see how this plays out for the 3 little local ski hills -- Cypress (Boyne), Grouse and Seymour -- that are all within a 20 min drive (rush hour traffic notwithstanding) of downtown Vancouver, BC, that cater mainly to locals and day-tourists. They are not "destination" resorts and never will be.

All three started out as family businesses. Cypress, with the best terrain, was acquired by Boyne in 2001 and eventually became the site of the freestyle events for the 2010 Olympics. Grouse was bought in 2017 by a shell company tied to overseas (non-ski) property developers. Seymour remains family run.

Cypress and Seymour are winter operations only, reverting back to being public parks in the summer. Grouse is a very successful (but somewhat gimmicky) year-round attraction, especially for day-tourists from cruise ships, package tours, etc.

Cypress could use some investment and upgrades ... I hope Boyne starts thinking about it again. Before the 2010 Olympics, they built an excellent new day-lodge, upgraded some chairlifts, and opened some new terrain. But their ticketing and rentals systems are prehistoric: all paper forms or tickets that require visual inspection at all points of contact. On busy days, this results in customers lining up for literally over an hour to get rentals and lift tickets. And get this: all part-time on-snow staff (instructors, patrollers, liftees, etc) have to line up daily at the public kiosks to get their lift ticket, even when they’re on shift, even though their tickets are free!!! Meanwhile Grouse, the most direct competitor to Cypress, upgraded to laser scanners well over ten years ago.

If Boyne actually intends to flip Cypress, I guess all bets are off. I wonder who the potential buyers would be for small, local hills.
 

LKLA

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If you are Vail or Alterra - or Peak - you need/want to own the mountains. What happens otherwise in very simplistic terms is that you are giving a lot of revenue to the partner resorts!

These three companies are largely focused on growing season pass sales. In the case of Vail because that is at the core of their public company investment story. In the case of Alterra because that is the easiest/fastest way to for them to establish themselves and compete and make an impact right out of the gate. And for Peaks, that is one of the ways they can continue to get bigger across all metrics and grow in the Northeast and Midwest and in the day and over-night segment.

I can get into this in much greater detail but in general pass revenue offers a more stable/recurring revenue stream, and is usually the fastest way to grow, at least in the near term. Season pass revenue allows the operators to grow the top-line at a faster rate than they otherwise would be able to by buying mountains or undertaking large investment projects at their current mountains (either can easily take 1-2 years to complete and 1-2 years after that before it to be accreative). Creating a pass, be it a good pass or a crappy pass, requires little upfront investment and little time to bring to market.

Vail
Vail has been selling the Epic pass for ten years. A long time! The growth of the Epic pass was slowing down so Vail decided to focus on acquiring mountains with the hope that the additions would drive Epic pass sales by making the pass more attractive as well as present an opportunity for them to more efficiently/profitably run these mountains (…Canyons in 2013, Perisher in 2015, Whistler in 2016 and Stowe in 2017 are all examples). And it worked! Epic Pass sales have been growing at double digit rates and Vail's revenue has grown at an average of over 11.5% per year for the last eight years and more than doubled revenue from $894 million to over $2 billion (an 11% CAGR) during that time. EBITDA across the acquired mountains has improved significantly as well, reflecting how Vail does indeed run the mountains "better".

The challenge for Vail is that it has once again hit a "growth wall" and needs to find new sources of growth. But, with Alterra coming into the picture and valuations for the larger and more desirable mountains being extremely rich, Vail has had a tough time finding ways to continue to grow via acquisitions, and likely via Epic pass sales! So something needed to change - bring in the joint venture growth story!

Vail took a page from Alterra and started to do joint ventures - something its CEO swore never to do just a couple of years ago. This will keep the Vail growth story alive (somewhat) for now as it will likely drive Epic pass sales into the double digits once again since the joint venture additions are likely going to be attractive to many skiers who were not Epic pass holders already. As an example, Vail added 7 unrestricted days at Okemo, which at around $80 for a ticket translates to roughly $550 in value. A week ago, I, along with most people, would have happily paid $899 for the Epic pass without that addition. Now, for the same price, I get 7 days at Okemo. I already know a number of folks for whom that was the tipping point to get them to buy the Epic pass for next season. Unfortunately for the Okemo pass folks, they "just" get 50% off Vail owned resorts - so they did not get anywhere close to as good of a deal/value out of the partnership.

The "problem" for Vail - and just about anyone else - with these joint ventures is that when I go to Okemo for two or three weekends, Vail will NOT see a single penny of my spend. Okemo will get all that high margin revenue from me. I will likely book a 2 hour private lesson and eat lunch every day at one of the on-mountain restaurants. I will likely buy some completely unnecessary item at one of the stores. If needed, I will happily pay for parking so we don't have to walk very far. In other words, I could easily drop $500-$700 at Okemo during those two weekend visits of which Vail would see none of.

Vail benefits from the increase in Epic pass sales, which is their main focus. Epic pass holders benefit from added value to their pass, which is great news for skiers. Okemo pass holders benefit from 50% discounts at Vail properties, which while not nearly as good of a deal as Epic pass holders, is still a nice thing. And Okemo (Tim Muller, Triple Peaks, EPR Properties, Och-Ziff) benefits from added revenue from Epic pass holder visits, which they would have not otherwise be able to generate on their own.

The problem is that if Vail keeps doing these joint ventures, more and more of that revenue will be lost and they will not be able to offset it by increasing Epic pass revenue. In the long run it is conundrum of sorts - if they add joint ventures that no one cares for, then they won't attract new Epic pass buyers, and, if they add joint ventures with mountains that are popular, then they will likely add new Epic pass buyers but also give up significant revenue since customers will be going to these popular joint venture destinations.

Alterra
Alterra needed more momentum out of the gate than what it had via its owned mountain portfolio, one which is likely to change over the coming 1-3 years as it does not have the ideal composition for what Alterra is aiming to do with the Ikon pass. So, instead of deploying added capital at lofty valuations to buy 4-6 additional mountains and take a long time to do so, it decided to go the "easier" and "quicker" route and add mountains via joint ventures.

These joint ventures have also allowed Alterra to further is strategy and focus on "iconic" resorts by adding what are arguably the most iconic resorts in the US - Aspen, Dear Valley and Jackson Hole. This has really served them well in advancing their differentiated pitch. There is lots of value in that. Between the owned and partner mountains, Alterra has created a legit threat/competitor to Vail's Epic pass.

Alterra is also testing the waters with these joint ventures and is likely also trying to "block" or "corner" Vail out of potential acquisitions with these resorts. There is value in both of those scenarios for Alterra that would make potential revenue loosing joint ventures worthwhile for them at this point.

For Alterra the loss of revenue at this point due to those joint ventures is liekely of little importance. They are in the building stage and can likely make a good business case for this strategy to their investors and backers.

Peak
Peak Resorts is not doing joint ventures with their Peak pass. They are firm believers in that more money is lost than is made by doing those types of deal. That has impacted their growth story as it has largely been based on long-term, high cost growth investments like buying mountains and building lodging at their current resorts.

Don't forget, skier visits are flat! Have been for decades, so growth in a market that is organically flat is never an easy thing, certainly not in the mid to long term. You just have to look a the dire straights that so many of the independent mountains find themselves in. So credit to these guys for trying to make it work, creating jobs, investing in the mountains, improving the experience, making skiing more affordable,...
 
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Wilhelmson

Making fresh tracks
Skier
Joined
May 2, 2017
Posts
4,328
Hard to imagine the boomers getting milked much more than they are alrdeady, but I guess it's hard to look farther than 10 years out operating a resort portfolio.
 

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