New England Vail Buys Stowe Mountain Resort (updated Title)

[nay]

As far as the comments regarding VR attenuating themselves from development, I think the translation is since the street won't give us credit on development the way they will operating income we'd rather focus on operations and integrating inquisitions...er...acquisitions.

I think you're right.

 

[Erik Timmerman]

Here's an example of how splitting into two entities changes things. Last summer the math for adding mountain amenities such as zip line or mountain biking would be driven by trying to increase hotel business. Now any amenities like that have to be profitable on their own (thigh Vail wouldvstillblookbat increased F&B or retail).

 

[quant]

1) Real estate was supposedly going to be an important part of VR business plan, but look at the numbers! It amounts to bupkis and it sounds like it always will. Katz now would rather have others build the RE and bare the risk.
2) The biggest problem for most resorts is something most people don't think much about. Lift replacement is expensive and most resorts never reserved for it. Some operators would rather sell than deal with the costs. Stowe, unlike most of VT and NH, won't have to worry about funding capital improvements. This is a competitive advantage.
3) Regardless of the multiple paid, MTN gets a prime property that it can improve in the offseason. MTN has people and resources to build MTB parks, zip lining, rope courses, golf courses, etc. What's needed in a lot of places is convention center capable of holding more corporate retreats. MTN will find a way to fill beds.
4) It will be interesting to see what MTN charges for the Stowe season pass. I assume it will be priced in line with the usual EPIC Pass, but it seems odd that the season pass for Stowe could drop by 50% or whatever (the family pricing makes things confusing).
5) According to FORBES, MTN paid 10x earnings: https://www.forbes.com/sites/daniel...-buying-stowe-resort-in-vermont/#12bcb21c6b86

 

[Josh Matta]

1) Real estate was supposedly going to be an important part of VR business plan, but look at the numbers! It amounts to bupkis and it sounds like it always will. Katz now would rather have others build the RE and bare the risk.
2) The biggest problem for most resorts is something most people don't think much about. Lift replacement is expensive and most resorts never reserved for it. Some operators would rather sell than deal with the costs. Stowe, unlike most of VT and NH, won't have to worry about funding capital improvements. This is a competitive advantage.
3) Regardless of the multiple paid, MTN gets a prime property that it can improve in the offseason. MTN has people and resources to build MTB parks, zip lining, rope courses, golf courses, etc. What's needed in a lot of places is convention center capable of holding more corporate retreats. MTN will find a way to fill beds.
4) It will be interesting to see what MTN charges for the Stowe season pass. I assume it will be priced in line with the usual EPIC Pass, but it seems odd that the season pass for Stowe could drop by 50% or whatever (the family pricing makes things confusing).
5) According to FORBES, MTN paid 10x earnings: https://www.forbes.com/sites/daniel...-buying-stowe-resort-in-vermont/#12bcb21c6b86

2. Stowe never had a problem with funding anything it has ever wanted..... AIG owned it.

 

[Philpug]

2. Stowe never had a problem with funding anything it has ever wanted..... AIG owned it.

Well, that is going to change. Expect to hear "It's not in the budget.." a lot. The only thing that is in the budget is the purchase of another resort.

 

[Muleski]

Stowe has always had a lot going for it. When C.V. Starr's insurance concerns were acquired by what became AIG, the Mount Mansfield Company came along with the deal. When AIG was becoming a giant in the world wide insurance world, MMC was this tiny little entry on the balance sheet. And the CEO, happened to be a Montreal native who loved to ski, loved his home in Stowe, and spent a LOT of time there.

Yeah, Stowe "got" whatever funding it needed, and the bottom line was not a huge focus. The times were also different. Replacing the gondola was a big deal. Taking down the Mansfield single and double and putting up the quad was a big deal. And obviously over the past 20+ years, it has accelerated.

But is has not been the typical situation that the GM's of the properties of the bigger operators face.....trying to advocate for a bigger piece of a limited pie to make some improvements, and being told to make due. "get through another year", then another, and more. It can be very, very frustrating.

Going to be interesting to watch. Hope it goes well. I can see a lot of challenges. I love the place, but I'm not sure if this is going to prove to be great for anybody, including VR.

I think it will be a very frustrating deal gorvthe current management team. They have probably been left largely alone by AIG. They will now have people analyzing numbers, trends, projections and all of those great "metrics" in real time, from CO.

"This is how we do it at Stowe" might be spoken by somebody once, before they get strongly corrected. Just my hunch.

 

[coskigirl]

I think the exact number is 19. Also, there were 42 contracts before they finally reached this point. Somebody needs a vacation.

AIG doing business with VR? The 42 may have been under reported.

So, I found out last week that one of the VR attorneys who has been working on this deal is in my run club. We're one town over from the headquarters in Broomfield so I wasn't all that surprised except that I had no idea he is an attorney much less that he works for VR. He's been working this deal for 4 months, all the while we've been doing our plyo workouts together. Yes, he needs a vacation.

 

[Monique]

4) It will be interesting to see what MTN charges for the Stowe season pass. I assume it will be priced in line with the usual EPIC Pass, but it seems odd that the season pass for Stowe could drop by 50% or whatever (the family pricing makes things confusing).

That's what happened at PCMR, I believe.

Well, that is going to change. Expect to hear "It's not in the budget.." a lot. The only thing that is in the budget is the purchase of another resort.

Assuming this is not just the usual griping (every company/family/government has a budget, and you can't make everyone happy), I don't understand it. It sounds like the old line, "We're losing money on each item, but we'll make it up in volume!"

 

[Erik Timmerman]

I think it will be a very frustrating deal gorvthe current management team. They have probably been left largely alone by AIG. They will now have people analyzing numbers, trends, projections and all of those great "metrics" in real time, from CO.

AIG has been pinching them pretty hard the last few years.

 

[Lorenzzo]

So, I found out last week that one of the VR attorneys who has been working on this deal is in my run club. We're one town over from the headquarters in Broomfield so I wasn't all that surprised except that I had no idea he is an attorney much less that he works for VR. He's been working this deal for 4 months, all the while we've been doing our plyo workouts together. Yes, he needs a vacation.

In my world, asset sales with a moderate amount of complexity took roughly 2-4 weeks to paper. And that included the pre-attorneys terms discussions. A major motivator for both sides is accumulating attorney's fees. So 4 months of asset sale documentation would typically be crazy but then we don't know all the moving parts. Still, insurance companies are generally awful in a process like this and VR probably ain't a model of function either.

 

[Read Blinn]

Over on the other site, naja & I have been discussing the impact of the Stowe deal on the rest of the Northeast market. If the Stowe pass drops to under $900, what happens to passes and lift products elsewhere in the region? Downward price pressure could kill some operations right off (along with climate change) — naja's hypothesis.

Evidence? Sunapee's new pass products were just posted. The top-tier pass is now $899 early season — unlimited Sunapee/Okemo, no blackouts. That's $50 less than my current second-tier product (unlimited, no-blackout Sunapee; unlimited, holiday-blackout Okemo). The old top-tier pass (unlimited Sunapee/Okemo/Crested Butte) is gone. Sunapee's also axed about $250 of value (in guest passes, Pico days, & Pat's Peak discounts) from the new top-tier pass. That $899 is pretty close to the Epic pass, and people reluctant to drive all the way to Stowe might be tempted by it — for Okemo, of course, not Sunapee, though Okemo's pass is likely to be priced the same.

 

[cantunamunch]

Do you see anyone going for the $899 season pass and the $329 MAX add-on?

 

[Philpug]

Over on the other site, naja & I have been discussing the impact of the Stowe deal on the rest of the Northeast market. If the Stowe pass drops to under $900, what happens to passes and lift products elsewhere in the region? Downward price pressure could kill some operations right off (along with climate change) — naja's hypothesis.

Evidence? Sunapee's new pass products were just posted. The top-tier pass is now $899 early season — unlimited Sunapee/Okemo, no blackouts. That's $50 less than my current second-tier product (unlimited, no-blackout Sunapee; unlimited, holiday-blackout Okemo). The old top-tier pass (unlimited Sunapee/Okemo/Crested Butte) is gone. Sunapee's also axed about $250 of value (in guest passes, Pico days, & Pat's Peak discounts) from the new top-tier pass. That $899 is pretty close to the Epic pass, and people reluctant to drive all the way to Stowe might be tempted by it — for Okemo, of course, not Sunapee, though Okemo's pass is likely to be priced the same.

I hear what you are saying but I don think people are choosing to get a pass at Okemo or Stowe, these two do not get crossed shopped. I am not sure Stowe is in competition with any other mountain. Even when ASC had $349 passes that covered up to Sugarbush, Stowe was way higher. With that said, I see the passes being more than 50% less than they are now and them selling 3X times more passes getting that many more people on the slopes..buying $6.25 hot chocolates and $17.95 Epic Burgers and $7.95 garlic fries.

 

[Read Blinn]

Do you see anyone going for the $899 season pass and the $329 MAX add-on?

Possible, right? Depends on the customer. I'd do it, if I could ski more. If I skied more, I'd be bored skiing just Sunapee-Okemo. I'm a bit miffed losing Pico.

Stowe was especially not in competition when its pass cost $1800+ — people were willing to pay that for Stowe b/c it was Steaux (the plural of Steau, apparently), and because it has excellent terrain for the east. If that drops below $900, the priced-out masses will reconsider; they'll want that terrain, too, maybe.

You're right there'll be more passes sold if the price goes down. Whether it's enough to offset the price drop is another question.

 

[cantunamunch]

Getting MSA and Tremblant and Sugarloaf is pretty attractive for start/end season, no? Can you extend the season to include those?

 

[Read Blinn]

Getting MSA and Tremblant and Sugarloaf is pretty attractive for start/end season, no? Can you extend the season to include those?

They're all a distance — seven hours + for MSA, Sugarloaf, six. I teach, so most of my skiing is weekend, snow day, Friday night, and February break. We might do a trip over February break, but for my wife, closer is better. We did Sutton this year, which was fun, and extremely cheap — both things made her happy.

 

[Muleski]

Do you see anyone going for the $899 season pass and the $329 MAX add-on?

We have done this for the past three seasons. Season passes at Sugarloaf, MaxPass add on, and scrounging a few other deals when possible out West. The MaxPass was a complete no brainer with a lot of family in CO, and a desire to make a weekend trip to Tremblant. Even more options in 2017-2018.

We'll buy a season pass with the blackout days, the Max Pass add on, and possibly the MCP. With day ticket prices so high, they pay off very fast.

 

[Tricia]

We have done this for the past three seasons. Season passes at Sugarloaf, MaxPass add on, and scrounging a few other deals when possible out West. The MaxPass was a complete no brainer with a lot of family in CO, and a desire to make a weekend trip to Tremblant. Even more options in 2017-2018.

We'll buy a season pass with the blackout days, the Max Pass add on, and possibly the MCP. With day ticket prices so high, they pay off very fast.

We don't get the Max Pass but we get the MCP and (of course) the employee benefits pass from VR.
In the past we've gotten the Squaw/Alpine Pass but have been so busy traveling, the MCP made more sense.

 

[Tricia]

And so it begins,....
Sugarbush has announced their season pass rate for the coming season $799 for the unlimited pass.
I have never purchased a Sugarbush pass but I understand that this is a significantly reduced price from pass' past.


Edit: Added a link to Sugarbush pass page

 

[Erik Timmerman]

I hate to think of the implications of that. I don't see how they can get by on $799 passes. Hopefully I am wrong.