Vail's Latest Acquisitions: Okemo, Sunapee, Crested Butte, and Stevens Pass

[nay]

I think climate change is part of what’s driving this... being able to spread out weather risk in a given year is becoming more and more important as the seasons get more erratic. Makes sense to really get into as many regions as you can.

And also simply that predictable annuity revenue from pre-season pass sales and growth trends in pass sales overall enables long term capital investment independent of seasonal weather variations.

Pass prices go up even in summer. How many of us are hedging our bets on the weather for next season vs. having already purchased at lowest possible price?

I’ve wondered how long the U.S. PNW would hold out since it’s a real outlier for a major ski region. I think the real point of an acquisition like Stevens is to draw destination skiers to other Vail resorts and is really part of the overall Whistler strategy.

I bet we see action in the interior PNW, both U.S. and Canada, in the coming months.

 

[Posaune]

I've skied at Stevens since my first day of skiing in 1963. This does not look good to me. It's a day only ski area that will be run by corporate resort people. I hope I'm wrong that it will mean higher prices for gussied up infrastructure.

 

[John O]

I think the real point of an acquisition like Stevens is to draw destination skiers to other Vail resorts and is really part of the overall Whistler strategy.

I agree. It's a pretty busy ski area that's almost 100% day trippers from a major metro area. Getting those people to buy Vail passes is a smart move, because you can pretty much guarantee you'll keep their business if they decide to take a trip somewhere.

 

[nay]

I think that in a perverse way, Stevens is giving Vail extra geographic insurance diversity for la Nina seasons like we just had.

Stevens isn’t a destination resort and there is already Whistler as the mega resort destination on the pass. Vail wants to drive as much destination traffic to Whistler as possible, and putting Seattle on the pass does that.

Stevens isn’t climate change insurance given it’s high vulnerability due to its low altitude. This is numbers most likely with Whistler as the draw, because it is on the pass for a Stevens skier.

 

[Philpug]

I agree. It's a pretty busy ski area that's almost 100% day trippers from a major metro area. Getting those people to buy Vail passes is a smart move, because you can pretty much guarantee you'll keep their business if they decide to take a trip somewhere.

Ding...Ding...Ding...

 

[quant]

And also simply that predictable annuity revenue from pre-season pass sales and growth trends in pass sales overall enables long term capital investment independent of seasonal weather variations.

Pass prices go up even in summer. How many of us are hedging our bets on the weather for next season vs. having already purchased at lowest possible price?

I’ve wondered how long the U.S. PNW would hold out since it’s a real outlier for a major ski region. I think the real point of an acquisition like Stevens is to draw destination skiers to other Vail resorts and is really part of the overall Whistler strategy.

I bet we see action in the interior PNW, both U.S. and Canada, in the coming months.

That is correct. The prepaid ski seasons allow for a smoother and relatively predetermined cash flow. Skiers with a prepaid season pass will go somewhere to ski.

Vail Resorts, unlike the "smaller" operators it acquires, has never backed away from capital improvements. People forget or never realized how expensive something like lift replacement is, and how almost no individual area has reserved for it. MTN has the cash flow and access to capital to keep its areas "modern," and the business model to grab profits from lodging and on-mountain activities. One downside is the loss of the local "feel" in some places. Another downside is the rise in on-mountain food service that offsets the (generally) lowered season pass price (I can afford an $18 burger but prefer to take a sandwich with me since the increased food cost pisses me off).

Change is going to happen. The building of the big retail malls of the1970's closed Main St. stores. The big box stores (e.g., Home Depot) helped consumers but closed local stores. The Internet helped consumers but killed many anchor tenants in the shopping malls. National credit reporting helped consumers but allowed big banks to expand hurting the local ones. The list goes on. For the most part, Vail's business model helps consumers, so this expansion is going to continue.

My once little kids are now taller than me and looking at colleges. Since Colorado College is on a short list, we may do some early season skiing in Colorado this year...using the EPIC Pass.

 

[LKLA]

Okemo, Sunapee and Steven’s are located near major metro areas Boston/NY (3-4hrs) and Seattle (1.5-2hrs), providing more of day-trip or overnight customer base rather than destination skiers.

Steven’s Pass in particular seems like it could benefit as it will no longer be operated by a disparate private equity owner.

Okemo on the other hand will be an "interesting" situation to watch. It has had some insanely crowded days. Not sure if this will makes matters worse or alleviate the crowding issue.
Seems like Vail paid a fair price, a little less than 10x, and, given Vail's leverage remains low, there are likely further resort acquisitions around the corner.

 

[Brian Finch]

Just posting in this most important thread.

 

[Philpug]

What is being missed here is that you, me, us, we are not Vail's customer. If we were, do you think they would have shut Epicski down? For the pennies (relative term) it cost to run the site let alone migrate it, it shows that the on line skier is not in their marketing plan. Are we too educated? Do we not buy the $18.00 burger that @quant is referring to? Do we not stay on the resort grounds? Whatever the reason is...the trend will continue.

 

[David Chaus]

I think that in a perverse way, Stevens is giving Vail extra geographic insurance diversity for la Nina seasons like we just had.

No doubt, we had a pretty good snow year this season. What Stevens also gives Vail is some serious terrain. Stevens is not going to appeal to Vail’s core of vacationers who want wide, perfectly groomed intermediate slopes, along with slope side lodging. It will appeal to their pass holders who want some easily accessible steeper terrain, with enough snowfall to get it all covered early January, often by Xmas.

That said, I think it’s mostly to get the Seattle-Tacoma-Everett metro skiers and boarders to visit other Vail resorts and spend money on lodging, food and everything else.

 

[wallyk]

The consumer should win here.......more places to ski under one pass. The Okemo deal is a winner for Vail as I have strongly believe that the demographic who visits Okemo would be willing to spend ski vacation dollars at a Vail property. I don't see how this type of consolidation is bad for the consumer. Upgrades in service and infrastructure....when was that ever a negative for 99% of the skiers in North America?

 

[nay]

Ding...Ding...Ding...

We shouldn’t miss the degree to which Vail is moving into the PNW generally. Epic has a limited set of days at 6 Canadian Rockies resorts along with now Whistler and Stevens.

Stevens is a major shot across the bow of what will likely be significant PNW consolidation, which has long struck me as heavily underserved for destination skiing given the % of locals who ski.

I’m not sure a higher inverse ratio of skiing participation to destination areas exists in North America and that seems ripe for the kind of investments locals hate and MTN and Alterra are built to deploy.

 

[David Chaus]

Yeah, I’ll bet Mt Hood Meadows is on the radar for Vail or Alterra.

 

[James]

What we need is a good Proton Torpedo. But Princess Leia is dead and Luke is old.

 

[David Chaus]

The consumer should win here.......more places to ski under one pass. The Okemo deal is a winner for Vail as I have strongly believe that the demographic who visits Okemo would be willing to spend ski vacation dollars at a Vail property. I don't see how this type of consolidation is bad for the consumer. Upgrades in service and infrastructure....when was that ever a negative for 99% of the skiers in North America?

You have no idea how crowded Stevens can get on weekends. The overflow parking lots are well-used. I doubt that gets any better with infrastructure upgrades. If they added some new terrain, as the current master development plan proposes, that would help somewhat.

 

[Philpug]

What we need a a good Photon Torpedo. But Princess Leia is dead and Luke is old.

Mixing Star Trek and Star Wars, how gauche.

Thanks @David Chaus

 

[David Chaus]

What we need a a good Photon Torpedo. But Princess Leia is dead and Luke is old.

If you’re going to mashup, include a Tardis and a sonic screwdriver. Made of Vibranium.

 

[Lauren]

I think climate change is part of what’s driving this... being able to spread out weather risk in a given year is becoming more and more important as the seasons get more erratic. Makes sense to really get into as many regions as you can.

Agreed, basically investing 101...creating a diversified portfolio. To add to it, they are tying more and more skiers into season passes in the spring/summer of the year before. Basically creating a guaranteed early revenue which makes it much easier to absorb a bad snow year with minimal economical impact.

 

[Philpug]

If you’re going to mashup, include a Tardis and a sonic screwdriver. Made of Vibranium.

And a blanket!

 

[SkiNurse]

Damn. I was hoping that CB would only be bed buddies with Vail for a couple of seasons. Money talks.