On February 8, 2017

From Stratton to Stowe, Burke and Jay, ski resort ownerships may change

By Karen D. Lorentz

For two weeks now rumors have been flying that Vail Resorts might be buying Stowe Mountain Resort. Those rumors were based on reports of CEO Rob Katz being seen at the mountain two weekends ago.
Stowe
This past December, the Mountain Times reported that retired Steamboat President Chris Diamond (now a consultant) wrote in his memoir SKI INC. that “Vail Resorts will also certainly find a way to enter the Northeastern market, regardless of the weather vagaries and the challenges of providing the ‘Experience of a Lifetime’ under those conditions.”
Diamond went on to say, “a property such Killington would be a very desirable acquisition,” citing its being the largest area in the East with possibly the “largest customer base.” Mentioning areas in other New England states as possibilities, too, he opined, “it’s just a matter of time” before Vail comes East.
Vail Resorts (NYSE:MTN) went public in Feb. 1997 with an IPO price of $22 a share. As of Feb. 7, 2017 it was trading at $177.26 . The stock climbed 27 percent in 2016 due to strong earnings growth and its major acquisition of Whistler Blackcomb, according to S&P Global Market Intelligence.
Since 2008, when the federal government bailed out Stowe’s owner — the insurance conglomerate American International Group, Inc. (AIG) has owned the ski area since 1970 — Stowe Resort was reported for sale, as AIG has divested assets to repay the $182 billion bailout (and lately reported to be selling assets to simplify its holdings and to buy back shares). An AIG official confirmed Stowe was for sale back in 2009, mentioning several unsolicited bids.
However, it was noted that the resort was in the midst of a $400 million expansion project and that it would be worth more when that was complete, which makes today’s rumors of Vail Resorts interest in Stowe Mountain Resort plausible given the company’s acquisition spree of late (including three smaller areas in Wisconsin, Michigan, and Minnesota which serve as local learning hills and feeders to larger destination resorts).
As a classic yet updated New England area, Stowe is also one of the oldest continually operating areas in Vermont. Thanks to the snow trains, skiers were climbing up on skins in the early 1930s long before the first rope tow began operating at the Toll House Slopes on Feb. 7, 1937. With the Village of Stowe and the mountain a popular summer mecca since the 1850s, Stowe Mountain Resort has the panache and potential that would fit the upscale Vail Resorts’ interest in year-round resorts and first foray into the East.
The ramifications of a Stowe sale to Vail would be significant for the increased visitation and revenues it could bring to the town. Those who purchase Stowe season passes would see a huge drop in their cash outlays because the Epic pass sells for half of what a Stowe pass goes for.
Additionally, giving access to Vail Resorts’ stable of areas in Colorado, Utah, Lake Tahoe, and Canada might mean more passes sold and greater competition for other Vermont areas. The Epic pass is widely regarded as the impetus for other ski resort owners to form partnerships and offer their own conglomeration of ski areas on one season pass like the M.A.X. pass which has seen 39 mountains join together to compete with the Epic pass. So while the competition would heat up for some Northeastern ski areas, the end result could see more value for skiers in competitive and value laden passes.  However, one industry source noted a down side to the less expensive Epic Pass, stating that Vail raises the prices on food, rentals, and lodgings when adding areas to its pass.
Stratton
But Stowe is not the only ski area that may be changing hands. According to a Jan. 13, 2016, Reuters article, Stratton’s owner, Intrawest Resorts Holdings, Inc., “is working with investment banks on a possible sale” (the specific source remained unidentified, however).
Intrawest was once the largest owner of ski resorts in North America and topped Vail Resorts in annual skier visits in 2009 with its five areas in the U.S. plus one it operated for the city of Denver (Winter Park). That was prior to selling Copper Mountain to Powdr Corp in Dec. 2009 and then selling Whistler Blackcomb to Vail Resorts in Dec. 2016. Intrawest still owns Steamboat (Colo.), Stratton (Vt.), Snowshoe (W.V.), Mountain Creek (N.J.), and Mont Tremblant in Quebec along with other holdings like CMH, a Canadian Rockies heli-operation.
Intrawest is reported to be “in the initial stages of reaching out to potential buyers, including buyout firms,” Reuters reported. It could be years or just a matter of time before more Intrawest areas are sold.
The private equity firm Fortress Investment Group, LLC, is the majority-owner of Intrawest. Fortress took Intrawest private in 2006 for $2.8 billion and in 2014 took it public again. Now the former ski resort giant appears to be getting out of the ski business, and with great snow seasons at some of its resorts that could be fortuitous timing as far as sales prices go.
Intrawest’s recent sale of Whistler Blackcomb to Vail Resorts for over $1 billion was the largest price ever paid for a ski resort and along with Vail Resorts’ 2015 acquisition of Perisher in Australia for $136 million, it’s a sign that Vail Resorts is making a serious foray as a global ski resort company. Vail also partners with several European resorts for limited ski days at each for its Epic Pass holders.
Jay Peak and Burke Mountain
The sales of Stratton (via Intrawest ownership) and Stowe are not the only ones likely. When the Jay Peak case gets settled, it is possible we’ll see new owners for Jay and sister area Burke Mountain. Whether an independent owner or one of the major players will do that remains anyone’s guess, but the consolidation trend has been around and growing since the 1990s.
Still the last three Vermont ski-area purchases have been by individuals and local groups. Local volunteers worked to revive the former Ascutney resort into a small non-profit hill (with plans to grow) while others have rescued good mountains as private areas. In the case of the former Bear Creek (Round Top Mountain), it is now Plymouth Notch Ski Area, a private winter club in its third season, and Haystack Mountain is in its fifth season as the Hermitage at Haystack Club.
It is not known if any other areas might be for sale at this time, but one thing industry experts agree on is that “any area can be bought for the right price.”
Jim Barnes, the owner of the Hermitage Inn in southern Vermont, wasn’t looking to buy a mountain resort in 2011 but he did, chalking up the rescue of Haystack to “a compelling price and an offer that you can’t refuse.”
With a belief that the private club model could work, millions have been invested at the area, which has grown to 900 members, making the Hermitage Inn Real Estate Holding Company, LLC, the fastest growing privately-owned company in the state for the last three years and landing it at no. 133 on INC. magazine’s top 5,000 list in 2016.
If Vail Resorts sees potential at Stowe that meets its business model, that Eastern acquisition could become breaking news any day. Burke and Jay will likely take longer due to the legal situation and receivership. Stratton has been looked at by other companies in the past so if there is validity to Intrawest Resort Holdings looking to sell, Stratton also could eventually see a new owner.

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