By Karen D. Lorentz
As Okemo Mountain Resort enters into its 63rd ski season, it will be as a member of the Vail Resorts family of ski areas, if regulatory approvals are secured.
Vail Resorts, now the largest global operator of ski resorts, had its genesis in the vision of 10th Mountain Division veterans who founded Vail Mountain in Colorado with a dream to create “a world-class ski resort.”
Similarly, Perry Merrill, a Vermont state forester, had a vision for Okemo to become a “major New England Ski ground.” Although his plans lay dormant for 20 years, his dream for a year-round resort saw fruition with Tim and Diane Mueller’s very successful operation of Okemo as its second owner/operator.
Recognizing that success, Vail Resorts will further diversify its holdings with the acquisition of Okemo — its second addition of a Vermont resort in two years — and the Muellers’ other two Triple Peaks resorts of Mount Sunapee, N.H., and Crested Butte, Colo.
Why Okemo and what’s in store
Responding to a question of “Why Okemo,” Vice President of Corporate Communications Carol Fabrizio told the Mountain Times, “Vail Resorts selects each of the resorts we acquire very carefully in order to meet our strategic objectives. The addition of Okemo’s family-oriented programs will offer our guests an entirely new and distinctive experience, particularly in New England.”
Asked about plans for this latest round of acquisitions, Fabrizio said, “After closing of the Triple Peaks and Stevens Pass transactions, which are separate from one another, Vail Resorts plans to invest $35 million over the next two years across Okemo, Mt. Sunapee, Crested Butte and Stevens Pass to continue to elevate the guest experience. Upon closing over the next couple months, subject to regulatory review, we plan to review and learn more about the specific operations at each resort, listen to key stakeholders, and determine what will provide the greatest benefit to our guests. As with all of our mountain resorts, Vail Resorts’ goal will be to continue to provide the ‘Experience of a Lifetime’ to skiers and snowboarders at Okemo, Mount Sunapee, Crested Butte and Stevens Pass.
“Regarding staffing, Vail Resorts is committed to managing and operating the resort locally with critical leadership and operational functions residing at the resort. We will be retaining the vast majority of the resort’s year-round staff and will be working with resort leadership team in the coming months to set the right long-term structure for the organization.
Addressing possible anti-trust issues, Fabrizio said, “The ski resort industry is highly competitive in Colorado, throughout North America, and beyond, offering skiers and snowboarders a number of options. We face competition from both domestic and international companies, as well as independent resorts.”
Fabrizio confirmed that Vail Resorts “will continue to honor previously sold 2018-19 season pass products for Okemo, Mount Sunapee, Crested Butte and Stevens Pass. We also look forward to integrating all four resorts into our Epic season pass and other season pass products for the 2018-19 winter season. Should anyone who pre-purchased Okemo season passes want to convert to an Epic, they’ll either be charged the balance or refunded the difference depending on the product price difference. More information on process for exchanging pass products to be announced after closure of the acquisitions.”
In the beginning
New Englander Pete Seibert (1924-2002) fell in love with skiing at age 7 after he discovered skis in his parents’ barn. He became a ski racer and, as this country entered World War II, he served in the 10th Mountain Division ski troops. So seriously wounded he was told he’d never ski again, he rigged up braces, competed, and made the U.S. Alpine Ski Team in 1950. He worked as a ski patroller and an instructor at Aspen, graduated from a famous hotel management school in Switzerland, managed Loveland Basin, and helped build trails at Aspen Highlands — all experiences that strengthened his dream to develop “a world-class ski area.”
In March 1957, his friend Earl Eaton led him to “the perfect place,” an unnamed mountain that was “love at first site,” Seibert wrote in his book, “Vail: Triumph of a Dream.” The deep snow, scenery, and back bowls sold them on developing what would become Vail Mountain (named after Vail Pass at the eastern end of the valley).
They struggled to raise the $1.6 million the U.S. Forest Service required to grant them a special use permit for 6,740 mountain acres. With investor funds and loans, a permit was issued in March 1962, and Vail Associates opened Vail Mountain and a small village (grown from scratch) on Dec. 15, 1962.
Seibert noted that Vail quickly grew and became very successful, attracting the families he had hoped for and international skiers who not only visited but also settled in the town to operate businesses.
In the first 10 years of pioneering, Seibert had accomplished the “world-class ski resort” of his dreams.
Interestingly, he credited some of that success to Colorado passing a 1963 law that allowed condominium ownership, which in turn fueled Vail’s real estate development and mountain expansion.
Bumps in the road
The next decade brought more growth and the purchase of — and plans for — 2,200 acres at nearby Beaver Creek, which Seibert had hoped to develop for the 1976 Winter Olympics. However, Colorado voters nixed the hosting of the Olympics, and tragedy struck when two gondola cars fell to the ground in March 1976, killing four skiers.
With his board fearing $50 million in lawsuits, Vail Associates sold to Harry Bass for $13 million. (The lawsuits were settled for $12 million, most covered by insurance.) The Goliad Oil magnate fired Seibert due to a personality clash.
The Bass family, not seeing their expected return on investment, fired Harry Bass and sold Vail Associates to Gillett Holdings (1985).
Millionaire businessman George Gillett further grew Vail with the opening of China Bowl and expanded Beaver Creek (1980 debut), which hosted the World Ski Championships in 1989.
With Seibert having developed the nearby Arrowhead Ski Area, Gillett hired him and annexed Arrowhead to Beaver Creek.
When Gillett had to file for bankruptcy, Apollo Advisors, a New York investment firm, took control of Vail Associates for $130 million (1992).
New leadership for Vail Resorts, Inc.
Under Apollo, Vail Associates transitioned to a Colorado powerhouse by acquiring Keystone and Breckenridge in 1996 and to Vail Resorts with a January 1997 IPO at $22.50 a share. Heavenly in Lake Tahoe was acquired in 2002.
Rob Katz who had worked on the acquisitions joined the Vail Resorts board. Apollo divested its Vail stock in 2004, but Katz who had moved to Colo. after 9/11, remained on the board and became CEO in 2006 at age 39.
Katz saw the potential for Vail Resorts to become a global leader in the mountain vacation experience and today the mission is to provide an “experience of a lifetime” at the various mountains.
The company acquired: Northstar at Tahoe (2010), Kirkwood (2012), Canyons (2013), Park City Mountain Resort (2014; connected to Canyons for 2015-16), Perisher (Australia, 2015), Whistler-Blackcomb (2016), and Stowe (2017; its first eastern acquisition) as well as three “urban” areas in the Mid West — Brighton, Afton Alps and Wilmot which serve as important “feeder” areas.
Millions have been spent on continuing upgrades to enhance the individual resorts while retaining their special and distinctive identities; i.e., Keystone as an affordable family resort and Beaver Creek as an upscale luxury resort.
According to annual and quarterly reports, Katz’ strategy for the company includes: owning areas in diverse geographic areas to reduce possibilities of weather or other negative influences; buying successful areas and continuing to improve them; focusing on the stability that season pass sales bring in business prediction for lift and other revenues like food, retail, rentals and lodging; guest-targeted marketing; and increasing the appeal of Epic Passes with more areas to choose from and thereby building loyalty from guests around the world.
In 2008 Katz introduced the Epic Pass ($579), reducing the cost of season passes and offering access to all the company’s areas on one pass. Epic now has several iterations and a full pass is $899.
Although discounted passes had been introduced a decade earlier at a few individual ski areas, they didn’t offer skiing at multiple areas. The Epic Pass caused other ski companies to join forces and offer alliances that resulted in collaborative and competitively priced passes like the MAX and Ikon.
A number of days at Epic partner areas in France, Austria, Italy, Switzerland, and Japan have since been added as benefits for various Epic Passes; new Epic Military Passes have also been added.
In 2017, Vail Resorts expected to sell more than 740,000 Epic Passes in 50 states and 104 countries. Whereas skier visits had been the metric for measuring success, pre-season pass sales have been a game changer that have benefitted Vail Resorts (reportedly with 40 percent of lift revenues) as well as skiers
Vail Resorts gained a reputation for giving back to workers and their communities.
Employees gave nearly 21,000 hours of company-sponsored volunteer time to nonprofits last year. To strengthen the bond between employees and communities, four volunteer programs were initiated to encourage volunteering for events and projects, with one program offering up to 40 hours of paid time off to volunteer with an organization.
Recognizing the need for affordable housing for seasonal and year-round workers, Vail Resorts made a $30 million commitment in 2015 to develop new employee housing projects in the communities where it operates. Since then, three projects have been announced — one in Vail, one in Silverthorne, and one in Keystone.
In 2015 the EpicPromise Foundation was formed to support employees and their families in time of need as well as to offer educational scholarships for children of employees.
A fall 2017 release noted that the company would give approximately $8.6 million to 250 non-profit partners in their resort communities during the 2017-18 season.
Last year, Katz exercised stock appreciation rights (SARs) and donated approximately $58 million in proceeds to a new donor advised fund that will initially focus on helping to address mental and behavioral health and alcohol and drug abuse in the mountain resort communities in which Vail Resorts operates.
Katz and his wife Elana Amsterdam donated $650,000 in grants to local community non-profits that focus on these issues and made a $750,000 donation in March 2018 to Operation Homefront, a nonprofit that supports military families. The personal donation was in honor of the Company’s founders and in celebration of the 10th anniversary of the Epic Pass, according to a press release.
On June 12, Vail Resorts announced that Katz is exercising another round of SARS and will be donating an estimated $31 million to his family charitable foundation and to the donor advised charitable fund. Also announced were grants of $150,00 each to: The Environmental Defense Fund, The Other Side Academy in Denver, and to the Fund for a Safe Future (strategies to reduce gun injuries and deaths).
Energy and water conservation, recycling, and working with others to protect forests and wildlife habitat are part of Vail Resorts’ environmental stewardship efforts and another way the company and employees seek to give back.
Change and continuity
While new ownership will mean changes to some things — Okemo senior and midweek passes will no longer be available for example — such changes will have their bright sides as the Epic and Epic Local passes will allow adults to ski on weekends, thereby promoting Okemo’s intergenerational family focus.
With a similar focus on employees, communities, the environment, and providing the best possible experiences for guests, Okemo shares the values that Vail Resorts holds. As a private company, Triple Peaks seeks to continue to benefit guests, workers, local communities, and the environment through its sale to Vail Resorts.
As a public company, Vail Resorts (NYSE: MTN) also rewards its shareholders. Its stock closed at $280.81 on June 22, having risen from 211.28 a year ago and from $61.52 five years ago. The company declared a quarterly cash dividend of $1.47 per share for common stock payable on July 12, 2018.
In the June 4 announcement of the transactions, Katz commented that in addition to adding variety to Vail Resorts’ network of mountain experiences, each acquisition will “individually offer guests from around the world entirely new and distinctive experiences in extraordinary locations from coast to coast.” That bodes well for continuity of the Okemo experience.