Vail Resorts Rumored to be interested in Buying Stowe

VailResorts

Photo courtesy of Vail Resorts

This week, Lisa Lynn from Vermont Ski and Ride reported that there are rumors being heard in the Vermont area that Vail Resorts is interested in buying Stowe (Vermont). Lynn’s article goes on to make excellent points on why the purchase makes sense. But, Vail Resorts has been on a shopping spree in the last few years and has been making huge investments in both large and small resorts. So, my question is: What is Vail Resorts up to?

Vail Resorts has been on a buying spree in the last few years. They bought Lake Tahoe’s Kirkwood in 2012. In 2014 their purchase of Park City for $182.5 million was a big one that allowed it to merge Canyons and form the largest ski resort in the United States. They expanded into the southern hemisphere by acquiring Australia’s Perisher Ski Resort for $135 million in 2014. Also, they aren’t only interested in the big mountains. A year ago they bought Wilmot Mountain for $20 million and then invested another $13 million in renovations. That’s a lot of big purchases and they topped everything off last August by purchasing the largest ski resort in North America, Whistler / Blackcomb for $1.06 billion.

That’s a lot of money and what’s interesting is that it the mountains are located all over the world. Vail Resorts is not a player in the East Coast of the United States. Currently, they do not own any resorts in the east coast. So, the questions are why would they want to own a resort in the East Coast? There are two answers: 1. Continue to grow the number of Epic Pass holders and 2. Diversify to different climates to adjust to the warming climate.

ParkCity

Photo courtesy of Park City

Expanding Epic Pass Holders

Multi-park passes have become very popular in the last few years. Vail’s Epic Pass allows holders to access all of Vails resorts including Vail, Arapahoe Basin, Beaver Creek, Breckenridge, Keystone, Park City, Heavenly, Northstar, Kirkwood, Wilmot, Afton Alps, Mt. Brighton, Perisher (Australia). With the high cost of single-day lift tickets, multi-park passes have become very popular since it allows access to numerous mountains at a set cost and lets pass-holders explore different mountains.

With the addition of Park City, Whistler, Wilmot, and a possible East-Coast resort, Vail Resorts is getting skiers and snowboarders from across the country to buy into the Vail Resorts “Epic” brand. While the purchase of Wilmot Mountain may seem odd to many people, it is located 60 minutes from Chicago which is one of the most populist cities in the world. Not only will skiers/riders from Chicago be able to ski/ride locally at a newly renovated mountain, but they will have access to all of Vails World Class resorts at a very reasonable price.

During a past investor conference call, Vail CEO Rob Katz, said the Perisher acquisition was largely completed to drive Australian ski visits to America. At the time, he noted that sales of the Epic Pass increased 22 percent to $37.1 million. Recently, Vail Resorts reported that season pass revenue was up 4.3% compared to the prior year season. That’s very impressive and shows why Vail Resorts is staying aggressive in expanding their mountains and increasing the number of Epic Pass holders. Thus, there purchase was very successful.

Vail Resort

Photo courtesy of Vail Resorts

Adjusting to Climate Change

According to an article in Market Watch, Whistler CEO, Dave Brownlie stated the deal for Vail Resorts to purchase Whistler was to help the company stave off the effects of unpredictable “year-to year regional weather patterns”. Simply put, a ski resort needs snow for people to come. According to Brownlie, “Whistler Blackcomb with its unprecedented acreage of high alpine terrain and glacier bowls, is well positioned” to meet these challenges.

By having resorts in different regions, the company will diversify itself similar to an insurance company. With resorts in different parts of the world, there will be winners and losers with snowfall every year and by diversifying, Vail Resorts will not have all the resorts in an area that can have a poor snow season. They will have some winners.

For Vail Resorts, the plans to diversify for climate change isn’t only for snow. They are also expanding the mountains for summer activities. By choosing mountains with existing summer activities or the potential to invest in projects for summer activities, they can expand their revenue and have a means of earning revenue in the summer.

Stowe Mountain

Photo courtesy of Stowe

Is Stowe the Only One?

In her article, Lisa Lynn points out that Stowe isn’t the only one being talked about. Jay Peak and sister property Burke, have been in receivership due to an SEC investigation for EB-5 fraud and therefore could be prime candidates for Vail Resorts at a bargain price. Other resorts such as Mt Stratton could be a nice fit as well.

In my opinion, Vail expanding into the East Coast will just be a matter of time. It seems like a sound business strategy that appears to be paying off and as a fan of multi-mountain passes, I look forward to seeing what they have to offer and the new mountains I can explore.


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