Vail buys Okemo, Sunapee, Crested Butte

http://news.vailresorts.com/corporate/vailresorts/tpsp.htm

04 June 2018

Vail Resorts will acquire Triple Peaks, LLC, the parent company of Okemo Mountain Resort in Vermont, Mount Sunapee Resort in New Hampshire, and Crested Butte Mountain Resort in Colorado.

In a separate transaction, Vail Resorts will acquire Stevens Pass Resort in Washington State.

Upon closing, Epic Pass and Whistler Blackcomb Edge Card products will now include additional access to all four resorts for the 2018-19 winter season, providing even more variety and options in New England, Colorado, and the Pacific Northwest.

Vail Resorts plans to invest $35 million in total capital across the four resorts over the next two years.

BROOMFIELD, Colo. – June 4, 2018 – Vail Resorts, Inc. (NYSE: MTN) announced today that it has entered into an agreement to purchase Triple Peaks, LLC, the parent company of Okemo Mountain Resort in Vermont, Mount Sunapee Resort in New Hampshire, and Crested Butte Mountain Resort in Colorado. The Company will purchase Triple Peaks, LLC from the Mueller family for a purchase price of $82 million, subject to certain adjustments. At closing, Triple Peaks will pay $155 million to pay off the leases that all three resorts have with Ski Resort Holdings, LLC, an affiliate of Oz Real Estate, with funds provided by Vail Resorts.
 
As part of a separate transaction, Vail Resorts will also purchase Stevens Pass Resort in Washington from Ski Resort Holdings, LLC, who was advised on the sale by Houlihan Lokey, for a total purchase price of $67 million, subject to certain adjustments. Both transactions are subject to certain closing conditions, including regulatory approvals.
 
“Together, the acquisitions of Okemo, Mount Sunapee, Crested Butte, and Stevens Pass will significantly enhance the Vail Resorts’ network of resort experiences, adding even more variety and choice for all of our pass holders and guests. Okemo and Mount Sunapee are terrific complements to Stowe in the Northeast, as is Crested Butte to our four Colorado resorts, and Stevens Pass for our Whistler Blackcomb and Seattle guests,” said Rob Katz, chairman and chief executive officer of Vail Resorts. “Additionally, each of these resorts will individually offer guests from around the world entirely new and distinctive experiences in extraordinary locations from coast to coast.”

The days of Mom and Pop anything are loooong gone. Sad, very sad.

Haven't we seen this before? Should we expect this wave of consolidation to be followed by a wave of liquidations in a few years when these companies' let their overhead explode or is this a permanent development this time?

Too big to Vail?

Brownski wrote

Haven't we seen this before? Should we expect this wave of consolidation to be followed by a wave of liquidations in a few years when these companies' let their overhead explode or is this a permanent development this time?

Agree with Brownski. This looks like the Les Otten model (or, if more cynically, the Bain Capital Model).

Buy a bunch of resorts with debt. Use the debt as an excuse to cut wages, benefits, jobs. Eventually try to hike lift ticket prices. Lose tons of money as people rebel against the shitty conditions of the mountains & start to ski elsewhere. Eventually collapse.

It works until it doesn't work. Maybe a few people will get rich, but it doesn't seem like a sustainable way to run a business (or a dependant ski town like Stowe, Ludlow, or Crested Butte).

There is a rumor that they are already going to cut early access at Stowe.  No more 7:30 and 8:00 a.m. openings, it will be 9:00 a.m. across the board.

Okemo is flat.  Unless you are an Okemo die-hard this still doesn't give East Coast skier's a real reason to buy a Vail Pass over the Ikon Pass.  Okemo's clientele are beginners and/or the wealthy who care more about slope side amenities then the actual skiing.

Vail's smartest move would be to buy Mount Snow, or all of POWDR.   Although I'm not sure if they are selling, or what they would even ask for.

I predicted this in the other Epic and Aspen threads.  This buys makes perfect business sense for Vail.  Okemo delivers a eastern group of the Vail demographic who will for sure travel to Vail and Beaver Creek.  Sunapee gives them a decent Mt a little over an hour from Boston’s suburbs.  CB gives them more ammo to compete in the Denver market.  Stevens Pass givens them more reasons for Seattle skiers to buy an Epic Pass.  It’s a major home run from a business sense.  

The next sale will be Jay / Burke.  I think it’s a good buy for Boyne but given that they just spent on buying thier leaseholds out they probably don’t have the cash.  Vail is out as they still need to buy Smuggs and the Feds might start to get involved if they got Okemo, Jay and Smuggs.  Aspen KSL doesn’t seem as put together as I expected thus I think Powdr will get Jay.  

MC2 5678F589 wrote

Buy a bunch of resorts with debt. Use the debt as an excuse to cut wages, benefits, jobs. Eventually try to hike lift ticket prices. Lose tons of money as people rebel against the shitty conditions of the mountains & start to ski elsewhere. Eventually collapse.

It works until it doesn't work. Maybe a few people will get rich, but it doesn't seem like a sustainable way to run a business (or a dependant ski town like Stowe, Ludlow, or Crested Butte).

What makes you think that Triple Peaks or Stevens Pass have a lot of debt?  They have been operating under long-term lease arrangements for quite a while.  OZ bought the ski resorts that CNL was selling as a package deal.  Now OZ is selling resorts in separate deals.

Vail bought three independent ski resorts in the midwest several years ago.  Spent a fair amount of money on improvements.  They sold a lot of Epic passes from the folks who live in Chicago, Detroit, or Minneapolis/St. Paul.  The folks who live close enough to Okemo or Sunapee or Stevens Pass to consider a season pass seem like good targets for Vail marketing.  Crested Butte can be a draw for folks in the east or midwest.  At least it seemed like it was for MAX pass holders.

http://www.chicagotribune.com/lifestyles/travel/ct-wilmot-renovations-travel-0327-20160310-story.html

http://blogs.denverpost.com/thebalancesheet/2012/12/06/vail-buys-midwest-ski-areas-minnesota-michigan/7699/

campgottagopee wrote

The days of Mom and Pop anything are loooong gone. Sad, very sad.

It actually seems quite the opposite recently, mom and pops seem to be making a strong effort. At least in New England. Magic is making huge strides, Tenney just reopened, Whaleback reopened a few years back and is now managed as a local community non-profit, Abram got an infusion of cash for a green initiative a few years back, Black ME has cleared a ton of new glades, the Freedom Pass linked up a bunch of local areas for reciprocal access, and Berkshire East just picked up Catamount.

The areas that are being bought and sold into consolidated holdings are already big resorts with more focus on the resort itself than the ski areas. Nothing is changing at those areas, these areas are already resorts. And their goal isn't to cannibalize smaller and mid-sized mom and pop areas. Their goal is to compete with the other big resorts by having a local east coast pass option and getting people to fly out west on their pass so they can capture lodging, F&B, and resort up charges. The people buying into that are not the same people buying into the local mom and pop or mid-sized skier focused mountains.

If anything, smaller, mid-sized, local, and mom/pop areas have a marketing opportunity here by pointing out what they offer that the big resorts do not. The bigger the resorts get, the more opportunity to differentiate the alternative. Magic is doing a really good job with their marketing effort on that front.

marznc wrote

MC2 5678F589 wrote

Buy a bunch of resorts with debt. Use the debt as an excuse to cut wages, benefits, jobs. Eventually try to hike lift ticket prices. Lose tons of money as people rebel against the shitty conditions of the mountains & start to ski elsewhere. Eventually collapse.

It works until it doesn't work. Maybe a few people will get rich, but it doesn't seem like a sustainable way to run a business (or a dependant ski town like Stowe, Ludlow, or Crested Butte).

What makes you think that Triple Peaks or Stevens Pass have a lot of debt?

I meant that it costs money to buy ski resorts and, in buying those resorts, MTN is taking on debt. And they already had $1.22 Billion before the purchase.

I'm not so convinced there is a large overlap of Okemo skiers and those wanting to travel out west.  Most people I know who go to Okemo take one or maybe two ski weekends a year.

Hey, I'm one of the last to defend the Dark Lord, Vail Corp., but, hold on with the disaster predictions and moaning and groaning. Remember high priced one mountain season passes? Well, you're a bunch of easterners, so, you're maybe still paying well over a grand for one mountain. Not out west. Vail has made skiing very affordable to the masses for some time now with their Epic pass, and the competition has reacted in a very consumer friendly way by joining in. And, at this moment, my Epic local pass that I bought this Spring for about 600 bucks gets me a holiday restricted season pass at Stowe, which used to cost in the high teens just a few years ago, and now Okemo and Sunapee in the East, and, a hell of a lot of skiing out west. 600 bucks! So, add to that my basic Ikon pass, which, I forget, cost me about 700 bucks(?), and for the old price of a Killington or Stowe (not even!) one mountain pass, I have an enormous amount of ski mountain days available to me, east and west.
Now, I get over leveraging and all that, but, Vail Corp. seems to be a pretty well run company, with solid profit results and a strong stock. It ain't ASC all over again. And this pricing model has been around for what, almost twenty years now? Seems to work. Ask a Denver resident. Now we're getting some.
Besides, even if interest rates are going up, debt is still dirt cheap. Now is the time to borrow. I only wish our government would do this to fix infrastructure, but, I digress.

This subject came up over at TGR, and somebody posted this great Louis CK rant. https://m.youtube.com/watch?v=q8LaT5Iiwo4 That might be a way of saying, calm down and enjoy this. These may be the golden years, and you're whining that it won't last. Sheesh. 600 bucks!

Btw, how's Sunapee? Never been.

Vail is not ASC
Ottens model was really about selling timeshares
Vail is not dependent on selling real estate for thier profits

While Okemo and Sunapee are not my cup of tea this buy is a home run from a biz sense for Vail

TheGreatAbyss wrote

I'm not so convinced there is a large overlap of Okemo skiers and those wanting to travel out west.  Most people I know who go to Okemo take one or maybe two ski weekends a year.

They certainly didn’t have the incentive like they do now.

I agree with Z here. I think we were all waiting for this one knowing that Vail had to be eying something like this up.

Now I’m waiting to see their Smuggs purchase and interconnect announcement

raisingarizona wrote

TheGreatAbyss wrote

I'm not so convinced there is a large overlap of Okemo skiers and those wanting to travel out west.  Most people I know who go to Okemo take one or maybe two ski weekends a year.

They certainly didn’t have the incentive like they do now.

I can't think of a more perfect "client" pool for Vail inc. than the Okemo skier. Those people are gonna love Keystone. Vail will make them think they are "extreme" skiers.

TheGreatAbyss wrote

I'm not so convinced there is a large overlap of Okemo skiers and those wanting to travel out west.  Most people I know who go to Okemo take one or maybe two ski weekends a year.

I don't think of the target market as the current Okemo season pass holders or <10 days a season skiers/boarders.  The question is whether someone who hasn't ever thought about driving past Mount Snow to Okemo but lives in Philly, NYC/NJ or CT would consider an Epic Pass because of they also want to take a trip out west.  The goal seems to be to sell Epic Passes before October.  Whether or not a pass holder uses it within driving distance of their house doesn't matter.  Especially if it turns out to be a bad snow season.

I know people who ski Okemo midweek.  A few of the advanced skiers who do travel are very interested in checking out Crested Butte.

MC2 5678F589 wrote

marznc wrote

MC2 5678F589 wrote

Buy a bunch of resorts with debt. Use the debt as an excuse to cut wages, benefits, jobs. Eventually try to hike lift ticket prices. Lose tons of money as people rebel against the shitty conditions of the mountains & start to ski elsewhere. Eventually collapse.

It works until it doesn't work. Maybe a few people will get rich, but it doesn't seem like a sustainable way to run a business (or a dependant ski town like Stowe, Ludlow, or Crested Butte).

What makes you think that Triple Peaks or Stevens Pass have a lot of debt?

I meant that it costs money to buy ski resorts and, in buying those resorts, MTN is taking on debt. And they already had $1.22 Billion before the purchase.

Ah, didn't think of it that way.  Has Vail shown a profit or a loss in quarterly reports the last couple years?