Stowe Likely to Increase Rates??? AIG Reports Record Losses

[mondeo]

Originally Posted by Angus

Didn't realize that Stowe was owned by AIG. If I was a AIG shareholder, I'd be asking why am I in the ski area business?

Even though Stowe is probably making AIG money, the current trend is to spin off companies that aren't a core competency.

Although, with the way things are, maybe it's Stowe that will spin off the insurance business.

[GrilledSteezeSandwich]

Originally Posted by thetrailboss

Saw that AIG reported major losses last year....so as the parent company of Stowe, or the Mount Mansfield Company, I imagine that the rates will go up even more....

Stowe is a drop in the bucket for AIG..as for rates going up..I imagine 98% of all ski resorts nationwide will increase their rates due to rising inflation. A couple bucks more per day isn't going to keep me from the best ski area east of the Rockies.

[ski_resort_observer]

On Stowe Mountain Lodge/Spruce Developemnet, the alpine village currently being master developed by Spruce Peak Realty, LLC, the joint venture between Mt. Mansfield Co., Inc., a wholly-owned American International Group, Inc. (AIG) entity, and AIG Global Real Estate Investment Corp., AIG's real estate investment management subsidiary. The Spruce Peak at Stowe project includes 235 developable acres and 2,000 acres of conservation lands.

[Geoff]

I just did a quick internet search. AIG has something like $100 billion in book value (subtract debt from assets) and, by asset base, is the largest insurance company in the world. They've had years where they had $10 billion in earnings.

Stowe is almost invisible in their investment portfolio. Based on skier visits and revenues, Stowe can't be worth $50 million.

[dropKickMurphy]

Originally Posted by Geoff

Based on skier visits and revenues, Stowe can't be worth $50 million.

What percentage of Stowe's income comes from skier visits? With the new development at Spruce, they'll now be taking in $$$ from real estate sales, as well as lodging and meals in the new Spruce Lodge. There's also the new golf course.

I know that ski areas have been going for bargain prices in the last couple of years. $83 million for Killington, $73.5 million for Mount Snow + Attitash. But AIG must have spent hundreds of millions over the past few years on new lifts, trails, snowmaking, and construction. It's hard to imagine that the resort isn't now worth a lot more than $50 million.

[Tin Woodsman]

Originally Posted by Geoff

I just did a quick internet search. AIG has something like $100 billion in book value (subtract debt from assets) and, by asset base, is the largest insurance company in the world. They've had years where they had $10 billion in earnings.

Stowe is almost invisible in their investment portfolio. Based on skier visits and revenues, Stowe can't be worth $50 million.

Prior to the Spruce Hamlet development, maybe that would have been in the ballpark. Got to be well north of $100MM right now.

[thetrailboss]

Originally Posted by Geoff

I just did a quick internet search. AIG has something like $100 billion in book value (subtract debt from assets) and, by asset base, is the largest insurance company in the world. They've had years where they had $10 billion in earnings.

Stowe is almost invisible in their investment portfolio. Based on skier visits and revenues, Stowe can't be worth $50 million.

As said, the new hotel/improvements are worth at least $100 million alone. So the company, as an operating entity, is probably worth a lot more than you think. The "Stowe Brand" is very valuable.

[deadheadskier]

Originally Posted by Geoff

I just did a quick internet search. AIG has something like $100 billion in book value (subtract debt from assets) and, by asset base, is the largest insurance company in the world. They've had years where they had $10 billion in earnings.

Stowe is almost invisible in their investment portfolio. Based on skier visits and revenues, Stowe can't be worth $50 million.

I guess it depends on how 'worth' is determined. Resort revenue is probably a very small factor.

[billski]

Or perhaps Stowe is a veiled playground for AIG executives? The whole lift ticket, parking lot, advertising, real estate thing is just ground cover for a hugely expensive perquisite for AIG brass? Keep the prices high, keep the riffraff out, give the executives staff jackets and cut privileges, set aside a few of those multi million$ "cottages" Hey, if you're paying out $50M in exec salaries, what's another 100M for benefits?

[Tin Woodsman]

Originally Posted by deadheadskier

I guess it depends on how 'worth' is determined. Resort revenue is probably a very small factor.

Technically, something is worth the discounted value of its future cash flows. Anecdotally, it's worth what someone will pay for it.

In this case, you've got a mish mosh of the technical approach, plus a plain asset or replacement value approach - there is a lot of money in the steel, concrete and timbers of the new Spruce Mountain Lodge. Not sure what sort of revenues the other properties can be expected to continue generating. Either way, the intangible/goodwill value of the Stowe brand, the fixed assets, and the actual revenue/EBITDA generating capability of the entire place add up to an entity that is worth well North of $100MM in my mind. If Mt. Snow, which isn't half the mountain Stowe is in many respects, sold for $70MM-ish, then that's a pretty valid comparable.

Either way, Geoff's larger point that Stowe is a rounding error in the AIG empire is 100% spot on. If AIG cuts its toilet paper bill by 5%, they've saves more money than Stowe profits each year.