Big Burke announcement

[ablb]

Well the good news is, the owners that take over after Q can re-purpose the tennis facility pretty easily.......

All joking aside, It isn't my money thankfully. I believe, and someone can correct me, that the EB5 projects sit in a silo as they have so many specific provisions attached to them as far as job creation etc. and the funding of course is separate from the operational budgets. And this is where I get concerned, where is the large amount of capital for the snow-making overhaul coming from?

There are some very interesting articles on EB5
http://www.wsj.com/articles/investor-visas-soaked-up-by-chinese-1409095982

China is also imposing limits on their side post the Virginia and Chicago scams.

 

[ablb]

In the end it doesn't matter what they build from the investors perspective, since the primary motivator is buying US citizenship. EB5 is administered by Immigration Services, not typically the bureaucracy that has experience counting jobs and reviewing business plans. The job counting includes "peripheral" or indirect job creation. The job counts for Jay are wildly inflated. If true the unemployment rate in the NEK would be 0.

 

[the original trailboss]

Well the good news is, the owners that take over after Q can re-purpose the tennis facility pretty easily.......

All joking aside, It isn't my money thankfully. I believe, and someone can correct me, that the EB5 projects sit in a silo as they have so many specific provisions attached to them as far as job creation etc. and the funding of course is separate from the operational budgets. And this is where I get concerned, where is the large amount of capital for the snow-making overhaul coming from?

From the hotel revenue stream, of course...............

 

[VTKilarney]

I've seen figures of $108 million for the who project and $55 million for the hotel.


Sent from my iPad using AlpineZone

 

[River19]

From the hotel revenue stream, of course...............

That is the piece I would like to see them confirm, which of course I wouldn't admit if I were them as it is a dubious plan. So the snow making investment probably relies on filling the hotel, which most likely requires snow making to fill and/or a shitload of good luck like the past 3 weeks of snow.

But even if that is true and they fill that thing from day 1....which we were told is mid December 2015......that means no significant improvement in snow making until the 2016/2017 season?

Let's do some simple math here......116 rooms......assume a 15 week season for this simple example....lets also assume $200/night per room

100% occupancy, 7 days per week, for 15 weeks is what like $2.4M in total room revenue, excluding food/drink sales and potential increased pass revenue.......which is obviously not reality as no hotel is 100% occupancy. I wonder what the financing options are for a multi-million dollar snow making setup as the debt service needs to be supported by the hotel, which may be possible if they can get decent occupancy for the season. It's really not a hard pro-forma to build necessarily........a slow start to the hotel open due to "meh" snow conditions could spell serious trouble though.

 

[VTKilarney]

That is the piece I would like to see them confirm, which of course I wouldn't admit if I were them as it is a dubious plan. So the snow making investment probably relies on filling the hotel, which most likely requires snow making to fill and/or a shitload of good luck like the past 3 weeks of snow.

But even if that is true and they fill that thing from day 1....which we were told is mid December 2015......that means no significant improvement in snow making until the 2016/2017 season?

Let's do some simple math here......116 rooms......assume a 15 week season for this simple example....lets also assume $200/night per room

100% occupancy, 7 days per week, for 15 weeks is what like $2.4M in total room revenue, excluding food/drink sales and potential increased pass revenue.......which is obviously not reality as no hotel is 100% occupancy. I wonder what the financing options are for a multi-million dollar snow making setup as the debt service needs to be supported by the hotel, which may be possible if they can get decent occupancy for the season. It's really not a hard pro-forma to build necessarily........a slow start to the hotel open due to "meh" snow conditions could spell serious trouble though.

Passholders were told that revenues associated with the hotel will be the mechanism to pay for snow making system enhancements.


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[River19]

Passholders were told that revenues associated with the hotel will be the mechanism to pay for snow making system enhancements.


.

Sounds like..."you want snow? keep paying for shitty early season snow and eventually you may get some snow making improvements"

What would the passholders have said to Wildcat if they said "give us 2-3 years".......?

 

[VTKilarney]

Sounds like..."you want snow? keep paying for shitty early season snow and eventually you may get some snow making improvements"

What would the passholders have said to Wildcat if they said "give us 2-3 years".......?

I'm keeping an open mind until the phase 1 plans come out in a couple of months.


.

 

[River19]

I'm keeping an open mind until the phase 1 plans come out in a couple of months.


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More wait and see.......time will tell. In the meantime, snow is not a problem anywhere in New England.......lol

 

[mbedle]

Is it possible that Burke could use the future projected earnings from the hotel to obtain funding to complete the snowmaking upgrades?

 

[VTKilarney]

Is it possible that Burke could use the future projected earnings from the hotel to obtain funding to complete the snowmaking upgrades?

My assumption is that the hotel revenues go back into the hotel corporation itself. I can't imagine the investors approving it going elsewhere. However, those hotel guests will presumably be purchasing lift tickets, food, etc.

Despite all of the new EB-5 hotel rooms at Jay Peak, we haven't seen significant upgrades to ski area operations as of this point in time. The biggest is probably the purchase of the energy efficient snow guns.

 

[deadheadskier]

The snowmaking system needs a $2M upgrade at minimum. It will be a long time before the hotel earnings will cover that. The Qs need to bite the bullet and shell out that money upfront otherwise they will have a lot of empty hotel rooms making no money at all for them.

 

[thetrailboss]

The snowmaking system needs a $2M upgrade at minimum. It will be a long time before the hotel earnings will cover that. The Qs need to bite the bullet and shell out that money upfront otherwise they will have a lot of empty hotel rooms making no money at all for them.

Agreed. Probably more than $2 mill if they are going to redo the whole thing and add more coverage. If they are going to run a ski area they need to invest in the product.

 

[River19]

The snowmaking system needs a $2M upgrade at minimum. It will be a long time before the hotel earnings will cover that. The Qs need to bite the bullet and shell out that money upfront otherwise they will have a lot of empty hotel rooms making no money at all for them.

I agree with you. I always come back to the chicken or the egg theory.

 

[deadheadskier]

Now, if someone suggested hotel profits would greatly help fund the snowmaking operating budget, that I could see. But, to suggest the profits would cover the necessary capital improvements needed? Lol.......no

 

[VTKilarney]

What encouraged me from the recent meeting is that they recognize the fact that they need to sell hotel rooms, and it seemed that they understood that having 8 trails open during Christmas break is not going to accomplish that goal. So I am convinced that if it can be done they are going to make improvements to the mountain - even if it's an incremental process. I'm certainly aware that there are a lot of moving pieces that need to fall into place, but as I mentioned earlier I am will to be optimistic for now.

 

[MEtoVTSkier]

Despite all of the new EB-5 hotel rooms at Jay Peak, we haven't seen significant upgrades to ski area operations as of this point in time. The biggest is probably the purchase of the energy efficient snow guns.

Yep, so evidently the EB-5 isn't a cure-all for all resort problems, or the single answer to creating the capital to try.

The snowmaking system needs a $2M upgrade at minimum. It will be a long time before the hotel earnings will cover that. The Qs need to bite the bullet and shell out that money upfront otherwise they will have a lot of empty hotel rooms making no money at all for them.

Q-senior could fund the upgrades if he wanted to, why he isn't, and therefore setting things up for failure makes one wonder.

Agreed. Probably more than $2 mill if they are going to redo the whole thing and add more coverage. If they are going to run a ski area they need to invest in the product.

The lesson to be learned is what Wildcat went thru over the past 18-24 months... If they could even accomplish 30% of what Wildcat did, improvement-wise, I'd be willing to be that most of the negative vibes would disappear.

 

[MEtoVTSkier]

They stated they are going to increase compressor capacity for next year... (So that means they'll just have a handful of rental diesel compressors that Ary did away with? Seems like without giving out a solid explanation of what they plan to do to remedy the shortfall, all they are inferring is that they'll be back to where they were last year, without actually fixing any problems.

 

[MEtoVTSkier]

Seems that while they did give out lots of new information, they didn't really address the reason why the meeting had to be held in the first place. The issues the skiers/riders/condo owners/second homeowners brought up and were irate about since the holidays. Sounded like it was glossed over as quickly as possible without stating anything was actually going to change. Sorry, but that's the way you all have it portrayed for me...

If they were serious, SMI would have been there too, and they'd be bragging up and down what the future plans are, even if they were only going to accomplish 5% of the plan before next season begins. Sure didn't sound like that.

Proof will be in the pudding, guess we'll have to wait and see if any improvements start to happen over the summer. If nothing is observed, then I guess we'll have our answer.

 

[VTKilarney]

They stated they are going to increase compressor capacity for next year... (So that means they'll just have a handful of rental diesel compressors that Ary did away with? Seems like without giving out a solid explanation of what they plan to do to remedy the shortfall, all they are inferring is that they'll be back to where they were last year, without actually fixing any problems.

We will just have to wait and see. They said that the passholders will be told exactly what is going to be done for next year. Until we get that information we are just speculating. On the other hand, they were clear that whatever is done will only be "phase 1" of a multi-year project. So the total solution isn't coming in time for next year.