Vail Resorts is buying Peak Resorts.

[abc]

+1. If Vail just wanted people from NY and Boston to fly to Colorado for a week, there would be much cheaper ways to make that happen than buying Stowe and a bunch of other eastern ski areas.

Cheaper, yes. But as effective? No.

I think many had missed how Vail operates and WHY they're successful. I'm surprise no one had bother to point it out given there're many here are entrepreneurs or management professionals.

For ANY BUSINESS, it's extremely desirable to have STEADY, RELIABLE and PREDICTABLE revenue income than wild swing and fluctuation of revenue.

With predictable revenue, the business can plan ahead, take advantage of scale and any other economic opportunity they can find, instead of scrambling to react to the volatile ups and downs at the last minute. That's why almost all business offers some forms of "subscriber contract" where the customer pay up front to receive a discount over the on demand price on the day of service. Sure, they also get a tiny amount of interest if they put the "subscription fee" in a bank CD. But really, it's so they can plan and schedule to order supplies to get the best price they can find. Having a better idea of how much supply they need in advance is extremely valuable! That's a lot more saving than what they earn by banking the up front fee (or even the saving on the interest they would have needed to pay for a loan to order supply).

In business, a bird in hand IS literally worth 2 or 3 in the wood!

While running ski areas will never been a business of 100% steady income. The smoother the income stream, the better overall profitability. By offering attractive season pass prices, Vail is doing exactly that, guaranteeing a predictable, reliable steady income stream.

Almost all ski areas sell season pass to get some working capitals to prepare for the start of the season. But Vail management runs the company more like a corporation. Then it's more than just working capital the season pass sale provides. Vail is trying to remove as much of the unknown of random income into known season pass sale.

Buying up northeast mountains, they turned existing season pass sales into Epic pass sales. The customer still gets to ski the same mountain. So no big deal. (those who balk at the price increase can go ski somewhere else, those are typically NOT the kind that will get on a plane for a week in Vail anyway). So even for the local mountains Vail bought, it's likely to yield better profitability too. What's not to like?

 

[abc]

But, having defended Vail's business practice of low-season-pass with high-daily-rate, I don't quite understand why they don't offer local only season passes. Those are people who don't want to ski elsewhere anyway. Forcing them to pay a higher price season pass just creates ill will (or drive them away) Sure, those may not be the most desirable customer. Still, there's little downside to keep them around.

 

[BenedictGomez]

I suppose they could be moving it to a new location? That was a great way for folks to interact with management. Hope they keep it around.

Hah! That's funny.

Vail does not do, "interacting with management", Vail does, "you will bend to my will".

I will be interesting to see if the communications crew from Mount Snow are as active on AZ as they have been in the past, or if Vail policy changes that? Time will tell I guess

No need to wait, that's over too. There will be unified messaging, and it's control & dissemination is centralized.

 

[thetrailboss]

So far for the Vail executive board room, us at Alpinezone Ski Development Planning have proposed the various alternatives of...a tunnel, a magic carpet, a t-bar, a tunnel UNDER a pond, a dozen snowcats, and horses towing skiers...

This forum cracks me up :lol:

Yes. We all can dream. :lol: That's what makes it interesting.

 

[thetrailboss]

They sent an e-mail out about this to members of the forum on Tuesday (or maybe it was just to members like myself, who responded to the page that popped up saying that my account had been blocked and to contact the admins if I felt this was wrongly done - I did contact the admins through the link that popped up).

The official explanation they gave was 2 fold. First, they expected a large number of questions from members about the details of the merger, and 2nd, for full transparency, they wanted to only address and answer the questions via their public social media feeds to make sure that everyone can see the questions and answers.

Going forward, I will be interesting to see if the communications crew from Mount Snow are as active on AZ as they have been in the past, or if Vail policy changes that? Time will tell I guess

Yes, regrettably, as said, expect centralized communications from HQ in Broomfield, CO. That's how they roll.

For the NE, I think it is troubling to go from four relatively large resort conglomerates (Vail, Boyne, Peaks, and sort of Alterra) down to three (Vail, Boyne, sort of Alterra). Anyone foresee Boyne selling out?

 

[thetrailboss]

Except Vail does not own any of the Spruce Village Lodging. They only own the Mountain.

Yep. Exactly. Vail would prefer that these folks ski at a Vail resort, stay at a Vail property, eat at Vail restaurants, and shop at Vail retail outlets. That's what they plan and hope folks do. That's their model.

 

[Domeskier]

[snip lots of valid points about the real reason Vail is making acquisitions in the east]

So it appears that you agree that Vail is not actually buying eastern mountains as "feeders hills" to get people to visit its western assets, after all.

 

[thetrailboss]

But, having defended Vail's business practice of low-season-pass with high-daily-rate, I don't quite understand why they don't offer local only season passes. Those are people who don't want to ski elsewhere anyway. Forcing them to pay a higher price season pass just creates ill will (or drive them away) Sure, those may not be the most desirable customer. Still, there's little downside to keep them around.

They do. It is called Epic Local. Folks may not like it, but all of the local discounts, special deals, multiple pass options, etc. all disappear to the simplified Epic pass product--Local or Full Epic. That's it. Two choices.

Additionally, a key part of their strategy is to have VERY LIMITED pass options to make things easy for consumers and easier for marketing and sales. It's exactly like Costco--you only have two or three options for a product instead of like 20. That's because if consumers get confused they are more likely to not purchase.

 

[thetrailboss]

So it appears that you agree that Vail is not actually buying eastern mountains as "feeders hills" for its western assets, after all.

It appears that they are expanding beyond western destination resorts and feeder hills to some eastern destinations.

 

[Domeskier]

It appears that they are expanding beyond western destination resorts and feeder hills to some eastern destinations.

Agreed. The idea that Vail is investing this much money in destination resorts in the east because it could drive up traffic in its Western hotels and villages is silly. There is a ton of money to be made from eastern skiers who will never set foot out west (even with an epic pass), and Vail has finally come to realize that.

 

[crystalmountainskier]

They do. It is called Epic Local. Folks may not like it, but all of the local discounts, special deals, multiple pass options, etc. all disappear to the simplified Epic pass product--Local or Full Epic. That's it. Two choices.

Additionally, a key part of their strategy is to have VERY LIMITED pass options to make things easy for consumers and easier for marketing and sales. It's exactly like Costco--you only have two or three options for a product instead of like 20. That's because if consumers get confused they are more likely to not purchase.

They do have local passes. There's a Kirkwood Pass, Wilmot Pass, Afton Alps Pass, Mt. Brighton Pass, Stevens Pass Pass, etc.

 

[abc]

So it appears that you agree that Vail is not actually buying eastern mountains as "feeders hills" to get people to visit its western assets, after all.

Actually, no. The two are independent.

Vail operates in a steady revenue model, which works in both destination resort and feeder hills. It still reaps the benefit of scale and predictability.

Personally, I still believes Vail's real cash cow is ... Vail! But that doesn't mean they will operate the eastern mountain as a loss leader. They don't need to lose money in the east to drive traffic to the west. Not if they can help it. But if push comes to shove, they could as long as they come out ahead. That's the beauty of a large corp. They can cover the loss in a few isolated mountains.

What I AM saying is Vail is unlikely to expand the eastern destination which may compete with their primary goal of driving skiers to the western destination mountains.

 

[thetrailboss]

They do have local passes. There's a Kirkwood Pass, Wilmot Pass, Afton Alps Pass, Mt. Brighton Pass, Stevens Pass Pass, etc.

Maybe for some of the smaller places, but for example, I'm looking at Park City and it looks like for that resort it is just the Epic Local and Epic. There is a youth pass.

https://www.parkcitymountain.com/plan-your-trip/lift-access/passes.aspx

Similar with Stowe:

https://www.stowe.com/plan-your-trip/lift-access/passes.aspx

 

[EPB]

Actually, no. The two are independent.

Vail operates in a steady revenue model, which works in both destination resort and feeder hills. It still reaps the benefit of scale and predictability.

Personally, I still believes Vail's real cash cow is ... Vail! But that doesn't mean they will operate the eastern mountain as a loss leader. They don't need to lose money in the east to drive traffic to the west. Not if they can help it. But if push comes to shove, they could as long as they come out ahead. That's the beauty of a large corp. They can cover the loss in a few isolated mountains.

What I AM saying is Vail is unlikely to expand the eastern destination which may compete with their primary goal of driving skiers to the western destination mountains.

Vail now owns three major resorts in the east: Stowe, Okemo and Mount Snow. It's safe to say they're in the business of running major Eastern resorts. Maybe they buy something else, maybe not. I think Smuggs would make obvious sense - perhaps another feeder or northerly resort to take a load off their existing footprint could be in play, too.

You've made many valid points here, but we should add that this acquisition serves two key proposes for Vail: 1) it's a land grab across many new metro areas and 2) it enhances the value of the Epic pass to skiers from metro NYC, Boston and everywhere in-between. Both factors will enable Vail to sell many more Epic passes. Would they like users to go west and fill their relatively limited and non-core supply of lodging? Of course, but the big driver of profit is getting people to buy the passes and spend money on-mountain wherever that mountain may be.

Sent from my VS988 using AlpineZone mobile app

 

[Domeskier]

What I AM saying is Vail is unlikely to expand the eastern destination which may compete with their primary goal of driving skiers to the western destination mountains.

If Vail's goal were to corner the market on eastern skiers vacationing out west, there are much less expensive and much more efficient ways to do that than buying large destination ski resorts in the east. Vail's clear intent is to enter the eastern ski market, not to move eastern skiers west. The idea that Vail will avoid investing in its eastern ski resorts because it might keep skiers from visiting its western resorts is equally absurd. People go out west because the want to ski western mountains and snow, not because Stowe lacks amenities. Improvements to its eastern assets will increase the money generated by those assets, which is exactly the reason why Vail is purchasing them in the first place - not because it believes it can get a few more Mt. Snow regulars to go to Vail rather than Jackson or Aspen on their annual trips out west.

 

[EPB]

If Vail's goal were to corner the market on eastern skiers vacationing out west, there are much less expensive and much more efficient ways to do that than buying large destination ski resorts in the east. Vail's clear intent is to enter the eastern ski market, not to move eastern skiers west. The idea that Vail will avoid investing in its eastern ski resorts because it might keep skiers from visiting its western resorts is equally absurd. People go out west because the want to ski western mountains and snow, not because Stowe lacks amenities. Improvements to its eastern assets will increase the money generated by those assets, which is exactly the reason why Vail is purchasing them in the first place - not because it believes it can get a few more Mt. Snow regulars to go to Vail rather than Jackson or Aspen on their annual trips out west.

Make no mistake, Vail definitely thinks it can (and it certainly will) capture more Mount Snow traffic on their trips out west. Are some people going to want to go to Jackson no matter what? Sure. That doesn't mean Vail won't capture a serious about of traffic from any former (or new) Peak resort skier that frequents Hunter and resorts to the north and east.

Sent from my VS988 using AlpineZone mobile app

 

[Domeskier]

Make no mistake, Vail definitely thinks it can (and it certainly will) capture more Mount Snow traffic on their trips out west. Are some people going to want to go to Jackson no matter what? Sure. That doesn't mean Vail won't capture a serious about of traffic from any former (or new) Peak resort skier that frequents Hunter and resorts to the north and east.

Sent from my VS988 using AlpineZone mobile app

Sure. But the amount of money spent by eastern skiers going out west pales in comparison to the amount of money spent by eastern skiers skiing in the east. ABC's suggestion that Vail is buying eastern ski resorts to increase its shares of that much smaller pot of money is silly. If there wasn't significant money to be made from eastern skiers skiing eastern ski resorts, Vail would not be buying them. The cost of doing so would simply not be justified by any reasonably expectable increase in Vail's share of the much smaller pot of eastern ski money being spent out west.

 

[abc]

If Vail's goal were to corner the market on eastern skiers vacationing out west, there are much less expensive and much more efficient ways to do that than buying large destination ski resorts in the east.

Give some examples of “less expensive AND much more efficient” ways please?

You seems hellbent to believe eastern skiers going to Vail’s western resorts is mutually exclusive to them skiing in the east? Further more, you’re still implying Vail’s eastern purchase price are all losses!

 

[Domeskier]

Give some examples of “less expensive AND much more efficient” ways please?

Advertising. Targeted discounts. Partnerships with eastern ski resorts. There is no reason to buy a large eastern ski resort and assume the costs of operating one if your primary purpose is to increase your share of the money being spent by eastern skiers on western ski trips. You do that by getting eastern skiers to come out west as cheaply as possible.

You buy and operate a large eastern ski resort because you want to make money off people who are skiing in the east, not the west. You view Vail as a regional corporation that wants to increase its regional dominance by investing outside of its region in the hope that it will bring more people into its region. If that is what Vail intends, it has bigger problems than even BG has identified.

You seems hellbent to believe eastern skiers going to Vail’s western resorts is mutually exclusive to them skiing in the east? Further more, you’re still implying Vail’s eastern purchase price are all losses!

On the contrary. I am saying that you do not purchase major eastern ski resorts because you think that's the best way to get more people to come to your western ski resorts. You buy major eastern ski resorts because you think it's profitable to own and operate major eastern ski resorts. You seem to think that this will only be profitable for Vail if it causes more eastern skiers to visit its western resorts. I think any uptick in visits to Vail's western offerings by eastern skiers was not a major factor in its decision to acquire Peaks. I think its decision to acquire Peaks was motivated primarily from a desire to become a national corporation with significant money making operations in the east. I think your condescending attitude toward eastern skiing is interfering with your ability to think rationally about the reasons Vail would purchase an eastern ski resort. The idea that Vail purchased these major eastern ski resorts as "feeder hills" that it will be happy to operate at a loss because it expects to double or triple or quadruple its profits at its western resorts with these acquisitions is the part I find ludicrous. There is a huge market here for skiers who rarely, if ever, go out west. Vail wants a part of the money they are spending in the east. If a few more of them go out west, all the better. But the success of this acquisition will not be measured by how many more eastern skiers visit Vail or some other western destination.

 

[abc]

The idea that Vail purchased these major eastern ski resorts as "feeder hills" that it will be happy to operate at a loss because it expects to double or triple or quadruple its profits at its western resorts with these acquisitions is the part I find ludicrous.

What’s ludicrous is you putting word nobody said into other people’s mouth and starting to argue against it!

Please quote any post that suggests Vail expect to operate eastern mountains at a loss? I certainly didn’t post anything remotely to that effect. Nor do I recall reading any post suggesting that either.

I think your condescending attitude toward eastern skiing is interfering with your ability to think rationally about the reasons Vail would purchase an eastern ski resort.

You’re the one who’s irrational by assigning opinions others didn’t express and then attack them!