Vail Resorts is buying Peak Resorts.

[Not Sure]

Maybe a bit of diversification? How often do East and West coast winters sinc? Usually one is good and the other bad so maybe a little risk spreading?

 

[Domeskier]

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

Let's see. Here's where you claim that Stowe, et al., are just feeder hills intended to drive traffic to Vail:

Vail wants Stowe skiers go to Vail. Not the (non-local) skiers going to Stowe. To Vail, Stowe/Okemo/Hunter are all just feeder hills.

And here's where you claim Vail would be fine running its eastern resorts at a loss:

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.

Now let the back-tracking and bizarre use of random quotation marks begin.

 

[abc]

And here's where you claim Vail would be fine running its eastern resorts at a loss:

Now let the back-tracking and bizarre use of random quotation marks begin.

I seem to read there’s a word “if” in the post you quote.

But I’m not going to help you understand what that word means. It’s a word taught in grade school.

Yeah, call me condescending. I regret to have even wasted my time arguing with such an uneducated mind.

 

[cdskier]

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.

I think some people (not just you) are focusing a bit too much on the eastern resorts in the Peaks portfolio. While those are certainly nice and give Vail a probably pretty reliable income stream, don't overlook the mid-western and even smaller PA resorts near the DC area. Buying Peaks gives them access to skiers in numerous major metro areas. For Mt Snow/Hunter/Wildcat skiers here in the Northeast this may not be a big deal from a western perspective because we already have pretty decent sized mountains with pretty decent skiing. However the people skiing little hills in the mid-west now suddenly are getting access to much bigger resorts out west (and in the northeast) by virtue of becoming Epic. Those people (not the north eastern skiers) are the ones that are probably far more likely to suddenly want to plan trips to other Epic/Vail resorts. Don't think for a second that this wasn't a substantial factor in the Peaks acquisition.

 

[EPB]

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.

Okay I think you need some basic corporate finance to understand this.

We saw Vail pay a hefty premium to the market share price to buy Peak. Why would this happen?

Vail thinks it can generate more profit in perpetuity out of Peak resorts under it's umbrella than the market thinks Peak could on its own. There are three reasons why this is the case: revenue synergies, cost synergies and better capitalization.

I'll go in reverse order. Peak had a very high and expensive debt burden. Right sizing it (and being under Vail) makes the cost of debt and likelihood of bankruptcy lower. Simple enough. Peak is worth more under Vail than as a standalone on this basis.

Cost synergies are savings that Vail can realize at Peak that Peak couldn't have achieved on its own. It should be simple to understand why this adds value. Vail said it will keep most employees for now, but I don't think many here doubt that Vail will centralize and downsize more of Peak's non customer facing workers and costs (think accountants, managers, etc.).

Revenue synergies refer to extra revenue Vail can generate at Peak's resorts. I'll stick to Mount Snow for simplicity. Getting current passholders to pay more is one way this happens. This means capturing more of their Western trips and maybe moving Mount Snow to the full epic pass one day if the data suggests it's a good idea. Another key way, as I mentioned, is getting more skiers to buy the Epic pass because it now works at all Peak resorts (e.g. family from CT that likes to take a week at Mount Snow and "out west" now buys an Epic pass). The later example isn't a simple eastern skiing vs western skiing equation.

I say this all to illustrate how the corporate development people at Vail might look at the deal. Implicit in their value is today they continue to run the Peak resorts well AND they add substantial value to those resorts because of the quality of the portfolio of assets they now offer to eastern skiers. I'm frankly confused why you think that offering all a better product - east, west, feeder, resort included isn't a value add and driver of further pass sales for a variety of skier types across the east.

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[JimG.]

Ugh, this thread is getting depressing.

 

[Zand]

Ugh, this thread is getting depressing.

It's sure making me glad I have Ikon. Sure Stowe is up there with Sugarbush and Sugarloaf, but after that Killington and Sunday River >>>>>> any other resort in the Vail eastern portfolio. And Wildcat is the only other one even close to those. Mt Snow, Okemo, Sunapee, Attitash, Hunter, etc will be even more of a zoo now. Like I've said before, if Alterra gets Jay, I'll send them a blank check for next years pass and they can take whatever amount of money they please.

Plus as a newly crafted SLC fan, my mind is already made up anyway.

 

[drjeff]

To give folks a bit of perspective of some of the Vail resorts acquisition mindset, from a FB post on the elite skiing group a few days ago, I learned that Rob Katz, the CEO of Vail Resorts, has a podcast called Epic by Nature. The most recent episode, which was released about 10 days ago, was all about what Vail Resorts looks for with respect to mergers and acquisitions, and then what they do to integrate the new resort acquisitions into the Vail Resorts network.

Was an interesting and informative listen as I was driving up to my condo at Vail... err, Mount Snow [emoji6] , this evening.

Also if one wants to get some perspective about what the corporate leadership qualities and perspectives are, listen to the Epic by Nature podcast about pioneering women in the ski industry. Very good listen

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[ss20]

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.

Well if they own everything "going elsewhere" is tough to do. See Summit County where they have Breck, Keystone, Vail, and Beaver Creek...what competition is there?? Copper...that's it (A-Basin and Loveland are not week-long ski destinations). Now they have a stronghold on Southern Vermont with both Okemo and Mount Snow.

And if you own property on one of these mountains you're not going to sell your $200k slopeside condo and buy at another mountain to save $300 on a season pass each year.

 

[ScottySkis]

Ugh, this thread is getting depressing.

Yes it is
I tried to make it enjoy some when I posted few pages ago
plattekill season pass price is high all Catskills resort and without snow making of them and much less open days for customers I never understood this
I went to Vail my first trip out west. I much rather go 1 state to the west of Vail for many reasons

 

[BenedictGomez]

Anyone foresee Boyne selling out?

How much do the Kircher children enjoy the prestige & respect of being top management & the lifestyle-trappings that come with that?

Because that's for the life of me the only reason I see for them possibly not selling right now.

We are in he golden age of skiing M&A, and they will NEVER in their lifetime get a better opportunity to sell than right now. They have to know this. The obvious acquirer would be Alterra, which could lock Big Sky down forever rather than having a trial contract that may-or-may-not be renewed, as well as for Brighton, which they would immediately unlock huge value from by meshing it with Solitude.

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.

I disagree. Once YoY comps become difficult I think Vail is likely to "expand" in all sorts of places many may view as unsuspected. Internationally is my #1 bet, for reasons that are turbo cynical even by my well-known highly-cynical standards.

 

[Newpylong]

I think the amoeba is done and I wouldn't be surprised at seeing a divestiture before another aquisition by Vail in the East.

 

[Glenn]

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

RIP MtSnowNingOwitz

I wonder if Vail would be interested in Maple Valley....

 

[EPB]

RIP MtSnowNingOwitz

I wonder if Vail would be interested in Maple Valley....

Or connecting to Haystack and the other side of Crotched... Why have we been obsessed with Smuggs when these other potential connections were right under our noses?

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[BenedictGomez]

Or connecting to Haystack and the other side of Crotched... Why have we been obsessed with Smuggs when these other potential connections were right under our noses?

No horse-drawn ski lifts or tunnel blasting = BORINGGGGGGGG

 

[Domeskier]

I seem to read there’s a word “if” in the post you quote.

And this is inconsistent with may claim that you think Vail would be fine losing money on its eastern resorts as long as it increased profits at its western resorts how, exactly? I thought your problem was just poor reading comprehension and a misunderstanding of basic economics. It turns out that it is the much more serious problem of lacking a fundamental grasp of the basic semantic and logical consequences of the words you use. Until you remedy that, talking to you is like talking to a plant. Completely pointless.

Yeah, call me condescending.

I called your attitude toward eastern skiing condescending. I know reading comprehension is not you strong suit, but sheesh.

 

[Domeskier]

Okay I think you need some basic corporate finance to understand this.

[Snip a bunch of non-sequiturs]

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Um, thanks for the lesson, I guess. I dispute nothing you just said. What I dispute, one again, is abc's idiotic claim that the reason for the acquisition was to funnel more eastern skiers to Vail's western resort, in particular, to Vail's hotels and restaurants in Vail village. If this acquisition only made sense to Vail because of some projections on how it would impact visits to its western holdings, then everyone should divest their stock in Vail immediately.

 

[Domeskier]

I think some people (not just you) are focusing a bit too much on the eastern resorts in the Peaks portfolio. While those are certainly nice and give Vail a probably pretty reliable income stream, don't overlook the mid-western and even smaller PA resorts near the DC area. Buying Peaks gives them access to skiers in numerous major metro areas. For Mt Snow/Hunter/Wildcat skiers here in the Northeast this may not be a big deal from a western perspective because we already have pretty decent sized mountains with pretty decent skiing. However the people skiing little hills in the mid-west now suddenly are getting access to much bigger resorts out west (and in the northeast) by virtue of becoming Epic. Those people (not the north eastern skiers) are the ones that are probably far more likely to suddenly want to plan trips to other Epic/Vail resorts. Don't think for a second that this wasn't a substantial factor in the Peaks acquisition.

Yes, actual feeder hills. Not Stowe/Okemo/Mt. Snow. Vail is in the business of selling lift tickets and season passes at the resorts it owns and operates. The fact that abc thinks the skiing is superior at Vail than at Stowe or any other major eastern resort in Vail's portfolio is irrelevant. Vail wants people skiing at resorts that Vail owns. Having a lot of resorts all around the world ensures that Vail skiers will likely ski at Vail resorts when they vacation. These skiers may even change their customary plans and stay in Vail Village for a couple days every few years or so, where Vail can make some profits off its hotels and restaurants. But to think that all of Vail's acquisitions are somehow intended to get people to come to Vail Village is the height of ignorance.

 

[thetrailboss]

I disagree. Once YoY comps become difficult I think Vail is likely to "expand" in all sorts of places many may view as unsuspected. Internationally is my #1 bet, for reasons that are turbo cynical even by my well-known highly-cynical standards.

I am pretty sure that Vail already owns resorts in other countries.

 

[thetrailboss]

I think the amoeba is done and I wouldn't be surprised at seeing a divestiture before another aquisition by Vail in the East.

Agreed. I am interested to see what resort(s) they sell. I read that Vail was not at all happy with the condition of the lifts at Crested Butte and had to knock down the price paid.