As the winter sports industry nears the end of its 2016-17
season, ski resort operators can probably be divided into two camps: Vail
Resorts and everyone else.
Vail continues to reap the benefit of its recent spate of
mountain acquisitions, its stock approached record highs last week while the
rest of the sector struggled to attract enough millennial skiers and
snowboarders to replace the baby boomers who are exiting the market.
With the number of U.S. ski resorts shrinking, Vail has the
luxury of hiking lift-ticket prices while boosting skier loyalty via its Epic
Pass multi-resort season pass, sales of which have increased about 12% a year
since 2012. For the quarter ended Jan. 31, Vail's net income jumped 28% from a
year earlier, to $149.2 million, as skier visits rose 16%.
"There is ... room for further margin expansion as the
company drives increased visitation, particularly at Park City and Whistler
Blackcomb," MKM Partners analyst Christopher Agnew wrote in a March 20
note to clients.
Big ski deal
Aspen Skiing Co. and private-equity firm
KSL Capital Partners have formed a joint venture that will acquire Intrawest
Resorts Holdings, in a move that will likely form the most formidable
competitor to Vail Resorts. Read More
As Vail realized gains, however, the rest of the industry
appears to be lagging. For the 2015-16 ski season, U.S. snow sports resort
visits fell 1.5%, to 52.8 million, marking the third straight annual decline
and approximating mid-1990s visitor numbers, according to the National Ski Area
Meanwhile, the number of U.S. ski areas fell to 463 last
year from 546 in 1991-92.
"We have a global phenomenon where the sport as a
percentage of the global population is flat or declining," said Paul
Pinchbeck, CEO of the Canadian Ski Council, speaking at the Mountain Travel
Symposium (MTS) in Banff, Alberta, late last month. "We have work to do."
Additionally, the industry could be saddled with the larger
issue of global warming, which many fear could irreversibly shorten ski
Technology Crossover Ventures partner Erik Blachford told
the MTS audience, "You can debate this as much as you want as far as its
causes, but climate change is going to force your hand."
Whether such broader trends catch up with Vail remains a
question. Since 2012, the company has acquired "feeder" Midwestern
ski resorts Afton Alps, Mount Brighton and Wilmot Mountain, and earlier this
year, it agreed to buy Vermont's Stowe Mountain Resort for $50 million.
More notably, Vail in 2014 bought Utah's Park City Mountain
Resort for $182.5 million, and last year it completed its $1.05 billion
acquisition of British Columbia's Whistler Blackcomb.
As a result, Vail's debt had swollen to $1.26 billion as of
Jan. 31, from $693.3 million a year earlier.
Vail representatives declined to comment about debt, global
warming or industry trend concerns, instead referring to comments executives
made last month on the company's earnings call for the quarter that ended Jan.
31, where Vail CEO Rob Katz cited "robust destination guest-spending
As of late last week, Vail shares had surged about 48%
during the previous 12 months to near-record highs, suggesting investor
confidence that the resort operator is sufficiently girding itself against the
impact of either more competition or fewer overall skiers.