Vail Resorts' industry-shaking agreement in late July to
acquire the 17-mountain portfolio of Missouri-based Peak Resorts is being
viewed by analysts as an effort to elevate the company's position in the
Northeast ski market while simultaneously strengthening the value of its Epic
The acquisition likely was also spurred by Alterra Mountain
Co. and its Ikon Pass, which became a clear alternative to the Epic immediately
upon its launch ahead of last year's ski season.
"It may well have been a preemptive purchase by Vail,
preemptive of Alterra getting that strong footprint in the Northeast,"
said Tom Foley, senior vice president of business and analytics at Inntopia,
whose DesiMetrics platform collects and analyzes lodging performance metrics in
the destination ski industry.
Vail, already the largest ski operator in the U.S., expects
the acquisition to close in the fall for approximately $264 million.
The purchase will leave Vail with 34 North American ski
areas, doubling its current portfolio. By comparison, Alterra, Vail's largest
competitor, owns 13 North American ski areas.
The Peak Resorts holdings consist of primarily small and
midsize ski areas located within 100 miles of major cities in the Northeast and
Midwest, including New York, Boston, Philadelphia and Cleveland. The largest is
Vermont's Mount Snow.
The Peak holdings include five ski areas in Pennsylvania,
four in Ohio, three in New Hampshire, two in Missouri, Paoli Peaks in Indiana
and Hunter Mountain in New York.
In an email, Vail director of communications Johnna Muscente
said that acquiring Peak Resorts will further the Epic for Everyone initiative
that Vail announced early this year, which involves a commitment to making
skiing more accessible.
"One way we do this is by providing guests access to
ski both close to home and at world-class mountains around the world, all with
one pass," Muscente wrote. "With the success we've already seen with our
acquisitions in the Northeast and Midwest, we felt this was a perfect time to
continue to add to our presence in those regions as well as to expand into the
Vail entered into the feeder ski area market in 2012 with
the purchases of Mount Brighton near Detroit and Afton Alps near Minneapolis.
Then in 2016 it added Wilmot Mountain in Wisconsin, 65 miles north of Chicago.
After the Peak announcement, stock analyst Tyler Batory of
Janney endorsed Vail's approach in a note to investors.
"We think [Vail] can use these properties as feeder
resorts for its West Coast destination properties," Batory wrote. Vail, he
said, should also benefit from additional guest data for marketing purposes. "Last,
we think this furthers its competitive position in the Northeast given it's
arguably a more compelling and comprehensive offering than what is included on
the Ikon Pass."
The Ikon Pass currently includes access to seven East Coast
resorts, including Alterra-owned Stratton in Vermont and Snowshoe in West Virginia,
along with Alterra partner mountains Killington and Sugarbush in Vermont,
Sunday River and Sugarloaf in Maine and Loon Mountain in New Hampshire. Sunday
River, Sugarloaf and Loon are owned by Michigan-based Boyne Resorts.
Prior to the Peak Resorts deal, the Epic Pass could be used
at only three East Coast ski areas -- Okemo and Stowe in Vermont and Mount
Sunapee in New Hampshire -- which Vail purchased in 2017 and 2018.
Bill Jensen, CEO of Epic Pass partner Telluride Resort in
Colorado, said the Peak purchase will especially bolster the Epic in the New
York and Washington markets. In Washington, he said, Vail will get a boost from
the purchase of nearby Pennsylvania ski areas, which include Liberty Mountain
and Whitetail Mountain. Vail's acquisitions of Attitash and Wildcat in New
Hampshire should improve Epic's presence in the Boston quarter, Jensen added,
serving as a counter to Alterra's relationship with Boyne.
Still, the acquisition deal has raised hackles among some
Northeast skiers who worry about the potential homogenizing impact of so many
mountains being bought up by an industry behemoth.
"Maybe you all should spend more time skiing in Maine,"
wrote one member of the Facebook user group for the clothing company Ski the
East. "Still no Vail resorts here, as far as I can tell."
But both Jensen and Natalie Ooi, program director of the ski
area management program at Colorado State University, said that consumers will
win from the deal. Notably, Vail has said it will inject $15 million over the next
two years into capital improvements at the Peak Resorts ski areas, and the
company is selling its annual Epic Local Pass, which will offer unlimited
access to all of Vail's East Coast mountains except Stowe as well as a
combination of limited and unlimited access to Stowe and 13 Western ski areas,
"What Vail is offering in terms of their Epic Local
Pass for an East Coast skier would cover you for pretty much everything you
need," Ooi said. "I think there is a lot of the fear of things
getting more expensive, but I don't think it is really founded."
Bringing more Eastern skiers onto the Epic Pass will boost
revenue for Vail at its large Western destination resorts, Ooi predicted. Epic
Pass holders will choose Vail mountains for their annual trips due to the
prepaid lift passes but then spend money at hotels, restaurants, retail shops
and rental shops that Vail owns in those locations.
Indeed, Foley said that Vail's purchase of Peak Resorts
should be viewed as the latest escalation in the pass battle that began with
Alterra's release of the Ikon Pass last year.
"I'd fully expect Alterra to counter at some point with
additional purchases of their own," he said.
Jensen agreed, adding that Vail's Peak Resorts purchase
could signal a shift in buying patterns within the industry.
"I think the industry was watching Vail and Alterra
snatch up the well-known resorts," Jensen said. "Now, with this
purchase of 17 smaller resorts, is it going to start up a new era of
acquisition of smaller ski areas near urban population centers?"