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New England Vail Buys Stowe Mountain Resort (updated Title)
- Thread starter Mike Thomas
- Start date
Any more "heard on the hill, or around town updates?"
I am hearing that there is all sorts of talk going on with any number of groups in the industry. Not necessarily related to Stowe. Just a lot of potential stuff to possibly happen over the next 6-8 months.
CNL's sale of their portfolio closes fairly soon, and there is some speculation that the buyer is then going to break it up and sell off the parts. That creates all sorts of speciation. Some real gems in that group. Not any immediate fire sale, of course, but realizing their return by eventually selling them all, and essentially operating as if any piece is available for discussion.
Intrawest has evidently got all sorts of conversation going with their bankers and any one of their properties could have a lot of appeal to at least a couple of buyers. Again, they might do well breaking it up in some configuration.
VR likely has to walk a fine line depending on where they go, and how big they get when it comes to anti trust, or so I hear. Might need to divest some to acquire some? It might take them out of the running on others. Heading East could make sense.
KSL closed out another fund this fall, and after their piece of the W-B sale is sitting on something like $3.5 Billion of cash. Or some absurd number. Money they need to deploy at some point.
Boyne has some very unique leases on the properties that they formerly owned. Could be that they team up with an investment partner and become owners again, of any number of resorts. They have a great reputation.
I hear all the time that the best managed ski operation in the business is Aspen SkiCo, but I also hear that there is no interest in expanding the business. The Crown family is probably happy as is. Aspen is home, But I also hear some speculation. Sadly not around Stowe. I would love to see that.
Recently heard some speciation regarding Les Otten, and the whole Balsams project. The question is whether he will go all the way through with it, or shift direction. The comment was that Les can create a vision and raise money. A lot of money. I get the impression that very few ski folks buy into his plan for the Balsams.
The whole Stowe thing is interesting. And yes, there seem to have been a lot of sightings of some key people in the business, in the Northeast. I know one who was here unrelated to this, but he casts a pretty big shadow, so rumors start. He was watching a race with me recently and chuckling about it.
I did ask him point blank about Stowe. His comment was that the he could never make it work for his company, but that nothing would surprise him. And if AIG {or whatever subsiduary} has reached a point where it makes sense for them to simply no longer own a ski resort, the real talks might move quickly and the real price might be compelling for a buyer. The brand is one of the best.
I was part of a group that looked at it twice, and AIG was very firmly dug in on price and terms. This is when Hank G was in town most weekends, and AIG's stock price was on a steep line upward. 20+ years ago. No need to sell. As I have said before, our vision stopped far short of what has been developed now. So far short. Embarrassingly so!
This time, I sense that something is really brewing. VR or not.
So....any updates?
My wife and I were getting all nostalgic about skiing with our kids at Spruce when they were toddlers, and Stowe was our ski home. Which took me back to the late fifties, when I was their age, and doing the same with my parents. My wife was saying that Stowe is just unique. My next door neighbor is Swiss, and he takes his family there two-three times a year. Winter, summer and fall. When he skis, it's often in Europe, or at non VR type Western resorts. Just gets my mind working.....
Very interested to watch this one.
If VR does acquire it, the pricing of passes and tickets will be interesting, to say the least. The whole thing will be interesting! IS interesting!!
I am hearing that there is all sorts of talk going on with any number of groups in the industry. Not necessarily related to Stowe. Just a lot of potential stuff to possibly happen over the next 6-8 months.
CNL's sale of their portfolio closes fairly soon, and there is some speculation that the buyer is then going to break it up and sell off the parts. That creates all sorts of speciation. Some real gems in that group. Not any immediate fire sale, of course, but realizing their return by eventually selling them all, and essentially operating as if any piece is available for discussion.
Intrawest has evidently got all sorts of conversation going with their bankers and any one of their properties could have a lot of appeal to at least a couple of buyers. Again, they might do well breaking it up in some configuration.
VR likely has to walk a fine line depending on where they go, and how big they get when it comes to anti trust, or so I hear. Might need to divest some to acquire some? It might take them out of the running on others. Heading East could make sense.
KSL closed out another fund this fall, and after their piece of the W-B sale is sitting on something like $3.5 Billion of cash. Or some absurd number. Money they need to deploy at some point.
Boyne has some very unique leases on the properties that they formerly owned. Could be that they team up with an investment partner and become owners again, of any number of resorts. They have a great reputation.
I hear all the time that the best managed ski operation in the business is Aspen SkiCo, but I also hear that there is no interest in expanding the business. The Crown family is probably happy as is. Aspen is home, But I also hear some speculation. Sadly not around Stowe. I would love to see that.
Recently heard some speciation regarding Les Otten, and the whole Balsams project. The question is whether he will go all the way through with it, or shift direction. The comment was that Les can create a vision and raise money. A lot of money. I get the impression that very few ski folks buy into his plan for the Balsams.
The whole Stowe thing is interesting. And yes, there seem to have been a lot of sightings of some key people in the business, in the Northeast. I know one who was here unrelated to this, but he casts a pretty big shadow, so rumors start. He was watching a race with me recently and chuckling about it.
I did ask him point blank about Stowe. His comment was that the he could never make it work for his company, but that nothing would surprise him. And if AIG {or whatever subsiduary} has reached a point where it makes sense for them to simply no longer own a ski resort, the real talks might move quickly and the real price might be compelling for a buyer. The brand is one of the best.
I was part of a group that looked at it twice, and AIG was very firmly dug in on price and terms. This is when Hank G was in town most weekends, and AIG's stock price was on a steep line upward. 20+ years ago. No need to sell. As I have said before, our vision stopped far short of what has been developed now. So far short. Embarrassingly so!
This time, I sense that something is really brewing. VR or not.
So....any updates?
My wife and I were getting all nostalgic about skiing with our kids at Spruce when they were toddlers, and Stowe was our ski home. Which took me back to the late fifties, when I was their age, and doing the same with my parents. My wife was saying that Stowe is just unique. My next door neighbor is Swiss, and he takes his family there two-three times a year. Winter, summer and fall. When he skis, it's often in Europe, or at non VR type Western resorts. Just gets my mind working.....
Very interested to watch this one.
If VR does acquire it, the pricing of passes and tickets will be interesting, to say the least. The whole thing will be interesting! IS interesting!!
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Yeah I would say Stowe cross over is more with the likes of jackson, alta, Bird than say Breck and Vail.
Financials aside, Stowe is the iconic eastern ski resort and so as a brand it would be of interest to Vail Resorts.
But, "Financials aside" is not realistic, is it?
Nobody is looking at this without a fine eye toward the return, either on a standalone basis, or as adding to the overall results of a bigger entity, such as VR. At least, IMO and IME.
I am sure it would have interest to many. Have been there twice. It will take the right deal. AIG is probably not going to give much, unless there has been a real change in thinking, and a savvy organization is not going to overpay.
Unless I am missing something, has there been any indication that AIG needs to sell, wants to sell, or will make a great deal to sell?
Now having said that, my hunch is that W-B sold because the VR offer was so compelling....
I would loved to know how VR, if they are at the table, is looking at this one. My friends at Stowe would probably not head to a VR property on a trip West. Just saying. That would even be with an Epic pass in the picture. If they have a bunch of kids, maybe.
And I am not sure how the numbers work if you start discounting the most expensive seasons passes in the East.
And, Stowe and the whole Stowe experience consists of so much more than the Stowe Mountain Resort. Having spent an awful lot of time in Vail, the mothership, everywhere you look, VR is getting a cut of so many dollars being spent so many ways. The amount of retail and restaurant space that they own, for example is staggering. Let alone the housing and lodging. It also blows my mind to see the money spend on day and multiday tickets.
I think that many are expecting the cost to ski at Stowe to go down with a move like this, at least for season passes. It might, but where do they make it up? $25/day to park?
Like I said, very interesting.
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That's certainly plausible. Of course part of that might include selling the Adventure Center to itself. Actually, I think that is some kind of a lease. Still, construction is going strong. One of the homes going up is $15 million.
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Looks like it's true.
Vermont Business Magazine
"Spruce Peak at Stowe has announced a total of more than $70 million in closed and newly signed contracts in 2016, bolstered by the introduction of the 18 four-bedroom Village Townhomes in November 2016. "
http://www.vermontbiz.com/news/december/spruce-peak-sales-hit-70-million-record-time
Vermont Business Magazine
"Spruce Peak at Stowe has announced a total of more than $70 million in closed and newly signed contracts in 2016, bolstered by the introduction of the 18 four-bedroom Village Townhomes in November 2016. "
http://www.vermontbiz.com/news/december/spruce-peak-sales-hit-70-million-record-time
Impressive. I guess the question is whether the ball can keep rolling, and how you value that momentum. What piece of the price is the present value of the future development.
Is SMR building and developing all of that, including the $15 Mil home? That is real money that adds up.
All really interesting. In 1990, some very smart and savvy people concluded that "the real estate development potential was almost non-existent." How funny {or sad} is that in retrospect? Unbelievable.
This will be interesting. Wondering if one of my friends is playing his cards very close to the vest. With sales like that, on such a short timeline, it makes an eventual complete "redo" of the Toll House area seem very viable. Like done rather than dreaming.
Still curious about how it fits, with VR. Because IF it will. It will NOT be cheap!
If it's happening, hope it's a win win for all!
Is SMR building and developing all of that, including the $15 Mil home? That is real money that adds up.
All really interesting. In 1990, some very smart and savvy people concluded that "the real estate development potential was almost non-existent." How funny {or sad} is that in retrospect? Unbelievable.
This will be interesting. Wondering if one of my friends is playing his cards very close to the vest. With sales like that, on such a short timeline, it makes an eventual complete "redo" of the Toll House area seem very viable. Like done rather than dreaming.
Still curious about how it fits, with VR. Because IF it will. It will NOT be cheap!
If it's happening, hope it's a win win for all!
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This report from an associated site: http://www.epicski.com/t/145119/what-resort-will-vail-resorts-buy-next/60#post_2053465
There's a crane over on Spruce side now building what looks like somebody's very, very big home... That thing all by itself would take up a big chunk of $70M.
Maybe a bit off-topic, but... I love skiing Stowe as much as anyone does. That said, if I had "millions and millions" of dollars to spend, I'm not sure I'd be buying property in Stowe. Ski conditions range from "obscenely bad to outrageously good"... If you had that type of money to spend, why not fly out to Colorado, Utah, i.e., "sure thing" destinations on a regular basis? Maybe the people buying these mansions aren't necessarily going there to ski and they just want a "Stowe address"?
If you look at Vail's primary acquisitions, they share some common themes:
1) Real estate development; and
2) Adjacent services market development (food, transportation, etc.); and
3) Deployment of a full two season on-mountain model (winter and summer);
or
4) Putting a resort on Epic that will bring destination tourists to places that share the features of 1-3 above, such as Perisher, effectively competing against the destination Japanese ski market from afar.
The key that I think most people miss is #3, and this is where Vail is not interested in competing purely in a winter sports model. I believe Vail knows that the primary growth opportunity is to compete with other summer vacation types such as beach vacations. Katz has said as much about Vail itself in that the focus is going to be the other season(s), and Vail launched Epic Discovery last summer.
The two season model started with summer's corresponding lift based activity, which is downhill mountain biking. But with extensive base amenities, deploying mid-mountain summer activity areas, and leveraging the fact that most destination vacationers are looking to relax in summer, being able to take a gondola up on the mountain opens up more of a European style business model.
I firmly believe that as Vail tests out an expensive summer pass model - Epic Discovery was something like $89 per day for an adult - that a full year EpicPass is coming relatively soon. Such a pass would be incredibly sticky for families, because it would greatly reduce the costs of either the summer or the winter trips, however one tends to look at it. Epic is expensive to me for just winter, but add summer months reasonably and even as a local it gets far more appealing.
I still wouldn't do it, because you really need to own or rent some sort of mountain lodging to deal with the ingress/egress daily time loss of skiing most of the CO Vail resorts, but then this aligns with the core strategy of making the full commitment by acquiring real estate (or regularly renting it).
Stowe isn't much of a fit for #4 above, because northeast skiers already travel west to ski, i.e. that model is already in place and a pass is already economically attractive for those skiers who spend more than a couple of days. 1-3 is more interesting, although #3 typically is based upon proximity to a major metro area so that just like skiing you have a sizable season pass population that will day trip.
All of Vail's premiere resorts fit this model: CO with proximity to Denver, Park City to Salt Lake City, Whistler to Vancouver. Most of the rest of Vail's portfolio orients destination tourism to the premiere amenity areas. Kirkwood is interesting given Tahoe, from what I read from the local skiers here, seems to lack a Vail type model. But like Stowe, is to too far from a major population center to effectively develop into a premiere regional multi-season resort?
Anyway, if Vail were to acquire Stowe, it would probably need to satisfy 1-3 but not be dependent on 4, meaning Stowe would become a place that other EpicPass holders would travel to and not so much from. Offering a cheaper season pass at Stowe with much more expensive day passes does what to everybody around them? Does Stowe have a viable two season destination model when looking at what it means to be "on-mountain" in the summer?
Vail doesn't buy resorts to manage them. Katz has said he wants to focus more on the mountains than on being the real estate developer, but those two things go hand in hand. Meaning somebody has to be doing the "beds on base" development in order to increase ROI for the on-mountain assets.
1) Real estate development; and
2) Adjacent services market development (food, transportation, etc.); and
3) Deployment of a full two season on-mountain model (winter and summer);
or
4) Putting a resort on Epic that will bring destination tourists to places that share the features of 1-3 above, such as Perisher, effectively competing against the destination Japanese ski market from afar.
The key that I think most people miss is #3, and this is where Vail is not interested in competing purely in a winter sports model. I believe Vail knows that the primary growth opportunity is to compete with other summer vacation types such as beach vacations. Katz has said as much about Vail itself in that the focus is going to be the other season(s), and Vail launched Epic Discovery last summer.
The two season model started with summer's corresponding lift based activity, which is downhill mountain biking. But with extensive base amenities, deploying mid-mountain summer activity areas, and leveraging the fact that most destination vacationers are looking to relax in summer, being able to take a gondola up on the mountain opens up more of a European style business model.
I firmly believe that as Vail tests out an expensive summer pass model - Epic Discovery was something like $89 per day for an adult - that a full year EpicPass is coming relatively soon. Such a pass would be incredibly sticky for families, because it would greatly reduce the costs of either the summer or the winter trips, however one tends to look at it. Epic is expensive to me for just winter, but add summer months reasonably and even as a local it gets far more appealing.
I still wouldn't do it, because you really need to own or rent some sort of mountain lodging to deal with the ingress/egress daily time loss of skiing most of the CO Vail resorts, but then this aligns with the core strategy of making the full commitment by acquiring real estate (or regularly renting it).
Stowe isn't much of a fit for #4 above, because northeast skiers already travel west to ski, i.e. that model is already in place and a pass is already economically attractive for those skiers who spend more than a couple of days. 1-3 is more interesting, although #3 typically is based upon proximity to a major metro area so that just like skiing you have a sizable season pass population that will day trip.
All of Vail's premiere resorts fit this model: CO with proximity to Denver, Park City to Salt Lake City, Whistler to Vancouver. Most of the rest of Vail's portfolio orients destination tourism to the premiere amenity areas. Kirkwood is interesting given Tahoe, from what I read from the local skiers here, seems to lack a Vail type model. But like Stowe, is to too far from a major population center to effectively develop into a premiere regional multi-season resort?
Anyway, if Vail were to acquire Stowe, it would probably need to satisfy 1-3 but not be dependent on 4, meaning Stowe would become a place that other EpicPass holders would travel to and not so much from. Offering a cheaper season pass at Stowe with much more expensive day passes does what to everybody around them? Does Stowe have a viable two season destination model when looking at what it means to be "on-mountain" in the summer?
Vail doesn't buy resorts to manage them. Katz has said he wants to focus more on the mountains than on being the real estate developer, but those two things go hand in hand. Meaning somebody has to be doing the "beds on base" development in order to increase ROI for the on-mountain assets.
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The reason Katz wants to focus less on real estate development to pay for on mountain amenities is because you eventually run out of real estate to develop, but you have tons of second homes that are mostly empty most of the time. So there is $ to be made in filling those empty beds with people who also buy meals, alcohol, lessons, hard and soft goods, parking etc. High priced lift tickets can easily be discounted to offer comparably inexpensive ski and stay lodging packages even for lodges that Vail does not own. And of course high priced lift tickets make season passes more attractive as well.
Part of Vail's evil plan
is to have the customer pay for the skiing and lodging well in advance so once at the resort the first time a guest opens his/her wallet it is to pay for high priced on mountain food which is comparably less painful than paying for a really high priced lift ticket or season pass purchased months ago.^^^^Yep. Vail doesn't have to develop the real estate, it just needs it there so that you have that captive customer. Of course, that evil plan is what in other parts of life is just referred to as a "vacation". The more amenities you provide for a vacation, the more vacationers you get and the more of their wallet share you own, especially when you are open well over half the year and cater to both summer and winter vacations. It wouldn't be hard to argue that Vail with a year round pass is better in the summer, because Vail is more unique in the summer (big acreage, lift/gondola infrastructure, not confined to high alpine, diverse set of available actives, lots of cultural stuff that is village based, etc.).
Places with high season pass prices logically lack a serious ability to capture additional wallet share - they have to price to the straight cost of you skiing and in that case it is a relatively expensive lift ride and the support infrastructure. And that's why it's easy for a business like Vail Resorts to hammer them with a horizontal markets strategy. The most horizontal aspect being summer, which in Vail's business model largely leverages the same assets: food, transportation, lifts, lodging, and entertainment.
It's super cool in skiing to not be those things, but usually you need a billionaire in place to eat the risk or you might just be shopping your assets hoping Vail has increased your value (see: Winter Park).
Places with high season pass prices logically lack a serious ability to capture additional wallet share - they have to price to the straight cost of you skiing and in that case it is a relatively expensive lift ride and the support infrastructure. And that's why it's easy for a business like Vail Resorts to hammer them with a horizontal markets strategy. The most horizontal aspect being summer, which in Vail's business model largely leverages the same assets: food, transportation, lifts, lodging, and entertainment.
It's super cool in skiing to not be those things, but usually you need a billionaire in place to eat the risk or you might just be shopping your assets hoping Vail has increased your value (see: Winter Park).
You're assuming it's either/or.
We're talking about people who can own a place in Stowe, own a place in Beaver Creek, and choose on a whim which they will visit.
True... I also forgot -- as somebody mentioned above -- that Stowe is (apparently) busier in the summer than it is in the winter... Once the lifts stop turning, I don't show up again until the lifts spin again except for an occasional hike. I need to do some Vermont bike riding as well... so maybe two visits this summer.
Yeah, there's a guy in my little town whose interest income (say, 5%) would be $800,000,000/year before taxes. A little 15 million dollar home is just a drop in an overflowing bucket.
Well, then he can feel free to adopt me and buy me a mountain home ... I mean, I need less than a million!
You're cheap! I don't know what slope-side residences in Aspen go for, but I'm guessing it's more than $1M. Plus I'd need to hire staff to do the cooking, cleaning, ski maintenance, daily massages, etc. Maybe a million a month?
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