Another great article by Jason Blevins. I hope he doesn't mind that I keep linking him here.
http://www.denverpost.com/2017/05/07/ski-industry-merger-antitrust-concerns/
Some excerpts:
Twenty years ago, a merger of giants in the ski industry triggered antitrust concerns that the lack of competition could lead to price spikes for skiers.
Today, with
recent consolidation deals setting up a battle between two major resort operators in an industry driven by season-pass sales, the competition could involve two titans offering more for less.
When Denver private equity firm KSL Capital Partners — the owner of California’s Squaw Alpine resort — announced last month it was
joining privately owned Aspen Skiing Co. in acquiring Intrawest’s six resorts for $1.5 billion as well as southern California’s
four-hill Mammoth Resorts, the deal marked the return of an oligopoly in the resort industry.
Within the span of one newsy week in April, the resort industry veered from a semi-monopoly controlled by Vail Resorts to a duopoly, with two giants vying for control....
A source close to the KSL-Aspen Skiing deal said a pass product involving all the Intrawest resorts, Squaw Alpine, Mammoth Resorts and Aspen Skiing’s four ski areas is planned and will rival the Epic Pass.
Independent resort owners across the state are watching the KSL-Aspen Skiing deal warily. A market dominated by cheap season passes could pinch resort owners dependent on day-ticket sales....
Powdr Corp. is the model of resort operator adaptation. The company, which owns nine mountain resorts in six states, including Copper Mountain and Eldora, has diversified away from a reliance on lift ticket sales with the acquisition and expansion of the Outside Television network and Woodward action sports training camps, making it more of an adventure/lifestyle company than a ski-area operator.
“Powdr’s approach to the ski business has evolved over the years and differentiated us within the competitive industry,” said Tim Brennald, Powdr’s head of resorts, who had forged pass-sharing deals with Intrawest to promote cross-visitation.
Even with a footprint beyond ski areas, Powdr relies on season pass sales.
“It’s still early to tell what kind of impact resort consolidation might have, but our partnership with Intrawest on pass products has been key in reaching our goal to provide guests awesome experiences in amazing places,” Brennald said.
But with Vail and Aspen selling day lift tickets for
as much as $189 last season— a pricing strategy that pushes both day-trippers and destination guests toward the $859 Epic Pass — the little resorts with tickets closer to $100 have an appeal among budget-minded skiers who aren’t bothering with a season pass.
“In some ways, I wonder if this might help us,” said Davey Pitcher, the longtime owner of Wolf Creek ski area. “Our day tickets are much lower than most day tickets. These crazy season passes, it’s a business model that we have to live with but I’m not really sure it’s anything we can complain about.”
“We have a big pricing advantage over the big guys,” said Monarch owner Bob Nicolls. “If they raise prices, that’s a good thing. We can track behind those guys. Things are going to consolidate, and they aren’t going to lower prices. Just watch.”
Exactly, said Soma. If the price for season passes does fall with the introduction of a KSL-Aspen Skiing pass, they won’t stay low for long in a market controlled by two entities.
“History says that a duopoly will simply maximize the price between the two entities,” Soma said.
One interesting twist in the KSL-Aspen Skiing deal is that Aspen Skiing’s chiefs have said repeatedly that their four Roaring Fork Valley ski areas — Aspen Mountain, Aspen Highlands, Buttermilk and Snowmass — will remain separate from the collective under the new, yet unnamed company. That would prevent Aspen Skiing from even being at the table when the new company schemes its ticket revenue strategy. Two competitors can’t work together to set pricing. So the deal will likely require Aspen Skiing to create a sort of wall between the new KSL partnership to prevent the appearance of collusion on pricing.
“We are very aware of all these things and proceeding accordingly,” said Aspen Skiing spokesman Jeff Hanle, adding that it was “premature” to discuss any potentially contentious issues before the deal is even finalized, which is expected in the next several months.
Soma said the idea that Aspen Skiing will remain separated from the new company “is just horsefeathers.”
“That’s a bunch of baloney,” Soma said. “Give it two, three years and they will be operating as if they are the same group.”