The reverberations of the blockbuster billion-dollar deal announced this week that Vail Resorts purchased Whistler Blackcomb are already starting to be felt, both by skiers and other resort operators. “The competitive environment just went up a full notch,” says Andy Wirth, President and CEO of Squaw Valley and Alpine Meadows in California’s Lake Tahoe basin, where three Vail Resorts ski areas already operate.
The $1.06 billion deal ($1.4 billion Canadian), which Vail and Whistler CEOs are calling a “strategic combination,” will close by late October, subject to final shareholder and regulatory approvals. Undeniably, the big just got bigger. Vail Resorts is the largest mountain resort operator in North America, and Whistler racks up the most skier days of any single resort on the continent.
By rolling Whistler Blackcomb into its holdings, Vail Resorts—and its 13 ski destinations—will have more season passholders, visitors, acreage, geographic diversity and (most significantly) resistance to weather vagaries than any other ski resort operator on the globe. And, yes, as of winter 2017/2018, Vail’s currently priced $809 Epic Pass will include unlimited access to Whistler Blackcomb, too.
For skiers, the value of this merger—and of such deals in general (which industry insiders expect to see more of in the near future)—remains to be seen. Will today’s wave of consolidation do to the skiing industry what elite hotel chains, such as the Ritz Carlton, did to the American luxury lodging industry? That is, establish a consistent experience and level of service, but at a price of a reduction in distinctiveness. Or will the efficiencies of economies of scale outweigh the loss of local character? And will the consolidation movement, and the ensuing less competitive marketplace, eventually lead to higher prices, despite the Epic Pass’s current value pricing model? For its part, Whistler might present its own challenges, as its boasts a particularly passionate mountain culture and mountain community—even in an industry that isn't short on passionate mountain cultures and communities.
For now, this much is clear: Vail, whose portfolio long favored family-friendly “big blue” ski areas in competitive micro-environments like Tahoe, Park City and Colorado’s Front Range, went courting Canada’s brawny, stand-alone ski king. “Whistler Blackcomb is coming off of a record year on every level,” says Rob Katz, Vail Resorts CEO—a model Katz would like to duplicate at other already-successful Vail destinations.
The vision now (in distinct contrast to the ’90s ski industry model in which resort conglomerates supported ski resort expansion through real estate development and sales) is about maximizing operations of the mountains themselves. “Whistler Blackcomb does an incredible business in summer, with 500,000 visitors up on the mountain,” says Katz by example. “Understanding how they’ve done it, and how they’ve done it so well, will be a huge positive.”
Some rival ski-resort operators look at the deal as confirmation of the value of their properties. Whistler’s purchase price tallies at roughly sixteen times Whistler Blackcomb’s EBITDA (earnings before interest, taxes, depreciation and amortization), making it the highest valuation of a North American ski resort in modern mergers and acquisitions history. “It’s great for the ski industry,” says Rusty Gregory, CEO of Mammoth Resorts. “And for those of us that own ski assets, particularly well-positioned high alpine resorts, it means our stuff has value. Some of the big resorts still have a lot of growth in them.”
The acquisition—like Vail’s 2015 purchase of Australia’s Perisher—also gives the Epic Pass, which is one of the foundations of Vail’s business model, even greater reach. “What has made a number of our acquisitions including recently Park City so impactful is not the impact it has had in the local Salt Lake market but … across the United States,” Katz says. “There are so many people around the United States who want to have the opportunity to go and ski Park City. The ability to do that on one pass was transformative. We think the same is true of Whistler Blackcomb, but instead of this being about the United States, it’s really about the world.”
Visions of global domination? This will help. Whistler and its dual mountains already draw robust visitorship from Latin America, the U.K., Europe, Asia and Oceania—as well as a trend-bucking high percentage of visitors under the age of 45. Now Whistler will have ready access to more affordable capital, too.
The ski industry is capital intensive; being part of a large, profitable public company like Vail Resorts means capital is cheaper. In fact, senior management from several other resorts previously acquired by Vail cite big-ticket investment in languishing capital projects as a hallmark of becoming part of the “Vail family” —even following poor snow years. For Whistler Blackcomb’s CEO Dave Brownlie, who in April unveiled a $265 million, long-term, redevelopment plan called Renaissance, cheaper and more reliable capital is great news. “Being part of Vail provides the financial strength and commitment that will support us in the long run,” Brownlie says, referring frequently to stability and security for Whistler Blackcomb and all its stakeholders. “I look at it as adding a bigger engine to what we have to take us further and faster, and elevate our experience.”
Christian Knapp, vice president of marketing for Aspen Skiing Company, acknowledges that “there is some anxiety and trepidation around the recent consolidation," but notes that while “it may be a concerning trend, it's not a new trend in the industry.” Knapp, the chief developer of the Mountain Collective pass program, which was launched four seasons ago by a handful of independent resorts as a response to the Epic pass program, says the Whistler purchase “allows other destinations to further differentiate themselves” from the Vail family of resorts.
In the immediate future, expect business as usual. Mountain Collective passholders (which this week announced the addition of Telluride and Revelstoke to its roster of allied “skier’s mountains”) will be able to use their passes at Whistler Blackcomb this season. For 2017/2018, however, Whistler Blackcomb will go “Epic”—with the upside that local season passholders are likely to see a 30-40 percent reduction from current prices. Expect capital improvements on the mountain to follow. And where capital improvements go, so do Vail Resort’s 550,000 or so global passholders. Or so is the plan.
Vail Resorts, the leading player in the ski-resort industry for going on two generations, has a history of embracing paradigm-shifting trends a few years before other resorts. In this case, after the Whistler purchase, the basic question remains: Is more, in fact, more? Of course, it probably depends on your vantage point. Vail or Whistler stockholder? Rival resort operator? Skier or rider? Local business owner? For all involved: Stay tuned.