Will KSL-Aspen compete with Vail?
Mammoth Resorts, which includes Mammoth Mountain, Bear Mountain, Snow Summit, and June Mountain ski areas, along with the privately-held company Intrawest, were acquired by a joint venture formed by KSL Capital Partners and Henry Crown and Company (the owners of Aspen Skiing Company) on July 31. The private equity firm Starwood Capital Group previously owned the majority interest in Mammoth Resorts.
The new entity has not named itself, but has commonly been referred to as KSL-Aspen. The Denver Post noted that industry people in Colorado have been calling it the “UnVail,” in its October 13, 2017 story “What’s in a Name?”
In April 2017, Jeff Hanle, Vice President of Communications for Aspen Skiing Company, told The Aspen Times that the new company will be privately owned. This week, Hanle confirmed that this was still the case, adding that “Aspen Skiing company’s four mountains here in Colorado are still independent from the new company.” Those mountains, which include Aspen Mountain, Snowmass, Aspen Highlands, and Buttermilk, will continue to be owned by the Lester Crown family of Chicago.
As part of its $1.5 billion purchase of Intrawest, KSL-Aspen acquired seven resorts, in addition to the four ski areas that comprise Mammoth Resorts. KSL also owns the Tahoe resorts Alpine Meadows and Squaw Valley, and purchased Utah’s Deer Valley in August of this year. According to the National Ski Areas Association’s listings, KSL-Aspen currently owns 13 ski resorts, excluding the four owned by Aspen Skiing Company. According to its website, Vail Resorts, Inc. owns 14 ski resorts.
Despite Hanle’s assertion that the new company will not go public, KSL-Aspen has emerged as a clear rival to Vail Resorts’ dominant presence in the ski industry. Kristin Rust, Director of Public Relations for KSL-Aspen, said this week that she did not have any information to release regarding a pass to rival Vail’s Epic Pass, but that she would have more information in 2018.
According to its website, Vail Resorts, Inc., which is a publicly traded company, expects to sell 650,000 Epic Passes, at $859 a pop, for the 2017-2018 ski season. The Epic Pass provides Vail’s customers with access to all 14 of Vail Resorts’ ski areas. In contrast, Mammoth Resorts’ Cali4nia Pass, which provides unlimited riding and skiing at its four resorts, cost $1,049 as of this week. A comparable pass from KSL-Aspen could include skiing at 13 resorts.
Local realtor Paul Oster said that the change in ownership could be an economic boon—if KSL-Aspen chooses to go public. Mammoth Mountain has never been managed by a publicly owned company. Since being sold by Dave McCoy in 2005, the Mountain has been managed by private equity firms. “A publicly held company handles money differently than a private equity firm,” said Oster this week. “They [private equity firms] load their private enterprise with debt, get paid to repay that debt, and grind out the bottom line to cut costs. Then they get out.” Oster contrasted this strategy with that demonstrated by Vail Resorts, Inc., whose website boasts that the corporation has invested $600 million into its portfolio of ski areas in the last six years alone.
Tom Higgins has owned and operated a ski shop, American Ski Exchange, in Vail, Colorado since 1986. Vail Resorts Inc., formerly Vail Associates, went public in 1997, after being owned privately and locally by George Gillette. Like Mammoth Lakes, the Town of Vail grew with the mountain. Vail Mountain began running its lifts in 1968, two years after the town was founded. Unlike Mammoth Mountain, Vail Mountain was never owned by a private equity firm.
Higgins said that if KSL-Aspen wishes to compete with Vail Resorts, it will be a boon for Mammoth Lakes. “Most people, I think, are a little nervous about The Empire [Vail or KSL-Aspen] purchasing their ski area, but I promise you that this will be an upgrade for Mammoth.” He said the year-round economy of Vail Valley improved when the company went public. “They are very good at lateral development,” said Higgins of Vail Resorts, adding that, although the local economy has grown, it is difficult for “independents,”or local businesses owned privately by local individuals, to compete with Vail Resorts’ competitive packaging of luxury services like ski rentals, hotel rooms, and lift tickets.
Chris Ball, a realtor for Slifer Smith & Frampton Real Estate and resident of Vail since 1978, said he’s “seen it all.” Ball said that Vail Mountain being owned by a publicly traded company with ample capital helped the community get through the recession in 2008. “What transposes into quality product to sustain real estate values is for people to feel comfortable because they’re confident that there’s capital backing to support the mountain’s operations and development,” said Ball.
Higgins pointed out that several of KSL-Aspen’s executive management team are former Vail Resorts managers. KSL Capital’s Chief Financial Officer Eric Resnik served as Vice President of Strategic Planning and Investor Relations for Vail Resorts from 1996 to 2001.
Board Chairman Michael Shannon co-founded KSL Capital, and previously served as President and CEO of Vail Associates from 1986 to 1992. KSL-Aspen Interim Chief Executive Officer Bryan Traficani worked in Strategic Planning and Investor Relations at Vail Resorts from 1998 to 2001. “They know how to play this game, because they know how Vail Associates and Vail Resorts work,” said Higgins.
Over the last 20 years, Vail Resorts has purchased several smaller ski areas in the Midwest and East Coast with the intent of attracting new skiers close to America’s urban centers. Skiing at these mountains is included in the Epic Pass. In 2016, Vail Resorts, Inc. announced it would invest $13 million to renovate Wisconsin’s Wilmot Mountain, located approximately 65 miles north of Chicago. It has recently acquired Vermont’s Stowe Mountain.
KSL-Aspen owns Stratton Mountain Resort in Vermont, Mont Tremblant in Quebec, and Snowshoe Mountain resort in West Virginia. It is the only other ski industry giant to own smaller ski areas on the East Coast, and Higgins said that if KSL-Aspen creates an Epic Pass competitor, those mountains could expand traffic to KSL-Aspen’s other destinations dramatically.
When Vail Associates became Vail Resorts, Inc. and went public in 1997, the company immediately invested $18 million in on-mountain improvements, the largest single-year investment in the ski area’s history.
In contrast, The Denver Post reported in Jason Blevins’ May 9, 2017 story, “An Inside Look at the $1.7 billion deal that weds Aspen, Steamboat, Winter Park, and Canadian Mountain Heliskiing Operation,” that “Intrawest, between 2013 and 2017, re-invested eight percent of its revenues, compared to 11 percent by Vail Resorts. The difference between Vail Resort and Intrawest’s investment over that period was $60 million.”
Starwood Capital purchased Mammoth Resorts in 2005 for $365 million. Mammoth Resorts Public Relations Manager Lauren Burke said she did not have figures for how much Starwood Capital had invested in on-mountain improvements between 2005 and 2017.