Ski resort leaders carved out a new future for the industry
May 14, 2018
Throughout the last several months, it seemed that the major players in the ski industry were announcing the purchase of an additional resort almost monthly. Last fall, for instance, Deer Valley Resort was one of the final ski areas the recently formed Alterra Mountain Company snatched for its 12-resort portfolio before creating a pass that would provide access to them all.
Large companies owning multiple ski resorts is nothing new in the industry, but the size of the most powerful companies and the rise of season passes that provide access to many or all the resorts they own are. While the future of ski areas and season passes is still unkown, industry leaders do know that larger companies offering more resources for resorts and changing season pass purchasing habits have led the industry to where it is today.
Kelly Pawlak, the new president and CEO of the National Ski Areas Association based in Colorado, said that single companies purchasing multiple resorts began around the late 1980s and early 1990s. When she started in the ski resort industry in 1985, Mount Snow in Vermont, where she worked, was owned by the parent company S-K-I Ltd., which later purchased six other resorts.
Locally, Park City Mountain Resort was owned by Powdr Corp. before being purchased by Vail Resorts in 2014. Powdr Corp., which is based in Park City, still owns eight resorts across the country.
“It has been a very stable market for years, but there also hasn’t been tremendous growth in the industry. The only way somebody is going to get a guest to visit them is by doing something better,”Erik Forsell,Alterra Mountain Company
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"Like most businesses, once you have a solid business model, expansion is often common," Pawlak said.
Part of the reason that consolidation happens in any industry is that it can be beneficial for small companies to have access to the resources that a large organization does.
Coleen Reardon, director of marketing for Deer Valley Resort, said that the resources from Alterra Mountain Company have already proved to be useful. For example, she said that the resort has needed a website rebuild for multiple years, but has not been able to do a redesign for various reasons. Now, Deer Valley will have an entire team of specialists helping to create it.
Vail Resorts also pumped resources into Park City Mountain Resort, investing $50 million into connecting the Park City and Canyons Village sides of the resort a few years ago, and it also made upgrades to lift infrastructure and on-mountain dining. At the end of last year, Vail Resorts announced that it would build a new learning area for beginners and families, as well as renovate the Mid-Mountain Lodge.
Pawlak said that the resorts also gain access to knowledge and physical assets when they are bought out.
Reardon added that the amount of money for capital investment available to Deer Valley Resort under Alterra Mountain Company is hard to compete with. The resort was previously owned by Royal Street Corporation and Red Gables Corporation, which were owned by the Stern and Penske families, respectively.
"The Penskes and the Sterns were incredible and always trying to reinvest in the facility and the mountain, but at some point, you have a couple of rough winters and that gets harder to do," she said.
Erik Forsell, chief marketing officer for Alterra Mountain Company, said that Alterra formed because it was becoming harder and harder for individual resorts to make investments in technology or capital projects, particularly during the offseason.
"The idea of partnering with a lot of other resorts, whether it was through partnership or ownership, looked more appealing," he said.
He said that the next logical step was to look at the success and growth of other multi-resort passes, such as the Epic Pass, Rocky Mountain Super Pass and the Mountain Collective pass, and move toward creating a similar product.
Alterra announced the Ikon Pass earlier this year.
He said that the reason that multi-resort passes have been so successful is partly because they provide an opportunity for choice. Consumers, and especially millennials, like to have a variety of options, he said. Plus, they tend to wait to make decisions.
"They say it is a new phenomenon, that consumers like to delay choice and wait until the last minute," he said.
But with ski passes, if consumers wait, the cost goes up. With passes like the Epic and Ikon Passes, skiers and riders can decide on a group of resorts and purchase early to save money but still sit on their decision on which destination they will ultimately choose to visit.
Bill Malone, president and CEO of the Park City Chamber/Bureau, said that the ability to wait could create fickle customers who "chase the snow." In Park City, that may result in fewer visitors booking lodging months in advance.
"I think the proliferation of the two main Epic and Ikon (passes) might turn out to be challenging for us in terms of the advance booking side," he said.
But he said that those purchasing the season passes will likely commit to taking a ski trip early, even if they don't necessarily choose the destination upfront. Early purchases of passes could benefit the ski industry as a whole, particularly during seasons with poor snow years in certain regions.
Forsell said that owning multiple resorts across the country can protect a company against the unpredictable, but significant, factor of weather.
Companies like Alterra Mountain Company and Vail Resorts, which owns 10 mountain ski resorts and three urban ski areas, tend to own resorts across the continent — and even on other continents. When there is a bad winter in certain regions like there was in the Rocky Mountains this year, the parent companies can lean more on revenue from regions that experienced a strong winter.
Forsell said that, due to changes in consumer habits and the nature of the ski industry, it was time for a new revenue model for companies.
"It has been a very stable market for years, but there also hasn't been tremendous growth in the industry," he said. "The only way somebody is going to get a guest to visit them is by doing something better."
Now, smaller, locally owned resorts will need to compete with multi-resort companies and the products they offer. Some worry that they will not be able to thrive, but Pawlak does not see them going anywhere because individuals will likely learn to ski and ride at smaller, local resorts and then graduate to the larger ones.
"The smaller areas are important to the larger — they feed the new customers. So it is prudent for the larger ski areas to support their smaller brother/sister resorts," she said.
With Park City split between two different pass products, neither resort will have to address that uncertainty. Instead, the unknown lies in which pass individuals will choose.
"We are one of the few cities that have both," Malone said. "We are in an enviable position. I think we are pretty fortunate that we are not just stuck with one brand."