Vail Resorts Inc.’s Sept. 11 acquisition of Park City Mountain Resort in Utah is already lifting sales of the company’s season passes and shaking up the U.S. ski resort industry.
MTN reported last week that as of Sept. 21, sales of its Epic Pass, which grants owners access to its nine U.S. ski resorts as well as partner resorts in Switzerland, France and Japan, were running 14 percent ahead of last year in units and 18 percent in dollars.
“We saw a very significant pickup in season pass sales certainly when we announced the deal,” MTN CEO Rob Katz told analysts during the company’s fiscal fourth quarter earnings call. He noted that sales increased to residents in Utah as well as so-called destination guests who fly in from as far away as Europe and Asia.
While those growth rates are expected to taper by the end of the selling season, the results reflect the success MTN has had encouraging guests to purchase their passes earlier in the year and the growing power of the Epic Pass program. This upcoming winter, for about $850, or about $100 less than they paid for a PCMR season pass, people can buy an Epic Pass and have access to both PCMR and the neighboring Canyons resort MTN took over last year, as well as Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Heavenly, Northstar and Kirkwood in the Lake Tahoe area; Afton Alps in Minnesota and Mt. Brighton in Michigan and resorts in Switzerland, France and Japan.
MTN executives describe the $182.5 million cash transaction as “transformative,” and they hardly appear to be exaggerating. In addition to settling a legal dispute that had threatened to close PCMR this winter, the deal clears the way for a long envisioned integration of PCMR and Canyons, which MTN has leased through 2063. MTN disclosed last week that it plans to build a lift and other infrastructure to connect the two resorts next summer, and will be looking to upgrade or add new lifts, restaurants and snow making capabilities at both resorts in coming years.
Once connected, the resorts will offer 7,000 contiguous acres of skiable terrain, creating the largest single ski resort in the United States and further enhancing the appeal of the Epic Pass.
“We believe the combined resort with its unparallel location will attract destination skiers from across the United States and around the world and will drive season pass sales, visitation and ancillary business,” Katz said.
Five days after the deal was announced, Salt Lake City boosters unveiled a national advertising campaign that will promote the city as “Ski City USA.” The campaign emphasizes that Salt Lake is the only U.S. city within 35 miles of four world-class winter resorts. Its tagline: Once youve stayed in Ski City, youll never stay in a ski town.
Because it is located on privately owned land, PCMR has gotten a jump on many western mountain resorts when it comes to developing summer attractions. It’s summer recreational amenities include an alpine slide, mountain biking trails, a climbing wall, a miniature golf and zip lines. By contrast all four of MTN’s Colorado resorts and Kirkwood operate on land owned by the U.S. Forest Service under special use permits that restrict many commercial uses and greatly slow capital projects.
“They have done an outstanding job of creating a fantastic summer experience, and we intend to continue to push that forward,” Katz said last week when asked how the acquisition of PCMR would affect capital spending at MTN. “Certainly its proximity to Salt Lake City I think makes it a very attractive destination. We think the summer piece is big”
MTN said it anticipates the acquisition of PCMR will boost non-GAAP EBITDA from its lodging, lift tickets, ski school, retail/rental stores, dining and other resort operations by approximately $35 million, or about 10 percent, in fiscal 2015. Resort EBITDA margin is expected to grow 300 basis points to approximately 25.3 percent.
“We believe the combined resort with its unparallel location will attract destination skiers from across the United States and around the world and will drive season pass sales, visitation and ancillary business,” said Katz.
In Vail, CO, some were wondering if the axis of the U.S. ski industry had suddenly shifted 375 miles west to the Wasatch Range. In California, meanwhile, the state’s largest ski area operator announced a plan last week to acquire the next largest. On Sept. 24, Mammoth Mountain Ski Area, which owns the Mammoth Mountain and June Mountain ski resorts due east of San Francisco, announced plans to acquire Big Bear Mountain Resorts, which operates Southern California’s two largest and most popular ski resorts. Although the deal has not closed, Mammoth immediately began selling a new season pass that includes unrestricted access to all four mountains at the discounted rate of $689 for adults
