By David Clucas
At a quick glance, Vail Resort’s deal to buy Canada’s Whistler Blackcomb for CAD$1.4 billion ($1.06 billion) announced this past week may seem like many other acquisitions… buy out a significant rival, grow the company’s reach, increase synergies, make more money.
But a deeper look at the deal — plus the numerous other ski-resort acquisitions Vail has been making throughout the past few years — reveals a broader and more complex strategy rooted in consumer data, marketing and geographic positioning.
While Whistler Blackcomb is a shining star on its own — it’s the largest ski area in North America — the greater value for Vail is incorporating Whistler’s 2.2 million skier visits a year into its growing network of resorts where people not only ski but lodge, dine, shop and entertain themselves. Additionally, these resorts are being visited during off-seasons, not just in the winter.
A Global Network
A big part of Vail’s goal in all its recent acquisitions — including Australia’s largest ski resort (Perisher), the largest ski area in the U.S. (Park City) and even its smaller purchases of several ski areas in the Midwest (Afton Alps and Mount Brighton) — is to get those guests introduced and encouraged to travel to Vail’s now dozen worldwide resorts. The idea is that when guests travel, they are spending more money than what they would on a day trip and will more greatly immerse themselves in the ski culture.
Supporting those efforts is what Dave Brownlie, Whistler Blackcomb’s CEO, described as Vail’s “very sophisticated marketing engine” that will expose his resort to many more around the world, and in turn expose his guests to other Vail resorts. Whistler will join Vail’s top-tier Epic season pass in 2017-18, allowing skiers access to its top resorts at a bulk discounted price, provided they ski a minimum amount of days.
Vail Resorts CEO Robert Katz echoed the marketing data strategy on a call with investors August 8: “We believe that the most fundamental strategic benefit from the acquisition is the complementary nature of Whistler Blackcomb’s guest base with Vail Resorts’ existing network.” He added that the acquisition increases “our ability to market more effectively through increasingly personalized and targeted messages that are part of our broader network-wide marketing strategy.”
He continued: “Of course, this begins with guest data, and with Whistler Blackcomb’s scale and its complementary geographic reach, we expect the acquisition will significantly increase the size of our database. We have more information about how people move between resorts, which we think is a benefit for our financial results, as we’ve seen in the U.S., but also a benefit for the Whistler Blackcomb guest, because we can provide great values for the people who really want them.”
For example, Whistler Blackcomb is “very popular in Australia,” Katz said, so the acquisition now strengthens Vail’s purchase of Perisher even further as it can more easily attract its Australian guests to Whistler. Taken even further, Perisher is very popular with an increasing amount of Chinese travelers, who then might find their way to Whistler next season, on to Vail or Park City the next and so on. All its resort acquisitions are purposely near major cities and airports, Katz noted.
Whistler “is the best positioned resort in North America to benefit from the expected growth in ski trips taken by Chinese travelers, particularly as that winter sports market is energized by the build-up to the Beijing Olympics in 2022,” Katz said.
Based on its current strategy, we wouldn’t be surprised to see Vail acquire a resort closer to Asia to further strengthen those connections.
Closer to home, Katz said Whistler had done a better job in attracting visitors from the West Coast and Pacific Northwest to Canada, rather than getting Canadians to come south of the border to ski in the U.S. at places like Vail or Park City.
“We will focus on integrating those guests into our pass products and ensuring that our marketing messages are reaching Canadians who are not currently a big market for Vail Resorts,” Katz said.
For all the benefits, there are still some risks to Vail’s moves.
As it diversifies itself around the world, like any global brand, it will encounter different cultures and government regulations. Investors on the call noted that it will be the first time Vail has to deal with local Squamish and Lil’wat First Nations in Canada, on whose land the resorts reside on.
Increased currency fluctuations come into play as well. The Canadian dollar has dropped significantly against the U.S. dollar in the past few years — largely due to falling commodity prices — which, while creating a discount for Vail’s acquisition and making it cheaper for U.S. tourists to visit Canada, means those Canadian dollars will, in the end, be worth less to the company and make it more expensive for Canadian customers to visit Vail’s U.S. resorts.
And then there’s global climate change. Even Whistler Blackcomb’s Brownlie acknowledged on the conference call that the uncertainties accompanying climate change helped convince the resort that having a larger and more diverse parent was a prudent move. While that global diversity certainly helps Vail — sometimes it can be a bad winter in one area of the world, and a good winter in the other — the global trend points more in a direction of warmer temperatures and less snow.
While good snow and skiing still dominate the revenue picture for Vail, Katz made sure to point out that building its network also including the peripheries of the business — real estate, retail, lodging, dining and entertainment.
“We are true believers that ski vacations are about more than just skiing, and are really about creating an outstanding experience for the whole family, on and off the mountain,” he said. “This is why resorts with great towns are among the most-visited resorts in the world.”
That reach extends beyond the winter season, he added
“Whistler Blackcomb is by far the industry leader in creating a true year-round resort, with over 500,000 summer visits and consistent positive EBITDA in all four quarters,” Katz noted. “We also believe there are additional opportunities for further growth in summer at Whistler Blackcomb. Robust summer business will allow us to continue to diversify our revenue base across our fiscal year.”
Katz added that Vail will continue to pursue Whistler Blackcomb’s previously released “Renaissance” plan, which still needs regulatory approval, including an indoor water park, upgrades to lifts, base facilities, snowmaking, touring and two “very compelling real estate development projects.”
Photo courtesy Whistler Blackcomb