What Corporate Mergers Mean for Skiers

After the dust settles, what the deal between Aspen, KSL, Intrawest, Mammoth will bring to the ski industry

MAMMOTH LATITUDES
Mammoth Mountain and its Southern California ski resorts are part of the Aspen-KSL-Intrawest merger announced last week, bringing a huge marketshare of passholders into the newly formed group. PHOTO: David Reddick

The headlines hit like avy bombs after a storm. On April 10, Aspen Skiing Company (SkiCo) and Denver-based private equity firm KSL Capital Partners announced they would buy Intrawest for $1.5 billion. Two days later, the Colorado partners picked up Southern California's Mammoth Resorts for an undisclosed sum. When the contracts are signed, KSL and SkiCo will form a new business entity to operate Intrawest's resorts—Steamboat and Winter Park in Colorado, Stratton in Vermont, Snowshoe in West Virginia, Blue Mountain in Ontario, and Tremblant in Québec, plus the heli-ski operation Canadian Mountain Holidays—as well as Mammoth, June Mountain, Bear Mountain, and Snow Summit in California. SkiCo's four mountains will remain separate under the Aspen Snowmass brand; California's Squaw Valley Alpine Meadows, KSL's sole ski property, could join the larger portfolio.

By first chair of the 2017–18 season, the ski world will have a new conglomerate that rivals the size and reach of industry leader Vail Resorts.

Because Vail Resorts markets a homogenized ski experience across its 13 resorts, the new supergroup must be different. To do that, KSL and SkiCo need resorts with unique identities and culture intact. Vail sold 650,000 Epic Passes for 2016–17; naturally KSL and SkiCo want that business. That's why they first partnered in 2012 to launch the Mountain Collective pass, with Aspen Snowmass and Squaw Alpine as founding members. That's how SkiCo CEO Mike Kaplan got to know KSL executives and Mammoth CEO Rusty Gregory.

"We get together once in a while and we do it on the hill,” says Kaplan. “Skiing opens your mind and lets you connect more deeply. That set us up to have a conversation around what would be possible together.”

Contracts won't be signed for another 90 to 120 days. Since it's a private deal, there will be no big reveal of who owns how much. But many expect the new group to offer a 2018–19 season pass that lets skiers click in from California's San Bernardino Mountains to North Lake Tahoe, sip Verve Clicquot at Aspen Highlands and then choke on powder in Steamboat, dine on frites smothered in gravy and cheese curds at Tremblant or rehydrate with a bourbon-aged porter from Big Timber Brewing at Snowshoe.

"The reason you do this is because you get scale," says Bruce Tracey, a professor of management at Cornell University. "At a strategic level, it makes sense if Aspen and KSL grow this out to compete, because there's really only one other player in North America."

Consolidation is an old story in the ski world. Vail Resorts bought Keystone and Breckenridge in January 1997. Months later, British Columbia's Whistler and Intrawest-owned Blackcomb merged. In fact, consolidation is part of every industry's life cycle. Consider our friends in craft beer: The modern scene kicked off in the early '90s and saw explosive growth in the aughts. Then, as the industry matured, big beer started buying up the small competitors. In 2015, Anheuser-Busch bought up Seattle's Elysian and Oregon's 10 Barrel Brewing. That move brought competitors into the portfolio, streamlined operations, and increased market share by acquiring established brands with loyal following. Sound familiar?

Skiing was introduced to North America with rope tows and grew into destination resorts driven by real estate deals. When the 2008 recession cratered real estate, ski resorts looked elsewhere for revenue. Vail introduced the Epic Pass in 2008. The Mountain Collective followed. As Vail bought up resorts, the Collective added new members—all in a race to create a season pass that sells to skiers who travel.

If mergers give skiers and riders more choices, what do resorts get? Most importantly, shared resources.

"The reason you do this is because you get scale," says Bruce Tracey, a professor of management at Cornell University. "At a strategic level, it makes sense if Aspen and KSL grow this out to compete, because there's really only one other player in North America."

When ski resorts team up, the customer base gets bigger—and so does the data stash. The more they know about your skiing vacation, the more they can customize the experience and increase loyalty. That partnership pays off in day-to-day operations, too. KSL and SkiCo could work together on information technology: smartphone app updates, online user interfaces, and e-commerce. If they decide conditions and timing are right for ticket and lodging discounts, they'll have an extended reach through social media, email, and push notifications to sell those deals.

A larger portfolio can also leverage better terms from vendors, so watch for KSL and SkiCo to invest in lift upgrades, more efficient snowmaking, and modern grooming equipment. A good product means more than just quality surface, though.

"What's so cool about the ski business is each resort has its own character," says KSL CEO Eric Resnick. "If you ski in West Virginia, Vermont, or Colorado, no two days are identical. I don't see that fundamentally changing."

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Competition could help ski culture at large, too. For decades, the U.S. population has increased but skier numbers have remained flat. If KSL, SkiCo, or Vail can attract new skiers with season pass price wars or splashy marketing, that's good for everyone. Especially independently operated ski areas close to urban centers with growing populations.

That's already happening across the Intermountain West. Loveland, an independent ski area 55 miles from Denver and in proximity to Vail-owned ski resorts in Summit County, just recorded its best season yet. And they got Forest Service approval to expand the lodge in their beginner area.

At Bridger Bowl, a nonprofit ski area located 20-minutes from Bozeman, Montana, skier days have increased by 30,000 over the last five years.

Even in a consolidated market, heritage brands can thrive, says Win Smith, president of Vermont's Sugarbush. He spent 28 years on Wall Street before buying a ski resort and feels bullish about the recent shakeup. "There's always room for a niche player," he says. "We have a good product that can't be taken away, and that's the mountain."

But a ski mountain needs snow. Town hills and owner-operated resorts with lean budgets will be vulnerable if a run of warm winters depletes cash flow. That's the final stage of an industry's life cycle: decline.

"Everybody forgets that nobody has anything to sell if it doesn't snow," says Bridger Bowl General Manager Randy Elliott. "Seeing things warm up as time goes on is not great for those of us below 8,000 feet."

Meanwhile, corporate players who diversified vast portfolios with zip lines, water parks, mountain coasters, and summer festivals will be positioned to survive without snow. Aspen SkiCo has a strong legacy of pro-environment business strategy. But that doesn't mean you should wait for our newest corporate citizen to storm D.C. and demand climate action. Ultimately, this comes down to the skier, and the choices we have to make: Next fall, will it be the Epic Pass, some form of the Mountain Collective, or the increasingly unique independent?