The news was in yesterday of one of the largest consolidation in the ski resort industry. Vail Resorts Inc. which already owns Vail and Beaver Creek amongst many other ski resorts have acquired Whistler Blackcomb Holdings for $1.06 (~C$1.4) biillion deal. In a news release by TSX-listed Whistler Blackcomb Holdings, “shareholders will receive, for each Whistler Share held, C$17.50 in cash and 0.0998 Vail Shares”, indicating a cash and share acquisition of this fabled ski resort. This deal values Whistler Blackcomb Holdings at roughly C$36 per share.
The deal is for Whistler Blackcomb Holdings which essentially owns 75% of the assets of Whistler Blackcomb as the remaining 25% is held by Nippon Cable and its affiliates.
The Big gets Bigger
Vail Resorts Inc. is probably already the largest ski resort operator in America if not the world. Over the last few years, Vail has made acquisitions such as consolidating Park City and Canyons in Utah, and even purchased Perisher Ski Resort in Australia. There is no doubt in its seemingly takeover of the ski resort world, and follows the American way of companies becoming bigger by M&A.
With the acquisition, Vail will operate 4 of 5 of the largest ski resort in North America based on skiable acreage, as it includes Heavenly Ski Resort in Lake Tahoe, Park City in Utah, Vail in Colorado, and Whistler Blackcomb in BC. There are other ski resorts like Big Sky in Montana and Aspen/Snowmass in Colorado that are independently owned though. And by comparison to some of the large ski areas in Europe, much of the resorts are quite small. However the large interlinked resorts in Europe might not be owned by the same entity, and that just means Vail is probably the single largest operator of skiable area on the planet.
For skiers, Vail has their own version of the Mountain Collective. Unlike Mountain Collective that brings together independently owned ski resorts, the Epic Pass includes days in all Vail-owned resorts. Starting for the 2017/18 ski season, Whistler Blackcomb is expected to join the Epic Pass, though Mountain Collective ski pass purchasers would still be able to access the ski resort for this 2016/17 season.
The purchase of Whistler Blackcomb by Vail might just stabilize ski pass prices in the resort since the new owners are expected to keep things steady for the first few years of ownership. Furthermore the current rates for the Epic Pass which grants unlimited access to Vail’s resorts retails for $809 (~C$1,060) and that is about 30% cheaper than what Whistler charges its unlimited season pass buyers for C$1,649. Though no word yet by Vail on whether Whistler Blackcomb will be incorporated into the Epic Pass, considering the 25% that would need to be paid to Nippon Cable and its affiliates.
Motivations for the M&A
This section will all be about the business side of things, so readers not interested should just skip through. Financially, the deal values Whistler Blackcomb in excess of $1.09 billion and that has got to be a record somewhere in terms of ski deal acquisitions. Compare this to the $182.5 million that Vail paid to takeover Park City Mountain Resorts in Utah and the deal seems large.
However, Whistler Blackcomb does hold its own in North America being the largest ski resort and having one of the best brand recognition amongst ski resorts. Furthermore, the increasing Asian skier population from Vancouver, Japan and Korea would be an asset to Vail in the long run.
Ownership of varied ski resorts across North America by Vail would also shield it from the variable climate experienced by smaller ski resort operators. In some seasons, certain areas might have exceptionally bad snow. Like in the 2014/15 season, many ski resorts around Seattle and Vancouver (Whistler Blackcomb included) had a very bad snowfall hurting business and reducing skier visits. By owning a variety of resorts spread across geographical regions, Vail can minimize its exposure to climate change risks.
With the US Dollar being higher than the Canadian dollar right now, it makes a lot of sense to purchase Canadian assets as well for Vail and what other better resort to buy than Whistler Blackcomb? (Even though Vail’s CEO refutes the claim that the purchase has nothing to do with the low Canadian dollar)
My Take on the Acquisition
Personally I am a bit sad to see Whistler Blackcomb being purchased. Though with the need for continuous investments to make it better, the backing of a resort operator like Vail should give it some sense of stability in the long run. Having stayed and skied at Beaver Creek (which is owned and operated by Vail), I was impressed at the facility and remarkable operations. Its other purchase of Park City also means Vail owns some of the more luxurious ski resorts. Thus I see more investment to make skiers feel more comfortable in the cold, with Whistler Blackcomb being geared to target more of the high end market.