Corporate Skiing

Come together, the Beatles once urged famously, and now that imperative is applying to North American ski resorts in a big way. Corporate consolidation – the merging of major ski resorts into large, well-funded corporate families – is booming, and Tremblant is along for the ride. The recent acquisition of Tremblant, by the newly formed partnership of KSL Capital Partners and Henry Crown & Company (HCC) is just one piece of a much bigger consolidation picture.

Vail Resorts, now comprising 15 resorts, and , KSL-HCC are the biggest kids on the corporate block, going mano a mano in sweeping iconic resorts across the continent under their corporate umbrellas. The US$1.5-billion purchase of Intrawest, with Tremblant as a part of the package, was the first, blockbuster move for the KSL-HCC team. More recently, Deer Valley in Utah was added to a portfolio that now includes, among others, Steamboat, Mammoth Mountain, and Squaw Valley.

©Tremblant

A little historical perspective might help, because there is a precedent for this trend. An initial wave of consolidation rolled through the North American ski-resort world in the 1990s. The American Skiing Company, based in Sunday River, Maine, began an acquisition spree that by the end of the decade had netted 10 resorts. It was a boon for skiers; much-needed new lifts and snowmaking went in at Sugarbush in Vermont, for example, and the Canyons in Utah underwent a transformational makeover.

But by the end of the decade, ASC, a victim of self-inflicted corporate bloat, couldn’t meet its debt obligations. One by one, resorts were sold off, and ASC folded. In short, corporate conglomeration, ASC-style, didn’t work, collapsing after an initial burst of positive activity.

Another big player of that era was the multi-resort conglomerate that was Intrawest, which bought Tremblant in 1991. Pouring hundreds of millions of dollars into

new developments both on and off the mountain, Intrawest spearheaded the reinvention of Tremblant. A sleepy little Laurentian ski area morphed into an internationally acclaimed destination resort.

The overall result: better lifts, better lodging and dining, better skiing. More visitors helped local businesses thrive. Who could complain?

But Intrawest ran into a financial wall, too. The initial capital infusion was empowered by filling a real-estate vacuum at the base of the mountain, says Roger McCarthy, who was then Tremblant’s CEO. It was a “one-time” opportunity, says McCarthy, that proved unsustainable over time. After Tremblant’s base village was fully built, real-estate revenues dwindled. Fortress Investments arrived in 2006 for financial support, but that money flow eventually turned into a trickle, too.

©Tremblant

So the track record for corporatization is shaky at best. And it might all seem Wizard of Oz-like stuff – mysterious men behind a giant corporate curtain making giant corporate decisions. How will the new era of corporate consolidation, and KSL-HCC’s acquisition of Tremblant, filter down to skiers and riders? Will it be a magic antidote to what many Tremblant locals perceive to have been a decade of indifferent ownership or outright neglect?

“Underneath the covers, you notice all the little details,” says Pierre Goyette, who has been skiing at Tremblant for 20 years. Goyette’s take: Lifts have grown old, and, a new trail hasn’t been cut on the mountain in 15 years. Uphill lift capacity and on-mountain restaurant space haven’t kept pace with increased skier traffic – often more than 10,000 skiers a day during busy periods. The food quality isn’t up to par with what’s offered at other major resorts. Just one man’s opinion, perhaps, but it is shared by many Tremblant regulars.

It is still too early to tell how the new ownership might address such issues. According to Loryn Kasten, a spokesperson for KSL-HCC -owned Steamboat, the plan for this season is that “everything at the resorts is going to stay the same.” Executives at KSL-HCC are going to huddle and “get to know the products (resorts) and the needs they have,” says Kasten, before making any changes.

That go-slow approach might disappoint those looking for a quick remedy. But McCarthy urges Tremblant skiers to keep the faith. KSL-HCC, he says, are both led by “very good ski people” with an understanding of both skiing and the financial sides of the business. They are not, he says, “investors who just want to pump it up and sell it.” If so, that’s good news for skiers, and even Goyette says, “I am thrilled that we are finally owned by people who understand skiing.”

One possible concern: KSL-HCC might recast its resorts under the imprimatur of a rigidly homogeneous corporate brand. But Kasten insists that “there is an emphasis on maintaining the identity – the vision and master plan – of each resort.” Mary McKhann, editor of The Snow Industry Letter, thinks that’s critical. As much as anything, skiers are looking for “authenticity,” says McKhann. “Differentiating the resort experiences is really important.”

How the parent company chooses to distribute its capital among its resorts, however, remains to be seen. McCarthy likens Intrawest meetings in the 1990s to “beauty pageants,” where the various resort managers would parade in front of the corporate bigwigs in hopes of getting noticed and having money directed their way.

The 1990s real-estate boom that funded Tremblant’s initial development may be gone as a business model. Vail Resorts is now relying heavily on selling hundreds of thousands of moderately priced season passes rather than on real-estate sales. Will KSL-HCC counter with a similar concept? Still unknown. Stay tuned.

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