New Whistler resort owner aims to make skiing more affordable
August 9, 2016 7:01 AM PDT
Whistler-Blackcomb Holdings will be purchased by Colorado-based Vail Resorts Inc. under a friendly deal announced this morning by the companies. Roundhouse Lodge on Whistler Mountain at Whistler Blackcomb Ski Resort is shown in this file photo.
Season ski pass holders at Whistler Blackcomb can expect to see a dramatic cut in costs after Vail Resorts’ $1.4-billion purchase of the B.C. resort on Monday.
Vail Resorts says it will slash the price of a Whistler season pass starting in 2017 — normally around $2,000 Cdn — to roughly half that, and fold it into Vail’s popular 13-resort Epic Pass, which currently sells for US$809.
The rewriting of season pass holder fees is one of the more immediate consumer benefits of a friendly cash-and-stock takeover of Whistler Blackcomb, the crown jewel of North America’s ski resorts, by Colorado-based resort giant Vail Resorts. It is the first foray into Canada by Vail, which in recent years has been on a buying spree and now owns nine other mountain resorts and two ski areas in the U.S. and Australia.
In a path away from that taken by other periodic U.S.-based owners of Whistler Blackcomb, Vail said it will significantly invest in the property, expanding its attraction to the Chinese market ahead of the 2022 Beijing Winter Olympics, as well as attract new visitors from Latin America.
It comes only months after the provincial government approved of Aquilini Investment Group’s plan to build a $3.5 billion ski resort at Garibaldi, a proposal opposed by Whistler Resort Municipality and Whistler Blackcomb.
In purchasing Whistler Blackcomb, Vail Resorts said it plans to carry on the company’s recently-announced $345 million Renaissance plan to expand the resort’s four-season market. It did not say how much it will invest in Whistler beyond the multi-year Renaissance plan, which includes a covered water park.
The change in season pass prices, which will not come into effect this year, is part of Vail’s North American effort to make skiing more affordable and attractive. The company has also had lots of evidence to show a lower overall pass, coupled with access to multiple resorts, is good for the company’s bottom line.
“We believe with the price being lower and all the benefits added, we can really expand our base,” Rob Katz, Vail’s CEO said Monday. “It is true that for a handful of people they are going to get a great discount but for so many other people they are going to buy a season pass when they ordinarily wouldn’t. We’ve seen this broaden and make much more accessible the opportunity to ski at the best value possible.”
When Vail first opened its Epic Pass program in 2008, a season pass at Vail Mountain sold for US$1,500. The company lowered it to $600, and watched as the number of season pass holders went from 40,000 to more than 550,000 today.
The purchase of Whistler Blackcomb, one of North America’s premier ski resorts, came after a concerted courtship by Vail in recent months, while the company was working on the Renaissance project and trying to also write a new master development plan with the province and Squamish and Lil’wat First Nations.
“We were focused on our business and working with the province and First Nations communities on our master development agreements and we really weren’t interested at the end of the day in terms of accommodation with Vail,” said Dave Brownlie, Whistler Blackcomb’s CEO. “But they were persistent and they kept calling and at the end of the day they put a very attractive offer on the table.
Both Vail and Whistler Blackcomb are publicly-traded companies. Under the scheme Whistler Blackcomb shareholders are being offered $17.50 per share in cash and 0.0975 shares of Vail Resorts common stock for each of their shares, for a total of $676 million in cash and Vail stock worth about $715 million. When the deal closes this fall, Whistler Blackcomb shareholders will own approximately 10 per cent of Vail’s shares.
Whistler Blackcomb shares closed in Toronto on Friday at C$25.14 — giving it a market value of about $960 million before Monday’s announcement. Shares of Whistler Blackcomb jumped to an all-time high when markets opened Monday and closed at a record $36.63. In New York, Vail Resorts stock also hit an all-time high, closing at US$155.46.
Under the deal Brownlie will remain as the chief operating officer for Whistler Blackcomb, which will keep its local name.
While season pass holders will see their costs slashed dramatically, the companies are not expecting to significantly change other ticket frequency and pass programs.
“We’ve got to walk through all our products and align them, but I think our frequency program will highly likely stay similar to what it is today,” said Brownlie.
How Vail’s expansion will affect the proposed Garibaldi resort is unclear. But Jim Chu, Aquilini’s vice-president of special projects, said it won’t affect his company’s plans.
“We believe that further investment and improvements by Vail Resorts to the local all-season resort industry is positive. The enhanced competition level will benefit workers, skiers, summer visitors, and will increase tax revenue,” he said.
“Our plans for the Garibaldi at Squamish resort have not changed. When we become operational, we will complement Vail Resort’s exciting new acquisition and the Province of B.C. will benefit from a cluster of destination resorts.”
Whistler Mayor Nancy Wilhelm-Morden said she’s optimistic the sale will be good for Whistler, but is watching it carefully.
“It opens up so many issues and questions, not the least of which was that Vail Resorts was one of our primary competitors, so how that is going to unfold in the future is going to be very interesting,” she said.
“Whistler Blackcomb has had many different ownership models over the years, ranging to Backcomb being owned by Aspen Resorts years ago. But Whistler Blackcomb has always come through as being a global leader the ski resort business.”
But former Whistler mayor Ken Melamed, now the president of the Green Party of Canada, sees a potential downside. Recalling how New York hedge fund manager Fortress Investments stripped value out of the company after it took over in the mid-2000s, Melamed isn’t sure having an international owner is good for Whistler Blackcomb.
“We’ve been through this before, where the company was owned by a variety of large corporations that did not have local priorities,” he said in a telephone interview from Ottawa. “Every time Whistler Blackcomb has been owned by a large corporation, a large part of the profits have gone to pay off the borrowing necessary to pay off the purchase, and therefore have left the community.”
But Katz said Vail’s investment in Whistler Blackcomb will not be financed by debt. He noted Whistler Blackcomb is already a public company with many U.S.-based shareholders.
“It is important to understand we are not an investment firm. We are in the ski business and it is all we do,” Katz said. “If you look at our track record, we have never sold a ski resort in our 50-year history and we have been the leader, truly, in all of North America in investing in our resorts.”
For Whistler Blackcomb shareholders, the Vail acquisition is seen as giving them an attractive pay off for their patience, as well as attaching the resort to a bigger source of capital for its expansion plans.
Whistler Blackcomb raised $300 million, selling stock valued at $12 a share when the company was taken public again in 2013.
Vail’s offer represents a 43-per-cent premium to their last close Friday on the Toronto Stock Exchange, and by the end of Monday trading Whistler Blackcomb’s share price was up 46 per cent to $46.63.
“Why Whistler is selling, is because they got a great price,” said Ben Cherniavsky, an equity analyst who covers the company for Raymond James. “It could have taken years and millions of capital to try and get their share price to $36.”
And Brownlie said the Whistler resort welcomes the increased financial strength.
“We’ve always been a successful company on our own, and this is just like adding a bigger engine to the machine to allow us more strength and stability,” Brownlie said to Bloomberg News.
In Return, Cherniavsky said Whistler Blackcomb gives Vail Resorts added diversification for its portfolio.
“Arguably it will be the crown jewel,” Cherniavsky said in an email.
With a file from Derrick Penner
A timeline of the development of Whistler Blackcomb
Whistler Blackcomb Holdings, the owner of the Whistler Blackcomb ski resort in B.C., is being purchased by Colorado-based Vail Resorts. Here’s a timeline of the development of Whistler Blackcomb:
Early 1920s: Before skiing, fishing lured tourists to the area, making Rainbow Lodge on Alta Lake the most popular summer destination west of the Rocky Mountains.
1960: A group of Vancouver businessmen formed Garibaldi Lifts Limited to develop an alpine ski area on London Mountain.
February 1966: The mountain opened for skiing with a four-person gondola, a double chairlift, two T-bars and a day lodge. London Mountain was soon renamed Whistler Mountain in recognition of a local alpine marmot that makes a whistling sound.
Dec. 6, 1980: Neighbouring Blackcomb Mountain opened for business.
March 1997: Whistler Mountain Ski Corp., the owner of Whistler, and Blackcomb owner Intrawest Corp. merge.
Spring 2000: A new village at Whistler Creekside begins development.
December 2008: A gondola began operating to connect Whistler and Blackcomb mountains.
February 2010: Whistler Blackcomb is one of the venues for Vancouver’s 2010 Olympic and Paralympic Winter Games
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