Since Vail Resorts Inc. bought Whistler Blackcomb for US$1.1-billion in 2016, it has faced ire from some locals who watched Canada’s iconic winter resort subsumed by the biggest operator of ski areas in the United States.
Some skiers in Whistler and Vancouver felt Vail made wealthy destination skiers its main priority while ignoring people from the region and cutting popular programs. But as Vail has struggled to win over some in British Columbia, the acquisition has helped propel the company, which started on Colorado’s Vail Mountain in 1962 and went public in its current incarnation in 1997. Two winters of record results on the mountains at Whistler and Blackcomb have buoyed Vail’s overall results, helping to make the company an outlier in an industry that grapples with unpredictable weather and flat customer growth.
“It has such a huge presence, both of course in Canada but around the world and in the United States,” Vail chief executive Rob Katz said in an interview last week after a luncheon at the Greater Vancouver Board of Trade. “It is the No. 1 resort for a lot of reasons.”
Skier visits in the United States are down about 10 per cent from a peak seven years ago and the number of skiers and snowboarders is the same as it was two decades ago. Inconsistent snow conditions and aging baby boomers are two primary challenges. Yet Vail, with a market capitalization of US$12-billion, has been a hit on the stock market, where ski companies often struggle. Since Mr. Katz became CEO in 2006, Vail shares have soared nearly 800 per cent, while the U.S. market over all has climbed about 125 per cent. About half of Vail’s gain has come since the Whistler acquisition.
Mr. Katz has a reputation for jarring action. He started as CEO of the company when he was 39; Vail owned five resorts, four in Colorado and one near Lake Tahoe. On his first day, Mr. Katz told workers at company headquarters near the base of Vail Mountain that the office would be relocated two hours east to a suburb of Denver, with access to more workers and an international airport. It was a physical way to represent Mr. Katz’s global ambitions for the ski brand – he has likened it to Four Seasons Hotels Ltd., which is headquartered in Toronto rather than on the Caribbean island of Nevis where it has a resort.
In 2008, Mr. Katz introduced what Vail calls its Epic Pass, a substantially discounted season pass that provides access to all Vail resorts. Mr. Katz’s thinking was that if he could entice more skiers to buy an advance pass, he would lessen Vail’s exposure to the financial hit of a winter with poor snow. A tough winter can cut visits by one-sixth.
As Vail has expanded, the pass, which today costs US$929, became more valuable for skiers and the company. It now owns 18 ski areas, from Stowe in Vermont to Perisher in Australia. Analyst Brett Andress of KeyBanc Capital Markets estimates Vail will have more than 800,000 Epic Pass holders this coming winter, up from 500,000 three winters ago.
Geographic reach also bolstered Vail’s protection against dry winters.
In 2016-17, the winter after Vail bought Whistler Blackcomb, skier visits dropped 5 per cent at Vail’s U.S. resorts, but Whistler Blackcomb had a record of more than 2.2 million visits – to push Vail’s total to 12 million skier visits from 10 million a year earlier. This past winter, Vail cited “excellent conditions” at Whistler Blackcomb as a reason why total skier visits had risen 2 per cent, even with a lack of snow in places such as Park City in Utah.
As Whistler Blackcomb delivers for Vail, the company works to rehabilitate its reputation among people in B.C. In Vail’s push to get people to buy season passes – whose price was lower than previously at Whistler Blackcomb – it eliminated other programs including a popular prepaid three-day option. Vail also made single-day tickets more expensive.
After the criticism, Vail introduced a two-day option, and elementary school kids get five free days per winter. Vail is also spending US$52-million on three new lifts.
The changes have not yet improved Vail’s local reputation, a situation it has encountered at many of its resorts. At the Vancouver board of trade last week, one audience member asked about the cost of skiing and stated, “It seems like Whistler has become unaffordable for regular [Vancouver-area] families.”
Mr. Katz believes Vail will win over skeptics at Whistler Blackcomb, like he said it has at Park City.
“They won’t be viewing it that Whistler Blackcomb was subsumed into Vail Resorts,” Mr. Katz said. “They’re going to see that Whistler Blackcomb is leading Vail Resorts.”
Meanwhile, Vail is expanding further. In June, it bought four more ski areas in the U.S. Bigger future moves could come overseas. Vail already has partnerships with icons of the Alps such as the Arlberg in Western Austria and Tignes-Val d’Isère in France.
“There are resorts in Europe that could be quite impactful for us, and in Japan, and ultimately in China,” Mr. Katz said.