Vail Resorts gets strategic

BROOMFIELD — Vail Resorts Management Co. continued its pattern of aggressive acquisition last year, acquiring Australia’s Perisher Ski Resort for $135 million and reporting revenue of $1.4 billion for its 2015 fiscal year, up 11.6 percent.

Net income quadrupled compared with the previous year, to $114.8 million from $28.5 million.

Broomfield-based Vail Resorts has been on an acquisition binge, including Park City Mountain Resorts, which was acquired for $182 million last year — despite a lack of snow for its three California resorts near Lake Tahoe.

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During an investor conference call, Vail CEO Rob Katz, who has said the Perisher acquisition was largely completed to drive Australian ski visits to America, was also quick to note that sales of the company’s Epic Pass increased 22 percent to $37.1 million.

“With a strong U.S. economy and robust high-end consumer demand for ski vacations, we are continuing to leverage our network of vertically integrated resorts and sophisticated marketing to drive guest spending,” Katz said in the teleconference.

But is Vail, which some people might perceive as the Beast That Ate the Ski Industry, somehow able to buck the trend of resort earnings depending upon snowfall? Perhaps, but most experts still point to snow as being the most important driver of visits to other resorts.

“The biggest thing is still going to be the weather,” said Michael Berry, president of the National Ski Areas Association in Lakewood.

Or as Jennifer Rudolph, communications director for Colorado Ski Country USA, put it:

“A good snow base will trump anything, from the economy to gas passes,” Rudolph said. “The packages create a nice incentive, especially for early season booking, but snow is still the biggest driver.”

Vail has certainly helped raised the stakes in the industry, both with its aggressive acquisition and annual ski-pass sales. But industry experts note that those moves, while notable, are not necessarily unique in the industry.

“The industry has always had an element of consolidation,” said Berry, noting the American Ski Co., which owned a number of eastern U.S. resorts as well as the Canyons in Utah and Steamboat before its dissolution in 2008. “Whether it’s Vail, Intrawest or Powdr, it’s been a part of the fabric of the industry going back 25 years.”

What is a little different today is that Vail is apparently offering its Epic Pass across all of its resorts. But what’s also clear is that those sales will be challenged by an increasingly diverse set of offerings from its Colorado competition, many of which are combined offerings from multiple independent resorts.

“We’re fortunate in Colorado in that we have 500,000 active skiers and snowboarders, and that’s a group that’s very savvy about what’s happening in the Colorado ski industry and resorts,” Rudolph said.

Colorado resorts, since the advent of the Buddy Pass in the 1990s, have been on a rather interesting path: raising single-day passes to rather incredible rates, while creating more and more affordable and varied annual passes.

Nate Fristoe, director of operations at Boulder’s RRC Associates, said it’s a bit of a “carrot-and-stick” approach, but also an important factor in maintaining the overall population of active skiers, which has been about 10 million annually for the last 15 years.

“Colorado is kind of the poster child for that,” said Fristoe, whose consulting firm is used by some 85 resorts around the nation. “Colorado resorts have had the foresight in getting very aggressive in addressing that (maintenance of the skier population), and I think they’ve been exceptionally creative there.”

Berry noted that annual pass discounts work best for resorts near large urban areas, such as Colorado’s Front Range, where the loss at the ticket stand is offset by the sheer number of visits. While a relatively flat skier and snowboard population may not seem to be great news for the industry, Berry said it’s fairly outstanding compared with other sports, such as golf, which has lost 2 million active players since 2003 — a 17 percent decline.

That brings up the paradox: How does an industry that hikes its prices aggressively attract new participants?

That’s a question the industry is addressing in a big way, Fristoe said. Many resorts have programs for fifth- or sixth-grade students to participate for relatively affordable, sometimes free, programs, and there are discounts available for families who bring their children into ski schools, as well.