Vail Resorts to buy Kirkwood in Calif.
February 22, 2012
VAIL, Colorado – The value of Vail Resorts’ Epic Pass just got a whole lot sweeter with Wednesday’s announcement that the company is set to acquire Kirkwood Mountain Resort this month.
Vail Resorts announced that it has entered into agreement to acquire the resort for a purchase price of about $18 million. The purchase also includes undeveloped sites at the center of the base area, which are zoned for residential and commercial development, according to a company statement released Wednesday.
Vail Resorts Chief Executive Officer Rob Katz said the move represents a desire to essentially recreate the success seen in Colorado.
“What we’re looking to do is to provide the best resorts at a great value, just like we’re doing in Colorado.” Katz said Wednesday. “We feel like that strategy has been incredibly successful for us in Colorado, so we’re replicating that for the northern California market.”
The acquisition, while not yet final, means Epic Pass holders now have access to seven Vail Resorts ski areas – Kirkwood, Northstar-at-Tahoe, Heavenly, Vail, Beaver Creek, Breckenridge and Keystone – as well as affiliated Arapahoe Basin, for a total of eight resorts. Heavenly and Northstar pass holders have immediate access to Kirkwood and vice versa, as of Wednesday’s announcement.
Kirkwood claims the most snow out of any Lake Tahoe-area resort, with an average of 472 inches annually. The mountain has 2,300 acres of terrain – about 500 more acres than Beaver Creek – and has 2,000 feet of vertical drop.
Katz said the terrain at Kirkwood includes a lot of high alpine terrain, bowls, glades and wide-open skiing.
“The skiing at Kirkwood is amazing,” Katz said. “It’s high alpine, incredible, exhilarating terrain. It gets the most snow of any of the Tahoe resorts. We felt like when you look at Northstar and Heavenly, Kirkwood complemented them well.”
Katz said Kirkwood will be the company’s smallest resort in terms of skier days, but said that doesn’t mean it’s not a “very compelling opportunity for our guests.”
JMP Securities released a note to investors Wednesday following the announcement that says the acquisition should increase earnings per share for Vail Resorts stock, as well as better position the company in the Lake Tahoe region.
“Still, the incremental EBITDA (earnings before interest, taxes, depreciation and amortization) from Kirkwood of $2 million-$3 million will not move the needle much on a company projecting to earn $233-243 million of annual EBITDA,” wrote Will Marks, managing director at JMP Securities and a Vail Resorts analyst.
The note goes on to say that the addition of Kirkwood to the Epic Pass “should drive some amount of increased purchasing.”
“Also, Vail’s general marketing expertise, versus an owner of just one resort (the seller of Kirkwood), could lead to more ticket sales,” Marks wrote.
Pre-season pass sales have proved exceptionally valuable for the company in recent years. Thirty-five percent of Vail Resorts’ lift ticket revenues are received before the majority of the ski season has occurred, which the company says mitigates exposure to weather-sensitive guests, drives strong customer loyalty and generates additional spending.
Reaction via Facebook was generally enthusiastic, although a few loyalists to the mom-and-pop nature of Kirkwood expressed some dissatisfaction.
In Eagle County, Sunny Koch wrote that Kirkwood is her favorite Tahoe-area resort.
David Proctor, of Eagle, said “it would seem that the healthier the company is, the more likely it is to thrive. That can only be good for Eagle County, right?”
Katz said that destination business to the Lake Tahoe region in general is “nowhere near as developed as in Colorado,” adding that Vail Resorts hopes to attract more destination business there. Destination guests – guests who fly in from out-of-state or internationally – typically stay longer and spend more and Vail Resorts has made it no secret that destination business is its most coveted.
Katz said the company’s presence in Lake Tahoe brings coordinated sales and marketing efforts that would help access more of that destination business.
Katz said there are many development opportunities at Kirkwood that Vail Resorts is committed to in the future, but said that development will depend on the real estate market.
“We believe there’s nice potential to develop the resort,” Katz said. “The focus now is about the skiing.”
There are no immediate plans for upgrades such as high-speed chair lifts or new on-mountain lodges, though, Katz said.
The acquisition news comes just a week after Vail Resorts announced a restructuring of its executive management, which included the addition of a president-international position that valley resident John Garnsey will assume. Garnsey said of the new gig that it could mean international acquisitions in the future, adding that he has been spending a lot of time in Japan, China, Europe and South America over the last year and a half.
Community Editor Lauren Glendenning can be reached at 970-748-2983 or firstname.lastname@example.org.