Alterra Mountain Co. to spend $555M on improvements at Steamboat, Winter park, other resorts
The Denver Post
Alterra Mountain Co. plans to spend more than half a billion dollars on its 12 ski resorts in its first five years as a resort operator, including $130 million in a spending spree this year that includes a new gondola for Winter Park and a restaurant expansion at Steamboat Springs.
The five-year strategy for $555 million in improvements comes as Alterra Mountain Co. peddles its new Ikon Pass in hopes of replicating the success of Vail Resorts’ Epic Pass. Vail Resorts sold 750,000 passes last year, enabling the company to make $150 million in capital improvements at its 11 destination resorts this year.
Alterra just started selling its first Ikon Pass last week. So where’s this money coming from?
That would be the deep pockets of Denver equity fund KSL Capital Partners and the Crown family, which owns Aspen Skiing Co. The two partners joined last year to pay $1.7 billion for Intrawest’s stable of resorts and then bought California’s Mammoth Mountain and Utah’s Deer Valley.
“This is a very well-capitalized company with private investors,” said Alterra’ CEO Rusty Gregory, who spent 40 years working at Mammoth Mountain, starting as a lift operator and ending as an owner and chief executive when the California resort sold last year to Alterra.
“We are an operating company, so it’s really recurring earnings we are looking for. Those recurring earnings eventually at some level go back to shareholders, but if you look at the Crown family’s history, they buy and hold assets for a long, long time.”
‘Real Business People’
Lester Crown, the patriarch of the billionaire Crown family, bought Aspen Skiing Co. in 1985. The family also has ownership stakes in General Dynamics, Sara Lee and JPMorgan Chase & Co., the latter of which is leading the consortium of banks handling Alterra Mountain Co.’s roughly $1.2 billion in debt.
“They are real business people, and they spend a lot of attention on profitability. It’s not about having profits no matter what, but what the Crowns have done is take profits and invest it back into their assets and you will see Alterra doing the same thing,” Gregory said. “The whole idea is to invest in the resorts and make a profit doing that.”
The Alterra resorts are thirsty for investment after languishing under Intrawest, which was crippled during the recession by both the downturn in resort real estate and overwhelming debt.
“We are a very different company than Intrawest,” Gregory said.
The announced upgrades — a gondola replacing the Zephyr lift at Winter Park, a 72-seat expansion at Steamboat’s slopeside Bear River Restaurant, new lifts at Vermont’s Stratton and Quebec’s Tremblant, snowmaking improvements across several resorts and base-area improvements at California’s Big Bear — are the first step in catching up on more than a decade of lagging investment.
The half-a-billion in upgrades is earmarked for planning and mountain investment, not real estate. Alterra controls more than 1,100 acres of undeveloped resort-area real estate as part of its acquisition of Intrawest. Gregory said he expects any real estate projects would be financed separately from mountain improvements.
Adding extra room to a restaurant at the base of Steamboat might not sound like much, Gregory said, but it’s a start, and the company is directing “a significant amount of money” into untangling the decades of planning for the base area “to fix the mess that it’s become.”
The $28.2 million directed to Winter Park is the largest single-year investment in the City of Denver-owned resort’s history. The money will install a 10-person gondola and improve snowmaking.
“Getting $28 million in one shot is unprecedented for us,” said Winter Park spokesman Steve Hurlbert.
Alterra’s chieftains all spent their careers in idiosyncratic mountain towns. They are aware of the specific cultural, economic and social challenges that come with big projects in remote resort communities. Spurring growth can be problematic in Colorado’s resort communities, where unemployment is at all-time lows and affordable housing is scarce.
There are opportunities in those challenges, Gregory said, noting, for example, that workers in tight labor markets can earn more and then spend more at local businesses. Alterrra wants to take a holistic approach to its plans, soliciting input from communities and resorts, Gregory said.
“The whole strategy of the company is kind of built on the ability to create a sustainable enterprise,” Gregory said. “Sustainable from an economic standpoint, from a cultural standpoint in our small towns and from a resource standpoint.”
The valley’s commercial and residential property markets are similar in some ways — availability is tight and nothing is what you’d call “cheap.”