In Europe, Vail Resorts finds something similar to its marquee US resorts

Like Park City and Canyons, or Beaver Creek and Arrowhead, Andermatt and Sedrun’s new connectivity is expected to bolster revenue

A view of terrain on the Gurschen above Andermatt in central Switzerland, in 2007. Vail Resorts has entered into an agreement to purchase a majority stake in Andermatt-Sedrun Sport AG from Andermatt Swiss Alps AG, marking the company’s first strategic investment in a ski resort in Europe.
Urs Flueeler/KEYSTONE via AP

In Switzerland, Vail Resorts has found something similar to some of its United States properties in the recently linked ski areas of Andermatt and Sedrun.

Vail Resorts on Sunday announced it is acquiring a 55-percent ownership stake in Andermatt-Sedrun Sport AG, a massive ski resort which is the product of two existing ski areas recently joined. When the deal is finalized later in 2022, it will be Vail Resorts’ 41st ski area and its first in Europe.

The effort to link Andermatt and Sedrun began in 2007 with investment from Egyptian billionaire Samih Sawiris, whose Swiss-based firm Orascom Development put up “very substantial financial backing to make the vision become a reality,” Lux magazine reported in its winter 2019 issue.

“With the completion of this link, we connect two cantons, two languages and two cultures,” Sawiris told Lux. “The region from Andermatt to Sedrun, with the connection to Disentis, which will be in place from summer 2019, will be a highlight of the Swiss winter-sports offer.”

Vail Resorts called the project “one of the most ambitious resort development opportunities in Europe,” and said Sawiris invested more than $1.3 billion in Swiss currency into the surrounding base area and over $150 million into the ski resort.

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“The extensive investments that ASA and the Sawiris family have made in both the base area and the mountain have created a high-end experience with significant capacity for growth from guests from Switzerland, the United Kingdom, other parts of Europe and around the world,” said Vail Resorts CEO Kirsten Lynch in a statement announcing the news.

For Vail Resorts, Sawiris’ moves should look familiar. In acquiring Park City and Canyons in 2014, Vail Resorts’ first major capital project involved combining the two ski areas, a move the company perfected two decades earlier after it acquired Arrowhead resort and joined it with Beaver Creek via chairlifts in Bachelor Gulch.

Vail Resorts’ growth from becoming the owner of one ski area to the owner of many started with some of those projects. In 1980 the company, then called Vail Associates, had been working for nearly a decade to open Beaver Creek.

Sports Illustrated, in a 1980 story about the new opening, posited that Beaver Creek “could be the last resort” in the U.S., saying “there is no guarantee that there will be another laid out on the scale of Beaver Creek — a first-class ‘destination resort’ to rival the country’s best and biggest: Aspen, Vail, Sun Valley.”

A snowboarder glides through powder on the Gurschen glacier above Andermatt in central Switzerland. Vail Resorts has entered into an agreement to purchase a majority stake in Andermatt-Sedrun Sport AG from Andermatt Swiss Alps AG, marking the company’s first strategic investment in a ski resort in Europe.Urs Flueeler/KEYSTONE via AP

And Sports Illustrated has been proven correct. In recent decades the ski industry in the U.S. has had a much easier time expanding the boundaries of existing ski areas than opening new ones.

After opening Beaver Creek, however, expansion of the ski area proved to be a difficult proposition for Vail Associates; the company filed for bankruptcy in 1991 and was taken over by Apollo Ski Partners in 1992. One of the new company’s major projects was to purchase nearby Arrowhead ski area and combine it with Beaver Creek via new lift development in Bachelor Gulch.

The new company was “charging ahead,” as noted by Vail founder Pete Siebert in his book “Triumph of a Dream.” The benefits weren’t only being realized by skiers hoping to move farther via chairlifts — more profits were being ushered in, as well.

Years later, part of the benefit of combining Canyons and Park City would also be the generation of more revenue for the company, then-CEO Rob Katz told the Salt Lake Tribune in 2014.

“We expect to generate significant additional EBITDA growth as we implement our plans to combine the ski experience of Park City Mountain Resort and Canyons into the largest mountain resort in the United States with over 7,000 acres of skiable terrain,” Katz said.

“We believe the combined resort, with an unparalleled location in Park City, will attract destination skiers from across the United States and around the world and will drive season-pass sales, visitation and ancillary business,” he added. “This is truly a transformative acquisition for Vail Resorts.”

Today, as Vail Resorts prepares for another transformative acquisition in entering the European ski market, the company is once again eyeing the profit potential of two newly combined ski areas.

“Vail Resorts anticipates significant EBITDA growth over time from the expansion of the village bed base, the mountain investments and capacity expansions, and the inclusion of the resort on the Epic Pass products,” the company said Sunday in announcing the new deal with Andermatt-Sedrun Sport AG. “Subject to the timing of capital project approvals and completion, Vail Resorts anticipates that with its CHF 110 million investment and the inclusion on the Epic Pass, the resort is expected to generate over CHF 20 million of annual EBITDA in five to seven years, including the impact from incremental Epic Pass sales.”

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