Ski resort buying binge over for Aspen Skiing Co.?
July 30, 2017
As the owners of Aspen Skiing Co. near completion of purchasing Intrawest Resorts LLC and Mammoth Resorts in the next few weeks, it remains to be seen if the buying binge is over.
Steamboat and Mammoth ski areas are the big prizes in the two acquisitions orchestrated by affiliates of Aspen Skiing Co. and KSL Capital Partners, which owns Squaw Valley Alpine Meadows. But Aspen Skiing Co.’s development of a Limelight Hotel in Ketchum, Idaho, has fueled speculation among some observers of the ski industry that Skico covets Sun Valley as well.
“That rumor has been out there for a long time,” Skico president and CEO Mike Kaplan said last week. There is no purchase being pursued, he said.
Skico spent $70 million acquiring land and building a 99-room hotel at the base of the iconic ski area. The Limelight in Ketchum opened last ski season. The project also has 14 condominiums.
Aspen Skiing Co. President and CEO Mike Kaplan said Skico's business model for the Limelight in Ketchum never depended on a bigger presence in Sun Valley.
A source in the Aspen hotel industry, who didn’t want to be identified by name because of business relations with Skico, said that size of investment only makes sense if Skico operates the ski area and has access to the customer base. It can help drive business to its hotel, the source said.
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But Kaplan said Skico’s business model for the Limelight in Ketchum never depended on a bigger presence in the ski resort. The money raised by the sale of the condos underwrites the construction of the project and reduces the amount of invested capital, he said.
So far, 11 of the 14 condos have sold at prices ranging from $1.5 million to $3.9 million, according to Don Schuster, Skico vice president of hospitality.
Ron Throupe, associate professor at the Burns School of Real Estate and Construction Management, Daniels College of Business at the University of Denver, said it is plausible that Skico saw an opportunity to open a hotel in Ketchum without a grander design of buying the ski area.
If Skico has what’s called a finance-free cash flow — more money than it needs for its operations — that might have fueled its interest in looking at other investments, he said.
“If a corporation doesn’t have local opportunities for whatever they’ve done in the past, they’re going to have to put their money to work some place else. That’s a possibility of what’s going on,” he said.
“What are they familiar with? They’re familiar with ski resorts,” Throupe added.
Since making its move into Ketchum, Skico has gotten very busy. It teamed with KSL and East West Partners earlier this year to acquire Snowmass Base Village. The partnership has embarked on a $600 million development push that includes a Limelight Snowmass.
Kaplan noted that Sun Valley and Aspen Skiing Co. are rare in the ski industry in that they are among a handful of family-owned resorts. The Crown family of Chicago owns Skico. The ownership will remain separate from an affiliate that will own the ski areas acquired from Intrawest and Mammoth.
Sun Valley is privately owned by the R. Earl Holding family, which also owns Sinclair Oil Corp. The family owns Snow Basin resort in Utah and hotels in various locations.
Kelli Lusk, Sun Valley’s public relations and communications manager, said Earl Holding purchased the resort in 1977. He was credited with restoring the luster to the resort. Holding died in 2013 at the age of 86. His family retains ownership of Sun Valley.
“There are no plans to sell it at this time,” Lusk said in an email.
Meanwhile, the Intrawest and Mammoth deals are progressing toward closing this quarter, Kaplan said. Skico chief operating officer David Perry left his post to become a consultant for the Crowns and KSL on the new venture. He also will have a role with the new company once the acquisitions are completed.
Perry said recently that the purchases could be completed in early August.
By acquiring Intrawest, the affiliates of Skico and KSL will obtain Steamboat, Canada’s Tremblant and Blue Mountain, Stratton in Vermont and Snowshoe Mountain in West Virginia as well as a heli-ski business in British Columbia. Intrawest also holds a long-term operating agreement for Winter Park resort in Colorado. Skico and KSL will take on Intrawest’s debt, boosting the deal to $1.5 billion.
The four California resorts owned by privately held Mammoth Resorts are being sold for an undisclosed amount.
KSL is bringing two resorts it already owns to the table. Squaw Valley and Alpine Meadows will be part of the new company.
“We don’t anticipate any of what I would call customer-facing changes for this year,” Kaplan said at an event in Snowmass Village this week. He also assured an audience that the purchases of all the ski resorts wouldn’t deflect Aspen Skiing Co.’s focus from the Roaring Fork Valley and specifically Snowmass Base Village.
“We’re staying totally focused and grounded here,” Kaplan said.
However, he added that Skico officials are “excited” that Perry is joining the new company, which hasn’t been named yet.
“He’s going to bring what we call our DNA and our approach into that new company and allow us to stay here and focus on what we’re doing,” Kaplan said.