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Climate change could turn the ski industry into the equivalent of a melting ice cube. But until then, Wall Street is determined to get as much cold hard cash off the slopes as it can.
Earlier this week, Vail Resorts settled a labor dispute with the city’s Professional Park Ski Patrol Association, a union that represents workers at a Utah mountain controlled by publicly traded Vail Resorts. Social media over the holidays was filled with images of long lines and disgruntled Park City skiers suffering through understaffed facilities.
Like Park City’s towering Jupiter Peak itself, the quaint structure of the ski industry has been carved over time. Once an industry of independent operators catering primarily to middle-class skiers, the US market is now dominated by two players – Vail and Alterra Mountain.
Each has created ski resorts across America to create integrated national networks. Vail Resorts now has about 40 locations in North America and even a few in Europe and Australia. Its current form can be traced back to a leveraged buyout organized by Apollo Global Management more than 30 years ago.
The ski duo’s main strategy is to push skiers away from day-fee lift tickets and into season “passes.” They also push expensive extras from equipment rental to food and accommodation. For the well-heeled power user, the merger may make sense. But increasingly even wealthy Americans are realizing that it’s cheaper to book European ski tours than to fly to the Rockies.
Wall Street logic is pretty solid. Revenue based on daily skiers is erratic given the variability of weather conditions, a risk that has been exacerbated by a warming climate. Vail’s roughly $1,000 season pass, known as an Epic, provides income. So is the Ikon card offered by Alterra, which is held by private equity firm KSL Partners. Mirrors accounted for a quarter of Vail’s revenue in 2008; now it is 65 percent.
The union said it had secured a base wage of $23 an hour for patrolmen, up from $21 an hour. Vail previously said patrolmen’s pay had increased 50 percent overall in recent years. The company claims that its staff are treated better than ever. Regardless of the balance of power, the cost of doing business has risen. For customers, this means higher prices.
Vail and his supporters would argue that skiers are better off for his efforts and his professional management. The company’s enterprise value is about $10 billion—triple what it was a decade ago. However, many skiers pine for the days when they could ride the mountain and pay less than $100 for a day on the slopes, rather than the several hundred dollars today. Now they pay more and get more, like it or not.
sujeet.indap@ft.com
