Vail Resorts to acquire Heavenly
VAIL<Vail Resorts announced Tuesday the $102 million purchase of Lake Tahoe1s Heavenly Ski Resort from the ailing American Ski Company.The acquisition brings to five the number of top-15 ski resorts operated by the ski resort and hospitality company, which adds Heavenly to its other ski resorts at Vail, Beaver Creek, Keystone and Breckenridge.3We got the resort at a very attractive price, Vail Resorts1 chief executive officer, Adam Aron, said Tuesday. 3We1re growing our ski business in a big way.The acquisition fits neatly into a three-year-old growth strategy by Vail Resorts to grow by managing better, acquiring bargains, using its capital to enhance its holdings and to consolidate holdings within the ski industry. In the past 12 months the company has made $225 million in acquisitions, including:Heavenly, the $49 million Marriott1s Mountain Resort and the $70 million Rock Resorts luxury hotel management company.Facilities upgradeVail will invest $40 million into Heavenly1s infrastructure over the next five years, said Aron, who rated the mountain facilities at the bottom end of a 1-to-10 scale. The mountain, however, as well as the views and service rated near the top end of the scale, he added.The up side for Vail Resorts, said Aron, will be to geographically diversify its business into an area outside Colorado and to improve the operation and infrastructure of the mountain, which has languished in the past two years under financially strapped American Skiing Company.Vail Resorts and the American Skiing Company both began trading publicly in 1997, but have fared far differently:? Vail1s offering price was $22 a share; today it trades at $21 a share.? ASC1s initial offering was $18 a share; today it is trading for less than a dollar a share.Aron said the company will look to maximize returns on Heavenly1s seven restaurants and six year-round and nine seasonal retail locations, as well as open a new retail location near Heavenly1s new $25 million gondola, which opened last summer.Aron and Vail Resorts president Andy Daly said Tuesday they intend to upgrade Heavenly to the level of the company1s Colorado resorts.3Even though Heavenly has got a ton of visits, many of the facilities are outdated, Aron said.There isn1t much time this year to effect major improvements at the resort, he said, but that there would be some significant improvements announced in the next year.The company also intends to build new on-mountain restaurants, upgrade and replace lifts and snowmaking systems and enhance the resort1s environmental efforts.3We believe we can grow Heavenly1s skier visits in a relatively short period of time, said Daly.Bigger market shareBy adding Heavenly, Vail has carved off a slightly larger market share of the static national skier and snowboarder market. Last year, a record year, Vail Resorts1 four resorts hosted nearly 5.7 million skiers and boarders. Heavenly could add approximately 15 percent to those numbers.One area where the acquisition differs from the company1s Colorado holdings is in its real estate development potential.3There1s isn1t a lot that can be developed there, said Aron.It is possible the company will extend its popular $249 and $299 Buddy Pass concept now in place in Colorado to include Heavenly, Aron said.American Skiing Company purchased both Steamboat and Heavenly in 1997 for approximately $280 million. The resort has 1,600 employees during peak season, Daly said.Heavenly1s customer base is approximately one-third destination visitors, one-third regional visitors and one-third day skiers, said Aron. Its destination visitors come from Texas and from Great Britain.The acquisition puts the skier numbers of Vail Resorts and that of arch-competitor Intrawest on par. Last month Intrawest was the winning bidder on operating and developing a new base village for Winter Park.Heavenly factsSkier days: 846,000 last yearVertical drop: 3,500 feetSkiable terrain: 4,800 acresLifts: 29Snowmaking: Covers 69 percent of the area1s trailsLift tickets: $57SKI magazine ranking: A reader survey ranked it as one of the top 15 resorts in the country.
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