Vail Resorts’ $1.1 billion purchase of Canada’s Whistler Blackcomb — the most trafficked ski area in North America — marks the biggest deal in the history of the ski resort industry.
Adding Whistler’s 8,171 acres — and its roughly two million skier visits a year — made Vail Resorts the largest ski resort operator in the world. The deal will help push Vail Resorts toward more than 650,000 season pass sales this season.
The Coke-buys-Pepsi-like news of the deal, which finalized in October, swept through the ski industry. Not necessarily because it affirmed Vail Resorts’ dominance, but — that price tag. With Japan’s Nippon Cable still owning a quarter of Whistler Blackcomb, the deal valued the resort at more than $1.5 billion. With Whistler Blackcomb delivering about $95 million in annual earnings, the Vail Resorts priced the resort somewhere around 16 times its annual earnings, which is about double the going rate for ski areas. Rob Katz, the chief of Vail Resorts who has led the company on a buying spree, acquiring nine resorts in three countries in six years, has never paid more than eight times annual earnings.
Overpaying for resorts has happened before. And it didn’t end well for American Skiing Co. But Vail’s Whistler cash-and-stock deal wasn’t highly leveraged like those now notorious American Skiing acquisitions in the late 1990s, which were supported (not very well) by planned real estate sales of slope-side condos that never reached expectations.
Vail Resorts expects its return on investment to come from pass sales — the company reported pass sales increased by about 150,000 following the Whistler acquisition — and an ability to tap Whistler’s loyal foreign skiers. Katz told analysts earlier this month that the weak Canadian dollar and the strong U.S. dollar could draw more international visitors to Whistler than the company’s U.S. resorts, delivering Vail Resorts a hedge against the U.S. dollar’s high value that mirrors its geographic hedge against Mother Nature with resorts spread across the West.
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