Vail Resorts Updates Park City Lodging Association

The Park City Area Lodging Association recently met with Blaise Carrig, President, Vail Corporation Mountain Division. As you'll see from the highlights below, the future for Park City is positive and we are quite optimistic for what is to come. The purchase of PCMR by Vail has been huge news in the ski industry and even more so for the local's who call Park City home. For investors looking for rental property, vacation homes or just a second home to spend more time, the town of Park City has never been more appealing than now. 

Vail Corporation (NYSE symbol MTN) has three divisions:

Division 1, the Mountain Division is their most profitable.

This operates 11 ski resorts in the US: Vail, Breckenridge, Beaver Creek, and Keystone (Colorado), Kirkwood, Heavenly, and North Star (Lake Tahoe), Canyons and Park City Mountain Resort (Utah), and 2 smaller resorts in the Mid-west. All travelers can use one single Epic Pass season pass to ski at these resorts. Mid-west skiers are encouraged to travel out west and visit some of these great ski destinations, driven by the Epic Pass joint use. Vail's value of growth is incredibly picky. The resorts they pick try to add diversity to their overall portfolio. Each guest vacation experience should be different from each other. It's this diversity that is part of their overall model. Vail sells over 300,000 Epic Passes per year and is approximately 15% of the entire ski destination market, selling passes in 70 Countries worldwide.

Vail has retail stores at the base of most of their mountain resorts; three in Denver and four in San Francisco too. They like to sell a lot of mountain sports apparel at their resorts and at their villages. They are trying to fill a retail niche, but also like the local mountain flair and shops. Blaise said, "we are not the 800-pound gorilla" he wants to keep Park City local business.

Vail owns transportation businesses too. Mostly to increase guest satisfaction but don't really want to be in the transportation business. It's all about increasing the customer satisfaction about their overall ski destination experience.

Division 2: Real estate division.

The real estate division is mostly at the base of their resorts. Breckenridge is one of their high-end real estate division areas. Sometimes they partner with companies such as the Ritz Carlton to develop quality lodging at ski destinations. All of their real estate divisions are not financed and will generally pre-sale to cover the cost of construction, then will build out the community. It's about filling a need for quality bedding at the base of their resorts if it does not exist.

Division 3: Hospitality division.

Vail had a diverse portfolio before the recession including Palm Springs, Turks and Caicos, Grand Tetons, and many others. After the recession hit, they wanted to be good at their core, that is "Mountain and Skiing hospitality destinations". So, they got out of the business at other areas, selling off far-flung places and back to their Core: Quality lodging at mountain and ski destinations. Keystone is their largest hospitality division controlling much of the base area.

Questions and Answers with Blaise Carrig, President, Vail Corporation Mountain Division:

How did they pay $182.5 million for Park City Mountain Resort?

This was financed and Vail Corp has a strong cash balance sheet, making five acquisitions within the past four years. PCMR is the only financed one; all others were paid by cash.

What is the Vail Corp philosophy?

Circle of Life: Each mountain destination is uniquely different.

What is the normal investment by Vail?

There has been over 100 million in capital investment over the past year in their ski destinations. Why? They want a quality product, giving the skier a great experience, and committed to quality for the guests that brings in high-volume tourism.

Can property managers sell lift tickets to their guests?

Generally, Vail Corp controls their own customer base and do not use 3rd parties such as Liftopia, only using their own platforms to sell lift tickets. The lift ticket window will be the highest price but there are several pre-purchase programs that are cheaper options for guests. Ski school and retail is a big part of their business, which will also be a big part of Park City's model.

What is the Vail corporate culture?

Passion in creating great destinations for its guests. Leadership is very much into their business model and also loves this business.

What is their mission?

Create an experience of a lifetime for guests and their employees. Treat them both with great respect and they will come and keep coming back. Their employees will share this with customers too. During the recession, Vail Corp had to reduce wages from the top down, but no jobs were lost. Everyone got stock in exchange for wage reduction that is worth about $87/share today.

What is Vail planning to do at PCMR?

There was no time to do due diligence. The PCMR purchase was done so quickly they are not sure at this time. Through City Council meetings, they know the City is interested in a transportation component but they will need to explore the opportunities. Vail Corp is focusing on the mountain for now and working with the City. This summer, Vail Corp plans to aggressively invest capital and will create a multi-year plan for improvements. This could include some real estate and possibly work with larger hospitality groups to accomplish this goal. Expansion of the Legacy Lodge is possible.

Are there any plans to enhance the Town Lift area?

Maybe, if it's a viable portal to the resort. Focusing on connecting the two resorts ASAP is a major priority and they are working with the City/County to get this done, making the largest ski resort in America. Park City will be the main brand with a strong reputation for youth programs, family vacations, events/races, and pride in local operation.

Discount passes for the local schools and kids?

School programs are in place at many of their resorts. It 'may' be more expensive than now, but they plan to have a program for the local schools. Vail Corp works with several outreach programs for those who can't afford to ski. Supporting outreach to underprivileged is big for Vail Corp.

Plan to increase summer business and for the months outside of ski season?

Best practices for all Vail Corp Resorts. They have stepped out of ski magazines, cut back on ski media advertising, but have greatly increased customer relationship management and outreach programs.

Online is huge for Vail Corp. creating the Epic Mix that give you personal skier statistical data like vertical feet, what you did, free online photo's, and finds your friends/family. Guests will need to register online to see this data but most is free. Off-season offerings and mining their guest database is also a big part of increasing off-season business. Summer attractions are a strong part of their outreach for Park City: Epic discovery, more activities, learning about the mountains, and additional mountain experiences is part of the plan.

Vail Corp also has a huge international following which will help drive tourism in countries such as Brazil and Argentina who are very active vacationers off-season. These countries love shopping, nightlife, and is a good fit for Park City. Vail Corp will focus heavy on international business for Park City.

What will the combine resort be called?

PCMR and Canyons: One entity; two mountains. Park City has a very strong brand that will be the main focus, plus the epic Utah snow. Many guests have never considered this a fun destination but that will change. They will brand the town of Park City, ski school and a great family destination. Vail Corp will aggressively go after the Los Angeles market and likely pull business away from Mammoth Resort with the Epic Pass. They are projecting a large market share from Los Angeles.

How do other Vail Corp Resort COO's feel about Park City?

They love it and will collaborate efforts to make it great. It's a great fit and COO's will share best practices to grow all the resorts. Every time Vail Corp adds a resort, it increases business for all the Vail Corp resorts. Vail Corp has wanted to be in Utah for a very long time and everyone is excited about Park City. Park City will be the primary brand. Selling both brands and having two different mountain experiences.