Telluride: Community waits for news from new owners
February 18, 2004
People in the ski industry are taking notice not so much of who bought into Telluride Ski Resort, but who didn’t.
Chuck and Chad Horning, a father-son real-estate investment team from Newport Beach, Calif., became joint partners this week with Joe Morita, who formerly owned the entire company. The Hornings have extensive California real-estate holdings but are newcomers to the ski industry.
The Hornings’ purchase of Telluride Ski Resort could foreshadow a new and developing trend in ski area sales, according to Jerry Jones, a former Vail executive and industry consultant. He believes the ski industry will experience fewer sales to conglomerates and more to families and individuals with deep pockets.
The trend in the 1990s was for the big to get bigger. Conglomerates snatched every resort available, but with disappointing results. American Skiing Co. nearly went broke after a frenzy of ski area acquisitions and development, Jones said, and is now selling pieces of its empire. Vail Resorts is struggling to show a profit and the other industry giant, Intrawest, isn’t thinking expansion right now, Jones said.
He believes resorts are more likely to be sold to deep-pocketed buyers who want to add a ski area to their portfolio because of a connection to that town or resort ” much like the connection between Chicago’s Crown family and Aspen.
The Crowns own the Aspen Skiing Co. outright. Jones said he would be surprised if they make any money from the ski business, but they still take pride in owning and operating the company.
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“It’s like owning a sports team, but [ski resorts] don’t appreciate that much,” said Jones.
Another change in Telluride
Telluride-area residents are waiting anxiously to learn more about the second set of new owners in five years. Morita, son of the founder of Sony, bought into Telluride Ski Resort, also known as Telski, in 1999. He bought out longtime owners Jim Wells and Ron Allred in 2001.
Telski was expected to announce this week how much of the company the Hornings had acquired, but no announcement had been made as of press time. Signs indicate, however, that the Hornings will have a substantial interest. They acquired $23 million in real estate from Morita at the end of 2003, according to the Telluride Daily Planet. Most of that property, both developed and undeveloped, is in Mountain Village, which is connected to the old mining town by a gondola.
The real estate purchase was separate from the Telski acquisition.
It’s nothing new for real estate developers to take an interest in a ski area to enhance the value of their property. Gerald Hines, head of a development firm with worldwide interests, purchased Aspen Highlands in the early 1990s so he could develop real estate at and around the base. He immediately sold the controlling interest in the ski area itself to the Aspen Skiing Co.
In a similar deal, developer Norman Perlmutter attempted to buy into the Aspen Skiing Co. in the early 1990s. His firm, the Snowmass Land Co., was interested in developing the Two Creeks and Pines luxury subdivisions and it owned property at Snowmass’ base.
Instead, the Crown family acquired the Skico. They worked out a deal with Perlmutter that added a chairlift at Two Creeks and the Crowns purchased the base area property from him.
Tough to make a buck on skiing
Jones believes the Hornings acquired Telluride for the development potential around the ski area. Although Telluride can be considered a world-class ski area, he said, it would be difficult to make money on the ski operations alone.
“What has been the problem from day one there is still the problem,” said Jones.
That problem is transportation. The town has a small airport that is tricky to fly into, even for smaller aircraft. Montrose, the closest large airport, is 65 miles away.
Telluride ski area was created in the early 1970s by Joe Zoline, whose family also lives in Aspen. In 1978, he sold to Jim Wells and Ron Allred, who built it into an elite destination resort. Morita became partners with the two men and eventually bought them out.
Because of geography and inaccessibility, Jones considers Telluride a niche market with limited opportunity for growth. The number of customers buying lift tickets has been flat for a decade, he noted.
The ski area had about 300,000 visits in 1993-94. Its best season in the last decade was 1998-99, when it logged 382,500 visits. Business plummeted in 1999-2000, but has since crept back up. The resort captured industry attention in winter 2001 for the addition of the Prospect Bowl, which added 733 acres of exceptional skiing terrain.
The mysterious Hornings
Art Goodtimes, a longtime Telluride-area resident, environmentalist and current San Miguel County commissioner, said it’s tough to know exactly what the Hornings are planning. “They haven’t introduced themselves to the community,” he said.
Chad Horning declined an interview request from The Aspen Times.
Goodtimes said he believes there are differences between the sale of Telski and other resorts, where development potential is a huge factor.
The Telluride area doesn’t face development pressure on as broad a scale as other resorts ” in part because it is located in a remote box canyon, and in part because of good land-use planning, Goodtimes said. Success in Telluride cannot spur development like Aspen’s success sparked growth throughout the entire Roaring Fork Valley or the way Crested Butte’s success could trigger sprawl between there and Gunnison.
In addition to the natural barriers to growth, Telluride adjusted its growth-management plans based on experiences of places like Aspen.
Zoning won’t allow massive enclaves of luxury homes and starter castles on land in the county on the fringe of the ski area. And Goodtimes agreed with Jones that the town’s inaccessibility makes for slower growth.
“I don’t think we’re in that same kind of downhill slide that many ski resorts are in,” Goodtimes said.
Scott Condon’s e-mail address is firstname.lastname@example.org