Ski resorts spend billions on upgrades
October 7, 2007
DENVER ” Colorado’s ski areas are going to extremes to outdo each other again this season.
Collectively, resort operators and investors are sinking $3 billion ” a conservative estimate at that ” into ambitious makeovers that involve everything from slopeside real estate development to mountain upgrades.
“The ski business sucks up capital,” said James Chung, president of New York-based Reach Advisors. “In a way, it’s a little bit of an arms race. That’s part of the game they have to play . . . to be top-notch.”
More than 12.5 million skiers flocked to Colorado resorts in each of the past two record-setting seasons, helping to justify all the building activity.
“It’s easier (when resorts are doing well) because you have the cash flow to reinvest,” said Dave Belin, director at RRC Associates, the Boulder-based research and consulting firm.
Some ski resorts ” Steamboat, Vail, Snowmass and Winter Park ” are practically reinventing themselves in the process with grand villages replacing the ’70s-style motifs. And while the biggest projects stretch over a few years, key phases already have been completed.
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Chung said the resorts have little choice but to think big, given the luxury tastes of those who travel to Colorado for ski vacations.
“The vacation traveler has gotten spoiled, not just by ski resorts but by everything they do on vacation,” said Chung, whose strategy and research firm advises resorts and other businesses. “The consumer has developed higher expectations and has become pickier.”
Toward that end, Broomfield-based Vail Resorts Inc. has pumped about $100 million into capital improvements at its five ski areas this season.
Vail Mountain, for instance, got two new high-speed chairlifts that will shorten trips to some of its most popular terrain at the top of the mountain.
But much of the frenetic pace of investment has been fueled by a growing appetite for more than just groomed trails and speedier lift rides.
Skiers increasingly want to stay as close to the ski runs as possible, while still having easy access to dining, retail shops and entertainment. And the demand for luxurious lodging has been growing.
That helps explain why resorts with aging base villages have been leveling or renovating outdated buildings or building a slew of new ones.
The town of Vail, with the help of the ski area operator, has been undergoing a $1 billion-plus renewal. One of the biggest additions to the high-end lodging scene is the Arrabelle at Vail Square, which opens in January.
Farther west in the Aspen area, Snowmass Village will unveil $25 million worth of new improvements, part of an overhaul plan to reinvent the aging base area there. A new kids center, which cost about $17 million to build, is the largest capital project in the company’s history. It sits at the center of the new base area.
A number of big ski areas have been playing catch-up with the help of new owners.
The Mueller Family has put $200 million into a base village overhaul at Crested Butte. The southwestern ski resort had lacked luxury lodging and a big meeting facility at the base. The Elevation Hotel, which formerly housed a Club Med, has received a $25 million face-lift and will soon get a spa.
Winter Park, which has been among the last to develop its base area, has grand plans for a pedestrian village and already has committed $132 million to the first phase of the project.
Almost 200 new condo units will open in January, while a parking structure with roughly 300 spaces will be available in December. The projected opening for a new commercial village is December 2008.
The ski area, which is still owned by the city of Denver but operated by Canadian resort giant Intrawest, also put $8 million this summer into a Panoramic Express Chairlift and new runs at Mary Jane.
Intrawest’s 2007 purchase of Steamboat Ski Resort also kicked off a building boom in the area. Much of the base is slated for redevelopment, and the downtown area is flush with construction projects.
In its first major move under a new owner, the ski area spent $16 million this summer to fix flaws in its beginner area and moved and installed chairlifts.
A number of other areas ” Copper Mountain, Telluride, Arapahoe Basin, Echo Mountain and Monarch ” have opened new ski terrain this season.
Arapahoe Basin will almost double in size to 900 acres when it opens an expansion on the backside of its summit in December. The ski area, on the western side of Loveland Pass, spent $3 million on the project and hopes the extra runs will help to spread out growing numbers of visitors.
“The A-Basin expansion is one of the biggest things happening this season,” said Rob Perl-man, president of Colorado Ski Country USA, an industry trade group.
Monarch Mountain, whose relatively new owners have spent some money recently buffing up the small base area there, invested another $600,000 this year.
The area will offer an additional 200 acres of cat skiing on the steep chutes in “No Name Bowl” in the Gunnison National Forest.