In Europe, Vail Resorts finds something similar to its marquee US resorts
In Switzerland, Vail Resorts has found something similar to some of its US properties in the newly linked ski areas of Andermatt and Sedrun.
Vail Resorts on Sunday, March 27, announced acquires a 55% stake in Andermatt-Sedrun Sport AG, a massive ski resort that is the product of two existing ski areas recently joined. When the deal is finalized later in 2022, it will be Vail Resorts’ 41st ski area and the first in Europe.
The effort to link Andermatt and Sedrun began in 2007 with the investment of Egyptian billionaire Samih Sawiris, whose Swiss company Orascom Development has put in place “very significant financial support to make the vision a reality”. Lux magazine reported in its winter 2019 issue.
“With the completion of this link, we are connecting two cantons, two languages and two cultures,” Sawiris told Lux. “The region from Andermatt to Sedrun, with the connection to Disentis, which will be in place from summer 2019, will be a highlight of the Swiss winter sports offer.”
Vail Resorts called the project “one of the most ambitious resort development opportunities in Europe”, and said Sawiris had invested more than $1.3 billion in Swiss currency in the surrounding base area and more than $150 million in the ski resort.
“The significant investments that (Andermatt Swiss Alps AG) and the Sawiris family have made in both the base area and the mountain have created a premium experience with significant capacity for growth from guests from Switzerland , the UK and other parts of Europe and around the world,” Kirsten Lynch, CEO of Vail Resorts, said in a statement announcing the news.
For Vail Resorts, Sawiris’ moves should look familiar. When acquiring Park City and Canyons resorts in 2014, Vail Resorts’ first major capital investment project was to combine the two ski areas, a move the company perfected two decades earlier after acquiring Arrowhead resort and joined it with Beaver Creek via chairlifts at Bachelor Gulch.
Vail Resorts’ growth from owning one ski area to owning many began with some of these projects. By 1980, the company, then called Vail Associates, had been working for nearly a decade to open up Beaver Creek.
Sports Illustrated, in a 1980 article about the new opening, postulated that Beaver Creek “could be the last resort” in the United States, saying “there is no guarantee that there will be another one laid out on the scale of Beaver Creek – a first-class “resort” to rival the best and biggest in the country: Aspen, Vail, Sun Valley.
And Sports Illustrated turned out to be correct. Over the past few decades, the ski industry in the United States has had a much easier time expanding the boundaries of existing ski areas than opening new ones.
After Beaver Creek opened, however, expanding the ski area proved to be a difficult proposition for Vail Associates; the company filed for bankruptcy in 1991 and was taken over by Apollo Ski Partners in 1992. One of the major plans for the new company was to purchase the nearby Arrowhead ski area and combine it with Beaver Creek via the development of a new lift at Bachelor Gulch.
The new company was “moving forward,” as Vail founder Pete Siebert noted in his book “Triumph of a Dream.” The benefits were not only realized by skiers hoping to travel farther via the chairlifts – more profits were also introduced.
Years later, part of the benefit of combining Canyons and Park City would also be generating more revenue for the company, then CEO Rob Katz told the Salt Lake Tribune in 2014.
“We expect to generate significant additional (earnings) growth as we implement our plans to combine the ski experience of Park City Mountain Resort and Canyons in the largest mountain resort in the United States with more 7,000 acres of skiable terrain,” Katz said.
“We believe the combined resort, with an unparalleled location in Park City, will attract destination skiers from across the United States and around the world and drive season pass sales, tours and ancillary activities,” he added. “This is truly a transformative acquisition for Vail Resorts.”
Today, as Vail Resorts prepares for another transformative acquisition by entering the European ski market, the company is once again eyeing the profit potential of two newly combined ski areas.
“Vail Resorts expects significant (profits) growth over time through the expansion of the Village bed base, investments in the mountain and capacity expansion, and the inclusion of the resort on Epic Pass products,” the company said on Sunday when announcing the new agreement with Andermatt-Sedrun Sport AG. “Subject to the timing of capital project approvals and completion, Vail Resorts expects that with its investment of CHF 110 million and the inclusion of the Epic Pass, the resort should generate over CHF 20 million. CHF of annual EBITDA in five to seven years, including the impact of additional Epic Pass sales.
This story comes from VailDaily.com.