Battle for Tahoe begins; $80M in investments over next five years
Two corporate heavyweights are squaring off in a battle for Lake Tahoe's skier visits. Vail Resorts, which recently acquired Northstar-at-Tahoe, and KSL Capital Partners, Squaw Valley USA's new owners, have committed a combined $80 million for upgrades at their respective resorts.
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What already has been an exceptionally busy season for Tahoe ski areas just hit fifth gear. Vail Resorts, Inc., announced March 10, 2011, that the Colorado-based resort operator plans to spend $30 million on major capital improvement projects at the recently acquired Northstar-at-Tahoe Resort in Lake Tahoe, Calif.
KSL Capital Partners of Denver, which purchased Squaw Valley USA in November of 2010, already announced that it plans to spend $50 million in upgrades at its own new Tahoe acquisition. Barring additional investments at other nearby Tahoe ski areas, such as Heavenly Ski Resort (which Vail also owns), or Alpine Meadows (which KSL is rumored to be attempting to buy from JMA Ventures — spokeswomen at both Alpine Meadows and Squaw have denied the reports), the region will receive $80 million worth of new chairlifts, restaurants and ski trails in the next five years.
For its part, Vail’s plans at Northstar include a new high-speed chairlift that will service expanded gladed terrain and additional ski trails, and increase the skiable terrain by 10 percent. At the Village at Northstar base area, there are plans for the construction of a new 500-seat on-mountain restaurant, and new national retail outlets and a “signature restaurant.”
“We have elected to take an aggressive approach with our first-time investments at Northstar-at-Tahoe,” Vail Resorts CEO and chairman Rob Katz said in a statement. “The resort already offers a comprehensive experience not otherwise found on the North Shore of Lake Tahoe, and we intend to further widen the gap with more family friendly terrain, more grooming and snowmaking, a best-in-class on-mountain dining experience, and a village experience that is far superior to any other destinations in the region. This will be the first of many steps that will come in future years.”
In published reports, Squaw CEO Andy Wirth, who was out of the country and unavailable for comment at press time, said KSL’s investment will focus on improving “culinary services, food and beverage, guest experiences — everything from the lift operations and ticket checkers to the staff in the parking lot.”
That should be good news for skiers who love the area’s incredible terrain, but think the amenities — especially the rarely filled Village at Squaw — don’t boast near the appeal of the slopes. The idea that Squaw might start toning down its rugged reputation to compete with Northstar by offering more of its own “family friendly terrain,” however, has made many of the area’s hardcore locals decidedly nervous.
GNAR, a movie celebrating Squaw’s rebel ski and snowboard culture, has become an underground sensation on the Internet at unofficialnetworks.com, particularly for a series of scenes that lead to the filmmakers getting kicked off the mountain in the season prior to the KSL purchase. And just last week, a report that the new management would be closing the popular Silverado Chair on weekdays drew a full scale Facebook revolt, with one local writing that, “The people that make your mountain go all weekend deserve to ride Silverado on their days off.”
The area did an about face in response to the complaints, and reopened the chair on Thursday, March 3, 2011. But the following Monday, when six skiers had to be evacuated from the Siberia Lift because of a mechanical failure, the boo-birds were back. “World class terrain, third-rate antiquated lifts,” one poster wrote. Added another, “maybe new ownership needs to step in here.”
Not that Vail’s announcement regarding Northstar drew a standing ovation on its own Facebook page. Most comments focused on the need for more parking, shorter lift lines, and the hope that the area’s hike-to Sawtooth terrain would finally be lift-accessed. “Restaurant is not needed, more terrain is,” one poster wrote.
Beyond the reservations of the hardcore locals, though, the reality is that the Tahoe region is rapidly growing in skier visits.
“The combination of Northstar-at-Tahoe with Heavenly resort drove strong increases in season pass sales for both resorts, and that has translated into higher visitation, as Northstar-at-Tahoe is currently on track to achieve a record season in terms of visitation and revenue,” Katz said. “We believe we are in the early stages of realizing tremendous potential at that resort.”
A report that ran in the Northern Nevada Business Weekly following the acquisition of the two resorts predicts that the increased skier traffic — and higher lift ticket yield — is exactly what is leading large corporations into the ski business. The weekly quoted National Ski Areas Association president Michael Berry, who said, “It is a business with significant cash flows…and that is why we are seeing interest from groups like Vail and KSL, who have looked around and chosen to be involved in major destination resorts.”
On the same day Vail announced its investment strategy for Northstar, the company also released its fiscal second-quarter earnings report, which included news that the company’s net income was up $13.9 million to $54.6 million over the same period the previous year, an increase of 34.1 percent. (Click here to read more from SNEWS on Vail’s latest financials).
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