Vail Resorts is planning to buy Victoria’s Mount Hotham and Falls Creek ski resorts for about $120 million to expand its global offering of resorts and widen the pool of customers to whom it can cross-sell.
New York-listed Vail Resorts, which already owns 15 ski fields across the US, Canada and Australia – including Perisher in NSW, Australia’s largest ski field – is understood to be paying owner British-listed Merlin Entertainments a hefty multiple of 10 times earnings for the two ski fields.
But the expensive deal is not just about Australian skiers. Vail Resorts wants to tap the fast-growing market of Chinese skiers that has the potential to supercharge the global skiing industry as well as demand for accessories such as clothing and equipment and it setting itself up to be a major supplier to that market.
“What’s happening on a global scale is changing the game,” said businessman Lorenz Grollo, whose family owns the Mount Buller resort, also in the Victorian Alps.
Mr Grollo said Colorado-based Vail Resorts had also approached his family about buying Mount Buller and the multiple it was prepared to pay on Mount Hotham and Falls Creek showed it was confident about future growth prospects for the industry.
“They were keen to talk to us. We said no,” he said.
“To get 10 times [earnings] for a ski resort … is incredible. They’ve got a view on the future of the industry.”
For Vail Resorts, which purchased Perisher in 2015 from James Packer and his joint venture partners, Luca and Guido Belgiorno-Nettis, for $176.6 million, adding the 450-hectare Falls Creek and the 320-hectare Mount Hotham brings two more resorts as well as their pool of regular skiers into the company’s worldwide Epic Pass network, which allows holders unlimited access to its resorts.
But the move may be a mixed blessing for locals. After Canada’s Whistler Blackcomb resort, which Vail Resorts purchased for $1.3 billion, was added to the network this year, Canadian skiers complained that the move favoured high-spending jetset skiers over locals and the pass priced in US dollars pushed up costs for people paying in the weaker Canadian currency.
Chinese skiers push demand
A Vail Resorts spokeswoman, Johnna Muscente, declined to comment on the deal.
“We do not comment on or speculate about acquisition rumours,” she said.
Merlin, which also operates attractions including the Sea Life aquariums in Sydney, Melbourne and Sunshine Coast and Madame Tussauds in Sydney, likewise declined to comment.
“We don’t comment on rumour or speculation,” spokeswoman Rachel Anker said.
China is creating much of the demand for the ski industry to boost its scale. The number of Chinese skiers rose 16 per cent to 17.5 million last year from 15.1 million in 2016, figures from sports industry website ISPO.com show.
The country, which will host the 2022 Winter Olympics, is promoting skiing and seeks to position itself as a global destination.
China has built 646 resorts in the past two decades and is targeting 1000 by the time the Olympics begin in February 2022, the ABC reported in February.
Alpine property values have been recovering in recent years from their post-GFC slump. That, plus the growing Chinese market is clearing the skies above the industry.
“Ski resorts are now a lot more bankable than they used to be,” Mr Grollo said.