US skiing juggernaut Vail Resorts sharpens edge over smaller rivals

Snow has been in short supply in the north-east US this winter, but on a recent day at the Stowe Mountain Resort in Vermont, skiers contended with near whiteout conditions as they made turns through a dense, sticky flurry.

The white stuff came from belching snow guns, which can keep some destinations running even after a long spell of dry weather, including Stowe, where 83 per cent of trails are covered by artificial snow-making equipment.

Superior snow-making capabilities are but one edge that Stowe’s owner, Colorado-based Vail Resorts, enjoys over its rivals. It is also better positioned to withstand what may be the biggest threat to ski operators worldwide: climate change.

A Financial Times analysis of northeastern ski businesses found Vail owns destinations that have a higher base elevation than the average of the market in the states of New York, New Hampshire and Vermont. In New Hampshire, for example, where Vail owns four resorts, its average elevation is 2,547ft. For the other 24 ski resorts in the state, the average elevation is 1,685ft, according to data from the National Ski Areas Association, an industry trade group, and the website SkiCentral.

“Elevation is a big advantage for snow-making,” said Jeffrey Stantial, an analyst who covers Vail at Stifel, adding that higher terrain also “helps with natural snowfall versus rain”.

Other operators in the region have been less fortunate, like Ascutney Outdoors, a resort 93 miles south of Stowe that does not make snow. “Because of climate change, we cannot rely on snow sports,” said Shelley Seward, a board member of the non-profit that runs the resort, which has been largely shut to skiers this year.

Seward noted that in good conditions a family of three can ski at Ascutney for one day for as little as $60 (or $175 for a season pass) versus about $500 for lift tickets and rentals at nearby Okemo, a snow-making resort also owned by Vail. “When we have snow, we will be able to offer an alternative that is affordable.”

Northeastern winter resorts proliferated in the second half of the 20th century to cater to skiers living in large cities such as New York, Philadelphia and Boston. Although the experience pales in comparison to the skiing on offer in the west of the US not to mention the European Alps, it has remained popular with urbanites wanting a weekend destination they can drive to.

At the outset these resorts were for the most part independently owned, but that changed during successive waves of consolidation, most recently the one engineered by Vail. The Colorado group and its nearest competitor, Alterra, “operate a duopoly for scaled, multi-resort season pass products”, that cover nearly 50 per cent of the North American ski market, Stifel’s Stantial said.

“It is just really hard to compete and this is something that has been going on for years and really helped accelerate a consolidation trend that you saw really led by Vail,” said Stantial.

Vail’s thirst for new resorts has not been limited to the US. Last year it expanded into Europe for the first time by taking a 55 per cent stake in Andermatt-Sedrun in Switzerland for $162mn. In 2019, it made a push into Australia that saw it buy the largest ski resort in the state of Victoria. And it has a partnership with Rusutsu Resort and Niseko in Japan.

The company’s expansion in the north-east of the US, where it owns 94 ski lifts versus 41 for its nearest competitor, Boyne USA, is part of a strategy to turn these resorts into feeder destinations. The idea is that visitors to ski areas in New York and Vermont will become customers for its larger resorts in the west, including the eponymous Vail and Breckenridge in Colorado and Park City in Utah.

Crucial to this effort is selling season tickets, known as Epic Passes, which offer skiers access to its 41 resorts on an unlimited basis or for a set number of days.

“This locks in revenue,” said a spokesperson for Vail, adding “no matter the winter we have, it allows us to make investments in new lifts [and] in snow-making technology.”

Vail’s share price is down 10 per cent over the past 12 months.

In 2019, it acquired Peak Resorts, the owner of 17 ski resorts including Hunter Mountain in New York and Mount Snow in Vermont, for roughly $264mn. Shortly after the deal, then chief executive Rob Katz, told investors: “What it’s really going to do is give some of the major population centres in the US access to local and regional skiing on the same pass that they can access destination resorts within our network.”

Despite its dominance, Vail has argued that the North American market is competitive, and that it accounted for about a fifth of skiing trips in during the 2021-22 season. Yet its ubiquity combined with capacity problems at some resorts that has resulted in long lift queues is prompting some skiers to look elsewhere.

“You saw a shift in skier consumer preference this year to thinking outside the box to say, ‘hey, I would rather ski than wait’,” said Patrick Scholes, an analyst at Truist.

More than 100 independent ski resorts now participate in a rival season pass programme called the Indy Pass, which styles itself as an alternative to the Epic Pass. Skiers paid $279 to start this ski season for two days at resorts in the US, Canada and Japan (plus 25 per cent off for a third day). Indy Pass revenue and unit sales are up 50 per cent this year, the organisation’s founder said.

“Vail has created a market space that we never even knew existed,” said Jon Schaefer, owner of two ski resorts in New York and Massachusetts that are affiliated with the Indy Pass. “Our business is growing since all [Vail’s] New England acquisitions have happened. If anything it has created a narrative for us.”