Mega-ski companies are hurting…

A few years ago, Vail Resorts and Alterra were buying ski resorts left and right, probably paying far too much for them, fighting among themselves to get the deal, seemingly ignoring the real threat of global warming and understandably unaware of the pending epidemic that would be a global game-changer.

This what happens when you give key people a checkbook and ask them to “acquire” asset. I’ve seen that movie unfold with a company I used to work for, East West Resorts, in which a well-to-do real estate developer eager to reproduce what seemed to be a lucrative business model in Beaver Creek, Colorado all over the Rocky Mountain West.

In their hurry to buy and look good, its purchasing team didn’t conduct good due diligence and paid through the nose for questionable assets, in markets where the cost of entry was very low. The end result was that five years later most of the hastily gotten acquisition had to be liquidated at a substantial loss.

Today, both Vail Resorts and Alterra are in the hot seat with each a class-action suit against them for not refunding skiers for part of their season ski passes, following a shortened winter by Covid-19, and the former company that is public is facing a dwindling stock price and the threat of having to shed assets.

In Park City, for instance, the former owners of Deer Valley and Park City Mountain Resort must be high-fiving each other and thinking that they were indeed very smart in selling when they did and for so much money. The morale of that story is that a fat checkbook is always a dangerous guide, especially if the buyer lacks patience, time and qualifications for making a smart purchase!