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« Previous Story | The Industry Report Home Page | Next Story » Size, Technology Spurs Spate Of Ski Travel MergersBy Mountain News Staff  The Darwinian result: get big or go bust. "Technology has become a strategic mandate," says Ralf Garrison, founder of The Advisory Group, Mountain Travel Symposium and co-founder of the Mountain Travel Research Program (MTRip). For some players, it's easier to acquire than to create. Once one or two players become bigger, competing companies must beef up as well in order to match them on technology and marketing budgets. "It's kind of a self-fulfilling evolution," says Richard Davidson, president of Ski Europe, which merged with Alpine Adventures in August, giving the new entity the economies of scale in both financial and human terms. "If you have a few people get wrapped into a bigger one, you have a company that is much larger, much more powerful and has more resources. That places a threat on smaller companies." The importance of technology and size became more obvious this summer with three mergers or acquisitions coming in the wake of Ski.com/Aspen Ski Tours' acquisition of Lynx Vacations last fall. Besides the Ski Europe/Alpine Adventures deal, Overstock.com purchased Ski West, and Park City-based Lespri Resorts purchased Moguls Mountain Travel from Intrawest Corporation. Size begets efficiencies. One reason Lynx started its roll-up six years ago was to house air reservations functions for five companies in one office, according to co-founder Jody Strauch, now vice president of business development and strategic partnerships for Ski.com/Aspen Ski Tours. Mega online travel agencies like Travelocity and Expedia have focused on packaging, targeting niche markets such as skiing, with its attractive demographics, bringing their highly recognizable brand names as well as their powerful technology and CRM (customer relationship marketing) tools into the marketplace. They're seeing huge growth - Travelocity's ski sales grew 85 percent over the previous ski season, that is, October through April, says Cady Wolf, director of partner marketing for Travelocity. There's also a strong human factor. Companies are buying seasoned staff with decades of experience in selling a complex product. Acquiring those customer databases and expert staff with strong relationships with those customers was a major reason for Lynx's roll-up of the five tour operators it acquired, according to Strauch. Thus, anyone who wants to play must have deep pockets to consolidate call centers, make them efficient - and keep staff informed and comfortable about the merger at the same time. Meanwhile, property management companies have become key players in ski vacations. Property management companies are keenly aware of the fact that wholesalers are selling more and more of their inventory. Scott Rogers, founder of Lespri Resorts, the Park City property management company, bought Moguls in late July. He says property management companies were seeing 20 percent of their inventory sold through wholesalers three years ago. That figure now has soared beyond 50 percent. Once those sales reached those proportions, Rogers says, it was time for property management companies to acquire a wholesaler for themselves. Lespri acquired a small, Park City-based wholesaler, Accommodations Unlimited, and tried to acquire Lynx. The Accommodations Unlimited purchase was an experiment to see if purchasing a wholesaler could drive market share - and Lespri found that it did. So it acquired Moguls. Lespri plans to take the lessons it learned with Accommodations Unlimited and apply it to Moguls, giving it more of an online focus. Mark Travel, the biggest tour operator in the U.S., is the power behind several ski vacation brands: Mountain Vacations, United Vacations, Southwest Airlines Vacations and US Airways Vacations. Fifty percent of its accommodations bookings are condominiums, according to Ali Kirchen, manager of destination experience for Mark Travel. In some markets, such as Steamboat Springs and Snowmass, condos account for almost all the inventory. Bruce Rosard, founder of Moguls, who has just accepted a position as vice president of sales and business development for PhoCusWright, an online travel research and consulting company, says that Lespri had very different ideas about how to run Moguls. "They didn't need me," he says. "I was happy to step aside and move on to bigger and better things." Lespri is not the first property management company to buy wholesalers; East West Resorts bought Lynx six years ago. East West sold Lynx to Aspen Ski Tours because it was focusing less on ski resorts and more on mountain resorts. According to Strauch, it found real estate development more lucrative than property management. "I thought East West was right on track," says Rogers, who purchased East West of Utah in 2003, in describing their strategy with Lynx. He says they never executed the concept properly, perhaps simply because they initiated it too soon. Vacation homes were one reason Overstock.com, based in Salt Lake, bought Ski West. The purchase allowed the online "close-out" retailer to add a distinguishing niche to its travel offerings. It already had air, car, hotels and cruises but wanted products that would differentiate it in the marketplace, according to Jonathan Johnson, Overstock's senior vice president of corporate affairs. "Ski West's niche was vacation homes or second homes in resort areas and that was something that the average consumer doesn't know how to get and you don't get that on most travel sites," Johnson says, adding that Ski West also had "great technology." Expanding product is another key to mergers and roll-ups. The Ski Europe /Alpine Adventures merger gave the new entity competitive advantage by broadening the range of travel products it sells. Europe, for example, is hot with U.S. skiers now, so more and more operators are focusing on their European offerings. Travelocity bought UK-based LastMinute.com. Selling Europe is on their radar, according to Wolf. Ski.com/Aspen Ski Tours now includes Adventures on Skis, which has 26 years of experience in selling overseas destinations, according to Strauch. But technology is the driving force, travel execs agree. It allows companies to sell more. Rather than re-invent the wheel, Ski Salt Lake has made Travelocity its booking engine - that is, the computerized system that allows people to choose flights, cars and lodging on the Internet. Ski Salt Lake's booking engine essentially resides on Travelocity and has seen its bookings increase by 60 percent since last year. Younger management execs with fresh mindsets are also considered crucial to success in this increasingly competitive market. "You can sell to a corporation that rolls them up or look for companies that are run by younger people who can carry on our heritage," says Davidson of Ski Europe. He says he found that synergy with Alpine Adventures' brother and sister team of Rick Reichsfeld, president, and Richelle Blanken, vice president of marketing. That said, it's really Darwin at work in the vacation travel industry, according to MTrip's Garrison. "Intermediaries have to prove their value or go the way of the dinosaurs," he says. - by Kate Rice « Previous Story | The Industry Report Home Page | Next Story » Comments
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Posted by: Sandy Bakken | January 5, 2007 02:12 PM
