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« Previous Story | The Industry Report Home Page | Next Story » An IR in-Depth Report: Happy New Owners – What A ConceptBy Craig Altschul 
"I have no regrets so far," Steve Kircher, President of Boyne Resorts’ Eastern Operations told The Industry Report's Roger Leo. "It's been good for our company, a positive every which way, and having a good starting year has made it that much easier." Boyne now operates Loon Mountain, "a drive-to resort;" Sunday River, "one of the biggest resorts in the region;" and Sugarloaf, "a true skiers' mountain," under long-term lease agreements with CNL Income Properties. That's how Kircher describes the acquisitions. "We looked at going East a couple times in the last 20 years, but it didn't come to the right fit," he told Leo. “How things came together in 2007 after 18 months of plotting allowed us to put together a trifecta. It's a pretty compelling strategy from the Boston market perspective. We obviously stepped in at the right time, and with our Pacific Northwest resorts as well." The general satisfaction is evident in Vermont, too, where POWDR Corp. acquired Killington – the legendary "Beast of the East," and venerable neighbor, Pico. Chris Nyberg, tapped as President and General Manager for the two properties, has been part of the ski industry for more than three decades. He saw the upside, but understood the challenges. "Killington is an icon in the ski industry," he said. "It's known worldwide for its diverse and varied terrain, tremendous snowmaking, and high elevation skiing (for the region). POWDR's expectation was to start re-polishing a gem that had been tarnished by many years of neglect under ASC ownership." Nyberg was quick to point out to Leo that the blame could not be placed "on the management that was here, but on owners that did not allow them to take care of on-going maintenance that needs to be done at a ski resort." CNL's Steve Rice, Vice President of the REIT's Lifestyle Properties Division, whose fast-bulging portfolio now includes 10 resorts coast-to-coast and in B.C., told the IR he thinks the winter got people in the New England markets "excited about the new operators and owners. "It wasn't a new lift or a base lodge or a whole new pod of skiing, but people were excited to see we're doing it right. It builds confidence for someone buying a pass or choosing where to ski." The past season played well with CNL investors, too. "The season showed investors the upside potential that exists," Rice told Leo. "Good years are important to stimulate the marketplace, to introduce new skiers and riders to the sport, and provide good momentum for the industry in general. But, it doesn't make us giddy with notions of returns that can't be grounded in more average performance. It would be foolhardy to think we're going to repeat a year like this last one every year or every other year." But, he said, "We're still grateful for it." One of the biggest benefits of the CNL-Boyne relationship is the access to capital, regardless of the most recent season's performance. Boyne is investing $14.5 million in improvements to Sunday River this summer, including a $7 million Chondola (a mix of chairs and gondola cabins); $1.7 million in snowmaking; and $1.4 million in lodging improvements. That means Boyne will have spent more than $20 million at Sunday by the time Labor Day rolls around. Sugarloaf will pick up $5 million in snowmaking upgrades (a 25 percent increase). More investment will continue at Loon's South Mountain expansion. Kircher said Boyne and CNL engage in long-term master planning. "We don't have to wait for what a winter is like with CNL and we're planning for 2009 right now. We will commit to capital expenditures before winter and the capital will be in place by December. It won't adjust much even if we have a terrible winter season." CNL's available capital has changed skiing at Brighton, also operated by Boyne. "A new base lodge going in this year complements the new Milly Express detachable quad in an area that used to be served by two old doubles," said Rice. CNL and Boyne's Summit at Snoqualmie in Washington set an all-time record for visits and operated well into May. The infrastructure there is getting attention now. It was a good year at Mountain High (not operated by Boyne) in Southern California, but it did so, says Rice, "swimming against the tide of gas prices and mortgage issues in the younger demographic it draws." Meanwhile, back in the Green Mountains, Nyberg said POWDR has begun the process of restoring Killington to its glory years. There hasn't been a new lift or building at the resort in a decade. "We are replacing the Skye Peak quad, an aged, long, slow-ride chairlift, with a modern high speed detachable express chair," Nyberg told Leo. The result will be a reduction from 13 to five minutes and easier access to cruisers and terrain parks. POWDR, Nyberg says, measures performance through earnings and guest satisfaction. "We find that our guests' on-mountain experience has gone up dramatically over prior years, as measured by the same company that has done this in the past here. I have a lengthy background in snow and in creating the best product we can. That's a big focus of mine," he said. Nyberg said POWDR is investing $8.4 million into Killington this summer. "We reinvest our earnings, after taxes and expenses. They don't go anywhere else," he explained. POWDR owns Mt. Bachelor, Ore.; Boreal and Soda Springs, Calif.; Las Vegas Resort, Nev.; as well as Killington/Pico. It was a very good year to become a proud new owner of a mountain resort. WHAT IT MEANS: Sure, there are clouds on the horizon in terms of travel access, people worried over the economy, their checkbooks, and whatever else comes along. But, it appears for the first time in many moons over mountains, some of the major players in the modern ski industry are operating far from hand to mouth. « Previous Story | The Industry Report Home Page | Next Story » |
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