On The Acquisition Trail

Travel consultant Carolyn S. Bakar of Raymond & Whitcomb Co. in Boston sends skiers to resorts all over the country. So why is she so eager to book clients into Breckenridge and Keystone this year?

Simple. The two Colorado resorts, just 17 miles apart, merged in April, and skiers can now use one ticket to schuss both. Besides being able to split time between the Victorian town of Breckenridge and modern Keystone, skiers can take advantage of the pair's staggered hours (Keystone offers night skiing) and stay on the slopes for up to 12 hours a day. Says Bakar: "With a whole bunch of people at different levels of ability, they stay at one place but ski where it's suitable."

ENERGIZER BUNNY. With costs of everything from snowmaking to workers' compensation going up and with the number of U.S. skiers leveling off, Keystone Resorts Management Inc.'s strategy is growth through acquisitions. By buying Breckenridge for $90 million, "we're getting significant synergies and cost savings," says Brian D. Smith, executive vice-president for resort operations. Smith is consolidating the marketing and accounting departments of Keystone Resorts, which is owned by Ralston Purina Co., and will begin joint promotions of such events as ski races.

There will be corporate synergies, too: Breckenridge will join Keystone on the back of Ralston Purina cereal boxes and may well be visited by Ralston's Energizer Bunny. Next year, Ralston will package Keystone, Breckenridge, and a smaller day area, Arapahoe Basin, with its cereal and cracker subsidiaries into a new company that will be spun off to shareholders.

Keystone, whose three areas racked up 2.5 million skier-days last year, is now the largest U.S. ski conglomerate, but it's hardly alone on the hill. S-K-I Ltd., which owns Killington in Vermont, started the trend in 1977, when it acquired Mt. Snow, Vt. It now also owns Bear Mountain in California and has imminent plans to acquire Pico, a small resort adjacent to Killington. And S-K-I, the largest operator on the East Coast, with 1.9 million skier visits last year, holds an option to buy Haystack, next to Mt. Snow, and is eyeing a Canadian resort.

Out West, Kamori Kanko Co., a Japanese operator with resort holdings all over the world, bought Colorado's Steamboat in 1990 for about $110 million and Heavenly Valley in California in 1991 (no price available).

Vail Associates Inc., which also owns nearby Beaver Creek, will buy neighboring Arrowhead early next year for an undisclosed price. And Aspen Skiing Co., which already owns three Aspen-area resorts, expects to add a fourth, Aspen Highlands, this winter.

"The trend is going to accelerate," predicts I. William Berry, editor of The Ski Industry Letter. "Some areas are hanging right on the ropes." In 1980, there were 845 ski areas in the U.S. Last year, there were 529.

UPHILL RACE. During the 1970s, resorts saw skier visits grow at double-digit rates, and their biggest worry was expanding fast enough to accommodate demand. But the hot dogs of yesteryear are getting gray around the headbands and packing a few more pounds under their parkas. In the 1960s, 70% of skiers were under 35, according to a Ralston Purina report. Today, only 50% are under 35. With families and mortgages, baby boomers ski less. And when they do go out, they demand costly amenities such as high-speed lifts, which some operators are hard-pressed to provide in today's business climate.

Moreover, the cost of fighting environmentalists who want to stop development is causing undercapitalized areas to disappear like snowflakes in July. "Midsize areas can't pay it," says Berry. "[Environmentalists] have made the world safe for the $40 lift ticket."

The demise of inexpensive small and midsize areas is sending a chill through the industry, since they act as farm teams for major resorts. "You learn to ski close to home. Asking someone to come to Colorado and spend a lot of money on a sport they've never tried is like having to go to Hawaii to learn to play golf," says Keystone's Smith.

So, operators see acquisition as healthy for the industry. And skiers like the improvements that well-heeled operators bring to small resorts. Aspen Skiing, for instance, will spend $35 million over five years to upgrade Highlands.

There's a hitch, however: Skiers who paid $30 for a lift ticket at Aspen Highlands last year will have to pay up to $46 for a ticket good at all four Aspen areas. Still, faced with a choice between pricier tickets and shuttered ski areas, most skiers will put up the money before they put away their skis.

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