Whistler, Canada's Top Ski Hill, Now World's Best Performingby
Loonie decline lures tourists to snow-laden Coastal Mountains
Resort could still expand ski terrain by 25 percent, CEO says
Whistler Blackcomb is a ski resort of superlatives. Now its financial performance and share price are among them.
Whistler Blackcomb Holding Inc., North America’s biggest and busiest ski resort, has benefited this season from above-average snowfall and a weak Canadian dollar, which have drawn big-spending visitors from abroad and helped send its stock to a record. The Vancouver-area resort may boost its ski terrain by a further 25 percent and attract more summer customers to keep growth humming, its chief executive officer said.
Whistler Blackcomb could increase visits by skiers and snowboarders to about 2.8 million from 2.0 million now, CEO David Brownlie said in a phone interview. “That’s kind of what we’ve planned," for a maximum winter-visit capacity. “Summer definitely has a longer way to go. We don’t see a limit at this point.”
Shares in the company touched a high of C$27.42 last week, pushing the company’s market value above C$1 billion ($753 million) and making it one of the largest publicly traded ski-hill operators in the world. The stock has gained 40 percent in the 12 months through Monday, exceeding the performance of global peers including Vail Resorts Inc. and Sweden’s Skistar AB. Whistler Blackcomb was up 0.8 percent at C$25.80 at 9:51 a.m. in Toronto compared with a 0.8 percent decline in the benchmark Standard & Poor’s/TSX Composite Index.
Opened in 1966 as part of a plan to bid for the 1968 Winter Olympics, the Canadian ski hill now attracts visitors from across Canada and the U.S., Europe and increasingly Asia who come to carve turns and relax in the swish surroundings, or hike, mountain-bike, and take in a glacier in the summer. Whistler got a boost from the 2010 Vancouver Winter Olympics and Lindsey Vonn’s gold-medal win that showcased the soaring Coast Mountains and the resort’s more than 200 ski runs and its peak-to-peak gondola, the highest in the world.
Whistler Blackcomb could expand its ski terrain by about 25 percent from more than 8,100 acres (3,278 hectares) now, Brownlie said. “We can still build that business over time with new amenities,” he said.
This year, the combination of the weak Canadian dollar and plenty of snow, after the lowest in 36 years last season, resulted in 23 percent more visitors in the fiscal first quarter that ended Dec. 31. Earnings before interest, tax, depreciation and amortization rose 68 percent to C$17.2 million, a record for the company.
The Canadian dollar has dropped about 16 percent against the U.S. greenback in the past two years and about 10 percent against the euro and the Japanese yen in the past 12 months. That’s made visits by foreigners cheaper and helped send British Columbia’s growth to the fastest among the country’s provinces.
“Whistler Blackcomb remains a significantly cheaper all-in vacation for our U.S. neighbors, European and Asian visitors,” said Mona Nazir, an analyst at Laurentian Bank in Montreal, who rates the shares buy. “The increase in visitors from outside of Canada is also correlated to higher revenue and margins as guests typically spend more per visit than regional guests.”
Five of six analysts covering the company recommend buying the stock. Whistler Blackcomb share performance is edging out Broomfield, Colorado-based Vail Resorts, a company that’s almost five times larger in terms of market value. Manulife Asset Management and CI Investments Inc. are among the largest owners of the stock, according to data compiled by Bloomberg.
Whistler Blackcomb has been investing in new restaurants as well as services on the ski hill, such as its ski school. Approval of its expansion plans by the government of British Columbia, which owns the land the resort operates on, would unlock the next wave of expansion for the company, allowing it to increase the number of summer visitors. The company is also open to acquisitions if they are “complementary,” said Brownlie.
“There are different opportunities that cross our desk,” he said. “If the right one comes along, it’s something we’ll seriously take a look at. Good resorts don’t necessarily come available very often and what is paid, is quite frankly, maybe too high.”
Only three large ski resorts have been built in North America in the past three decades because of the high cost and environmental challenges associated with building in often remote areas. Farther east in British Columbia, developers have been trying to build a ski resort known as Jumbo, the subject of a recent documentary, since 1990 in the face of local opposition concerned about the impact on grizzly bears.
Fickle weather brought on by climate change is among the risks for ski resorts. Farther south, California’s multi-year drought has resulted in curtailed ski seasons for many ski resorts, including some near Lake Tahoe, after the driest January last year in the state since record keeping began in 1895.
Whistler Blackcomb currently has about 2.7 percent of the North American market of about 75 million skier visits and almost 11 percent of the Canadian market, according to the company. Its most significant competitors are resorts in Colorado, the Canadian Rockies as well as ski hills in the eastern part of the continent including Ontario’s Blue Mountain and Quebec’s Mont Tremblant, Brownlie said.
Whistler Blackcomb pays a quarterly dividend of C$0.24 a share, giving it an indicated yield of 3.66 percent. That compares with 2.57 percent for Vail Resorts and 3.35 percent for Stockholm-based Skistar.
While the company’s financial performance has beat competitors, Brownlie would like to do better on a different metric: getting out to ski more. With this year’s cumulative snowfall on track for an above-average season which normally reaches more than 11 meters (36 feet), the chief executive only manages a couple of days of skiing a week. “It’s never enough.”