Some breaking news today on the future of skiing and snowboarding in Australia. What does this mean for you? If you don't already have a Freedom pass you can get one for only $749 until May 31st and then you can use that same pass at Vail, Beaver Creek, Breckenridge, Keystone and Arapahoe Basin in Colorado, Park City and Canyons in Utah and Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada

 

Colorado-based Vail Resorts has bought Australia's largest ski resort, Perisher, for $176.6 million. By Robert Harley. Australian Financial Review. March 31st 2015.

The resort, which is held on a lease till 2048 with a 20-year option to review, is owned by James Packer subsidiary Murray Publishers and Transfield Corporate.

The acquisition includes the resort areas of Perisher Valley, Smiggin Holes, Blue Cow and Guthega, along with ski school, lodging, food and beverage, retail/rental and transportation operations, which together comprise Perisher.

Perisher's Freedom Pass, which goes up for sale this week at $749, will now include access to Vail resorts with unlimited skiing at Breckenridge, Keystone and Arapahoe Basin in Colorado, Park City and Canyons in Utah and Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada - subject to traditional holiday restrictions.

The chairman and chief executive officer of Vail Resorts, Rob Katz, said the acquisition was aimed at boosting Vail's 10 per cent share of the Australians sking in the Northern Hemisphers.

"Australians are great skiiers and travellers," he said. "This acquisition is part of Vail Resorts' continued strategy to drive season pass sales and build loyalty with guests from around the world."

"Australia is one of the most important international markets for ski resorts across the Northern Hemisphere, generating an estimated over 1 million skier visits annually to resorts in North America, Japan and Europe. We see this as a ground-breaking acquisition that will dramatically enhance the connection between our company and Australian skiers and riders."

Mr Katz also expects the free season-long pass access to Vail's North America resorts to bring more skiers to Perisher, boosting local businesses at the resort and Jindabyne at the base of the Snowy Mountains.

Within Perisher itself, it will be business as usual, Mr Katz said, with the same staff and the same arrangements with the club lodges.

"We think Perisher is the Australian leader in innovation and guest experience," he said.

Vail is a listed resort operator, capitalised at $US3.6 billion after a year in which investors enjoyed a total return in excess of 40 per cent.

The deal, which requires the approval of the NSW Government, is expected to close in the fourth quarter of fiscal 2015.

Vail expects Perisher to generate incremental resort reported EBITDA of around $20 million during its first twelve months of operation following the purchase.

Ski season EBITDA is expected to be around $38 million balanced against negative resort reported EBITDA of around $18 million during the off-season.

During the first year, Vail expects Perisher to generate approximately $US6 million of free cash flow after deducting capital expenditures at the resort, income taxes (both US and Australian) and all interest expense relating to the acquisition.

However, the figures do not include any incremental benefit of increased visitation to the company's US resorts from Australian guests.

Mr Katz said the fall of the Australian dollar did not drive the deal but the currency was "oppportunistic".