The corporate evolution of the ski industry continued last week when the American Skiing Company, one of North Americas three largest ski area operators, announced it had merged with MeriStar Hotels and Resorts, the largest independent hotel management company in the United States.
The deal, which wont close until the new year, is a tax-free, stock-for-stock merger. It is expected to bring some year-round stability to ASC, a company whose bottom line fluctuates with the seasons and which has recently made large capital investments in some of its nine ski resorts.
The new merged company will be called Doral International Inc. With assets exceeding $1.2 billion and revenues of approximately $600 million, the new company will have head offices in Washington, D.C.
MeriStar manages hotels which operate under such well known names as Hilton, Westin, Doubletree, Radisson, Marriott and Sheraton. The company lists several golf and warm weather resorts among its assets.
MeriStar Hotels and Resorts has a "paper clip" association with MeriStar Hospitality, the third largest real estate investment trust in the United States. The REIT owns 106 hotels which are now managed by the re-named Doral International.
Les Otten, the founder of ASC, will become chairman of Doral International, while Paul Whetsell, chairman and CEO of MeriStar Hospitality and MeriStar Hotels and Resorts, will become CEO of Doral International.
Doral International will operate 23 resort hotels, 246 hotels, 15 golf courses, four conference centres and nine ski areas. The ski areas include: Steamboat in Colorado; Heavenly at Lake Tahoe; The Canyons in Park City; Killington, Mount Snow and Sugarbush in Vermont; Sunday River and Sugarloaf/USA in Maine; and Attitash Bear Peak in New Hampshire.
"Doral International is in a position to reap the benefits of the heavy infrastructure investment made by American Skiing over the past several years," Whetsell said in a release.
"As we move from more of a development stage to an operating focus, it will be our intent to create world-class, year-round resorts in attractive cold- and warm-weather locations, with a full range of lodging and retail facilities, as well as such amenities as skiing, golf, spas, tennis and water sports," Whetsell added.
Structuring of Doral International will be somewhat similar to the way Intrawest has organized its Resort Operations, Resort Development and Resort Club divisions. Doral International will have four divisions: Doral Leisure, which will specialize in year-round resorts; a hotel management division; an international corporate housing arm called BridgeStreet Accommodations; and a real estate division which "will focus on development of upscale vacation villages and resort real estate." The real estate division will introduce and market the Doral Owners Club, "an upscale, full-service travel and lifestyle organization that will offer purchasers of the companys real estate a variety of amenities."
"Our target market for Doral Leisure will be the expanding universe of active baby boomers and the echo boom generation immediately following them," Otten said in a release.
In putting together ASC Otten acquired ski areas throughout the 1990s. He took the company public in November, 1997. ASC stock opened at $18 but it has never maintained that level and was trading at $2.75 at the time the merger was announced on Dec. 11.
ASC had made large capital investments in its resorts in the past year, including a $25 million gondola at Heavenly and new fractional ownership lodges at Steamboat, Heavenly and The Canyons. A village development at the base of The Canyons is also underway.
ASC reported losses of $52 million this year, on top of a $24 million loss last year. But a $150 million investment by Texas-based Oak Hill Capital Partners has helped keep the company afloat. Under the merger, Oak Hill now owns 45 per cent of Doral International.
Sales of units in the new ski resort lodges are expected to generate substantial cash flow. As well, Doral Internationals ski areas and resort properties hold real estate development rights for up to 14,000 more units.
ASC competes with Intrawest and Vail Resorts for the unofficial title of largest ski area operator in North America.