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Intrawest to acquire Colorado’s Steamboat

$265 million purchase includes resort, real estate, commercial core

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By Andrew Mitchell

Colorado’s Steamboat Ski and Resort Corp. is close to taking down the For Sale sign put up in July, once regulators and U.S. Forest Service approve Intrawest’s purchase of the resort for US$265 million.

The two companies inked an agreement on Tuesday, and the sale could be finalized by the end of the 2006-07 ski season.

The purchase, Intrawest’s first major ski resort purchase since the company acquired 50 per cent of Blue Mountain in 1999, is credited to the acquisition of Intrawest by Fortress Investment Group. That deal, which saw Intrawest once again become a private company, was finalized in October when Intrawest shareholders approved Fortress’s purchase offer.

The financial backing of Fortress, and the parent company’s interest in expanding into ski area and resort operations, freed up the capital to sign a deal with the American Skiing Company.

“This was definitely a Fortress deal,” said Intrawest Mountain Resorts president Hugh Smythe. “It’s something we would have been interested in, but it’s a large acquisition and we would have needed Fortress’ backing.”

American Skiing Company bought Steamboat Springs and Heavenly ski resorts for $288.3 million in 1997, later selling Heavenly to Vail Resorts in 1997 for roughly $96 million.

According to Alex Wasilov, the president and CEO of Intrawest ULC, “The acquisition of Steamboat represents another milestone in our long-term strategy to develop, market, operate and provide our customers with access to the world’s premier network of experiential destination resorts.

“This acquisition marks the resurgence in our strategy to grow through acquisitions and to leverage our platform to enhance value for our customers through the Intrawest network of resorts.”

In 2005 Intrawest sold controlling interest in Mammoth Mountain Ski Area in California, retaining about 15 per cent ownership as well as other assets in the resort. Intrawest has also sold off stand-alone golf resorts and real estate management operations in recent years.

While many have speculated that Fortress’s acquisition of Intrawest would quickly lead to the sale of some of the less profitable mountain resorts in company’s portfolio, few predicted Intrawest would start acquiring more resorts so soon. But Smythe sees the acquisition of Steamboat as a good fit.

“Steamboat is a phenomenal resort and this is a very exciting transaction for everyone involved,” said Smythe. “Steamboat’s success has been built on a powerful combination of a solid and long-tenured management team led by Chris Diamond, a dedicated employee base, a supportive community and access to some of the region’s most legendary terrain.

“We look forward to working with the entire Steamboat team and the local community to connect with the resort’s unique culture and traditions.”

According to Smythe, Intrawest has been working on the deal since American Ski Company announced that Steamboat was for sale in July when American Skiing Company placing the resort under “strategic review.” Tim and Diane Mueller made an unsuccessful bid for the resort in 2002 and had been granted an exclusive 30-day negotiation period earlier this year, but failed to come to an agreement with American Skiing Company.

There was a lot of competition from other companies, said Smythe. “There were definitely some other suitors, all big hitters, so it was definitely a competition down to the end. Steamboat is considered a prized acquisition.”

Smythe says that Intrawest will continue to look at resort acquisitions in North America, and is currently shopping for resorts in Japan and Europe.

Steamboat is the third Colorado resort that Intrawest will operate. The company owns and operates the Copper Mountain resort and operates the Winter Park resort under a contract with the City of Denver. Intrawest is also involved in real estate development at Copper, Winter Park and other Colorado ski areas.

Opened in 1963, Steamboat is one of the largest resorts in North America with access to 3,490 acres of terrain on six peaks, serviced by 20 lifts. It has a vertical rise of almost 1,200 metres. It also receives consistent snow with a base elevation of 2,103 metres (6,900 feet), and a summit elevation of 3,224 metres.

Although the resort is 43 seasons old, Smythe says the town’s winter traditions go back a lot further. Their annual winter carnival is turning 95 this year this year.

“Steamboat Springs is a very authentic, historical Western Town, one of the great iconic brands in skiing,” he said. “More winter Olympians hail from Steamboat than from any other city in North America. Seventy Olympic athletes come from there.”

  In addition to acquiring Steamboat’s tenure, which is located on U.S. Forest Service Land, Intrawest will acquire fee owned real estate as well as development rights for several parcels of lands. Commercial acquisitions include 13 dining venues, the commercial core and management of the Steamboat Grand Resort Hotel and Condominiums, Steamboat Central Reservations, and employee housing.

SKI Magazine has named Steamboat the No. 1 family resort in the west the past four years in a row.

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