The planned merger between a major hotel management company and one of the three largest North American ski resort operators collapsed at the end of March, and one of the leaders in the resort consolidation movement is now out of the ski industry.
American Skiing Company, which owns nine U.S. ski resorts, announced last December it was merging with MeriStar Hotels and Resorts, the largest independent hotel management company in the United States. But in late March the two companies announced they had jointly decided not to go ahead with the merger.
"Given the slowdown in the economy, we believe it is more prudent for us to continue to focus on our core business of operating hotels, rather than consummate the merger," Paul Whetsell, MeriStar Hotels & Resorts chairman and chief executive officer, said in a March 23 release.
A week later, in a move which many analysts believe was not related to the failed merger, Les Otten announced his resignation as chairman and CEO of ASC. Otten, one of the most dynamic personalities in the ski industry, was replaced by William Fair, formerly COO of ASC.
Otten was largely responsible for ASCs growth from one ski area in Maine 21 years ago to a publicly traded company whose holdings now include Steamboat in Colorado, The Canyons in Utah, Heavenly in California, Killington, Mount Snow and Sugarbush in Vermont, Sunday River and Sugarloaf in Maine and Attitash Bear Peak in New Hampshire. While the companys resort holdings rival those of Intrawest and Vail Resorts, much of ASCs expansion was debt financed. A $150 million infusion by Texas-based Oak Hill Capital Partners last year helped keep the company afloat, but it also meant Otten lost control of the board of directors of ASC.
Fair addressed ASCs immediate future in a release. "Although the company faces near-term challenges, I am confident that substantial shareholder value can be created at American Skiing during the next few years. I am eager to work closely with the rest of the senior management team to achieve our game plan," said Fair.
He noted that ASC is experiencing growth in revenue and earnings in this fiscal year. At this time, the company anticipates that resort EBITDA will likely be at or slightly below the low end of the previously guided range of $50-$60 million, although results are subject to change.
The ASC merger with MeriStar, which manages hotels that operate under such well known names as Hilton, Westin, Doubletree, Radisson, Marriott and Sheraton, was expected to increase the profile of ASC resorts through the hotel network.
Last week, in an unrelated move, MeriStar was swallowed up by FelCor Lodging Trust Inc. in a deal worth $1.1 billion in cash and stock. FelCor is a real estate investment trust based in Dallas and one of Americas biggest hotel companies.