Vail Resorts is the largest operator of ski resort infrastructure in the world with a portfolio of 41 resorts, mainly in North America. That it is on the acquisition trail for European ski resorts with the right “fit” is well known. Its first acquisition in the Alps was in Andermatt last year with a 55% stake in the owner of the resort's ski infrastructure. With this announcement Vail will acquire 84% of CMA, the infrastructure company that owns and operates the ski lifts and pistes in Crans-Montana, alongside 80% in SportLife AG which owns a ski school there, and 100% of an entity owning real estate including 11 restaurants.
A fractious relationship
The local press had speculated that Crans-Montana was a target - to us it makes perfect sense. It is fair to say, in our opinion, that the seller, CPI Property Group, Luxembourg based and originating in the Czech Republic, had a fractious relationship with the Communes and with some other Swiss resorts. A dispute with the council in 2018 resulted in the opening of the ski lifts being delayed. Questions were asked about the resort's safety protocols after several injuries and a fatality on the piste due to an avalanche in 2019.
Local politics matters in Switzerland and also, money talks. For example, all of the local Communes around Crans-Montana can offer their own tax deals to outsiders, sizable funds have been raised for investment into the town. But this has not been matched and the opinion of many is that CPI has not invested sufficiently to keep the ski infrastructure up to date.
The acquisition could not have come at a better time
Despite these concerns, other investors have already seen the potential.
Le Régent International School opened in 2015, backed by the Commune and a group of investors. It has flourished. More recently the school has formed an alliance with Institut Le Rosey. The school counts nearly 270 students currently, with newcomers in the winter term, and plans to extend the campus for up to 400 students by 2026.
Alaïa Chalet is a new action sports centre in Lens, 10 minutes from Crans-Montana, with a 5,000m² site, the largest of its kind in Switzerland. Specialising in board sports and BMX, and offering summer camps, this is an innovative addition to the appeal for younger families.
The Six Senses group completed its significant and luxurious piste-side complex last season, with a spa and 5* hotel for the 2023-24 season. Only a few units remain for sale, and to buyers of any nationality, at a price range above CHF 25,000/m².
Also notable is the investment by a prominent UAE investor in the Le Crans Hotel & Spa in 2020. The Moubra Lake is a popular venue in the summer, and the Sports Centre nearby has been renovated. The town has retained its casino licence for a further 20 years, the only one awarded in Valais.
What will Vail Resorts bring to the table?
This is a prime opportunity to bring the resort, which until recent years has had a somewhat ageing demographic, to a new audience. Vail Resorts is a profitable business, with a healthy 31% EBITDA margin** which underlines the experience gained with a large pool of comparable businesses. The company has stated its intentions to invest approximately CHF 30 million in the resort over the next five years to improve the user experience, improve the quality of restaurants and increase the snowmaking capacity.
The Epic Pass is attractive to skiers who like to move around, benefitting from discounts on food and beverages, lodging, rentals, and more. Within its US estate, the pass offers local, regional and nationwide options. Here in the Alps you have access to Andermatt, five days at Verbier4Vallées, seven days at Les 3 Vallées in France, seven days at Skirama Dolomiti in Italy and three days at Ski Arlberg in Austria. Crans-Montana will be added for the 2024-25 ski season.
This acquisition should also prove positive for the organisation of the FIS Alpine Ski World Championships, to be held in Crans-Montana in 2027.
Can we quantify these benefits for property investors?
Vail Resorts themselves point to 5-7% annual property value increases after the acquisition of a resort. Comparing prices in Crans-Montana, which are at least 40%* lower compared to Verbier, its famous peer in Valais, might be overly ambitious. But it gives a sense that there is much to play for given the resort's impressive ski and lifestyle credentials.
APi has always believed that the resorts with the best infrastructure prosper - this has been demonstrated elsewhere without doubt. That the property market in Crans-Montana over the last 10 years has been in the doldrums - until the pandemic - is a symptom. Per annum price growth of 1.4% over this period significantly lags the broader property market in the top Swiss Ski Resorts*.
Where next in the Alps for Vail Resorts?
In our opinion, the top French Resorts would be a difficult proposition. They are large, well financed, well integrated, and quasi state-backed. For example Les Trois Vallées is operated partly by Compagnie des Alpes, whose footprint is a vast group including La Plagne, Les Arcs, Tignes, Val d'Isère and others. The network operated by the Compagnie du Mont-Blanc stretches from Vallorcine, via Chamonix, to Megève. The Association Internationale des Portes du Soleil coordinates the entire network in this 12 resort ski area.
Elsewhere in the Alps - in a sample of 42 Swiss ski resorts, over half were deemed to be insufficiently profitable to sustain future investment***. We suspect that Austria may present some opportunities: the same paper points to around half of the country’s 220 lift operators, mainly in the smaller resorts, that are unprofitable. That said, we do not doubt for one moment that the largest established operators in other top Swiss and Austrian ski resorts will argue they are doing just fine and indeed, take pride in their resorts as symbols of local economic prowess.
*UBS Alpine Property Focus 2023 and APi | **Company FY2024 guidance | *** Tourism Economics - University of Innsbruck, 2019