[News & Views]
structure, and they want to see that invest- ment made. And the belief is that we can keep growing, [although] not growing in terms of that many more people on busy days. As you invest in it, we can hopefully make better returns. And the more money we make every year, then we have more to put back in the resort. So, it becomes kind of a self-funding machine.” “‘THIS IS AMONG THE BEST TEAMS IN THE BUSINESS. IF YOU’RE GOING TO DO THIS, MAKE SURE YOU KEEP THE TEAM ON BOARD.’” It was clear to Gross and the other investors that Powdr’s investments in the resort’s facilities and infrastructure have paid off. “When they built the Peak Lodge and the K-1 [lodge] and put in the Snowden six-pack, the customer experi- ence was much better, but so were the operations. So that got us down the path of, ‘Let’s just reinvest as much of the cap- ital as they need into growing the moun- tain,’” says Gross. Growth strategy. Solimano holds up the K-1 lodge, completed in late 2022, as an example of the strategy going forward. “We charge more for food in K-1 than we do at Bear [Mountain] or Snowshed, but last year, 50 percent of our [food and bev- erage] revenue ended up at K-1. It shows, as you improve, that people are willing to pay, and the value proposition changes.” “We’re not going crazy upscale,” he says, adding that improvements to the resort don’t mean the season pass price is going to, say, double. But, “we’re not going for volume,” he says. The resort is already plenty busy—too busy—on a Saturday. The goal of the investments, he says: to make the operation more profit- able and deliver a better experience, without making it more crowded. Integral to that growth strategy is Great Gulf’s development of a new slo- peside village. Initial elements of the project, such as the installation of new municipal water infrastructure and the reconstruction of the resort access road, are already underway. Its centerpiece will be a new 85,000-square-foot base lodge, which will be complemented by
upwards of 110,000 square feet of retail and dining space and some 650 ski-in / ski-out condos and townhomes. “When you put that together with what Powdr has done … you can get pret- ty excited about what Killington’s going to be like when [the village is] all done in 5, 7, 8, 10 years,” says Gross. (The first phase of occupancy for the village is slat- ed for some time between Q4 of 2027 and Q2 of 2028.) The additional real estate represents a real opportunity for Killington. “When the village gets built out, it’s going to be a different mountain,” says Gross. “It’s going to be one that probably has a good chance of gaining a lot of market share if we can spread the [skier visits] out to weekdays. And that’s what ski-on, ski- off real estate will do.” Gross anticipates a robust rental market. Board oversight. As for growing the business while managing the crowds, Gross says the how is up to Solimano and his team. “They’re the experts. They’re going to decide how to deal with that.” The new owners intend to leave the operation of Killington / Pico to the existing management team. A nine-per- son board will meet twice a year, once to approve the budget and once to approve capital spending for the following year. “The board’s definitely going to have some input,” says Gross, “but we’re let- ting them run the mountain.” Gross and the other investors were assured by SE Group during due dili- gence that the operation was in good hands. “[SE Group] came back to us and said, ‘This is among the best teams in the business. If you’re going to do this, make sure you keep the team on board.’ That’s a very comforting thing to know for somebody who knows nothing about running a ski area,” says Gross. “All we’re really going to do is keep the capital in the Killington region and let Mike run the mountain the way they always have.” Pros and cons. The shift to indepen- dent ownership brings risks and oppor- tunities, says Solimano: “There are always pluses and minuses.” On the upside, there is an increase in nimbleness. “I think [among] the piec- es that are the positives for us is we can move quicker,” he says. “So I think that, to me, it’s a more entrepreneurial envi-
ronment, which I think is really fun.” Killington / Pico was also already largely a standalone operation, he says, in that it had a robust team and wasn’t overly reliant on consolidated Powdr ser- vices prior to the sale. So, there will be no scramble to bring things in-house that had previously been outsourced. But the operation has lost a safety net, so to speak, in the transition. As an inde- pendent, says Solimano, “You live and die off your own cash flow, and if you have a couple bad years, you’ve got to make sure you can balance that. … There’s always a little more security as you get bigger that you can weather some of those things.” That the new owners acquired the resort without debt and are prepared to rein- vest in it certainly alleviates some of the financial pressure. Unique? It is for these reasons that Killington / Pico is, perhaps, uniquely well-equipped to transition from con- glomerate to independent. And that makes it less likely that Killington’s tra- jectory will be replicated in the sale of Powdr’s other resort assets currently on the market: Eldora, Colo., Mt. Bachelor, Ore., and SilverStar, B.C. For one thing, it appears Powdr sold Killington / Pico at a discount. “It’s clear they could have sold it for more,” says Solimano. “Everybody wanted this resort.” “I’M REASONABLY SURE THAT THERE WAS A FINANCIAL SACRIFICE FOR THE SAKE OF LETTING THE LOCALS OWN THE MOUNTAIN.” In an open market bidding system, he says, “my impression is it would be harder for some of the other resorts to figure out a local deal. I just think it’s very hard to compete with some of those big groups.” “I’m reasonably sure that there was a financial sacrifice for the sake of let- ting the locals own the mountain,” says Gross. But Powdr was ready to sell, and Gross and Ferri were able to move quick- ly to put together a deal. In the end, “It was the right thing to do,” says Gross, for Killington / Pico and for Powdr. » continued
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