Vail Resorts to buy Afton Alps

In news that is NOT from the Onion, Vail Resorts has announced that it will purchase two ski areas in the Midwest: Afton Alps, outside the Twin Cities of Minneapolis/St. Paul, and Mt. Brighton, outside Detroit.

Honestly, I’m stunned. Vail Resorts holds a number of big-name properties, including Breckenridge, Heavenly, and of course, Vail. It has certainly bought ski areas before, including Northstar-at-Tahoe (2010) and early this year, Kirkwood, another Tahoe-area resort.

But there’s a big difference between, say, Beaver Creek, and Mt. Brighton, and it isn’t just the vertical drop or acreage. For the most part, Vail Resort properties have been destination areas, with a heavy emphasis (Vail, Beaver Creek) on expensive real estate development. By contrast, Afton (where I have held a pass for several years) and Brighton are commuter businesses. In other words, think of beer leagues and fried hamburgers, not spas and menus fit for foodies.

It will all be interesting to watch. Customers of Afton and Brighton will benefit from ugprades Vail Resorts will make to the snowmaking systems, and perhaps they’ll see spiffed-up day lodges as well. (Nicer restroom facilities and parking lots would be a great start, at least at Afton.)

Both Afton and Brighton operate in highly competitive local markets. For example, in Afton’s market, Welch Village has likely been stealing customers since it introduced a no-blackout season pass of $99 in 2008. (The price of an early-purchase season pass has gone up to $149, but that still undercuts Afton as well as the four other ski areas in the region.) To help build an advantage for the Midwestern areas, Vail Resorts has announced that season pass holders of both Afton and Brighton will receive a 25 percent discount on the window price of tickets at Vail, Beaver Creek, Breckenridge, Keystone, Heavenly, Northstar and Kirkwood.

There are many interesting questions going forward. Why did Afton and Brighton sell out, aside from the opportunity to make a bundle of cash? Did they see competitive pressures making a big dent into revenues in the coming years? Did pending changes in health care laws and regulations, as well as tax rates, play a role? (Deep-pocketed Vail Resorts, like any large business, is better situated to respond to increasing government regulations and tax rates.) What will happen to Afton and Brighton’s competitors? Will they attempt to step up their game? Can they? Or will they hope that VR will boost ticket prices such that they can claim the low-budget market?

Your thoughts?