Can the new U.S.-based owners of Mount Washington Resort pull it out of its tailspin of the last two years?
Last November, Utah-based Pacific Group Resorts Inc. (PGRI) signed a deal two years in the making to purchase Mount Washington Alpine Resort. Fans of skiing, snowboarding and other winter sports, along with businesses that benefit from the resort, are hoping the sale will breathe new life into a ski area that’s been a staple of Vancouver Island winter recreation since 1979. That’s when Alex Linton and business partner Henry Norie hatched the idea to install ski lifts on this mountain with an ocean view above the Comox Valley.
“Pacific Group Resorts are pros in the industry and they’ll be very involved in strategic planning moving forward, but they’ll be working with existing managers on day-to-day operations,” says Peter Gibson, president and general manager of the resort and a longtime Mount Washington employee.
Gibson has paid his dues at Mount Washington and has the scars to prove it. Physical ones from the time in the mid-1970s when as a young hire he helped fall trees and cut ski runs. And more recently, emotional scars acquired during the consecutive dismal winters of 2013/14 and 2014/15 when the resort struggled to stay open, and it fell to Gibson to buoy up the spirits of a skeleton staff, respond to the barrage of questions from unsympathetic season-pass holders and address media covering the misfortunes of the resort like a death watch.
If it was tough on Gibson, it was even tougher on shareholders. The group, led by Campbell River logger George Stuart, had owned the mountain since 1989 after buying it from the founders. During those years, they had watched cash flow dwindle after missing the lucrative Christmas season one year and closing in mid-February the next. Funds hemorrhaged simply to keep the lights on, pay staff and maintain bare-bones operations.
Though recent tough winter seasons had some people wondering if there could be a future for skiing on the Island, Mark Fischer, PGRI’s executive vice-president of resort investment and brand development, is convinced there is indeed a future. PGRI acquired all recreational property — lifts, lodges and other infrastructure — as well as more than 40 hectares of developable land while Stuart and his partners retain two parcels of property. Fischer says the company may partner with the former owners to develop these parcels, but that’s a future decision.
“Anybody who’s in the ski business in North America knows about Mount Washington,” Fischer says over the phone from Maryland. He first inquired about the purchase opportunity back in June 2013, but says he had been aware of the resort for decades because of its legendary snowfalls, which can top 10 metres in big years.
Location, Location
Mount Washington is famous for its feast of big snowstorms, but also its famine of a temperate coastal climate where the difference between rain and snow on the slopes can be a matter of a degree or two in temperature. It can also make a difference of hundreds of thousands in profits and losses. However, the folks behind PGRI are accustomed to running ski resorts in marginal locales.
Mount Washington joins PGRI’s portfolio of three American properties — Wisp Resort in Maryland (not exactly renowned for winter sports), Wintergreen Resort in Virginia and New Hampshire’s Ragged Mountain. Despite the word “pacific” in PGRI’s name, this is its first foray into the resort industry on the Pacific side of the continent. Neither PGRI nor previous owners have disclosed the sale price, but Mount Washington is believed to have sold for well below the rumoured $30 million list price, which one industry insider had called wishful thinking at best.
In many ways, the Utah investor’s timing couldn’t have been better. Mount Washington’s weather-weary owners were motivated to sell, and the U.S. dollar was trading at more than Can$1.30 around the time the deal was announced, deeply discounting investments north of the 49th parallel for American buyers. Furthermore, tourism on the Island is enjoying a healthy growth spurt, up five to seven per cent in 2015 thanks to the weak loonie. To top it off, winter was kind to Mount Washington this past season for PGRI’s first year of ownership.
An All-Season Strategy
Two key pillars of PGRI’s business strategy are snow-making — an investment the previous two owners never made — and all-season marketing. Though Fischer says Mount Washington is better known for winter tourism, summer tourism is a major focus of the new owners as they shape the future of the resort, which has so far struggled to grow a strong summer product and leverage infrastructure that sits mostly idle after the snow melts at the end of one winter season until first flakes fall to herald the arrival of the next.
“Mount Washington comes with an excellent management team, great ski terrain and a beautiful setting next to Strathcona Park,” Fischer says, noting that PGRI’s resorts on the eastern seaboard all border beautiful natural areas, such as Virginia’s Blue Ridge Mountains.
The new owners have “cred” in ski-resort development and management and are avid skiers and cyclists. They prefer not to be the public face of Mount Washington, leaving that to general manager Peter Gibson and the management team that is unchanged from the previous ownership. PGRI will, however, be hands-on when it comes to big-picture decisions and development.
President and CEO Vern Greco managed Park City Mountain Resort in Utah up to and through the 2002 Winter Olympics. Fischer brings a background in finance and brand development to Mount Washington and PGRI’s other properties. He believes the Island resort is punching below its weight in terms of business potential.
“Relying on four months of winter operations for a year’s worth of revenue is like operating a factory with one eight-hour shift per day,” Fischer says.
He says Mount Washington’s winter market will remain largely focused on the island, centred on the Comox Valley and spanning from Campbell River to Victoria. He views summer tourism as the big area for potential growth and has his sights on capturing a much larger share of the travellers from around the world who visit Vancouver Island during the dry season.
As a first step, Mount Washington has reopened its mountain-bike park, which features more than half a dozen lift-accessed trails dropping from the mountain’s 1,588-metre summit. Three years ago the then-owners suddenly announced the bike park’s closure, citing escalating costs for insurance and operations coupled with a flat market. But poor planning and lack of investment might have been the real reason.
Comments posted on Facebook at the time of the closure from one local mountain-bike enthusiast summed it up this way: “People were not going because not enough energy was being invested in creating and maintaining world-class mountain-bike trails.” PGRI hopes to change that; the new owners, as part of the reopening, are building fresh trails and tweaking existing ones to make them more beginner and family friendly. The company is serious about the mountain-biking product — in June, the company brought snow-school director and bike-park manager Mike Manara down to Park City, Utah, to learn how that resort has parlayed a network of more than 250 kilometres of trail into its tourism mix.
The company has also purchased a new bungee trampoline and is undertaking modest renovations to the main lodge that will reconfigure the front-end layout and add to the outdoor deck space to capitalize on the mountain view. At the time of this interview, Fischer said renovations to Fat Teddy’s Bar & Grill, the resort’s principle eatery, were on the books as well. In the long term, he says, the company will look into introducing additional summer activities such as ropes courses and aerial parks, both featured at the company’s other ski resort properties. PGRI is also conducting market research aimed at updating Mount Washington’s aging hotel stock.
The Winter Mainstay
Though PGRI is planning significant investments in summer tourism, winter remains the backbone. That’s why the sale hinged heavily on PGRI’s ability to secure government permitting and licensing to draw water for snow-making. Fischer admits the Island’s mild climate poses challenges for a ski resort, which requires the right mix of temperature and humidity. He says the company is working with snow-making technology firms to address this issue. He expects to have a couple of snow guns in place for the coming season. Being able to guarantee early-season snow and ensure a Christmas-vacation opening is critical to the resort’s bottom line.
Currently, Mount Washington is in rebuilding and maintenance mode. Despite clocking a healthy 250,000 skier visits last winter (in comparison, Whistler Blackcomb has roughly 1.1 million winter visits and five times the skiable terrain) and enjoying good snow conditions, Peter Gibson calls it a “B” performance in terms of resort operations. Some decisions made last year alienated longtime pass holders, such as the mid-week closure of the Boomerang Chair, which accesses black-diamond terrain on the mountain’s north side and discontinuing the popular mid-week season pass.
“Because of the last two years, the place basically needs a fresh coat of paint. There’s a lot of catching up to do,” Gibson says, adding that mechanical failures with snow cats resulted in inadequate grooming of ski runs, which resulted in a slew of customer complaints. “We know we can do better.”
Resort on the Rebound
The resort sale has created a buzz in the mid-Island business community and among skiers and snowboarders. At full operation, Mount Washington employs 900 people, from millwrights, electricians and other trades, to ski instructors, front-end service staff, bartenders, lifties and salespeople.
Although a detailed analysis of the resort’s overall economic impact has never been done, it’s safe to say that it’s significant for the region. According to Gibson, 30 per cent and 15 per cent of the resort’s customers come from Victoria and Nanaimo respectively, and they all gas up vehicles, dine at restaurants and purchase outdoor gear from local retailers.
PGRI takes the reins at Mount Washington at a time when the property market in the Comox Valley is red-hot, driven partially by Baby Boomers cashing out of the Lower Mainland, according to Jamie Edwards, a Royal LePage realtor and developer in the Comox Valley.
Sales of vacation properties at Mount Washington, which had stagnated before and during the recent lean-snow years, are on the rebound. Sixteen condos sold in the first six months of 2016, up 400 per cent from the same time last year. As its first real estate play at the resort, PGRI plans to develop a subdivision of single-family lots dubbed Sky Island. The company has not given a timeline for the project.
“Absolutely, Mount Washington is a huge part of the lifestyle draw for people moving to the Comox Valley,” Edwards says.
Dave Petryk, CEO of Tourism Vancouver Island, calls the resort the only significant winter product on Vancouver Island. “So it’s important,” he says, “and I’d hope to see the summer program up there grow as well.”
Brent Curtain, destination marketing and tourism manager for the Comox Valley Economic Development Society, says his organization is in regular talks with PGRI to see how it can help facilitate the company’s plans.
There’s no doubt that when the resort fails to thrive, so too do local businesses. Outdoor retailers watch as inventory languishes on the shelves, and hotels see occupancy sag.
During the 2013/14 season, when lack of snow delayed the resort’s opening for a month, causing it to miss the crucial Christmas season, the Holiday Inn in Courtenay reported occupancy of just 28 per cent, down sharply from 55 per cent in January the previous year.
If PGRI is successful with snow-making, a guaranteed Christmas opening would be a huge boost for these businesses.
Jeremy Grasby owns and manages the Riding Fool Hostel in Cumberland and has been instrumental in the development of the Comox Valley’s booming biking scene. He services an active clientele that skis in winter and mountain-bikes in the shoulder and summer seasons. According to Grasby, the return of lift-accessed mountain biking to Mount Washington is exciting and will help build on the Comox Valley’s reputation as a cycling destination with trails to suit all abilities, from flowing cross country to technical downhill routes.
“There’s no doubt that Mount Washington drives incremental business. That’s a no brainer,” agrees David Rooper, general manager of the Old House Village Hotel and Spa, adding that the Old House will be offering special stay-and-play packages to dovetail with Mount Washington’s renewed summer mountain-biking program.
For ski enthusiasts, the mood in the Comox Valley ebbs and flows through the fickle months of a West Coast winter. Retirees who moved there to golf 12 months a year may groan as the dark days of winter set in, but for many other residents of the region, having ski lifts a half-hour’s drive away from the saltchuck is what makes the community unique and desirable.
It’s the same reason PGRI was attracted to the investment in the first place. However, Mark Fischer knows the company has work to do to regain customer confidence after two tough snow years followed by this past season of rebuilding and ownership. “Last season,” Fischer says, “we received quite a few emails about grooming, road maintenance and other things, and we pay attention to those comments.”
There’s no doubt locals are rooting for Mount Washington’s recovery.
“Mount Washington is the infrastructure, the weather is the wild card,” says Grasby. “It definitely impacts us. When the mountain has
a good year, we have a good year.”
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