Gillett Goes On Resort Buying Spree
Where will he go next?

Our industry isn't the only one musing over the implications of consolidation; that buzzword has also popped up within the resort industry. What's feeding all the talk about the C-word in the resort industry? It could be the purchase of ten North American resorts in three months by Booth Creek Ski Holdings, Inc.

Owned by George Gillett and family, and financed in part by the John Hancock insurance company and the Canadian Imperial Bank of Commerce, Booth Creek is the latest corporation to step up to the plate, joining biggies like American Ski Company, Powdr, and Vail Resorts.

Last November, Gillett purchased three California resorts Northstar-at-Tahoe, Sierra-at-Tahoe, and Bear Mountain as well as Waterville Valley and Mt. Cranmore in New Hampshire. In December, Booth Creek continued its buying frenzy with the purchase of four Northwestern resorts Alpental, Snoqualmie, Ski Acres, and Hyak ski areas in western Washington. The corporation rounded out the year with an agreement to purchase Grand Targhee Ski and Summer Resort in Wyoming.

Whew!

SNOWboarding Business went to the chairman of Booth Creek himself, George Gillett, to find out what all this will mean for the resorts and for snowboarding.

What do you think of snowboarding?

Snowboarding is a very important part of the ski industry. We think of the sports of skiing and snowboarding as snow sliding. Sometimes we still trip and call it skiing, but with four sons several of whom are major snowboarders and others who tele-ski we like to look at the sport as an all-inclusive not-just-Alpine-skiing sport.

Do you snowboard yourself?

My wife and I are going to try it this winter not just try it we re going to do it. But we've got to do it when the snow is soft, cause I've got such a bad shoulder that the doctors told me if I fall down the wrong way, I've got to have it replaced or something.

Do you have any special marketing strategies you plan to implement toward snowboarders at your resorts?

If you've been at Bear [Mountain, California] in the last few weeks, I think you'll see the initial attempts we're making to really emphasize how important boarding is for us with a substantial increase in snowboard instructors, special terrain-featured boarding areas

Like halfpipes and snowboard parks?

Absolutely. And with food service that attempts to be attractive, both in terms of food content and price. We ve also set up special rental shops and clothing shops that are not integrated with Alpine or Nordic skiing. There's an overall feeling that each segment of people who use our snow are welcome.

Will Bear Mountain will be a model for some of your other resorts?

I think Bear Mountain and Snoqualmie each do a very strong job with boarders. This year we re doing a number of snowboarding competitions, and starting next year, we re negotiating to bring in several international snowboarding competitions.

Are you competing against recreational businesses like the cruise industry? Do you have to market your resorts as being the total winter vacation experience ?

That's a great question. I think it's a little bit early for us to give you an answer. As it relates to the area snowboarding, the odds are probably no. I don't think we view their alternative day or weekend strategy as getting on a cruise ship and going down to Mexico. We're thinking of them more into surfing and things of that sort. It's going to require a specific marketing strategy one we're in the process of developing.

Are you planning to offer programs like joint lift tickets between nearby areas?

Through our Vertical Club program you can get the equivalent of frequent flyer miles in winter sports. For every vertical foot that you ski or slide, you get credit that can be used for airline tickets, discounted resort packages, goggles, clothing, boards, or whatever. That's a program we already have in play [at Northstar, Sierra, and Bear].

Now with the higher volume, now, will lift-ticket prices go down, stay the same, or go up?

Over the years in Vail we've concentrated on guest value. We do an awful lot of market research, and we want to make sure the guests believe that their value goes up each year, whether the price goes up or down. If the price goes up but you ve given them more terrain, different lifts, better snow, most of the them don't even think about price, they're thinking about value.

I can't predict whether prices are going to go up or down; I'll guarantee you, though, that value's going to go up in a variety of ways.

We won't think about that [price changes] until next summer or early fall. An awful lot depends on what kind of capital we put in or what kind of winter we all have ... one thing we do know is that our costs go up every year it's like death and taxes [laughs].

You re spreading your resort purchases in different regions across the U.S. Have Les Otten's antitrust problems in the Northeast influenced your decision-making?

Oh, I don't think so. Our basic strategy is very clear: we want to be close to the major markets the major population centers. We ve got two outside of Boston, one in Los Angeles, two outside of Sacramento/San Francisco, and four outside of Seattle, and now Grand Targhee which is a regional destination resort that gets an awful lot of its guests out of Seattle. Of the top five markets where skiers and boarders live, the only market we re not currently within two or so hours from is New York.

Do you think that area might be next?

I don't really have any idea [laughs]. It's funny. Sometimes you plan and plan and plan, and with some things, you re disappointed. Then with others you never dream something's going to become available, and then all of a sudden it happens very quickly. You just want to be ready; it's hard to really predict in this business.

Is it your intention to acquire other resorts?

I don't think there is any question we re going to continue to look for ski areas within a couple or three hours of major population centers.

Does having ten resorts affect your economies of scale? For example, do you plan on consolidating and having one big marketing department?

Some of that is still work in progress. I don't think we ve drawn too many conclusions. We have a corporate staff comprised of four people: the president and CEO, Bill Jensen; Nanci Northway, our CFO; Julie Maurer, head of marketing; and Mike Roth, who's in charge of R D. Those four people are at corporate headquarters. Absent that, everything else stays the same at the resorts. Each will continue to have its own marketing department.

So it wasn't your intention to be able to do more with less? I know American Ski Company feels they can do more with less.

Don't put me with anything American Ski Company says; they run their company differently from the way we do. I m not quite sure how to answer that question, we ve never made any comments along those lines. I think what we basically said is that there are some efficiencies. American Skiing has made a major case out of this, and frankly done it they've done a substantial reduction of staffs and so forth. They operate in a small geographical area, relatively speaking, and they may be able to operate that way. From our standpoint, we re going to have a small corporate headquarters, and for all intents and purposes, all the staffs at the resorts will stay roughly the same.

There are some efficiencies available to us in terms of purchasing, some with regard to certain services things like insurance and retail purchasing, there s some financial rationalization that can take place there.

I think Les Otten's great, he does his thing, we're doing something a little different. We think this is a business of the here and now; it's a very difficult business to operate out of a corporate headquarters.

How is all this being financed?

We're a private company. We have two wonderful partners. Amongst the three of us, the company is very well financed and well capitalized, and our family is the majority partner. That's really all we want to say for now.

—Christine Rasmussen