Intrawest goes European
By Bob Barnett
Old World numbers and New World expertise are a couple of the factors behind the alliance that brings Intrawest and Compagnie des Alpes together, two mountain resort operators that attracted more than 15 million skier visits last year.
The alliance, announced May 29, provides Intrawest with marketing opportunities to Europe and its 240 million skier visits. CDA, which has ownership interests in 11 French resorts and Courmayeur in Italy, will be able to tap into Intrawest’s expertise in resort design and real estate development.
"There are cross-marketing opportunities whereby we can jointly market to each other’s resorts and to tour operators," Intrawest President and CEO Joe Houssian said in a release. "We also have agreed in principle to explore additional business opportunities with CDA, including possible real estate development at several of their resorts and the opportunity to acquire additional resorts in other European countries."
CDA’s resorts have approximately 10 million skier visits per year, which makes CDA the largest ski operator in the world. Through the new alliance Intrawest will be able to market directly to those skiers. Although France is not considered a big skier export market, French resorts such as CDA’s La Plagne, Tignes, Les Arcs and Les Menuires attract a large number of skiers from the United Kingdom and other countries in Europe, which Intrawest will be able to reach through the alliance.
Colorado ski resorts have the strongest presence in Europe of any North American ski areas, due to years of group marketing under the Colorado Ski Country USA banner. The alliance with CDA may position Intrawest’s nine resorts across North America as an alternative to the Colorado Ski Country USA group.
As for real estate development, the French policy on resort development bears some resemblance to British Columbia’s Commercial Alpine Ski Policy. Former provincial ski co-ordinator Al Raine studied the French policy when he wrote the CASP policy in the mid-1970s.
The French are also believed to be looking at condo-hotel development, a concept pioneered at Whistler and now used by Intrawest and others across North America.
The Intrawest-CDA alliance proposes Intrawest purchasing nearly 16 per cent of the common shares of CDA. At the same time CDA will purchase one million new shares in Intrawest. Both investments will be done at market value.
Three days before the alliance was announced Intrawest issued a release on May 26 stating the company was filing a preliminary prospectus with securities regulatory authorities in Canada and the United States regarding a proposed public offering of 3.5 million common shares of the company.
The release stated: "The offering is expected to close in mid-June 1998. The company intends to use approximately $50 million of the net proceeds to reduce bank and other indebtedness. The balance of the net proceeds will be used for general corporate purposes, including expanding and enhancing operations at the company's resorts, supporting continued growth of the company's real estate operations and resort club operations and financing potential acquisitions and investments."
During the equity issue Intrawest is required to maintain a quiet period, which prohibits media interviews. However, it is known that Hugh Smythe, president of Intrawest’s Resort Operations Group, has been having discussions with CDA for several years.
The alliance also gives Intrawest a leg up on its two chief North American rivals in the mountain resort business, Vail Resorts and the American Skiing Company. Vail’s five resorts, all in Colorado do about 4.7 million skiers visits per year. ASC owns seven mountain resorts, in New England, Colorado, Utah and California, which do more than 5 million skier visits annually.
"From our base as a developer of North American mountain resorts, we are initiating steps to grow into a global, diversified leisure company," Houssian said in the release. "We believe our development expertise and proven operational methods can be successfully applied to additional leisure market segments and other areas of the world."
On April 2 Intrawest announced the planned acquisition of Raven Golf Group, which owns two golf courses in Arizona, as a first step in its objective to acquire, develop and operate golf courses and golf resorts. On May 26 Intrawest announced the acquisition of Sandestin Beach Resort, the largest resort and residential community in north-western Florida, which includes 63 holes of golf.