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Intrawest's Whistler thrives despite 'Olympics aversion'

Forecasts were for dismal demand for the slopes at the B.C. resort. But good weather and deals beckoned skiers

David Ebner

VANCOUVER — From Monday's Globe and Mail

It's 9 a.m. on a Saturday, 70 centimetres of snow has fallen in the past 24 hours. Crowds throng the heart of Whistler Village, long lines of excited skiers and snowboarders ready to relish an epic day, everyone willing to face the equally epic queues that stretch from each of the lifts to ride up Whistler and Blackcomb mountains.

This is the scene two weeks ago at Whistler Blackcomb, co-host of the Winter Olympics this month. Even though a bright global spotlight will shine on Whistler, the Games were expected to be bad for business as the feared "Olympics aversion" factor would keep the crowds away from the mountain all season long, not just in February.

It was supposed to be a big negative for the premier resort of heavily indebted Intrawest ULC, which has missed a major debt payment and is trying stave off angry lenders who are planning to foreclose on the company and auction the assets on Feb. 19.

But, at Whistler, business is good. Snow has been plentiful - almost 10 metres, the most ever recorded by the end of January. The lure of powder, and a series of special deals, has attracted increased regional traffic, even as international numbers are down. All in, skier visits are up almost 10 per cent from a year ago, according to Dave Brownlie, president of Whistler Blackcomb.

"It's not a record year but given the Olympics aversion, to be well ahead of plan is certainly a good thing," Mr. Brownlie said.

Better-than-expected business at Whistler is the only good news for Intrawest owner Fortress Investment Group LLC, the New York hedge fund and private equity fund that bought the company in 2006 at the peak of the real estate bubble for $2.8-billion in a heavily leveraged buyout. Its equity is now near worthless and Fortress has sold two ski resorts - Copper Mountain in Colorado in November and Panorama Mountain Village in southeastern British Columbia last week - to pay down debt.

Intrawest now owns eight winter resorts and one golf-beach resort in Florida. At Whistler Blackcomb itself, there is a minority owner, Japan's Nippon Cable with 23 per cent.

Last September, the mood was grim at Whistler. A marketing brochure asked: "Why on earth would you buy a season pass in 2010?" The pitch was "an offer you can't refuse," the $1,100 season pass that's cheaper than it's been in a decade, almost 30 per cent off the previous year for a resort routinely ranked No. 1 or No. 2 in North America and among the best in the world.

Hotels in Whistler offered many specials and Whistler introduced a three-day option for a regional discount card that normally is only available in prepaid one-, five- and 10-day versions. Buying a five- or 10-day card early got customers a free bonus day to use before Christmas.

Worse, the Olympics aversion year came after what Fortress told its investors was a "difficult" 2008-09 season for Whistler, whose high-end product suffered in the recession even as the mountain was battered by rain and a lack of snow. Also, in December, 2008, a gondola tower snapped, injuring a dozen people and stranding more than 50 for several hours, generating terrible publicity.

Starting today, the actual Olympics impact is felt - no day parking for skiers is available through the month. Traffic on the mountains is expected to be down by more than half. Whistler last week did announce some paid parking until Feb. 10, two days before the games begin.

So even though all of Blackcomb and a lot of Whistler will be open to ski - the races take place on the Creekside portion of Whistler - getting to the mountains will be tough.

Long lines at Whistler on January powder days won't be enough to save Fortress from its creditors, according to James Brander, a business professor at the University of British Columbia who said last week that "it seems very likely" the lenders will take over Intrawest. Fortress can avoid the Feb. 19 auction by getting court protection from creditors but that move would almost certainly knock its remaining equity value to zero, effectively losing control of the company.

Although Whistler is the most important piece of Intrawest's portfolio, it's unclear how much profit it generates. In 2006, when Fortress took over, two-thirds of Intrawest's profit was in real estate, not the mountains, which was not unusual given that Intrawest started as a real estate company that got into the resort business, rather than being a mountain operator at its core.

Also, while the Olympics aversion factor hasn't been as strong as forecast, Intrawest has expressed skepticism about the long-term benefit of hosting the games - even though billions of people will be watching on television.

"I don't know if it [the benefit] will ever be measured in dollars," Intrawest CEO Bill Jensen said at a ski conference last year. "The jury is out on whether we will experience ... a longer-term sustained bump."

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Cory Raven
Telephone:604-220-9399
Cory Raven - Managing Broker
RE/MAX Select Realty
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Vancouver, BC
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