Resorts Gobble Retailers: Intrawest buys Max, Vail mergers with Specialty Sports

Two major resort corporations have acquired in a pair of predominant retail chains based in Colorado, causing new perspectives to arise on an emerging trend in retailering.

Intrawest Corporation and Vail Resorts are rapidly increasing their leverage in the retail aspect of the resort business with more visibility in Max Snowboards, Inc./Breeze, Inc. and Specialty Sports, Inc., respectively. These transactions will generate approximately 70-million dollars in revenues for each company, with combined networks of 165 locations for Intrawest and 70 for Vail.

Intrawest Corporation announced September 8 the purchase of Max Snowboards, Inc. and Breeze, Inc., a conglomeration of 43 snowboard and ski rental companies located in Utah, Colorado, Oregon, California, Wyoming, Idaho, and Nevada. On a parallel note, Vail Resorts and Specialty Sports, Inc. (SSI) announced last July the merger of Vail’s retail operations with SSI to form one jointly owned company known as Specialty Sports Venture, LLC. This venture combines Vail Resorts’ outlets at Vail, Beaver Creek, Breckenridge, and Keystone with Colorado Ski & Golf, Boulder Ski Deals, Telluride Sports, Grand West Outfitters, Aspen Sports, and Base Mountain Sports.

“The trend of consolidation is here,” says Tom Sapiro, vice president of Max and Breeze, about these events. “It’s really hard for marginal players to compete against resort operators. The resorts have so much more capital to work with, and they have become one place that can design every aspect of the ski vacation.”

Sapiro explains that the ability for guests to call one telephone number and have their entire vacation planned in fifteen minutes is obviously a huge perk. As a retailer, he wants to be integrated into the process.

“The most important thing is to have our guests come back,” he says. “And as long as the people on the other end know the product, they will. Now we (Max and Breeze) are better equipped to do that.”

Ken Gart, president of Specialty Sports Venture, adds that the presence of the four major corporations in the industry-Vail Resorts; Booth Creek, Inc.; Intrawest Corporation; and American Skiing Company; is clearly making an impact on retailers.

“There are four big companies who are all aggressive,” says Gart. “They need to figure out how to best perform in each area of operation, and retail is different than running a ski area.”

The Gart family founded Gart Brothers Sports and left the chain in 1992, although the stores still hold their name. Specialty Sports Ventures will remain under management by the Gart family, with Vail acting more passively in the arrangement.

“Some of their buyers and managers have been brought in to work under our umbrella,” says Gart.

For employees, Gart says the changes that will occur as a result of the merger really depend on individual goals. “For those employees who’s main goal is to ski every day, their jobs won’t change,” he explains. “But for those who want to grow there is more upside. There is no ceiling as far as growth.”

In the short term, employee benefits for Max and Breeze associates will be extended in the form of Copper Mountain season passes for all full-time salaried personnel at both store level and the corporate office in Denver. Intrawest is the owner of Whistler/Blackcomb and Panorama, British Columbia; Tremblant and Mont Ste. Marie, Quebec; Copper Mountain, Colorado; Stratton, Vermont.; Snowshoe, West Virginia; Mountain Creek, New Jersey; and Mammoth, California (58 percent).

Intrawest also operates timeshare businesses in Keystone, Colorado and Squaw Valley, California. In addition, the company recently formed an international alliance with Compagnie des Alpes, the leading ski company in the world for skier visits.

As far as upcoming alterations in Max and Breeze locations, Intrawest Executive Vice President and Chief Financial Officer Daniel Jarvis says the company plans to develop a strategy for both expansion and structurall changes in existing stores.

“We have earmarked capital and believe there will be visible improvements,” says Jarvis.

Targeting the snowboard industry early on, Intrawest opened the first Showcase Snowboards in 1989, a pioneering venture in the retail experience.

According to Sapiro, the recent acquisition will pave the way for four to seven new “Showcase Max” stores boasting 4,000 to 5,000 square feet. The stores can be expected to open in both major metropolitan areas as well as significant resort locations.

Max Snowboards originally opened in 1994 with the idea to introduce a high-performance rental and demo center for riders of all abilities. This format will remain the same, with a more dramatic increase in softgoods and accessories retail.

“People will find the same high-caliber equipment,” says Sapiro, “But can expect to notice new products and fixtures. We are working on making a more pleasurable experience for the guest, especially considering the rental shop is often the first place they will go.”

Sapiro’s view on boosting the rental experience seems to be consistent with the general direction of the industry. Offering a higher quality of product to the consumer has significantly increased growth of rental revenue over the past four years, with high-performance skis and snowboards showing the largest margins. Rental shops are operating with margins that exceed 80 percent, while more typical ski retailers tend to look more at an average of 40 percent. Both Intrawest and Vail are embracing this trend as they look to a means to couple their resources with an already existing niche.

“Companies are now combining ski-area operations with the people who have the time and expertise to devote to it,” says Gart.

The long-term result will take its course as these ventures unfold. Inevitably, Intrawest and Vail have obtained a substantial piece of a better means to market their product. On the retailer’s side, they have become immersed in a bigger picture that will only enhance their existing visions to excel.

-Gretchen Treadwell