Killington Real Estate Blog

Tankers aren’t turned on a dime

 All of us in Killington and those who have an interest in Killington are anxiously awaiting some positive sign from the new owners of how the resort is going to improve.  Certainly, I want to see something NOW but let’s be honest; we need to give it a chance.  After all, the ownership transferred less than a month ago.  A tanker cannot be turned on a dime.

First strike and you’re out??

OK, the first announcement (came from ASC, not the new management) did not enamor anyone to the new owners.  (It was an issue about “lifetime passes” and their expiration within 2 years, if you missed it.)  But, let’s be honest, we cannot fault the new owners for paying attention to making money.  They did not agree to take on ASC liabilities when they bought the assets of the resort.  If “lifetime pass” holders have a “beef”, shouldn’t it be with ASC for “selling them out?”

Profits are to be reinvested

From what I hear, when the resort makes money, the money will be reinvested back into this area and will help to continue the improvement of the resort.  We have no reason to believe that this will not be the case, other than that’s an approach that we have not seen in many years.  Powdr says it will invest this year what ASC invested in the last two years combined.  That amounts to millions of dollars.  The unfortunate part is that is a drop in the bucket of what is needed in Killington.  But, we have to start somewhere.  No reasonable business person can expect money to be spent without regard to payback.  That will take some time.

New priorities

Powdr wants to make money.  Let’s be real, if they aren’t profitable, nothing will improve.  Powdr feels that the path to profitability comes from improving the quality of the guest’s experience.  The objective is to get people who come to Killington to stay longer and come back.  That sounds like a noble objective to me.  They go on to say that low prices may bring in the masses, but that does not necessarily translate into a high quality experience for anyone.  We have all been on the mountain at some time when there have been 18,000 other customers there.  I expect your reaction was similar to mine, “AHHHH, get me out of here.  This is a death trap.”  Then again, those people lucky enough to experience Killington on a non-holiday midweek probably go home telling everyone how terrific the place is and cannot wait until their next trip back.  Did those two different experiences occur at the same place?

Expect a new pricing strategy

I think the bargain season pass rates are a “thing of the past.”  I do expect to see a pricing strategy that may dissuade people from busy periods (i.e., higher prices) and encourage a balance of traffic to provide a more even higher quality experience for all.  This should result in visitors wanting to come back.

“Beast” versus “Best” of the East?

To some, “beast” IS “best” but to many, particularly the more profitable guests, it is not.  I personally think that an objective of creating the “Best of the East” will be better for everyone.

So, when??

I think we will begin to see some solid announcements within a week.  Powdr executives have been in town in meetings with key employees and these meetings have been characterized as very productive.  Season pass rates should be “out” any day.  Hopefully, there will be announcements of other tangible plans for this summer as well.

Let’s give them a chance!

American Skiing Corporation announced on Tuesday that they have agreed to sell Sunday River and Sugarloaf to Boyne USA for $77 million.  Boyne USA is a privately held company which owns and operates eleven ski areas and and golf resorts in the US and Canada.  One of their most notable holdings in the ski industry is Big Sky in Montana.

According to the Rutland Herald, Les Otten did bid on the two Maine resorts but was beat out by Boyne.  For the full story…

The sale of Sunday River and Sugarloaf, expected to occur by the end of July, will leave American Skiing Company with just one remaining resort, The Canyons in Utah.

Prestige Real Estate of Killington has recently sold two more properties.  A beautiful 4 bedroom 3 bath home in Killington for $650,000 and a trailside town home for $765,000.  We have also just listed for sale two Sunrise condominiums, a 1-bedroom unit for $178,900 and a 2-bedroom unit for $225,000.  These units are both the lowest priced units of their kind, currently on the market in Sunrise Village and have direct ski in, ski out access.  For more information on these and other properties, visit Prestige Real Estate of Killington’s website. 

Prestige Real Estate of Killington has recently sold 2 more ski on-ski off properties in Killington.   We were both the listing and selling office for the sale of a 3 bedroom 3 bath home on Trailview Drive.  This house closed for $900,000.  Prestige Real Estate of Killington was the selling office for a 3 bedroom 3 bath Sunrise condominium which sold for $321,500.   We continue to be the leader in Killington home and condominium sales.

If you have a vested interest in the Killington real estate market as I do, you probably have been waiting with great anticipation for announcements from the new owners of the Killington Resort as to their plans.  After all, major infrastructure improvements will signal great confidence in the vitality and potential in the area and should translate into an upsurge in buyer interest and real estate prices.

So far, the approach of Powdr Corporation, the entity that will be managing the ski and resort operation, is to take one step at a time.  First, they have recruited an extremely qualified individual, Chris Nyberg as President.  Chris has been in place for about a week and is getting acclimated to the resort and the personnel.  Based on his comments at a recent meeting, it seems there will be two areas of initial focus:

1. To focus on upgrading the small things that will make a good first impression
2. To upgrade the snowmaking infrastructure to ensure a good customer experience and keep people coming to Killington

Although these activities are important first steps, they are not likely to make a tremendous difference in Killington real estate sales prices in the short term.  In a newsletter put out by Prestige Real Estate shortly after the announcement that the mountain would be sold, we predicted that market activity should increase but prices will be most affected when there is tangible evidence of significant new investment.  For the full text of that newsletter…

A statement made by Chris Nyberg indicates that as improvements that are made at Killington bear “fruit” (i.e., profits) for Powdr, those profits will be re-invested in Killington to fund larger and larger projects.  Obviously this will take some time.

The bottom line is that there is great reason for optimism.  I translate that into “this is a great time to buy in Killington.”  There is a strong inventory of quality properties and prices are very attractive.  These prices are not likely to drop, given the anticipation of future development, and they are most likely to increase as more significant infrastructure improvements begin in the area.

As you have probably read or heard by now, the new owners of Killington made quite a first impression by announcing that bond-issue and stock-issue season ski passes will only be honored for two more years.  The truth of the matter is that the announcement came from American Skiing Company, not Powdr Corp.  These are passes that when bought, were expected by the buyers to last through the buyers’ lifetime. 

Apparently, these are “lifetime” passes, but the [Sherburne] Corporation’s lifetime, NOT, the buyers’ lifetime.  In this case SP Land and Powdr purchased the assets of Killington and Pico.  They did not buy the Corporation and have concluded they have no legal obligation to honor the arrangement. 

I would expect that this will not be the last we will hear about this and perhaps it will be decided ultimately in a court of law.  What I am sure about is that the new owners did not buy a lot of goodwill with this move.

Regarding season pass rates and offers for the general public, they are not expected to be announced for a few weeks.

I had the good fortune of sitting in on a meeting this past weekend sponsored by the Killington Resort Homeowners Association.  Chris Nyberg, new President of Killington was asked to speak and answer questions about the plans for the mountain and the Killington resort.  Chris spoke and answered questions for about 90 minutes. 

First, I will say that Chris seems to be highly qualified for the position and seems highly approachable.  He has over 30 years experience in the ski industry in a wide range of activities, including building a ski area from scratch to his most recent role as Vice President for Bombardier, a world-wide leading provider of snow cats and heavy equipment for the ski industry.

Much of the discussion centered around the priorities of the new management of the resort.  Chris emphasized that the new owners will invest this year, what American Skiing Company (ASC) has spent at Killington in the last two years combined.  He also emphasized that Powdr’s track record is re-investing in areas that make money (i.e., what is made in Killington will stay in Killington).  After stating that he feels that “Killington is an icon, the gem of the East” and has tremendous potential,” Chris summarized his impression of the condition of the resort by saying that “this place [Killington] is getting a bit old.”

In the short term, the priorities will be:

Overall Appearance and Improving 1st Impressions

• “We will polish the resort up over the summer”
• “We will put new toilets in Ram’s Head for the women”
• “We will focus on upgrading small things that will help make a good 1st impression”
• “Improving the customer experience”
• We will also spend a lot of money on snowmaking system improvements (underground pipe) that may be invisible to the general public

The Village

• Steve Selbo, President of SP Land will be moving the Act 250 process forward
• No real infrastructure changes are expected to occur until at least Spring/Summer 2008, although it is likely that we will see “stakes and ribbons” up and around in the next 3-4 weeks
• What’s closest to the “lifts” will most likely be built first

In general, the exchange between Chris and the audience was very upbeat and optomistic.  As one would expect, attendees made an effort to forward their particular “hot buttons” such as re-energizing the philosophy of “1st to open, last to close”, etc. and extending the attractive season pass rates. 

I think what we will see is a careful examination of the economics of each decision, many of which we will not “see” for a while.

The sale of Killington to SP Land and Powdr was FINALLY completed yesterday.  Now the question is what will the new owners do?  Chris Nyberg has been named to succeed Allen Wilson as President of Killington Resort and Pico Mountain.  No other details are available at this time.  It is fully expected that the preparations for the development of the Ski Village will take some time, most likely more than a year before any real shovels hit the ground.  Some of the questions on my mind, and I assume are on many others’ minds are:

1. Will the new company re-energize the plans for the interconnect between Killington and Pico resort?  Some say the Village will drive skier visits and will justify the interconnect.  Others feel the interconnect will draw more skiers?  Is this a case of “the chicken and the egg?”
2. What will the ski season pass rates be?  Will Powdr offer discounted pass rates similar to those offered by ASC over the past couple of years?  Many think that ASC was “forced” to offer attractive deals to capture “cash” early in the season.  Will Powdr see ski pass rates as a “loss leader?”
3. What will the priorities be for the new company? We know that the “Village” is the focus of SP Land but will the company view the base lodges as they currently exist as a help or a hinderance?  Will people who might be interested in buying a new slopeside property be turned off by the aged infrastructure at the mountain?  Will base lodges be renovated or possibly torn down and rebuilt?  Will new hi-speed lifts be added?  Will new trails be developed?  Will the wooded areas be trimmed to encourage more “tree skiing?”
4. Who will be part of the management team?  Chris Nyberg has been involved in the ski business for many years and was formerly Vice President for Bombadier, a maker of snow equipment such as snow cats.  Who will he choose for his team?

For what we know now, see the story in the Saturday, May 12th Rutland Herald.

We will continue to post items in this blog as we learn more.  In the meantime, tell us what you think.

According to the Rutland Herald this morning, the sale of Killington has been complicated by the fact that the resort is located on state land.  This has required a review of the transaction by the State Department of Forests, Parks and Recreation.  Apparently, the transfer of the lease, with no changes, was approved on Monday.  The lease runs until 2060.  Steve Selbo, President of SP Land is hoping that the closing will take place on Thursday of this week.  For the rest of the Rutland Herald story…

All of us in Killington are anxiously awaiting the official announcement that the sale of Killington to SP Land and Powdr Corp. has been completed.  We are anticipating announcements from the new owners as to their plans for the real estate and hopefully, upgrades to the mountain.  Stay tuned!

One single family ski in/ski out house and two condos sold during the month of April in Killington, VT.  In addition, seven Killington condos went under agreement during the month.  The activity this month equals the activity level in the entire first quarter of 2007.  Hopefully this signals an uptick in buyer interest in Killington but it may be premature to ring the “back on track” bell. 

The modest increase in activity may merely reflect the fact that Killington enjoyed one of the best spring skiing seasons in years and people just kept coming.  Conversely, for those of us who tend to be more optimistic and look at the glass as being “half-full”, this may be the beginning of a turnaround.  I guess we’ll have to wait and see what happens in the next few weeks.

The entire Killington community is anxiously awaiting some announcement from the impending new owners of the ski area.  What are you going to do and when?