Creating value for multiple stakeholders

James O’Donnell
Senior vice president and chief operating officer, Vail Resorts Hospitality & Real Estate, Denver

Tourism is one of the strongest economic drivers for the state of Colorado and thrives as a multibillion-dollar industry that supports some 150,000 jobs and contributes close to a billion dollars in local and state tax revenues. According to Longwoods International’s latest report on Colorado tourism, the state has retained a significant lead over others as a ski destination, capturing more than 20 percent of all overnight ski trips nationwide. So, how do commercial developers in seasonal resort destinations continue to drive the best value for their businesses, the communities in which they are developing and the guests who are supporting these developments?

Mountain resort operators are focused on doing what they do best – managing and enhancing ski area infrastructure and service. As mountain resort operations continue to become more business-savvy, on-mountain investments increase – from new and more efficient chairlifts to support robust skier visitation to investments in summer activities that will generate new jobs and help support a much healthier year-round economy. Mountain resort operators are thoughtfully improving the experience for guests and involving stakeholders like the U.S. Forest Service and surrounding communities throughout the process. All of these things ultimately improve the greater destination and real estate development opportunities at the mountain resort base areas.

The base areas must maintain parity with the continually elevated on-mountain experience. Many mountain towns have undergone significant transformations in the last decade; and yet, there’s room for more changes. It is imperative that developers and ski resort operators join forces to improve the entire experience for guests while also committing to doing so in the long-term best interest of the resort communities.

At Vail Resorts, we’re oriented around creating value on the mountain and in the base areas of the mountains we operate. Our company is the leading global mountain resort operator and the leading manager of hotels in iconic resort locations, particularly in mountain destinations. We’ve successfully developed and completed several mixed-use projects at the base areas of our mountain resorts, including The Arrabelle at Vail Square, A RockResort in 2008; The Ritz-Carlton Residences, Vail in 2010; and One Ski Hill Place, A RockResort in Breckenridge also in 2010. These and other projects have benefitted visitors and local communities by revitalizing underutilized areas and creating revenue streams and options for visitors through lodging, dining and retail.

Developer Partnerships

We are keenly focused on the remaining land we have at our base areas. Instead of developing these prime parcels of land ourselves, we’re looking for third parties who can lend their expertise in development and partner with us throughout the process. This will ensure that our guests and communities are being carefully considered from beginning to end. We’re not just looking for the highest bidder for our sites – rather, we want to help developers through the process of determining the best use of the site as well as local nuances like parking, employee housing, entitlement and planning, all of which can set the tone for the long-term success of the project.

We have a vested interest in ensuring that projects are completed, completed right and enhance the entire destination. We have dedicated senior leaders of our team to work side-by-side with developers to create and manage the best possible project.

No company can be all things to all people, of course – in the case of Vail Resorts, it was this type of self-awareness that helped us recognize the value in shifting gears from developer to partner. Companies like ours focus on the value they bring to the table and how each player can join forces for the collective benefit and greatest impact.

Just as the mountain operators are the experts in mountain management and development, so are real estate developers to hotel, residential, retail or mixeduse development. What can significantly strengthen both parties is the expertise and know-how in navigating the stakeholders that make up the resorts in their entirety – the year-round community, workforce, local government and businesses, and second homeowners.

A third party looking to develop in a seasonal resort destination ought to:

• Consider who to work with at a local government level and the history of development in the area;

• Adjust for the seasonal nature of guest volume and cash flow and develop an understanding of year-over-year calendar shifts;

• Consider the ins and outs of working with the ski resort; • Navigate recruitment, training, development and retention of seasonal staff;

• Consider data and analytics – often dubbed the new “oil” – that can maximize the value of a property, whether through occupancy, sales or the like; and

• Ensure that a property or business is considered and maximized for valuable group business to the area.

Few developers have the resources or local knowledge to go it alone in this territory and should think carefully before doing so. Missteps can lead to years of growing pains and strife with key stakeholders, all of which inevitably will affect the bottom line and the quality of the product. An experienced partner can bring tremendous opportunity and value to third parties and other stakeholders for true long-term benefit.

Featured in CREJ’s April 20-May 3, 2016, issue.