April 5, 2015 / 9:03 PM / 3 years ago

Australia's not-so Snowy Mountains: Why Vail bought a ski resort Down Under

SYDNEY, April 6 (Reuters) - When self-confessed snowboarding addict Risma Utami planned ski trips from her adopted hometown of Sydney, conspicuously absent from the wishlist of destinations were the fields in the nearby Snowy Mountains.

“Europe, Japan and New Zealand are cheaper, you have better quality snow there, more challenging slopes, great accommodation, less waiting time at the lift and more skiing,” the 29-year old said.

With climate change threatening Australia’s already meagre alpine skiing resources, the Snowy Mountains might not seem an obvious choice for the first international foray by U.S. ski giant Vail Resorts Inc, which last week agreed to pay $136 million for Perisher Ski Resort.

Perisher is Australia’s largest and most popular ski resort, but in a country better known for deserts and beaches, it faces some significant natural hurdles.

The summit of Mt Perisher, at just over 2,000 metres (6,500 ft), is nearly 900 metres (2,950 ft) below the base of Vail’s Breckenridge, one of the almost dozen U.S resorts it owns.

Perisher’s annual snowfall has varied between a healthy 384 cm (12-1/2 ft) and a woeful 7 cm (3 ins) over the past five years, according to snow sports website OnTheSnow.com, forcing the resort to increasingly rely on artificial snowmaking.

But for Vail, the deal was as much about attracting more well-travelled and well-heeled skiers from Down Under to its U.S. resorts as getting its hands on Perisher’s limited, albeit profitable, assets - particularly as climate change bites.

“Mountains in the northern hemisphere are generally more luxurious, bigger, better mountains than those in the southern hemisphere,” Vail chairman Rob Katz told Reuters after the deal, which will offer Perisher season pass holders access to Vail’s North American resorts.

“In Australia, for somebody looking at Perisher and saying ‘should I buy a pass?’ on worries maybe the season won’t be that good this year, they now know they can also ski in the United States for free.”

HOTTER AND DRIER

The challenge facing the Australian ski industry are only expected to rise as the climate becomes hotter and drier. Since the 1950s, the Snowy Mountains’ snowpack has fallen by about a third and is expected to decrease by half or more before the end of this century, according to top Australian science body CSIRO.

With uncertain snow conditions, smaller mountains and hefty lift prices, many Australians already choose to ski in places such as Niseko in Japan, New Zealand’s Queenstown or Whistler in Canada. Colorado, Vail’s home state, is also popular.

Australians love their adventure sports and rank among the top 10 wealthiest countries in the world per capita, making them a small but important market for global ski resorts that target international visitors, who stay longer and spend more than locals.

Some North American resorts credited Australian skiers with helping them weather the recent recession, said Ben Cardenas, marketing manager at Travelplan Ski.

Around 900,000 Australians ski or snowboard, and in 2011 and 2012, when the Australian dollar was trading around parity with the U.S. dollar, almost half of the Australians who did snowsports on their last holiday went overseas, according to Roy Morgan Research.

With a weakening yen, some of the world’s best powder snow and facilities, Japan has become a key competitor to U.S. resorts, especially as the U.S. dollar rises.

“We’ve definitely noticed a big surge in bookings to Japan and we think this has a lot to do with affordable ski options,” said Kellie Carty, an executive at Flight Centre Travel Group , highlighting an 82 percent rise in flights to Tokyo over the past three years.

Peter Murphy, a Sydney-raised surfer-cum-snowboarder and skier who runs tour operator SkiJapan, said he did not believe Vail’s move would threaten the “pre-eminent” position of resorts such as Niseko among travelling Australian skiers due to Japan’s shorter flight times, easier time zone and reliable snow.

But analysts were largely positive on Vail’s move, expecting cash-flows from Perisher to prop up off-season earnings, while some speculated it could spark a similar response from other international ski groups.

“It is something that even New Zealand or Japanese ski resorts may get threatened by,” said Ryan Lin, a senior analyst at research firm IBISWorld. “They might consider similar tie-ups with some Australian ski resorts.” (Additional reporting by Lincoln Feast in SYDNEY and Ankit Ajmera in BANGALORE; Writing by Lincoln Feast; Editing by Alex Richardson)

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