KSL’s Shannon bullish on ski resorts as investment

The ski business is good business according to Mike Shannon, managing director of KSL Capital Partners. While golf courses and real estate have fluctuated in recent years, Shannon told NSAA convention attendees how ski resorts have provided investors with a steady rate of return.

Listening to Mike Shannon extol the virtues of the ski resort business, you get the sense that his company’s acquisition of Squaw Valley USA in December 2010 won’t be its last. The industry passed the recession stress test with flying colors and deserves a place in a diversified portfolio, a bullish Shannon, managing director of KSL Capital Partners, told the National Ski Areas Association Convention audience on May 6, 2011.

Shannon served as president and CEO of Vail Associates from 1986 to 1992, then founded KSL Recreation Corporation, building a topflight portfolio of luxury resort properties--albeit none in the ski sector--before selling in 2004 to CNL Hotel & Resorts for $2.4 billion. In 2005 he started KSL Capital Partners, whose roster includes the NSAA Convention host La Costa Resort & Spa and ClubCorp, the largest owner of private golf clubs. Soon after its Squaw acquisition, KSL announced plans to invest $50 million in the resort. 

Shannon trotted out--then debunked--a frequently referenced quote from a 1992 Fortune Magazine article on how the weather-dependent ski industry is better left to those who are deeply passionate about it and willing to accept inconsistent returns. The industry’s response and recovery to the recession proves it's not too cyclical, while the evolution and increase in season pass sales and snowmaking have made it less weather dependent, he said. Ski resorts have managed to diversify revenues and delivered 1 percent compound growth annually for the past two decades. Also helpful are the high barriers to entry, with virtually no new resorts being built (while golf courses are closing in record numbers, 10 once-shuttered ski resorts did re-open this past season).

Shannon said he’s impressed with the guest service improvements in Squaw’s inaugural season under new CEO Andy Wirth, and said with capital improvements and an improved experience the Tahoe resort is poised to broaden its appeal to both to its traditional clientele and to destination visitors.

--Andy Bigford

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