U.S. investors spending big bucks on Canadian ski resorts.

CONSOLIDATION

There may be less snow than there used to be, but that’s not slowing investor appetite for Canadian ski resorts.

On Monday, Mont Tremblant and Blue Mountain owner Intrawest Resorts Holdings Inc. announced it has agreed to be acquired by the U. S. ski resort company Aspen Skiing Co. and private equity firm KSL Capital Partners in a US$ 1.5 billion deal.

Six months ago, Coloradobased Vail Resorts Inc. said it would purchase B.C.’s Whistler Blackcomb Holdings, Canada’s biggest ski resort, for US$1.4 billion.

With a 20- year trend of declining seasonal snowfall, spending big bucks on Canadian resorts seems counterintuitive. But Michael Bellisario, an analyst with Robert W. Baird & Co. Inc., said American ski chains are looking north for the same reason as American visitors.

“Just as the strong U.S. dollar makes Canadian investments look more attractive, the stronger U. S. dollar also makes it more attractive for U.S. citizens to travel as their dollars go further,” he said.

“Consumer confidence and consumer spending, especially discretionary spending, remain strong in the U. S., benefiting the ski industry.”

While some Canadian ski areas have struggled to adapt to warmer winters and changing demographics, many others have thrived, said Christopher Nicolson, the president and chief executive of the Canada West Ski Areas Association.

Nicolson said resorts like Whistler Blackcomb that have successfully marketed themselves as year- round mountain vacation destinations have come out on top.

Given the global trend toward consolidation in the travel industry, it’s no wonder big international firms are looking to Canada for acquisition targets, Nicolson said. “When you look at the increase in travel on a global perspective, they’re actually running numbers and looking favourably at the future.”

The world’s leading ski resort companies can’t afford to ignore climate change, however. A 2015 study from Stanford University’s Steyer-Taylor Center for Energy Policy and Finance analyzed how variations in winter temperature affect Vail Resorts’ valuation, concluding the continent’s largest resort operator has been able to offset some, but not all, of the changing climate’s negative impact by cutting costs and increasing summer offerings.

“Despite efforts by ( Vail Resorts) to offset the impact of lower snowfall on its valuation ... climate change negatively affects its financial performance,” Stanford researcher Donna Bebb said in the study.

Michael Pidwirny, a professor at the University of British Columbia who has made climate models predicting the effect of warmer winters on Canadian ski resorts, said one good ski season on the West Coast may have been enough to return resort operators to optimism.

“Memories are short and this year’s weak La Nina has produced epic ski conditions in this same area,” he said in an email.

Aspen Skiing and KSL Capital Partners’ proposed acquisition of Intrawest is expected to close by the third quarter of 2017. The sale must meet certain conditions and acquire regulatory approval before closing.

Intrawest CEO Thomas Marano said the US$ 23.75 per share cash offer is a 40- per- cent premium over where the company’s shares were before a report in January speculating that it was exploring a potential sale. Intrawest shares closed down US$ 1.70 at US$ 23.60 in trading on the New York Stock Exchange on Monday.

OFFSET THE IMPACT OF LOWER SNOWFALL ON ITS VALUATION.