Intrawest Corporation

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Intrawest Corporation

200 Burrard Street, Suite 800
Vancouver, British Columbia V6C 3L6
Canada
Telephone: (604) 669-9777
Fax: (604) 669-0605
Web site: http://www.intrawest.com

Private Company
Incorporated: 1973 as Intrawest Properties Ltd.
Employees: 24,800
Sales: $1.60 billion (2006)
NAIC: 233110 Land Subdivision and Land Development; 531312 Nonresidential Property Managers; 561520 Tour Operators; 713990 All Other Amusement and Recreation Industries; 721199 All Other Traveler Accommodation

Intrawest Corporation, based in Vancouver, British Columbia, Canada, is the largest operator of ski resorts in North America. Its ski resorts, with a combined seven million skier visits a year, include Whistler Blackcomb in British Columbia, Mont Tremblant in Quebec Province, Snowshoe Mountain Resort in West Virginia, the Stratton Ski Resort in Vermont, and Copper Mountain in Colorado. The company also owns a minority share of the Mammoth Mountain Ski Area in California. After attaining a leadership position in the ski industry, the company began adding golf and beach developments to its portfolio. Intrawest has also built a network of vacation club destinations and diversified into adventure and luxury travel.

Originally focused on multifamily dwellings, Intrawest developed several major residential and commercial projects in Canada and Seattle, including the Gateway Urban Centre in Surrey, British Columbia; Park Plaza in Edmonton, Alberta; the Pacific Reach Business Park in Vancouver, British Columbia; and Arbor Place in Seattle. The company began divesting itself of non-resort-related properties in the mid-1990s.

The company defines its mission as creating memorable experiences for guests. More activities, stores, and adventures translate into longer stays. Intrawest's specialty is converting mountain, golf, and beach resorts into four-season destinations centered around a European-style, pedestrian-friendly, village concept. In addition to operations, development of resort-related property accounts for a significant portion of revenues. The company typically brings on partners to maximize returns and minimize risk.

EARLY HISTORY

Intrawest Properties Ltd. was formed in 1973 as a Vancouver real estate development firm by Joe Houssian, a native of Regina, Saskatchewan, with a master's degree in business administration from the University of British Columbia. He was joined in this venture by a Lebanese cousin, Mo Faris, who had financial contacts in Europe and the Middle East. Faris would leave the company when it went public in 1990.

For the first six years, the company concentrated on residential real estate, developing 26 projects encompassing about 1,800 apartments, townhouses, and single-family homes in Vancouver, as well as in Edmonton and Calgary, Alberta. In 1979, Intrawest Properties Ltd. and Intrawest Equities Ltd. were merged to create the Intrawest Development Corporation.

Intrawest expanded into commercial real estate in 1981 when it acquired the Cedarbrae Shopping Centre, which was then under construction in Calgary. That was followed by development of the Glenmore Landing Shopping Centre in Calgary, completed in 1985, and the Lonsdale Quay Public Market and Hotel, a mixeduse development in North Vancouver that was completed in 1986. In the mid-1980s, Intrawest also expanded into the United States, completing its first major U.S. project, Arbor Place, a $28 million residential and office complex in Seattle, in 1989.

THE FIRST RESORTS: BLACKCOMB MOUNTAIN AND MONT TREMBLANT

In 1986, Intrawest acquired half interest in Blackcomb Skiing Enterprises, which operated a ski resort on Blackcomb Mountain at Whistler Village, British Columbia, from the Aspen Skiing Company. That entrée into the resort business would eventually change the company's strategic focus.

Aspen Skiing, originally a partnership between 20th Century Fox and Alberta businessman Alan Graham, had formed Blackcomb Skiing Enterprises and begun developing Blackcomb in conjunction with the British Columbia provincial government in 1978. The resort opened in 1980, and after a new T-bar lift was installed in 1985, the resort boasted the greatest vertical drop in North America: 5,280 feet.

Blackcomb quickly gained popularity among skiers. However, by 1986, 20th Century Fox, then owned by U.S. billionaire Marvin Davis, had decided to sell its ski operations. Hugh Smythe, a Canadian from New Westminster, British Columbia, who had been managing Blackcomb, met Joe Houssian at a Young Presidents Association dinner in Vancouver, and talked to him about purchasing the resort. Houssian, then 36, who admitted knowing practically nothing about the ski-resort business, negotiated to buy 50 percent of Blackcomb Skiing Enterprises for about $3.7 million, with an option to acquire the other 50 percent in five years for $5.8 million.

Intrawest then launched a $112 million expansion and upgrading of skiing and resort facilities at Blackcomb Mountain, adding a mountain-top restaurant and ultimately increasing resort capacity from 4,000 to 14,000 skiers per day. As a result, skier visits increased from 278,000 in 1986 to 972,000 in 1995. Blackcomb Skiing Enterprises had a management lease with the provincial government of British Columbia, which owned the mountain property, to operate the ski resort until 2029.

As part of its purchase of Blackcomb Skiing Enterprises, Intrawest also gained development rights to 118 acres at the base of the mountain, along with 8,000 "bed units" under Whistler Village's land-use regulations. Intrawest sold several parcels of land and assigned bed units to other developers to promote immediate use of the ski resort. In 1989, Intrawest also began developing residential projects of its own on the remaining land. By 1993, the company had completed more than 1,400 "resort units."

Intrawest went public in 1990, raising $26 million for 27 percent of the company's equity. In 1991 the company paid an estimated $22 million to acquire Mont Tremblant Resort, Inc., which managed a four-season resort and Canada's oldest operating ski area in the Laurentian Mountains north of Montreal, Quebec. The Mont Tremblant Resort, which had opened in 1939, included a summer beach and tennis club and 16,500 acres of mountain terrain leased from the Quebec provincial government. The lease ran through 2051.

COMPANY PERSPECTIVES

Animated pedestrian villages, incredible natural attractions and unparalleled attention to detail create unforgettable experiences that are hard to describe. According to one guest, it's "that feeling that you can't put your finger on, you just feel good being here." This is what brings visitors back to Intrawest resorts again and again. From regional, destination and world-class ski resorts, to crystal-blue waters and rolling greens, Intrawest offers the ultimate playgrounds to share and create life-long memories. Intrawest. Great Playgrounds of the Western World.

As it did at Blackcomb, Intrawest expanded and upgraded resort facilities at Mont Tremblant, investing $48 million between 1991 and 1995, and increasing capacity from 8,500 skiers per day to 14,500. Included in the expansion were a 1,000-seat mountain top restaurant, an 18-hole golf course, and The Edge, the first new peak opened for skiing at Mont Tremblant since 1943. To help finance the expansion, Intrawest sold 23 percent of Blackcomb Skiing Enterprises to the Nippon Cable Company in Japan for $18 million.

Along with Mont Tremblant Resort, Inc., Intrawest also acquired 1,800 acres at the base of the mountain, which the company intended to develop as a $400 million, master-planned community, much like Whistler Village, including retail shops, several condominium and townhouse developments, and a full-service hotel projected to be completed by 1997. Intrawest was to have a 49 percent share of the proposed 308-room Chateau Mont Tremblant. Also in the works was Vieux Tremblant, a re-creation of "old Mont Tremblant" with several renovated buildings from the 1940s. In 1994, Tremblant received Quebec's Grand Prize for the Development of Tourism.

In 1993, the Intrawest Development Corporation officially changed its name to the Intrawest Corporation. The company also acquired its third ski resort, Panorama Resort, near Invermere, British Columbia, for about $7.1 million. Panorama, a family-oriented resort at the edge of the Bugaboo Mountains, included a 107-room hotel, a tennis complex, and about 300 acres of land for development.

Intrawest also entered into a joint real-estate venture with Ralcorp Holdings, Inc., which owned the Keystone Resort in Keystone, Colorado, to develop a resort village called The Village at River Run. Ralcorp Holdings, a subsidiary of the Ralston Purina Company, was the owner of the nearby Breckenridge Ski Resort.

Intrawest entered the $4 billion vacation club industry in 1993 by forming the Intrawest Resort Ownership Corporation, with Intrawest Resort Club members receiving an annual allotment of points that entitled them to stay at various club properties. The first Intrawest Resort Club, a 45-unit condominium development at Blackcomb Mountain, opened in 1994, and the company sold 500 memberships in the first six months. By 1996, Intrawest also had resort club facilities at Tremblant and had plans for club resorts in southern California, Hawaii, the Caribbean, Costa Rica, Mexico, and Florida.

FOCUSING ON RESORTS

Intrawest, which had retained an ownership interest in many of its larger residential and commercial developments, began divesting itself of all non-resort-related real estate in 1994, selling nearly half of its non-resort properties, including The Newmark and Belltown Court residential and retail developments in Seattle, and Station Tower, a high-rise office complex in Surrey, British Columbia, for $158 million. In 1996, Intrawest's remaining non-resort properties consisted primarily of undeveloped land and residential projects under construction. Emphasizing its decision to become "a pure resort company," Intrawest also reorganized into three operating divisions: the Resort Operations Group (with Smythe as president), the Resort Development Group, and the Resort Club Group.

Intrawest expanded its interest in the U.S. resort market in 1994 by acquiring the Stratton Ski Corporation, owner of the four-season Stratton Mountain Resort in southern Vermont, which included a 27-hole golf course, golf school, and sports and tennis complexes. Stratton was purchased from Victoria U.S.A., which had owned the resort since 1988.

KEY DATES

1973:: Intrawest Properties Ltd. is formed in Vancouver to develop residential real estate.
1979:: Intrawest Properties merges with Intrawest Equities Ltd. to form Intrawest Development Corporation.
1981:: Intrawest acquires its first commercial property, a Calgary shopping center under construction.
1986:: The company enters the ski resort business with an interest in a resort on British Columbia's Blackcomb Mountain.
1990:: Intrawest raises $26 million in an initial public offering on the Toronto Stock Exchange.
1993:: The Intrawest Development Corporation is renamed Intrawest Corporation.
1994:: The company begins selling off non-resort-related properties and acquires Vermont's Stratton Mountain Resort.
1997:: Intrawest shares begin trading on the New York Stock Exchange.
2001:: The vacation club business opens its first urban location in Vancouver.
2003:: Revenues exceed $1 billion.
2006:: Intrawest is sold to Fortress Investment Group LLC for $2.8 billion.

The company followed up in 1995 by acquiring the Snowshoe Mountain Resort and the neighboring four-season Silver Creek Mountain Resort in West Virginia, which included an 18-hole golf course and 10,000 acres of land. Snowshoe, which opened in 1973, averaged 400,000 skier visits per year, making it the largest ski resort in the mid-Atlantic and southeastern regions of the United States.

In January 1996, Intrawest announced that it had purchased a 33 percent interest in the Mammoth Mountain Ski Area, which included Mammoth Mountain and June Mountain, in Mammoth Lake, California, east of San Francisco in the Sierra Nevada mountains. With more than one million skiers annually, Mammoth was the official training center for the U.S. Olympic Ski Team, and ranked second only to the facilities at Vail, Colorado, in popularity and size.

Intrawest also acquired all the developable real estate owned by Mammoth Mountain including 92 acres at June Mountain and 14 acres in the town of Mammoth Lakes, and negotiated right of first refusal if Dave McCoy, founder, president and controlling shareholder of Mammoth Mountain, or his family decided to sell his remaining interest in the ski area. McCoy had reportedly opened Mammoth Mountain in 1938 with a portable rope tow he bought by selling his Harley Davidson motorcycle. He purchased June Mountain in 1986.

Another significant purchase was Copper Mountain, also bought in 1996. One of Intrawest's signature villages would open there within six years. To differentiate it from the prevailing old-fashioned themes at other Colorado ski resorts, Intrawest opted for a very modern, high-tech, high-alpine feeling for Copper Mountain, reflected in fiber-optic wiring infrastructure and store hardware crafted from modified ice climbing equipment. Copper Mountain was also being positioned as a major entertainment venue.

LOOKING TO BOOMERS FOR GROWTH

Intrawest was basing its strategy for growth on the aging baby boomers. In the company's 1993 annual report, founder Joe Houssian, then president and chief executive officer, wrote, "The largest group of buyers of vacation homes is between the ages of 45 and 64. The baby boom generation, which over the past 40 years has fueled so many industries, is now emerging as a catalyst in the leisure and resort industry." In 1994, Houssian said Intrawest's goal was to become "the dominant player in the North American mountain resort industry of the 21st century." Houssian, who became chairman in 1994, was the largest individual shareholder in 1996 with four percent of the company's stock. The company's shares, already traded in Toronto, were listed on the New York Stock Exchange in 1997. In the same year, the company acquired Quebec's Mont Ste. Marie, which was sold five years later.

While Intrawest vied with three others (American Skiing Company, Booth Creek Ski Holdings, and Vail Resorts) for leadership of North America's consolidating ski industry, it also branched out into new areas. The company acquired Raven Golf Group in 1998 and added British Columbia's Swan-e-set Bay golf resort a couple of years later.

A unique property was acquired in 1998: New Jersey's Mountain Creek resort. A key feature was its location within 50 miles of New York City. Intrawest invested millions to convert the former day-trip destination into a leading East Coast golf and ski resort.

Environmental and other costs had made building ski resorts from the ground up an impractical venture for years. A lack of suitable ski properties to buy was one reason that Intrawest decided to take its winning formula to the beach, which also had much more universal vacation appeal than skiing. Intrawest acquired its first seaside resort, Sandestin in Destin, Florida, in 1998. It spent the next five years developing a village there.

In 1999, Intrawest bought a minority interest in the Canadian Mountain Holidays helicopter-skiing operation; the remainder was acquired five years later. The affluent clientele were a match with the customer base for condos at Intrawest's resorts.

The company continued to acquire existing resorts and to invest in upgrades. In January 1999 Intrawest paid CAD ten million for a half interest in Ontario's Blue Mountain Resort, a two-hour drive from Toronto.

FIRST VILLAGE IN EUROPE IN 2002

In 2002 the Mont Ste. Marie ski and golf business was divested as construction began on a village center at Les Arcs in the French Alps, which was the company's first project in Europe. Success here (its village was dubbed "Arc 1950" after its elevation in meters) led to the establishment of a permanent office in Switzerland. The company's venture into Europe had begun in the late 1990s when it acquired a 20 percent holding in the publicly traded French resort owner Compagnie des Alpes, the world's largest ski operator. Intrawest had plans to develop another 15 or so ski, golf, and beach resorts in Europe over the next 20 years.

Revenues exceeded $1 billion in fiscal 2003. The company was reorganized into two divisions in 2004: the Leisure and Travel Group, and the real estate development or "Placemaking" group. In July 2004 Intrawest bought a controlling interest in Abercrombie & Kent, a leading luxury and adventure travel company that had been slow to recover from the travel slump following the terrorist attacks against the United States on September 11, 2001.

The Starwood Hotels group bought most of Intrawest's interest in Mammoth Mountain Ski Area in 2005. Intrawest retained a minority holding. Company revenues slipped four percent to $1.6 billion in the 2005/06 fiscal year; however, net income rose 52 percent to $73 million. The corporation had grown to employ nearly 25,000 people.

A PRIVATE COMPANY AGAIN

Intrawest was then building more than 1,000 new condos a year. In spite of its success, its largest shareholder, Connecticut-based hedge fund Pirate Capital LLC, grumbled that the company should be sold since it seemed to be undervalued by the stock market. The question of valuation was complex, noted Canadian Business, due to the vast range of Intrawest's real estate holdings. In October 2006, Intrawest was acquired by an indirect subsidiary of Fortress Investment Group LLC in a deal worth $2.8 billion, including $992 million in assumed debt. This made Intrawest a private company once again. The company's flagship Whistler Mountain resort in British Columbia was due to receive a blizzard of media attention with the coming of the Winter Olympics to Vancouver in 2010.

Dean Boyer

Updated, Frederick C. Ingram

PRINCIPAL SUBSIDIARIES

Blackcomb Skiing Enterprises L.P. (77%); Abercrombie & Kent Group of Companies S.A. (Luxembourg; 67%); Alpine Helicopters Ltd.; Copper Mountain, Inc. (United States); Intrawest California Holdings, Inc. (United States); Intrawest Golf Holdings, Inc. (United States); Intrawest Resorts, Inc. (United States); Intrawest Retail Group, Inc. (United States); Intrawest U.S. Holdings Inc.; Intrawest Sandestin Company LLC (United States); Intrawest/Winter Park Holdings Corporation (United States); IW Resorts L.P.; Mont Tremblant Resorts and Company L.P.; Mountain Creek Resort, Inc. (United States); Playground Destination Properties Inc. (United States); Snowshoe Mountain, Inc. (United States); The Stratton Corporation (United States); Whistler Mountain Resort L.P. (77%).