The Inertia for Good Editor
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Too Big to Vail: An Opinion on Why This Might be the Downfall of the North American Mega Resort

The experience of skiers and snowboarders was cited in the letter. Photo: Change.org.


The Inertia

The investment firm Late Apex Partners (LAP) has called for an executive overhaul of Vail Resorts, the publicly traded company that owns and operates 42 mountain resorts around the world and has reshaped the entire ski industry since its introduction of the Epic Pass in 2008. The firm called for “overdo changes” in a letter sent to board members of Vail Resorts Inc. on Monday, including an ouster of current CEO Kirsten Lynch, CFO Angela Korch, and Executive Chairman Rob Katz, as well as sharing an 88-page presentation outlining the company’s “path forward.” LAP manages funds currently invested in Vail Resorts.

Vail, of course, has made weekly headlines this winter due to coverage of a labor dispute and the 13-day strike by Park City Mountain’s ski patrollers, which ended in early January. Public response online was largely negative, including stories of three-hour lift line waits during the patrollers’ strike, letters written by union leaders criticizing Vail’s tactics that included asking patrollers from sister resorts to cross picket lines, and even an investigation “into allegations that Vail and Park City executives “engaged in securities fraud or other unlawful business practices.'”

One would assume Late Apex’s scathing letter would be a reaction to the strike and its fallout, however, the labor dispute wasn’t even mentioned in the investment firm’s note. Instead, the firm’s argument focuses mostly on the bottom line and sees replacing executives as one step along the road to a $400 share price.

The letter outlines four core problems plaguing the company and therefore, hurting shareholder value. First up is a disconnect between the incentives of Lynch and Korch and the shareholders LAP represents. Lynch has been paid $19 million over the past three years, for example, while free cash flow has decreased by -15 percent.

“Management have no skin in the game, signaling zero conviction in Vail’s future: Since becoming CEO, Lynch has not once purchased MTN shares, while CFO Korch owns less than $0.5M in stock,” they wrote.

Second, the letter says the $2 billion invested in mergers and acquisitions and capital expenditure hasn’t created any value and “guest experience has deteriorated.” They argue its cost the company its ability to reinvest “into high-return initiatives and its key asset: customer experience and goodwill.”

“Vail has virtually endless opportunities to reinvest into the business, grow its competitive advantages, and grow the sport. Competitors are eating Vail’s lunch, and management is asleep at the wheel,” they wrote.

The most colorful piece of the letter is LAP’s fourth point, which referenced the public’s claim that Vail has become the “Evil Empire.”

“The core skiing community has labeled Vail the ‘Evil Empire.’ Vail’s marketing reductions, and decision to centralize marketing under CEO Lynch has created significant gaps, been inauthentic, and cut out the heart of each mountain,” reads the letter. “Management’s incredibly short-sighted actions have led to lost opportunities and destroyed brand value.”

Vail Resorts Inc. (MTN: NYSE) shares took a notable dip the first week of January amidst the ongoing strike. On December 10, 2024, shares were trading above $195. The Park City Professional Ski Patrol Association authorized its strike within the next week and MTN shares fell to $175 on January 2, 2025. As of the end of the trading day January 28, 2025, a full business day after LAP’s letter, prices were down again to $169.

 
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