This story first appeared in The Outsider, the premium outdoor newsletter by Jason Blevins.
In it, he covers the industry from the inside out, plus the fun side of being outdoors in our beautiful state.
Alterra Mountain Co. on Thursday announced plans for one of the country’s largest-ever ski area expansions at its Deer Valley resort in Utah. And the ski expansion is quite literal. The new terrain will not be for snowboarders, who are unwelcome at Deer Valley.
The plan calls for 16 new chairlifts, 135 runs across 3,700 new acres of ski terrain above a new village at the Utah resort. If all goes as projected, Deer Valley will more than double in size to 5,726 acres with 37 chairlifts by the winter of 2025, growing larger than Vail. It’s the largest U.S. resort expansion of new terrain in more than 40 years.
Alterra is partnering with the Extell Development Co., a luxury real estate developer that builds skyscrapers in New York City. Extell has been working on the project — formerly called Mayflower Mountain — since 2014. Extell founder Gary Barnett has acquired nearly 7,000 acres in the past decade and secured bond financing through Utah’s Military Installation Development Authority.
In 2021 the authority trumpeted a deal with Barnett that delivered more than $250 million in bond financing to the $3.2 billion project, which will offer hotel discounts for active military and veterans.
The new development includes a village with 800 hotel rooms, 1,700 residential units, 250,000 square feet of commercial space and a 68,000-square-foot recreation center. The project could add 2,000 jobs to the region.
The deal harkens back to the 1990s and 2000s, when developers dove headlong into giant ski resort villages that transformed base areas at Aspen Highlands, Copper Mountain, Crested Butte, Granby Ranch, Keystone and Winter Park.
The Great Recession clobbered resort operators that went too deep into real estate, with companies like American Skiing and Intrawest pretty much collapsing under village-building debt. The Alterra-Extell partnership appears to have the New York developer doing all the village work while Alterra handles the ski resort. That kind of partnership will likely define future resort development, with operators focused on skiing and selling passes while partner developers build hotels and condos.
“This partnership with Deer Valley brings together two of the very best in the business of real estate, service and hospitality, and we look forward to working with them to create what will be the crown jewel of Utah,” Barnett said in a statement. Barnett founded Extell in 1985 and has developed iconic residential skyscrapers in New York City.
Extell has been negotiating with Alterra to manage its ski resort for more than five years. Alterra formed in 2017 when Denver-based KSL Capital Partners and the owners of Aspen Skiing Co. joined to buy the 11-resort Intrawest. Alterra quickly added California’s Mammoth Mountain and Deer Valley to its stable of resorts. The company has grown and invested more than $1 billion in its now 17-resort stable.
The investment at Deer Valley is not part of the $490 million of upgrades Alterra announced in March at its resorts, including $50 million for employee housing and $40 million for technology upgrades.
Alterra is privately held and does not release revenue numbers or sales results for its signature Ikon Pass. But the company has debt.
Earlier this year Alterra secured two $500 million loans due in 2028 and 2030. The loan due in 2030 would repay $310 million from a loan due in 2024 and add $190 million in cash to the company’s balance sheet.
Moody’s Investors Service, which rates debt for bond investors, in May reported that Alterra generated $1.7 billion in revenue between January 2022 and January 2023. Moody’s reported Alterra had $1.1 billion in cash in January 2023 and the new loans would bump that to $1.3 billion with access to the $500 million loan due in 2028.
For comparison, Vail Resorts, the largest resort operator in North America with 37 ski areas, reported $2.5 billion in net revenue for its fiscal year 2022. In April, Vail Resorts reported $896 million in cash and access to about $630 million in debt.
The Deer Valley expansion — all onto private property — was announced a day before the U.S. Forest Service in Minnesota denied a long-planned, $56 million expansion at Lutsen Mountains, a family-owned ski area in Minnesota. The Skinner family since 2017 had planned a 495-acre expansion of their ski area on the banks of Lake Superior. The new ski runs, a parking lot and mountain-top chalet would access Forest Service lands on which three tribes retain treaty rights. Hundreds of locals came out in opposition to the project and on Friday Superior National Forest officials said they would not issue a permit for the expansion, citing concerns with the tribal treaties and environmental impacts.