The ski season got off to a bit of a slushy start at the end of 2011. Unseasonably warm weather and deepening fears of another recession kept tourists off the slopes, but it isn’t stopping two major investment firms from slaloming to bid on three resorts.
Financial group PPF, which is owned by Czech billionaire Petr Kellner, has made a bid to buy a one-third stake in three ski areas in the Krkonoše Mountains near the Czech-Polish border. PPF offered minority shareholder Czech Ski Association (SLČR) 194 million Kč ($9.8 million/7.6 million euros) for shares of Špindlerův mlýn, Pec pod Sněžkou and Harrachov ski areas, or 155 million Kč for shares just in the first two areas. The company’s bid is reportedly as much as 17 percent more than an independent appraisal, but PPF had access to the resort’s finances through a related company, Sportlease, which also has a minority stake in the areas.
“The purpose of acquiring a stake in the ski resorts is to help the SLČR stabilize its existence in a situation when its minority stake is its only viable asset and its minority decision doesn’t provide for comfortable decision-making over cash flow,” said Milan Tománek, a PPF spokesman.
The company has also expressed interest in purchasing majority stakes in the areas now owned by the Czech Sports Association, but progress on the deal will have to wait until a new director is elected this year.
Shortly after PPF submitted its offer and the SLČR executive committee said it would recommend to its members the sale be approved, a rival bid offering slightly more for shares in the same resorts was submitted.
Slovak company Tatry Mountain Resorts, owned by J&T Banka, made an offer just before the end of the year that is nearly identical to the PPF offer, just 1 million Kč more.
Other investment groups may soon be going public with offers of their own on the same properties, including Natland, Penta and rubber magnate Tomáš Němec, as well as owners of land where the slopes and lifts are located, daily Hospodářské noviny (HN) reported Dec. 21.
Though exact figures on ski tourism won’t be published before the end of the season, preliminary reports from hotels show a rough start to the season. Resort hotels, which are normally booked solid during the Christmas and New Year holidays, were half-vacant in some cases during the festivities this year, and Krkonoše hotels were around one-third vacant, HN reported.
Though Czech mountains offer some of the least expensive skiing in Europe, a lot of renovation is still needed to bring them on par with world-class ski destinations like those in the Alps. Alice Dvořáková of CzechTourism said that though not nearly as much has been spent on renovations last year on the Czech slopes – around 400 million Kč compared with investments in the billions in years past – there is no shortage of interest in improving the resorts.
“It’s not so common to invest such large amounts of money every year, and that’s why the investments are not as high as in previous years,” she said. “This year we saw improvements, especially in children’s areas and areas for handicapped tourists.”
Weather and economics aside, running a ski resort is no easy business, which makes it no wonder owners would be looking to sell to a long-term investor in a slowed economy, said Ondřej Špaček, a tourism adviser for KPMG.
“The equipment and infrastructure needed for ski resorts is expensive, and you have to make money from other services like accommodation and ski schools,” Špaček said. “And the people with these firms that want to provide the ski resort have to have the skilled services and an additional business plan in order to make them profitable.”
He added that investors with a background in these types of services can often offer just the type of alternate business plans resorts need to keep profits strong.
“It’s a long-term investment together with the development of the ski resorts. You want to connect other business activities like the development of hotels, cabins and apartments.”
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