Boston Magazine, February 1998

Ski Mogul

Snow gently falls outside the windows of Les Otten's office in Bethel, Maine, landing on a vast network of ski trails. Indoors, Otten is rummaging through a mound of papers the same way an adroit skier tackles a mogul, swiftly with determination. Handsome with salt and pepper hair, a Pierce Brosnan chin, and expressive eyes that would be poorly suited for bluffing at poker, Otten nevertheless looks haggard. He has just returned from his tenth cross-country flight in the month of December. Less than 12 hours ago, he was outside of Salt Lake City to commemorate the opening of The Canyons, one of his newest ski resorts.

Snow, or more precisely, the enjoyment of snow is Les Otten's life. In the 80s, he took over a small struggling ski resort called Sunday River and guided it from the brink of bankruptcy to the second most popular ski area in the East. Not content to simply rest on his laurels, he ventured over the Maine border to the White Mountains where he acquired Attitash Mountain in January 1994. A year later, he picked up Sugarbush in the small rural community of Warren, Vermont. Then in February 1996, he stunned the Eastern ski establishment when he made a bold deal to buy S-K-I Ltd., a publicly traded operating company twice the size of his own privately held, LBO Resort Enterprises. Vermont's Killington and Mt. Snow/Haystack, Sugarloaf USA in Maine, and New Hampshire's Waterville Valley were now part of Otten's growing empire, renamed the American Skiing Company. The Justice Department demanded Otten sell Waterville Valley to maintain competition in the East, but this didn't stop his feeding frenzy. Only now, he looked West.

In July of this year, the brash 48 year-old purchased The Canyons, formerly known as Wolf Mountain and ParkWest. Next, he finalized a deal for Colorado's Steamboat and California's Heavenly ski areas, reportedly worth $288 million. On November 5, American Skiing Company went public, offering 14.75 million shares at an initial price of $18, to help offset the cost of Heavenly and Steamboat. The stock has since dipped to $14 1/8, but Jake Fuller, analyst with Donaldson, Lufkin, & Jenrette, the investment firm that helped underwrite the IPO remains optimistic. "It's trading at a very large discount now, but we have a twelve-month price target of $26 per share and we expect ASC to grow at a faster pace than the other publicly traded skiing companies."

Fuller is referring to Vail Associates who own Vail, Beaver Creek, Arrowhead, Keystone and Breckenridge resorts in Colorado; and Intrawest, proprietors of ski resorts all over North America, including Whistler in British Columbia, Stratton in Vermont, and Mt. Tremblant in the Laurentians.

Otten is not particularly concerned with the other skiing conglomerates. "Right now we're competing very successfully with the cruise lines, Disneyworld, and large hotel chains. These are our main competitors" he says. "I think all three of our companies (ASC, Vail, Intrawest) own very significant assets and we all believe that the demand on recreation is going to be increasing dramatically in the next decade." Otten knows that attendance at ski resorts has been relatively flat in the past ten years, but he has also studied population trends as carefully as a researcher at the Almanac.

"There's a new baby boom and when these kids become of ski age, the industry will take off. We're looking at a full 15 years of increased attendance," says Otten. But skiing is only a part of the equation. Real estate development at these ski areas could be far more lucrative than any number of lift tickets sold. Otten is aggressively t East. By the time he arrived at Killington, he was told all four slots for this position were filled. The program expanded to five by the time Otten left the office.

His tasks at Killington were menial -- splicing chairlift cables, painting lift towers -- all for $2.25 an hour. But he also was curious to see how long it took for lift parts to wear out and he ended up writing a program to service those parts before that date happened. Another paper written by Otten discussed how the thirty employees at the guest check-in could be reduced to eight. Management was impressed with his initiative and as a reward, a year later, he was assigned to help run a tiny, neglected ski area the company owned in the backwoods of Maine. When Otten arrived, the Sunday River Skiway had three T-bars and one chairlift. Ownership made him general manager in 1975, but they refused to pour any more money into their souring investment. So in 1980, Les Otten, at the age of 30, put together a deal to buy Sunday River, even borrowing money from the parent company. People in the industry thought he was writing his own death certificate. His 93-year-old father was the worst skeptic of all.

"He offered me $100,000 not to buy the business and take on the risk of $1.2 million in debt," says Otten. "That motivated me even more to make the purchase. It was very sad but we didn't speak for at least six months afterwards."

Sunday River posted a $235,000 loss against total sales of $541,000 that year, attracting just 40,000 skier visits. But, alas, Les Otten was a prolific skier, and like an actor who finally gets his chance to direct, Les Otten was ready to transform Sunday River into a skier's mountain. He had more than ample terrain to expand and there was an abundance of water available for snowmaking from nearby Sunday River. But for the first six months, he had to stave off bankruptcy. To raise initial capital, he sold off scraps of metal that were lying around for twenty or so years -- old bulldozer blades left in the woods, abandoned wiring, anything that wasn't nailed down. Then he went to work, implementing ideas that he has since used at every ski resort he owns. With debtors calling, he wasn't about to wait around for Mother Nature to drop her load. He installed new snowmaking technology that would run night and day, becoming the first ski-area operator to fully capitalize on the importance of snow quality. He tore down the archaic T-bars and replaced them with the fastest lifts of the time. Finally, he created new trails, doubling the terrain and then doubling it again.

Word of mouth spread far too slowly for Otten, so he used a little marketing savvy to push it along. He sent snowballs to TV weathermen, dumped snow on Boston Common during a drought, and brought press up to the mountain to see what was going on. In 1988, when the legendary bump run, White Heat, opened, he deleted the commas in an advertising slogan to claim Sunday River had the "longest steepest widest" trail in the East. Of course, with commas, it was neither the longest, nor the steepest, nor the widest mogul run in New England. Otten also created the first learn-to-ski-in-one-day program and founded an innovative skiing course called the Perfect Turn. By 1993, Sunday River had 450,000 skier visits, second only to mighty Killington. Otten had accomplished everything he possibly could at Sunday River and now was growing restless.

The following year, he purchased Attitash and in 1995, acquired Sugarbush. "I was looking for expanding opportunities in the East and they were available," says Otten.

The drive north on Vermont's Route 100 to the base of Sugarbush is on one of the most bucolic stretches of road in New England -- a mix of rolling hills, farmland so fertile you feel like jumping out of the car and digging your hands in the soil, and anonymous towns with their ubiquitous white steeple. Then you reach the small village of Warren and shortly thereafter, Waitsfield, the twin communities Sugarbush hovers above. You drive through their respective covered bridges to find one-road towns where nothing seems to change. And that's the way locals prefer it.

This is especially true of their beloved ski areas, Sugarbush and Mad River. Mad River still has a chairlift for single skiers and both mountains feature the New England skiing of yore, a time when trails were cut by hand so they weren't much wider than a hiking path. In Les Otten's growing empire, Sugarbush is an anomaly. It's challenging terrain is not well-suited for families like Mt. Snow; the rural setting offers no raging apres-ski scene like Killington; and it's not a remote mountain getaway like Sugarloaf in the middle of Maine. Sugarbush borders the spine of the Green Mountains on a well-traveled route that connects Okemo and Killington ski areas in the south to Stowe and Jay Peak in the north.

Indeed, Sugarbush has always been far more popular with locals than with tourists. They include some of the most renowned skiers in the country like John Egan, an extreme skier who can be seen on many of Warren Miller's films flying down the side of an uncharted mountain or volcano, and Peter Oliver, contributing editor to Skiing magazine for the past decade and one of the foremost experts on skiing the East. Both of these snow aficionados live to slither down the narrow trails of Sugarbush's legendary Castlerock Peak. So when Otten purchased Sugarbush, the locals, afraid that he might widen these old style trails, began the rallying cry, "Less Otten, More Rock." Otten, however, as a shrewd businessman, didn't touch the Rock.

"He listens to people," says Egan. "He didn't mow down the mountain terrain and make it a big flat wide western area. That's pretty impressive." Peter Oliver concurs: "He's politically pretty astute. When he came into Sugarbush, he understood that Castlerock is special and he kept it special within this community. Instead, he's taken snowmaking and fast lifts, his winning technique for building Sunday River, and adapted that to Sugarbush."

One of those lifts is the Slide Brook Express, a breathtaking ten-minute chairlift ride that connects Sugarbush with neighboring Mt. Ellen. To see the ridge of the Green Mountains slope down to the valley and the rivers of central Vermont is worth the price of admission alone. Few people in the region thought Otten could pull it off since the lift travels over bear habitat. Otten managed to allay the fears of environmentalists and just recently exchanged 3,000 acres of bear habitat on Killington for 1,000 acres of state land. "We thought it was a great trade," says Vermont's Governor, Howard Dean. Otten wants the land to connect Killington with neighboring Pico.

Now that American Skiing Company owns nine ski resorts, critics are worried that all the areas will become homogenous, actually calling the conglomerates McSkiing. Mel Allen, longtime editor of Yankee magazine and an avid skier who first visited Sunday River in 1970, says that's not possible. "I don't think any one can take away from a mountain's personality. It's formed by geography and tradition to some extent. Sugarloaf is not going to appeal to the same person Mt. Snow appeals to." Otten rebuts that his resorts are similar only in respect to "quality service and the quality of the snow." Peter Oliver adds "that you have to have differentiation between ski areas. If not, what's the point of people traveling an extra hour past Killington to go to Sugarbush or past Sunday River to visit Sugarloaf."

Oliver and the people in the Sugarbush community are far more concerned about cookie-cutter real estate developments. Otten's plans for a hotel here have finally been accepted, but Oliver points out that the first design was essentially the same hotel being built at all the other resorts. "This is a reluctant resort community. People want to have the benefit of Sugarbush but not necessarily the character of a resort, which has already happened at Mt. Snow or Killington. That's why it's important that we have something that fits in here and not just something that fits into the ASC plan," says Oliver. Regardless of design, Governor Dean states that it's essential these large-scale hotels be built to attract more clientele. "Basically, Vermont was a leader in the ski industry until the late 1960s. Colorado leapfrogged us and showed that you really have to have a four-season resort with beds right on the slopes to make it work. That's what Les is doing."

Otten has also implemented several marketing schemes like a Frequent Skier Program called The Edge and a Magnificent 7 card that offers skiers the chance to ski any seven resorts in the ASC umbrella for $299. "Mag 7 sales are already up a hundred percent from the same time last year," says Otten. "A lot of that has to do with the fact that the deal is usable coast-to-coast." Mel Allen, father of two sons whose great passion from Thanksgiving to April is throwing themselves down a mountain, thinks the Magnificent 7 card is a wonderful concept. "It gives people a sense of power. Instead of being locked into one mountain, you can now ski all these various peaks. You receive a different trail map at each ski area and it gives you a sense of entering a new country for a day." Still, Otten says it would be bold to expect Westerners to head East. "I see Californians going to Steamboat and The Canyons, or vice-versa, more Easterners heading West, and Europeans heading to both coasts."

Otten seems particularly excited about the European market. He has been advertising heavily in Great Britain over the past several years and it seems to be working. Last season, ASC recorded some 40,000 skier visits from the British market alone. "We believe that America is a more service-oriented ski destination than Europe and that's why we're seeing an increase of European skiers coming here." Not to mention the exchange rate is far more favorable for Europeans. "I rode a chairlift the other day at Sugarloaf with a man from England," says Mel Allen. "He was able to fly from England to Bangor, rent-a-car, drive to Sugarloaf, get a week at the hotel, with all meals and skiing included, for five-hundred pounds British. He couldn't come close to doing that in Europe."

The jury is still out on whether Otten has improved the slopes for skiers, but pundits admire what Otten has done to get people up on the mountains. "There's a lot of naysayers out there saying how impersonal the (Sugarbush) ski area is now, but I'll tell you, a bankrupt closed-down ski area is a lot more impersonal than one that's running with hordes of people around," says John Egan. Mel Allen agrees: "People will probably thank Les Otten for saving mountains that would have either gone under or had been bought out by absentee owners."

No one in the ski industry will be surprised if Les Otten and ASC continue to acquire more ski resorts around the country. As their stock filing states: "The Company intends to consider acquisitions of large, well-established destination resorts." Otten also harbors a secret desire to work in the role of public service, but not as an elected politician. "Either through volunteerism or being appointed, I'd like to contribute to a wide range of subjects I'm interested in -- education, the environment, and business and economic issues," says Otten. But for now, he has more flights to catch. Otten's back to The Canyons in two days and then he's meeting his wife and three children at Steamboat for a vacation. It's a toss-up between which card gets more use—his Frequent Skier Card or his Frequent Flyer Card.