The stature of Northstar-at-Tahoe is clearly on the rise as evidenced by a series of high-profile accolades in recent weeks. I have made quite a bit of noise in this report regarding the opportunity presented by Vail Resorts as the resort operator of Northstar to maximize the potential for Northstar. Such efforts are clearly well underway as initiatives not previously fathomable for any Tahoe resort are becoming a reality.

Most noteworthy in recent days is Northstar’s selection as the home resort of Shaun White; the most famous Winter Olympian in a generation; and an athlete with tremendously broad appeal. From a Denver Post article last week:

The multiyear deal has the most celebrated athlete in snowboarding and skateboarding representing all six Vail hills, with the company's newest addition, Northstar at Lake Tahoe in California, serving as White's home mountain.  Part of the deal includes Vail Resorts donating $5 to White's chosen charity, Tennessee's St. Jude Children's Research Hospital, for every Epic Pass it sells. The company sold almost 300,000 season passes last season. White will design a 22-foot halfpipe at Northstar. Vail acquired Northstar in October and plans $30 million in capital improvements at the lakeside ski area, part of nearly $123 million in new chairlifts, lodges and improvements across its stable of six ski areas in Colorado and California.

In addition to this announcement, Vail Resorts is well underway investing $30 million in creating a new mountain lodge and chairlift at Northstar, both of which will be open this winter season. This capital investment is a great first  step in a plan to upgrade infrastructure both on the mountain and throughout the resort in order to enhance the skier experience.

With the caliber of Northstar on the rise, other top-end brands are inevitably drawn to the resort.  Most notable is Ritz Carlton; Lake Tahoe which recent recently received the first ever AAA Five-Diamond rating anywhere in the Tahoe region.  Ritz Carlton Lake Tahoe is now one of just 124 properties in the country to receive this prestigious ranking. The presence of the Hyatt brand on the Northstar Lodge property as well as several new vendors to featured in the Northstar Village this winter are further evidence of quality attracting quality.  

As for real estate development, East West Partners remain fully engaged and committed to executing the long-term vision for Northstar through thoughtful development of on-mountain properties. The health and viability of the developer is evident in vertical construction now underway of the Home Run Townhomes found just below the Ritz Carlton on Northstar Mountain. The first eight (of sixteen total) townhomes are being built with two already sold of what will inevitably be an attractive product come ski season. Further, infrastructure is currently being laid for The Glades, an exclusive enclave of 25 single-family homesites found just over the shoulder of the mountain from the Ritz Carlton featuring a series of ski trails meandering through the neighborhood. With a committed equity partner in place, East West is energized by the opportunity to create these intimate neighborhoods of on-mountain real estate at Northstar; an entirely unique product to Tahoe and one consistent with elite-tier resorts including Deer Valley and Beaver Creek.

With success inevitably comes controversy, most recently in the form of an article in the local newspaper attacking the viability of the plans mentioned above. While it would be disingenuous to not acknowledge financial challenges over the past few years including reorganization, the credibility brought by overwhelming infusion of capital from major institutions including Crescent Equities, Vail Resorts, and KSL would say otherwise.  These powerhouse operators understand how to speak to the consumer like no others and are well situated to (continue to) tap into the vastly-qualified Northern California feeder market; one that has been resilient in the face of difficult times; and as well as to expand into other ripe markets. Tahoe always has and likely always will be attractive to the Bay Area traveler that has been making the migration up Highway 80 for years on end. In fact, in recent years Lake Tahoe has grown its stature as a preferred location for regional travel when consumers may have otherwise sought distant locations. As our consumer demographic has shifted towards younger families, the short frequent trips to Tahoe provide a better opportunity for gathering than a single, annual trip elsewhere. As such, we are quick to differentiate our product as “second homes” for frequent stays rather than “vacation homes” for occasional use.

There is no getting around the challenges we have faced as real estate values have declined from the inflated values of the last decade.  Certain market segments remain in the doldrums while we work through the inventory of distressed sales that we, like all markets, continue to face. Nonetheless, the fundamentals present in the region are as strong as those in any market, resort or otherwise, and we remain incredibly bullish in the long term.

Written by Steve Kegal, submitted by Tim Lampe.