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Decision Soon on Cardrona Acquiring Treble Cone

You'll recall that Cardrona is seeking to acquire Treble Cone, and the decision is pending from the Commerce Commission (ComCom). Initially the decision date was indicated as Nov 1, then early December, now December 13 is said to be the day.

There’s some interesting dynamics at play, with a recent submission from a party whose offer to acquire Treble Cone was rejected. With apparently little or no experience in the ski industry he refuted many of Cardronas, and others submissions. As a result the ComCom appears to have sought more information about local competitiveness, specifically the impact on season pass prices and whether Cardrona could isolate and price discriminate against Wanaka locals. The idea of this sort of price discrimination, i.e season pass prices could be higher for locals than visitors, would seem to us to be extraordinarily unlikely, if not impossible to even implement.

There have also been further submissions, all offsetting this dissenting voice, with some interesting insights, especially by one of the submitters Nat Craig, previously a shareholder and board member of TC. He doesn't paint a pretty picture for TC suggesting "revenue yields have essentially been maximised ... and the business is no longer commercially viable as a stand alone independent operation, no matter which way you assess it or attempt to restructure it, or invest in it." He goes on to say "As part of a larger ski group such as Cardrona Alpine Resort Limited (CARL), there would be an opportunity to significantly reduce duplicated overheads, and include the differing product offering with combined marketing efforts. In my opinion this is the only viable solution to TC’s financial difficulties and a sustainable future." It's an insightful read. 

Another submitter, Mel Jay suggests that "the expansion of Vail Resorts and the creation of the Alterra Group means that pricing for passes and services will be dictated by the global market". Given around 40% of the ski market is international visitors, that has a degree of truth.

She goes onto say “I would argue that the only way for New Zealand resorts to maintain market competition is to merge regionally (as resorts on the North Island/Ruapehu Alpine Lifts, and Queenstown/NZSki have done) and continue to invest in infrastructure. Without investment, continued development, and increased international tourism, New Zealanders face losing both their share of the valuable international ski tourism industry, and access to ski hills themselves: as operating costs continue to mount in our changing climate and resorts face closure.” And I think this is absolutely true.

The further submissions are an interesting read if you have a few minutes spare.…/cardrona-alpine-resort-limited-tre…

As Cardrona says, the party “has an interest in the Cardrona acquisition not proceeding and his submission should be read in that light”. Let’s hope the ComCom does indeed do that, and approves the deal on Dec 13.