The Victorian government is set to attempt to sell two mountains which have been popular with snow fantatics. Picture: Supplied.
The Victorian government is looking to cash in on a pair of mountain ski resorts it’s been operating at a loss.
An expressions of interest campaign to run the snow fields at Lake Mountain and Mt Baw Baw is slated to start in December, with no price indicated so far, but the government open to a 99-year-lease arrangement that would effectively put them in the control of private parties.
The campaign will run until January, despite summer generally being considered one of the more challenging times to list alpine property.
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It also comes off the back of two consecutive poor ski seasons with limited snowfall.
In an announcement of the upcoming sale, Alpine Resorts Victoria who runs the two sites have also indicated they have “not been able to achieve a commercially viable model”.
The announcement from the government indicates that they have “enhanced the profitability of commercial services” for the two mountains and “reduced operational costs”.
“While ARV remains committed to delivering further efficiencies at Lake Mountain and Mt Baw Baw, it acknowledges that other commercial entities may be better positioned to run these mountains in a more efficient and effective way,” the statement said.
“Importantly, other commercial operators may have capacity to invest in the tourism offerings of these destinations to provide them with a vibrant and sustainable future.”
Victoria’s six alpine resorts bring in a combined $2.14bn to the economy, and employ 12,130 full-time woerkers.
Kids in the snow at Mt Baw Baw. Picture: Visit Victoria
Minister for Environment Steve Dimopoulos said it was early days and the government were not yet sure how the tender to take on a piece of the two mountains would shape up, but noted there was scope it could wind up as a 99-year lease or in other partnership arrangements.
In most scenarios the government would hand over effective control of the mountain snow fields to a private operator, however Mr Dimopoulos clarified that the freehold to the mountains would not be sold.
“We want to make sure as many Victorians as possible can enjoy our great outdoors, and our natural assets are meeting the needs of Victorians and those who come from across the globe to visit them,” he said.
Opposition Treasurer Brad Rowswell said the government was now reaching to the back of an empty pantry and questioned whether any money made would go to supporting Victorians, or if it would be used to pay down the state’s debts.
Mr Rowswell added that the timing of the expressions of interest over Christmas likely indicated they were looking to access more cash ahead of the Victorian budget.
With real estate values falling across much of Victoria in the past year, there are growing concerns there will be a holein the state’s budget come May with the possibility that stamp duty revenues will decline.
Industry sources said most of the existing operators were already heavily exposed to the weather-sensitive ski industry and after enduring their second straight year of lacklustre winter snow falls would be “reluctant” to look at either site without a very attractive price.
Vail Resorts are already heavily exposed with the ownership of both Mount Hotham and Falls Creek resorts.
The Grollo family, who own substantial chunks of Mt Buller including the mountain’s ski lift company, would be increasing their reliance on good snowfall by making a purchase.
Meanwhile Merlin Entertainments, who own the Otway Fly zip line tourist spot, are actively looking to sell their alpine attraction, and industry experts would likely regard Baw Baw or Lake Mountain as too small of an operation to take on.
Cross-country skiing at Mt Baw Baw. Picture: Visit Victoria
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Alpine real estate sales regular John Castran said that the government was considering a headlease scenario employed at Threadbow in NSW — underwhich other parties would sublease properties and still have to pay all water and sewerage, was unexpected — and not necessarily palatable for the private sector.
Mr Castran said Lake Mountain was “transactable”, but while “gorgeous”, Mt Baw Baw — where the government has installed a handful of ski lifts — would be a hard sell.
“But I don’t think anyone would buy Baw Baw, it’s too hard to get to,” he said.
“There’s not enough snow there, and it’s not high enough.
“So there’s no development potential. There’s not enough ski lifts.
“Even at $1 you would have to assume so many costs.”
The agent noted that Lake Mountain’s value was difficult to predict, but could be anywhere from just $5m with an ongoing payment to the government in perpetuity, to closer to $100m for a 99-year lease scenario where it was a one-off payment.
In both cases, Mr Castran said “I don’t know who the buyer is”.
“The question is, how much will someone pay for something that loses money?”
The agent added that in addition to staffing and resourcing the mountain resorts, neither had power connected and required costly generators to run electricity as well as to fire up snow-making machines.
Baw Baw Real Estate director Ben Codling said while he mostly sold lifestyle properties off the mountain, the region’s real estate market typically shut down for December and most of January.
The Herald Sun Tour has also been run at Lake Mountain. Picture: Michael Klein
“In summer, it does slow down, and only kicks back in around mid-January,” Mr Codling said.
“I would usually tell people not to sell in December and January. There’s staff parties, holidays and Christmas. So it is an odd time, you would have thought they’d wait for coating of snow.”
Mr Codling added that while he had secured a number of sales this spring, the area’s property market was “not thriving”.
However, he said if a private operator could be found to take on Mt Baw Baw, it would likely give the area a boost.
Mr Castran added that while unprofitable, both sites did provide a benefit to the state’s bigger ski resorts — as they drew snow-play tourists and young families away from the taller mountains that did not have the carparking to cater to additional crowds.
He added that any buyer would likely be seeking guarantees from the government that they would not seek to extract further revenue from the sites with taxation changes in the future, following this year’s increase to land tax and a looming short-stay accommodation levy.
Both of the government moves impact alpine property markets, where many residences are owned as a secondary home or investment and often leased short term during ski seasons.
Interested parties will make offers via Buying for Victoria, with a tender process to be announced early in December.
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