Why Victoria will struggle to sell Mount Baw Baw alpine resort
More than one-third of commercial sites lie empty at Victoria’s Mount Baw Baw village and a lack of power supply makes it unclear how many can be used or how much a new operator would pay to take over a resort unable to operate at its full potential.
Analysis by The Australian Financial Review shows as many as 17 of the 49 titled sites at the off-grid alpine village resort, 170 kilometres east of Melbourne, are vacant. Long-term business owners say potential commercial operations have long been held back by underinvestment in power.
Alpine Resorts Victoria, the government body selling operating rights to Mount Baw Baw and the separate Lake Mountain resort, said it was considering renewable power options on site and was also willing to discuss power needs put to it by potential bidders.
But the lack of power – and the likely expense of upgrading it – along with low elevation that means the resort gets less snow than higher resorts such as Mount Buller, Falls Creek and Mount Hotham, mean any sale process will struggle, said John Castran, an alpine land valuer and real estate agent.
Lower-lying resorts such as Mount Baw Baw are more susceptible to the effects of climate change. This year, Mount Baw Baw and Mount Buller stopped their lifts on September 1, ending their second straight season early after lower-than-average snowfall.
A 2017 report by consultancy SGS Economics and Planning forecast Mt Baw Baw’s days of natural snow cover of more than 1 centimetre to fall from an average of 80 a year in the 2000s to only “transient” snow cover by the 2050s.
“There’s no demand for the individual sites,” Mr Castran said. “You can’t make a commercial return by building a building on them.”
The cash-strapped state government hopes to offload the two loss-making southern resorts and last week started an expression-of-interest campaign for the operations and facilities that will run until the start of February.
“What we want to do through this process is bring in a commercial operator who can apply their own insights to the resort,” Alpine Resorts Victoria chief executive Amber Gardner told the Financial Review.
“However, if that doesn’t bring a viable operator, we’ll continue to work with government to consider what some of those investment opportunities may be in those resorts into the future.”
Long-standing problems at the village include a lack of sufficient power, which is supplied by generators, said Leona Turra, a member of the Mount Baw Baw Stakeholders Association and former lodge owner at the village.
“Power’s been on the shopping list for as long as I can remember,” Ms Turra told the Financial Review.
“I understand we have a cash-strapped government, but this neglect has been going on for more than 20 years.”
But Ms Gardner said there was enough power for current operations.
“There is appropriate power at present for snow-making, for lifted operations and to support the current commercial operations and then some,” she said.
“It’s been operating at a deficit for many years, so that limits the capacity to reinvest in the resort.”
Ms Gardner said the northern resorts had not subsidised Mount Baw Baw and Lake Mountain but could do so under a recent governance change that put all of them under the responsibility of her organisation.
“Now we’re united all under the one entity, there’s some concern that if there are surpluses in the northern resorts that they would be invested to offset the deficit of the southern resorts,” she said.
“However, at the moment, all of the northern resorts are still recovering from the impact of COVID on their finances, so it’s not happening. There are no significant surpluses to be re-investing anywhere else in the portfolio.”
The state government, which will retain ownership of the mountain, had to fund investment into its power infrastructure, Ms Turra said.
“They need to invest in what is a taxpayer-owned asset so that there can be a viable provider of goods and services,” Ms Turra said.
“We’re not talking about making Baw Baw a wildly expensive resort. That’s not the concept. It’s about ensuring there are enough toboggan runs, enough snow play area, enough runs to ensure people come to Mount Baw Baw.”
Ms Gardner said the resorts had their challenges but also offered opportunities for a new operator.
“They’ve got vibrant communities, they’ve got popular products, and they’re really unique in terms of their position in the alpine landscape,” she said.
“There’s a lot of real innovators out there and entrepreneurs who have the capacity and the vision to turn these resorts around.”
Mr Castran said grid power had to be connected to the village to ensure its longer-term sustainability.
“All towns are based around water and infrastructure,” he said. “If you don’t have infrastructure, how can you have a town? I don’t know.”
