At Stowe, fondness, fear for owner AIG

Insurer's downhill slide stirs talk that elite resort may be up for sale

Yoon S. Byun/Globe StaffWorkers walked around Stowe Mountain Lodge at Stowe Mountain Resort in Stowe, Vt. Nearly everyone in town has an opinion on developments, and business owners and bartenders alike can quote AIG stock prices and name corporate officers. (Yoon S. Byun/Globe Staff)

STOWE, Vt. - In ski parlance, "bailing out" is a controlled fall to avoid dangerous terrain. Here, in this mountain paradise, the phrase has taken on new meaning.

Few people beyond this town's evergreen-shrouded borders know that much of this community - the mountain, the ski lifts, the opulent new resort - is owned by American International Group, or AIG, the global insurance company that is the single largest recipient of cash from the $700 billion federal bailout. No roads or restaurants bear AIG's name; its namesake letters appear nowhere in the resort's logo.

"It's not like they're hanging out AIG signs," Gerry Bouchard, a building supply salesman, said as he pumped gas.

AIG may be despised by many for the price taxpayers are paying for its financial mismanagement and ill-timed junkets, but Stowe is a company town. A new $400 million slopeside hotel complex, opened last summer, has continued a decades-old AIG tradition of making huge real estate investments in its corporate playground, and that has helped the local economy prosper.

But now that AIG has stumbled on a global scale, industry officials predict the company will have to sell off valuable assets.

When asked whether the mountain is for sale, AIG spokesman Peter Tulupman spoke cryptically.

"I can't confirm it, but I can't deny it," he said recently, declining to speak further on the topic.

Tulupman said he has received calls from people, taxpayers, who want to know if they might ski at Stowe for free. The answer is no.

Dick Marron, a member of the Selectboard, said the company has been a good partner, helping to create a community that is financially strong and well-diversified, drawing vacationers year-round for hiking and golf.

He chastised a reporter for referring to AIG's taxpayer relief as a bailout, even as he acknowledged a growing uncertainty about the future.

"It was a love affair," he said of the town's relationship to AIG. "That's gone now."

That love affair began in the 1940s when AIG's founder, C.V. Starr, first skied Mount Mansfield, Vermont's tallest peak and the resort's central attraction. Starr later bought out other mountain investors, including Lehman Brothers president Roland Palmedo, and began making improvements to lifts and building the resort's first hotel. Stowe village, in the shadow of Mount Mansfield and the lesser Spruce Peak, began to prosper.

"Starr's charming, titian-haired wife, Mary . . . was as much in love with the Vermont ski resort as her husband," the town newspaper glowingly reported in 1951. "Few people realize what he and his wife have done for the Stowe resort area."

Today, AIG owns the mountain through a subsidiary called Mt. Mansfield Co. Inc., which last year paid the town of Stowe about $2.3 million in taxes. And even Starr could not have envisioned the area's transformation. The Stowe Mountain Resort is home to dozens of condos and hotel rooms, two golf courses, and banquet and conference space.

The new complex is a joint venture between AIG subsidiary Mt. Mansfield Co. Inc. and AIG Global Real Estate Investment Corp.

The idea was to turn Stowe into the Aspen of the East.

Guests can visit the spa for a $500 massage package or the hotel bar for a $250 glass of Remy Martin Louis XIII cognac ("the cognac of celebrities, artists and politicians").

The tables at Solstice, the resort's newest restaurant, glitter with Simon Pearce stemware. The tables were hewn from maple and black walnut trees felled from the site, a former campground.

There are 139 guest rooms and another 150 rooms under construction, said Jeff Wise, a spokesman for the resort.

"Demand continues to be high enough that we're actually building another wing on the hotel," Wise said.

A day ski pass at Stowe costs $89 for an adult, slightly higher than Killington and other Vermont mountains. A two-bedroom suite at the hotel costs about $1,200 on a Saturday night in peak ski season.

The ability to draw that kind of wealth has made Stowe infamous in Vermont, where many nearby towns have struggled with poverty and unemployment. The joke usually goes like this: Stowe is great because it's so close to Vermont.

Greg Kolb, a research analyst who follows the ski industry for Janco Partners Inc. in Denver, said Stowe is widely considered by industry experts to be for sale.

There are also widespread but unconfirmed rumors that Starr's successor, former AIG CEO Hank Greenberg, may be a potential buyer. Greenberg, now in his 80s, owns a home in Stowe.

He could not be reached for this story.

"The pool of people who could buy it five years ago would be huge," Kolb said. "Now you're going to have far fewer privately wealthy people bidding on it because they don't have as much money or they're not interested."

Many year-round residents are watching developments closely.

Nearly everyone in town has an opinion, and in Stowe, business owners and bartenders alike can quote AIG stock prices and name corporate officials. Alex Stein, owner of Edelweiss Mountain Deli, said the workers at his deli counter grew hushed when news of the company's demise aired on TV.

"A lot of people were freaking out, calling their spouses," he said.

Other residents refuse to believe that ownership could change.

"No, I don't think so," said Ken Strong, the owner of The Shed bar and restaurant.

"Pretty much the whole town is excited about the resort," he said. "It's a large jump forward and puts us ahead of other ski towns."

Chris Townsend, who recently opened a coffee shop in Stowe, is pinning his hopes on speculation that jet-setting skiers will stay closer to home given the economic times.

"It's a great destination spot," he said of the resort. "It won't just sit idle and empty."

Megan Woolhouse can be reached at mwoolhouse@globe.com.