Vail Resorts reports strong Spring

This article was pubished in the Summit Daily News, June 9, 2010, by Julie Sutor.

SUMMIT COUNTY — Vail Resorts finished the 2009-2010 ski season in stronger shape than in the previous year, with increased activity among destination visitors and improved guest spending, according to an earnings report the company released Wednesday.

Skier visits during the company's third quarter (February through April) improved by 4.6 percent over the same period in 2009. Its third-quarter bottom line in the mountain segment improved by 9.6 percent.

Vail Resorts CEO Rob Katz said he was “very pleased” with the company's performance in its mountain segment, which includes lift tickets, restaurants and ski school.

“In fact, during the spring break and Easter periods in 2010, we saw levels of skier visitation, total lift revenue, ski school revenue, dining revenue and retail/rental revenue that were comparable to the results we saw during the same periods in 2008 and 2007, giving us confidence in improving customer trends as we start planning for the 2010-2011 season,” Katz said.

Destination visitation during the third quarter increased by an estimated 7.9 percent over the same quarter last year.
Skier visits on the rise

Heavenly posted the strongest improvement in skier visits, with a 9.6 percent increase in visitation in the third quarter of fiscal year 2010, compared to the same period in 2009. Overall visitation for the quarter at the company's Colorado resorts — Breckenridge, Keystone, Beaver Creek and Vail — increased by 3.7 percent. Total skier visitation for all five of the company's resorts during the 2009-2010 season increased 2.5 percent over 2008-2009, despite record-low snowfall at the Colorado resorts during the early part of the 2009-2010 season.

Of the four Colorado resorts, Breckenridge fared best in terms of skier numbers, with an increase of 5.6 percent for the season. Neither Vail nor Beaver Creek were able to surpass the previous season's skier numbers, owing to the scant early-season snowfall. Vail did not open its back bowls until after Christmas. Skier visits at Vail declined by 1.4 percent for the season, even though third-quarter skier visits were stronger than in the previous year. Beaver Creek's skier numbers were down by 0.4 percent for the season.

Season passholders skied approximately 10 days on average during the 2009-2010 ski season, down by half a day compared to last season.

Within the mountain segment, ski school and retail/rental revenues were particularly improved. Revenue from ski school increased $4.3 million, or 11.7 percent, for the quarter, and retail/rental revenue increased $6.9 million, or 14.3 percent, primarily due to higher retail sales and rental volumes across the majority of locations.

Lodging still sluggish

The company's bottom line in the lodging segment during the third quarter was down 5.5 percent from the same period last year. The decrease was due almost entirely to declines at Keystone lodging properties and increased expenses in marketing and employee medical costs. Keystone experienced a significant drop in business from large groups, with a 24.6 percent decline in group room nights during the three-month period.

Excluding Keystone properties, total room revenues would have increased by $0.5 million, and transient room nights would have increased by 7.9 percent.

Looking forward

Vail Resorts recently completed its One Ski Hill Place project in Breckenridge. To date, the company has closed on 23 of its 88 luxury condominiums and anticipates additional closings over the next several weeks.

“We have full confidence in the ultimate success of this project and will be patient in our approach to ensure we maximize our proceeds from future sales,” Katz said.

Spring season pass sales for next season are down by about 14 percent compared to last spring. But Katz said last spring's strong season pass sales were due to a “mad dash” by consumers to purchase the Epic Pass, uncertain over whether the company would continue to offer the product. This year, the company assured consumers of the ongoing availability of the Epic Pass, thereby eliminating their urgency to purchase it.

The company has allocated $75-85 million in capital projects and maintenance, most of which will be spent this summer. The projects include a new high-speed chairlift at Vail, an alpine coaster at Breckenridge and renovations to lodging rooms at Keystone.