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Vail Resorts CEO sees more growth in coming year

Lauren Glendenning
Vail Daily

Record skier visits, great snow and higher prices helped Vail Resorts grow revenues during the 2011 fiscal year despite lingering economic concerns, company CEO Rob Katz reported Thursday.

Vail Resorts reported revenue growth in all of the company’s primary business areas, with the strongest growth in the mountain and lodging divisions, although the typical fourth-quarter losses were heavier in 2011 than in 2010.

Total mountain net revenue was up $49.3 million, or 7.7 percent, over the 2010 fiscal year , not including the company’s October 2010 acquisition of Northstar-at-Tahoe. Lodging net revenue was 9.9 percent higher in the 2011 fiscal year, at $214.7 million.

Resort reported EBITDA (earnings before interest, taxes, depreciation and amortization), which includes the lodging and mountain divisions, was $221.9 million in the 2011 fiscal year, a $35 million, or 19 percent, increase over 2010.

“This was a very successful year for us on many fronts,” Katz said.

Operating costs spiked in fiscal year 2011, however, because of the Northstar-at-Tahoe acquisition, as well as a longer season due to early season snowfall and a late Easter. The company spent $84.3 million more than it did in 2010, or $30.5 million more when excluding Northstar-at-Tahoe. The increases were because of everything from higher fuel costs to labor costs to wage and benefits increases.

Real estate EBITDA was negative $5 million, compared to negative $4.3 million in 2010. But real estate net revenue was stronger, with $200.2 million for the year compared to $61 million in fiscal year 2010.

Much of the revenue was driven by the closings of 71 condominium units at the Ritz-Carlton in Vail, including all of the fractional ownership units, with an average price per square foot of $1,216. Deposits from buyers who defaulted on units under contract at the Ritz brought in $7.8 million for the company. The Ritz still has 30 of its 71 condos still available.

Vail Resorts chief financial officer Jeff Jones said the reason overall EBITDA estimates for real estate are down for fiscal year 2012, with estimates at negative $16 million to negative $24 million, is because sales and revenue are expected to go down while expenses such as marketing and corporate costs, are staying consistent.

That being said, Jones said the company is still pleased with the sales pace.

“We’re seeing great momentum, especially out of the Ritz product,” Jones said. “How many units we’ll sell over the season is just an education guess, but we feel good our estimates are very reasonable right now.”

The company is looking at the 2012 fiscal year as a year that will remain consistent with the last few years. Katz calls it a “choppy economic environment,” but the company feels it can continue to outperform others in the industry.

“We’re looking at growth across all our various business lines,” Katz said. “We see this year that we’re not going back to (2003-08) so quickly.”

Ancillary spending increases in fiscal year 2011 show promise, however. And, ironically enough, the areas of business that are seeing the highest increases in spending are the higher-priced items.

“The upper part of the market continues to have more confidence,” Katz said.

But that doesn’t mean the company isn’t remaining cautious, even if Katz said there aren’t significant overall concerns right now, despite with current economic trends.

International business has been strong and there are “good trends” in international bookings already for next year, he said.

Business from the United Kingdom has declined dramatically, however, but there’s still growth in international sales even with those declines.

There’s good growth in places like Canada, Mexico and Brazil, markets Katz expects to see more business from in the 2011-12 se ason.

There’s also good pre-season indicators for 2011-12 nearly across the board, he said.

“I think today, I don’t think we’re ready to say we’re in an up market going into next year,” Katz said. “Barring a real decline in economic confidence, we should see continued (growth).”


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