Intrawest reports earnings up 6.8 percent
SUMMIT COUNTY – Despite a blow to tourism-based businesses Sept. 11, Intrawest Corp. – owner of nine resorts in North America, including Copper Mountain Resort and a 50-50 partnership in Keystone Resort with Vail Resorts Inc. -held steady in the fiscal year 2002 and is optimistic about its prospects for this year.
“Coming out of the year, revenues proved far less vulnerable to both the events of 9-11 and to economic conditions than most hospitality and leisure businesses have shown and even more broadly than most consumer-driven businesses,” said Daniel Jarvis, Intrawest’s executive vice president and chief financial officer.
The Vancouver, British Columbia-based company reported a 6.8-percent increase in revenue for its fiscal year which ended June 30, from $922.8 million in 2001 to $986 million. Revenue and operating profit from real estate sales for the fiscal year 2002 increased 17.5 percent and 11.2 percent, respectively.
Ski and resort revenue and earnings before interest, income taxes, non-controlling interest, depreciation and amortization decreased by 1.4 percent and .9 percent, respectively, from the prior year’s record levels. Full-year resort operations margins increased from 22 percent to 22.1 percent in 2001 and real estate margins decreased from 18.4 percent to 17.4 percent.
One of Intrawest’s goals for the next few years is to decrease the approximately $900 million debt it reported as of June 30 this year, Jarvis said. During the fiscal year 2002, Intrawest sold about $30 million in non-core assets and plans to sell another $50 million in assets this year, he said.
“Some are under contract,” he said. “We expect to close the bulk of them in six to nine months.”
Despite threats by Vail Resorts Inc. to sue Intrawest over the company’s pact with Denver to operate and redevelop the city-owned Winter Park Resort, Intrawest likely will go forward with the deal, Jarvis said.
Vail alleges the deal violates a noncompete clause in its contract with Intrawest for development of Keystone Resort. The clause states neither company will develop competing real estate within five miles of any ski resort in Grand County unless it gains a “controlling interest” in the resort. Intrawest said, while it would lease the resort from Denver, it would assume all the financial risk and pay all resort costs.
Vail is lobbying the Denver City Council to delay approving the deal so elected officials have more time to understand the complexities.
“We haven’t finalized the transaction but, hopefully, we will have by season’s end,” Jarvis said.
Intrawest likely will begin planning the development of Winter Park Resort next summer, he added.
“The issue will have to be settled in the courts,” said Charles Goeldner, University of Colorado professor emeritus at the school’s Center for Sustainable Tourism. “Intrawest and Winter Park lawyers say they don’t feel there’s any problem.”
Intrawest continues to expand its existing Colorado resorts. The company is adding to The Village at Copper, a pedestrian-only area at Copper Mountain Resort that includes shops, restaurants and entertainment, said Beth Jahnigan, communications coordinator for the resort.
Intrawest began construction of the now-named West Lake Market at Copper last spring, she said. This development will include seven new restaurants and shops including Larkin’s Cross, the Irish Pub, Blue River Anglers – a fly fishing shop- Ready Paint Fire, where customers can paint their own pottery and Giggle Works, which will sell toys and candy, she said.
All the shops and restaurants at West Lake Market except the Irish Pub are scheduled to open around Thanksgiving, Jahnigan said. The development also is planned to include ice skating on West Lake and a fire ring to include storytelling and marshmallow roasting for children, she said.
“West Lake Market will enhance where the village is going and add more night life and dining,” Jahnigan said. “It will bring a lot more activity and energy to the village.”
The Village at Copper is in keeping with Intrawest’s development strategy, which is to create a resort and a village with restaurants, shops and entertainment to create a year-round resort experience, Jahnigan said.
“When Intrawest purchased Copper in 1997, the company made a commitment to turn it into a year-round resort,” she said. “A couple years ago, it was just a parking lot and a day lodge. Now, we have something to offer to everyone. It is not just a great ski area. We have a village that’s worthy of the mountain.”
On the operations side, Copper cracked the million-mark for skier days for its first time, registering 1.005 skier days. The resort continued its aggressive approach to introduce skiers and boarders to the resort through attractive lift ticket pricing.
Intrawest also has a partnership at Keystone Resort with Vail Resorts, Inc. This partnership, called Keystone Real Estate Developments LLC, came about because in 1993, Ralston Resorts, the former owner of Keystone, asked Intrawest to develop the base area of Keystone. In 1996, Vail Resorts bought Keystone Resort, thereby forming the partnership between the two industry giants.
Intrawest has been developing base projects at Keystone Resort, including River Run, a neighborhood of condominiums, shops and restaurants near the River Run Gondola and Settlers Creek, a development of two- to four-bedroom luxury townhomes.
These townhomes, which average 1,480 square feet, include such amenities as moss rock fireplaces and gourmet kitchens, as well as a game room, swimming pool and two hot tubs for residents’ use. Intrawest plans to continue development of Settlers Creek this year, said Leslie Robbins, an Intrawest spokeswoman.
Sales of the condominiums at River Run have done excellently, Robbins added. “Fifty to 60 percent of them were presold before we even put shovels in the ground,” she said. “Intrawest has a presale requirement before we build anything. That is our way of testing the market. If we don’t meet the threshold, we need to revisit the project.”
That threshold is 50 percent presales.
Goeldner said Intrawest is one of the top companies in the ski resort industry and it should have another strong year this year.
“Intrawest runs first-class ski resorts and has invested millions,” he said. “I believe that as long as we continue to get decent snow that Intrawest will continue to do very well.”
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