Vail Resorts driven by Colorado, Utah
By the numbers
62 cents: Per-share dividend, payable April 15, a 50 percent increase.
15.9 percent: Growth in skier visits across the company over the previous year.
15.7 percent: Growth in revenue per available lodging room over the previous year.
43 percent: Decline in snowfall at Tahoe, compared to the previous year.
BROOMFIELD — The current ski season is a strong one for Vail Resorts, with the company reporting solid second-quarter growth across its skiing and lodging operations. The company also announced an ambitious capital improvement plan for both winter and summer operations, including a new chairlift at Vail and the start of the Epic Discovery summer program.
During a Thursday conference call with financial analysts, Vail Resorts CEO Rob Katz and company chief financial officer Michael Barkin detailed revenue increases in company operations from pass sales to lodging to ski schools and restaurants.
Those increases came despite a severe, continuing drought near Lake Tahoe, where the company operates the Heavenly and Northstar resorts. Katz said current seasonal snowfall at those resorts is down 43 percent from last season’s low snow total.
Snowfall has been affecting visits to those resorts, Katz said, adding that the company’s overall success is in part due to “geographic diversification.”
This season, the snow has been in Colorado and Utah, where Vail Resorts now owns or operates both the Canyons resort and the adjacent Park City Mountain Resort.
Katz said the company has repaid all the borrowing under the “revolver” portion of its credit that was used to finance the $182.5 million acquisition last year of Park City.
That resort, along with the Canyons, is the subject of plans in the coming year that Katz called “transformative.” Katz said Vail Resorts intends to spend about $50 million this year on projects that will include linking the two resorts to create what is by acreage the largest ski area in North America. The local-government approvals for those projects are moving smoothly, Katz said, and work is expected to start this summer.
Vail Resorts intends to spend $60 million to $65 million at its other resorts in the next year, including replacing the Avanti lift at Vail with a six-place chairlift and improving the snowmaking system at Beaver Creek.
Part of that spending will include about $10 million to create the first phase of the company’s Epic Discovery summer programs. Vail will see a mountain coaster, canopy tours and a summer tubing area, while children’s activities will be created on private property near Breckenridge.
Speaking about the company’s performance for the quarter ending Jan. 31, Katz said overall mountain revenue was up 18.2 percent compared to the previous year. That increase was driven by factors including a 15.9 percent increase in visitation compared to the prior year.
Those visitors occupied more of the company’s hotel rooms, and the lodging division charged more for those rooms.
Katz acknowledged that visits to Vail and Beaver Creek declined during the 2015 FIS Alpine World Ski Championships.“But the minute the championships were over, we saw a marked improvement at Vail and Beaver Creek,” Katz said.
With early-season prices for next season’s Epic Pass announced recently, Credit Suisse analyst Christie Fredericks asked about the roughly 5 percent price increase on the pass.
Katz said the company takes a “methodical” approach to price increases, adding that considering the improvements coming to the resorts — particularly in Utah — “Guests will see the value.”
Katz also said the company welcomed the March 10 announcement that three rival resort companies will offer a pass similar to the Epic Pass. The M.A.X. Pass, offered by Intrawest, Boyne Resorts and Powdr, provides skiing at 22 resorts, and is priced at $699 for adults. Next season’s Epic Pass is priced at $769.
“We like to see more press and more attention to the issue (of passes),” Katz said. “Maybe guests will take a closer look… We like feel we deliver great value.”
On the real estate side of the company, Katz noted that there have been more sales at both the Ritz Carlton Residences in Vail and One Ski Hill Place in Breckenridge. The company also sold an unused hotel in Breckenridge that will become a Marriott Residence Inn.
Katz said the property sale is part of the company’s new focus on looking for outside investors to develop property. There could be similar announcements over the next year, Katz said.
Following the call, Vail Resorts’ stock ended the March 12 trading day up $8.26, to $93.27 per share.
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, firstname.lastname@example.org or @scottnmiller.
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