Vail Resorts posts strong second quarter
BROOMFIELD — The second quarter of Vail Resorts’ fiscal year falls in the heart of the winter season. The company’s performance this season has been particularly strong.
In a conference call discussing the company’s performance in the quarter that ended Jan. 31, Vail Resorts CEO Rob Katz reported increases throughout the company’s operations. Areas from lift income to revenue generated by lodging rooms have increased from the same period in the previous fiscal year. Across the company, visitation is up by nearly 10 percent.
He said the company continues to see “robust” spending from visitors, adding that the company’s resorts near Lake Tahoe have seen significant increases in visitors. He also reported double-digit revenue growth at Park City Mountain Resort and Canyons Resort.
Colorado resorts have also seen solid growth, he said, noting that this year’s revenue growth is coming on the heels of a record period in the prior fiscal year.
He said the company’s growth in visitation came primarily from growth in the domestic market. The decline in international visits “moderated” during the period, he said, adding that guests numbers are “stable” from the Mexican and Australian markets. The Australian market has been particularly good, he said. Guests are coming, and generally stay longer and spend more than those from any other international market.
While Vail Resorts’ two biggest international markets continue their strength, Katz acknowledged that guest numbers from Canada, Brazil and the United Kingdom have declined.
The Australian plan
Katz attributed the strength of the domestic market to more sophisticated marketing efforts to those customers. For Australia, he credited that strength in part to the company’s acquisition of Perisher ski resort. The company had been confident that selling an Australian Epic Pass would benefit U.S. resorts, and he said current performance shows that confidence was well-founded.
In North America, he said Vail Resorts believes its recent purchase of the Wilmot ski area, about 65 miles north of Chicago, will provide a similar boost.
He said the company saw positive results from season pass sales when Vail Resorts bought a pair of urban ski areas outside of Minneapolis and Detroit. Those markets combined have about 470,000 skiers, he said. Chicago has about 800,000 skiers.
“Chicago is one or our most important destinations,” he said. “From there, skiers can easily travel to Colorado, Utah or California.”
Vail Resorts spent about $20 million to acquire Wilmot, and he said the company will put another $13 million into the resort this year, upgrading the dining, the children’s ski school, the terrain park and the snowmaking.
Those improvements present an opportunity to create an appealing entrance into snowsports, he said.
New lift at Vail
The company’s improvements this year also include an upgrade to the Sun Up Lift at Vail. That triple lift will be replaced by a high-speed quad, improving capacity by about 40 percent, and will shorten the ride time to the Back Bowls to four minutes.
The capital improvement plan also includes improvements to the Pines Lodge at Beaver Creek, a new 500-seat on-mountain restaurant at Breckenridge and revamping the corporate websites and the reservations call center.
For summer, the plan will include new Epic Discovery work, mostly at Breckenridge. The $2 million in spending this year is in addition to $27 million already spent on summer projects, mostly at Vail and Heavenly.
Speaking during a question-and-answer session with analysts, Katz said the company still has growth potential. But that growth will probably come at the company’s newer properties. He said Vail Resorts continues to examine the prospects of buying other resorts, particularly in other countries, including Japan. The addition of a resort there could help Vail Resorts tap into the growing Chinese market.
But, he said, any future acquisitions need to fit the company’s overall strategy.
“All that stays on our radar, but in a methodical way,” he said.
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