Vail Resorts reports early pass sale boost
June 9, 2015
VAIL — Vail Resorts reported a 10.9 percent increase in net earnings in the third fiscal quarter compared to last year, said CEO Rob Katz in a conference call Monday morning.
"We are pleased with our performance in the third quarter of fiscal 2015," said Katz. "Our results reflect the continued momentum from our growing season pass products, our ability to attract high-end destination guests to our collection of resorts and the profitable growth that we are driving across our business."
The 2014-15 season capped off a big year for the resort company, which is currently in the midst of a $50 million capital improvement project at the newly-acquired Park City Ski Resort and also is closing a deal with Perisher Ski Resort in Australia.
Colorado resorts enjoyed excellent spring conditions and gave the resort growth in lift ticket revenue (up 13.2 percent), lodging (up 1.7 percent) and ski school (up 6 percent), offsetting record low snowfall in Tahoe and unseasonably high temperatures in Utah, said Katz.
“We are pleased with our performance in the third quarter of fiscal 2015. Our results reflect the continued momentum from our growing season pass products, our ability to attract high-end destination guests to our collection of resorts and the profitable growth that we are driving across our business.”Rob KatzCEO, Vail Resorts
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The increases came despite a 1.4 percent decline in skier visits compared to last year for the quarter, which officials attributed partly to the 2015 FIS Alpine World Ski Championships in Vail during the month of February.
"That's the way the numbers played out, with the impact of the World Championships," Katz said. "However, we tend to look at the revenue that we're driving, and the trends are still very strong."
Resort courts destination season pass holders
Katz attributed part of the growth to Vail's season pass program.
"Through the third quarter of fiscal 2015, our season pass revenue grew 20.9 percent and represented 40.8 percent of our total lift revenue, contributing to the stability and overall growth we have experienced," he said. "The strong value proposition of our season pass products continues to drive significant growth in the number of destination guests purchasing season passes and maintains the loyalty of our more weather- and value-sensitive local guests."
Early season pass sales for the 2015-16 season are already off to a strong start, with sales up 12 percent in passes and 20 percent in sales dollars compared to the same period last year. The resort says a large part of that growth comes from destination skiers — people outside of Colorado, Utah and Tahoe — largely driven by the addition of Park City to the Epic Pass and marketing efforts, said Katz.
"The destination market has made up 43 percent of season pass sales. It used to represent 30 percent four years ago," he said. "I think absolutely adding Park City created a tipping point. People now feel they can ski Colorado, Tahoe and Utah on the same pass. Also, I think we've also become much more sophisticated in how we drive season pass sales, plus there's the acceptance and culture of a season pass."
Upgrades and additions
Vail Resorts is also in the midst of a number of upgrades and additions, the most recent being the acquisition of Perisher in Australia. Perisher season pass sales were up dramatically for that resort compared to last year. Perisher's Freedom Pass sales with Epic Benefits increased 68 percent compared to last year, with two-thirds of the growth coming after the acquisition (March 31 to June 2).
The resort expects to close on the deal in the fourth fiscal quarter for $135 million USD and expects Perisher to generate $16 million in net income in its first year of operation.
Katz said it is too early to tell if the addition will bring many Australian visitors to American resorts.
"Given how much of their growth came after we added access to our resorts, clearly that's a big driver. However, as we know through our other pass programs, skiing is aspirational, so people will buy the pass and maybe they're thinking about taking a trip, but we don't know how many of those people will actually make the trip," he said.
Capital projects include an ongoing $50 million upgrade to connect Park City Ski Resort and Canyons, which will make the combined resort the largest ski area in the country. Vail Resorts also plans to replace Chair 2, Avanti Express, in Vail with a high-speed six-pack.
During the earnings conference, Katz also alluded to the fact that Vail Resorts planned to stay competitive in market when it comes to wages and benefits, but declined to elaborate on details.
"In today's market, it's more important than anything to get and keep talent," he said. "I think that's something we can do."
Vail's Assistant managing editor Melanie Wong can be reached at 970-748-2927 and email@example.com. Follow her on Twitter @mwongvail.
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