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Resorts posting banner year so far

ALEX MILLEReagle county correspondent

AVON In reporting its second-quarter earnings Monday, Vail Resorts had mostly sunny news from the snowy skies that have boosted skier visits as well as the bottom line this season.The company posted a 7.9 percent increase in skier visits in its second fiscal quarter, which ended Jan. 31. Also reported was a bump in revenue of 8.4 percent in the second quarter compared to the same period last year, along with record net income of $43 million a 33.4 percent increase over the second quarter of 2005.With the cash flowing, the company announced about $80 million in spending for upkeep and new projects for the coming year. The biggest news may be the announcement of construction on the long-awaited gondola connecting the town of Breckenridge to the resort. The company also has plans to add a new high-speed lift at Heavenly; upgrade snowmaking systems at all four Colorado resorts; build an expanded spa at Keystone Lodge; and making improvements to the companys central reservations system.All told, the companys board of directors approved between $185 million and $195 million in real estate capital expenditures in 2006. That includes ongoing projects like construction of the Arrabelle Lodge and Gore Creek Place in Vail; the Vail Front Door project; development of a golf course in Jackson Hole, Wyo.; and the second phase of the Mountain Thunder Lodge condos in Breckenridge.In a conference call Monday, new chief executive Rob Katz said some of that money may also go toward more acquisitions.I think in the mountain resort industry, there are a handful of opportunities of high interest to us, Katz said.Asked about the recent news from ski-area operator Intrawest that it might be interested in new partnerships or even selling some of its assets, Katz said he couldnt comment other than to note that Intrawest does own some of those true franchise assets Vail Resorts might be interested in.

On the ski operations side, the only bad news came from Heavenly Resorts in California, which had weak snow conditions earlier in the year and suffered a drop in skier visits especially during Christmas week.Katz, who recently replaced Adam Aron as chief executive of Vail Resorts, said projections for the upcoming sale of units in Arrabelle and Gore Creek Place are below projections due to higher than anticipated construction costs. Even so, he said the projects should generate revenue between $63 million and $73 million minus taxes and overhead.Overall, Katz said hes happy with the companys performance. It is a further indication of the success of our focus on the guest experience and the incredible contribution of all of our employees, Katz said. Overall, our resorts showed strong increases in skier visits, even after absorbing a decline at Heavenly due to certain adverse weather impacts. We also realized price increases at all of our resorts, and season pass sales exceeded last year by 10.8 percent.Some of the companys numbers for the second quarter may not look so good on the surface. The decline in the lodging sector, for example, was mostly due to the fact that Vail Resorts sold two of its properties in fiscal 2005 the Vail Marriott and the Lodge and Spa at Rancho Mirage. It does continue to operate both hotels, however.Vail Resorts also sold the Snake River Lodge & Spa in Wyoming in January.Katz said he expected to be in the upper end of its previously announced guidance that fiscal 2006 income will be $30 million to $39 million, including a $6.9 million stock-option expense. Excluding that expense they expect income of $34 million to $43 million.The Associated Press contributed to this report.


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