Vail Resorts’ mountain revenue up
BROOMFIELD – Vail Resorts announced a 3.9 percent increase in its yearly mountain-related revenue Thursday during the company’s fourth quarter and fiscal year earnings call. Snowfall in Colorado was at a 30-year low during the 2009-10 ski season – a major reason Vail Resorts chief executive officer Rob Katz said the growth in mountain revenues is especially pleasing. The company’s mountain segment includes lift ticket, dining, ski school, retail and rental revenues. Katz said the results from fiscal 2010, which ended July 31, show encouraging signs for the upcoming winter. Season pass sales have improved significantly from the third quarter report in June, when they were down about 15 percent from the previous year. Pass sales are now down about 1 percent compared to the same time last year. Lodging reservations are also looking stronger for winter compared to reservations on the books at this time last year, Katz said.
“It’s still early in the booking cycle, but most booking indicators are up in both room nights and revenues over prior year at same time,” Katz said. Less than 15 percent of winter season bookings are typically made by this time, according to the company’s report. Katz said summer visitation at the company’s mountain resorts was strong this year despite the still volatile economy.
“We are optimistic about the upcoming season,” Katz said.
Overall, the company saw an 11.1 percent decrease in total net revenue, with $868.6 million in fiscal 2010 compared to $977 million in fiscal 2009 – the company attributes this difference to the timing of real-estate closings.
While mountain business is slightly up over last year, Katz said the company is a long ways from 2007 and 2008 levels. That being said, he said some types of spending are creeping back up.
“We saw a strong end-of-season last year in ancillary revenue, particularly in ski school,” Katz said.
Retail and rental revenue was up 5 percent, or $7.4 million, mainly because of higher retail sales and rental volume at Vail, Beaver Creek and Breckenridge. Retail and rental revenue got a boost in the spring when snowfall was better and the resorts had higher skier visits than earlier in the winter, Katz said. In areas where spending remains sluggish, such as dining, Katz said the company will be focusing on many promotions to bring that spending back up in fiscal 2011. Mountain dining revenue increased $1.1 million, or 2.0 percent, with dining operations negatively impacted in the first half of the 2009-10 ski season by low early season snowfall, which resulted in delays in the openings of some mountain restaurants.
Vail Resorts’ chief financial officer Jeffrey Jones said the company has an expectation to return to more traditional price increases in lift tickets and other products. Katz said season pass prices across the board are up about $10 to $20, depending on the pass. Pass sales tend to increase just before what Katz refers to as a price break – a deadline for when a certain pass price is guaranteed. Those deadlines come up in mid-October and mid-November. “We saw throughout the summer some very good momentum across the board (with pass sales),” Katz said. Lodging is an area where the company seems to be more cautious. Jones said the company expects a recovery in lodging growth, but not to the point the company was expecting about a year ago. Katz added that group business at Keystone, or a lack thereof, attributed to a lot of the lodging losses. He thinks the Keystone group business will pick up in the summer of 2011. As for the early bookings for this winter, the company believes the numbers prove travelers are becoming more and more likely to book vacations in advance, rather than last-minute. “We think the cycle is shifting,” Katz said.
The Ritz-Carlton Residences in Vail, a Vail Resorts development, recently received its certificate of occupancy and is now officially open. Katz and Jones both suspect the opening will help fuel more interest in the homes for sales there. The company’s real estate revenue for the fiscal year was $125 million less than the previous year, which saw big revenues because of some major closings, including $111.5 million for eight Lodge at Vail Chalet units and $16.7 million for two Arrabelle condominiums. The Ritz-Carlton Residences in Vail did see closings on all of the 45 fractional units there just after the end of fiscal 2010, for a total of $110.9 million, earlier this month. The Marriott corporation bought all of the fractional units. There are 48 of the 71 wholly-owned units currently under contract, with closings expected to start happening over the next couple of months, Jones said. “We anticipate, given the status of the real estate market, although there’s definitely more activity than a year ago and a positive to have buildings complete and people being able to access them, that it’s going to take a multi-year time period to get these sold through,” Jones said, referring to both One Ski Hill Place in Breckenridge and the Ritz-Carlton Residences in Vail. When asked how the two real estate projects are holding up during the recession, Katz said the company has been pleased considering the circumstances.
“There’s no question these projects are less profitable than what we would have expected before the financial crisis and economic recession hit,” Katz said. “We’re seeing the travel habits of folks are really coming back. People are starting to spend and travel again – that’s coming back first, and we would expect real estate to come back next.”
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