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VR reports robust earnings

CLIFF THOMPSONeagle county correspondent

VAIL – Strong ski resort activity and real estate sales allowed Vail Resorts to post a profit in a quarter where it typically does not.The company is reporting net income of $32.2 million on revenue of $264.6 million for its second quarter, which covers the beginning of the ski season. That’s a turnaround from the same period last year when it lost $6.7 million. Profit during the second quarter last year was reduced by a one-time $37 million refinancing of the company’s debt.Business was strong across the company’s three divisions – the ski mountain, lodging and real estate – said an ebullient Adam Aron, chief executive. The news drove the company stock up 1.25 percent to $24.25 at market close.”We just could not be more elated with our financial performance for the quarter,” he said.A number of factors helped drive the company to a record quarter. An improving economy, good snow, a weak dollar that has increased international tourists and a booming demand for resort real estate helped drive profit. Aron also credited tight expense management for helping to drive profit. In January the company also sold, for $13 million, its 49 percent stake in the Ritz Carlton Bachelor Gulch.Revenue was up 7 percent in the mountain division, to $214.2 million. Increased ticket prices, bigger ski school classes and more on-mountain spending was cited by Aron.Revving real estateSkier numbers across the company’s five resorts – Vail, Beaver Creek, Breckenridge, Keystone and Heavenly near Lake Tahoe – were up 1.7 percent to 2.66 million. But it was the company’s real estate division that Aron singled out, not for its performance for the quarter, but for the potential it holds in the face of one of the hottest real estate markets in the country. Properties are selling for approximately double what it costs to build them, he said.

“Vail’s New Dawn is the largest, most lucrative and most important project in the company’s history, ” he said. “The resort market is hot and we intend to capitalize on it.”When the company began selling condos in the 62-unit Arrabelle project two months ago, it had 573 bids from people interested in plopping down $100,000 deposit checks for the unbuilt property, Aron said.”We had demand for $1.3 billion worth of a condominium project,” he said. “Arrabelle has caused us to rethink our schedule.”The real estate boom in resorts is being caused by baby boomers, age 50 to 64 and at the height of their spending power, who are reaching into their ample pockets to pay for second homes, Aron said.

At the halfway point of its fiscal year, that runs from Aug. 1 to July 31, the company appears poised to have one of the most profitable years on record. The busiest and most profitable part of the ski season falls in the company’s third quarter, the earnings report for which will be made public in about three months.The company’s total revenue for the first half of the year is $362.5 million, 3.3 percent better than last year. Pretax profit is up 12.7 percent to $53.7 million.The company will be spending about $65.4 million on resort-related improvements and maintenance, including installing new high-speed lifts at Beaver Creek, Heavenly and Breckenridge as well as expanding grooming and snowmaking operations. Net income is projected to range from $14 million to $22 million.


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