Lauren Glendenning
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December 4, 2012
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Vail Resorts bookings down amid dry weather

VAIL, Colorado - Vail Resorts CEO Rob Katz said Tuesday the company's expectation of 27 to 32 percent growth over last year will be more difficult to achieve based on current trends.

Katz and Vail Resort Chief Financial Officer Jeffrey Jones hosted a conference call for investors Tuesday and focused on positive trends from the late summer months as well as negative early trends this season due to weather. The earnings report was for the first quarter of fiscal year 2013, which covers the period of August through October and is historically a loss quarter for the company.

The loss was larger in the first quarter this fiscal year compared to fiscal year 2012, however.

While Katz said there's still "plenty of time in the season" for weather conditions to improve in Colorado, the dryer and warmer start to winter is having an early effect.

"Bookings are slightly worse than when we were last talking about bookings in September," Katz said. "We're seeing some negative trends, more so in Colorado."

The company's Lake Tahoe resorts are experiencing much better early season conditions. Katz said a recent storm brought snow to that region measured in feet, not inches, recently.

In Colorado, however, the story is different. Katz said the poor snow year last season is also still having an effect and that had last year been better, the company would probably have a different view about readdressing its earnings expectations.

"I think we do feel it's related to weather and a little bit of a hangover from last year," Katz said.

Acquisitions

The company plans to update its fiscal 2013 guidance again in mid-January when it releases ski season metrics. When guidance was issued in September, it was based on normal weather conditions, Katz said. And while it's still early to make a big adjustment to the guidance range, the company does currently see "some things that could affect the range."

"Without kind of a great start to the weather pattern ... no question it makes it more difficult to achieve the target we set out (to achieve)," Katz said.

Analysts on the call were interested in the Monday announcement that KSL Capital Partners, the owners of Squaw Valley and Alpine Meadows ski areas near Lake Tahoe, is buying 24 percent of Whistler Blackcomb from Fortress. Analyst Felicia Hendrix, from Barclays Capital, told Katz many investors hoped the announcement would have come from Vail Resorts because Whistler "is a marquee asset."

Katz said while Whistler is "obviously a terrific mountain resort," it would be difficult for Vail Resorts to take on a minority stake in a public company and still achieve its business goals.

"Not that we'd never do it," Katz said. "That structural situation makes it very different for us."

Vail Resorts doesn't make acquisitions just for the sake of owning nice resorts. Katz said the company does it when it feels it can drive significant, strategic value.

"I'd say, in general, I don't think you'll see us doing those types of deals in the future," Katz said. "I think we're very focused on looking for opportunities where we feel they can help drive our pass sale business."

Pass trends

While KSL Capital Partners did not announce a season pass product that would combine its resorts, including Whistler, analysts "expect at least a joint pass program at some point, leading to more competition for Vail," wrote Will Marks, of JMP Securities, in an investor note Tuesday.

Katz said it's logical to think more multi-mountain pass products would compete, but Katz sees such moves as creating long-term growth and stability in the ski industry.

"I'm quite comfortable that our selection of resorts and what we offer will always be competitive," Katz said.

As for pass sale business, Katz said the company is pleased considering weather conditions both last season and early this season in Colorado. The sales were worse than expected, though. As of Dec. 2, pass sales were up roughly 5 percent in units and 8 percent in dollars. In September, units were up 17 percent and dollars were up 21 percent.

"The total growth of the program is slightly below our expectations, as we believe that the amount of sales that we pulled forward to earlier selling periods was somewhat larger than expected and that weather was still a concern for those purchasers who delayed their purchasing decisions," Katz said. "Sales in Tahoe and international markets continued to show the most strength. We expect the final results of the program will be generally consistent with these percentage increases as final sales conclude in the coming weeks."

Katz wouldn't specifically answer one analyst's question about whether Colorado resorts were seeing any booking cancellations due to weather. Bookings are down compared to the first quarter last year, though.

"There's no question that that dynamic plays out a little bit in some of the numbers you're seeing today," Katz said.


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The VailDaily Updated Dec 4, 2012 09:12PM Published Dec 4, 2012 09:08PM Copyright 2012 The VailDaily. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.