Vail Resorts’ profits up for early winter
Ryan Summerlin March 11, 2009
VAIL, Colorado ” Vail Resorts reported overall profit increases, but drops in on-mountain revenues at its Colorado and California mountains for November, December and January.
The Broomfield-based company, which operates resorts at Vail, Beaver Creek, Keystone, Breckenridge and Heavenly on Lake Tahoe, made $60.5 million in profit this fiscal quarter, a $9.2 million increase from last year, largely from strong real estate and season pass sales.
However, revenues from the mountain, which includes lift tickets, ski school and on-mountain dining and activities, was down $9.6 million, or 8.3 percent, compared to last year.
Dropping skier visits, down almost 4.5 percent compared to this time last year, resulted in less lift ticket revenues and also decreases in ski school, dining, rental and retail revenues, Katz said.
The company has forecasted that on-mountian revenues will continue to drop for the next quarter, said Vail Resorts Chief Financial Officer Jeff Jones.
The next fiscal quarter is longer, meaning that any negative trends seen now will be magnified in the coming months, said Vail Resorts CEO Rob Katz.
In response to the outlook, Katz announced pay cuts ranging from 2.5 percent to 10 percent for all employees. Katz himself is forgoing his salary for a full year and will take a 15 percent pay cut the following year.
The company also said that decreased profits were partially offset by strong season pass sales. The unrestricted, five-mountain Epic Pass went on sale again Wednesday. The pass will cost $579, the same price as last season, through April 2.
Vail and Beaver Creek have continued to draw many skiers while the company’s other resorts are seeing significant drops in visits.
Vail saw a 9 percent increase in skier visits, and Beaver Creek saw a more than 7 percent increase. Vail Resorts’ other mountains are seeing as much as 10 percent drops in their skier numbers.
Katz said that is partly due to increased visits from Epic Pass holders who previously had passes that had limited visits to Vail and Beaver Creek.
Also, Vail and Beaver Creek visitors are wealthier, meaning that many of those skiers are still able to come on vacation, although they may be spending less once here, Katz said.
“They’re cutting back on spending ” they’re not spending as much at ski school or on fine dining, but they’re still able to come,” he said. “But at other resorts like Keystone and Breckenridge, when they’re cutting back, they may be cutting the whole trip or days.”
Real estate revenue was $89.2 million this quarter for Vail Resorts, up from $45.5 million last year. However, similar increases aren’t expected for the near future as sales on the company’s projects wrap up.
Real estate sales included six closings at the Lodge at Vail Chalets, and one Arrabelle home. The last chalet is expected to close this spring, and all 66 of the Arrabelle units have been sold.
The company also reported that revenue from the resort’s lodging increased from last year at this time, mostly due to the opening of the Arrabelle and the acquisition of Colorado Mountain Express.
Without those impacts, revenue from lodging would have decreased more than 13 percent.
Advance bookings for the company’s lodges are also off almost 15 percent compared to last year. However, the bookings show an improvement from December, when advance bookings were down more than 20 percent.
Vail Resorts is also getting ready to market its summer vacations.
The new promotional package offers an “Epic summer ” a Colorado family adventure.” The package is a six-night, seven-day vacation that includes white water rafting, gondola rides to the top of Vail, tours through Breckenridge’s historic mining district, horseback rides at Beaver Creek, and sightseeing through national parks.
“We believe that we will see a return this summer to the classic family vacation,” Katz said. “We believe our company is perfectly positioned to capitalize on that.”
Despite the negative impacts on the travel industry, Katz said he’s optimistic that Vail Resorts is on strong financial ground.
“The company remains in a strong position from a capital structure and balance sheet perspective which we believe will enable us to navigate through the current environment,” he said.
Staff Writer Melanie Wong can be reached at 970-748-2928 or firstname.lastname@example.org.