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Great snow equals greater revenues

Staff Reports

Weather’s a funny thing. For confirmation, check the ever-changing theories about El Nino, La Nina, climate change, and global warming. There are a billion factors that led to this year’s snowpack, and while Vail Resorts can’t predict (or take credit for) the weather, the company’s gotten pretty good at predicting what a great snow year will do for their earnings.More than a few ski lifts across the Pacific Northwest and Canada are rusting on their cables due to a terrifically horrible snow year, but here in Colorado, across the West and in California, skiers have frolicked in hundreds of inches of the white gold. Vail Resorts capitalized on the plentiful snow and managed to reverse a potential company downturn.A few weeks ago, the company’s stock was trading higher than it had in a half decade almost $26 a share. Also this year, our hometown resort behemoth reported a solid second-quarter fiscal 2005 net income of $32.2 million.”Thanks to increases in lift-ticket pricing, favorable visitation mix changes, a modest growth in skier visits and a robust ski school patronage, all five of our ski resorts performed very well during the (second) quarter,” said Vail Resorts chairman and CEO Adam Aron in a press release dated March 10.Across the company, almost every arm of Vail Resorts reported greater revenues than the comparable period last year. Mountain revenue was up 7 percent. Lodging revenue was up 8.5 percent. Even real estate sales were up slightly.In announcing the company’s earnings, Aron highlighted that Vail’s investment in Bachelor Gulch Resort could further boost real estate sales. Then there’s the planned condo development in Lionshead that’s had buyers swarming in hopes of scoring a ski-to-your-back-door unit.Yes, the good news and good snow has had both investors and skiers smiling. But the revenues aren’t just due to great snow. A weak dollar has helped bring in foreign skiers and their pesos, yen and euros. Also, during the second quarter of fiscal 2005, Vail finished a highly successful refinancing of its senior bank credit facility including loan payoffs and a better line of revolving credit, according to the company.It’s almost like the perfect storm of finances. Or so some ski industry analysts are saying.”You’ve got good snowfall in Colorado, weak snowfall in Canada. You’ve got the weak dollar and hot hotel market,” remarks one ski-industry market watcher. “All these factors are going to drive ski revenues up.”Along with the earnings announcement, Vail made public that it would spend $68 million on resort-related capital expenditures this year. The company will use the money for improvements at its five ski resorts and luxury hotels. But don’t expect much in the way of an overhaul on our local mountains next year no new China Bowls next season. We’ll likely have to be content with a few lift upgrades and a handful of new trails. VT By Jed Gottlieb


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