Vail Resorts reports robust earnings | VailDaily.com
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Vail Resorts reports robust earnings

Cliff Thompson
Shane Macomber/Vail DailyLots of skiers and boarders are helping Vail Resorts have one of the best winters on record.
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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, and borrowing a line from former NBA coach Pat Riley, added, “It’s a three-peat because this is the third year of record second quarters.”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.

Vail, however, experienced a 1.7 percent dip in skier numbers for the first quarter. Aron said poor snow at Thanksgiving was the cause.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.”Demand is deep and it may be spreading to other resorts, too,” he said. “I’m quite bullish about it. We’re on the verge of monetizing a huge premium.”Much of that highly profitable real estate is included in Vail’s $1 billion renovation that will see the building, expansion and renovation of 20 buildings in Vail Village and Lionshead. But Aron said there are several parcels of land the company owns near the Marriott in Lionshead that will be developed and sold.Halfway thereAt 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. Pre-tax 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 snow-making operations. With about six weeks of ski season remaining, Aron is optimistic about the potential for profit, he said.”Our ski areas have received plenty of snowfall this year and once again we had record season pass sales,” he said. “Air, hotel and ski-school advance bookings are all strong for the remainder of the ski season, and lodging advance bookings for the fourth quarter also are encouraging.”The company’s guidance, or prediction of pre-tax profit made last summer, is calling for a record $152 million to $160 million in the mountain operations and lodging division, and $10 million to $16 million in pre-tax profits for the real estate division. Net income is projected to range from $14 million to $22 million.

Staff Writer Cliff Thompson can be reached at 949-0555, ext. 450, or cthompson@vaildaily.com.Vail, Colorado


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