Vail Resorts third quarter shows positive results from ski season, pass sales
By the numbers
7.9 percent: Increase in lift revenue over the same period in 2017.
12 percent: Increase in pass sales through May 31 over the same period in 2017.
19 percent: Increase in pass revenue through May 31.
$1.47: Announced per-share dividend for the third quarter.
Source: Vail Resorts
BROOMFIELD — Vail Resorts’ acquisition and pass-sales strategies seem to have weathered a snow-short winter in the Colorado Rockies.
During a Thursday, June 7, conference call, Vail Resorts CEO Rob Katz said the company performed well in the third quarter of its 2018 fiscal year. The company’s fiscal year runs from Aug. 1 to July 31, so third-quarter results encompass the final three months of the ski season.
Katz said the company’s mountain revenue increased 7.1 percent from the same period in 2017. Lift revenue grew 7.9 percent for the quarter. Total visitation grew 6.4 percent.
Much of that gain came from resorts in places other than Colorado. But, Katz said, late-season snow in Colorado brought more visitors, showing that demand for ski vacations exists among “high-end consumers.”
Acknowledging the “challenging” weather at Colorado resorts, Katz said the company’s third-quarter results show the “resilience” of the company’s business model, which includes both geographic diversity and season-pass sales.
Information provided by the company shows that pass sales for the 2018-19 ski season are running ahead of the same period in 2017.
Through May 31, pass sales are running 12 percent ahead of 2017. Revenue is up 19 percent over the third quarter of 2017.
Those numbers don’t include sales of the company’s new passes for active-duty and former military personnel. Those products are priced at $499 for former military personnel and their families. Active-duty military members and their families can buy unlimited passes for $99 each.
Katz noted that the military passes have seen “strong” sales.
“We’re seeing significant sales to new guests,” Katz said. But it’s going to take some time for the company to get a better handle on how many first-time buyers there are, as well as the number of people who previously bought retail passes who are now buying the military passes. Katz said the company expects to release information about the military passes this fall.
Vail Resorts Chief Financial Officer Michael Barkin noted that this week’s announcements that the company has contracts to purchase four resorts — Stevens Pass in Washington, Okemo in Vermont, Sunapee in New Hampshire and Crested Butte in Colorado — each represent “an important strategic addition,” offering skiers more choice and access to more resorts.
Katz noted that as Vail Resorts expands its holdings, skiers at newly acquired resorts become part of the company’s marketing efforts. But, he added, applying Vail Resorts’ marketing technology to newly acquired resorts may be a more important tool than information those resorts had at the time they were acquired.
“It’s not just the past five years, but the next five years (of data)” that’s important, Katz said.
Responding to a question from Bank of America analyst Shaun Kelley about the prospects for further acquisitions, Katz said he believes there are still “select opportunities” in North America. But, Katz added, any future acquisitions must provide Vail Resorts with something unique for the firm.
“We have to be even more selective,” Katz said, adding that the company is also looking for opportunities outside North America.
Regarding existing resorts, Katz said the company has a $150 million capital spending plan for this year. That spending includes $40 million at Whistler; spending at Park City to improve family areas, dining and snowmaking; and a new chair at Heavenly. In the wake of this week’s purchase announcement, Vail Resorts intends to spend $36 million at those four resorts over the next two years. Specific plans will be announced after the deals close this summer.
Chris Woronka, an analyst with Deutsche Bank, asked Katz about spending on labor and employee housing.
Katz said there are “a number” of workforce housing initiatives in the works but didn’t provide more details or a timeline.
But, he added, the company’s workforce is a “huge priority for us,” adding that the company expects to see wages and compensation growing faster than the rate of inflation.
Given a tight labor market in many areas in which it operates, “we need to make our own investments into our employees,” Katz said.
Investors appeared pleased with the news of this week. The company’s stock price Thursday was $270.72, an increase of $11.62 over the previous day’s closing price.
Vail Daily Business Editor Scott Miller can be reached at email@example.com and 970-748-2930.
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