VR’s "best-ever quarter’ | VailDaily.com
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VR’s "best-ever quarter’

Cliff Thompson

Bolstered by higher lift tickets and revenue from hotel operations, the company grossed $242.4 million in resort operations and $4.5 million in real estate sales. The news reverses the company’s post-9/11 pessimism and recession hangover.

“Vail Resorts is coming off our best-ever quarter financially,” said Vail Resorts’ chief executive officer, Adam Aron. “Our results for this recent quarter – and for that matter the whole ski season – exceeded even our wildest expectations.”

In February the company lifted an employee wage freeze imposed after the Sept. 11 terrorist attacks significantly slowed air travel.



The third quarter’s earnings apparently left Aron in a New York frame of mind. He compared the company’s performance to an old Broadway song by Ethel Merman.

“Honey, everything’s coming up roses,” he said. “It has turned out to be a surprisingly good year and good quarter, given 9/11 and the economy.”



Investors apparently weren’t impressed with the glowing quarterly report, however. Vail Resorts stock – MTN on the New York Stock Exchange -fell a smidgeon, 0.15 percent, to $18.10 per share.

“Its very frustrating to many of us, because we believe our company is much more valuable than reflected in the share price,” Aron said, adding that the trading volume of the company has been but 11,000 per day, low for a company the size of Vail Resorts, which has 36 million stockholders.

Net income for the quarter was $46.9 million and $1.33 per diluted share, compared to last year’s third-quarter net income of $40.8 million and $1.16 per share.



The strong third quarter brings the year-to-date resort revenue to $482.1 million, up 4.6 percent from the same period last year. Total revenue was $539.1 million, compared to $486 million for the first half of last year, a 10.9 percent increase.

Comparison of same-store sales showed the company’s revenues grew a modest 3.3 percent.

“Few (businesses) can report same-store growth this winter,” Aron said.

Hotel operations provided 60 percent of the pre-tax profits for the quarter, Aron said. Average occupancy at the the company’s Rockresorts, where the average daily room rate was $213, was 61.3 percent for the quarter. At other Vail Resorts’ properties, occupancy for the quarter was 73.9 percent and room rates averaged $180.

Strong ski pass sales and record revenue per skier visit also added to the strong performance.

“We were able to discount room rates at the base of the mountain to increase vacationing at resorts when few across the country were vacationing,” Aron said.

Non-lift ticket revenue for the company grew 13.1 percent.

Some penny-pinching

Real estate sales and dining sales, meanwhile, were two areas the company’s in which revenues did not increase.

“All season long people showed up, but they were spending a little less on food. It was clear the economy was having an effect,” Aron said. “For people who thought Vail was recession-proof, it was interesting that even Vail customers were watching what they spent.”

Real estate sales were down 29.4 percent due to anticipated timing of land sales, Aron said. The real estate division actually lost $1 million during the quarter, up from the $800,000 lost in the same quarter last year.

Vail Resorts managed to pare expenses, however, while growing revenue, Aron said. Revenues increased by $22 million, but expenses increased by $13 million.

Aron also took time to paint the future of the company a rosy hue.

He said he anticipates the integration of recently acquired Heavenly Valley Resort, with its 1,000-bed hotel and 800,000-plus skier days into the mix providing an excellent growth opportunity.

In Breckenridge, an agreement between the town and ski company over development of new lifts and ski terrain for Peaks 7 and 8, as well as 500 units of base development, will also provide more room for growth of revenues. That total project could total $800 million.

In Eagle County, the Tom Fazio Golf Course at Red Ski Ranch, which Vail Resorts developed, will open June 29. There have been $31 million in real estate sales there. An additional 20 single-family homesites will be brought to market on the second, Greg Norman-designed golf course later this year. Those will sell for an average price of $640,000 each.

Meanwhile, the 237 room Ritz Carlton Hotel at Bachelor Gulch is scheduled to open next ski season.

Year-to-date

On a year-to-date basis, the company’s earnings before taxes, depreciation and amortization are $137.7 million, an increase of 5.7 percent. Real estate revenue for the nine months were $57 million, up from $25.2 million for the same period last year.

Net income for the first nine months of 2002 was $45.4 million, or $1.29 per diluted share. Net income for the same period last year was $35.7 million.

Total skier visits in the four Colorado resorts – Vail, Beaver Creek, Keystone and Breckenridge – were down 4.3 percent to 4.7 million.

“Vail Resorts is coming off our best-ever quarter financially. Our results for this recent quarter – and for that matter the whole ski season – exceeded even our wildest expectations,” Aron said.

The company reiterated its change of auditors. It hired Price, Waterhouse and Cooper to replace the troubled firm of Arthur Andersen.

Skier projections for Vail and Beaver Creek for the 2001-2002 ski season, if consistent with a 4.3 percent area-wide decrease for the resort company, means the two resorts will have seen 2.22 million skiers compared to 2.32 million in the 200-2001 ski season. Company-wide, the skier numbers should approach 4.72 million.


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