Hoffman West Real Estate


1.866.949.1902
970.926.6000


Vail Resorts reports record revenue for 2017 fiscal year even as U.S. skier visits decline

BROOMFIELD — Vail Resorts announced another record-breaking year during a Thursday, Sept. 28, earnings report from company CEO Rob Katz and chief financial officer Michael Barkin.

The company reported record revenue for another fiscal year — Aug. 1 to July 31 — despite a drop in Colorado skier visits. That drop in Colorado was attributed to scant early-season snowfall, as well as a late-arriving Easter holiday.

Skier visits elsewhere increased, and strongly. According to the company’s report of Katz’s remarks, skier visits climbed to roughly 12 million for the 2016-17, season, a 20.1 percent increase. Much of that increase was attributed to what Katz described as a better-than-expected season at Whistler Blackcomb, which was integrated into companywide results for the 2017 fiscal year.

Katz said strong visitation numbers were also seen at the Park City/Canyons resorts, as well as the firm’s Northern California resorts, which benefited from massive snowfall.

Near the top of the company’s big news was the report of a substantial jump in season pass sales compared to the previous year. Katz said pass sales through Sunday, Sept. 24, were up 17 percent over the same period one year ago. That increase in pass sales also came with a 23 percent increase in revenue.

While proud of the increase, Katz said the company expects the full-year growth to be more modest, since many pass buyers were acting to beat early deadlines. The addition of Whistler and Stowe, Vermont, also helped fuel pass sales.

‘GEOGRAPHIC DIVERSITY’

Katz said Vail Resorts’ “geographic diversity” has helped pass sales, since the company now has resorts in the Pacific Northwest, the Northeastern United States, California and the Rockies.

Early pass sales also bring the company more financial certainty than walk-up lift ticket purchases, Katz said.

To that end, Katz said pass sales also allow the company to get guests into the firm’s databases, allowing the company to directly target guests.

Responding to a question from Bank of America analyst Sean Kelly, Katz said he isn’t particularly concerned about the expected slowdown in pass sales until ski season starts. Some of the expected growth in pass sales came sooner than later this year, he said. That means a number of people who would buy passes have already bought them.

In addition to increased visits, guests also spent more money across the resort’s other businesses — many due to Whistler’s appearance on the company’s balance sheets. Ski school operations saw a 24.1 percent increase, and dining increased a similar amount. Retail and rental revenue also increased by more than 20 percent.

In lodging, revenue per available room increased, despite a 1.4 percent overall decline in occupancy.

Some of those declines have come from international guests. Katz said a strong U.S. dollar against the Canadian and Australian dollar, as well as Latin American currencies, has been a boon for Whistler.

But, he added, “It’s critical for the U.S. to focus on inbound tourism,” adding that he expects the strong U.S. dollar to continue to be a challenge for the firm.

INCREASING COMPETITION

While Vail Resorts’ various season passes have set an industry standard, Felicia Hendrix, an analyst for Barclay’s, asked Katz what effects from competition he expects.

The Aspen Skiing Co. and KSL Holdings have in the past year or so acquired several prominent resorts, including Deer Valley in Utah, Mammoth Mountain in California and all of Intrawest’s ski resorts, a portfolio that includes the Steamboat ski area.

“We’ve been competing with many resorts for a long time,” Katz said. That competition also includes multi-resort passes from the Mountain Collective and the Max Pass.

“It’s good for the industry,” he said. “Skiers and riders will get so many more options.”

Despite the appearance of a new large player in the industry, Katz said he’s confident in his company’s marketing efforts.

Competitors “can absolutely go into that,” he said. “But it takes a little bit of time. I feel good that it’ll be our company … that’s the determiner of our success.”

Responding to another question from Hendrix — reporters aren’t allowed to ask questions during the earnings calls — Katz said Vail Resorts is still looking for acquisitions.

“There are still some unique opportunities in North America,” he said. “It’s the matter of getting the right match.”

Vail Resorts is also looking for opportunities in Europe and Japan, Katz said.

Chris Agnew, an analyst with MKM Partners, asked Katz about the performance of Epic Discovery, Vail Resorts’ relative new summer programs.

Katz acknowledged that there were “operational downtime challenges” at Breckenridge and Heavenly over the summer. But, he added, the company has expected it will take five years for the summer programs to mature.

Despite another record fiscal year for the company, the firm posted a loss in its fourth quarter — which isn’t unusual. That loss — $57.1 million — equates to $1.43 per share, a better performance than the $1.82 per share estimated by Zacks Investment Research.

The company announced a quarterly dividend of $1.0575 per share for shareholders as of Oct. 10 of this year.

The company’s stock closed the Sept. 28 trading day at $221.79 per share, down $6.25 per share from the previous day.