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

Scott Miller - Vail Daily

BY THE NUMBERS

17 percent: Increase in season pass sales over the prior year

$1.9 billion: Total net revenue in the 2017 fiscal year

19.1 percent: Increase in total revenue over prior year

5.4 percent: Decline in skier visits at U.S. resorts

Source: Vail Resorts

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.

Copper Mountain Resort floats proposal for new boutique hotel, housing in coming years

Kevin Fixler - Summit Daily

The look and variety of offerings at Copper Mountain Resort could be changing considerably in the next five yeas, and the development of a new neighborhood near the Alpine Lift on the ski area's east side may very well be at the forefront of its transformation.

During a Tuesday afternoon work session with Summit's Board of County Commissioners, the resort and county staff each laid out the early stages of a forthcoming application with a 50-room hotel featuring a restaurant, bar and spa, and approximately 10,000-square-foot conference center as its key fixtures. The proposed $30 million project at the site of the Powdr Corp-owned resort's existing Triple Treat parking lot would also include a blend of nearby for-sale housing, in addition to a three-level underground parking area and small snack station for skiers and golfers, depending on the season.

"This has been an exciting project for us to work on," said Gary Rodgers, the resort's president and COO. "We think this is an important part of the overall economic model for the resort, but by no means the only thing we're planning to do."

While still in its conceptual phase, the development has an ambitious goal of breaking ground as early as next spring. Should the A-Lift Neighborhood receive the necessary county rezoning approvals in the next six-to-eight months, it could hypothetically hit that mark en route to an estimated two-year project completion once shovels are in the ground.

The undertaking is a joint business venture between Utah-based Powdr, which has owned Copper since 2009, in addition to other ski areas across the country such as Killington in Vermont and Mount Bachelor in Oregon, and real estate developer Continuum Partners. Among others, the Denver-based group has previously overseen projects like the reimagining of Union Station as the capital city's transportation hub and the Belmar entertainment district in Lakewood.

The A-Lift Neighborhood is presently zoned for 12 single-family homes, each up to 2,500 square feet, or 30 duplex equivalents spanning 3 acres of land. Aside from the boutique hotel and attached conference center, the new design would comprise 15 condos, eight duplexes and three single-family homes across an additional 5 acres, and require alteration to the Copper Creek Golf Course — specifically shortening and realigning the 15th hole.

As presented, the application would request nearly doubling the area's height restriction, from 35 feet to 65 feet for the hotel. The condos, which would also act as part of the hotel stock when not occupied by their owners, would stand at 55 feet, and the duplexes and single-family dwellings would remain at 35 feet.

Tuesday was the first chance for the three-member county board to see the new vision of the A-Lift Neighborhood and provide feedback. Beyond those potential visual impacts, the commissioners and county staff both raised concerns over the effects to wetlands on what is considered private open space land and the purpose of the three high-priced homes situated on steep slopes.

"I love the idea of this," Commissioner Karn Stiegelmeier said. "I'm not so comfortable with the wetlands impacts and question the value of those single-family lots. I guess those would have to sell for a lot."

Connectivity issues for pedestrians, bicyclists and shuttle services within the property had yet to be hashed out in the preliminary proposal. Questions about commuter safety and access points to the area, most likely off the State Highway 91, operated by the Colorado Department of Transportation, are still unsettled for now as well.

The meeting functioned as the project's official public unveiling, too, and the reception was mixed among the Copper Mountain residents in attendance who commented. Critics of the project underscored the possible environmental worries and uncertainty for how it might impact the adjacent Colorado Trail, while some noted the probable marketing for the hotel as ski-in, ski-out off the Alpine Lift would be misleading because the two-person chair is the resort's oldest and only services black-diamond expert terrain.

Others, meanwhile, were optimistic the development could enrich the Copper community as a whole and be part of a longer-term stimulus to draw more people and opportunities to the resort in the ever-competitive ski industry market. Rodgers agreed, stating the A-Lift Neighborhood was never envisioned as a main portal to the resort, but rather a unique offshoot, and is the first of several new collaborative commercial and residential developments just down the road.

"It's easy to have ideas," said Rodgers. "To get them to contract — especially the financing in the mountain communities is a challenge — but we think we've got the right development partners, not only here but elsewhere in the resort."

In an unrelated item on the commissioners' Tuesday agenda, the privately owned Lodge at Breckenridge, located off Overlook Drive in the Upper Blue Basin, received unanimous approval Tuesday to transition roughly 7,000 square feet of under-utilized recreational space into 14 more rooms and two "dorm-style" employee units — the latter of which will contain five bedrooms for up to six workers. The complex, which currently maintains 45 rooms, was built in 1968 and the partial redevelopment of the property was branded as a modernization of the inn.

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