Spring boosts Vail skier visits
Tribune News Service
VAIL – Vail Resorts saw an increase in destination guests to its mountain resorts in the third quarter for fiscal year 2010, and guests across the board were spending more money than they did in the third quarter the year before.
The company announced its third quarter earnings for fiscal 2010 Wednesday, revealing mostly positive results for the 2009-10 ski season. The company does, however, expect a dip in fourth quarter earnings and executives predict the company will miss the top end of the guidance issued last September, said Jeffrey Jones, Vail Resorts’ chief financial officer.
The company’s net income increased 18.1 percent for the third quarter compared to the same period in 2009.
The results are giving company executives confidence in improving consumer trends as it plans for the 2010-11 ski season, said Chief Executive Officer Rob Katz.
The holiday periods around Spring Break and Easter especially helped boost company earnings for the ski season, Katz said.
Visitation and spending levels during the spring holiday periods matched 2007 and 2008 levels, Katz said.
“(The match was on) an absolute basis, which is obviously great news,” Katz said.
An area where the company is lagging behind last year’s third quarter is season pass sales. Vail Resorts sold 14 percent less season passes in the third quarter of 2010 than in the same period last year, which Katz said is a result of lower Epic Pass sales.
Katz attributes lower sales to the fact that consumers weren’t as sure the year before about whether Vail Resorts would continue to offer the Epic Pass, so they pounced on the chance to buy it early.
People are more comfortable now that the Epic Pass will continue to be offered, he said.
“I think at this point, what’s happened is that instead of this mad dash at the beginning, the Epic Pass is a product that has essentially settled back into the normal percentage we see for our other products,” Katz said.
Last year’s third quarter pass sales were up 40 percent over the previous third quarter, but ended up being 9 percent above the previous year in the end.
Katz said he expects this 14 percent decline to balance out much as that 40 percent spike did in 2009.
“I think this is almost just the corollary to what happened last year,” he said. “We currently believe the decline we experienced in the spring of 2010 to be largely due to a timing shift and that we will more than make up the current shortfall in the fall of 2010.”
Epic Pass sales in the spring of 2010 did exceed Epic Pass sales in the spring of 2008, though, he said.
The company’s real estate segment was about a third of what it was in the third quarter of 2009 due to a $9 million closing at the Arrabelle in 2009 and only a few affordable units that closed in 2010 for much less money.
Closings for the Ritz Carlton Residences are expected to begin later this year, showing up in fiscal 2011 first quarter earnings, Katz said. The company has closed on 23 units for its brand new One Ski Hill Place in Breckenridge, but expects some units under contract to default because of a difficulty to get financing under the current economy, Katz said. He didn’t comment on whether the company has similar expectations for the Ritz Carlton Residences.
Lodging income for the company was down over the third quarter last year, mainly because of Keystone, the company’s resort that has struggled in the last year with major declines in group lodging business. There were slight increases in average daily room rates and revenues per available room, up 1.3 percent and 0.2 percent respectively.
Katz wouldn’t comment on the lodging segment of business looking forward, but did say the company anticipates some better pricing dynamics, meaning higher lodging rates, going forward.
“So that’s certainly something that we anticipate being a better trend for us in upcoming quarters,” Katz said.
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