Go Play: Vail Resorts has plans to spend big bucks in Utah
By the numbers
$50 million: Expected 2015 spending by Vail Resorts at Canyons and Park City.
31.2 percent: Increase in summer activity revenue.
13 percent: Increase in season pass sales.
3: High-end real estate sales, two at Vail’s Ritz-Carlton Residences, one at One Ski Hill Place in Breckenridge.
89.18: Vail Resorts Dec. 8 closing stock price.
BROOMFIELD — Those watching the industry suspected Vail Resorts had big plans for Utah when it purchased Park City Mountain Resort earlier this year. The first of those plans are now public, and the industry-watchers were right.
During a Monday conference call with industry analysts to discuss the company’s fiscal performance during the first quarter of its 2015 fiscal year, Vail Resorts CEO Rob Katz announced plans for $50 million in capital spending to link Park City with Canyons, the Utah resort the company took control of in 2013. The big part of the plan is a gondola to link Park City with Canyons, as well as a new, six-person lift and a new quad lift at the resorts. Other plans also call for building a 500-seat restaurant at Park City and upgrading a 250-seat restaurant at Canyons.
The plan also includes upgrading snowmaking at in the Iron Mountain area of Canyons and as much as $5 million in what the company calls “catch-up” maintenance at Park City.
LARGEST RESORT IN NORTH AMERICA
The gondola and the ability to ski both resorts on one lift ticket will create what is effectively the largest ski resort in North America, with more than 7,300 acres of skiable terrain.
Katz called the coming work in Utah “transformative,” and a release from the company anticipates that revenue will improve as the ski experience is upgraded.
Since the resorts in Utah are on private property, the construction work depends on approvals from town and county officials.
While the Utah resorts drew much of the attention, Katz also noted that Vail’s Avanti lift, currently a quad, will be replaced by a six-person lift in time for the 2015-16 season.
THIS SEASON’S STRENGTHS
Vail Resorts’ fiscal year begins Aug. 1, and as is usually the case, the company lost money during the period, since there’s little in the way of resort activity during that time. But, Katz added, the ski season to come looks strong in several ways, including:
Snow: Colorado resorts in particular have the best early-season snow in years. California resorts, which have been hit hard by a multi-year drought, received some snow in recent weeks.
Pass sales: Katz said pass sales have increased by 13 percent — and 16 percent in revenue — over the previous years. Despite what Katz called a “dip” in pass sales for Tahoe-area resorts, increases were particularly driven by news about the Utah resorts. Katz said pass sales in some of the company’s main destination markets, both international and domestic, have also shown strength.
Overall, roughly 400,000 people have purchased some sort of pass. That represents about $200 million in revenue for the company.
Lodging: Roughly 50 percent of Vail Resorts’ ski-season lodging is already booked and at higher daily rates.
Real estate: The company closed sales of two units at the Ritz-Carlton Residences in Vail and one at One Ski Hill Place in Breckenridge.
Guidance: The company expects its total “earnings before interest, taxes, depreciation and amortization” to be between $327 and $354 million.
Vail Resorts stock finished the day at $89.18 per share, down $2.25 for the day. But one analyst, Robert LaFleur, of JMP Securities, wrote in an investors note that he expects the company’s stock to outperform its corporate guidance and could meet or exceed JMP’s price target of $100 per share.
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