Vail Resorts posts impressive financial year after major Park City buy
The Vail Daily
BROOMFIELD — Vail Resorts had a very good fiscal year, and its new year started off with a bang. That bang, the purchase of Park City Mountain Resort, dominated the company’s most recent earnings report.
Vail Resorts president Rob Katz and company chief financial officer Michael Barkin Wednesday provided financial analysts with an overview of the company’s 2014 fiscal year, which ended July 31. Aside from broader fourth-quarter losses — a period in which the company generally posts losses — the fiscal-year news was good on almost all fronts. Everything from ski pass sales to revenue per available room increased over 2013’s numbers. Even skier numbers increased by 10 percent during the year. That came despite a crippling drought in California that dropped visits at Tahoe-area resorts by more than 15 percent.
Revenue in the company’s lodging business has grown through both increased occupancy and higher prices. The “revenue per available room” at company hotels increased by more than 12 percent.
That growth came thanks to improved business in Colorado and at the company’s urban resorts in Minnesota and Michigan.
Even the real estate side of the business has done well, Katz said, with 11 sales at One Ski Hill Place in Breckenridge and eight units sold at the Ritz-Carlton Residences in Vail.
Those sales represent “modest” improvement in the company’s real estate business, Katz said.
The good news — record resort revenue for the fiscal year — equates to a dividend of 41.5 cents per share of company stock to those who own stock as of Oct. 7.
Park City Mountain Resort boost
While the quarterly reports generally talk about past performance, Wednesday’s report put a lot of focus on Vail Resorts’ Sept. 11 purchase of Park City Mountain Resort.
Barkin said the company has seen a bump in pass sales in the weeks following the sale.
Pass prices for Park City skiers will also go down as they shift to Vail Resorts’ Epic Pass.
Katz said the season pass offered through Powdr Corp., the former owner of Park City, was about $850 and included a few other resorts. This year’s price for an Epic Pass is $749, and the pass provides unlimited access to all the company’s resorts, as well as several days at European resorts. The Vail Resorts pass offers “sea change in value over where they were before,” Katz said.
During a recent earnings press call, Katz said the Park City deal won’t affect the way Vail Resorts prices its passes.
“The effort around our pass program is providing incredible value,” Katz said, adding that the company’s practice of small annual increases will continue into the future.
Katz also talked generally about plans to link Canyons Resort and Park City Mountain with a chairlift, as soon as next year.
“We want to do as much as possible in 2015,” Katz said, adding that precise plans won’t be unveiled until March or so of next year.
Park City already has several summer recreation activities on the mountain — which, unlike Vail Mountain, sits on private, not U.S. Forest Service property. But Katz said plans are being considered now to include Park City in the company’s Epic Discovery program, a summer amenity program that will start work in Vail in 2015.
When the lift linkage is created, it will create the largest single-site ski area in the U.S., at more than 7,000 acres. That link could create some real estate opportunities at the Canyons, Katz said, adding that Vail Resorts won’t have direct involvement in possible future development there.
With ink still drying on the Park City deal, Felicia Hendrix, an analyst with Barclays, asked Katz if the company has other destination markets in its sights.
“It tends to take a long time to do a transaction,” Katz said “We’re always looking — but sometimes it takes years.”
Katz was also less than bullish about future real estate projects.
“There are no projects being launched at any resorts,” Katz said, although he noted there’s dwindling inventory in the company’s stocks. Katz said he expects to see a rebound as the national economy and resort markets get stronger, but that hasn’t happened yet.
He said growth plans at this point are focused on making the company’s “network” more powerful for guests.
“We’re taking a highly guest-focused approach,” he said.
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