Vail Resorts’ (owner of the Breckenridge ski area) economic growth continued in its most recent fiscal year, with strong gains reported across virtually all segments of its operations.
In a Monday morning call with financial analysts, Vail Resorts President and CEO Rob Katz detailed the results for both the fiscal 2016 fourth quarter and the 2016 fiscal year overall (that period is Aug. 1-July 31).
Katz said the company is “extremely pleased” with pass sales in the period, adding that he’s particularly pleased with marketing efforts that have prompted consumers to buy their passes earlier in the year.
Through the end of the fourth quarter — which ended July 31 — pass sales had grown 24 percent in units and 29 percent in revenue. The full effect of earlier pass sales won’t be known for a number of weeks, but those early sales — which include spring and Labor Day promotions — added up to 60 percent of all pass sales in fiscal 2015. Katz said he expects that number to increase in the 2016 fiscal year.
Those pass sales, in addition to favorable, snowy weather last winter in the western United States, drove higher visitation, and those people tended to spend more money.
Vail Resorts Chief Financial Officer Michael Barkin said that visits to the company’s U.S. resorts grew 13 percent in fiscal 2016. And, Barkin said that the company’s total skier-visit number in fiscal 2016 exceeded 10 million for the first time.
While overall visitation was up, international business is a mixed bag. Katz said that Australia remains a growing market — due in large part to Vail Resorts’ purchase of the Perisher ski resort in 2014. But visits from Great Britain and Canada declined in the fiscal year. Visits from Mexico were about even for fiscal 2015, Katz said, adding that the Brazilian market saw “dramatic” declines, not just due to the strong dollar, but that country’s own economic problems.
Moving forward, Katz said the company expects currency exchange rates to stabilize in the 2017 fiscal year.
Which leads to Whistler.
Katz said the deal for Vail Resorts to buy the giant resort in British Columbia — a deal announced in August — has passed muster with the Canadian Competition Bureau and other government agencies, and he expects to finalize the transaction later this year.
The Whistler deal hasn’t had any effect on current pass sales, since Vail Resorts announced in August that its own Epic Passes won’t be accepted at Whistler in the coming season.
Katz said having Whistler in Vail Resorts’ portfolio gives the company a way to adjust to international currency fluctuations. Whistler has benefited from the strong dollar, Katz said, adding that the resort “provides a natural currency hedge.” Exchange rates can drive guests to either Canada or the U.S., he added.
Taking questions from analysts, Katz said since the busiest summer months are in July and August — different fiscal quarters — the company will have a better idea of the program’s first full season in Vail and Heavenly at the end of this calendar year.
But, Katz said, Epic Discovery gives the company an opportunity to attract people who may not visit mountain resorts in the winter.
“Epic Discovery gives us a chance to convert (those guests) to taking winter trips,” Katz said, adding that summer customers “aren’t our best target for season pass buyers.”
EASING OUT OF REAL ESTATE
While Vail Resorts’ resort businesses are growing, the company is easing out of the real estate development business.
The company did generate $22 million in cash flow in fiscal 2016, and closed the sales of five units at the Ritz-Carlton Residences in Vail, three Crystal Peak Lodge units in Breckenridge. The company also sold a land parcel at the base of Breckenridge. That sale totaled $9.25 million.
While the company still holds more than $90 million worth of real estate, Katz said that the company is looking for partners with projects that “make economic sense.”
“We’re focused on what the resort and community needs,” Katz said. “We hope to announce a number of partnerships in the coming years.”
Those partnerships will include Park City. But, Katz said, the company is in no hurry.
“We’re happy to take whatever time is required,” he said. “We need to have something everyone can feel good about.”