Broomfield, CO – Vail Resorts, Inc., the nation’s largest ski and snowboard resort operator, today reported results for the fourth quarter and fiscal year ended July 31, 2010, including a 37.9% drop in net income primarily due to the timing of real estate closings.nNonetheless, net revenue generated by the company’s Mountain segment increased by 3.9% and total skier visitation improved by 2.5% for the 2010 fiscal year. Resort revenue increased 2.1%, and looking ahead, season pass sales for the 2010-11 ski season have been tracking well ahead of the prior year and are now only down approximately 1% in units and sales dollars compared to the same period in the prior year, after having been down 14% and 16%, respectively, in June 2010.
Total net revenue was $868.6 million for Fiscal 2010 compared to $977.0 million in the prior year, an 11.1% decrease. Net income attributable to Vail Resorts, Inc. was $30.4 million, or $0.83 per diluted share, for Fiscal 2010 compared to $49.0 million, or $1.33 per diluted share, in the prior year.
“I am very pleased with the performance that we delivered for Fiscal 2010,” said Rob Katz, Chief Executive Officer at Vail Resorts. “Even with snowfall at historically low levels and the slow recovery in consumer spending, we were able to deliver growth in all key segments in our Mountain division: skier visits, lift ticket revenue, dining, ski school and retail/rental. The improvements were driven by strengthening destination visitation and guest spending patterns, which accelerated through the spring break and Easter holiday periods.”
The company’s key Mountain segment metrics gradually improved over the 2009-10 ski and snowboard season, leading to 12.0% growth in Mountain Reported EBITDA on a 3.9% increase in revenue. Lift ticket revenue increased 4.6%, with season pass revenue up 6.5%. Total skier visitation increased 2.5% for the year led by the company’s Heavenly resort at Lake Tahoe in California, which experienced a 10.7% increase in visitation, while overall visitation for the company’s four Colorado resorts — Vail Mountain, Beaver Creek, Breckenridge and Keystone — increased by 1.2% as they were all saddled by low snowfall last season, particularly through the first half.
Ski school business experienced the largest revenue increase for the year of any of the company’s ancillary businesses, up 8.2%. Retail/rental also achieved strong growth, up 5.0%, while dining revenue increased 2.0%, in line with skier visits. Lodging revenue declined 4.0% and Lodging Reported EBITDA was down $4.4 million, resulting in large part from declines in Keystone transient and group-related business.
Commenting on real estate sales, Katz added, “In the fourth fiscal quarter of 2010 we were able to close on 61% of the 59 One Ski Hill Place (Breckenridge) condominiums that were under contact, for total gross proceeds of $50.7 million. In addition, subsequent to the July 31, 2010 year end, we closed on 100% of the 45 fractional units at the Ritz-Carlton Residences, Vail for total gross proceeds of $110.9 million. Given the continued challenges in the real estate market, we were very pleased with our ability to deliver these closings, which we feel was due to the unique nature of our properties at our world class resorts. Furthermore, we have now passed a critical inflection point, as cash inflows will exceed cash outflows in our existing real estate projects. We look forward to closings on certain of the whole ownership units at the Ritz-Carlton Residences, Vail which are scheduled to take place in October and November 2010.
“We ended the year with Net Debt at 2.8x Total Reported EBITDA, even after self-funding two large real estate projects, investing in our mountain assets, repurchasing stock, and completing acquisitions of Mountain News and the remaining non-controlling interest in SSV,” the company’s equipment retail and rental business, Katz noted.
Lift revenue increased $12.7 million, or 4.6%, for Fiscal 2010 compared to Fiscal 2009, due to a $6.6 million, or 3.6%, increase in lift revenue excluding season passes and a $6.1 million, or 6.5%, increase in season pass revenue. The increase in lift revenue excluding season passes was driven by a 3.3% increase in visitation excluding season pass holders coupled with a 0.4% increase in effective ticket price excluding pass products. The increase in season pass revenue was due to an increase in season pass units sold, as well as year-over-year price increases in season pass products including the Epic Season Pass. Average visits per season pass holder declined approximately 4.8%, or approximately one half a day less skied per season pass holder, over the 2008-09 ski season resulting in an increase in effective ticket price.
Total Lodging net revenue for Fiscal 2010 decreased $7.1 million, or 4.0%, compared to Fiscal 2009. Vail Resorts acquired ground transportation provider Colorado Mountain Express (CME) on November 1, 2008, and as a result Lodging net revenue for Fiscal 2009 includes only nine months of operations for CME. Excluding the impact of CME revenue for the first quarter of Fiscal 2010, total Lodging net revenue decreased $8.9 million, or 5.0% for Fiscal 2010 compared to Fiscal 2009.
Revenue from company-owned hotel rooms decreased $1.7 million, or 3.9%, for Fiscal 2010 compared to Fiscal 2009, driven by a decrease in occupancy of 3.4 percentage points partially offset by an increase in average daily revenue of 4.0%. The decrease in occupancy was primarily due to declines in occupancy at the company’s Keystone lodging properties of 11.5 percentage points. This decrease was partially offset by a 3.9 percentage point increase in occupancy at Vail Resorts’ lodging properties proximate to their other ski areas during the second half of the ski season due to increased visitation, particularly during the spring break and Easter holiday periods, and an increase in occupancy at Grand Teton Lodging Company in Wyoming of 10.8 percentage points in the fourth quarter of Fiscal 2010 compared to the fourth quarter of Fiscal 2009.
Revenue from managed condominium rooms decreased $2.5 million, or 7.2%, for Fiscal 2010 compared to Fiscal 2009, driven by a decrease in occupancy of 4.2 percentage points partially offset by an increase in average daily revenue of 6.5%. The company attributes the decrease in occupancy largely to declines in group and transient room nights, primarily at Keystone lodging properties.
Katz remained optimistic regarding the ski season ahead. “As we prepare for the upcoming ski season, there are several encouraging signs,” he commented. “First, our sales of season passes have already improved significantly over the course of the summer and into the early fall selling period. We are pleased to report that through September 19, 2010, our season pass sales are down only 1% in units and sales, a substantial improvement from the 14% and 16%, respective declines we reported in June 2010. This recent trend supports our statement made in June that we believed the early season decline was due to an unusual timing shift in the prior year selling period and that we would more than make up for that shortfall in the fall of 2010. We are now just past the mid-point of pass sales, based on historical trends, and we look forward to continuing to sell all of our pass products into the late fall. Second, although it is still early in the bookings cycle, (less than 15% of winter season bookings are historically made by this time), most booking indicators at our resorts are up in both room nights and revenue over the prior year at the same point in time. Third, sales at our retail outlets during our annual Labor Day sales events exceeded the prior year, indicating that Front Range (Colorado) skiers are excited about the arrival of this coming ski season. And fourth, we saw strong summer visitation at our mountain resorts, which indicates that our guests’ propensity to travel and recreate in the spring carried through the summer, despite a volatile global economic environment. With the momentum from all of these indicators aligning with the favorable trends we exited the 2009-10 ski season with, we are optimistic about the upcoming season.”