Revenue at Vail Resorts takes a 33% hit

[Admin]

http://www.firsttracksonline.com/News/2 ... rter-2010/

 

[Tony Crocker]

Sort of a misleading headline. It's remarkable how stable the Mountain and Lodging revenue are with the crappy start to the season, confirming my opinion as the worst since 1980-81. It makes the aggressive season pass program look smart.

On the big decline in Real Estate revenue, they don't say whether fewer properties were being developed this year, or whether development was comparable but there were few sales.

 

[Admin]

Sort of a misleading headline.

"Vail Resorts Revenues Plunge 33% on Real Estate Woes"

Not at all misleading -- the company's revenue dropped 33% year over year, driven nearly entirely by the company's Real Estate segment. That headline is hardly misleading, it's factual and clear.

It's remarkable how stable the Mountain and Lodging revenue are with the crappy start to the season

You need to look more closely. Season pass revenue and bigtime budget cuts offset the decrease in visitation:

The dramatic decline in Real Estate segment revenue was partially offset by the company's Mountain and Lodging segments, which improved in the second quarter from the same period in the prior year by 3.6% and 2.0%, respectively, driven largely by an increase in season pass revenue and cost reduction initiatives implemented in the second half of fiscal 2009.

All the while that revenue was up, visitation was actually down -- Katz said:

a 1.6% decline in visitation at our Colorado resorts when compared to the prior year, though our overall visitation was up 0.1% due to increased visitation at Heavenly. Vail Mountain visitation was the most impacted as we could not open the vast majority of the Back Bowls until after Christmas.

The fact of the matter is that visitation at VR's Colorado properties can be expected to remain relatively stable throughout periods of fluctuating snowfall. These are the places that regular clientele visit for a week every single year, often their only ski vacation each season. A 1.6% drop in that climate is significant.

There's also some monkeying around with how lift revenue is computed:

In addition, effective ticket price ("ETP") growth of 1.7% was driven by an increase in season pass revenue when combined with a decline in the average number of days skied by pass holders, partially offset by a decline of 1.1% in ETP excluding season pass products.

On the big decline in Real Estate revenue, they don't say whether fewer properties were being developed this year, or whether development was comparable but there were few sales.

They did say but I didn't put that into the article as it got into hopeless minutiae:

The Company's Real Estate operating revenue is primarily determined by the timing of closings and the mix of real estate sold in any given period. In the second quarter of fiscal 2010, Real Estate segment net revenue for the three months ended January 31, 2010, primarily included allocated corporate revenue. Operating expense for the three months ended January 31, 2010, primarily included general and administrative costs of approximately $7.2 million (including $1.1 million of stock-based compensation expense). General and administrative costs were primarily comprised of marketing expense for the real estate projects under development, overhead costs such as labor and labor-related benefits and allocated corporate costs.

In the second quarter of fiscal 2009, Real Estate segment net revenue for the prior year three months was driven primarily by the closing of six Chalet units ($76.9 million of revenue with an average selling price per unit of $12.8 million and an average price per square foot of $2,689), three residences at Crystal Peak Lodge ($3.7 million of revenue with an average selling price per unit of $1.2 million and an average price per square foot of $972) and the closing of one condominium at Arrabelle ($7.7 million of revenue with an average price per square foot of $1,533). Operating expense for the three months ended January 31, 2009, included cost of sales of $44.5 million commensurate with revenue recognized, primarily driven by the closing of six Chalets units ($36.6 million in cost of sales with an average cost per square foot of $1,280), three residences at Crystal Peak Lodge ($1.5 million in cost of sales with an average cost per square foot of $416) and the closing of one condominium at Arrabelle ($6.3 million in cost of sales with an average cost per square foot of $1,251). Operating expense also included sales commissions of approximately $4.6 million commensurate with revenue recognized and general and administrative costs of approximately $7.4 million (including $1.1 million of stock-based compensation expense). In addition, included in segment operating expense in the three months ended January 31, 2009, the Company recorded $3.0 million of costs in excess of anticipated sales proceeds for an affordable housing commitment resulting from the cancellation of a contract by a third party developer related to its Jackson Hole Golf & Tennis Club development, which is reflected in Real Estate segment operating expense in the three months ended January 31, 2009.