Vail Bets Recession Over as U.S. Ski Resorts Begin Recovery - Rocky Mountain Resort Management™

Vail Bets Recession Over as U.S. Ski Resorts Begin Recovery

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Oct. 26 (Bloomberg) — Vail Resorts Inc.’s season pass sales rose 13 percent in September as skiers eager for powder prepared to make tracks a year after the financial crisis.

“This year the economy is still struggling but there is more confidence that it’s not getting dramatically worse,” Robert Katz, chief executive officer of Vail Resorts, said in an interview. “The economic issues that we faced last year started right at the beginning of ski season and got worse until the end of the season.” The company operates five U.S. ski properties.

Resort operators are forecasting increases in bookings this season after the recession kept some snow lovers home last year. Lodging and slopes close to metropolitan areas such as New York, Denver and Los Angeles stand to benefit the most as residents stay closer to home, said Ralf Garrison, an analyst with the Denver-based Mountain Travel Research Program.

Bookings at ski resorts made in August for all future arrivals were up 2 percent year over year, Garrison said.

Starwood Hotels & Resorts Worldwide Inc., the third- largest U.S. lodging company, is also reporting an improvement at its ski resorts from last year, said K.C. Kavanagh, a company spokeswoman.

“We are seeing that travelers who did not ski last year are not willing to forego their trips again this year,” she said. “People are anxious to get back on the slopes.”

Rooms Filled

The company’s St. Regis Aspen Resort in Colorado, “is pacing better” than last year and rooms for the winter holidays are “close to being filled” at the soon-to-open St. Regis Deer Crest Resort in Utah, Kavanagh said.

Demand at the Dakota Mountain Lodge in Park City, Utah, part of Hilton Worldwide’s Waldorf Astoria collection, is “strong,” said Steve Lindburg, the general manager. Nightly rates for Christmas week range from about $800 for a one bedroom to about $6,000 for a four-bedroom suite.

Rick Saidenberg, a 46-year-old trader and money manager in Westchester, New York, said he would rather forgo a vacation in the Caribbean than skip skiing.

“I feel like skiing is my last chance to experience this whole-body, animal-aggressive feeling I don’t want to miss out on,” Saidenberg said. “I want to spend less money right now, just like everybody else, but I am still going to go skiing.”

Vail

Skier visits at Vail, which owns its namesake resort as well as Keystone, Breckenridge and Beaver Creek in Colorado and Heavenly in California, are likely to rise at least 2.4 percent this season from 5.86 million last year, according to Hayley Wolff, an analyst at Rochdale Research.

Deer Valley Resort near Park City, Utah, a ski-only mountain with signature runs like Stein’s Way overlooking Jordanelle Reservoir, also expects visitor numbers to top last year’s.

Vail forecast in September that earnings before interest, taxes, depreciation and amortization from its mountain operations and its lodging component would climb as much as 9.9 percent to $188 million for fiscal year 2010, ending July 31, from the prior year. Wolff rates Broomfield, Colorado-based Vail Resorts, which has climbed 38 percent this year, “buy.”

Ski resorts appear to be bucking the trend in the travel industry. Hotel occupancy across the U.S. January through August dropped to 57 percent, the lowest since at least 1987, according to Smith Travel Research.

Ski Visits Fall

During the last ski season, which generally runs from November through mid-April, total skier visits fell to 57.4 million from a record 60.5 million the prior year, hurt by the start of the financial market collapse in September 2008, according to the National Ski Areas Association.

“Over the next 90 days, the 2009-2010 season will begin to outperform last year’s,” said Garrison. “Ski area lift ticket sales will continue to outperform resort lodging due to an ongoing shift toward more local/regional skiers.”

Scott Webster, a 37 year-old Spanish teacher at Wilton High School in Connecticut, would rather cut back elsewhere than skip skiing.

“Unfortunately my family got me hooked on this expensive habit early on,” said Webster, who has also modeled on the side for Coca-Cola Co. and L.L. Bean Inc. advertisements. “I will go out of my way to make time and to put money toward it.”

Spending Less

Webster, who usually flies twice during the season to Colorado to ski, has already booked a four-day family trip to Vail for February. Webster expects total costs, including meals and lift tickets, to be around $1,200.

While many skiers and snow boarders try to avoid cutting down on their time on the slopes, they may curb their spending while on the mountain or when shopping for hotel rooms.

Revenue from food on Vail’s mountains dropped 16 percent to $52.3 million for the fiscal year through July 31, 2009, and revenue from ski schools declined 20 percent to $65.3 million, according to company filings.

Vail, like most other resorts, is trying to avoid lowering lift ticket prices this season. The company sold its Epic season pass for $579, the same price as last year, if purchased by May. It cost $599 thereafter. The company will also offer special values on the mountains such as the “Lunch for Less” value meal for $9.95, which includes an entree, side dish and a beverage. At its Keystone Resort, couples who marry at the property ski for free for the entire season. In Aspen, kids stay and ski free in March with a five-night package bought by Jan. 15.

“I have always gone skiing, even during difficult times,” said Mark Kelley, 59, a Denver-based commercial and residential real estate broker at Re-Max, who has skied since he was 4 years old. “I am more inclined to cut down on my spending on the mountain than to not go skiing at all.”

To contact the reporter on this story: Nadja Brandt in Los Angeles at [email protected]

Last Updated: October 26, 2009 00:01 EDT

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