Vail Resorts Inc. eked out a 1.3 percent increase in rental/retail revenue despite a nearly 10 percent decline in skier visits in the third quarter ended April 30, as a higher ratio of more lucrative destination travelers spent money on rentals and gear and sales continued to grow at 02Gearshop.com.
Retail/rental revenue per visit was up 12.3 percent, reflecting the high income demographic of resort guests, which enabled the company to benefit from enhanced consumer spending, especially in the luxury segment, as well as from international guests. Destination guests generally purchase higher-priced lift ticket products and utilize more ancillary services, such as ski school, dining and retail/rental, as well as the lodging at or around our resorts. Because they plan far in advance, they are also less likely to cancel plans due to the weather.
Skier visits were down 9.0 percent at the company’s Colorado resorts (Vail, Breckenridge, Keystone and Beaver Creek) and 12.4 percent at its Lake Tahoe (Heavenly, Northstar and Kirkwood) resorts during the quarter.
Retail cost of sales increased $2.6 million, or 13.2%, primarily due to an increase in retail sales volume at 02Gearshop.com and reduced retail gross margins brought about by a higher level of discounting required to clear unsold merchandise. This was largely offset by lower labor expense as well as reductions in other expenses, including supplies and repairs and maintenance.
Cumulative snowfall levels for the 2011/2012 ski season were down more than 50 percent across the company’s seven resorts from the prior year, while snowfall at its Colorado resorts was down more than 70 percent in March. The lack of snow, combined with unseasonable temperatures, affected visitation levels during the key spring break and Easter vacation periods.
Lift ticket revenue increased 0.7 percent during the quarter despite a drop of 9.8 percent in visitation benefitting from a 12.8 percent increase in season pass revenue and a 9.4 percent gain in ETP, excluding season pass holders. On a per visit basis, ski school revenue per visit increased 12.1 percent and dining revenue per visit was higher by 9.7 percent.
Over the course of the 2011/2012 ski season, international visitation increased by approximately 2 percent, despite a 12.1 percent decline in total visitation and continued challenges in the European economy, reflecting targeted marketing efforts to drive more visits from this growing international segment.
Total spring season pass sales, which include sales through Tuesday May 29, compared to sales through Tuesday May 31, 2011 and including Kirkwood pass sales in both years, were up approximately 17 percent in units and approximately 22 percent in sales dollars. MTN acquired Kirkwood, which is the closest ski resort to San Jose, in April.
“These sales, which will be recorded as revenue in the second and third quarters of fiscal 2013, provide perhaps the strongest indicator we have seen for the upcoming 2012/2013 ski season,” Katz said.
