Vail Resorts, Inc. reported revenues for its resort segment, which includes it's Mountain and Lodging segments, declined 6.4% in the first quarter of 2010 to $80.6 million from $86.0 million in the year-ago period. Reported resort EBITDA was a loss of $38.3 million compared to a loss of $39.1 million in the year-ago period, an improvement of 2.0%.
Season pass sales to date were up approximately 11% in units and approximately 9% in sales dollars when compared to the year-ago period.
By Segment, Vail reported net revenue of the Mountain segment was $39.2 million, down 3.9% from $40.8 million in the first quarter of 2009. EBITDA in the Mountain segment was reported as a loss of $37.0 million compared to a loss of $39.4 million in the year-ago period, an improvement of 6.1%.
Vail said its first fiscal quarter historically results in negative Mountain Reported EBITDA, as the company's ski resorts generally do not open for ski operations until the Company's second fiscal quarter. The first fiscal quarter consists primarily of operating and administrative expenses plus summer business and retail/rental operations.
Total Mountain segment net revenue decreased in part due to a $0.9 million, or 4.0%, decrease in retail/rental revenue due to lower sales volumes primarily at the company's mountain resort stores.
For the first quarter of fiscal 2010, other revenue decreased $0.2 million, or 1.6%, compared to the first quarter of fiscal 2009, primarily due to a decrease in marketing and employee housing revenue, mostly offset by an increase in private club operations resulting from the opening of the Vail Mountain Club in November 2008 and an increase in on-mountain summer activities at Breckenridge and Keystone as the prior year's on-mountain summer activities were restricted due to construction activities at the respective resorts.
Mountain segment operating expense decreased $4.8 million, or 5.9%, during the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009, which primarily resulted from a decrease in labor and labor-related benefits expense, retail cost of sales and general and administrative expenses.
For the company's Lodging segment, net revenue for the first quarter of fiscal 2010 decreased $3.9 million, or 8.6%, compared to the first quarter of fiscal 2009. This decrease in lodging net revenue was partially offset by transportation revenue of $1.8 million due to the acquisition of CME on November 1, 2008. Excluding the impact of CME revenue, total lodging net revenue decreased $5.7 million, or 12.6%, for the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009.
Revenue from owned hotel rooms for the first quarter of fiscal 2010 decreased $1.2 million, or 9.9%, compared to the first quarter of fiscal 2009, which was driven by a decrease in occupancy of 10.6 percentage points primarily due to significant declines in group business as well as declines in transient guest visitation, partially offset by an increase in ADR of 6.7% at the company's owned hotels, due primarily to increases at GTLC.
Golf revenues decreased $1.2 million, or 15.1%, for the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009, resulting from a 15% decrease in the number of golf rounds played combined with lower revenue per round. Other revenue decreased $1.1 million, or 11.5%, in the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009.
Lodging segment operating expense decreased $2.3 million, or 5.1%, for the first quarter of fiscal 2010 compared to the first quarter of fiscal 2009. Lodging segment operating expense in the first quarter fiscal 2010 included $2.7 million of CME operating expense.
Commenting on the company's fiscal 2010 first quarter results, Rob Katz, Chief Executive Officer said, “The first quarter Resort results are generally driven by the company's summer mountain operations, lodging operations including our summer seasonal business at Grand Teton Lodge Company, golf operations and group business. The company's Mountain reported EBITDA results in this year's first quarter improved by $2.4 million, or 6.1%, compared to the prior year first quarter and benefited from the cost savings initiatives previously implemented in January and April of 2009, including wage reductions for our full-time and seasonal employees.
Additionally, Mountain segment results were favorably impacted by improved retail/rental contribution due to higher gross margins, improved summer operations due in part to prior year construction impacts, higher fees and dues revenue from private club operations and the timing of marketing spend including a significant shift away from more traditional print media. Lodging segment results in the current year first fiscal quarter included Colorado Mountain Express, which was acquired after the prior year first quarter on November 1, 2008, and negatively impacted year-over-year Lodging reported EBITDA comparisons by $1 million in a seasonal loss first quarter.”
“The company's Lodging segment results in the first fiscal quarter are historically impacted by group business, which was down as expected in the current year compared to the pre-recessionary period of the prior year.”
Balance Sheet
As of Oct. 31, 2009, the company had cash and cash equivalents on hand of $13.0 million, Net debt of 2.4 times trailing twelve months Total reported EBITDA and no revolver borrowings under a $400 million senior credit facility, which matures in 2012 and has $307 million available for borrowing after considering $93 million in currently issued letters of credit. The company has virtually no principal maturities due until 2014.
Outlook
Commenting on the company's 2009/2010 season pass sales, Katz said, “We are very pleased with the results of our season pass sales efforts. As season pass sales in the prior year represented 34% of ultimate total lift ticket revenue, we believe this season pass sales performance provides stability and good momentum heading into this ski season. Among the various season pass products, the sales of the Summit Season Pass increased significantly, with a majority of the increase coming from guests outside of Colorado. We believe this increase was due to the inclusion of the Summit Season Pass in our national marketing efforts for the Epic Season Pass and its availability starting this year online for first time purchasers.”
Commenting on advance bookings trends, Katz continued, “As of November 30, 2009, the company's lodging advance bookings through our central reservations and directly at our owned and managed properties for the 2009/2010 ski season are down approximately 13% in room nights compared to the same period last year. However, at this point in the bookings cycle, it is still very difficult to project trends for the current season. Though overall advanced reservations are lower than the prior year, we have seen an even shorter booking window than last year and are seeing bookings at some resorts and some time periods actually ahead of last year. In fact, as of Nov. 30, at our owned and managed properties, total room night bookings are down 7% for the second quarter ending January 31, 2010. It is also important to note that as of November 30 of last year, advance bookings for transient guests represented less than 50% of such total ultimate bookings for the prior year ski season. In addition, airline reservations for Eagle County Airport, the nearest airport to our Vail and Beaver Creek resorts, are currently approximately 4% ahead in the number of seats sold compared to the same time in the prior year. Given all of these trends, we currently anticipate the booking trend for the full ski season to improve significantly from the booking status as of November 30.”
Commenting on the company's fiscal 2010 outlook, Katz said, “Overall, our key early season metrics are indicating some optimistic signs with strong year-over-year season pass sales and improved airline bookings into Eagle County Airport. However, our overall lodging bookings are showing mixed results with some periods and locations stronger, while most periods are down compared to the prior year, especially in Summit County. Accordingly, at this early point in our 2009/2010 ski season, we are reiterating our fiscal 2010 guidance ranges issued in late September 2009.”
