You know, I always try to write things that identify a valuable business lesson. The valuable business lesson here I guess is do what Vail did. While I think there are a couple of interesting industry considerations, I can’t strategically fault this deal. Vail by no means got a great deal with a price of a little over US$1 billion, but paying a fair price for a good property is the kind of combination that’s most likely to work out in my experience.
It figures. Over the weekend I finished up a long article for SAM (Ski Area Management) on winter resorts generating summer revenue. I think it included some interesting approaches to the issue, but apparently I missed one.
Today Vail Resorts announced that it’s acquiring Perisher Ski Resort in New South Wales, Australia. Here’s the link to the resort web site. It’s fall there, so the web cams show no snow. Hmmm. Looks a little like some West coast resorts right now.
Vail Resorts released some metrics today on their season through April 22nd that I thought were worth a quick review because of some of the lessons it teaches any business about market positioning. I also want to discuss briefly accounting for season passes (try and contain your excitement). You can see the complete press release here. The numbers exclude Kirkwood, which was acquired by Vail only on April 12th.
Lift ticket revenue was down just 0.3%, in spite of a 12.6% decline in skier visits. Ski school revenue rose 0.3% while dining revenue fell 4.0% and rental/retail was down 0.3%. These numbers are compared to last year’s season through April 24th.
In Vail Resort’s March 6 conference call, CEO Bob Katz described snow conditions during the quarter ended January 31st in the following terms:
“In Colorado, snowfall levels were the lowest in over 30 years and for the first time in as many years, we were not able to get Vail’s Back Bowl open until Mid-January.”
This 10K was filed a couple of weeks ago for the year ended July 31. There are about 760 ski areas in North America. Vail owns five major ones that accounted for 7.7% of skier visits (about six million) during the last season. We don’t get many chances to see individual data from many of them, so taking a look at this is worthwhile. It’s particularly interesting, in our current economic circumstances, to see how the real estate component of Vail’s business is faring.
Numbers by Segment
Given that Vail says the snow up to about Christmas was the worst in 30 years, you have to say that they really did okay. But I think the most interesting thing in the whole 10Q was the disclosure that 13 holders of contracts to purchase Ritz-Carlton Residences had sued to get out of the contracts and get their deposits back because of a disputed delivery date.
I enjoy hearing from you, even when you disagree. The exchange means that I learn something, too. Leave a comment on any of my posts to contact me directly.
Market Watch updates
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- Ho Hum. Another Solid Quarter: VF CorporationFebruary 18, 2019 - 12:32 pm