Historically Low Snowfall Totals Hurting Ski Mountain Operators

Vail Resorts 2.0

Historically low snowfall totals across the Western U.S. has reduced visits to Vail Resorts (MTN) properties, by 10.8% this year. Vail, Park City and Beaver Creek (CO based resorts) received their lowest snowfall totals in 30 years (50% less than the next lowest winter season), while their 3 California based properties received 69% less snow than the 20-year average. Despite the lack of fresh powder, MTN reports that lift ticket revenue is up 1.6% YOY; with season pass sales (+14% YOY to 740,000) helping to offset the decline in single day visits (and lift ticket sales). Revenue declines from ski school (4.5%), dining (8.7%) and retail/rental property (11.5%), more accurately reflect the impact the weather has had on the company’s bottom line.

Howie Long-Short: MTN CEO Rob Katz has told investors the “challenging conditions” will cause the company to miss earlier earnings projections, but said the guaranteed revenue from season pass sales (+20% YOY) and investments the company has made in off-slope amenities (i.e. Park City got a $50 million renovation in ’15) would prevent further declines; even if the lack of snowfall continues. The disappointing fiscal Q1 comes on the heels of a typically slow summer for the company, reporting a loss of $28.4 million for the quarter that ended October 31st; though that figure is down from $63 million in Q1 ’17, the improvement comes as a result of a non-recurring tax benefit.

Fan Marino: The Western U.S. hasn’t had much powder, but that isn’t the case on the East Coast or in British Columbia. MTN reported that their newest acquisitions, both Stowe (Vermont) and Whistler Blackcomb (B.C.) have had strong winters thus far. Whistler’s snow conditions (96%-97% of the terrain was open Christmas Week) even abled the resort to open a week early this season!

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Rapid Consolidation Within the Ski Industry

Vail Resorts (MTN) and Aspen Skiing Co. have led an industry wide consolidation that has dawned an era of multi-resort seasonal passes; providing skiers discounts on lift tickets, a hedge against warm winters and incentives to visit different mountains. Within the last 12 months, Vail Resorts bought Vermont’s Stowe mountain and acquired Whistler-Blackcomb Holdings for a record $1.3 billion; while Aspen Skiing Co. (in partnership with KSL Capital Partners) bought 6 resorts from Intrawest Resort Holdings for $1.5 billion and 4 additional properties from Mammoth Resorts. Independent mountains, feeling the pressure to remain competitive, are also banding together to provide comparable offerings.

Howie Long-Short: MTN and Aspen Skiing have used acquisitions to take market share within the ski industry. There isn’t much of an alternative. No new ski resorts have been built in North America in nearly 40 years as environmental regulations and enormous infrastructure costs prevent new destinations from being developed. As of September 24th, MTN North American 2017-2018 pass sales were up 17% YOY. The company will next report earnings in December.

Fan Marino: Vail Resort Inc.’s top of the line multi-mountain seasonal pass includes unlimited access to all 15 MTN owned resorts plus bonus days at 30 partner resorts in Europe. The RFID-enabled Epic Pass costs $899. Looking to get in some runs before Thanksgiving? Vail Mountain will open as scheduled on Friday November 17th. Breckenridge and Keystone, 2 other MTN resorts opened last Friday.

As the Ski Industry Consolidates, Not Everyone Is a Winner

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