Vail 4Q16 Earnings Call Notes

Vail Resorts’ (MTN) CEO Rob Katz on Q4 2016 Results

Season pass sales up 24% in units

“Turning now to our 2016-2017 season pass sales for our US resorts; we are extremely pleased with our season pass sales to date. Through September 18, 2016, US ski season pass sales increased approximately 24% in units and 29% in sales dollars, compared to the prior year period ended September 20, 2015.”

Growth driven by “increasingly sophisticated marketing”

“Our growth continues to be driven by our increasingly sophisticated and targeted marketing efforts to move destination guests in to our season pass products, with this segment representing over half of this year’s growth. As always, we do expect our season pass growth rates to decline through the end of our selling season, given that some of the increase is driven by our efforts to encourage guests to purchase their passes earlier in the year.”

Goal is to get people to buy season passes and increase renewal rate

“And so for us our goal is really to move people from buying daily (inaudible) to buying season passes because we know that the renewal rate or the return rate on a season pass is much higher than if they are just buying a (inaudible). And then our goal once they are in the season pass program is to get them to renew that first year and second year, and one of our top priorities for this year has been to increase that first year renewal rate because obviously we are adding so many people to the program and we’ve been very successful with that.”

Renewal rate goes way up in second or third year

“The key obviously is, once you see a second year or a third year, all of a sudden the renewal rate goes way up. So one of the things that is driving our growth is increasing that renewal rate and a big part of that is us being smarter and more sophisticate in terms of how we talk to people, the message we send and how we get them to come back in to the program.”

Stable dollar should help international sales but will be tough to get to where it was 2 or 3 years ago

“I think as we go in to this year, we are seeing a better stability, one the currency having (inaudible) to the US dollar remained strong, but if you think about a year ago it was really in the middle of especially we think about a year ago last summer or spring, the US dollar was strengthening dramatically causing some instability there. I think now with the currency having stabilized we feel like that positions us pretty well going in to this year in terms of really for those countries where we did see some decline to really kind of moderate those declines if not eliminate them in some cases. We are also quite hopeful to be able to continue to drive growth from Australia. That said, with the strong US dollar, I don’t think we can necessarily get back to where we were 2.5, 3 years ago without seeing some shift in currency. ”

We have not seen a slowdown in the high end consumer

” I think we – what I’d say is that we have not seen a slowdown in the high end consumer. I don’t know that our confidence is any higher today than it was a year ago in the high end guest and their discretionary spending. Obviously there have been some wild wolves or whatever in high end consumer spending seen in some parts of travel, some parts of retail in particular. But what we are seeing is, it feels like vacation spending in particular has so far been strong and certainly over the summer we didn’t see any signs of some kind of slow down. I think people are still booking trips and may be this trend towards buying experiences, spending money on experiences versus buying luxury goods. Obviously that would help us.”