Vail Resorts Inc (MTN) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Vail Resorts fourth quarter and fiscal 2007 results conference call.

During today's presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (OPERATOR INSTRUCTIONS) This conference call is being recorded today, Thursday, September 27th of 2007.

I would now like to turn the conference over to Rob Katz, CEO of Vail Resorts. Please go ahead, sir.

Thank you, operator. Good morning, everyone.

Welcome to the Vail Resorts fiscal 2007 fourth quarter and year-end earnings conference call and simultaneous webcast, both open to the public and press at large. I'm Rob Katz, CEO of Vail Resorts. Joining me on the call this morning is Jeff Jones, our Chief Financial Officer.

Earlier this morning, we released our earnings for the fourth quarter and fiscal year ended July 31, 2007. Before we review those results, I would like to remind you that we are using the terms reported EBITDA and reported EBITDA excluding stock-based compensation to report earnings for each of our operating segments, namely Mountain, Lodging and Resort which is the combination of the Mountain and Lodging segments and Real Estate.

Complete reconciliations of reported EBITDA, reported EBITDA excluding stock-based compensation and other non-GAAP financial measures can be found in this morning's earnings release and on the Vail Resorts.com Web site in the Investor Relations section under the Quarterly and Annual Results tab.

I also need to mention that comments made during this conference call other than statements of historical fact are forward-looking statements that are made pursuant to the Safe Harbor provisions and the Private Securities Litigation Reform Act of 1995. Certain risks and uncertainties could cause actual results to differ materially from those contained in the forward-looking statements.

Investors are directed to the risks and uncertainties described in the documents filed by the Company with the Securities and Exchange Commission including the Company's Form 10-K for the 2007 fiscal year.

In addition, the Safe Harbor language in today's press release also applies to our comments on this call. All guidance and forward-looking statements made on this call are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements except as may be required by law.

So, with that said and before I turn to our results, I'm very excited to announce a completely redesigned Vail Resorts corporate Web site at vailresorts.com. The look and feel of the site are a great representation of the energy and excitement that we have here at the Company.

In addition, the site prominently features our company's mission: Extraordinary resorts, exceptional experiences, something you'll be hearing and seeing more of from now on. On the site, we share our perspectives on who we are, what we believe and what we do as well as the importance of our stakeholders and our environmental initiatives.

I'm sure many of will you appreciate the new Investor Relations section of the site which is has also been revamped to address many of the comments and suggestions we have heard over the past year. We encourage you to access these often for our latest filings, webcasts, news releases and presentations.

Let's now turn to our results. I'm very pleased with our fiscal 2007 results. Our seasonally low fourth quarter results were clearly in line with our expectations and most importantly, our full fiscal year 2007 results produced a 34.2% improvement in net income. This was primarily achieved due to extremely strong resort results with resort reported EBITDA up 16.3% for the year.

The favorable resort results were driven by a 7% increase in destination visitation at our Colorado mountain resorts, a 10.3% increase in effective ticket price for all of our resorts, a 17.7% increase in season pass revenue, corresponding strong revenue increases in our ancillary businesses including ski school, dining and retail rental, and an 8.5% and 9.5% increase in average daily rates and revenue per available room respectively at our lodging properties on a same-store basis and despite some challenging weather conditions especially at our Heavenly resort.

Specifically in our Mountain segment, these metrics helped produce a 7.2% increase in revenue and very strong flow-through leading to a 14.6% increase in reported EBITDA compared to the prior fiscal year. For the 2006-2007 ski season, our very own Breckenridge, Vail and Keystone resorts were the three most visited ski resorts in the United States and our Heavenly and Beaver Creek resorts were also in the top ten. All five resorts also again finished in the top 20 Ski Magazine rankings.

Our company's mission is extraordinary resorts, exceptional experiences. The quality rankings are a testament to our passionate employee base creating the top-notch service levels our guests enjoy.

Together with the iconic nature of the resorts themselves, the resorts are further enhanced by our continuous capital investments including our significant base area improvements driven by our real estate development. The continuous growth in ETP is certainly a strong indication that our guests see value in everything we put into the experience and the investments we make at our resorts.

The guest experience is also greatly enhanced by our Lodging segment. The Lodging results for fiscal 2007 with reported EBITDA up 38.8% were a reflection of the strong performance from our owned or managed hotels and condominiums at the base of the Colorado resorts which leveraged the positive destination visitation trends in our Mountain segment.

Our Lodging results also included revenue associated with termination fees reflective of the transition of replacing a few previously managed lodging properties outside of our mountain resorts with several recently announced new [rock] resorts, luxury resorts in truly iconic locations.

While fiscal 2007 was certainly a success for Vail Resorts, we are currently busy looking to make fiscal 2008 and beyond even more successful. With our marketing activities in full force, we are well under way on our sales of season passes which in fiscal 2007 comprised a significant 25% of our total lift revenue meaning one quarter of our full year's lift revenue is essentially secured before the season even starts.

Our season pass sales to date for the 2007-2008 season have increased 4% in units and 16% in sales dollars over the same period last year. We believe that the increase in season pass sales at this point in our selling process is in large part due to a higher number of earlier renewals combined with an 11% increase in effective pass price to date.

In addition, bookings through our central reservation systems for our five mountain resorts are up 3% in room nights and 13% in sales. These metrics are still early in the season, however, we do know, for instance, that we are sold out of condos at the Lodge at Vail for Christmas, therefore, similar to last year, if people are planning to come out this season, it's time to book. Both the season pass and bookings metrics are indicators as we continue to build momentum for the approaching winter season.

We've also been focused this summer on making significant capital investments in our resorts. This season we opened Beaver Creek's Buckaroo Express gondola, the new children's gondola that will further enhance what is arguably the premiere children's ski and snowboard school in North America.

We will unveil Vail's two new high-speed quad chairlifts replacing chairs 10 and 14 which will allow more convenient and faster access to it's back bowls, Blue Sky basin and Two Elk restaurant, and open Heavenly's new high-speed Olympic express chairlift which will provide access to hundreds of acres of trees and gladed skiing in the North Bowl area, and their new Heavenly Sky Flier which will take people on a 50-mile-per-hour zip line ride right into a spectacular view of Lake Tahoe. With these and many other capital investment projects, we lead the way in offering our guests a truly unique experience.

As anticipation builds for the upcoming 2007-2008 ski season, we have already had the first snowfalls of the year. Heavenly received its first snow last week with up to six inches falling in parts of the mountain. In Colorado, Breckenridge got dusted with snow last week and it snowed again at all four of our resorts in the past few days.

While it's not yet time to take out your powder skis, it's a reminder that the season is just around the corner. We are looking forward to opening day at Breckenridge and Keystone on November 9th. Lifts firing up at Vail and Heavenly a week later followed by Beaver Creek on November 21st.

I would like to turn the call over to Jeff Jones who will provide you with a detailed overview of our results for the fourth quarter and fiscal 2007 as a whole and review guidance for fiscal 2008. I will then provide an update on the status of some of our real estate projects as well as other exciting news at Vail Resorts. Jeff and I will then both be available for questions.

Let's now turn to Jeff for our 2007 fourth quarter and year-end results.

Thanks, Rob, and good morning, everyone.

As Rob mentioned earlier this morning, we released our earnings for our fourth fiscal quarter and year ending July 31, 2007. Also this morning we filed our Form 10-K for fiscal 2007.

I'd now like to take you through some of the highlights of our results. As you know, the fourth quarter is historically a loss quarter since although our mountain resorts are open for a portion of the fourth quarter for summer activities, there are no ski operations during this quarter.

Our fourth quarter results for fiscal 2007 were in line with our expectations. I will focus my comments on this call on the fiscal year results. Looking at our all results for the fiscal year ended July 31, 2007, Vail Resorts realized resort reported EBITDA of $225.9 million, a $31.6 million increase, or 16.3% compared to the prior year.

The Mountain segment results for the year show very similar trends to what we reported at the end of our third fiscal quarter. Our Mountain segment revenue grew 7.2% in fiscal 2007 driven by a 9.1% increase in lift revenue, reflecting a 17.7% increase in season pass revenue due to a combination of more passes sold and higher pass prices, and a 10.3% increase in effective ticket price partially offset by a 1.1% decrease in visitation.

Included in the overall visitation decline was an increase in destination visitation of 5.1% for the 2006-2007 ski season including a 7.0% increase for our Colorado resorts destination visitation, partially offset by a decline in visits by our season pass holders due to challenging weather conditions in the front range of Colorado and below average snow conditions at our Colorado resorts, as well as an overall 12% decline in visits at Heavenly given their adverse weather conditions.

Our destination visitation constituted 64% of total visitation in fiscal 2007 compared to 60% in the prior year. In addition to that increase that we experienced in lift revenue, we generated an 8.6% increase in ski school revenue, a 5.3% increase in dining revenue and a 7.5% increase in retail rental revenue compared to the prior year.

The destination growth helped drive the increases in our other ancillary business lines especially ski school which experienced an increase in lesson prices and higher participation in lessons as a percentage of total visitation compared to the prior year. Our dining revenue grew primarily commensurate with price increases.

Retail rental experienced strong performance from the Colorado locations which were partially offset by reduced sales at the California [any] mountain and Heavenly locations due to the adverse weather conditions.

Other revenue was only up slightly due to the sale of RTP at the end of the third quarter. Excluding RTP from both periods, other revenue would have increased by 5.2% commensurate with the other mountain revenue increases.

We were able to continue to manage our expenses with the Mountain segment having a 4.4% increase in expenses which included certain variable expenses including U.S. Forest Service and credit card fees, as well as ski school labor and cost of sales in dining and retail rental, all of which increased due to the higher revenue.

We have again experienced a greater amount of EBITDA flow through from every dollar increase in revenue. As such, our Mountain reported EBITDA as a percent of Mountain revenue which include fully loaded general and administrative expenses, increased 2 percentage points from 29.2% to 31.2% in fiscal 2007.

Looking at our Lodging segment, revenue increased 4.3% to $162.5 million in the current fiscal year from $155.8 million in the prior fiscal year. In January 2006 the Company sold our Snake River Lodge and Spa Resorts simultaneously acquiring a long-term management agreement for the property.

Additionally, revenue for fiscal 2007 included $5.4 million of fees primarily associated with the termination of the management agreements at the Equinox as a result of the sale of the hotel by the hotel owner, and at the Lodge at Rancho Mirage in connection with the closing of the hotel as part of a redevelopment plan by the current hotel owner, both pursuant to the terms of the management agreements.

Disregarding these items, same-store fiscal year-over-year operating statistics for our Lodging business reflected significant improvement. For fiscal 2007 on a same-store basis, our owned hotels and managed condominiums around our mountain resorts had a 9.5% growth in RevPAR to $99.58, incorporating an 8.5% increase in average daily rate to $216.83, and a four-tenths percentage point increase in occupancy to 45.9%, all of which reflected the growth in destination visitation at our Colorado mountain resorts.

Resort reported EBITDA, the combination of our Mountain and Lodging segment for fiscal 2007 was $225.9 million, a 16.3% increase over the prior year. Resort reported EBITDA excluding stock-based compensation expense for fiscal 2007 increased $31.5 million, a 15.8% increase to $230.8 million from the prior fiscal year.

Turning now to our Real Estate segment, Real Estate revenue increased $50.1 million, or 80% to $112.7 million for fiscal 2007 compared to the prior fiscal year. Reported Real Estate EBITDA decreased $9.2 million in fiscal 2007 to a loss of $2.5 million.

Our Real Estate segment results are primarily determined by the timing of closings and the mix of our real estate sold in any given period. During fiscal 2007, revenue was driven by the closings of ten Gore Creek Place units, 34 Mountain Thunder units and 12 Jackson Hole Golf and Tennis Club cabins, the sale of land together with certain related infrastructure improvements in Red Sky Ranch and Breckenridge to third party developers, the sale of a sole asset in a real estate joint venture and contingent gains on development parcel sales that closed in previous periods.

In addition to cost of sales associated with this revenue, we recorded an additional $7.6 million net of estimated recoveries from contractors and estimated incremental cost of sales related to our Jackson Hole Golf and Tennis Club development, and incurred marketing expense for projects that we have not yet recognized the revenue for, as well as general and administrative expenses in the year.

As we previously indicated, fiscal 2007 was a construction year for the Company. Our significant projects that are currently in the development phase including the Arrabelle, the Lodge at Vail Chalets, the Ritz-Carlton Residence at Vail and Crystal Peak Lodge in One Ski Hill Place in Breckenridge will factor strongly into our fiscal year 2008 and beyond results. Rob will speak in greater detail about these and other development projects.

In addition to the segment operating results just mentioned, I'd like to briefly discuss a few other items that contributed to the Company's overall financial results. The Company's investment income increased to $12.4 million for fiscal 2007 from $8 million in the prior year due to a significant increase in average invested cash balances during the period resulting from increased cash flows net of increased capital expenditures.

Interest expense decreased $3.9 million to $32.6 million due to an increase in capitalized interest associated with the significant ongoing real estate and related resort development. Depreciation and amortization increased $1.6 million primarily due to an increase in the fixed asset base due to normal capital expenditures.

Finally, the Company recorded total pretax stock-based compensation expense of $7.0 million included in the total reported EBITDA in fiscal 2007 compared to $6.5 million in fiscal 2006.

The Company reported fiscal 2007 net income of $61.4 million, or $1.56 per diluted share compared to $45.8 million, or $1.19 per diluted share for the same period last year. Excluding stock-based compensation expense, the Company's fiscal 2007 net income would have been $65.8 million, or $1.67 per diluted share for fiscal 2007 compared to $49.8 million, or $1.29 per diluted share in fiscal 2006.

We'd now like to take this opportunity to announce our guidance for fiscal 2008. We expect to continue to drive strong year-over-year performance in our Resort business while realizing significantly higher reported EBITDA from our Real Estate segment.

Based on our current estimates, we expect full-year Resort reported EBITDA, the combination of our Mountain and Lodging segments, to range from $239 million to $249 million and Resort reported EBITDA excluding stock-based compensation expense to range from $245 million to $255 million. The Resort guidance includes a range for Mountain reported EBITDA of $228 million to $238 million, and Mountain reported EBITDA excluding stock-based compensation expense of $233 million to $243 million.

While we expect Lodging reported EBITDA to range from $8 million to $14 million and Lodging reported EBITDA excluding stock-based compensation expense to range from $9 million to $15 million. As noted earlier, the fiscal 2007 Lodging reported EBITDA included $5.4 million of termination fees that we do not expect to reoccur in fiscal 2008.

Real Estate reported EBITDA is expected to range from $54 million to $60 million and Real Estate reported EBITDA excluding stock-based compensation expense is expected to range from $57 million to $63 million, and includes our assumption that all of the Arrabelle units will close together with six of the 13 Lodge at Vail chalets, with the remainder of the chalets closing in early fiscal 2009.

Based on our current estimates, we expect net income to range from $112 million to $122 million and net income excluding stock-based compensation expense to range from $117million to $127 million. This includes an assumption that we will receive payment of the arbitration award in fiscal 2008 relating to the termination of Rock Resort's (inaudible) spa management agreement.

Additionally, as the Lodge at Vail Chalets are anticipated to close over the course of the summer of calendar year 2008, the exact number of chalets which close in fiscal 2008 versus fiscal 2009 could result in a shift in Real Estate EBITDA net income between those two fiscal years.

Turning our attention to our balance sheet and the fourth quarter's capitalization events, at the end of our 2007 fiscal year we had $230.8 million of cash on hand excluding restricted cash, no revolver borrowings on our senior credit facility, and net debt defined as total debt less cash and cash equivalents of $363.3 million compared to $339.4 million at the end of fiscal 2006 with net debt in fiscal 2007 including an increase in nonrecourse financing of $73.5 million.

This equates to an improvement in the ratio of net debt to total reported EBITDA calculated on a trailing 12-month basis from 1.69 times at the end of fiscal 2006 to 1.63 times at the end of fiscal 2007, which is especially impressive given that our real estate held for sale increased from $259.4 million to $357.6 million or by 38% during that same period. We're in a very strong cash position and continuing to build cash even as we invest 95 to $100 million in Resort capital expenditures in calendar year 2007.

Finally, in August 2007, we continued our previously announced share repurchase program resulting in the repurchase of 232,504 shares at an average price of $50.31 for a total amount of $11.7 million. Since inception of this program in fiscal 2006, the Company has repurchased 906,004 share at an average price of $41.44 for a total amount of approximately $37.5 million, with 2,093,996 share remaining available under the existing repurchase authorization.

Our purchases under this program are reviewed with our board quarterly and are based on a number of factors as we evaluate the appropriate uses of our excess cash including but not limited to the share repurchase program.

At this time, I'd like to turn the call back to Rob.

Thanks, Jeff.

Before I turn to our real estate activity, I wanted to highlight some changes since our last call in our executive team. I would like to congratulate Fiona Arnold on her promotion to Senior Vice President and General Counsel. Fiona is overseeing all legal affairs of the Company and its subsidiaries and with her expertise in corporate governance and regulatory work will play a critical role in taking the Company's legal efforts to the next level.

Also, Lucy Kay, most recently Vice President of Marketing for Breckenridge and Keystone Resorts, took the reins as Chief Operating Officer of Breckenridge Ski Resort. Lucy has more than 25 years of experience in the mountain resort industry having spent all of it at three ski resorts in Summit County, Colorado. Lucy has played a major role in the success of Breckenridge and Keystone establishing both resorts as industry leaders in resort rankings, visitation, profitability and reputation. Please join me in congratulating Lucy on her new position.

In addition, I would like to welcome Sam Brown as our new Executive Vice President and Chief Operating Officer of Rock Resorts and Vail Resorts Hospitality. Stan comes to us from Marriott with 26 years of national and international hospitality experience most recently as Vice President Asia overseeing 50 resorts in five countries based in Hong Kong.

Stan's expertise is exactly what we need to continue delivering an outstanding guest experience throughout our lodging and hospitality division. Having delivered outstanding performance in many of Marriott's best international resort properties, he brings an intimate knowledge of how to deliver high-end guest service to the vacation and business traveler. I am confident that Stan will continue to help drive our performance in growth in our lodging and hospitality division.

Now, turning to our real estate activities. Our development projects provide with us an opportunity to reshape the landscape at the base of our mountain resorts and drive our guest experience. Fiscal 2008 will mark an exciting time for our company as we begin to transition from construction of our vertical real estate development projects to closing on these projects.

Not only do these developments expand the destination [bed] base for our mountain resorts, they often include a number of amenities which also benefit our resorts. We have 100% of the units at both the Arrabelle and Lodge at Vail Chalets projects under contract and in fiscal 2008, as Jeff said, we expect that we will close on all of the Arrabelle units and a portion of the Lodge at Vail Chalets with the remainder of the chalets closing in early fiscal 2009.

January 2008 will mark the grand opening of the Arrabelle's hotel and commercial components which will be the crown jewel of the Rock Resorts collection, and as its advertising campaign states, it's the best thing to happen to Vail since snow.

Though the summer selling season is typically slow and despite the current capital market conditions, we continue to see progress in our sales efforts at the Ritz-Carlton Residences Vail as we put six more units under contract including five sales since July 31st. Of the 71 whole ownership two to six bedroom condominium units and 45 fractional ownership units in the project, we currently have a total of 46 whole ownership units and all 45 fractional units under contract representing 66% of total expected revenue.

At our Crystal Peak Lodge development on Peak 7 in Breckenridge, just steps away from one of the new gondola stations, we have 45 of the 46 units under contract and construction is under way. This winter we plan to begin marketing the first building of One Ski Hill Place at Breckenridge Peak 8, the first in a phased five to six building multi-use development with the first building including 90 ski in, ski out residences ranging from studio to four bedroom with approximately 102,000 salable residential square feet.

The marketing of the Vail Mountain Club, an exclusive private club steps from the Vista Bahn express lift, is ongoing with activity expected to intensify in the winter months. We also have been selling memberships throughout the summer and to date we have sold 110 full memberships which include parking privileges, and an additional 123 social memberships which exclude parking, representing total sales commitments of $39.9 million of total proceeds when paid in full.

On the Company's Lodging business, we are excited with the recent announced expansions of our Rock Resorts luxury hotel portfolio including the addition of the Landings St. Lucia located on Rodney Bay, St. Lucia in the West Indies. Rock Resorts will manage the resort operations including 231 luxury suites ranging from 900 to 2300 square feet, spa facilities and restaurants as well as the resort's private yacht harbor and beach club. The Landing St. Lucia will open in four phases with phase one scheduled to open in December 2007.

We continue to seek select opportunities to manage properties of distinction outside of our mountain resorts not only in the United States but also into the Caribbean and other warm weather destinations as we further diversify the incredible landscapes and experiences available within our collection of world-class resorts.

In addition, we have also recently announced specific green measures for Ever Vail, our $1 billion development project located at the base of Vail mountain which we anticipate being the largest lead certified resort project in North America. Ever Vail will consist of over one million square feet of mixed use space including residences, a hotel, offices, retail shops and restaurants, mountain operations facilities, a public parking garage, a new gondola and related ski portal and a public park.

On the M&A front, I'm sure most of you are aware of our activities around the Canyons Resort in the Park City area of Utah. Since we are in the midst of litigation, I cannot discuss this further at this time other than to refer you to all public documents available related to this litigation and the public 8-Ks we have filed.

Additionally, we are hopefully nearing the end of the [Chica] arbitration and are awaiting the judge's finalization of the amount of our attorney's fees which should be reimbursed to us, together with the $8.5 million judgment we have already been awarded but have not yet received or recorded in our results.

In wrapping up, I would like to thank all of our employees for their hard work, dedication to our company's business goals and for the passion they bring every day to our extraordinary resorts. Our employees are instrumental in providing our guests the exceptional experiences that make Vail Resort the leader in the travel and leisure industry. We look forward to seeing you on the ski slopes in just a few months.

At this time, Jeff and I will be happy to answer your questions. Operator, we are ready for questions.

Thank you. (OPERATOR INSTRUCTIONS) Our first question comes from Felicia Hendrix with Lehman Brothers. Please go ahead.

Hi, guys. Good morning. I just have several quick questions for you.

Rob, I know you gave us some indication of some forward room night statistics but I'm just wondering to get to the booking curve if you can just give us an idea of how the booking curve is looking relative to recent historical, or recent past years? Just anecdotally, we're hearing it's actually pretty far out.

And then in light of that, I just was hoping you could help me understand your Lodging guidance, for EBITDA guidance for fiscal '08? Even if you adjust out the termination of the contracts it still looks like it's down year-over-year and I just wanted to understand that.

Sure. On the booking curve, I think last year, we certainly saw, obviously, some very strong early booking numbers and I think as we're reporting today, we're actually above those so I think we're still seeing a continuation of that booking. With that said, I think the numbers that we're reporting today are still, you know, a relatively small portion of the overall reservations that we're going to report for the year so I would just remind people of that.

On Lodging side, we have -- the major piece that I think is causing the decline is the preopening expenses for Arrabelle. So for this year we've got significant marketing and operating expenses before the hotel opens on January 5th.

Have you broken out those preopening expenses anywhere like in your K or can you tell us what they might be?

We have not broken them out but I would say that, you know, they are significant relative to causing the decline that you're talking about.

Okay.

And then just finally, regarding the Real Estate guidance, you were very clear as to what is included in there, Jeff, and then you did indicate that there is a slight risk that some of the final chalet sales could slip into fiscal '09. If you had to put some kind of probability on that happening, is it less than 10% or tough to tell at this point?

I think it's tough to tell. I mean I think we're currently scheduling closings for the beginning of July and the end of June.

Obviously, you know, based on the construction schedule does not basically adhere to our fiscal year which happens to fall, as you know, on July 31st. I think we're just putting out there that there certainly could be a portion of them that could slip but right now the guidance we gave is our best estimate.

And does not take into consideration any slippage?

It does not take any consideration into slippage.

Okay. Great, Thanks a lot, guys.

Thank you. The next question is from Michael Savner with Banc of America Securities. Please go ahead.

Thanks, guys. Good morning, everybody.

Two questions on pricing. First, you've given us a lot of granularity on the real estate progress and expected closings over the next 12 months. Can you give us more granularity, Rob, about what you're seeing in the pricing environment?

You did mention, I think, you said five units have gone under contract since July. But if you can tell us what you're seeing in terms of price, even directionally would be helpful.

And then the second pricing question related to the ticket prices. Certainly you seem to be having a very nice early season success on the season passes. Do you expect that type of price increase to continue as an effective rate over the course of the year or something close to that? Is that what's built into your guidance given that we're coming off of a very, what's going to be a big comp on 10% last year?

Sure. Let me answer the first question which is on real estate pricing, I guess what I'd say in total is that the market we are still seeing some strength. It's not as frothy, obviously, as it once was but on the Ritz project we raise prices and they are about four times, I think, since we originally launched it and the units that we put under contract after July 31st were at that higher pricing.

We did the same thing at Crystal Peak and obviously we're sold out with only one remaining. We also raised price on the Vail Mountain Club and continue to sell memberships through the summer. So we're not, I think we're still seeing good strength there but, you know, but at the same time, I think we're starting our projects in a pricing formula that, you know, that would basically lead to more revenue not necessarily quicker sales, which I think was the historical strategy.

Could you repeat your second question?

Just how we should think about overall effective ticket price increases as we head into the ski season. If what we're seeing in terms of your ability to push through pretty big increases on the season passes, do you think that'll be sustainable on the day rates as we get into the year?

I think it's certainly our, we will be increasing our single day and multi day lift ticket prices again this year. What I would say is the increase in effective ticket price last year was also partially a mix situation where we had a destination visitation that was significantly up and pass visitation that was not as strong.

So, it's important to always remember that for this year, obviously, it'll partially depend on the mix but you will see, certainly, absolute increases in both the destination prices and the front range prices at all of our resorts.

Terrific. Thanks very much.

Thank you.

Thank you. Our next question comes from Hayley Wolff with Rochdale Securities. Please go ahead.

Hi there, guys.

Hi, Hayley.

A couple of questions.

First in terms of pass sales, can you talk about typically the percentage of pass sales you've completed by this time of year? And then, you know, what type of mix shift did you see as people traded up to the more expensive passes?

And then second, at Heavenly Valley, coming off of such a bad year last year, what type of progression can we expect to see in sort of reclaiming those lost skier visits and what type of numbers did you see in season pass sales and does an early snow sort of help stimulate that?

Hayley, this is Jeff.

On the first one, by this time of the year we've typically sold about two-thirds or close to two-thirds of our season pass sales for the year. It's based on historical trends and so that's basically where we're at. Where we are. Obviously there's still more sales to go and more sales events to go before the start of the ski season.

On Heavenly, you know, I think we are expecting, you know, more normal weather this year and therefore, we're expecting Heavenly to come back to the direction that it was on before in terms of both skier days and revenue and EBITDA.

I think on the pass side, I think there's no question that the snow that we got, we actually did see a turnaround in our pass sales there and an increase in terms of what we've been selling. And I think that we're probably, there'll probably be some folks in the Bay Area who would wait and see for the snow to fall and make sure that this winter's going to be a strong winter there for an experience before they're going to commit to the pass product. With that said, the program there is still going very well.

Okay. Two more questions.

First, in terms of the weak U.S. dollar vis-a-vis Canadian dollar and the euro, do you have marketing programs in place aimed at trying to bring international visitors in and maybe a faster rate than in the past?

And then in your Real Estate disclosure, you talk about 65 to $75 million of EBITDA from the front door project. What are the elements of that? Is that just the chalets or does that include chalets and private club?

Okay.

On the international side, we actually are going to be increasing our international sales efforts this year and so we're going to be looking to capitalize even more on the international visitation. What we've seen over the last couple of years is essentially international visits in total have actually kept pace with our growth and destination visits but we've also changed the mix of international visitors so that they're actually a higher margin guest that were coming in and we've been pushing out a little bit of a lower margin to our operators. We think our increased sales efforts this year are obviously targeting to do more of the same.

What percent of the total visitor do they represent?

8%.

Total which -- and destination is about 60.

Right. Okay.

And then on front door, that is, the EBITDA is the profitability of selling the chalets themselves. And then we have separate guidance on our investment in resort depreciable assets and the club.

Okay.

So like back of the envelope can we take that over the number of chalets and use that number in terms of trying to understand any kind of shifts in timing of closings?

Yes.

You can do that.

Thank you.

Great.

Thank you. (OPERATOR INSTRUCTIONS) Our next question comes from Will Marks with JMP Securities. Please go ahead.

Thanks. Good morning, Jeff. Good morning, Rob.

Good morning.

I have a few quick questions. Hopefully quick.

Can you just remind me, someone had asked, what are the fourth quarter expenses? Why are they high at all?

Well, fourth quarter, you know, you obviously have all of your general administrative expenses as a reminder, we fully push down into the segment so all of the corporate expenses, all our full-year staff, all of the medical costs, all of the workers -- all of that kind of stuff is all basically spread out through the year and goes into each of the Mountain segments or the Mountain segment and the Lodging segment and the Real Estate segment.

The Lodging, obviously, has operating expenses as well, because the Lodging is running their business and including not only just the resorts around our mountain resorts but also GTLC really is a summer business and that's a pretty big number. So that really picks up from there.

And as I think I mentioned on the call, Real Estate has its own piece of the total G&A. We also, you know, record marketing expense for projects that we have not yet recorded the revenue for and that also will hit Real Estate as a period cost in the period that we incur the marketing expense.

One thing I'll just add to that. As we grow our business, particularly on the winter side, we're going to see the loss in the summer continue to grow. Now, overall, we're going to see the year, the full-year EBITDA grow, but to Jeff's point, as we bring on more people to do more amenities, more services, more businesses, you know, the revenue for the most part comes in the winter.

Okay. Great. That's helpful.

Few other things here. Do you guys buy any type of insurance related to lack of snow?

No.

Is it available?

No. You know, I can't answer the second question but the first question is we don't buy insurance on snow.

Okay.

And then Rob, maybe you can remind me or Jeff, how it's been a year or so now since you started purchasing wind power, how that's going, how that impacts your cost?

You know, I think it's been going fine. I think we actually locked in when we first did the wind power agreement, a three-year agreement so the expenses relating to wind or that transition, you know, are obviously locked in and are they're going along perfectly fine.

And you know, they're an important investment that we're making in kind of the right thing to do for our business, for our resorts and for our guests. They're not necessarily material to our overall financial results.

Okay. Great. And then my last question.

At Breckenridge, can you remind me, the pricing you got on your last project from last year and then if you can tuck it all in. I know there was a non-Vail development that I think was just launched. If you can comment on at all on the pricing there.

What I've seen is it appears to be higher than what you got on your last project so obviously I'm trying to get at what kind of pricing we can expect from your new 90 units.

The pricing on Crystal Peak I think was an average of about $960 a foot. There is another development called Shock Hill. I'm not sure if that's, that's what we've been calling it. I don't know if that's the official name of it.

They have put out pricing that would be significantly in excess of that 20%, 30% above that or even higher, 40% in some cases. I don't have a good -- I don't have good intelligence on, you know, how -- whether that's pricing or how clear or confident that they are in actually getting the pricing.

There is, we also sold, as you know, a parcel, so I don't know which one you're talking about, it's right next to Crystal Peak to a time share developer, but that pricing is really not comparable to what we're doing at Crystal Peak. I will say there are a number of the Crystal Peak units that have been put back on the market by the buyers at, you know, 20%, 30% premiums to where they were before, but we have not seen any sales on that.

Okay. Great. Thank you.

Thank you. Next question comes from Nick [Isling] with Marsico. Please go ahead.

Hi. How are you?

I just wanted to, there's something, if I'm doing this correctly and I adjust you're EBITDA for 2007 for the Lodging, is your guidance in the top end is that 30% to 40% growth?

I'm sorry. Can you repeat that, Nick?

I'm trying to back out the Lodging, the $5 million and then look at your, the top EBITDA guidance you're giving. So that's 30% to 40% growth?

Yes, I mean I'm not doing the math right here but if you just take the Lodging EBITDA from '07 and back out the $5.4 million and then put it into our guidance, whatever range you're using is obviously how you'd calculate the percent.

So, but that's, you're guiding for 30% EBITDA growth overall adjusted.

Yes, I think one of the things, I's say two things. One of the things is that because our SG&A is pushed down to both Mountain and Lodging, you're seeing a little bit of a bigger increase net of SG&A because that includes the allocation of corporate SG&A and because Lodging is relatively small, that can have a bigger impact. But, you know, yes, that's the math.

Okay. All right. Thank you.

Great.

Thank you. And management, there are no further questions. I'll turn it back to you for any closing comments you might have.

Great. Thank you, operator. Thanks to everyone who participated on our conference call today.

Fiscal 2007 was a great year for the Company and looking towards 2008 we are focused on leveraging the momentum generated from this past fiscal year as we continue to drive growth for our company and our shareholders.

Please feel free to contact me or Jeff directly should you have any further questions. Thank you for your time this morning and good-bye.

Thank you. Ladies and gentlemen, that will conclude today's teleconference.

If you would like to listen to a replay of today's conference please dial into 303-590-3000 or 1-800-405-2236 and enter the access code of 11097161 followed by the pound. We thank you again for your participation and at this time you may disconnect.