Vail Resorts Inc (MTN) 2008 Q1 法說會逐字稿

Good morning, Ladies and Gentlemen. Thank you for standing by. Welcome to the Vail Resorts Fiscal 2008 first quarter earnings 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 is being recorded Monday, December 10, 2007. I would now like to turn the conference over to Rob Katz, Chief Executive Officer of Vail Resorts. Please go ahead, sir.

Thank you, Operator. Good morning, everyone. Welcome to the Vail Resorts fiscal 2008 first quarter earnings conference call and simultaneous Webcast both open to the public and press at large. I'm Rob Katz, Chief Executive Officer 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 first quarter ended October 31, 2007.

Before we review those results I'd like to remind you that we're 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 a combination of 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 mornings earnings release and on the Vail Resorts.com in the Investor Relations Section under the quarterly and annual results tab. I also need to mention the comments made during this conference call other than statements of historical fact are forward-looking statements that made pursuant to the Safe Harbor Provisions in 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 fiscal year ended July 31, 2007, and Form 10-Q for the first quarter of fiscal 2008. 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 forecasts or forward-looking statements accept as being required by law. So with that let's turn to our results. Our fiscal first quarter is a seasonal low earnings period and historically a loss quarter.

First quarter results generally reflect Mountain Summer business, Lodging business including our Summer oriented Grand Teton Lodge Company, golf operations, certain group business, timing of Real Estate closing, and fixed expenses. In this years first quarter our results were favorable to our expectations particularly in our Lodging segment. Where Lodging revenue excluding a prior year termination fee grew 14% year-over-year driven by strong group bookings particularly at our GTLC and Keystone Lodging properties.

An area of focus for us in the first quarter is to establish the ground work for the upcoming winter season, including construction of capital projects to deliver on our mission of extraordinary resorts, exceptional experiences. Some of the construction in the first quarter will result in significant capital additions for the 2007/2008 ski season, including the opening of the Arrabelle at Vail Square, Beaver Creek's new Buckaroo Express Gondola, our shortest gondola for our littlest guest, kids. Vail's new high speed quad chairlifts, replacing chairs 10 and 14 , Heavenly's new high speed Olympic Express chairlift and the new Heavenly Sky Flyer, the 50-mile-an-hour zip line ride. These are just a few of the many new amenities that await our guests this season as they visit our truly unique resorts.

While we experienced a period of warmer than usual weather conditions for the better part of November, all of our resorts have recently received significant snowfall accumulation creating great conditions and we still have the vast majority of our ski season ahead of us. Over the last few weeks, we have had a series of winter storms pass through Colorado. This past week, a major storm dumped 27 to 32 inches of fresh snow at our Colorado resorts and we are expecting more snow this week. In the last 10 days we have received between 39 and 47 inches at our Colorado Resorts.

Vail currently has 4600 acres open which is 600 more acres than what we had open last year at the same time, including this past Saturday's opening of portions of the back bowls, Blue Sky Basin and Golden Peak, and all of this great snow was not lost on our guests as Vail Mountain had a record number of skiers this past Saturday for this point in the season. Keystone now has all three of its peaks open including North Peak and the Outback, Breckenridge has peaks 8 and 9 open including the Breck-Connect Gondola, while Beaver Creek has also opened Bachelor Gulch, Rose Bowl and Grouse Mountain with the new River Front Express Gondola's grand opening scheduled for December 20, providing access to the Mountain from Avon.

At Heavenly, Thursday through Saturday there was also a strong snowstorm bringing over 20 inches of fresh snow accumulation , allowing us to open additional terrain. The forecast for this week at Heavenly calls for very cold temperatures allowing us to maximize our snow making since 70% of the mountain's trails are covered by snowmaking. In summary, we are very pleased with the current snow conditions and the amount of terrain open at our Mountains at this point in the season.

We were able to continue to grow our season pass sales over our strong performance last year. With season pass sales up 7.8% in sales dollars over the same period last year, although units were down 1.6%. For our Colorado Resorts alone, season pass sales were up 10.4% in sales dollars and up 0.6% in units. Last year at this time, we saw a much earlier booking curve than normal, though overall room nights booked were ultimately relatively unchanged for the whole of the 2006/2007 ski season over the 2005/2006 season. At this time last year, bookings through our central reservations and directly at our owned and managed properties were something we call reservations on the books for the 2006/2007 ski season were up 24.5% in sales dollars and 16.2% in room nights over reservations on the books in December 2005 for the 2005/2006 ski season. For this year, we are seeing a return to a more traditional booking curve, although still in advance of just two years ago. Reservations on the books are up 2.5% in sales dollars over the same period last year, although down 6.6% in room nights ; however, in comparison to the same time period in December 2005, our bookings in the current year are up 27.6% in sales dollars and 8.5% in room nights. Given the current uncertainty in the economic environment we are very pleased with these early season metrics. I would now like to turn the call over to Jeff Jones who will provide you with a detailed overview of our results for the fiscal 2008 first quarter. 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 fiscal 2008 first quarter results.

Thank you, Rob, and good morning, everyone. As Rob mentioned earlier this morning we released our earnings for our first fiscal quarter ended October 31, 2007. Also this morning we filed our Form 10-Q for the first quarter. I would now like to take you through some of the highlights of our results. In our Mountain segment, Mountain revenue decreased 7.9% to 42.5 million primarily as a result of a sale of the companies investment in RTP in April 2007, which is previously recorded in other Mountain revenue and generated 3.4 million of revenue in the first quarter fiscal 2007. Excluding RTP, Mountain revenue would have been essentially flat.

Dining revenue benefited from strong summer operations including group and wedding business, and from the previous acquisition of two licensed Starbucks locations in Aspen and Dumont , Colorado. Retail rental revenue was negatively impacted by lower sales volumes primarily during current year fall sales events compared to the prior year. Included in the current year Mountain operating expense is 2.3 million in legal fees related to the companies attempted acquisition in the Canyon Ski Resort in Park City, Utah while the prior year quarter included 2.8 million of now divested RTP expenses. Excluding the impact of these items, Mountain operating expense would have increased by only 1.9 million or 2.5% which is primarily due to variable costs associated with increases in dining revenue and higher costs associated with the operations of 18 Breeze Ski Rental locations acquired in June 2007.

Mountain equity investment income, net, increased by 1.1 million, primarily as a result of improved results from the companies Real Estate brokerage joint venture, Swipper, Smith and Frampton, due to a significant amount of residential and commercial Real Estate closings approximate to Vail and Beaver Creek. Reported EBITDA loss for the Mountain segment increased 4.0 million or 12.2% to a loss of 36.4 million compared to a loss of 32.5 million for the same quarter last fiscal year. Again, due in large part to the 2.3 million of Canyons litigation expense and the loss of 0.6 million of contribution from RTP in the quarter.

Turning to our Lodging segment, Lodging revenue increased 7.2% to 43.3 million in the current fiscal year, from 40.4 million in the prior fiscal year. The prior year quarter included 2.4 million of revenue associated with the termination of the Management agreement to Lodge at Rancho Mirage, pursuant to the terms of the management agreement with the closing of the hotel as part of the redevelopment plan by the current hotel owner. Excluding this termination fee, Lodging revenue would have increased by 5.3 million or 14.0% which is driven by a 12.7% increase in conference and group room nights primarily at GTLC and Keystone Lodging properties.

Additionally, Golf revenue increased 1.2 million primarily resulting from improvements made at our Jackson Hole Golf and Tennis Club and Beaver Creek Golf Club. Lodging operating expense increased in the three months ending October 31, 2007 compared to the prior year first quarter due to higher variable expenses associated with the higher Lodging occupancies and revenue as well as higher National Park service fees incurred by GTLC resulting from a new concession contract which became effective January 2007 and start up expenses associated with the Arrabelle Bell Square Hotel which is expected to open in January 2008. I should add that despite the higher concession fee, GTLC significantly out performed the prior year reflecting strong Summer and Fall business.

Lodging reported EBITDA decreased 2.0 million or 48.7% to 2.1 million compared to 4.1 million for the same quarter last year, more than entirely due to a 2.4 million prior year termination fee. Now, taking a look at some first quarter same-store year-over-year operating statistics for our owned hotels and managed condominiums around our Mountain resorts on a same-store basis, rev par grew 15.8% to 6397 incorporating a 5.3% increase in average daily rate to $157.91 and a 3.7 percentage point increase in occupancy to a seasonally impacted 40.5%.

Resort revenue the combination of Mountain and Lodging revenue decreased 0.7 million or 0.8% in first quarter of fiscal 2008 from 85.9 million 86.6 million for the same quarter last fiscal year. Excluding the prior year impacts of the divested RTP revenue and Rancho Mirage termination fee, resort revenue would have increased 5.1 million or 6.3%. Resort operating expense increased 6.3 million or 5.5% to 122.2 million, and again excluding the current year legal expense associated with the Canyons litigation and prior year RTP expense resort operating expense would have increased 6.8 million or 6.0%. Resort equity investment income net increased by 1.1 million.

First fiscal quarter resort reported EBITDA decreased 5.9 million to a loss of 34.4 million or a 20.9% decrease over the same quarter last fiscal year. Resort reported EBITDA excluding stock based compensation decreased 5.9 million or 21.7% to 33.0 million. Again, with a decrease primarily due to the prior year termination fee of 2.4 million, the prior year RTP contribution of 0.6 million and 2.3 million of current year litigation expenses.

Turning now to our Real Estate segment. Real Estate revenue decreased 14.9 million or 55.3% in the first quarter of fiscal 2008 to 12.0 million from 26.9 million for the same quarter last fiscal year. Our Real Estate segment results are primarily determined by the timing of closing and the mix of our Real Estate sold in any given period. During the first quarter of fiscal 2008, Real Estate revenue was driven primarily by contingent gains on development parcels sold in previous periods approximate to Vail and Beaver Creek. In the prior year first quarter sales included the closing of 16 Mountain Thunder Condos in Breckenridge and two Gore Creek Place Town Homes in Lionshead. Real Estate EBITDA for the first quarter of fiscal 2008, increased 4.3 million or 536.9% to 5.1 million compared to 0.8 million in the same quarter last fiscal year. Our significant projects that currently in the development phase including the Arrabelle, Lodge at Vail Chalet, The Ritz Carlton Residence as Vail and Crystal Peak Lodge in Breckenridge, are expected to favor strongly into the rest of the current year and beyond results especially as we expect to be in closing on some of the Arrabelle units in the second quarter of fiscal 2008 continuing through the fourth quarter of fiscal 2008 and we expect to begin closing on six of the 13 Lodge at Vail Chalet. 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 companies overall financial results. Depreciation and amortization decreased to 0.8 million primarily due to prior year accelerated depreciation for certain assets which are retired in advance of their previously estimated useful lives and accelerated amortization in the prior year associated with certain intangible assets related to a terminated management agreement. The companies investment income increased to 3.2 million for the quarter from 2.1 million in the prior year quarter, due to significant increase in average invested cash balances during the period resulting from increased cash flows net of increased capital expenditures.

Interest expense increased 1.3 million to 7.6 million due to an increase in capitalized interest associated with a significant ongoing Real Estate and related resort development. Included in the first quarter fiscal 2008 results is the receipt of the the final cash settlement from Cheeca Holdings, LLC of which 11.9 million net of attorney fees and on a pre- tax basis were included in contract dispute credit, charges net, on our financials. Finally the company recorded total pre-tax stock based compensation expense of 2.0 million, included in the total reported EBITDA, in the first fiscal quarter of 2008 and 2007. The company reported a first quarter net loss of 24.6 million or $0.63 per diluted share compared to a loss of 35.8 million or $0.93 per diluted share for the same period last year. Excluding stock based compensation expense, the companies first fiscal quarter net loss would have been 23.4 million or $0.60 per diluted share for the first quarter of fiscal 2008 compared to a net loss or 34.6 million or $0.89 per diluted share in the first quarter fiscal 2007.

Now turning our attention to our balance sheet and the first quarters capitalization events at the end of the first quarter fiscal 2008 we had approximately 166.0 million of cash and cash equivalents on hand excluding restricted cash, and no revolver borrowings under our senior credit facility and net debt defined as long-term debt plus long-term debt due within one year, less cash and cash equivalents and including non-recourse debt of 445.4 million compared to 426.1 million a year ago, with a ratio of net debt to total reported EBITDA calculated on a trailing 12 months basis improving from 2.1 times at the end of first quarter fiscal '07, to 2.0 times at the end of the first quarter fiscal 2008, which is impressive given that our Real Estate held-for-sale on investment increased from 301.8 million up 415.4 million or by 38% during the same period. Finally we are still very early in our fiscal 2008 year and clearly the overall U.S. economic environment may add challenges to the year ahead. However, with our focus squarely on delivering an exceptional experience to our guests, we are positioning the company to continue our progress and momentum in fiscal 2008. Also in the first quarter, we continued on our previously announced share repurchase program, resulting in a re purchase of 232, 504 shares at an average price of $50.31 for a total amount of 11.7 million. Subsequent to October 31, 2007, we repurchased an additional 273, 879 shares at an average price of $50.81 for a total amount of 13.9 million. Since inception of this program in fiscal 2006, the companies repurchased 1,179,883 shares at an average price of $43.61 for a total amount of approximately 51.5 million with 1, 820, 117 shares remaining available under the existing repurchase authorization. Our purchases under this program are reviewed with our Board quarterly and are based on the 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. Turning to our Real Estate activity, we recently launched the first building of One Ski Hill Place in Breckenridge. This first building as part of a Phase five to six building multi-use development which will be branded a RockResort Property will include 90 ski-in, ski-out residents ranging from studio to five bedroom with approximately 102,000 salable, residential square feet. We announced the pricing for the first phase of this project on November 28, and have just begun accepting reservations on the first 15 units, at an average price per square foot of $1182. We continue to build on the momentum at Breckenridge where we now also have executed contracts on all 46 units at Crystal Peak Lodge and an average price per square foot of $ 964.

As an update on the Vail Mountain Club, even during traditionally slower Summer and Fall sales periods we have continued to add new members to the Vail Mountain Club, an exclusive Private Club steps from the Vista Bahn Express Lift. To date we have sold 250 memberships including 120 full membership which include parking privileges and an additional 130 social memberships which exclude parking privileges. Representing total sales commitments of 43.2 million of total proceeds when paid in full. This includes the sale of 10 full memberships and 7 social memberships, since the end of September 2007. We are currently gearing up for a more intense marketing effort going into the Winter season.

Turning to our Lodging development, we are excited that December 19 will mark the opening of the first of four phase s of the Landing St. Lucia located on Rodney Bay St. Lucia in the West Indies, the latest edition to the Rock Resorts Luxury Hotel portfolio. Rock Resorts will manage the resort operations including 231 water front residents ranging from 950 to 2300 square feet. The first phase of the resort will include 62, one- to three-bedroom residences, a marina with approximately 80 yacht slips and a Rock Resort spa. We continue to seek select opportunities to manage properties of distinction outside of our own Mountain resort s as we further diversify the incredible landscapes and experiences available within our collection of World-Class resorts. We are looking forward to the expected January 5 opening of the Arrabelle at Vail Square, the Crown Jewel of the Rock Resorts portfolio. This project including its Hotel, Commercial, and Real Estate components will redefine the look and feel of one of the major portals on to Vail Mountain as guests experience a quint essential European Village in the heart of Vail.

In addition to World-Class skiing and snowboarding, access via the gondola just steps away, Lodging guests at the Arrabelle will experience the highest level of amenities and services, such as a ski concierge, ski nanny, premium RockResort spa and fabulous new restaurants including Centre V, a French inspired Brasserie. In addition we expect to be in closing on the 67 Real Estate units over the next few months with all units scheduled to close in fiscal 2008. In addition, as part of our committment to the environment and our guests, we recently announced we will be providing good food on a grand scale, by serving natural hormone-free meats and poultry, and organic dairy products in our 40 fast casual on Mountain restaurants across all five of our Mountain resorts during the 2007/2008 ski season. As a result Vail Resorts will be serving more meals with natural meats and organic dairy than any other restaurant operator in North America.

As a further continuation of our environmental initiatives we are returning RockResorts to its original legacy of leadership in protecting the spectacular natural environment that serves as a setting for each one of its iconic resorts, launching comprehensive sustainability initiatives across the full spectrum of its operations including energy and water conservation, renewable energy, construction, guest rooms, meetings and events, cuisine, local community outreach, education and guest activism. Our environmental efforts are part of our responsibility to protect the very product we sell. The outdoors. It also serves as an opportunity to deepen our relationship with our guests around their connection to the environment.

In wrapping up, I would like to thank all of our employees for their hard work, dedication and passion as we begin the Winter ski season. We intend to make the 2007/2008 ski season a memorable experience for our guests as they enjoy all that Vail Resorts has to offer. I hope to see you out on the slopes or at one of our unique Lodging properties this season. At this time, Jeff and I will be happy to answer your questions.

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

Hi, guys, good morning.

Good morning.

A few questions for you, first just a point of clarification regarding your guidance. You didn't mention anything in the press release and are we to assume that that is unchanged?

Yes, based on everything we are seeing we did not feel the need to change our previously announced guidance.

Okay, great. The next thing is you're also some what cautious in the release and I'm wondering, are you seeing anything on the margin that the should indicate that the economy is playing a role in your resort business to this point?

I think that's hard to say. I mean, I guess I don't think we're seeing anything different in the economy than everybody else is seeing. I think certainly, some of the metrics we're seeing on the early part of our season that we've just announced, I think what we said earlier, we really stand by which is we're very pleased with them, given everything that we're seeing, but obviously, we also don't want to be or have our heads in the sand and obviously every day you're reading about issues going on around us. I mean you guys know probably better than us what that environment is like but so far to date, the metrics that we just announced we're very pleased with.

Okay, and then I just want to also my last question is on some of the statistics that you provided particularly along the lines of the room pricing, it looks like you're getting pricing at the expense of occupancy a bit and I'm wondering if you could just talk about your strategy there and how that the could help perhaps your booking trends through the rest of the season?

Well I think there's no question that there's been real strengthen the overall Lodging market. I think that you're seeing that through ADR's generally throughout the industry. I think we're benefiting from that as well. I think I'm not sure that we're trading off rate for occupancy. I think as of right now what we would say is that we're seeing a booking curve that is not as early as it was last year, because when you look at the numbers versus two years ago, what you realize is that we're actually pretty strongly ahead even in room nights of two years ago. Interestingly enough, last year, though our room nights were up significantly at this point in last year, they ultimately ended basically flat, so right now we're looking at is potentially people making their decisions a little bit later , but we have no reason to believe that, ultimately at the end of the season there's going to be a material change.

And is there anything specifically that you're seeing about the mix of the rooms that you're seeing that you could share?

Jeff?

Well, that certainly when you look at the difference between sales dollars and room night trends, I think the difference is going to be either through absolute price increases or ADR increases or a mix shift to people booking higher priced rooms earlier in the booking curve, and so I think that it's both of those that will impact that relationship between sales dollars and units on a booking curve, and obviously again, we'll continue to monitor as the season progress. It certainly is back to your earlier question, it's certainly in our best interest to drive occupancy around our Mountain resorts because of all of the ancillary business that benefits from people being in rooms during the winter.

Right, okay. Thanks a lot.

Thanks.

Next question comes from Michael Savner with Banc of America. Please go ahead.

Hi, this is Jake [Hendelong] calling in for Michael. Couple of questions. First in the near-term as far as the second quarter skier days are concerned, when we're thinking about we want to look a little closer at what's going on with holiday season bookings, just wondering how they've been relative to last year and if there was a pick up or if you expect a pick up based on the recent storms?

I guess I'd say we're not going to comment in any more specificity on our bookings. What I can say is that we're certainly feeling good about the experience that we're going to be providing over the holiday period. I think all of our resorts right now are doing great. Obviously, I think the recent snowfall helps on two fronts. Both the people that come out obviously have a great experience and I think that word of mouth travels pretty quickly and number two, obviously it tends to create some excitement back east and I think one of the things we've done is as some of you may have seen, is start to advertise some of these great conditions either online or in the New York Times, and so we think that's the right strategy to really kind of generate that added excitement for the rest of the season.

And I think I'd just clarify that the bookings stats that we did give today are bookings through November 30, this year through as compared to end of November last year, so certainly, all the snowstorms that happened over the last week have not been Incorporated in those bookings stats that we gave today.

Okay, great. That definitely helps, and then just looking further out into the fiscal third quarter and actually into next year, with the Arrabelle, what is your expected occupancy for the remainder of the ski season once you're open and would you expect that to ramp up and be higher next year?

I don't think we're going to talk about specific occupancy guidance. I mean about Arrabelle for this year but I would say there's no question, because it's a new property that we would certainly expect occupancy next year to be much higher and when we have our full marketing effort going for a full year and obviously when people are having a comeback in the editorial writers and everything else are going to stay at the Arrabelle and start writing about the experience which we believe is outstanding we think that will help for next year. The other thing is that although the hotel rooms are going to be open for a big part of this season, most of the condos and the [lock-offs] associated with those condos are not be open for a full season until next year.

Great. That's very helpful. Thanks, guys.

Thank you.

Next question comes from Hayley Wolff with Rochdale Securities. Please go ahead.

Hi, there.

Hi.

I have a couple of questions. First, what gives you confidence that the booking curve that you're seeing this year is more comparable to '05 versus just being weak against '06?

Well, I think, I mean again, I think what we're looking at is that last year, we were up significantly over ' 05 but in the end for the full year, our overall room nights booked were relatively unchanged, though clearly last year, what we saw was the increase in '06 over '05 was not an ultimate increase in room nights booked but just an earlier booking curve and I think to Jeff's point earlier, we had a lot of early season snow last year and that may have helped drive some of those early season bookings. We also had really really strong snow year-to-year, before. For this year, we know that we didn't have great early season snow meaning in November. We now have great snow in December, and I'd say beyond that and we're also seeing that we're up nicely over '05, so I guess what I'd say is this. We're not seeing evidence yet that we will be ultimately down over '06, but obviously these are merely comments looking at data. We don't have any assurances either way.

Okay. Is there any meaningful variance at the different resorts?

There are differences at the different resorts, but again it's hard to say how much of that is based on just differences at this time of year, how much of that is based on how much Lodging we do at each of the various resorts or again, whether or not that's going to be an ultimate difference by when we get to the end of the season.

Okay, if you overlay the economy against the different demographics at your four Colorado base mountains, is there anything that you can come up with that shows any signs of economic weakness creeping into your business? Clearly Beaver Creek is at the high end, so maybe it's more immune versus a Keystone or a Breckenridge?

What I'd say is as of today, no, we don't have any data that would necessarily suggest the economy is at work. I think that we, there's no question that certainly when one of the things we looked at was a lot of the retail numbers that came out and what certainly you saw is that the higher end retailers seemed to do better. I think that certainly would bode better for Vail And Beaver Creek where the average income is higher than our other three resorts but with that said what we don't know yet is whether or not the booking curve has, again, shifted from last year or will be ultimately lower in terms of room nights booked, at this point like I said we're looking more at the booking curve than we are at data that tells us that we're going to see that impact right up front. With all of that said, obviously, the economy affects everyone in some way and we don't think our entire business can be immune to anything that's going on in the general economy.

Okay. Last question, just anything coming out of the international markets that's noteworthy in terms of bookings?

I think we at this point we are seeing very strong number s coming out of the international markets, and we really doubled our efforts so to speak going into this season, it really both because we've seen some very good trends there before, we obviously have a weak dollar and so we're certainly expecting some very good results out of the international markets for this season.

Okay, great. Thank you.

Thank you.

Our next question comes from Will Marks with JMP Securities. Please go ahead.

Thank you, hello, Rob, hello, Jeff.

Hello.

The first question, on guidance, you did I just looked back and first quarter '07 you did in the press release mentioned that you were maintaining guidance. I'm just curious what your thinking was and maybe there's legal issues but why you didn't just bother to mention it in the press release?

Yes, again, I'll just repeat it. I don't want to get into why it was or wasn't in the press release but based on everything that we're seeing we don't feel the need to change our previously announced guidance and we want to make that clear.

Fair enough. Next question, on Breckenridge, you mentioned 90 units. I'm curious on why you also mentioned 15 are now for sale. I mean, how do the 90 plan on being leaked out?

We're doing a number of phases in the sales process so we're taking reservations one phase at a time and then reserving the right to launch the new phase as we think it's appropriate and so that's a strategy we've used before in other of our projects and so that's, we just think that it's better to really build demand for certain products and when we do in each phase is take a real cross section of the building and we think that helps build momentum for the overall sales effort.

Will, that's exactly what we did at Crystal Peak. We went out in 15, 15, and 16 and we now have all 46 sold well in advance of when the construction will be complete so we're taking a similar approach that we did at Crystal Peak at Peak 7 to the first building in Peak 8 and obviously you also saw in our release today that the pricing that we've announced is sizeable and ahead of Crystal Peak. Certainly we set those prices with full knowledge of the current market environment, so we're using a similar approach and you can see what we've done, at least on the pricing for the first piece of that.

Is there a time frame when all 90 expect to be on the market?

No, we don't actually, that's not something that we try and set in stone. Obviously, our goal is to both sell all 90 units over a good time frame but at the same time we're also looking to maximize revenue and so we balance those two things out in terms of determining how to set the process, how quickly, when to move new phases or new releases really I should say of those units into the marketplace. Again it was a strategy we used at Crystal Peak very successfully and it's something we'll use again at One Ski Hill Place.

And on the Ritz development, can you remind us where we are now in terms of sales and are you happy with that and have there been any lately, if not is it just due to the ski season just getting started?

What I can say is we were very happy with the sale that we made on the Ritz over the Summer. There is very little activity that goes on between I'd say the end of September and where we are today. We currently have a total of 46 of our units under contract and we have all 45 fractional units under contract which is about [2/3] of the expected total revenue so we actually were not expecting really to make sales in October and November. That's not our primetime but we are gearing up and will have a major sales push starting now really as we go into the Winter season.

Okay, and then just to give us comfort with the 25, I guess that are left, can you characterize the strength of the Vail residential market?

I think certainly, what we've seen is that I think it may not be as frothy as it once was but we're still seeing some strength when we looking at resales through our Swipper, Smith, Frampton brokerage unit. I think that we at the same time though, we're now going into a new selling season and I think we'll have a much better sense of all of this when we get on the phone again in March for reporting our second quarter.

Okay, and just one final question. Anything you can tell us about Utah and the resort there?

No. No update at this point.

Okay. Thanks, guys.

Thank you.

Thanks, Will.

(OPERATOR INSTRUCTIONS). Our next question comes from Yasuna Murakami with MC2 Capital Management. Please go ahead.

Hi, guys.

Hi.

Hi.

I've got a couple questions. You mentioned there was a great question on your international efforts and I guess I wanted to know how targeted are you guys talking just from kind of knowing that whole space in the area, there seem to be a large influx of people from South America as well as Europe. I mean, have you been targeting those specific areas or is this just a generic, I mean, what have you guys been doing or what can you talk about I guess?

I think we're targeting, yes, we are, we're targeting all of those areas and I think when we increase our effort, it's really about bringing on your salespeople, doing more events , putting more marketing dollars behind our PR, our advertising, and it is both of those. It is the markets that you just described and more and it is a very focused approach, with different people in different parts of the country including Asia, including Australia, including Russia, and we're really targeting to really bring in that clientele which I think we've seen although our overall international business has stayed relatively constant as a percentage with our total skier days over the last few years the business has been coming in and we've been able to get out of some of the discounting, and the wholesale touring where that's really lower priced and really bringing in the higher margin upper income demographic and that's really been I think a huge benefit and I think that's shown up in our results and certainly something we'll be focused on for this season as well. Yes, and I recall hearing about a lot of charter flights from South America going into Eagles Nest and it sounded like it was a big potential driver that you guy are were going to concentrate and I remember that last year, at least. Now, I guess, it seems that this year at least in the U.S. this early in the season there's been a pretty even amount of snow falling all over the place.

Do you see that as being good for sales in Colorado like having more, your four resorts there? How do you think this affects Heavenly for instance which seems to be kind of the weaker end of the scale I guess? How is Heavenly doing at this point?

I think there's no question that Heavenly, the early season snow at Heavenly was also challenging just like it was in Colorado in November, but the recent snowfall there, they've got great terrain open. They've had some of the best terrain over the last few weeks and I think that's going to continue. I think it's great and as we continue to see weather patterns develop, Heavenly is really going to shape up for a terrific Christmas season and but yes, there's no question that I think people are given last years more difficult weather in Tahoe, I think there's certainly no question that skiers out there are going to wait to see the snowfall and the great conditions for them to start getting out and that's one of the things we think is going to happen after this past week.

Has this corresponded into the season ticket side, I mean like how is that going as far as compared to last year?

Well I think what we announced today was obviously that our just reading between the numbers that our Colorado Season Pass sales were up stronger than our Heavenly Season Pass sales and I think that that, there's no question that weather has played a part in that and I think that that will get reenergized with the new snow and I think that will continue to happen as does new snowfall at Heavenly.

Okay. I think that's about it for right now. Thank you.

Great, thanks.

Thanks.

Our next question is a follow-up from Hayley Wolff. Please go ahead.

Hi, there. I just wanted to follow-up on Will's question regarding Breckenridge units. You talked about the Crystal Peak how you did a phased launch. Can you comment on what the pricing delta was throughout the different phases, if you did move it up?

That's something we can get back to you on. I don't have it off the top of my tongue or the tip of my tongue but I think that it was in the single-digit percentages type thing. It was not, we're not talking about a huge percentage delta between each phase.

Okay. And then can you, you said retail was down in the quarter but you have more units coming out of the Breeze acquisition ?

Yes, that's correct. Obviously, seasonally, they do very little sales volume in the quarter that we just completed and we'll really be obviously coming into play here in the Winter season because their-- Heavenly is skewed towards rentals.

Okay, thanks a lot.

(OPERATOR INSTRUCTIONS). The next question is a follow-up from Yasuna Murakami. Please go ahead.

Hi, guys, one last question I guess. In light of the last two years, elsewhere and kind of following up on the bad weather effect, are you guys considering anything out in other regions of the U.S., is there anything maybe to challenge IntraWest expansion, and kind of the demise of the American Ski Company here?

Again we're one of the key parts of our strategy is strategic growth and that's something we're always looking at and if we've got something to announce we'll let everybody know but until then, I think the additional details we can put into that other than to say it's still a very important part of our overall strategy.

Okay. Thanks.

Thank you.

Mr. Katz, Mr. Jones, there are no further questions in the queue. Please continue with your closing remarks.

Thank you, Operator and thanks to everyone who participated in our conference call today. Please feel free to contact me or Jeff directly should you have any further questions. Thank you for your time this morning and goodbye.

Ladies and Gentlemen, this does conclude the Vail Resorts fiscal 2008 first quarter earnings conference call. You may now disconnect and we thank you for using AT&T conferencing.