Vail Resorts Inc (MTN) 2008 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vail Resorts fiscal fourth quarter and fiscal year 2008 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 25, 2008.

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 2008 year end and fourth 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.

Before I get into a discussion of our results, let me 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 a 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 website in the "Investor Relations" section.

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 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 the fiscal year ended July 31, 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 except as may be required by law. So with that let's turn to our results.

As we mentioned in our earnings release, I am pleased with our results for fiscal 2008, which were achieved despite challenging early season conditions and overall deterioration in the macro economic environment. Results for our seasonally low fourth quarter were as expected for our Resort business while our Real Estate results versus our previous guidance were impacted by a timing shift of having one of the Lodge at Vail Chalets close in August just after our fiscal year end as opposed to in the fiscal fourth quarter.

We set new records for our fiscal 2008 Mountain, Resort and Real Estate revenue, Mountain, Resort and Real Estate reported EBITDA and net income. Our Mountain segment revenue for fiscal 2008 grew 3% on a same-store basis with approximately 64% of the same-store revenue growth flowing through to Mountain reported EBITDA driving a 100-basis-point increase in Mountain reported EBITDA margin to 32.2%.

Since our ski season was essentially completed at the end of the third quarter, the ski season stats were fully described on our third quarter release and earnings call and included total skier visits down 0.4% for the season. However, excluding the early season period from the beginning of the ski season until December 23, 2007 our total skier visits were up 4.1% including the impact of season pass holders who skied on average 9.7 days over the course of the season, up 0.4 days per pass holder from the previous season.

The favorable Mountain results were also driven by a 5.6% increase in effective ticket price, or ETP, and a 7.7% increase in season pass revenue. 26% of lift ticket revenue was derived from season pass revenue which continues to provide stability to our Mountain revenue. We anticipate the mix of season pass revenue to total lift ticket revenue will further increase with the introduction of the Epic Season Pass adding to our stable of advanced purchase products.

In addition, our overall performance was positively impacted by an estimated 26% growth in international guest visitation with even higher revenue growth from international guests given that they typically stay longer and spend more per visit than our other guests. The growth in ETP, season pass revenue and international visitors mitigated the impact of the U.S. economic weakness we began to see in the second half of the season.

Our Lodging segment on a same-store basis for the year reported a 5.7% increase in revenue per available room due to strong peak period demand driving an 8.3% increase in Lodging revenue, excluding $5.4 million of revenue associated with the prior year's termination fees. These Lodging results were achieved despite overcoming similar challenges as faced by our Mountain segment.

In addition, our Real Estate segment in fiscal 2008 benefited from the closings of 64 Arrabelle units and five Chalets driving a $48.4 million increase in Real Estate reported EBITDA and marked a record year as we transition from the construction phase to the closing phase of these two projects. Looking ahead to the 2008-2009 ski season our new Epic Season Pass, which will be used by guests for the first time this upcoming season, has already made quite a splash since its introduction this past spring.

The Epic Season Pass allows guests unlimited skiing at all of our resorts and Arapahoe Basin, and its valid on all of the most coveted holidays all for a price of $579 for adults and $279 for kids. The Epic Season Pass, which must be purchased by November 15, 2008, allows us to offer guests a true value this season. As a complement to the Epic Season Pass, we have also introduced an unlimited ski/snowboard rental option starting at $359 for the season which eliminates the added airline costs and hassles of transporting, storing, and carrying equipment on your vacation.

We recently launched our "Holidays on Us" promotion which allows guests to stay for free at any of our owned or managed lodging properties for the night of any of the best holidays subject to certain restrictions. For the Christmas holiday period, for example, we are restricting December 27-30 from this promotion meaning it is targeted at having guests commit to a several day stay prior to Christmas or after New Year's to receive the free day.

As you can see, we are committed to making a vacation with our resorts more accessible this season. Finally, we have just released a completely revamped consumer website, snow.com, for the upcoming season which offers dramatic enhancements to our main portal to the websites of all five of our Mountain resorts. Here guests will find a one-stop shop to discover our resorts, plan their vacation, see current mountain conditions, watch videos or purchase an Epic Season Pass.

The site represents the first phase of enhancements with our second release planned for the '09-'10 season offering an upgraded state-of-the-art booking experience. As an update on our season pass sales and lodging bookings for the upcoming season, we have certainly begun to see the impact of the current economic softness during these unprecedented times. Whether these results represent guests delaying their purchases or are signs of a visitation decline for the upcoming season is not something we can discern yet as we clearly have less visibility into these early season indicators.

This year's Colorado season pass sales, including Epic Season Pass sold to Colorado Front Range customers, are up 0.2% in sales dollars, while down 8.4% in units over the prior year; including Heavenly sales are down 1.5% in sales dollars and 10% in units. At this point, these results historically represent 65% of the ultimate total sales of season passes for the year. As we have previously disclosed, given the Epic Season Pass as a new product we will discuss total Epic Season Pass sales results after the selling period expires in November.

Advanced bookings through our central reservations and directly at our owned and managed properties are down 13% in sales dollars and down 17.7% in room nights over the same period last year. It is critical to remember that bookings to date represent only approximately 15% to 20% of the ultimate total room nights for the season we historically have booked through these channels.

Before I turn this call over to Jeff, I wanted to make some general comments on the overall economy and our business model. There's no doubt that today the overall economic climate has worsened significantly from our last earnings call four months ago. However, we feel strongly that the quality of our irreplaceable world class assets, stability of our unique season pass programs, and the strength of our balance sheet will allow us to weather this storm better than most over the short term.

We intend to leverage the impact of these market challenges to continue to differentiate ourselves over the long term by further improving the truly exceptional experience we offer all of our guests. With that said, Jeff will provide you with an overview of our results for the fiscal 2008 year end and fourth quarter and our guidance for fiscal 2009.

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. Let's now turn to Jeff for our fiscal 2008 year end results.

Thanks, Rob. Good morning, everyone. Earlier this morning, we released our earnings for our fiscal year ended July 31, 2008 and filed our Form 10-K for fiscal 2008. I would now like to take you through some of the highlights of our results.

Just briefly on fourth quarter before I turn to our full year results, as you are aware, our fourth quarter is historically a loss quarter for the Company since although our Mountain resorts are open for a portion of the fourth quarter for summer activities, there are generally no ski operations during the quarter. Our fourth quarter results were driven by our Lodging and Real Estate segments, most significantly with closings on 35 Arrabelle units and five Lodge at Vail chalets in the quarter, offset by our non-seasonal expenses across the Company.

In addition, our Grand Teton Lodge Company, the summer seasonal business in Grand Teton National Park performed very favorably this summer even in the face of rising fuel prices and the overall economic uncertainties. Now turning to our full year fiscal 2008 results. Starting with our Mountain segment, revenue increased 3% for fiscal 2008 including a lift ticket revenue increase of 5.2%, and Mountain reported EBITDA set a new record at $220.6 million, up 6.2% from the prior year after absorbing $2 million in legal fees for a litigation related to our acquisition of the Canyons.

As Rob said, overall skier visits were down 0.4% for the season due to the early season impacts of the poor early season conditions and the earliest Easter in 90 years in the late season. Season pass holders skied an additional approximate half a day compared to the prior year, offset by a 3% decrease in paid skier visits.

As Rob mentioned, total ETP has consistently grown, up 5.6% this fiscal year and ETP, excluding season pass eliminating the impact of the increased pass holder visits, increased 7.6%. We were able to continue to grow our season pass sales over the strong performance in the prior year with season pass revenue up 7.7% driven by an 8.8% effective pass price increase.

Turning to our ancillary Mountain business, including ski school, dining and retail rental, these generally tracked with our lift revenue growth including benefiting from absolute price increases in the year. Our dining revenue grew 4.8% favorably impacted by the acquisition of two licensed Starbucks stores in June 2007 offset by the decline in paid visitation.

Retail rental revenue grew 5.1% due in part to revenue associated with the operations of 18 Breeze Ski rental locations in June 2007. Excluding the impact of the acquired stores, retail rental revenue would have increased by 1.4%. Other revenue declined in fiscal 2008 compared to the prior year due to the disposition in April 2007 of the Company's investment in RTP.

Excluding the impact of the divestiture, other Mountain revenue would have increased 0.8%. Mountain segment operating expenses increased only 1.7% in the year. For our Lodging segment, the results were impacted by the same trends that impacted our Mountain segment. There were certainly differences between the peak and non-peak periods with peak periods performing at similar occupancy and higher ADR levels compared to the prior year, while the non-peak periods experienced softening metrics.

The Easter shift weakened the overall strength of the winter with lower quality business in the last three weeks of the season. On a same-store basis, excluding the new Arrabelle opening with its strong ADRs, ADR still grew by 5.1% to $227.83 for the year and occupancy was essentially flat resulting in a RevPAR growth of 5.7% to $105.28.

Also impacting the Lodging segment the prior year period included $5.4 million of revenue primarily associated with a termination of the management agreements at the Equinox and the Lodge at Rancho Mirage, each pursuant to the terms in the management agreements. Excluding these termination fees, Lodging revenue would have increased $13.0 million or 8.3%.

Lodging reported EBITDA for fiscal 2008 decreased $8 million also impacted by lower results from our Lodge at Vail property due to construction impacts from the soon to be completed Chalet project, $3.1 million in preopening and start-up costs for the Arrabelle, as well as decreased contribution from our Keystone lodging properties due in part to lower available rooms as a result of a reduction in managed property condos at Keystone.

Now to our Real Estate segment. As many of you know, 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. Additionally, besides projects specific profit which can be vary significantly by quarter based on the timing of closings, Real Estate reported EBITDA each year includes administrative and overhead costs, allocated corporate G&A and marketing expenses on projects which have still not closed.

In fiscal 2008, such non-project costs were approximately $25.4 million. Fiscal 2008 is driven primarily by the closing on 64 Arrabelle units with the remaining two Arrabelle units expected to close in fiscal 2009, as well as the closing of five of the expected six Chalets in July 2008 with a sixth Chalet closing a few weeks after our fiscal year end in August 2008.

In fiscal 2009, we expect to close the remaining two Arrabelle units and the remaining eight Chalets including the one that closed in August. Net income for fiscal 2008 was $102.9 million, or $2.64 per diluted share. That was impacted in addition to the Business segment results by accelerated depreciation expense on assets that will taken out of service due to new capital projects including the previously announced Keystone gondola in its skier services area, which will be replaced before next ski season, and depreciation on the new Arrabelle hotel placed in service in December and a new skier services building associated with the Chalet project.

Net income was also impacted by a $4.1 million decrease in investment income due to the lowered interest rate environment and a decrease in average invested cash during the period as a result of significant capital investments we made and stock repurchases we made and a $1 million impairment on a commercial paper write-down. Net income in fiscal 2008 was also favorably impacted by an $11.9 million credit, classified as a contract dispute credit, not included in EBITDA from the final settlement of the Cheeca dispute.

As we mentioned in our release, we are very fortunate that we have an incredibly strong balance sheet as we ended the fiscal year with $162 million of cash and cash equivalents on hand, despite being at a seasonally low quarter and having repurchased $58.7 million of stock in the quarter, net debt of less than 1.5 times trailing 12 months total EBITDA, and a $400 million senior credit facility with no revolver borrowings currently priced at LIBOR plus 50 basis points.

This provides our Company significant financial flexibility during these challenging times. Now let me turn to our fiscal 2009 guidance. We have extraordinary world class resorts and a unique customer demographic, but we are certainly not immune to the dramatic challenges facing the economy today.

It is important to know that at this point in time it is very difficult to fully predict the impact to our business of the current economic state as well as what that state will be as we go into our ski season. However, given the early season indicators and the unprecedented uncertainty of the future economic climate we think it is prudent at this time to forecast a decline in our first cal 2009 guidance as compared to the record results we reported for fiscal 2008.

Based on our current estimates, we expect full year Resort reported EBITDA, the combination of our Mountain and Lodging segments, to range from $200 million to $220 million Resort reported EBITDA, excluding stock-based compensation expense, to range from $206 million to $226 million. The Resort guidance includes a range from Mountain reported EBITDA of $182 million to $200 million, and Mountain reported EBITDA, excluding stock-based compensation expense, of $186 million to $204 million.

We expect Lodging reported EBITDA to range from $14 million to $24 million and Lodging reported EBITDA, excluding stock-based compensation expense, to range from $16 million to $26 million. The Lodging segment guidance includes approximately $5 million to $7 million from the planned Colorado Mountain Express acquisition, expected to close just prior to the beginning of ski season. Real Estate reported EBITDA is expected to range from $34 million to $40 million and Real Estate reported EBITDA, excluding stock-based compensation expense, is expected to range from $38 million to $44 million.

Based on our current estimates, we expect net income to range from $60 million to $76 million and net income, excluding stock-based compensation expense, to range from $66 million to $82 million. Finally, during the fourth quarter we announced a 3-million share increase to our previously announced share repurchase program and continued repurchases on the program resulting in the repurchase of 1,497,875 shares at an average price of $39.22 for a total amount of $58.7 million in the quarter.

Since the inception of the program in fiscal 2006, the Company has repurchased 3,004,108 shares at an average price of $41.76 for a total amount of approximately $125.5 million with 2,995,892 shares remaining available under the existing repurchase authorization. In fiscal 2008 alone, we repurchased $99.6 million of stock during the year.

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

Thanks, Jeff. I'm very proud that Vail Resorts was recently named by Conde Nast Traveler as a world saver for leadership in environmental protection.

As one of only six global travel companies hand picked from 142 applicants by an elite and prestigious judging panel for Conde Nast Traveler's environmental leadership awards, we were recognized for our commitment to renewable energy, aggressive and innovative energy layoff conservation program where we have earmarked a 5% reduction in our energy consumption for our fiscal 2009, and our successful forest conservation partnership with the National Forest Foundation, a non-profit associated with the U.S. Forest Service.

At Vail Resorts, our product is truly the great outdoors and as such we have a special obligation to protect the environment in which we live and work.

Now turning to our real estate activity. Fiscal 2008 marked a milestone for Vail Resorts as we near completion on both the Arrabelle and the Chalets. As we mentioned earlier in fiscal 2008, we closed on 64 Arrabelle units with the remaining two Arrabelle units expected to close in fiscal 2009.

On the Chalet project, we closed five Chalets in July of fiscal 2008 and in fiscal 2009 we expect to close the remaining eight Chalets including the unit that closed in August. At our Crystal Peak Lodge development on Peak 7 in Breckenridge, we currently have all 45 units under contract and will be working to close all of the Crystal Peak Lodge units during fiscal 2009.

On our latest project, the RockResorts branded One Ski Hill Place, which we brought to market in December 2007, at the base of Peak 8 in Breckenridge, we have released 70 units of the total 88 units and we currently have 50 units under contract. On the Ritz-Carlton Residences, Vail, we have 47 units under contract as well as 45 additional units sold to Ritz-Carlton for use in their club program representing 79% of the total units under construction.

Regarding the current environment for real estate we still remain very enthusiastic about the quality, progress and strategic nature of all of our real estate projects. Clearly, we are in an unprecedented environment for real estate and related financings marked by significant volatility and uncertainty. While we believe that our resort communities are ultimately more resilient, the severity of the current downturn could certainly have an impact on the amount and timing of revenue from our projects which would affect the projections for the project profit we previously disclosed.

At this point, we do not expect to continually update our projections for the individual projects as market conditions continue to fluctuate, but may readdress it as the volatility subsides and we get closer to project deliveries. Additionally, our real estate land portfolio is heavily differentiated from that of most third party developers in this economic environment in that we have a very low basis in the land itself, having owned more than 90% of the land contained in our real estate held for sale for 10 years or more with no specific debt on any of the land and all of it is situated at the base of our world class resorts.

Given that, we have the full flexibility to hold the land and continue to use it in our resort business until we are confident that a new project launch will be successful. Turning to our Vail Mountain Club, we are very pleased with the progress of the Vail Mountain Club. Since introduction, we have sold 386, or 97% of the available memberships, including 186 full memberships which includes parking privileges, and an additional 200 social memberships which exclude parking privileges with the total full and social sold memberships representing $69.7 million of proceeds when paid in full.

The private club experience is certainly a unique opportunity for our guests to see what makes our resorts truly unique and creates a long-term relationship between our guests and resorts for many years to come. Turning to our Company's lodging development, we will launch our newest RockResort managed property, the Tempo Miami, formerly known as 11 Biscayne, in April 2009. We are excited to raise the bar of Miami's luxury resort experience and introduce RockResorts' exceptional service, outstanding cuisine and rejuvenating spa in this iconic city.

Additionally, earlier this week, we announced our newest addition to the RockResorts family, the Mansfield Inn of Stowe, a RockResort situated in the heart of the town of Stowe, Vermont. This announcement includes a management agreement, marketing license, marketing licensing services agreement and a technical services agreement for the operation of this charming luxury inn planned to open for the 2010-2011 ski season. It brings RockResorts back to the Northeast in an exciting new way.

In addition, stay tuned for updates as we continue to expand our development pipeline for new additions to the RockResorts portfolio of new hotels. As an update on our planned acquisition of Colorado Mountain Express, we have successfully completed our due diligence process and expect to close on the transaction before the beginning of our 2008-2009 ski season, with a negotiated reduction in the purchase price from our previous announcement to an anticipated $38.3 million.

The acquisition is still subject to regulatory approvals and other closing conditions. We are extremely excited to welcome CME to the Vail Resorts family. CME, Colorado's leading ground transportation company providing service between our four Colorado ski resorts, other locations in Summit County and Aspen and both Denver International Airport and Eagle County Airport, offers four primary types of service including door-to-door shuttle business, point-to-point shuttle business with centralized drop-off at transportation hubs, private chartered vans and premier luxury charter vehicles. The vehicle fleet consists of approximately 250 vans and luxury SUVs.

We will shortly be commencing marketing and sales initiatives for the upcoming winter season to take advantage of the vertical integration synergies as we leverage Vail Resorts' brand, online presence, group sales effort and marketing initiatives combined with CME's track record of transporting guests to our resorts. We also believe the CME business will benefit from the significant new development occurring at and around the resorts including from our own growing hospitality business.

In addition, CME's service provides guests the option to minimize the number of vehicles on I-70 as well as reduce the fuel used in ground transportation, both of which are critical goals for our Company. The acquisition is perfectly aligned with our mission of providing exceptional experiences at our extraordinary resorts and it represents the first touch point with many of our guests when they arrive by air in Colorado.

Before I turn the call over for questions, I wanted to thank all of our passionate employees for their dedication in providing our guests with a truly extraordinary experience this past year, and their continued commitment as we gear up for the upcoming winter season. Highlighting what's new for the 2008-2009 ski season, we are excited to unveil our newest resort improvements this winter as we continue to lead our industry in investing in the guest experience we provide at all of our properties with $105 million to $115 million of resort capital expenditures expected to be invested in calendar year 2008.

Importantly, this excludes all of our investment in real estate and our investment in real estate-related resorts appreciable assets such as the Arrabelle hotel and the new spa at the Lodge at Vail, which are dramatically improving the base areas of our world class resorts. The largest capital investment project for the 2008-2009 ski season is the new state-of-the-art eight-passenger gondola in Keystone, which will include relocating the base station into River Run Village, adding a mid-station and enhancing the skier plaza area.

At Beaver Creek, following on the heels of last year's highly successful new Buckaroo Express Gondola, the resort will open a new children's ski school center, The Ranch, at the top of the Buckaroo Express Gondola which will revolutionize the way our guests learn to ski and snowboard. Also at Beaver Creek, the Osprey, formerly the Inn at Beaver Creek, is undergoing a $7 million transformation this summer and fall and is scheduled to be relaunched as RockResorts' newest addition in time for Christmas 2008.

This luxury boutique hotel, the nearest hotel to a chair lift in North America, will have a more contemporary design and will feature 41 rooms situated in the heart of the village of the world class Beaver Creek resort. New snow making at Peak 7 in Breckenridge and regrading of snow making for the main trail connecting California and Nevada at Heavenly will also await guests this winter.

There is a lot waiting for our guests this season and we are looking forward to seeing you at one of our magnificent mountain resorts this winter. At this time, Jeff and I will be happy to answer your questions. Operator, we are now ready for questions.

Thank you, sir. (OPERATOR INSTRUCTIONS). Our first question comes from the line of Anthony Powell with Barclays. Please go ahead.

How is it going, guys?

Good, Anthony.

The question is on, I guess, pricing this year. For the lift tickets that are going into Vail, you guys have really raised pricing over the past several years, I assume you are going to ratchet back on that.

Will you cut pricing versus last year in order to sort of give (inaudible) on the mountain?

We are not expecting to reduce price at for any of the kind of window or lead ticket prices at any of our five resorts. We have actually already put out pricing for our certain multi-day options and certain early season options and all of those prices would be an increase over last year.

Okay. Also, on international visitation, a big part of last year, are you seeing that slow down this year or is that going to continue to be stronger than domestic?

I think at this point, what we are seeing is that there's no question, two things I'd say. One is that last year we certainly benefited from the exchange rate and we also benefited from the fact that I think a lot of people abroad really want to come and try our resorts. The good news is they came last year and they tried it and we're seeing a good instigation of repeat visitation.

What I would say is that there are some economies, though, likely U.K. economy which is starting to feel some of the economic softness that is being felt in the U.S. What we don't know right now is how that will impact their ultimate visitation for the year.

Other places, Canada, Australia, Germany, I think, are still looking very robust for this year because we think we have some more gains to make in those markets. I would also add Russia to that list in terms of where we're seeing a lot more travel.

So overall it is too early to tell how the season will come, but we are still optimistic about how international visitation will help drive this season.

Right. One more question on real estate, you said that you may see, I guess, changes in the profit estimates for some of these projects that are closing the next few years. Most of them are under contract. So do you, are you looking at possible cancellations or are you -- if someone wanted to negotiate down a price, would you be willing to do that as it gets closer to closing? How will that actually work?

No, today we have no interest whatsoever in renegotiating any of our units that are under contract. What I would say, though, is we do have, particularly on the Ritz and on One Ski Hill Place, we do have units that are still not under contract, and I think that the comments we are making is those units may go at current the price list, they may go above that.

But at the same time we are looking at some instability in the real estate market and we're, obviously, just alerting people I think like everyone else in the country, that it is hard to exactly predict the future right now given what we are seeing out there. We wanted to make sure everybody was alerted with us.

All right. Good luck, guys.

Thanks, Anthony.

Thank you. Your next question comes from the line of Chris Woronka with Deutsche Bank. Please go ahead.

Hey, good morning, guys.

Hey, Chris.

Maybe you can talk directionally about how you see the mix this year shifting in terms of destination visitors versus season pass? I mean, obviously, from the forward bookings number you put out there, granted it is a small percentage, but it certainly appears as though that destination visits are not booking real strongly right now. Just kind of how you see that directionally shaping up? Thanks.

Sure. I think it is a very hard question to answer, obviously. I would say certainly in, if you look back historically, in times where travel gets impacted, we tend to shift a little bit more towards our local and Front Range or bay area customers because, obviously, I think they are much more stable and to the extent that we are going to lose some visitation, that's typically going to come from people coming from out of state.

I think that with that said, as we stand today, that's really hard to predict. I think that we also saw the booking curve for our out of state destination guests really expand over the last few years. So I think as we stand today we are certainly not seeing very optimistic trends, but at the same time I think you would expect to see the booking curve really shorten back into where it might have been a few years ago back and looking at it from that standpoint, it is hard to tell right now.

I also would say that I think even on our season pass sales, I think there's some of that same dynamic that's going on which is people are deferring a little bit their purchases and I think that's to be expected. I think my gut is is that we will probably have a better sense, but, obviously, of this mix when we talk again certainly at the December conference call.

Okay. Great. Thanks.

Thanks.

Thank you. (OPERATOR INSTRUCTIONS). Our next question comes from the line of Mimi Noel with Sidoti and Company. Please go ahead.

Hi, Jeff. Hi, Rob.

Hey, Mimi.

I am curious if you can elaborate on the genesis of the recent lodging acquisition in the Northeast? I'd previously thought you wanted steer clear of those assets because of the unpredictability of the weather. Can you talk a little bit about that?

Yes, Mimi, that's a -- from a standpoint of what our targets may be on the Mountain acquisition standpoint we certainly said that our focus normally would be on the West, not that we would preclude looking at something in the Northeast, but, obviously, our focus has been more on the West. But on the RockResorts expansion, I think RockResorts model works well, works very well, obviously, around our resorts, at other ski resorts and then certainly out into the warmer weather areas you have seen us expanding into.

I think this is, we absolutely should have a RockResorts in the Northeast. Stowe is a great town from a standpoint of the type of customers that would visit a RockResort and we think that's a great fit. Remember these RockResort expansions outside of our own resorts are not being done with our balance sheet.

They're being done with the owners, developers balance sheet. We are coming in managing, working a marketing arrangement to help them sell any real estate they might have to sell and other technical services that we provide. So it is really are from that standpoint, expanding that RockResorts presence in the Northeast market that certainly is going to want to be in New England, but also likes to come visit us in Colorado too. We get that RockResort reach out into a great town like Stowe. I think it is a home run from a standpoint of Rock's expansion.

Okay. Also, just looking for some clarification on the CME transaction. I was distracted, but did you say the price for that was renegotiated down?

Yes. We have gone through our due diligence process now, and we are not closed yet. We should say we don't have a final contract.

So for full disclosure, we are at the point in time, though, we believe we are, we have, our negotiations are [salt] and the price has gone down. The last price that we disclosed was $40.5 million. The price we disclosed today was $38.3 million.

Where, can you talk about some of the influences on that lower price?

No. I think we wouldn't want to get into the details of any of those negotiations. Obviously, I think we are still very excited about it, and it is just the settling of the price at the end of day before we close on the deal.

Okay. Thank you. That's all I have.

Thanks, Mimi.

Thank you. (OPERATOR INSTRUCTIONS). One moment, please. Mr. Katz, since there are no further questions, I will turn it back to you for closing comments.

Great. Thank you, operator. That wraps up our 2008 fiscal year end call.

Thanks to everyone who joined us for the conference call today. Please feel free to contact me or Jeff directly if 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. We do thank you, again, for your participation. At this time, you may disconnect. Have a nice day.