Vail Resorts Inc (MTN) 2009 Q2 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Vail Resorts fiscal 2009 second quarter results conference call. (Operator Instructions). This conference is being recorded today, Wednesday, March 11, 2009. 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 2009 second 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 term reported EBITDA 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. The Company defines reported EBITDA as segment net revenues less segment operating expenses plus segment equity investment income and for the real estate segment, plus gain on sale of real property. The Company also uses the term net debt which is defined as long term debt plus long term debt due within one year less cash and cash equivalents. Complete reconciliations of reported EBITDA and other non-GAAP financial measures can be found in this morning's earnings release and on the vailresorts.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 pursuit to the Safe Harbor Provision of Private Securities Litigation Reform Act of 1995. Certain risks and certainties 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 10K for the fiscal year ended July 31, 2008 and Form 10Q for the second quarter fiscal 2009. 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, let's turn to a discussion of our earnings release issued this morning which included our results for the second quarter ended January 1, our 2008-2009 season-to-date metrics through March 1 and our calendar year 2009 resort capital plan. As we mentioned in our release, our second quarter resort reported EBITDA results, which encompass the first part of the ski season, were down 8.3% reflecting the impact of the severe downturn in the economy. The Company's mountain segment results were negatively impacted by lower destination visitation, which drove lower lift revenue and to a greater degree, a decline in our ancillary business revenue, including ski school, dining and retail rental. This was partially offset by strong season pass revenue and past skier visitation including from our new Epic Season passholders. The strong season pass sales which are generally sold before the start of the season, enabled us to lock in sales from a large portion of our Colorado in-state guests, as well as a portion of our destination guests before the commencement of the major part of our ski season. Total season pass sales, including the Epic Season pass, increased by $17.1 million or 22.1% as of January 31, 2009, for the 2008-2009 ski season, over total season pass sales for the entire 2007-2008 ski season. As a reminder we record season pass sales as revenue over the course of the second and third quarters.

Our lodging bookings as of January 31, 2009, were down 14.9% to the prior year and reflect a much closer booking window experienced throughout this winter ski season. Lodging segment results benefited from the acquisition of Colorado Mountain Express at the beginning of the current year's second quarter, the full period operations of the Arrabelle compared to start-up and pre-opening expenses incurred in the prior year and the renovation of The Lodge at Vail as part of the Vail front door real estate project.

Our real estate segment's improved results reflect the timing of closings and mix of units sold, including the current year second quarter closings of six Lodge at Vail chalets, one Arrabelle unit and three Crystal Peak Lodge units, compared to the number and type of closings in the prior year. Overall, relative to the unprecedented environment we are in, our results for the quarter reflect the strength of our assets, brand, season pass programs and the passion of our employees in delivering the highest quality experience to our guests.

Very importantly in these times, our balance sheet remains strong with net debt leverage of only 1.2 times trailing 12 months total reported EBITDA. No borrowings under our revolver and virtually no principal maturities due on any of our debt through 2013.

I would also like to provide with you an update on the ski season metrics for the comparative periods from the beginning of the ski season through Sunday, March 1, 2009 and for the similar period year through Sunday March 2, 2008 which includes interim period data and is subject to fiscal third quarter and review and adjustments. Importantly, these metrics reflect similar trends with the previously disclosed season-to-date period through January 4 and what was disclosed today through January 31, when compared to the same periods of the prior year despite a worsening economic environment.

Season-to-date total skier visits for the Company's five mountain resorts were down 5.1% for the season-to-date period through March 1, 2009 compared to the prior year season-to-date period ending March 2, 2008. Season-to-date total lift ticket revenue through March 1, 2009, including an allocated portion of season pass revenue for each applicable period, was down 8%, compared to the prior year season-to-date period ended March 2, 2008.

Our ski school revenue trend remains consistent with what we reported in early January and our dining and retail rental revenue trends, while having worsened during January, have stabilized and are consistent with the trends for the periods through January 31, 2009, compared to February 2, 2008.

Additionally, the bookings through the Company's central reservations and directly at the Company's owned and managed properties as of February 28, 2009, were down 13.9% in room nights compared to the same period inclusive of actual guest stays season-to-date. We believe these trends reinforce that while guests may be spending less, there is still very strong demand for our vacation experience, even during this challenging environment.

I wanted to also mention that as we face the challenges of the current economic environment, we had previously implemented a cost savings plan to streamline our operations by limiting compensation increases and suspending our 401K matching benefits, targeted staff reductions, consolidating purchasing activities and reducing outside third party fees and other operating expenses. I believe that our results and metrics disclosed today indicate that Vail Resorts has performed admirably so far in a tough environment and prudent management of the Company over the last five years has left us in a relatively strong financial position. We have lowered our guidance today which Jeff will review in detail.

As we currently estimate that our profitability will be significantly down -- significantly down this year. As such, we are responding to our lower performance and preparing for what could be a sustained challenging environment in the future. Today we announced in a separate release, a Company-wide wage reduction plan targeted at further reducing our labor costs. Under the plan, all affected employees of the Company will have their salaries reduced on a sliding scale from 2.5% for seasonal employees to 10% for executives.

In addition as part of wage reduction announcement, we have made the decision to issue stock awards to each full time, year-round employee of the Company with a value on a sliding scale from 1.5% of salary to 7.5% of salary for executives. This will increase the number of employees owning stock from approximately 260 to over 2500, allowing many more of our employees to participate in the performance of Company.

As for me personally, I have decided to not take any salary for a 12-month period and then receive a 15% salary reduction. Each outside member of our board of directors has also decided to reduce their annual cash retainer by 20%. We estimate that this wage reduction plan, combined with certain other adjustments, will result in annualized labor savings of over $10 million. We have chosen a wage reduction plan rather than implementing broad-based layoffs to preserve as many jobs as possible and thereby insure we protect the guest experience that lies at the core of our Company. By asking everyone to take less starting at the top, we can continue to focus on our mission of extraordinary resorts, exceptional experiences.

I would like to now turn the call over to Jeff who will provide you with an overview of our results for the second quarter of fiscal 2009. I will then discuss our calendar 2009 resort capital expenditure plans as well as other exciting news at Vail Resorts. Let's now turn to Jeff for our results.

Thanks, Rob. And good morning, everyone. Earlier this morning, we released our earnings for the second fiscal quarter ended January 31, 2009. Also this morning, we filed our Form 10Q for the second quarter.

Turning to the highlights of our second quarter results. As Rob mentioned, our resorts segment results which included the combination of our mountain and lodging segments, were negatively impacted by the current economic conditions. Starting with our mountain segment, the economic challenges drove lower destination visitation and also resulted in overall lower lift ticket revenue, despite the favorable impact of the increased season pass sales.

Additionally, we saw a decline in ancillary business revenue and contribution. Lift ticket revenue decreased 5.1%, driven by a 19.3% decrease in skier visits, excluding season pass holders partially offset by higher season pass revenue, as well as the 4.6% increase in ETP, excluding season passholders. Our season pass revenue increased 18.2%. An effective pass price increased 18.4%, driven by the strength of our season pass program and the introduction of our Epic Season pass, with the increase in season pass visits causing the overall decline in effective ticket price or ETP of 4.4%. Our overall visitation was supported by strong pass visitation, especially from the new Epic Season passholders, who have skied more on average per pass, season-to-date. The significant increase in visits from season passholders which partially caused the offsetting decline in other visits, was primarily driven by the introduction of the Epic Season pass.

Additionally, the mix of destination to instate guest visits was approximately 52% to 48% respectively, in the current-year quarter compared to approximately 59% to 41% respectively in the prior year quarter. Colorado skier visits were up 0.9%, while total skier visits were down 0.8%. Skier visits were up year-over-year in the Christmas/New Year's time period.

I also wanted to highlight that the Company's lift revenue and skier visit year-over-year variance percentages were favorably impacted by the timing of the current year second quarter end which ended on a higher volume Saturday, compared to the prior year quarter ending on a Thursday. Total skier visits and lift revenue were down approximately 4.5% and 7.5%% respectively, when comparing the season-to-date period ending Saturday, January 31, 2009 with the prior year period ending Saturday, February 2, 2008.

Revenue for the Company's ancillary business, ski school, dining and retail rental operations, were all impacted by the current downturn in the economic environment and a resulting decrease in destination visitors and overall spending per guest. Ski school revenue decreased 17.6% and was especially impacted by a sharp decline in private ski school lessons. Dining revenue decreased 11.4% , driven by the decline in total on-mountain food and beverage transactions and lower check averages, coupled with the decrease in overall fine dining. Retail rental revenue decreased 11.3% due to lower sales in rental volumes at the Company's mountain locations. Ski school, dining and retail rental revenues decreased by approximately 20.1%, 15.5% and 13.9% respectively, when comparing the current year season-to-date period ending Saturday, January 31, 2009 with the prior year period ending Saturday, February 2, 2008. Other revenue increased 9.3% due primarily to the opening of the Vail Mountain Club. All of this culminated in a 7.6% decrease in mountain segment revenue.

Partially offsetting the revenue declines, mountain segment operating expenses decreased by 4.3%, attributable to a decline in variable based operating expenses, including US Forest Service fees, credit card fees, other resort fees, ski school and dining labor, dining and retail rental cost of sales, as well as a lower allocated corporate overhead expense. Driven by the revenue decline, mountain reported EBITDA declined 11.9% in the quarter, compared to the prior year quarter.

Turning it our lodging segment, the second quarter lodging results were impacted by similar trends realized by the mountain segment, including the decline destination visitation to our mountain resorts, as well as being impacted by declining group room nights with a shift to transient room nights.

During the quarter, the Company's owned and managed properties offered promotions and packages to attract guests to the mountains, driving a decrease in ADR. Second quarter ADR decreased 6.4% and REVPAR decreased 15.1% of the Company's owned hotels and managed condominiums on a same-store basis, excluding the Arrabelle, compared to the prior year second quarter. Overall the lodging segment experienced significantly less visibility with a much shorter booking window in both peak and non-peak periods. Lodging revenue increased 18.2%, primarily due to the full period impact of the opening of Arrabelle in January 2008 and the acquisition of CME on November 1, 2008. Excluding the impact of the Arrabelle and the CME, lodging segment revenue would have decreased 13.2%.

The current year second quarter included $7.9 million of revenue and $5.4 million of expense from CME, while the prior year quarter included $2.2 million of pre-opening and start-up expenses at the Arrabelle. Excluding the acquisition of CME and the operations of the Arrabelle in the current year quarter, and the Arrabelle's expenses in the prior year quarter, operating expenses would have decreased 12.5%, attributable to variable nature of a large part of lodging segment expenses which were reduced commensurate with the similar revenue decrease, excluding the Arrabelle and CME. Also to note, during the second quarter fiscal 2009, the Company opened the Osprey at Beaver Creek, a RockResort, formerly the Inn at Beaver Creek following a $7 million renovation.

Highlighting our real estate segment. As many of you know, our real estate segment results are primarily determined by the timing of closings and mix of real estate sold in any given period. Additionally, besides project specific profit which can vary significantly by quarter based on the timing of closings, real estate reported EBITDA each quarter includes administrative and overhead costs, allocated corporate G&A and marketing expenses.

Real estate revenue was $89.2 million in the second quarter of fiscal 2009, driven by the closings on six Lodge at Vail chalets, one Arrabelle unit and three Crystal Peak Lodge units. To date, the Company has closed on 12 of 13 Lodge at Vail chalets, with the remaining unit anticipated to close in the spring of 2009, due to the extensive nature of the buyer upgrades associated with this unit. All 66 Arrabelle units, with the final unit closing on March 9, 2009 and 42 of 45 Crystal Peak lodge units. I also want to mention that prior year real estate closings were primarily in the second half of the fiscal year which will balance out real estate comparative earnings for the fiscal year.

On the heels of the highly successful Vail Mountain Club where we closed on 384 Vail Mountain Club memberships for total proceeds of $70.1 million. The Company also launched the marketing of our newest signature private club, the Arrabelle Club, as part of the Arrabelle Hotel, offering member amenities such as luxurious locker facility, valet parking, personalized ski valet and spa access just steps from the Eagle Bahn gondola in Vail Square. To date, the Company has closed on 11 Arrabelle club memberships for total proceeds of $1.2 million.

Taking a look at the bottom line, net income was $60.5 million or $1.65 per diluted share in the second quarter of fiscal 2009, compared to net income of $51.3 million or or $1.31 per diluted share in the second quarter of fiscal 2008. The results were also impacted by increased depreciation due to a higher level of capital expenditures associated with placing and service, significant resort assets which included the Arrabelle, our new skier services building, the Vail Mountain Club and several gondolas and lifts within the last few years. Net income was also negatively impacted by a $1.7 million decrease in investment income due to a reduction in the average interest earned on investments, since the average interest rate has decreased by approximately 2.5 percentage points in the current year versus the prior year, as well as a decrease in average invested cash during the period.

In addition I wanted to highlight, included in the six-month net income results in the prior year was the receipt of the final cash settlement from Checca Holdings, LLC, of which $11.9 million, net of final attorney's fees and on a pretax basis, was included in contract dispute credit net in the prior years results.

At Rob mentioned earlier, we are very fortunate that we have a strong balance sheet. At January 31, 2009, the Company had cash and cash equivalents on hand of $139.2 million, net debt of 1.2 times trailing 12 months total reported EBITDA and a $400 million senior credit facility which matures in 2012, with no revolver borrowings under the facility currently priced at LIBOR plus 50 basis points. Very importantly in this environment, the Company has approximately $3 million of principal maturities due in total through 2013. In addition, the Company is currently self-funding its two real estate projects currently under construction, The Ritz Carleton Residences, Vail and One Ski Hill Place, Breckenridge, with construction progressing on budget and schedule with a third of expected project costs invested to date. We expect to incur approximately $280 million to $300 million of remaining development costs subsequent to January 31, 2009 on these projects. The Company remains in a strong position from a capital structure and balance sheet perspective, that we believe will enable us to navigate through the current environment, even if prolonged, while still delivering on our mission of extraordinary resorts, exceptional experiences.

Now let me turn to our fiscal 2009 outlook. 2009 has been a challenging time for the entire travel industry and our Company has certainly been impacted with negative trends in our resort business. We do expect for the remainder of the fiscal year, the trend of our results to the prior year will worsen from the results realized in the second quarter. This is due primarily to the third quarter being a historically larger revenue quarter than the second quarter, with a continuing negative trends having a greater impact. In addition, our real estate brokerage joint venture included in mountain segment results as mountain equity investment income net, was positively impacted in the first half of the current fiscal year by project related closings with the remainder of the fiscal year anticipated to experience a significant decline in brokerage fees, due to virtually no project closings and much lower residential activity.

In the fourth quarter of the prior fiscal year, there was also some one-time favorable expense credits in the areas of worker's compensation, property tax and health insurance costs which are not expected to reoccur in the fourth quarter of fiscal 2009. In our real estate segment, minimal second half closings are anticipated as the vast majority of the units are already closed for first half of the current year and projects now completed. Since we provided our initial fiscal 2009 guidance in late September 2008, the overall macroeconomic environment has continued to deteriorate causing us to disclose at the time of our first quarter fiscal 2009 results release that results could fall below the lower end of our original guidance range, given the advanced bookings we were seeing at that time.

Based on results to date and our current visibility into March and April, we believe our earlier concerns were well-founded and now estimate that full year resort reported EBITDA, the combination of our mountain and lodging segments, to range from $164 million to $174 million. The resort guidance includes a range from mountain reported EBITDA from $152 million it $162 million, including $4 million of stock-based compensation expense and lodging reported EBITDA to range from $9 million to $15 million, including $2 million of stock-based compensation expense and approximately $5 million of contribution from CME. Real estate reported EBITDA is expected to ranging from $40 million to $44 million, including $4 million of stock based compensation expense. Incorporated in our new guidance range, an increase to our real estate reported EBITDA guidance of $6 million at the low end of the range and $4 million at the high end of the range, which was favorably impacted by an improved contribution from our Crystal Peak Lodge development and other reduced costs. Based on our current estimates, we expect net income to range from $41 million to $51 million.

And finally turning to our repurchase activity, during the second quarter of fiscal 2009 the Company repurchased 317,727 shares of common stock at an average price of $23.48, for a total amount of approximately $7.5 million in the quarter. Since the inception of this program in fiscal 2006, the Company has repurchased 3,600,235 shares at an average price of $38.98 for a total amount of approximately $140.3 million with 2,399,765 shares remaining available under the existing share repurchase authorization. The purchases under this program are reviewed by the Company's board quarterly and are based on a number of factors to determine the appropriate uses of excess cash, including the Company's expected future financial performance, the Company's available cash resources and competing uses for cash that may arise in the future, the restrictions in the Company's credit facility and in the indentured governing the outstanding 6.7% -- 6.75% senior subordinated notes, prevailing prices of the Company's common stock, and a number of shares that become available for sale at prices, the Company believes, are attractive.

At this time I would like to turn the call back

Thanks, Jeff. Now turning to our calendar 2009 resort capital expenditure plan. Over the past four years, the Company has made significant investments in resort assets to enhance the overall guest experience. Highlighting several of these recent major discretionary capital expenditures, the projects have included the Keystone River Run gondola, the Breckenridge gondola, two new high speed chairslifts at Vail, chairs 10 and 14, Heavenly's high speed Olympic Express chairlift, Beaver Creek's Buckaroo Express gondola and the Ranch, a new children's ski school on-mountain check-in dining building, the Osprey at Beaver Creek renovation and new central reservations and web platform development.

Additionally, the Company has recently benefited from significant resort assets that have come from the Company's real estate development activity, including Arrabelle project which included Arrabelle Hotel, spa, private club, skier services and commercial space and the Vail front door project which included the Lodge at Vail spa and suite rooms, new skier service area and Vail Mountain Club. Over the past three calendar years of 2006 through 2008, the Company has expended close to $300 million dollars in resort capital expenditures, excluding the resort assets that have come from our real estate activities.

In recognition of the current economic climate and given these significant investments that the Company has made in resort assets over the past several years, the Company expects to spend approximately $50 million to $60 million of resort capital expenditures in calendar 2009, including $32 million to $37 million for maintenance capital expenditures that the Company believes are necessary to maintain the necessary high quality appearance and level of service at the Company's five ski resorts and throughout its hotels. Highlights of the maintenance capital expenditures includes Snowcat replacements, lift upgrades, snow making equipment, lodging furniture, fixture and equipment and rental equipment fleet capital.

This year's discretionary projects will include a skier bridge at Keystone following the completion of the Keystone gondola, enabling guests easier access to ski across the river to the new base of the gondola and River Run village, the buildout of a new restaurant at Peak 7 in Breckenridge in conjunction with the Crystal Peak Lodge real estate project, completion of a brand new online planning and booking platform, offering guests a much more seamless and useful way to make reservations at the Company's resorts and a new tubing lift and tubing hill expansion at Heavenly to generate both winter and summer business. Our level of planned capital expenditures for calendar 2009 while responding to our current economic environment, still underscores our commitment to the overall guest experience and includes investments to maintain our current high quality standards.

Looking at the overall landscape in travel, we believe that we will begin to see a return in the summer to the classic domestic family vacation, enjoying everything that makes America so special. With gas prices back to very affordable levels, we also expect to see more drive-to vacations than in year's past. We believe our Company is perfectly positioned to begin to capitalize on those trends, as our mountain resorts are desirable in both the summer and winter seasons. In deference to that, today we also announced a new all inclusive summer family vacation experience in Colorado's Rocky Mountains. Epic Summer, a Colorado Family Adventure will be its name.

Vail resorts is combining the best of its Keystone, Breckenridge, Vail and Beaver Creek mountain resorts in Colorado with classic Rocky Mountain summer adventures for guided, all-inclusive family vacation experiences. In these challenging times, we're seeing luxury now defined as companies providing a good value and people spending quality time with friends and loved ones. Our Epic summer vacation will have the best that Colorado's Rocky Mountains have to offer with everything included at one very attractive price.

On the six-night, seven-day itinerary, families will experience the Continental Divide in a trip to world renowned Rocky Mountain National Park, white water rafting, horseback riding on Beaver Creek mountain, a gondola ride to the summits of Vail and Keystone mountains and the historic old victorian mining town of Breckenridge. The four-day itinerary is an abbreviated version of this seven-day guided trip. While we don't anticipate any material contribution from this new venture in its first summer of operation, we are very excited to leverage our existing infrastructure and people, including our lodging, lifts, restaurants, vans and guides to offer a new vacation experience to many of our existing guests and what we hope will be new guests to our resorts at a value price.

While the current ski season is still in full swing, we are already planning for the 2009-2010 season. As part of that, today we also announced that the highly successful Epic Season pass will return for the '09-'10 ski season, initially at last year's introductory price of $579 for those folks who are willing to commit on or before April 9th, 2009. And we'll be heavily marketing this Epic Season pass and price point opportunity during the high traffic spring break period this season. The Epic Season pass offers unlimited and unrestricted days of skiing at our five resorts and we had approximately 60,000 Epic Season passes sold through the 2008-2009 season. At this value price point it offers a real win-win for our guests who are willing to commit to skiing at our Vail resorts properties well in advance of the season. It also enables us to lock in a greater portion of our lift ticket revenue before the ski season kicks off, with our season pass program growing from 23% of total lift revenue in fiscal 2005 to a forecasted 34% of expected lift revenue in fiscal 2009.

While we continue to navigate through these unprecedented times, we are committed to keeping our focus and efforts at the highest levels as we strive to come out of the other side of this recession in an even stronger position. We are more passionate than ever before on delivering on our mission of extraordinary resorts, exceptional experiences for the millions of visitors we are seeing at our resorts, spending their hard earned money with us. At this time Jeff and I will be happy to answer your questions. Operator, we are ready for questions.

Thank you, sir. (Operator Instructions). And our first question comes from the line of Felicia Hendrix with Barclays Capital. Please go ahead.

Hi, good morning, guys.

Hi, Felicia.

Congratulations, Rob, to you. Just some quick questions. Rob, you actually just wrapped up the call saying you think that 34% of lift revenues comes from season passes in '09. But what I'm wondering is a lot of pass sales last year occurred before the meltdown, before things started to deteriorate in September. And I'm just wondering where you're getting your confidence from that you are going it get a lot of these passholders to renew for this coming season.

Well, I would say two things. One is I don't think I really commented per se on what sales would be for next year. But I think what we're saying though is we have seen a tremendous amount of enthusiasm from the holders of these Epic Season passes this year. Based on a lot of our -- based on a lot of our research with them, we actually do believe there is a high intent to return. We also did sell a pretty big chunk of our Epic passes and our Colorado passes for that matter, after September of last year through the entire fall time period. I think what we're seeing this year in terms of the higher pass usage at our resorts, is that people are really purchasing these passes and using that as their full vacation experience for the entire winter. And I think they feel like they are getting a tremendous value from that. So I -- I guess that's what gives us confidence but we're not making any projections at this point in terms of what pass sales will be like for the '09-'10 season yet.

Okay. And then just moving on, I'm wondering how responsive your destination visitors have been to the promotions and discounts that are out there. I mean, you guys are doing a lot but I'm wondering if you think there are some other things that you could do to encourage destination visitation or if the current promotions and discounts are meeting those needs?

I think what we're finding is that the -- the biggest driver of -- of getting people to make a decision to come to visit us right now in terms of those who are looking for a deal is really lodging. There is no question that we do package in either lift tickets or ski school or other products with that. But lodging is the primary driver and then airfare. And we certainly have been fortunate this year that airfare has come done through the entire season which I think has helped to somewhat offset the huge headwinds that we've been facing from a macroeconomic environment. But I think that lodging is the primary driver and so we are constantly -- we've been out every week with new promotions, new opportunities for people to come, whether that was the holidays on us or spring break on us or ski free, stay free. I mean, we are just constantly promoting and hitting that drum.

What we are seeing is that people are waiting until the very last minute, sometimes until the last two weeks and then looking around at the best deal before making a decision. Obviously for those destination folks who have already purchased a pass, we know they are coming. But even getting them out for another trip, even if they are not paying for more skiing is still important to us because it does help to drive other ancillary businesses and our lodging business.

Thank you. And just finally, just wondering if you could give us an update in terms of sales of real estate at One Ski Hill Place and also Ritz Carleton?

There have been no new sales at the Ritz Carleton residences. We did have one sale just the other day, on a two bedroom unit at One Ski Hill Place.

Three this winter.

Three this winter.

So far we're up to 53 at One Ski Hill Place.

Great, thank you.

Thank you.

Thank you. Our next question comes from the line of Jeff Donnelly with Wachovia Securities. Please go ahead.

Good morning, guys.

Good morning.

First, I guess just a point of clarification on your books. I think you mentioned in your release that inclusive of guest stays to date room nights are down 13.9% versus say 23.3% in December. To be clear, when is the start of that period that you are using? Is it the start of the ski season or just for the particular quarter?

No. It is the start of the ski season.

And this is where I might be comparing apples and oranges. But if room night bookings to date and all future periods are down, I think it was 13.9% as of the end of February, but hotel occupancy is down, say, 9% in the quarter, setting aside changes in booking periods, wouldn't that imply that room nights for all future periods alone are, in fact, down much more than 13.9%? I don't know what the math works out to be but maybe high teens?

Yes. I think that -- I think that that is an inference that you can draw. But what we're seeing though, is the closing bookings are up dramatically and because of that, that trend has been -- so in other words, if you looked at our booking number at the end of January, or the end of December I should say, it was down around this 15% yet obviously you just commented on what our occupancy was down for the quarter. So what we're seeing is a big pickup short in and so right now when we're giving you the numbers as of the end of February, that's still not even close enough to spring break to actually see the full impact which is, certainly, unprecedented ever in lodging. But we've been tracking kind of the bookings within two weeks of a stay and for the peek periods in particular, it is up dramatically. I know for Christmas, the number of bookings we got within two weeks of Christmas were up 64% over last year. And we've seen similar trends, maybe not to that degree, but similar trends on each weekend and each peak period.

Is it your gut then that maybe in the next quarter, for example, that decline will be somewhere between, say, the 14% that you saw in the most recent period and the -- and the 23% you saw as of December? I mean the -- the -- worse or beyond that or --

No. I think we're expecting to see occupancy declines that are consistent with what we reported in the second quarter and not, and not -- not -- not more than the -- the current down 14% that you are seeing in bookings. Now obviously, this has been evolved to market and the visibility is tough but based on trends we've seen to date, particularly during peak periods, we've seen a lot of close-in bookings that have closed that gap just a bit.

Switching over to Epic pass, certainly the waning destination demand seems to have been partially offset by locals taking advantage of your Epic pass. As Felicia says, are well-timed. I'm curious, how do you balance discounting for locals who may or may not have come anyway, I guess you will never know, versus picking up market share and perhaps some cash flow visibility from the pass sales. How do you make that, I think it is called trade-off in your mind?

Yes. We actually don't see -- folks who upgraded from a Colorado pass to the Epic pass are actually providing us with a, with a price increase. And so we -- we didn't see very many locals who were buying single day tickets before all of a sudden switching to the Epic pass or locals who did not buy anything before switching to the Epic pass. Locals, whether they are locals in our mountain resorts or in the front range of Colorado or Heavenly. For the most part we're moving from one pass to another and the Epic pass for most of them, was a price increase. It is the destination guest obviously, that for those who are willing to come out a lot are potentially getting a good discount. But in this environment, getting people locked in to that pass and then getting them to stay in our lodges and eat food and all the rest of it we think, has helped our year dramatically, but it is not locals. The locals may be skiing more per pass which has helped our skier visits. But when you look at the lift ticket revenue decline of about 8%, that is because of locking in a lot of the destination guests as well. And quite frankly, providing terrific promotions and terrific offers and really connecting with this core group of customers, where skiing is really a part of their life and they want to come out, we just want to give them a way to do it.

Do you have any color on how many destination skiers bought the Epic pass and came more than once?

We do. We're not disclosing that at this point. But we do.

Okay. And just one last question or two is on the -- your active repurchasing stock. Have you continued to do that post quarter end and I guess what is your thinking on that -- on gaining capital in the future versus more stock or repurchasing debt versus just holding the cash/

I think we're probably taking a more cautious approach right now towards repurchase activity in the future, given the economic environment, given some of other announcements we made today and so -- obviously I think we -- we've been consistent with that program, we're not shutting it off. We're keeping options available, but I would say taking a more cautious approach.

The last question, what has been the activity around the club membership activity, I guess, or sales at Vail and Arrabelle. I know you give stats on what sales have been, I think, to date. But the last 30-60 days has there been good interest in and towards closings on those club memberships or has it really pulled back?

No. I think no question it has pulled back. I think the -- the entire market for real estate products and club memberships has definitely softened quite a bit over the last 12 months. I think that the good news for us though, is that we are making -- bringing in new members to the club. We can actually, as opposed to the Vail Mountain club, this is a club that people can experience firsthand before making a decision. And we plan, this is a club that we think offers a tremendous value and we'll just continue to -- to plug away, and we intend to make good, long-term progress on it. But there is no question that the velocity of -- of membership sales has declined over the last 12 months.

Okay, great, thanks.

Thank you, our next question comes from the line of Nicole Torraco with Babson Capital. Please go ahead.

Hi, good morning. Just a point of clarification on your CapEx guidance. That does no include your expected real estate development spending for --

That's correct.

Yes.

Yes, that's correct .

Do you have an estimate on your real estate development spending?

We actually listed that for our-- really we only have two projects that are under construction now. They all -- the other projects are -- have essentially all been completed. And range for what's left to spend, not just in the next fiscal year but to project completion in 2010 for both those projects, One Ski Hill Place and the Ritz Carleton Residence projects is a range of $280 million to $300 million.

Right. I'm wondering what you are expecting to spend in the next fiscal year?

Yes. We haven't broken that out.

You haven't? Okay. So it is just a number for the next two years that you are giving?

Correct.

Okay. Thanks.

Thank you. Your next question comes from the line of Will Marks with JMP Securities. Please go ahead.

Thank you. Hello, Rob, hello, Jeff.

Hi.

I guess first question on the -- on three Crystal Peak units. You might have mentioned this, Jeff, but I think at least two have been -- you've taken them back. What about the third one?

We've taken all -- we've taken all three of those back that did not close. So we -- we retained the deposits and -- and have the units back and are remarketing them right now.

Okay, great. And -- see next question on the early pass pricing. Are you -- are you doing the same for the Colorado pass, or any other products?

We haven't announced Colorado pass pricing yet. That will be coming out in early April. We did announce the Heavenly season pass which we announced would be going out at a reduced price to last year to try to instigate business there. And especially with the California economy struggling so much I think we have a dichotomy where the Colorado economy, quite frankly, is quite strong relatively speaking to the rest of country where the California economy is struggling. And we're going to try to make our pass product for Heavenly as good a value as possible for those folks.

And does your language or -- or the fact that you have stated you are maintaining this Epic pass price early on imply that you will definitely raise the price at some point this season?

No. The language says we're guaranteeing that price through a certain date and then when we get to that date we look at it and -- and make a decision. I -- certainly in Colorado, in particular, we've had a pretty long history of raising prices on those price breaks dates.

Okay. And on -- on the ski visits through -- through January, a pretty widest disparity. I can understand Heavenly being down significantly due to weakness in snow in particular. But how about between Vail and Keystone, a 20 point differential? Can you explain that?

Sure, I think what we're seeing is in Vail and Beaver Creek we're seeing -- the Epic pass there really allowed people who are fans of Vail and Beaver Creek, who might have been on the Colorado pass before, to get a lot more days in Vail and Beaver Creek. They are not counting their days, they do not have to worry about the ten-day limitation, one. Two, there also are no restrictions on the Epic pass and so they can visit Vail and Beaver Creek during the holiday period where again, those who were on the Colorado pass before could not. I think what you are seeing in Keystone is -- in Vail and Beaver Creek, what you are seeing is that we have a core customer who is still coming but at the same time isn't going to spend as much money. That is how they are cutting back on their total vacation travel budget. For Keystone, a lot of those folks were not spending a ton of money to begin with at Keystone. And when they cut back, they may be actually cutting back their entire trip or may be cutting their trip down from seven days to three days. And so I think Keystone is seeing a much bigger shrink in actual visitation because the income demographics of their guests are such that that is where they have to cut back. I think interestingly enough, I think that Breckenridge obviously does not benefit from the Epic Season pass as much as Vail or Beaver Creek or really very little at all. But is still seeing some pretty good stability in its visitation and I think that that comes from, again, the customer base there really boiled to the entire experience that Breckenridge provides.

Great, thank you. And on -- on real estate, can you give approximate date of first deliveries and final deliveries expected at the Ritz, as well as at One Ski Hill?

At this point, we're not going to lock into that. What I can say is that it is late spring and late -- late summer, early fall is the dates for One Ski Hill Place and the Ritz, respectively.

For 2010.

Yes.

But you -- yes. And as we get a little closer, we will -- we'll be able to -- to nail down those dates a little bit more, but we don't want to commit to anything right now.

Okay. Great. And my final question is just sort of beating a dead horse but asking it a little different way. You -- your -- your visitation through -- through February, through March 1st seems to be fairly strong. And the guidance on -- or the -- the bookings through the end of February are fairly strong. So -- and the drop in guidance is pretty significant. And I'm wondering -- I mean, where is that really coming from? It's -- is it coming from the destination visitors showing up but not spending as much? And I'm trying to get a sense of where visitation is going.

Well, I -- I think what I would say is two things. One is the third quarter is a bigger quarter than the second quarter, so the trends that we see get magnified in the third quarter, that is number one.

Number two, our brokerage business which Jeff mentioned earlier, is the difference between their first half performance and their second half performance will be significant, because we're not expecting very much velocity of transactions in Eagle or Summit County in the second half of the year. And in the first half there were the closings on Crystal Peak and the closings on the chalets, so that's going to be a major difference. We also at the end of last year, did a great job on -- on some of our medical plans and workers comp and other things where we actually got some credit. We're not expecting that to return this year. And so you combine all those things together, and that -- that's why we're being more conservative in the second half.

The other thing is that we -- what I would say is that we have -- our performance has actually held up fairly consistently throughout a deteriorating economy, but there's no question that between the end of January and even today the economy has gotten worse and therefore, we are going to be more conservative in deference to that.

Okay. And just to -- on a related note, so could -- could -- I know you typically don't guide in this regard, but can you give any data or qualitatively state what a third quarter visitation should be? It appear that the first month was well in the single digits. Do you expect the whole quarter to remain in the single digits in terms of a decline?

Yes.

I think, Will, and for everyone, this whole worsening third quarter just -- the -- to reiterate what Rob said, when have you a higher revenue quarter and you have negative trends which we have. And we've listed those through March -- beginning of March, which again, have remained very similar to what we've been seeing earlier in the year. But when you have a negative trend on an absolute basis against a higher revenue base you are going to have a higher negative contribution coming out of that revenue. And so I just want to make sure that that is -- that is what we were trying to say in the notes here. So that's -- that's a big thing.

The other piece is that two day impact that we had to lay out in the release and today on the call, that flips back the other way in the third quarter. So the fact that because we always close our resorts out at the same time time periods and you -- you picked up that timing in the second quarter favorably a little bit and that's why the trends looked better at the end of January 31st on an absolute basis. And obviously, when we compared it to the same Saturday the prior year, they -- they showed the same trends we've been talking about. That -- that absolute impact within the second quarter bounces back in the third quarter a little bit. And so when you add all of those things up that Rob just talked about and this one as well, --and again I think a little more conservative feeling at this point, just from that -- from that perspective, that's where we came out at.

Great. Okay. Thanks, guys.

Thank you.

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

Hi, guys.

Hi.

Just a few questions. First in the real estate segment, can you talk about any changes you might be making to the overhead there as you go into the slowdown?

Yes. We actually -- we did make some reductions in our overhead expense. Actually, we've been making them along this entire year. Some additional people were let go yesterday as part of that, given that we are -- we are now pushing off projects like one -- like of later phases of One Ski Hill Place and One River Run and -- But at the same time we are very actively focused on, of course, both the -- the building 801 at One Ski Hill Place and Ritz project and Ever Vail, which we have a lot of effort going into. So what I would say is we are trimming, but at the same time, it is a core part of our business and it's not something that we're going to be out of per se.

In the past it has kind of been a $20 million overhead number. How big of a reduction will we see there?

yes, we don't -- we don't give that kind of guidance, so it is not something I can answer.

Okay. And then talking about the -- the mix of visits shifting to Vail and Beaver Creek. Is there any intelligence you can glean from that in terms of thinking about marketing or investing in the resorts going forward?

I think what it says is that we -- there's no question that Vail and Beaver Creek both have -- Vail in particular, has a real -- it is the number one brand in skiing, we believe, in the world. And so there is no question that that is going -- once we offer something like the Epic pass and allow people to visit it more often that that is going to drive visitation, number one. Number two, I also think that in a year like this year, where those people who were purchasing passes were probably not making other vacation choices, because they already purchased their skiing. So we saw a lot more visitation there.

So what I would say is I don't -- I don't think it changes. I don't think we -- we didn't learn anything new by this visitation pattern from the Epic pass in terms of how attractive the resorts are. But there there are different income demographics at the different resorts and we market them appropriately. I think if you looked last year, Keystone actually had -- which is a resort that is not performing as well this year with visits, but last year performed extraordinarily well so I -- we don't jump too quick to conclusions in terms of changing the basic brand promise for each of the results.

So it just kind of natural asset?

Yes.

The -- have you looked at matching up air travel into Vail versus room bookings? Is there any kind of disconnect? I say that because I know people who are flying in for the holidays and have yet to book their rooms and so I'm just trying to see if you've tracked it any other way.

Yes. We actually have seen -- I think right now flights are an earlier indicator of traffic and overall occupancy than room -- than advance bookings so you are right, people are booking their flights before they are booking their rooms. And what I would say is that the -- the bookings into Eagle are consistent with what we have we've been seeing all year long which is this close-in booking trend. And those bookings support what we're seeing everywhere else.

Okay. Then one question. last year you had an early Easter which kind of truncated the ski season for a lot of destination guests. Given the pushout this year, is there anything that you are seeing in Easter bookings that is somewhat encouraging?

Probably not. What I would say is that we -- that we know that Easter -- that April will be better this year than it was last year. But I think that trend which in most normal years we would see today because of the close-in booking window, it will probably take us toward the end of March to see when people are going to be booking for Easter and I -- it sounds looney but it is true. I mean people even for these peak times, are really waiting for that last week or two to make their decision.

And the other thing I would add to that on April, is our early season and then our late season, which April certainly is, would be our most weather-impacted seasons. And I think in this environment, people are going to hold off and -- and wait to book until they're confident that the experience in that late spring period is going to be good before they want to commit their dollars to it. And they have that ability to do that this year through the -- through the late booking methodology everyone has been using.

What kind of expectation for Easter is built into the guidance you gave?

I think what -- what's built in is a -- an appropriate kind of bump but not the Easters that we've seen in years past.

Okay. So you have April up versus last year in your guidance?

Yes.

Okay. Thanks.

Sure.

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

Hi, Rob, hi, Jeff.

Hi, Mimi.

First of all, I want to ask if can you make any general observations about your competition along the I-70 corridor, perhaps closer to Denver. Are you seeing them perform better or worse than Vail or Beaver Creek?

Yes. We're not going to comment on that and I don't know that we have great visibility into that right now. I think at the end of the ski season, the Colorado resort does announce their skier day numbers.

Oh, yes.

So we'll have some visibility at that point.

Okay.

But as you know Intrawest and Aspen are both private companies and so we don't really get tremendous amount of detailed information from them.

Got you, okay. And then the second question was about the CapEx guidance. Obviously a big part of the -- of the strategy at Vail Resorts is your continual investments in the resorts with these upgrades and making it a comprehensive, positive experience for entire family. But it seems as though the CapEx budget was originally, if I recall correctly, somewhere in the neighborhood of $50 million and then it was trimmed back to somewhere in the $40 millions and now it is looking like it could be in the $30 millions, and this is maintenance CapEx. So how does that not undermine one of the major tenants of your growth strategy?

Yes. Maintenance CapEx for us, always stated, has been between $38 million and and $40 million. I think we've -- it has fluctuated between maybe $38 million, maybe above $40 by a million or two sometimes. But what I would say is that we're actually not cutting back on what we believe is absolutely necessary for exactly what you've said, which is to maintain, deliver the experience that people expect. I don't -- don't -- there will not be a single guest who comes to our resorts next year who will see any kind of decline or degradation in the experience of the facilities or the lifts, and -- and our CapEx budget is centered around that. So, no, we're not taking that down at all.

What I would say is we spent over the last five years, obviously travel has been a -- a booming business. And I think we did two things with our -- with our cash flow. One was we paid down our debt and the other one was we reinvested significantly into our properties. And so we actually feel very, very good in this position going forward and we're very confident that we'll be able to maintain the resorts, not only to the current expectations, but actually beyond expectations as we go forward.

Okay. That sounds good. Thank you.

Thanks.

Thank you. Our next question comes from the line of Jake Hindelong with Monness, Crespi and Hardt. Please go ahead.

Good morning, Rob, good morning, Jeff.

Good morning, Jake.

A couple questions. First on the cost side, year-to-date controls has been very good, you've announced new cuts as far as compensation are concerned. Assuming that the economy is going to continue to be relatively weak, what other cuts can we look for going into next year?

What I would say is two things. I think at this point with the announcement today on -- on labor, that's not something that we're going to be making a priority going forward. So I think we feel like we've really right-sized our labor. That doesn't mean there aren't additional selected opportunities. But in terms of looking at a Company-wide effort, I think with the announcement today we're kind of putting that behind us.

The next step for us is really doing a whole second layer review of every single thing we spend money on, including utilities and paper and all of the outside vendor fees that we have, suppliers, all of the rest of it, to make sure we've right sized that as well. But one of the decisions that we made at the beginning of this year and that we will stick with is that we are going to open and keep available the entire mountain and the resort and amenities and everything else that people expect when they come. And so we are not going to cut back on -- in any way on the guest experience. And I think that's going to be a differentiator. It is also an important thing when you are selling season passes, so people know that they can rely on the full experience.

So what I would say is that we're going to keep a tight lid on expenses. I think there are a couple of other areas that we will be attacking but I -- I think that -- there is no quantum change in expenses from where we are today.

And, Jake, just to add to that, the -- as you said, what further things can we do to impact next year. The greatest piece of the announcement today on the wage reductions, will actually impact next year.

Right.

Because for those --

The $10 million is all essentially going forward and wasn't in the fiscal second quarter.

Right.

None of it was.

None of it was. And it actually gets implemented starting in April, so for the seasonal people that are impacted that will actually really kick in next year forward. And then for the full-time this year obviously the greatest piece of that will be for next year.

Great. And then as we model that out throughout the course of the year for next year, would -- would it be fair to think of that more as a straight line or -- or more seasonal? On the wage side?

No. Well, it's -- a portion of it is seasonal, a portion of it is straight line. So -- but -- but it -- so in terms of trying to model it quarter by quarter, maybe that is something that you can talk with Jeff or [Michele] about offline.

Great, certainly. Okay, great, thanks. Then separately just on the analyst day or the investor day that you are having tomorrow, could you give us a very brief outline of what that will entail and any kind of detail on the discussion that you'll be having about your real estate holdings?

I think we -- we'll have a presentation that as we always do, that we'll be putting together, that will be available on the web. And I think if you will could make it to the presentation, then you will be able to see it, and if not then you can take a look at the -- at the power point slides on the web right after that. But I think we'll defer having that discussion right now.

Very good. Thank you.

Thanks.

Thank you, ladies and gentlemen. (Operator Instructions). And our next question comes from the line of Chris Sim with Shankman Capital. Please if ahead.

Hey. I just wanted to know how many of the Arrabelle membership units remain after the 11 that closed?

There's a total of 300 memberships.

Total of 300. And that marketing you said just started --

Yes, this season. At Christmas.

Okay.

Okay.

That's all I had. The other questions were answered. Thank you.

Thank you.

Thanks.

Thank you. Our next question comes from the line of Larry Schumacher with Oppenheimer. Please go ahead.

Hi, guys, I might have missed a couple of things but I'll ask them anyway. Do you have any look into the summer bookings?

I think what I said earlier in the call, I said that actually our view into Easter is actually quite difficult right now because of the short booking window. And so I think suffice it to say we do have summer bookings, but I think making any kind of conclusions about it would be folly because I think we're assuming that the summer will be very much like the winter, which is it is going to take quite a bit of time before we actually start to build up any kind of visibility.

Other than group bookings which tend to be more in advance, certainly we've seen a shift from group to transient in the winter. We'll see if that happens in the summer at our -- at our hotels but certainly group bookings in general on an advanced basis have been down.

Did you give a look at Easter?

No. We -- what we said was that because Easter is in April, April will be better this year than it was last year. But because of this short booking cycle we've -- we can't really make any conclusions about how Easter will be until we get further into March.

Okay. And I -- and I guess the other question was, can you quantify the foreign visitation demand or lack thereof, if that's possible?

We can't quantify but we can say that it -- that it is definitely down. I think it is certainly is tracking not that far off of our overall destination business, maybe a little bit better. But it is basically I -- I think we're -- it is struggling, I think because of trends that are -- opposite to where we were last year. Last year you had a weak dollar. And you had countries actually performing a little bit better, I think, than the United States in terms of economic activity. This year I think you are seeing obviously, a global recession and so other countries struggling quite a bit and at the same time the dollar has strengthened over last year, so both of those have combined to push down our international visitation.

Thanks, good luck.

Thanks.

Thanks.

Thank you. And we have a follow-up question from Mimi Noel from Sidoti and Company. Please go ahead.

Thank you. Rob, are you counting on not a revolt but with your seasonal employees, do you think -- how do you expect them to respond to the wage cut? I mean, do you price competitively enough that it's -- it's still attractive or do you factor in an increase in turnover or deterioration in retention, however you want it look at it?

No. I think we -- for -- especially for a lot of our long-term seasonal folks on the mountain, they are very much -- they are provided medical benefits and other things that are unusual for companies to provide seasonal folks, but they are really part of our family. And so I think we treat them that way on that front and at the same time, when it is time for everyone to cut back a little bit, there is no question that we'll -- that we're asking for them to do that as well. I think the labor market right now, I mean obviously no surprise is not a great market when you are looking for a job. I mean, I think it is -- that has just been unfortunate and I think -- so from a hiring stand point, that really has not been a challenge for us at all. But obviously that -- that is the same driver for lower economic demand which is hurting our revenue. So, I mean, we'd like nothing more quite frankly, than to see job losses stop around the country, which I think will pick up the economy, pick up demand and I think help the business overall. And I think we've told people that if the economy returns we will -- we will absolutely be looking to make adjustments to people's compensation so that it isn't just an one-way when things are bad, everybody gets hurt, it is when things are better, everybody does better too.

Okay. That's helpful, thank you.

Thank you. And our next question comes from the line of Yasuna Murakami with MC2 Capital Management. Please go ahead.

Hi, guys. Just wanted to congratulate you on the best possible result, I think, under the circumstances, but you briefly touched on this with Hayley. So basically, the Ever Vail stuff, everything is on track at this point. I realize last call you mentioned it was four, five years out, but everything is pretty much on track as far as that is going.

Ever Vail, yes, we are still moving full speed on Ever Vail, obviously we are still in the planning and approval process on that. We will not be taking Ever Vail to market unless the market is there to, we feel, can support a sales effort.

Okay. Now from -- obviously do you not talk about acquisitions but you are definitely looking out there at this point. It just seems to me that there is a lot of carnage out there as well from companies that are not as well positioned as you guys are, correct?

Yes. That part of our strategy is -- has not changed.

Okay. That's it. Everything else got answered. And I'm sorry I can't make it tomorrow but at least [Avi] will.

Okay, great.

Thank you.

Yes.

Our next question comes from the line of [Eric Mark] with James Caird Asset Management. Please go ahead.

Hi. Thank you for taking the question. Just wanted to get a sense in terms of the changing mix that you have between destination and local visitors and also on what is going on in media. Where are you seeing the best targeted media options in order to help move the needle for visitors? Are you changing your media advertising buying patterns at all?

I think that this there's no question that I think one of the best avenues right now is online, especially when you're -- when you're dealing with short-end bookings and people are making their decisions at the last minute. Some of the longer lead advertising opportunities are a little tougher, but we're still writing a program where you're promoting and building brand awareness over time and then trying to be -- have a greater call to action program, when you feel like somebody is going to be making a decision.

What I would say today, is that our online and e-mail programs and to a lesser extent but also important direct mail, are also becoming more important. Call to action and prices and promotions are definitely leading the day right now, and that is something that I think we will be continuing with throughout the summer and into next year.

That -- that's helpful. I mean, are there other -- is tv and print advertising maybe weaker. Are you looking into maybe the more expensive or traditionally more expensive buckets for targeted media?

We don't advertise on tv. I mean, other than in very, very selective situations on a local basis, but that's not really a medium that we use. So what I would say is, no, I think we're moving, again. If you were going to see a shift, it's going to be a shift towards online, direct mail, e-mail to our existing customers. We have a fairly robust database, quite frankly, of many, many people who have visited all five resorts and our RockResorts over a long period of time. And obviously, these are people who have already been out here and so this is the kind of environment where you are going to spend a lot of your time marketing to your existing customer base rather than trying to convince someone who has never been to your resort to come. And again, that is just because that's one of the travel trends that we're seeing right now is kind of the tried and true. In other words, people are more apt to take vacations where they know what to expect. They do not want to take a risk with their vacation dollars today.

Okay. That's very helpful. Would you say for the following year or for next year and beyond or for the foreseeable future, are you increasing your media buying patterns at all or keeping it stable or just down with costs?

Yes, we haven't even set our budgets for next year and it is not something that we would typically comment on.

Okay. Great, thanks very much.

Thank you.

Thank you. And our next question comes from the line of [Shazad Ali] with Jodocus Capital. Please go ahead.

Hey, guys, thanks for taking my call.

Sure.

Just wanted to extend my congrats, too, in a tough environment. Just one final question, here. You guys did a great job of giving us updates during the ski season, I think we had one update in January. Will we -- should we look forward to seeing more updates on the visitation or just kind of wait until the next results come out?

We are planning and we announced this at the beginning of the season, we're planning a final update which would be on kind of the ski season metrics piece which would be about a week after Easter. But, we haven't set an exact date yet.

Okay. So, like, mid-April.

Yes.

Okay. Sounds good. Thank you.

Thanks.

Thank you, ladies and gentlemen. (Operator Instructions). And our next question is a follow-up question from the line of Hayley Wolff with Rochdale Securities. Please go ahead.

Going to miss my flight if this call goes on much longer. A couple of quickies. First, can you talk about the hole maybe left by group business this year?

We haven't disclosed it but I -- it's -- I would characterize it as, group business does not represent a huge amount of skier visits. But it certainly represented a pretty big chunk of both fine dine and ski school, and to a certain extent, rentals. So I think -- but I think, I'd probably focus most on ski schools that you know a lot of groups would come in and take many, many instructors, particularly during the non-peak time periods. And I think one of reasons why you are seeing ski school underperform the other areas right now is because of that group business.

Okay. And then, any success or any read on Epic pass marketing to destination guests this year, and impact for next year? I mean, have you gotten the word out to some of these destination guests?

We are starting -- I think we talked about today that we are starting to market next year's Epic pass today. And it's going to be available at this -- the same price of $579 for adults, $279 for kids. And we are going to be actively and aggressively marketing it to our existing customer base and at the resorts themselves.

Okay.

And so especially during this spring break, peak spring break weeks.

Okay. And then last question, the -- as you think about your customer who has been the person that, at least the perception is they come with their family, they take two instructors for the day for the length of their vacation, assume that customer has changed their buying behavior permanently. How do you think about sort of repositioning your resorts?

I think I -- I think our view is that -- is that mountain resorts are actually uniquely positioned to pivot, so to speak, because they already host a wide range of income demographics. So while it is true that Vail and Beaver Creek have a lot of higher income people, they also have a lot of lower income people. And that is true of Breckenridge and Keystone as well and so you can get the -- someone who's skiing on a comp ticket they might have gotten from their friend who bought a season pass, with a brown bag lunch in their knapsack, is skiing right next to this family who you just outlined who has two instructors with them.

I think what you are going to see us doing for next season is really continuing to offer things like the Epic pass in all of our product lines so that we're making ski school and other things available in different formulations to make them a greater value, to lower the absolute ticket price. Again not re -- we're still going to be doing the exact same thing but you're going to have more choices when you come to our resorts to allow you to put together a vacation at different price points.

Oh, okay. Thank you.

Thank you.

Thank you. Ladies and gentlemen. (Operator Instructions). And at this time, we have no further questions in the queue. I would like to turn the conference back over to Rob Katz for any closing remarks.

Thank you, Operator. That wraps up our fiscal 2009 second quarter earnings call. Thanks to everyone who joined us on the 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.

Thank you. Ladies and gentlemen, this concludes the Vail Resorts fiscal 2009 second quarter results conference call. If you with like to listen to a replay of today's conference, please dial 303-590-3000 or 1-800-405-2236, followed by pass code 11126502. ACT would like to thank you for your participation. You may now disconnect.