Vail Resorts Inc (MTN) 2009 Q4 法說會逐字稿

Welcome to the Vail Resorts fiscal 2009 year end results conference call. (Operator Instructions) This conference is being recorded today, Thursday, September 24, 2009. I would like to turn the conference over to our host, Mr. Robert Katz, Chief Executive Officer of Vail Resorts. Please go ahead, Sir.

Thank you, Operator. Good morning, everyone. Welcome to the Vail Resorts 2009 earnings conference call and simultaneous webcast 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 in to the 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 a combination of the mountain and lodging segments and real estate. The company defines reported EBITDA as segment net revenue less segment operating expense plus or minus segment equity, investment income or loss, 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 the comments made during this conference call other than statements of historical fact are forward-looking statements and are made pursuant to the Safe Harbor in the Private Securities Litigation Reform Act of 1995. Certain risks and uncertainties could cause actual results to differ materially from those contained in the forward-looking statements. Investors are directed to the risks and uncertainties described in the documents filed by the Company with the securities and exchange commission including the Company's Form 10-K for fiscal year end July 31, 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 the call are made as of the date here of and we do not under take obligation up to date forecasts or forward-looking statements except as may be required by law. With that said, let's turn to our fiscal 2009 results and outlook.

As we mentioned in the earnings release, I'm pleased that Vail Resorts was able to deliver solid results for the fiscal year ended July 31, 2009. Given the unprecedented economic environment and its impact on the travel and leisure sectors, overall fiscal 2009 net income as well as reported -- resort reported EBITDA fell in the upper end of our guidance ranges which we issued in March 2009 and reaffirmed in June 2009 in our second and third quarter earnings releases respectively. Our real estate reported EBITDA slightly exceeded the upper end of our previous range. These results all benefited from our continued focus on implementing cost savings initiatives which helped to insulate our results of the downturn in the travel and leisure spending and better positioned the Company for fiscal 2010 where we will realize the full year impact of these initiatives. Importantly, we were able to achieve these expense reductions while actually improving our company wide overall guest satisfaction scores over the prior year when the economic environment was much more favorable for our guests.

Total skier visits declined 5.3% for the 2008, 2009 ski season and total lift ticket revenue declined 8.4% We estimate that total destination visitation defined as visits from our out of state and international guests declined by approximately 15% for the 2008, 2009 ski season while we saw overall business improve by 17% due to increase in number of passes sold and an increase in pass usage during the season. This was especially true for our new Epic Season Pass holders which includes both destination and in-state guests who skied more on average than our pass holders. Visitation at Colorado resorts declined by 3.5% during the 2008, 2009 ski season compared to the 2007, 2008 ski season. This compares very favorably to the skier visit results reported by the rest of the Colorado ski industry which declined 6.9% over the same period and the Utah ski industry which declined 6.5%.

The number of season passes sold for the 2008, 2009 ski season was 12.2% greater than the number of passes sold for the 2007, 2008 ski season due in large large part to the Epic Season Pass and 2008, 2009 season. When combined with 8.3% increase in effective pass price drove a 21.7% increase in season pass revenue. As we look back to fiscal 2009, the introduction of the Epic Pass marks a step change improvement in the way we market pass products to our guests and one we hope to grow substantially in the years ahead.

Our lodging segment continued to feel the impact of the economic environment in the fourth quarter where our properties continued to experience a much closer in booking window and offered an increased level of promotions and packaging discounts that reduced revenue per available room. RevPAR at our own hotels on a same-store basis declined by 10.9% for fiscal 2009 which is smaller decline than experienced by the luxury and upper upscale segments of the lodging industry as a whole which had estimated rev par declines of approximately 21% and 15% respectively. Our group lodging business was negatively impacted, especially during the shoulder and summer seasons including at our GTLC properties and, as a result, the Company saw a mix shift from group to transient business.

We are very pleased with our fiscal 2009 real estate segment results which included the closing on our last eight lodge at Vail Chalet units, 42 out of 45 residences at Crystal Peak Lodge and our final two condominium units at the Arrabelle which, together, represented the vast majority of our $186 million in fiscal 2009 real estate segment net revenue. In addition, we received final initiation fee deposits on 400 memberships to the Vail Mountain Club and Arrabelle Club representing total membership proceeds in excess of $71 million. Very importantly, all of these real estate closings and final club deposit receipts occurred in the heart of arguably the worst economic environment of our lifetimes. Our fiscal 2009 resort operating results, real estate sales proceeds, and private club initiation fee deposits combined with stringent discipline in managing our balance sheet and capitalization positioned us well in this challenging environment with net debt leverage less than two times trailing 12 month total reported EBITDA. No borrowings under our revolver and no principal maturities due on any of our debt until 2014. Before I highlight some new initiatives that we have been working on, let me turn the call over to Jeff to further discuss our results and fiscal 2010 guidance.

Thanks, Rob, and good morning, everyone. Earlier this morning we released our earnings for fiscal year ended July 31, 2009, and also filed our Form 10-K for the fiscal year 2009. As many of you are aware, our fourth quarter is historically a lost quarter for the Company, although our mountain resorts are open for a portion of the fourth quarter for summer activities, there were no ski operations during the quarter. Our summer mountain business was solid in the fourth quarter fiscal 2009, and when combined with continued strong expense control produced fourth quarter mountain segments that were better than expected.

Turning to our lodging segment which drove the majority of resort net revenue in the quarter. As rob mentioned earlier, the impact of the economic environment continued in to the fourth quarter for lodging segment. We saw a higher drop off in revenues than expected in our Vail lodging properties as well as at GTLC in the fourth quarter fiscal 2009 due primarily to a significant reduction in group business which could not be offset by FIT visitation with associated dining revenue also negatively impacted. However, overall we were pleased with our resort fourth quarter results as we were able to manage our operating expenses in the fourth quarter fiscal 2009 benefiting from our cost savings initiatives, partially offset by some one-time prior year favorable expense credits which has not recurred in the fourth quarter fiscal 2009. In fact, throughout all of fiscal 2009 in our mountain and lodging segments we were able to identify and adjust expenses more than might have been expected.

As far as our real estate segment in the fourth quarter fiscal 2009, we successfully closed on the final lodge at Vail Chalet unit for gross revenue of $20.2 million. That marked the final unit from both the Chalet and Arrabelle projects for the year. Besides that closing, our real estate results for the fourth quarter essentially reflected marketing expenses for our two active projects under construction, one ski place in Breckenridge and Ritz Carlton residents Vail, direct overhead expenses incurred in our real estate segment as well as allocated corporate overhead expenses all of which types of expenses will continue each quarter going forward for the foreseeable future. Fourth quarter fiscal 2009 continued repurchasing shares of common stock under its previously announced repurchase authorization, repurchasing 278,300 shares of common stock at $26.93 for a total amount of approximately $7.5 million in the quarter.

Now turning to our real estate development projects under construction, One Ski Hill Place in Breckenridge and Ritz Carlton residences in Vail, we expect to incur between $190 million and $210 million in cash expenditures subsequent to July 31, 2009, to complete these projects which is consistent with our total estimates of cost for these projects less what has been spent through year end. In addition, both projects are currently tracking on schedule with One Ski Hill Place projected to be complete late spring of 2010 and the Ritz Carlton residents Vail completion anticipated in the first quarter of fiscal 2011.

In addition, we are tracking on target with our previously announced calendar year 2009 resort capital guidance of $50 million to $60 million, excluding resorts appreciable assets arising from real estate activities of which approximately $20 million was spent as of July 31, 2009, leaving approximately $30 million to $40 million to spend on the remainder of the calendar year 2009. Included in those capital expenditures are approximately $32 million to $37 million in resort maintenance CapEx which we believe are necessary to maintain appearance and level of service appropriate for the Company's resort operations including routine replacement of snow grooming equipment and rental fleet equipment. The Company remains in a strong position from a capital structure and balance sheet perspective which we believe offers us greater flexibility during the times of economic uncertainty. Our $400 million senior credit facility which at year end had no revolver borrowings and $95 million of letters of credit outstanding, matures in 2012 and our senior subordinated debt does not mature until 2014. Consistent with what we have stated previously, we do anticipate modest revolver borrowings at certain times in fiscal 2010, given the remaining investments required for our two real estate projects under construction.

Turning to our guidance. Today we announced our guidance for fiscal 2010. After the economic turbulence experienced in fiscal 2009, we expect to benefit from a more stable overall economic environment in fiscal 2010, although our visibility at this point is limited as we are not yet in a period where ski operations have commenced for the upcoming season nor would we expect to see meaningful bookings for the ski season. In addition, supported by the momentum of our advanced season pass sales for upcoming 2009, 2010 ski season combined with our renewed efforts on improving destination visitation and ancillary business spend, we anticipate that the revenue lines for our resort business will improve year-over-year. Additionally, the cost savings initiatives implemented during fiscal 2009 will provide a favorable full year impact in fiscal 2010.

Therefore, based on our current estimates our fiscal 2010 guidance range anticipates growth in year over year resort reported EBITDA. Our fiscal 2010 full-year resort reported EBITDA, the combination of our mountain and lodging segments, is expected to range from $178 million to $188 million. The resort guidance includes a range from mountain reported EBITDA of $170 million to $180 million after $5 million of stock-based compensation expense and lodging reported EBITDA to range from $5 million to $11 million after $2 million of stock-based compensation expense.

Contrasting the resort segment, our real estate segment results which are an impact in any given year by timing and mix of real estate sold and closed are expected to decrease significantly given the type and number of units closed in fiscal 2009 as compared to anticipated closings fiscal 2010. Therefore, real estate reported EBITDA is expected to range from a loss of $8 million to zero after $4 million of stock-based compensation expense. Based on our current estimates, we expect net income in the range from $25 million to $35 million. At this time, I would like to turn the call back to Rob.

Thanks, Jeff. As Jeff mentioned, looking ahead to the 2009, 2010 ski season we are cautiously optimistic that the economic environment will, at a minimum, stabilize. However, we are anticipating that even should the environment improve, some of our guests will remain highly focused on value. Not necessarily looking for the cheapest option, but instead searching for ways to get the best experience at acceptable price points. Our Company is heading in to the 2009, 2010 ski season with our own intense focus on providing guests with the value they are looking for.

While we will remain active with packages and promotions throughout the season, we spent much of the off season creating new products, services and offerings which can provide appealing price points for our guests. Our initial efforts along the strategy is the marketing of our season pass programs. These products offer guests incredible value, providing our Company with greater certainty and stability to our resort revenue. To date we are very pleased with our season pass sales for our upcoming 2009, 2010 ski season compared to the comparable period of the prior year. Through September 20, 2009, our total season pass sales to date for the upcoming 2009, 2010 ski season have increased approximately 15% in sales dollars and approximately 14% in units over the same period last year with the prior year selling period representing approximately 55% of the total passes sold for the 2008, 2009 ski season.

We have continued to see sales of the Epic Season Pass outpace our other pass products and strong consumer reception to this new product. As a reminder, in the 2008, 2009 ski season, season pass revenue grew to 34% of lift ticket revenue compared to 26% in the 2007, 2008 season. We were hopeful that given the unique value pass products offer, we will be able to further grow season pass revenue as a percentage of lift ticket revenue and provide stability to financial performance. I should mention, while this remains strong, preseason performance is too early to discern the extent to which this trend will continue and what the ultimate level of any incremental new season pass purchases may be. I should also note, before we get to questions on the subject, that due to competitive reasons we will not be providing further detail on the performance of individual pass products.

So what are we doing differently this year to market the Epic Season Pass? This year we have redefined our strategy to increase awareness of our season passes through new marketing campaigns. We are very excited to partner with skier, Lindsey Vonn, a two-time defending World Cup overall champion who is preparing for her Epic season highlighted by her anticipated participation in five events at the 2010, Olympic winter games. Lindsey will represent all of the companies five world class resorts, Vail, Beaver Creek, Breckenridge, Keystone, Heavenly, and the Epic Season Pass. She will appear at select consumer events and ski shows in the US and Europe this fall prior to the start of the ski season to generate excitement for skiing and snow boarding, the upcoming Olympic games and to promote the Epic Season Pass.

In addition, for the first time we launched our Epic Pass retail tour partnering with select ski retail shops and key market across the country to promote Epic passes in all five of our mountain resorts. We are also teaming up with Warren Miller Entertainment to have on site event presence throughout their upcoming film screenings to promote Epic and summit passes. We should also note that we have shifted our marketing focus away from traditional print media like ski and skiing magazines and toured online and social media. This strategic shift made right after the 2008, 2009 ski season is a reaction to the significant changes going on in the media industry and response to where our guests will be looking for information in the upcoming season.

In addition, the ski industry is very well positioned to capitalize on many of these secular trends as a very high percentage of our guests go online before making vacation plans and also are more apt to be engaged in social media like Facebook and Twitter. As such, we intend to be interacting with our guests online before, as they make vacation plans, and after they arrive at our resorts. Toward that end, we have recently launched completely revamped web sites for each of our mountain resorts including a state of the art booking engine with trip folders, drag and drop product selection a highly intuitive lodging comparison function and virtual tour experiences for each of our resorts. We are very confident the guests will very much appreciate the greatly improved user interface. In fact, our main five resort portal, snow.com which was revamped before the 2008, 2009 ski season, was the winner of the OMMA award for website excellence in the travel category.

In addition, in the spring of 2009, we launched intensive internal process focused on recapturing revenue that we lost in our ski school and dining areas in fiscal 2009 and filling a new sense of creativity with product design and how we market these to our guests. We also focused on opportunities to further reduce costs without impacting the guess experience such as our previously announced paperless initiative. Taking a look at ski school, we determined that this product enjoyed a very high guest loyalty but that in the new economic environment we needed to provide an additional and compelling offering at an appealing price point. Towards that end, we recently announced the adventure sessions program tailored to give adult guests a new way to enjoy ski school. Our tag line for the program is if ski school had recess, this would be it, and it sums it up pretty well. The adventure sessions is for folks who are not looking for traditional ski school lessons but would like to enjoy the benefits of line cutting privileges, a ski instructor to guide them around the mountain, and the comradery of skiing with other folks at a similar skiing level and terrain interest. The product offers the feel of a private lesson but at the proximate price of adult group lesson of $119 to $129 per person for the day.

Turning to our dining initiatives, we have also unveiled new mountain dining programs designed to offer the highest quality food combined with some great value. This includes revamping all of the burgers we serve on the mountain to a fresh angus beef top quality hamburger but at the same price point as last season. A new $9.95 daily value meal always on sale at each of our mountain dining establishments and a convenient new prepaid mountain meal card which will offer added value by providing up to a 20% discount so as long as the card is purchased seven days prior to arrival at the resort. We look forward to aggressively marketing these and other programs to our guests throughout this coming year.

In addition, fiscal 2010 will be an exciting year for our RockResorts brand. We plan to add three new hotels to the portfolio, Balcones Del Atlantico in the Dominican Republic, Tempo Miami and One Ski Hill Place in Breckenridge. Balcones Del Atlantico, which is a recent new announcement, is a beach front resort in the Dominican Republic with 86 multiroom villas ideally situated along the sparkling waters of the white sand beaches, both the RockResort spa and fine dining restaurants will allow guests to enjoy some of the most breathtaking views around. Tempo Miami is a 67 story luxury hotel and residential development located in the heart of Miami's cultural center and will comprise 306 residents, 56 room hotel, and a variety of amenities including a full service RockResorts spa, fashionable street side restaurant, numerous pools and unparalleled ocean and city views. One Ski Hill Place, as part of our real estate development project, will be branded a RockResort and is located at the base of Peak 8 at Breckenridge Ski Resort. It will be comprised of 88 luxury ski-in and ski-out residences which will range from studio to four bedrooms featuring high ceilings, natural wood and stone materials, a stunning living room with fireplace and large windows and breathtaking Alpine views.

As we continue to grow the RockResorts brand we will look for properties of distinction that will provide our guests with luxurious accommodations in unique locations, acclaimed dining and a variety of year around outdoor adventures. Our pipeline of potential new RockResort properties has filled nicely in this environment and we hope to make further announcements of new RockResort properties in the near future.

Before offering some concluding remarks, I would like to acknowledge that Bill Stiritz recently announced that he would not be standing for re-election as a director at our December 2009 annual meeting. Bill has been on the Vail resorts Board since 1997 and prior to that has been intricately involved with Keystone, Breckenridge, and Arapahoe Basin since the early 1970s through his leadership roles at Ralston Purina and Ralcorp. Bill has been a passionate advocate for our mountain resorts throughout his tenure and a passionate Keystone skier and golfer. He has been an important leader on our Board and an important confidant to me and my predecessors. I would like to thank Bill for his years of service and particularly for the support that Ralston Purina and Ralcorp offered to Keystone throughout their involvement.

There is no doubt that fiscal 2009 was a tumultuous year given the economic uncertainties that we faced. However, I believe we passed the test with our fiscal 2009 results proving that our business model is strong and resilient. We have irreplaceable world class assets, growing season pass programs and a strong balance sheet all of which, when combined with our most important asset, our incredibly qualified and passionate work force, have allowed us to weather the storm better than most. As we continue to differentiate ourselves, we are well positioned to offer our guests a truly exceptional experience and a great value proposition.

Before I turn over the call for questions, we hope you join us at one of our extraordinary resorts to see new product offerings and also celebrate Vail's Blue Sky Basin's 10th anniversary and the opening of Keystone's new skier bridge following last year's opening of their new gondola. Finally, I would like to thank all of our employees who have been very instrumental in success for passion and dedication, especially considering the economic challenges we have faced which, as a company, has made us even stronger. At this time, Jeff and I will be happy to answer your questions. Operator, we are ready for questions.

(Operator Instructions) First question comes from the line of Chris Woronka with Deutsche Bank.

Good morning, guys. I noticed that you didn't disclose the hotel booking statistics this time as you did last year. I understand that booking windows have shortened and the pre season sales are only about 15% to 20%. But can you maybe talk directionally about it and what you are seeing, what you are doing on rate versus kind of rebuilding occupancy?

Sure. We definitely made a conscious decision not to talk about it. I think that's because we are not really that focused on it. I think the obviously I think we we were seeing shortening of the booking window last year. I think that when you combine the fact that this time last year was before the real impacts had hit from the financial dislocation, I think we felt like it's not a trend that's material. Obviously, bookings are down overall. We think that the December earnings call will be a better time to start updating and talking about that. At that point we will have some comparable statistics to periods after the financial crisis of last year, and given the shorter booking windows more meaningful numbers. In terms of rate and occupancy, I would say is we are really looking at a comprehensive strategy. We don't go with the focus on one or the other, we are really looking to maximize lodging revenue but at the same time maximizing overall resort revenue. That just depends upon the individual package, promotion, time of year, overall occupancy levels and many other factors, but it's something that we are highly focused on.

Okay. Fair enough. To switch gears for a second, on the acquisition front, I know you won't be able the say specifically, but is it your sense there is a better chance this year that an opportunity comes along as we are hearing about certain levels of distress across the industry and what's your number one criteria when you think about potential acquisitions?

Well I think you're right, I'm not going to comment on that, I'm not going to comment on it for this year either. I certainly can comment on our criteria. I think we are looking for properties or businesses that we feel allow us an opportunity to leverage our existing strengths and so there is reason why we can add value to whatever it is we would buy. I think the keeping for us is discipline. I think that's something obviously that has paid off in spades over the last year and we don't intend to walk away from that discipline. With that said, we are always actively looking for the right opportunity.

Okay. Very good, thanks.

Next question comes from the line of Felicia Hendrix with Barclays Capital. Please go ahead.

Good morning, guys. Just when -- as you are trying to get back your lost destination guests to get them to spend more, obviously you are implementing a lot of different initiatives. I'm wondering how you are thinking about the window -- the walk up window ticket pricing for the peak season?

What I would say is we haven't made any final decisions on that. I guess what I would share as a whole, this is not a year where we believe you're going to see too many price increases across the Company. I think this is not -- obviously in prior years and different economic environment obviously that's a key part of the strategy. No question going in to this year that's going to be a lesser part of our strategy. I think this is a time where you want to get not only guests who have been to the resort before to come back but also to take more trips and quite frankly we want to focus on getting the guests who have previously spent more money with us to again re-engage with a lot of those products. Again, I'm not going to speak to any specific price. I think if you thought about the overall strategy, our focus is much more on volume and participation than it is on price.

That makes a lot of sense. Thanks for that. Just on real estate just to get some updates since the last call and since we've been through this this summer, just on the repricing efficient just wondering if all the contract holders ended up taking that?

No they didn't. There are some that didn't, but certainly a big majority did. I think the -- what we are seeing on the real estate front is the way I described it is there is much more activity around the Ritz project. I think even if we haven't reported a sale, you are getting people taking tours and asking for contracts, and while in the end it's the sales that count, we went through a long period of time where there was really no activity. So I think we are starting to see real estate activity bubble up again. I think if you look at the overall numbers for (inaudible) County and the town of Vail, you will months, most recent months much higher than the previous four or five months or six months, those months in terms of real estate activity are still much lower than they were two years ago or year and a half ago. I think we are starting to see kind of that renewed interest goes along with up the tick in the stock market. People are feeling a bit more confident. We certainly feel more confident about our real estate efforts for this season, but still pretty cautious.

Just so I can understand, so the people who didn't take the repricing, did they walk or did that just not take it?

No they just didn't take it. It's hard to say why ultimately any particular person made their decision. I don't want to comment on that, but I will talk broadly and, again, probably should come as no surprise that broadly in the real estate industry there are people who sign contracts at one point in time and may or may not ultimately look to close on those contracts. We had that at Crystal Peak where we had 3 of 45 units that were under contract decide not to close. So I think there is -- that's a process that's going continue to play out over time and at the same time there are other people who are 100% confident they are going to close. I think that's something we will be working through over the next 12 months. I'm sure we will talk about that, particularly as we get in to the beginning of calendar year 2010.

Okay. Then with the units that Marriott has, have they been a partner with you in terms of how they are pricing their units?

No. There is no coordination.

I don't mean coordination. What I just mean is in line with -- basically, my question is have they been undercutting you?

No. I think there is -- I would say that both organizations have taken a more flexible approach to pricing. Obviously Marriott just put out an announcement yesterday about their fractional timeshare inventory and about taking a more flexible approach. That's consistent with what we are doing. It's a very, very different product. At the end of the day we don't view somebody coming in interested in buying a whole ownership is not interested in buying a 12th or 16th or a 10th of a unit. I think the art -- their fractional units are not really a primary concern for our efforts on selling the whole ownership units.

Okay. Great. Final last question, getting back, I know you said you are not going to give color on past stuff but I want to ask, you might have even said this but I might have missed it, did you give color on to what your same-store season past sales were?

No that's a very difficult -- same store we have people who are trading from one pass to another. So the concept of same-store as it relates to our season passes is very difficult. It's really we got different people moving from different products. So I think what we did say is the sales of the Epic -- sales of the Epic Season Pass are continuing to outpace everything else. I would say that by a material amount. There is differently a difference between the growth in that product and results on other products.

Okay. Great, thanks a lot.

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

Thanks. Good morning, Rob. Good morning, Jeff. I wanted to start out on taking Felicia 's question a step further. I was a little confused. I thought on the risk project you would receive part of your deposit back based on the lower pricing. Is that not accurate?

Yes, that is accurate.

So why wouldn't everyone?

Again, I'm not going to comment on -- I don't want to comment on why -- on the individual people involved at the Ritz. What I would say is, again broadly, people who are under contract for certain units but don't really want to close or have the means to close or whatever it is may take a different approach to the process than other people. And, again, that's about as much as I really want to say. I don't want to get in to speculating because we are not really privy to that.

Okay. Thank you. On Keystone, I don't think you mentioned, at this time last season or little further in you decided not to begin selling that project. Here we are a year later and you have the gondola set up. What are your plans there and any other real estate past the Ritz and One Ski Hill?

What I would say is we are currently in a holding mode as it relates to future real estate products, I think we are continuing on the planning or approval process, some of the design work. I think we need to see some better pick up in the real estate market before we would launch a new product. I would say at the moment we don't plan on launching One River Run this winter. Now with that said it is a project that is ready to go, if we saw a pick up and more real estate activity in the mountain resort industry, we would absolute reconsider that decision, but at the moment that would be our plan.

On One Ski Hill you haven't lowered your prices. I assumes this means you feel you are somewhere around the market?

Yes. I think we feel good about our prices, maybe that's the best way to put it.

Okay. Lastly, big picture in terms of guidance. I know you just give EBITDA guidance, not revenues, but I'm curious you gave us some qualitative view of ticket pricing, what about in terms of does your guidance assume increased revenues in certain areas like ski school and retail rental, even if it's qualitative thoughts.

Yes, it does. That guidance does include both, some volume increases on the skier -- well, I guess I should say it does include the volume impact on overall ticket revenue and it also includes anticipated volume increases in the ancillary businesses and a pick up in retail rental, pick up -- I think we are feeling like, look, there is very little visibility. I can't stress that enough in terms of what the economy is going to bring over next six to nine months. At the same time I think there is no question that the economy went south right in the heart of our season last year and I think we are feeling like even if we are not going to see things return to 2007, 2008 levels any time soon, we think there can still be some improvement that we can deliver through both our own efforts and guests feeling better season.

Okay. Thank you. A couple of questions for Jeff. You have a number -- since we have limited balance sheet information, but book value of real estate and then maybe construction in progress.

Yes. I think that well the real estate held for sale line item that we ended up with at the end of the year was $311 million on the balance sheet and I'd say the land component of that is a little bit over $50 million of the $311 million.

Okay. Great. That's it for me, thank you.

Thank you. Next question comes from the line of Jake Hindelong with Monness, Crespi, Hardt & Co. Please go ahead.

Good morning, guys. First question is just as far as bookings are concerned, you referenced a couple of times the steep downturn really in bookings, I would think more like last October. Last year at this time you were down about mid teens on a units or room night basis. If you project forward the rate that we are at now for September, do you think that by the end of October you would be in a similar place to where you were at the end of October?

I'm not going to be able to comment on any of that. I think, again, I think the booking pattern that we saw last year was so radically different than anything we had seen in the prior five to six years and it's still unclear to what the booking pattern for this year will be. So what I would say is we obviously incorporated visitation in to our overall guidance, but in terms of trying to guess exactly how the booking pattern will play out, it's hard to do. I do think -- I'm not sure exactly what the visibility will be like, but I do think that the December earnings call is a better time to share insight on that than today.

You talked about your change in marketing strategy. Can you talk about when you rolled that out so if that would already be impacting your season pass sales and then just what the the change if there is a change in spending level on marketing is?

Sure. No what I would say the change in marketing on a lot of new programs and promotions on season passes are really going in to place for the fall time period. I think they were not in place for the spring time period. In terms of broader marketing, those were put in place really back in the spring in terms of some of the changes that we were making in terms of where our dollars and resources were going to go. We are at this point not making any dramatic cuts in marketing. I would say being more flexible and being more opportunistic, but I think our thought is that this is an opportunity for us to continue to make in roads in a number of different areas and part of that is using or our marketing strength.

So last year there was nothing like the Epic pass retail tour?

That's right. There was not.

Got it. Great. Last question. Can you give us update on [Evervail]. I understand that there are a lot of local boards and planning going on with the town of Vail and there are some near-term benchmarks that might be hit or not.

Sure. I think we actually recently completed a in depth couple of days between our folks and the staff of the town of Vail really going through the entire project. I think everybody walked out of that feeling like it was an incredibly productive session and I think we started the process of talking with the town counsel and we will be resubmitting the project relatively shortly in the next couple of months and working through a step by step process both with the town of Vail, other regulatory bodies like the design and review board and planning commission. But, most importantly, they are continuing to take input from the Vail community. We will be continuing to do public sessions that allow us to share what our thinking is but also taking input from folks in the town. We actually feel very good about where that project stands, very good about the process we are going through, but we are not at the finish line yet.

Great, that's all helpful, thanks.

Thank you. (Operator Instructions) Next question is from [David Hargreze] with Sterne, Agee. Please go ahead.

Hi. I hope this is not too simplistic or maintenance related. Could you comment on your ability to incur debt as it stands today and, in particular, your ability to incur debt ahead of the notes?

Yes. I think we will I will defer on that. What I would say is certainly we remain in compliance with all of the covenants with all of our debt instruments. Beyond that, that's not something we can really comment on.

Could you just remind us as to what the tightest outstanding covenants are?

No.

Could you give us any sense of where your restrictive payment basket stands today?

No.

Thanks.

Thank you. (Operator Instructions) I show no further questions in the queue. Please continue.

Okay. Operator, are ready to conclude?

Yes, sir.

Thank you, Operator. That wraps up our fiscal 2009 year end 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 good-bye.

Thank you. Ladies and gentlemen, this concludes the Vail Resorts fiscal 2009 year end results conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3030 or 800-406-7325. Enter the access code 4154379. AT&T would like to thank you for your participation and you may now disconnect.