They only make a small profit from skiing. Most of the money brought in from their lift tickets, food/alcohol sales, ski school, parking fees, and ski shops go back into wages for the stoners, electricity for the lifts, water for the snow guns and land use permits from the forest service.
Yes they rent their mountains from a government agency.
Although both sectors look bad it's not tourism numbers MTN shareholders should look at as much as how commercial/residential real estate values are holding up in mountain resort communities. That's VR's biggest challenge... That and pine beetles killing 98% of the pine trees in Colorado.
I am long MTN, but I dont like that they have 162M in cash and 556M in debt and they need 217M to operate talking year basis. This numbers cant be good for any company. With all the credit crunch, mtn needs cash. Anybody agree? and why?
I agree with your concern, completely! Am surprised they have not paid down their debt. If this year is as bad as they suspect, look for a sale of one or more of their properties, or, take the company private and sell off a piece of it to a private equity firm (Intrawest senario). This is a VERY cyclical process of going private, then public, then private again. In my opinion, shareholder value is seldom the first thing on executives minds at MTN.
We have PLENTY of healthy pine trees in Colorado. The pine beetle is only attacking the lodge pole pine, and while we have alot of lodge pole pine, we have alot of other pines (spruce, fir, etc.)too! Its a great place to live!
As for real estate up here ... check out the figures. Prices continue to go up (although slowly). After all, how many mountain communities are there in the nation? location, location, location
I should have taken my own advice and shorted VR stock when I posted at 45 or so. It is still going down further I believe. The word is that bookings are down 25-30 for the coming ski season. Real estate sale are pretty much dead in the Vail Valley, except for the very high end. The Ritz and Westin sales are extremely slow and who knows how much the Wall Street mess will effect things. On top of that, if I understand it correctly, VR may buy back up to three million of it's shares and pretty much distribute that to the top brass as bonuses. If I am wrong on that, please let me know. Vail Resorts says the EverVail project is on schedule, but I believe there is some doubt. If they do not release the Lionshead structure to the town of Vail, they may not get the needed permits. If they do release the structure, another company is going to put in two new hotels and retail space in Lionshead, which is a much better location than EverVail. Seems they are in a no win situation. I know Vail is not the only income producer for VR, but it is the flagship!