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Vail Resorts Inc (MTN) Q3 2019 Earnings Call Transcript

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Vail Resorts Inc (NYSE: MTN)
Q3 2019 Earnings Call
Jun 6, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen. And welcome to today's Vail Resorts Third Quarter Fiscal 2019 Earnings Call. Just as a quick reminder, today's program is being recorded.

And at this time, I'd like to turn the floor over to Mr. Rob Katz.

Robert A. Katz -- Chairman and Chief Executive Officer

Thank you. Good afternoon, everyone. Welcome to our third quarter fiscal 2019 earnings conference call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer.

Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings and actual future results may vary materially. Forward-looking statements in our press release issued this afternoon along with our remarks on this call are made as of today, June 6, 2019, and we undertake no duty to update them as actual events unfold.

Today's remarks also include certain non-GAAP financial measures, reconciliations of these measures are provided in the tables included with our press release, which along with our quarterly report on Form 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.

So with that said, let's turn to our third quarter fiscal 2019 results. We are pleased with our overall results for the quarter and for the full 2018-2019 North American ski season, with strong growth in visitation and spending compared to the prior year, including a strong finish to the season with good conditions across our Western US destination resorts.

After the challenging early season period for destination visitation, our results for the remainder of the season were largely in line with our original expectation. Our results throughout the 2018-2019 North American ski season highlight the growth and stability, resulting from our season pass, the benefit of our geographic diversification, the investments we make in our resorts and the success of our sophisticated data driven marketing efforts. Our Colorado, Utah and Tahoe resorts experienced strong local and destination visitation throughout the third fiscal quarter, supported by favorable conditions across the Western US, which also allowed for an extension of the ski season for select resorts in Colorado and Tahoe.

The company continued experiencing relative weakness in international visitation compared to the prior year, particularly at Whistler Blackcomb. Total lift revenue increased 16.4%, driven by a 14.3% growth in skier visitation primarily from Triple Peaks and Stevens Pass. Total effective ticket price, or ETP increased 1.8% in the third quarter compared to the prior year, primarily due to price increases in both our lift ticket and season pass products, partially offset by higher skier visitation by season pass holders, lower ETP from the acquired Triple Peaks and Stevens Pass Resort and the new Military Epic Pass. Excluding season pass holders, ETP increased 5.5% compared to the prior year. The growth in visitation and spending compared to the prior year, along with the addition of Triple Peaks and Stevens Pass, drove a 9.4% increase in ski school revenue, an 11.7% increase in dining revenue and a 9.5% increase in retail/rental revenue compared to the prior year.

Now, I'd like to turn the call over to Michael to further discuss our financial results and our updated outlook.

Michael Z. Barkin -- Executive Vice President and Chief Financial Officer

Thanks, Rob, and good afternoon, everyone. As Rob mentioned, we are pleased with our third quarter performance with strong growth in visitation and spending compared to the prior year. Resort net revenue was $957.7 million, an increase of 13.8% compared to the prior year. Resort reported EBITDA was $480.7 million, an increase of 14.5% compared to the prior year. Mountain revenue was $877.9 million, up 13.6% from the prior year and Mountain reported EBITDA was $468.1 million for the third quarter, up 14.4% from the prior year.

Our lodging results for the third fiscal quarter were positive with revenue excluding payroll cost reimbursements increasing 16.8% compared to the prior year, primarily due to the incremental operations of Triple Peaks. The average daily rate decreased compared to the prior year, primarily as a result of the inclusion of the Triple Peaks resorts as well as incremental managed Tahoe lodging properties that we did not manage in the prior year, all of which generate a lower average daily rate as compared to our broader lodging segment.

Net income attributable to Vail Resorts, Inc. was $292.1 million or $7.12 per diluted share for the third quarter of fiscal 2019, compared to net income of $256.3 million or $6.17 per diluted share in the third fiscal quarter of the prior year.

Additionally, fiscal 2019 third quarter net income included the after-tax effect of acquisition and integration-related expenses of approximately $4.1 million and approximately $1 million -- $1 million of unfavorable currency translation, primarily related to operations at Whistler Blackcomb which the company calculated by applying current period foreign exchange rates to the prior periods. Our balance sheet remains strong and the business continues to generate robust cash flow. We ended the quarter with $59.6 million of cash on hand and our net debt was 1.8 times trailing 12 months total reported EBITDA. I'm also very pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts' common stock. The quarterly dividend will be $1.76 per share of common stock and will be payable on July 11, 2019 to shareholders of record on June 26, 2019.

Given the strong finish to the season, our successful season extensions and our continued focus on cost discipline, we now expect resort reported EBITDA on a comparable basis with our prior guidance issued March 8, 2019, which excluded the expected resort reported EBITDA contribution from the Falls Creek and Hotham resorts to be between $700 million and $710 million. For fiscal 2019, Falls Creek and Hotham resorts are expected to contribute approximately $2 million of resort reported EBITDA, including a $3 million stamp duty payment and $1 million of integration expenses. Including the impact of Falls Creek and Hotham, the company expects net income for fiscal 2019 to be between $277 million and $297 million and resort reported EBITDA to be between $702 million and $712 million, which includes an estimated $16 million of acquisition, stamp duty and integration-related expenses and $4 million of unfavorable foreign exchange, as a result of the US dollar strengthening relative to the time of our initial guidance issued in September 2018.

I'll now turn the call back over to Rob.

Robert A. Katz -- Chairman and Chief Executive Officer

Thanks, Michael. We are very pleased with the results of our season pass sales to date, which showed strong growth over the record past sales results we saw last spring with particular strength over the Memorial Day deadline. Pass sales through May 28, 2019 for the upcoming 2019-2020 North American ski season increased approximately 9% in units and 13% in sales dollars as compared to the prior year period through May 29, 2018. Excluding sales of our Military Pass products in both period, including Stevens Pass and Triple Peaks pass sales in both periods, and adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and US dollar to the current period and the prior period for Whistler Blackcomb pass sales.

Military pass sales are off to a strong start but remain in our verification period and we will plan to provide further updates on sales trends as the selling season progresses. Our pass sales growth was primarily driven by strong results in our destination markets. In particular, we have very strong growth in our Northeast markets, which are benefiting from the first full year of pass sales with Stowe, Okemo and Mount Sunapee included with unlimited access on the Epic and Epic Local pass products.

Our broader destination markets continue to perform well as we expand the resorts available in our network, including the recent addition of Sun Valley and Rusutsu, and enhanced ability to reach destination guests with our data-driven marketing. Our local markets continue to show solid growth, driven by favorable results among our local guests in the Whistler Blackcomb region, with particular strength in Seattle with the first full pass sales season including access to Stevens Pass. We are also seeing strong results from our Northern California and Utah guests, partially offset by more modest sales growth in our Colorado local market.

As expected, removing access to Arapahoe Basin on our pass products lowered our renewal rate on the Summit value and Keystone Plus Pass products, but we expect any loss of revenue to be more than offset by the elimination of our partnership payments to Arapahoe Basin. We have seen good growth from our new Epic Day Pass, though it was not material to our overall pass sales dollar growth in the spring and we anticipate that sales of this new product will be primarily concentrated in the fall. It is important to note that as we drive more guests to purchase passes in the spring, we believe the full year pass sales growth dollar rate, excluding Military Pass sales, will be lower than our spring growth rate with stronger relative performance in late fall versus Labor Day due to the introduction of Epic Day Pass.

The 2019 Australia ski season kicked off early at Perisher, and we are very pleased with ongoing sales of the Epic Australia Pass, which end on June 18, 2019 and are up approximately 19% in units through June 2, 2019, as compared to the prior year period through June 3, 2018, representing another significant year of growth and over 65% growth in the past three years. This year, Epic Australia Pass sales have benefited from the addition of Rusutsu in Japan. Given the timing of the Falls Creek and Hotham transaction closing in April, we won't see the full benefit of the Falls Creek and Hotham acquisitions until next year, but we are pleased to report that we received the final requisite approval this week to include unlimited access at Hotham on the Epic Australia Pass for the current 2019 ski season in Australia. Our commitment to reinvesting in our resorts and the guest experience remains one of our highest priorities.

As previously announced, this summer and fall, we will be completing important strategic capital projects, including a significant investment in our snowmaking systems in Colorado, that we expect will transform the early season terrain experience at Vail, Keystone and Beaver Creek -- and Beaver Creek, sorry.

At Park City, we plan to transform the Tombstone Express area with a new permanent Tombstone barbecue restaurant and the new four-person over and out lift that will provide a quicker, more direct route for skiers and riders to access Canyon's village from this of the resort. In addition, we plan to invest in a full renovation of the Beaver Creek children ski school facilities and improvements to the Peak 8 base area Breckenridge with new ski school and child care facilities as well as an improved ticket and retail and rental experience.

We remain highly focused on investments that we believe will substantially improve the guest experience across our resorts, including a new mobile lift ticket express fulfillment technology that will eliminate the ticket window for guests who purchased their tickets in advance. We also expect to complete the final stage of our point of sale modernization project and are investing in technology to automate our data driven marketing efforts. We also plan to make significant one-time investment across the recently acquired resorts and Crested Butte, Okemo, Mount Sunapee and Stevens Pass, which will include replacing and upgrading the Daisy and Brooks lifts at Stevens Pass and the Teocalli Lift at Crested Butte as well as on-mountain restaurant upgrades at Okemo. As we transition to summer operations at our North American resorts, I would like to take a moment to thank all of our employees for their passion and tireless dedication to delivering experiences of a lifetime to our guests during the 2018-2019 North American ski season.

At this time, Michael and I would be happy to answer your questions. Operator, we are now ready for questions.

Questions and Answers:

Operator

Thank you very much, sir. (Operator Instructions) And first from Barclays, we have Felicia Hendrix.

Felicia Hendrix -- Barclays Capital -- Analyst

Hi, good afternoon, thank you for your time. So Rob, overall, your season pass sales were better than I think most people were expecting and also, the spread between units and sales increased as well. And so we're all well versed in your data driven strategy, but I think given the continued concerns about icon and the competition there. I was wondering if you could just dig into what you think was driving that strength? And then also just on the cadence for the rest of the year, you did spell it out in the release and you just repeated it in the prepared remarks, but just wondering, if you could kind of dig into that a bit more as well, just sounds like sales could slow on a relative basis in the next quarter as the day pass sales really kick in, but then perhaps you could see an acceleration at the end of the selling season as last minute folks come in. So I was just wondering if that was an appropriate way to think about it?

Robert A. Katz -- Chairman and Chief Executive Officer

Sure. Yeah, I would say, we -- yeah, we're really pleased with what we saw so far in the selling season. I think our destination markets performed very, very well, obviously, we highlighted particular strength in the Northeast. I think having that first full year and a strong spring opportunity to really kind of connect to those guest in the Northeast with a different resort portfolio obviously having more data, more sophisticated approach as to how we're marketing people, all of that I think is -- are benefiting, the kind of engagement and kind of support we're seeing from our guests across the board. So we feel really good about that. I think we also wanted to acknowledge that, what we've seen over a couple of years is that we have driven a lot of our unit growth more in the spring necessarily than in the fall. And so even as we go into the fall selling season, we will typically see that growth rate come down based on some of the trends that we're seeing and expect. And then as between the two selling seasons in the fall, we do see that the Epic Day Pass sales will absolutely provide a boost in the late fall period. Now obviously, it's a new product for us. So of course, we have less precision on exactly what that impact will be, but we're expecting to see an acceleration in the fall, but in that kind of Labor Day time period will probably -- yeah, be our lowest growth point and then kind of picked up before you see the December numbers that we published at the end of the season.

Felicia Hendrix -- Barclays Capital -- Analyst

Okay, that's helpful. Thank you. And then just in Colorado, you used the word modest to describe the season pass sales growth there, it was that mostly the A Basin effect or was there something else?

Robert A. Katz -- Chairman and Chief Executive Officer

So I would say probably two things, one thing, last year, we saw pretty strong growth in Colorado, was one of our strongest years that we've seen. So I think we're lapping that growth at this year and so I think that probably is weighs down the growth rate a little bit and then yes, we as a portion of it that we saw kind of as expected, slightly lower renewal rates on two critical product -- pass product that have A Basin on it, there is no doubt A Basin is a terrific resort, but this is all kind of what we expected for this season, and more than made off by -- we expect from elimination of the partnership payment for them.

Felicia Hendrix -- Barclays Capital -- Analyst

Okay, great. Thanks. And just one final one on the international weakness at Whistler, is there any way to mitigate that?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, I think, I feel like we -- Whistler for has been on an incredible growth trajectory. If you look over the last four to five years, especially since after we acquired the resort both their visits to the resort, profit of revenue and profitability all of that has been incredibly strong and I think we saw kind of a moderation of that and which -- which I think in the end is important because we want to see -- we want to make sure that we manage the growth at Whistler appropriately so we protect the experience there. That said, we absolutely the international business at Whistler is critical to us. And so we have a number of plans that will be in place for next year to kind of bring back some of that business that may not have come this year and we've got a lot of different amenities to be able to do that obviously even just adding Hotham and Falls Creek in Australia will be huge in terms of connecting with that, Melbourne market and now providing them with a local pass option that will also provide Whistler access to them.

And so we think that's a terrific opportunity for us to try and build that and the number of strategies also to build the UK market, the Germany market both for Whistler by the way , but also across our US resorts. Unfortunately, it's been a little bit of a downward trend on international, obviously more than made up for by domestic business both in the US and Canada, but it's a critical part of the business. And so we absolutely intend to see that rebound next year.

Felicia Hendrix -- Barclays Capital -- Analyst

Great, very helpful. Thank you.

Robert A. Katz -- Chairman and Chief Executive Officer

Thanks.

Operator

And moving on, we have Shaun Kelley with Bank of America.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon, everyone. Maybe just to stick with season passes. To start, Rob, you did call out particular strength of a Memorial Day and kind of right into the deadline there, was there any change in promotion or a specific call to action you think drove that, or just any color you have on the consumer experience as to why that was that, I think the actual, the biggest -- the biggest buddy pass discount actually and decently earlier. So just kind of curious on why maybe you saw the behavior that you did?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, I think we did see real strength over that deadline, I think certainly a piece of it could be the extended seasons that we've had at a number of our resorts. I think we've got a very competitive price offering right now in terms of looking at the price of our products versus lot of our competitors. I think it's a pretty -- just on the value side a very compelling opportunity I think for guest right now who are interested in getting kind of the best value, best experience for next year and I think that's that really did show up through that Memorial Day deadline. It's actually not that far away, since we -- since that deadline ended. So we don't have all the detailed analysis of it, but it was -- we were very pleased to see such a strong and to the -- that spring selling season.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Great. And then the other question on pass that I had was just on, you mentioned Epic Day Pass in town particularly material for the dollar number, but I was actually curious on the unit side, was it impactful or large enough at all to move materially the kind of price spread that we did experience between units and dollars or that you did show here being roughly 4% between the 9% and 13%?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, what I would say is the -- obviously, we didn't put a comment out there about, its impact on units, but obviously its impact on units is going to be bigger than its impact on revenue, given that it's a lower dollar kind of cost item per unit. Overall, I would say, yeah, not -- didn't change the direction of any of the numbers that we put out there. That said, saw -- I think within the product itself pretty strong growth. But even if you look last year in the spring, the Epic four-day and Epic seven-day are prime -- were historically a fall product. And so as we saw great growth, but that's not going to be necessarily material to our overall results for the season because we're just starting at a small pace.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Right. And then just Q2 small ones as we sort of think about the cadence moving into the fall. So wanted to just -- I wanted to just ask specifically obviously in and out I think $16 million total of integration expenses between all of the different moving pieces. Just as we start thinking about the fall in the '19-'20 season for sort of our bridges, should all of those integration expenses be largely coming out as we get to sort of -- or we had a clean slate, or is there anything that's expected to continue as we think about the coming season, given that subject to change if acquisitions were to occur?

Michael Z. Barkin -- Executive Vice President and Chief Financial Officer

Yeah, I think certainly, certainly this year was a big year with Triple Peaks, Stevens Pass, and the integration is going on there. Then of course, the announcement of Hotham and Falls Creek and the associated acquisition expenses there. We did call out that one of the big pieces that goes with Hotham and Falls Creek is $3 million of stamp duty that clearly is tied to the acquisition actually getting closed. So those pieces would go away in the absence of -- in the absence of any deals. There will be integration expenses associated with Hotham and Falls Creek, given that we just closed those deals and they are going into their season. We've not yet size that, but certainly will, when we provide additional guidance for next year.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Okay, great. And then just sort of one other one, just sort of loop all this together as we're looking ahead. So obviously looking back on it, pretty much everything experienced since that early part of the season has been very much in line with expectation. As we look ahead, you're coming off of a pretty fantastic fall season overall, it had it's lumps, but it usually was probably because of too much snow. So as we think about that, specifically that early season period for next year. Just any kind of thought or view on it? Would that be a group -- would that be a customer segment or something that you think will possibly bounce back? Or is this an area where, just given the behavior that we saw, we maybe sort of should expect to that this is a little bit of a new pattern or behavior to kind of move forward. I know it's little early to be talking about guidance, but I'm just sort of thinking about that specific pattern behavior that, that was obviously different for this season?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, I think -- I think, certainly are -- going into this early season our assumption was that we would see more of a rebound. I think there's an opportunity for us to see more of a rebound next year, I think, as people maybe their confidence in the early part of the season is stronger given the conditions from this year, given the investment we're making in snowmaking on a number of our resorts. But that said, I think it's -- it is certainly too early to make any predictions about that and I think, given our experience we have this year, I think we're going to be cautious before predicting that we're going to see a rebound to where the early season might have been a few years ago.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Operator

And next question comes from Brett Andress with KeyBanc Capital Markets.

Brett Andress -- KeyBanc Capital Markets -- Analyst

Hey, good afternoon. So following up on the past questions. The full year is expected to slow from the current 13%. But how are you thinking about the magnitude of that slowdown. Are you expecting it to people more modest, because presumably you have the Epic Day Pass tailwinds at the end of the season? Or I guess is the amount of pull forward similar to last year, right, where we started at 19% and I think slowed to plus 10%. So just any additional color on how you're thinking about the magnitude of that?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, I think, we're not providing guidance beyond the commentary that's in the release. I think -- so tough for me to comment on that. I think we felt like we wanted to provide some directional color and then some directional color between the two upcoming deadlines and the two earnings releases that we'll put out there, but I think at this point, we're not prepared to provide more precision around that.

Brett Andress -- KeyBanc Capital Markets -- Analyst

Fair enough. And then a question on the Epic Day Pass. I know it's early and those sales come later, but so far, what are you seeing among the customers who had a four or a seven-day pass last year, are they opting for higher frequency, lower frequency options. Now they have a choice?

Robert A. Katz -- Chairman and Chief Executive Officer

I think, I guess, what I would say is that we're seeing, I'd say good strength in terms of new people coming into that product, which is terrific and it is a product that historically has been for new passholders, it's a great kind of entry point for them into our pass portfolio and we're seeing some of those trends this spring, and we're certainly seeing I think good engagement, actually across the lineup strength I think in higher frequency products, which is not surprising for the spring and we'll probably see right strength and lower frequency products as we get later into the fall. We're seeing real interest in some of the restricted product options which again not surprising to us, and that provides a lower price point, but also is a great opportunity for us in terms of helping to build the non-peak parts of the season. So right now, I would say that a lot of our results are very much in line with -- with what we would have expected and what we would have hoped, and of course, it's pretty early. So we have a long part of the selling season yet to go and obviously, the most important part of the selling season in terms of that product.

Brett Andress -- KeyBanc Capital Markets -- Analyst

Understood. And the last one I have, so last selling season you had softness in Northern California, in Utah you called that out its strong today. So I'm just curious what's driving that. Are you doing anything different in those markets this year, any different marketing strategy or are those markets just stronger in general?

Robert A. Katz -- Chairman and Chief Executive Officer

Hard to say, obviously, Northern California had a very strong winter, had a very strong spring. I'm sure that that's helping. I think the competitive dynamic. Again, as I mentioned, we feel like we're in a terrific competitive position in terms of providing that value and the best experience and I think that will ultimately help. And I just think in the end, there is -- we have a long track record of just continuing to broaden the reach of our past program. And I would expect certainly for us to be able to continue that as more and more people understand the benefit that the pass provide.

Brett Andress -- KeyBanc Capital Markets -- Analyst

Thank you.

Operator

Next question will come from Chris Woronka with Deutsche Bank.

Chris Woronka -- Deutsche Bank -- Analyst

Hey, guys. Good afternoon.

Robert A. Katz -- Chairman and Chief Executive Officer

Hi.

Chris Woronka -- Deutsche Bank -- Analyst

I want to ask... Hi. Wanted to ask about what you're seeing from some of the more recent acquisitions, the Triple Peaks and Stevens Pass in terms of, as you kind of scrub early season results from them. Are they apt to buy the premium passes in the same way that you might have expected when you underwrote them?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah. I think again, we're quite pleased with what we're seeing there in terms of the expectations that we had for the benefit that the resorts would provide and the new access. I think there's always a combination of factors, though it's both right us getting better and better and how we target people, having more data and getting more skilled in our communication approach to be able to bring people into the program, and of course it's, yeah, having additional resort access. We also certainly have access to whatever data those resorts had in terms of their customer list. So obviously, bringing that into our our database as well. So it's really all three components and yeah, again, right now -- yeah, I feel really good about what we're seeing in terms of trends there.

Chris Woronka -- Deutsche Bank -- Analyst

Okay. And then just on the Military Pass is now that you have a full ski season to -- of data to look at. Is the total spend or I guess, I should say, the ancillary spend about as you expected or is it higher or lower?

Robert A. Katz -- Chairman and Chief Executive Officer

I would say, I think we've seen good engagement. I'd say two things. One, obviously the spend from that guest as the passholder, what if you're comparing either, but particularly destination is lower and that's completely aligned with our expectations. We've seen pretty good frequency from that guest. And so I think we've been -- I think, we feel really good that -- we're seeing that guest really engaged with our resort and so that is getting us right that ancillary spend even though on a per visit basis it's lower than some of our other passholder groups, it's still really additive right to our bottom line and especially, because such a huge percentage of those passholders are -- were new passholders and certainly not folks that we had in our database before. So we really view that as a -- a great opportunity for us to make the strong connection and provide access to such an important group, right, in all of these countries, in terms of folks who have served their country, but at the same time, also a real incremental opportunity from the business side.

Chris Woronka -- Deutsche Bank -- Analyst

Great. And then just one last one for me. And that's, you had this -- you've had the urban strategy for what now seven or eight years I think, maybe more and as you kind of sit back and you've done a bunch of -- or several acquisitions since the initial ones, the results you're seeing from those in the network effect. Does it make you want to do more of those to the extent that they're available or how do you look -- how do you look at acquisitions right now?

Robert A. Katz -- Chairman and Chief Executive Officer

We -- I think that's been -- I think we shared at our Investor Conference some information on, some of that benefits that we've seen from those acquisitions and they have driven strong engagement in those markets on the pass side in terms of driving more visitation to our Western destination resort and so we think it's a strategy that is absolutely played out for us and we feel good about. And in terms of future acquisitions, obviously, it will be based on the opportunity and all the other terms and factors that go into when you have the right fit and the right moment, but we are still absolutely aggressive on looking for additional resorts that we think really add to our network and make the experience that we provide our guests better and we're going to be disciplined about that. And if that stars don't align, we're obviously going to be patient.

Chris Woronka -- Deutsche Bank -- Analyst

Okay, very good. Thanks, Rob.

Operator

Next from Berenberg, we have Brennan Matthews.

Brennan Matthews -- Berenberg -- Analyst

Hi, thank you for taking my question. I wanted to ask a little bit about the Hakuba Valley partnership. I know this is the first season you guys had them, but any interesting initial learnings there? I know Japan has been a market you've been kind of looking at for some time and just maybe if you -- did you see a lot of Epic Passholders visit there, just anything you kind of took away from your first season with them being a partner?

Michael Z. Barkin -- Executive Vice President and Chief Financial Officer

Yeah, I think, very pleased with the Hakuba partnership in it's first year, I think it's been a great working relationship with the resorts over there and I think importantly, like we talked about when we established that partnership, a big piece of that was the level of engagement that we felt like we could have accomplish with our guest in Australia and the folks who were considering the Epic Australia Pass and the benefit of being able to have access both in North America and then it one of the premier resort groups in Japan. Yeah, we thought it would add a significant value to that pass from their perspective and as we noted in terms of the multiyear growth of the Epic Australia Pass, we certainly see the partnership with Hakuba being a driver of that. And then certainly adding Rusutsu this year. We think will be another benefit for our Australian passholders in particular. So yeah, we feel very good about that partnership and establishing the Rusutsu partnership for the coming year.

Brennan Matthews -- Berenberg -- Analyst

That's all from me. Thank you so much.

Operator

All right. Next we will hear from Patrick Scholes, who is with SunTrust.

Patrick Scholes -- SunTrust Robinson Humphrey, Inc. -- Analyst

Hi, good evening. Thank you. I'm wondering -- a couple of questions. I'm wondering if you could talk a little bit about trends in sales for your Epic Pass product as it relates to international guests and specifically, how is that been trending for South American and Latin American guest versus North American?

Robert A. Katz -- Chairman and Chief Executive Officer

Well, I -- we are not providing specific commentary on that. But what I would say, it's right obviously very different right. So our North American market right by far, the dominant component of our program, outside of -- obviously Australia is another large component of it and our pass penetration in Mexico, other parts of Latin America is much smaller. Mexico would be certainly the biggest market within that. I'd say, we feel good about the results we're seeing there. I don't know that Latin America or the results in Mexico drive materiality in terms of any kind of the trends that we see in the overall program, but we feel good about the engagement down there, particularly in the Mexican market.

Patrick Scholes -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay, thank you. And the reason I asked that is my holiday December Christmas trips a lot of Spanish being spoken and certainly that's a peak season. So I was just curious on that I guess. Two more questions. The season extension in Colorado, was that material on earnings at all?

Michael Z. Barkin -- Executive Vice President and Chief Financial Officer

Yeah, I think the season extension was definitely a success for us. I think certainly oriented more to our local guests who could make that near-end decision and we're seeing the conditions, extended into May, certainly it was a positive relative to earnings, but, yeah, clearly also not a substantive part of the overall season.

Patrick Scholes -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay. And then one last question was sort of a high-level question, how do you folks thought about doing a co-branded credit card with say AMEX, certainly you have a fairly sizable critical mass with resorts and we've certainly seen those types of relationship, be very profitable for hotel companies. Any thoughts on that nature, on that regard?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah, actually, it is something that we are looking into. I think some of the more successful co-branded programs that are out there, typically the kind of customer size or transaction sizes is more significant I would say, one of the challenges, obviously we have is that a lot of our transactions are occurring in the winter and then we have much more limited transactions in the summer and then even less transactions a couple of other months of the year. So we have to kind of create the right program with the right partner that kind of reflects that. And -- but we do think, to your point, we have seen other people be successful with that and we think that, that is an opportunity for us, especially, as we're reaching more scale in terms of the size of the company and our overall kind of customer reach.

Patrick Scholes -- SunTrust Robinson Humphrey, Inc. -- Analyst

Okay, thank you very much. That does it for me.

Operator

Moving on, we'll go to David Katz with Jefferies.

David Brian Katz -- Jefferies LLC -- Analyst

Hi. Afternoon, everyone. Thanks for including me. I wanted to ask about the sort of M&A environment and one of the observations that I've made in the past is that given the scale you have and just the magnitude of skier visits in Europe, are there any specific gating factors or any issues related to the European market that you -- that would prevent you from participating there? And then I have one other quick question.

Robert A. Katz -- Chairman and Chief Executive Officer

No, I don't -- I mean, I'm not aware of any structural reason why our company couldn't be in Europe, and in fact, I think we've been quite open about our interest in participating in that market for quite some time. The business in Europe is quite different than the business in the US, and so certainly if we were to do anything in Europe, it would have to be -- we would be taking different approaches to the approach that we're taking in North America, that would be true if we were to operate in Japan as well, again, the business there is somewhat different. I think the European market is both the biggest opportunity that is out there in terms of the size and the number of skier visits, the breadth of the number of resorts throughout all the different countries in Europe. And I think we feel like, we need to find the right opportunity where we believe that we can really add value to whatever it is that we do there. And whatever opportunity we have, adds value to our existing network, in our existing business approach where we're respectful of the local community that's there and whatever partners or other kind of components need to come together to really make it a kind of successful effort for us. And so as much as we have over the years talked about how impactful it could be, we've also just like any of our acquisition opportunities, we're also going to be disciplined and patient to find just the right connection of all the different factors to make sure that it's a success.

David Brian Katz -- Jefferies LLC -- Analyst

If I can just follow that up, as a longtime follower, the amount of value the company has added to what it's acquired I think speaks for itself. When you look at the globe and the opportunities out there to acquire more stuff, are you finding that the bigger issue today is identifying targets, or just pricing, or the environment overall. How would you sort of rank order those issues as you look at acquisition targets?

Robert A. Katz -- Chairman and Chief Executive Officer

I would say that, what makes maybe this industry is slightly different than some of the other parts of travel is that, there's not a lot of owners of ski resorts that are active sellers. So if you look at the hotel market, there is obviously a pretty robust market of people buying and selling hotels, were in ski resorts, you can go a long time without seeing a transaction in a particular market. And I think outside of our company and then obviously some of the recent activity by Altera. But you look back over the last 10 years and we've had a pretty methodical approach both here in Canada and Australia. But we have -- I think one of the hallmarks of our successes that we've been very thoughtful each time and we don't tend to just run off and do a lot because we want to make sure that anything that we bring into Vail Resorts is something that will be forever a part of the Vail Resorts family and so that's kind of the approach we take. And I think on the side of the companies themselves with the other resorts, yeah, there is an amazing passion and connection that every owner or group of owners feels for their resorts and so it usually takes quite a bit of time to get to the right opportunity in the right way with the right people and we're comfortable waiting for that. It's more -- those are usually our hurdles rather than necessarily on price.

David Brian Katz -- Jefferies LLC -- Analyst

Got it. And if I can just clarify one detail because I know it's been discussed is when we look at the pass sales so far and I know that we don't entirely look at it this way at all, if we took out just the sales that -- that we may attribute to new mountains, will the pass sales still have been up versus last year?

Robert A. Katz -- Chairman and Chief Executive Officer

Yeah. So what I would say is, right, we don't really have we -- we talk about kind of markets in terms of where people live, but we're not really talking about. We don't -- I mean when somebody in New York buys one of our products that gives access to Stowe or to Okemo. We don't know that, that was the reason why they bought it. Certainly in terms of -- I mean just to clarify this, the pre-existing pass sales at any of our acquired resorts are included in the prior year in addition to this year. So we're not -- when you look at our -- at the numbers we're giving for pass sales that is a kind of more of a pro forma, so to speak, in terms of we're not just adding new pass sales that were pre-existing in those resorts. Does that help.

David Brian Katz -- Jefferies LLC -- Analyst

Absolutely. Thanks for your answers. Appreciate it.

Operator

And ladies and gentlemen, at this time, there is no further questions from the audience. I'll turn the floor back to management for any additional or closing remarks.

Robert A. Katz -- Chairman and Chief Executive Officer

Thank you, operator. This concludes our fiscal third quarter 2019 earnings call. Thanks to everyone who joined us on the conference call today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this afternoon and goodbye.

Operator

Once again, ladies and gentlemen, that concludes our call for today. Thanks for joining us. You may now disconnect.

Duration: 45 minutes

Call participants:

Robert A. Katz -- Chairman and Chief Executive Officer

Michael Z. Barkin -- Executive Vice President and Chief Financial Officer

Felicia Hendrix -- Barclays Capital -- Analyst

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Brett Andress -- KeyBanc Capital Markets -- Analyst

Chris Woronka -- Deutsche Bank -- Analyst

Brennan Matthews -- Berenberg -- Analyst

Patrick Scholes -- SunTrust Robinson Humphrey, Inc. -- Analyst

David Brian Katz -- Jefferies LLC -- Analyst

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