Skier visits grow

Debt detracts from ski company's record revenues

Thanks in part to 9 percent growth in skier days at Steamboat Ski Area during the first part of the season, American Skiing Co. lost a lot less money than it did during the same time period last year.

The parent of the Steamboat Ski and Resort Corp. released its earnings report for the second fiscal quarter this week and was able to claim record resort revenues in spite of a slight decline in skier visits among its eight resorts.

Despite increasing revenues by $6.5 million for the 13 weeks ending Jan 29, American Skiing had a net operating loss of $9.6 million in its resort division for those 13 weeks. However, that number compares favorably with the $21.4 million operating loss for the 14 weeks ending Jan. 30, 2005.

American Skiing's chief executive said his company's ability to sell multi-resort season passes in New England helped to offset the damage done by poor weather there this winter. And Steamboat's abundant snow added a significant boost.

"I am extremely pleased with our record second-quarter revenues," President and CEO B.J. Fair said. "Boosted by a fantastic season at Steamboat and The Canyons (in Utah), and a strong backlog of season pass sales, we remain committed to growing American Skiing Co., even in periods of weather-related difficulties such as those in the East this year."

The company's gross revenues for the 13 weeks leading up to Jan. 29 were $109.9 million compared with $103.4 million in the corresponding 14 weeks in 2005.

In addition to Steamboat and The Canyons, ASC owns six ski resorts in New England, the largest being Killington, Vt.

ASC spokesman Dave Hirasawa said this week that after a strong holiday season, the New England resorts were plagued by rainy weather in January. It didn't wipe out the skiing because the resorts have robust snowmaking capability, Hirasawa said. But conditions were less than ideal.

ASC's total skier visits during the period were up 2.4 percent in spite of a 3 percent decline year over year at the Eastern resorts.

The drop in the East might have been more precipitous if ASC had not pursued its preseason sales of multi-resort prices. Hirasawa said those discounted sales cut both ways -- they can act as a limit on the upside of revenues during times of abundant snow, and

In a winter like New England has suffered, they can serve as insurance against bad weather.

"The season passes are definitely a big part of it," Hirasawa said. "It's effectively a hedge against the weather."

Skiing conditions at the ski areas weren't as bad as images of the brown New England countryside might have suggested, Hirasawa said.

In terms of manmade snow, "Killington and Sunday River (Maine) produce a superior product," Hirasawa said. "Bad weather still hurts, but in a season like this, skiers know our product is superior to that of the competition."

The discounted pass sales also offer a plausible explanation for how ASC managed to post record resort earnings in spite of the downturn in skier visits in the East -- customers paid in advance for the passes but were less inclined to use them.

Steamboat, on the other hand, has enjoyed near-record snow, with season totals passing 400 inches this week.

Steamboat was up 9 percent in skier days during the first 13 weeks of the season, and The Canyons was up 18 percent. However, the incremental growth in Steamboat is more significant because it typically does several times as many skier days as the Utah resort.

February failed to provide improved skiing conditions in the East, and according to documents on file with the Securities and Exchange Commission, ASC took a hit in the four weeks ending Feb. 26.

"Our revenues are approximately $400,000 behind revenues for the same period in fiscal 2005," company officials wrote. "Our eastern resorts' revenues fell $2 million with total skier visitation down by 9 percent from the same period in the prior year. Our western resorts revenues increased by $1.7 million with total skier visitation up by 3.3 percent."

New England enjoyed a short blast of winter during Presidents Day weekend, yielding 2.4 percent growth over that short holiday. At the same time, The Canyons and Steamboat together posted 10.6 percent growth during Presidents' Day weekend.

"As of March 5, our hotel booking pace for the remainder of the ski season is approximately $2.5 million or 6.8 percent ahead of the pace of our bookings at the same time last year," ASC reported.

Hirasawa said ASC's quarterly losses could partly be attributed to heavy debt and the resulting interest payments taken on during a different period in the company's history. Those losses, which must be reported, obscure the company's current performance, he said.

ASC's ledger for the second fiscal quarter attributed losses of $21.36 million to interest expense.

"There are many, many companies that operate at a loss," that aren't contemplating going out of business, he said.

-- To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com

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