in Vail
Vail Reports Earnings and What it Says About Park City
On Monday, Vail Resorts reported a loss of $70 million in the last quarter of its 2015 Fiscal year. The loss was more than stock analysts expected and the stock dropped 4% in Monday trading. However, its revenues surged 20% to over $162 million during the quarter. In looking historically at the financials, a 4th quarter loss isn’t out of the ordinary, and in fact it was less than the 2014 loss. Vail still says they are on target to meet analyst estimates for the fiscal 2016 year, with earnings in excess of $400 million.
On a conference call, Vail CEO Robert Katz answered a number of questions about the company’s financials. As always it provides a little insight into our local Park City market. Here are a few select questions and answers:
Q: Consumer softening in spending seems to be occurring in lodging. Is Vail seeing this?
A: They are not seeing any softening in the consumer. They had a strong summer. Other parts of the industry struggle with supply side (i.e. too many competitors adding too many hotels), but they say not much supply has been added to mountain resorts in the places they operate.
Q: What sort of mix of local versus destination guests does Vail expect?
A: Last year Utah and Colorado was strong for Vail destination visitors.International customers represent 12%-15% of total destination visitors to resorts. Vail expects much of upcoming Utah market growth based on destination visitors.
Q: What sort of season pass penetration is Vail seeing in Utah?
A: Vail does not provide market specific information. That said, Utah season pass penetration is much less than Colorado, due to maturity of Colorado market. Vail sees potential opportunity to sell more passes in Utah but that potential is not as great as the potential to increase passes in other parts of the world.
Q: What does Vail real estate look like moving forward?
A: Still have a handful of units to sell. Inventory is starting to move. Development land parcels are starting to be sold. Great thing about real estate is that as developers develop land around resorts that enables the resort to add restaurants, retail space, and ticketing options near these new developments.
Q: Will Vail expand the Epic Discovery program to other areas (Epic Discovery is a summer focused program where they use their own land and when applicable rent forest service land in the summer to provide a summer experience for guests. It is not currently in Utah.)?
A: In Utah they are focused on combining the resorts. Once that is completed they will look at other opportunities, that could include Epic Discovery, to bolster revenues.
It’s always interesting to listen the question and answer portion of investor conference calls. While, it is very rah-rah, you do learn little tidbits of information. Here are some of the more interesting things I found:
- I was interested to see that they haven’t seen consumer softening. That bodes well for the winter season.
- There was lots of talk of currency rates and the impact of a strong dollar on international visitors to the U.S. Since the dollar is strong, it costs people more to come to the US and therefore they tend to vacation at home instead of come here. Vail acknowledged that this was going to be a challenge. It could also mean that Park City’s international visitors could be down a bit.
- The talk of plans to expand summer offerings are interesting. I’d guess it will be a couple of years until they feel they have integrated PCMR and Canyons… but then I would expect a huge push for summer here from Vail (not that summer isn’t already trending up in Park city).
- Their talk of supply in mountain resorts is interesting. Effectively they said that new resorts aren’t being built, so that isn’t putting price pressure on Vail. Yet, I wonder what happens i our market when (if) that Deer Valley Jordanelle expansion starts.
- Every time I hear Vail’s CEO I’m impressed. It’s like the US Army… they don’t seem to do anything without a plan. It made me think of our transportation issues. I wonder if they consider transportation problems an issue in Park City, and more importantly to them, a threat to their earnings . If so, what is their plan?
If you’d like to listen to the investor conference call, it is available here.
in Schools
Is the School District Educating or Bullying? People Likely See It Differently.
This weekend’s Park Record had a guest editorial calling out resident Bill Humbert for remarks made to the Park City Council. According to a previous Park Record article, during Public Comment Mr Humbert said he overheard a conversation between a city council person and a school board member regarding the upcoming $56 million bond. Mr Humbert said he overheard, “You just have to tell the voters that either you pass the bond or we will simply levy taxes on your property and it will cost you more.”
The editorial said Mr Humbert “took a conversation so out of context…that it is appalling.” It went on to say that the grandstanding that has gone on by many (not all) of those against this bond is so disingenuous that we must call it out. It ends by “shaming” the Park Record.
I don’t know what conversations were had by who at a parade. I don’t know if the accusations Mr Humbert were making were valid. I don’t know if the guest editorialist, Kathy Meyer, is the same Kathryn Meyer that received money from the school district in 2014. And frankly I don’t care about any of that.
Think back to 6th grade. Did you ever have a big kid in your class that would “kick your *ss” if you didn’t give him your lunch money? From personal experience, I know that he wasn’t lying. Just because it was true, it doesn’t mean it wasn’t bullying. Daren would beat the crap out of you if he had to, but he’d rather just take your money.
So, it’s accurate to say that members (and former members) of the school district have stated that their is no debate about whether the school district is moving forward with their $65 million plans. They have also said that if voters don’t vote for the bond, they will just raise taxes, which will cost a voter about 5 times more per year.
Do I believe them? Yes. I don’t think they are lying or bluffing.
In my mind the hard part is understanding intent, as this is a little different than school bullying. Is the mention of raising taxes purely educational in nature — something like “you should really save 10% for retirement because it’s more fiscally sound”? Or is it said with the intent of influencing the populace through a threat of raising taxes to a point that some people cannot afford?
The definition of bullying is to “use superior strength or influence to intimidate (someone), typically to force him or her to do what one wants.”
So, if those statements are said in a purely benevolent way in an attempt to educate the populace (imagine sitting down to a wedding dinner and being told you can either have the steak or fish … or in this case a bond or tax) then it’s hard to level a bullying claim.
However, if there is even an inkling of intimidation in any of these statements or tone by the district, it’s hard to come to any other conclusion than this is a case of bullying.
Is the school district just making sure we know we have a choice between bond and tax, or is it a no-so-veiled attempt to influence the voter through coercion?
I guess that slight distinction appears to be in the eye of the beholder.
What Exactly Is the Role of Mountain Accord?
I received an email over the weekend, touting Mountain Accord’s involvement in funding a trails project at the mouth of Little Cottonwood Canyon. When I first read the email, I thought, “Well, at least some good is coming out of the Mountain Accord.” Yet a question kept nagging at me. Is this what we expect the Mountain Accord to be doing?
In this case they provided $20,000 to the effort to clean up the Grit Mill area at the base of Little Cottonwood Canyon. It’s an area frequented by climbers, has a graffiti problem and lots of unofficial “trails” that lead to erosion. The recipient of the funding, the Salt Lake Climbers Alliance says, “years of unplanned usage has been a “spiderwebbed” collection of access trails that cause erosion and degradation of the water shed.” The article references Mountain Accord Director Laynee Jones and says “the project is emblematic of the sensible planning Accord signers want to see throughout the Central Wasatch.”
That all sounds good.
Yet, Summit County is putting about $50,000 into the Mountain Accord this year. So about two-fifths of that amount is going toward this trail project. More importantly, is building trails how we envisioned a portion of our money being used? In my mind, I thought it was looking at grand solutions like massive land swaps, protecting forestry land, changing the face of transportation, and providing studies. In fact, I, incorrectly I guess, thought we were still in the research phase of making plans. I didn’t realize projects were being funded.
Perhaps, this is a good use of Mountain Accord funds. As stated, maybe it is emblematic of the type of project and organization the Mountain Accord members (i.e. you and me) want to support. Maybe the idea of Mountain Accord is to focus on both the macro and micro level over the next few years, and while working on the grand solution, they’ll be using their funding on local projects.
If it is, and projects like these are where Mountain Accord is going to be spending their money, I hope Rena Jordan at Basin Rec and Charlie Sturgis at Mountain Trails are trying to get on that gravy train. I’m sure the Park City area has many trails that could benefit from this funding. If Mountain Accord truly is a regional solution, and is now into funding trail rehab, it should also support trail efforts on this side of the Wasatch.
The Super Market Scam That You Should Be Aware of
I was in Walmart on Sunday morning and saw something that may happen often but I’d never been aware of it. There was a man standing by the strawberries opening a number of tubs. I thought may be he was just inspecting them, trying to find the best batch. Then I thought maybe he was a worker… but no it turned out that he was just a thief shopper.
After he had left, I had to go see what was going on. As I walked over, it became evident. He had taken a whole bunch of strawberries from other packs and smashed them into his container. Since strawberries are sold by the pack and not by weight) this guy appears to have gotten about 2 for 1.
Some people may give the “Robin Hood Excuse” of “It’s OK to steal because I am stealing from Walmart and they are rich.” The problem is that other people, who may not notice the missing strawberries, are going to get shorted too. So, in this case, Walmart got ripped off and at least 5 other people probably did too.
In hindsight, I should have found a Walmart employee and told him/her about it. Although I’ve tried that before at other stores and just received the “shrugged” shoulders of indifference.
So, the best I can offer is a warning to take a look at everything you buy and make sure you are getting what you are paying for. It’s a problem I never knew existed.
If you happen to work at Walmart and care, the alleged thief will be easy to spot on video. He had long white hair and was standing by the fruit case (where all the berries are) at about 9:20 AM on Sunday morning. I’d guess this wasn’t the first time (or the last) that he’s pulled that “trick.”
in Election
Mountain Accord As a Political Issue
Remember the Mountain Accord? It was that crazy plan that was going to build a tunnel from Brighton to PCMR in order to enable light rail up Little Cottonwood Canyon to Park City. Over 400 people showed up at Park City High to provide their opinion on Mountain Accord and the tunnel. Most of it was anti-Accord. Yet, that was months ago, and with the tunnel being put on “hold”, many people have cleared the Accord from their minds.
Yet the Mountain Accord is about many other things. Back country skiing. The watershed. Transportation. Corruption. Land management.
It seems the people in Salt Lake City may not have forgotten about Mountain Accord. A friend of the Park Rag emailed a letter received from a Jackie Biskupski, a candidate that is running for Salt Lake City Mayor. It included the following, “While I appreciate the effort that has gone into the Mountain Accord and the time spent trying to solve the problem of slow degradation of our canyons, this document needs someone who will look at it with a critical eye.” If you delve into her campaign you will find a scathing assessment of the Mountain Accord. She cites:
- Canyon expansion benefits a small number of Utah residents at a very high cost to residents of Salt Lake City.
- We all know the saying, “if you build it, they will come.” We should be building to meet the needs, not creating pressure for future growth by high cost expansion.
- We face great uncertainty about the impact of climate change on our canyons. We need to invest our resources in strategies that allow us to respond in a flexible manner when conditions change.
- One of the most pressing issues confronting Utah over the next few decades is water supply. Mountain Accord promises new culinary water to Alta for expansion and increased water for snowmaking purposes, a demand that is likely to increase with the expected impacts of climate change. Any promise of water rights should be nonbinding to allow for reevaluation, and contingent upon future water needs.
While those people in Salt Lake City have a large number of considerations to take into account when voting for their next Mayor, it makes me think about our local Park City elections. In a recent article, the Park Record said, “There does not seem to be an overriding issue this election season like some years in the past.” Yet, is there anything bigger to us than the Mountain Accord and the-still-possible tunnel through to PCMR? Probably not.
The question is whether any Park City City Council Candidate will bring this up as an issue this Fall. Incumbent Andy Beerman is running for a second term, sits on the Mountain Accord, and has been an ardent supporter of the Mountain Accord. Mountain Accord seems like the perfect topic to differentiate one’s candidacy.
It will be interesting to see if most candidates play small ball or whether they decide to go big with something like Mountain Accord. I understand the draw of talking about something like “fixing transportation” but the concept is so amorphous. Attacking an incumbent based on his support of Mountain Accord and the potential negative impacts not only to local citizens but on local businesses (which hire citizens) seems so much more concrete.
It should be interesting to watch over the next few months.
h/t to the friend who sent the Jackie Biskupki email
in Park City
You Don’t See This Every Day …
A reader emailed this picture of the General Lee UDOT cruising the streets of the Snyderville Basin this morning. I suppose you have to admire this driver’s creativity, and as a fan of the Dukes of Hazzard, I have to give the obligatory golf clap. Yet, slapping a confederate flag on the back of a state of Utah vehicle, given recent events, probably isn’t the smartest thing (or most racially sensitive thing) you could do.
Park City Businesses Who Take Credit Cards Face Upcoming Liability Shift
Many of us are getting geared up for the winter season. If you are a local merchant, you probably are even making more preparations. However, as you are getting ready, don’t forget about the looming change that Visa, MasterCard, and American Express are dropping on your counter starting October 1. Beginning October 1, merchants who do not use chip card readers for credit card transactions will generally be held liable for fraudulent transactions.
Traditionally, in the U.S., most credit cards were simply swiped through a magnetic card reader. However, the credit card industry found that it was too easy for criminals to make fake cards with stolen credit card numbers on them. Thieves would somehow find credit card numbers and then make up fake physical credit cards and use them at merchants. In the past, the credit card company would be responsible for any fraudulent charges. As of October 1, that liability will now be shifted to any merchant not using a chip card reader.
How do you know if you have a chip card reader currently? They are often built into a traditional credit card terminal at the bottom of the machine or is a separate little box where a credit card can be inserted. However, unless you started your business in the last year, it is likely you’ll need to upgrade to new equipment. If you are the smallest of business and use a company like Square to process credit cards through your iPad or iPhone they have you covered as well. Square has a new box they offer that reads credit card chips. The company states that they will cover any fraudulent charges from the moment you order the device.
The good news is that if you are a consumer, this “liability shift” does not generally affect you. Your credit card liability continues to be limited, as it was before.
If you are a local merchant and haven’t looked into this yet, it may be a good time to speak with your merchant account provider and better understand what this change means for your business. Nationwide, it is estimated that 80% of small businesses haven’t yet shifted over to chip card readers and this change looms as a potentially big wake up call. Park City prides itself on its small businesses, up and down Main Street, throughout Kimball Junction, and around the Basin.
While it’s likely the big guys like Vail, Walmart, and Smiths are prepared, I’d hate for some of our much-loved, local businesses to get bitten by this.
in Schools
Park City School Board Skews the Numbers to Support Their Position
Quick quiz. How much bigger is 2% than 1.1%? It’s 81% bigger (thank you HP 12C calculator).
Why does 81% matter? Potentially it’s confirmation bias and reflects skewing of numbers by the Park City School Board to support their position.
I was reviewing slides from last night’s Park City School District Board meeting related to capital needs and the school board’s bond offering. Last night’s meeting was the first public hearing where the school district was officially explaining their arguments for why we needed to expand our schools. During the meeting slides were to be presented that justified the district’s decision to rebuild the Kearns Campus and put a bond offering on this November’s ballot.
The school district has stated that they need to have all day Kindergarten to improve the performance of Hispanic students (only 9% of 11th graders were proficient in english Studies in 2014). In order to have all day kindergarten, there needs to be enough space in our elementary schools to support the addition of all day kindergarteners. The school district has argued there isn’t space given the growth that is coming to our schools. In the slide below, they state that the student population is growing at about 2% per year.
What I have issue with is that the forecasted growth says “approximately 2% annually.” Yet, in a July 21, 2015 meeting school Business Administrator Todd Hauber stated that they had hired a demographer to look at enrollment growth at Park City Schools. They came in with 3 estimates. At the low end, students would decrease by 0.3%. The mid-line estimate was 1.1% growth. The high end was 2.3%.
In an unbiased world, the slide from the school board (presented above) would state that growth is expected to be 1.1% or if you were approximating you may just say 1%… but that doesn’t sound as good as the 2% presented above.
You may say, “what’s a measly 0.9% over the estimate. Parkrag, you are just being anti schools!” Yet, what if the Park Record reported that annual student growth was that same 0.9% difference, but this time less than the annual average (instead of over the annual average like the school board presented). Perhaps they had a bias against the bond initiative. They would report that Park City Schools are spending $66 million to prepare for 0.2% growth each year. Or to put it another way, we are spending $66 million to prepare for 8 new students each year.
In my opinion, the details matter. The school district paid for a growth study and received three numbers on student growth: -.3%, +1.1%, and +2.3%. It appears they chose to present information using the very top end of the range to influence voters.
I don’t have a problem with having an opinion (god knows I have more than a few) but please, as an official school body, don’t dramatically skew the numbers to support your position. It just calls into question all the other decisions that have been made.
in Economy
Danger Park City Main Street…Danger
Reuters is reporting that the 2015 holiday season could be the weakest since the recession started in 2009:
Dollars saved at the pump are being directed to personal savings or on non-retail activities, such as holidays, instead of discretionary items.
Higher income consumers are also expected to rein in spending after seeing their stock portfolios oscillate, due to the turmoil in the global stock markets following the devaluation of the Chinese yuan and the Federal Reserve’s decision to hold off raising interest rates.
The truth is that you never know. A healthy dose of El Nino snow could change everything, but as of right now, the default forecast doesn’t look good for the holidays.
in Schools
Coming to a Mailbox Near You …
Part of the requirements of any local bond offering is to provide language, in favor of the bond offering, that will be sent to voters. This year, Park City School District is placing a bond on the ballot for $56 million to renovate and rebuild schools. Therefore they had to submit language for the postcard. Here is that language, and the school district’s justification, for the bond offering:
Argument in Favor of a $56,000,000 Bond Election Proposition
Since 2006, the Park City School District has seen 13% enrollment growth, with growth accelerating the last few years. Five of seven schools have reached capacity. Trailside Elementary installed mobile trailer classrooms this year and Parley’s Park Elementary had a summer remodel to increase classroom count. As student population grows, the goal is to provide excellent and innovative education while maintaining fiscal responsibility.
As Park City and Summit County forecast further growth, a team of citizens and educators spent over a year studying school facilities, with public input. The team developed the following, prioritized list of projects totaling $66,306,336:
- PCHS Expansion including performing arts, career programming, and gymnasium remodel – $27,500,000
- New 5/6 School at EHMS Campus – $24,800,000
- McPolin Student Safety Improvements – $1,400,000
- Treasure Mountain Junior High Demolition – $606,336
- Athletic Facilities Improvements – $12,000,000
This list addresses essential needs, only, with over 80% of the cost relating to needed classroom space.
The high school expansion includes 16 classrooms, additional music, dance, and drama facilities, specialty rooms for biomedical, engineering, and technical programs, and gymnasium improvement. The original, unimproved 1977 gym doesn’t have enough space for PE classes as we grow. Almost all students take PE class.
The new 5/6 school will be built adjacent to the current Ecker Hill school, allowing for improved programming for all courses, conforming to state definitions of elementary/secondary programming, and reducing the number of student school transitions. The school will share fields, auditorium and kitchen with the current facility that will become the 7/8 school.
The changes to McPolin mitigate safety issues and increase future expansion opportunities. The current Treasure Mountain Junior High facility has reached end of useful life, requiring major system maintenance approaching the cost of a new, greener, better laid-out school.
Athletic facilities improvements will group fields, tennis courts, and ancillary structures (locker rooms, concessions, score/press box, equipment storage, multi-use indoor practice space) to support our student athletes.
Paying for construction costs over the proposed 20-year bond term is the least taxpayer impacting way to proceed. Bond financing also speeds project completion, which limits taxpayer exposure to construction cost inflation. The more expensive alternative would be for taxpayers to fund student population growth through a higher school capital tax levy.
Because the District has completely paid off its debt and has a $19 million capital reserve, it can borrow on historically favorable terms. A portion of the total project cost, $10 million, will be paid from the capital reserve; decreasing the amount borrowed and cost to taxpayers.
If district voters pass the proposed $56 million bond, estimates show that a $639,000 average primary residence would pay $10.27 per month and a business property or second home of the same value would pay $18.68 per month. By voting YES, school district taxpayers make a cost-effective investment in public education, supporting local students and families.
Parkrag
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