Rob Katz - Chairman, CEO Michael Barkin - EVP, CFO.

Shaun Kelley - Bank of America Felicia Hendrix - Barclays Ben Chaiken - Credit Suisse Scott Hamann - KeyBanc Capital Markets Joe Edelstein - Stephens Inc. Chris Agnew - MKM Partners.

Good day and welcome to the Vail Resorts Third Quarter Fiscal 2016 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rob Katz, Chief Executive Officer. Please go ahead, sir..

Thank you. Good morning, everyone. Welcome to our fiscal third quarter 2016 earnings conference call. Joining me on the call this morning 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 fillings and actual future results may vary materially.

Forward-looking statements in our press release issued this morning along with our remarks on this call are made as of today June 9, 2016 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 morning with the SEC and are also available on the Investor Relations section of our Web site at www.vailresorts.com.

So with that said, let's turn to our third quarter fiscal 2016 results. We are very pleased with our performance in the quarter and for the entirety of the 2015/2016 U.S. ski season.

Our results continued to demonstrate the strength of our season pass products, the momentum we have created by drawing destination guests to our resorts and the benefit from good conditions throughout the season in each of our western resort areas.

In particular, our first season operating the new Park City resort proved to be a success and results were in line with our ambitious expectations for what is now the largest ski resort in the U.S.

In addition, our Tahoe resort benefited from dramatically better conditions throughout the ski season and achieved record revenue levels in all key business lines. Our Colorado resort continued to deliver outstanding results with growth in visitation and revenue above our record prior year.

We did experience a modest decline in total international visitation compared to the prior year, however, we saw strong growth from Australia reflecting the benefit of our recent Perisher acquisition and introduction of a season pass which provides access to Perisher and our U.S. resort, called the Epic Australia Pass.

Our third quarter Mountain revenue increased 14.7% compared to the same period in the prior year, with lift revenue growing 17.4% driven by strong season pass revenue and an increase in ETP excluding season pass, of 8.2%.

Guest spending for the quarter was strong across the business with ski school revenue increasing 12.2% and dining revenue increasing 15.9% compared to the same period in the prior year. This season highlighted the importance and success of our increasingly sophisticated marketing efforts.

We continued to see strong growth in our season pass program, with season pass revenue increasing 18.9% year-to-date through the third fiscal quarter excluding Perisher compared to the prior year period and represented approximately 41% of our total lift revenue.

Our growth in season pass revenue was primarily driven by higher sales to our destination guests who increasingly appreciate our network of resort and a compelling value proposition our season pass products offer for their ski vacation while also benefiting from our improved ability to segment our guests and personalize our messages to them.

We are also driving our guest purchases through our own online distribution channels, providing our guests with the confidence that they are getting the best value and ensuring we maintain a strong relationship with them. This was particularly helpful in Park City as we build brand awareness and loyalty for a completely new experience at the resort.

At the same time, while we benefit from consistent price increases on lift tickets and season passes, we are offering guests a wide variety of products to access our mountains. This provides guests access to real savings for their vacations by purchasing in advance, purchasing multiple ski days or purchasing packages of products.

Vail Mountain is a great example of this strategy, where the average price per day across all adult visitors was approximately $86 excluding complimentary tickets. This is far lower than the single day peak price of $175 which is purchased by a relatively small share of our visitors.

Now, I'd like to turn the call over to Michael to talk further about our results..

Thanks, Rob and good morning, everyone. For the third quarter, resort net revenue was $645.7 million up 13.9% from the prior year period and resort reported EBITDA was $306.6 million an increase of 14.7% over the prior year period.

These increases were driven by strong visitation and robust guest spending on lift products as well as in our ancillary businesses across all of our western resorts.

In addition to on Mountain guest spending, we also drove strong performance at our Lodging properties, where we saw 7.2% increase in revenue per available room for the quarter compared to the prior year period. Our results reflect robust demand at our lodging properties across each of our geographies.

During the third fiscal quarter, we terminated the management agreement with respect to the Half Moon Resort in Jamaica resulting in a $3.5 million termination fee included in lodging revenue and received $4.5 million to repay the unamortized key money investment in the resort.

We generated approximately $600,000 of resort reported EBITDA from Half Moon in fiscal 2015 and we will be foregoing approximately $200,000 of expected resort reported EBITDA as a result of not managing the property for the remainder of fiscal 2016. Momentum continues in our resort real estate markets.

During the fiscal quarter we closed on two condominium units at Crystal Peak Lodge in Breckenridge and currently have two units at the Ritz Carlton Residences Vail under contract which we expect to close in our fourth fiscal quarter.

Given the strong performance to date this year, we expect that our fiscal 2016 resort reported EBITDA will finish the year between $448 million and $454 million, an increase of 7.3% to 8.7% relative to the mid point of our original guidance range for fiscal 2016 which we issued in September of 2015 and an increase of 28.2% to 29.9% compared to the prior year excluding the non-cash gain on the Park City litigation settlement in fiscal 2015.

We are also increasing our resort EBITDA margin guidance to 28.6% at the mid-point of our updated range which would be a 630 basis point increase in margin over two years. Our balance sheet remains strong and the business continues to generate robust cash flow.

We ended the quarter with $68.6 million of cash on hand and no borrowings under the revolver portion of our credit facility as we have fully paid down borrowings related to the Perisher acquisition. As of April 30, 2016, we had available borrowing capacity under the revolver component of our credit facility of $327.4 million.

Our net debt including the capitalized canyons obligation was 1.2x trailing 12 months total reported EBITDA. I'll now turn the call back to Rob to review our 2016/2017 season pass sales..

Thanks, Michael. We are thrilled with the results for our season pass sales to-date. Pass sales through May 31, 2016 for the upcoming 2016/2017 U.S. ski season increased approximately 29% in units and approximately 34% in sales dollars as compared to the prior year period through June 2, 2015.

This compares to the growth we reported from our spring 2015 sales of 12% in units and 20% in sales dollars which at the time were record results.

The season pass results of this spring represent our strongest absolute and percentage growth ever in our spring selling season and our strong indication of the compelling value of our season pass products, our successful targeted marketing efforts and the significant investment we make in our resorts.

Our spring pass sales included strong results from Northern California, likely due to the terrific conditions there this season especially as compared to last year. Additionally, we saw very good momentum in Colorado and continued high growth in our destination markets which combined represented over 70% of our total unit growth.

Importantly, percentage growth from the Chicago area was nearly double the growth from our other destination markets as guests in the area are looking forward to next season at the newly improved Wilmot Mountain as well as the opportunity to ski at our western resorts all on the same pass.

Our early season pass results demonstrate the success of our efforts to accelerate the timing of when our guests purchased their season passes.

As always it is important to note that we do not believe that the very strong growth rates from our early sales will be maintained through the remainder of the selling season as our early growth includes passholders who purchased 2015/2016 U.S. ski season passes last fall.

However, we believe that our success in moving our guest purchase decision earlier in the year creates more opportunity for stable and consistent growth and overall results. Season passes sold for the 2016/2017 U.S. ski season through May 31, 2016 represent approximately half of the total season passes sold for the 2015/2016 U.S. ski season.

We are excited to begin our first full season at Perisher which gets under way this weekend and are pleased with the sale of Epic Australia Passes to-date which are on sale through June 13, 2016. As we have said in the past, we will continue to be aggressive in returning capital to our shareholders while continuing to reinvest in our business.

We are in a strong financial position, are generating robust operating cash flow and are confident in the future growth of the business. I am pleased to announce that our Board of Directors has declared a quarterly cash dividend on Vail Resorts common stock.

The quarterly dividend will be $0.81 per share of common stock and will be payable on July 13, 2016 to shareholders of record on June 28, 2016. Additionally, we purchased 108,036 shares of our common stock at a weighted average price of $127.59 per share requiring total funding of $13.8 million during the quarter. While the 2015/2016 U.S.

ski season has drawn to a close, we are looking forward to the investments we are working on this summer and fall to improve the guest experience for next season.

As we've noted previously, the key projects for the upcoming season are the addition of a new 500 seat restaurant at the top of Peak 7 at Breckenridge, the upgrade of the sun up chair lift or Chair 17 at Vail Mountain from a fixed grip triple to a high speed four passenger chair lift and the beginning of a two year process to revamp our primary desktop and mobile Web sites to a single responsive platform which will be integrated with our database and personalized marketing technology.

We will also be further upgrading our customer database, our call center technology and remodeling the Pines lodge at Beaver Creek. Additionally, we will be investing approximately $13 million at Wilmot Mountain to transform and improve the guest experience for Chicago area skiers at our newest urban ski area.

Finally, we are very excited for the official launch of Epic Discovery at both Vail and Heavenly later this month.

Our summer guests will have the opportunity to enjoy a great line up of activities for the whole family including ropes courses, zip line, summer tubing and alpine coasters along with incredible opportunities for experiential learning in a high alpine environment. I want to thank all of our employees for making the 2015/2016 U.S.

ski season a great one. The dedication of our employees to deliver an experience of a lifetime to each of our guests' day in and day out is a cornerstone of our success. At this time, we are happy to answer questions. Operator, we are now ready for questions..

Thank you. [Operator Instructions] Our first question comes from Shaun Kelley with Bank of America..

Hey, good morning guys. I don't usually say this on these calls, but great results, so congratulations on that. Rob, maybe you could talk if I caught it correctly, in that last section in the prepared remarks you mentioned that I think you said you have now 50% of last year's season passes already sold.

So, number one, I want to check if I understood that correctly.

And then, could you give us last year, how much did the early season part of the pass selling initiative make up of the overall so basically what was that percentage I think last year?.

Sure. Thanks, Shaun. And thanks for the nice feedback. So yes, you did hear that right if you took our spring pass sales in units this year and compare them to the total last year that number is 50%. Last year, it would be --.

Last year was - the similar metric last year was 40% of the prior year..

Got it..

So we've gone from 40% to 50% now, obviously, our hope candidly is that 50% comes down, for the totality of 2016/2017 because obviously we're hoping to and expecting to drive growth in the program. But, I think it highlights the kind of magnitude shift that we were able to drive this year..

And was there any material change or anything in the incentives up front? I mean, you talked about some of the momentum you had in Northern California, so a lot of it may just be people had such a good experience that they decided to reup quickly, but anything in the incentives or anything else that might have pushed behavior differently this year or do you think it's pretty apples-to-apples with last year?.

I think it's pretty apples-to-apples and I would say -- I think as we highlighted there's no doubt that Northern California last spring was a challenging time and our Northern California was down a bit last spring and so obviously we're comping against that with good conditions this year.

But our Colorado results were very, very strong and our destination results outside of Chicago were very, very strong and on both of those we are not comping anything. There was really no change and what I would say is I think that is absolutely two things.

One the momentum, I think of the product itself and we are continuing to drive brand awareness of the Epic brand itself across the industry and we are continuing to improve the way we target and segment and communicate to our guests and that gets more sophisticated, more -- we're just more intelligent every year as we learn more from the previous year and I think you're seeing the combination of all that drive significant growth..

That's great. Last one for me would be, you called out sort of a slightly different statistic than I think you've talked about in the past when you referred to sort of the average price per day at Vail of $86 across your adult visits.

So I'm curious have you thought at all about how that compares to sort of maybe other experiences that you think obviously you already have a high income guest.

But, how do you quantify that in a broader -- kind of in a broader sense of like what other experiences might compare to Vail for a day of entertainment and where do you think you can get that number two over time..

I would say -- I think we certainly compare the experience at Vail to a whole wide variety of other location-based entertainment experiences.

We obviously believe that we are providing at our mountains a very high-end experience, one candidly that's very complex to deliver in terms of versus what you see elsewhere in terms of our ability to have to manage through weather, grooming, safety, all of the various businesses that we run.

And so we feel very good about that and I would say it's also important to remember that we are - that price includes people who are buying in advance, people who are buying multiple days, people who are buying packages, people who are buying obviously a full season of skiing.

So we highlighted that price because we do get questions I think both from our shareholders and from others about while they see this headline price and they wonder kind of what that price means in terms of the peak lead window price and we felt like it was good to highlight.

We've been talking for a number of years about how the sophistication of our pricing and segmentation is all about offering a wide variety of discounts pass and options for people and we look at each one of those channels separately. And in terms of where we can drive that to, I think our goal is just really consistent.

And I think we want to continue to drive obviously our yields up and but also connect that to continually investing in the resorts. So we feel the more benefit and more value, more improvements we can drive for our guests that allows us to consistently and thoughtfully take up the price..

Great. Thanks for taking the questions and again congrats..

Thanks..

Next we'll hear from Felicia Hendrix with Barclays..

Hi. Thanks a lot. I'll add to Shaun's congratulations and also say that I'm already praying for a strong snow season for you next year. To the extent that I can control that, I will through my best. So I just wanted to talk for a second about how you're thinking about your organic growth over the near term.

Rob you mentioned some of the CapEx plans that you have at few of the resorts.

But, just in addition to that what some of the other drivers for same-store sales growth in general would be? And then also with Park City now firmly integrated into your operations, I was just wondering if you could talk for a moment about the growth opportunities you face there that could benefit you next ski season?.

Yes. So, I'll start with Park City maybe. I think we said on a prior call or maybe at our conference that we do feel like Park City has more growth potential than a number of our other resorts because we think we're just getting going in terms of educating people about the Park City experience.

We have a lot of room to continue to dial in the experience there and improve it. And now I think there's no doubt that this year was a very significant year. It was very transformative.

But, I think as we go forward that will still be in our minds a resort that continues to drive kind of above industry average and above even our own company average growth.

I think across our business though we do -- our ability to leverage the segmentation sophisticated marketing approach, the new capital that we invest in all of our resorts, all the new tools that we spend money on to create these things we believe give us an advantage of helping to build better repeat visitation to our resorts.

And for those guests that are sampling between different resorts pick up an extra visit from them or an extra day, continue to move people to season passes which also again builds loyalty and builds extra days of skiing based on the research that we have.

I'd say that as we said for the last year or two, the success we've been able to drive on season pass we're very confident we can do the same thing with kind of that daily lift ticket buyer, and but we're earlier, we've spent more of our time on season pass.

So when I look across, I think we see terrific opportunity to continue to drive organic growth.

And I would say there's no doubt that as we remind people always we are part of the vacation travel industry and in particular part of the upper income portion of that and our growth certainly is dependent on those trends but we feel we can outperform in that segment..

Great. Thanks.

And then, can you just give us a little more granular detail on the international visitation, which markets did you actually see growth from and which declined and how you're expecting that to trend going forward?.

Sure. So, overall we saw international visitation down modestly and that was made up of a pretty strong growth from Australia, definitely our strongest major international market. We saw strong double-digit growth from there in a season that I think was very difficult, the Australian inbound visitation into the U.S.

because of currency I think was quite difficult. So we are very, very pleased with that. Mexico, I think saw a very, very modest decline, again, something we somewhat expected because of the particular guests we have there and less currency sensitivity.

We saw more significant declines from Brazil given both the currency and the economic challenges that they're having and we saw declines from Canada and the U.K. which we absolutely attribute to currency.

And so in total we actually this is the one area of our business that I think saw more headwinds but on the other hand we very much feel we outperformed given everything that we were faced with..

Thanks. That's helpful. And then, Michael, your leverage is getting closer to one-time.

Can you just -- can we see more meaningful increases in the dividend or buyback in the near future? Can you just talk about how you're thinking about leveraging capital allocation?.

Sure. So I think our strategy on capital allocation remains the same as what we've been talking about for the last several quarters. And obviously, last quarter we had a pretty meaningful increase in the dividend of about 30%. And so we feel like that was a pretty significant move last quarter.

We've also over the last several quarters been buying back stock and continued to do that this quarter.

And I think our approach continues to be the same which is to be opportunistic yet methodical on the buyback and continue to look for ways to return capital to shareholders at the same time maintaining the flexibility we want on the balance sheet as strategic opportunities come up.

So I would note that this is the seasonal low in our leverage just given the seasonality of the business so that does depress it somewhat this quarter..

Okay very helpful. Thanks so much..

Thanks..

Our next question comes from Ben Chaiken with Credit Suisse..

Hi guys.

With regards to the season pass, when you think back on prior years, how much were you booked in this early season time frame for the full year? So in other words, what is this year-to-date period typically represent for the full year if you can kind of quantify that?.

So, yes. It's been in the high 30s to 40% if you go back historically. So this year obviously, I think what I'd say is we obviously, we believe we're going to increase that percentage, we don't think it will not be 50% when we finish the year because we're comparing, because we do expect growth.

So obviously, we're comparing spring pass sales for 2016/2017 to the entirety of the 2015/2016 season. But yes, as I said earlier, I think that we have certainly and our growth rates indicated we certainly seen a bit of a quantum shift in terms of our ability to really drive even earlier purchase decisions..

That's helpful. Thank you.

And I know you called it California and Tahoe was up in season pass when you look historically where do we stand in this market, is there still room to rebuild here?.

Absolutely. We think there is. Certainly, Northern California markets more mature than many of our destination markets like New York City, but less mature than Colorado.

And so, obviously, the last couple of years has been -- have this weather dislocation, but I think what we're very pleased with most importantly is that even after a couple of challenging winters there, we saw robust engagement from our guests in Northern California both showing up at the resort, buying season passes and I think it just highlights the resiliency, the loyalty the commitment and enthusiasm that people have..

Got it. That's helpful. And then, lastly, can you talk about how you market the Epic Pass for Wilmot? It sounds like you're having a lot of success here.

Is it targeting the existing customers', existing skiers or just give you a channel now to reach the entire Chicago market and how do you do that?.

So, yes, I would say -- to be candid, Wilmot did not have a guest database so they had a very small season pass program, but didn't have really a customer database the way we would think about it.

So our marketing efforts right now are targeted towards our own skiers in the Chicago market that come out to our resorts who are not on the season pass yet and converting them to a season pass.

I think what the next step is once we go through one season at Wilmot just like we did at Afton and Brighton, as people come to the resort to buy lift tickets we pick up their data and then are able to create a relationship with them.

So then we start to communicate to people who are in that market who do go to the resort who might not have gone to one of our resorts yet out west. So in this time period most of our focus is on folks who are already in the Vail Resorts database and then next year we'll have augmented that with the entire Wilmot guest as well..

Got it. Thanks a lot..

And moving on, we'll hear from Scott Hamann with KeyBanc Capital Markets..

Yes. Thanks. Good morning.

So just following up on the international question, what visibility do you have at this point into the next season in terms of the booking, season passes, some of these international markets and kind of how are you thinking about what the impact could be for the next year?.

International pass sales are totally solid, they are fine. We aren't seeing anything concerning there. But, I would say we're still very early to really understand the visitation dynamics for next year. I do think if you look backwards a year, the currency had really been -- the U.S.

dollar had been strengthening quite a bit in the whole run up to that season and it has appears to have stabilized a bit if not come down a little bit from where those ratios kind of bottomed out or peaked out or however you want to look at it. But, I do think that some of this will depend upon how the currencies move over the next couple of months.

I think we may have a better sense of it in September certainly than in December but at this point, we aren't seeing too many concerns.

I think if anything, we think certainly we have some upside potential because we'll be comping more challenging results from last year, but obviously there is external factors that will play into exactly how much upside we can actually generate..

Right.

And these are obviously very high value guests given length of stay and spending and are there any levers that you're looking to pull to attract them to come in through incentives or anything like that?.

Absolutely. I think we are always aggressive on that. I think that said, we treat our guests and our markets the same and it's a little bit of my earlier comment, we want people to feel like they're getting the best value, best price no matter where they are. So, we don't -- the markets are so different, we don't react market-by-market.

We try and hold a very thoughtful and stable kind of pricing approach. But I would say there's no doubt that if you look at the season pass, that we created to give access to both Australians and to give access to Australians to both Perisher and the U.S., I mean that was obviously a very aggressive move and had tremendous success.

And we think that was only our first year doing it. We think we can get much better at that for next year. So without any other changes we do feel like we'll see continued growth and strength from Australia somewhat regardless of currency and assuming no wild swings..

The other thing on Australia is that we didn't close that deal until June. We announced it in March of last year. Their season runs June to September essentially June to October and so this is really the first full season of preseason pass sales in its entirety relative to where we were last year..

Okay. Got it.

And then, just the last one, could you remind me on the Crystal lodge project what's going on there?.

I think we've now sold out, that was a project that was completed a long time ago and had three units a couple units that we had kind of taken off the market while we were selling One Ski Hill Place and once we got down to a position with One Ski Hill Place we only had a couple units left there and we put those couple units from Crystal peak back on the market and those are now sold, so--.

We have no more inventory at Crystal Peak..

We have no more inventory at Crystal Peak..

Okay. Great. Thanks a lot..

The next we'll hear from Joe Edelstein with Stephens Inc..

Hi, good morning, everyone..

Good morning..

So we just saw powder by El Dora had and also looking to set up a new partner for themselves in Japan.

I was hoping you could just talk to the competitive landscape around M&A or even developing additional partnerships and then similar to that can you just comment on whether or not valuations are moving higher as you've seen it across the landscape? Thank you..

Sure. I think our approach to M&A is pretty consistent. We like to ensure that we understand the different opportunities across North America and across the world and make sure we keep a dialogue with many, many people. Ultimately we have a pretty defined set of things that we're interested in.

And our view is that, we don't just want to acquire to acquire, we want to acquire resorts certainly where we think we can improve them, but much more importantly than that where we think that resort is very impactful had to our overall network.

And so we have a lot of analysis and data that goes into which resort we think can really help our business the most. And then, we're fairly patient and disciplined then about making sure that we get the right opportunity at the right price, the right terms all of that.

And I think the industry is made up of a wide array of owners and sometimes it takes time to work through those situations to get them to a good spot and we're fairly diligent on that.

And the industry itself has a lot of passion and enthusiasm and it's very often there's both financial discussions and sometimes emotional challenges to coming to the right outcome on a particular asset. So I would say that we tend not to kind of go up and down in our acquisition approach.

We stay pretty consistent year in and year out looking for those best opportunities and we're confident the next couple years we'll be able to identify some situations that we feel I can continue to create growth the same way we've done in the last couple of years..

Appreciate that, Rob and certainly there's a lot of excitement around Wilmot Mountain and what you're seeing out of the Chicago market already.

When you're doing these smaller urban market deals, are these still generating on a standalone basis the returns that would be at or above kind of the broader targeted hurdle rates that you'd look for on say a western resort?.

Absolutely, I think on a percentage basis, absolutely. So we do feel that the urban opportunities that we look at has to make sense on a standalone basis. And then, on top of that, we feel we get the network benefit to all of our other resorts and that's something that we look at it in every acquisition.

And I think in all of our resorts, we have met those, those targets obviously subject to any weather variations in any one season, but apart from that, so far we look backwards and feel that we've kind of dialed in this approach that we have and sometimes it can be frustrating when it takes us a little longer to get the right opportunity, but we think it's better to take that time and then make sure we get it right..

I appreciate those comments and if I could just squeeze in one more I was hoping to ask on Epic Discovery as you built out the summer activities looking to really open that up this summer.

Are you starting to get more visibility in terms of how the lodging bookings and just even just a better sense in kind of how that summer business could ramp this year and even potential in terms of where you might be with developing past products specific to just summer activities themselves, so any comments there would be helpful. Thank you..

Well, I think maybe the good news/bad news on that question is, the good news is that our summer activities are not predicated upon bringing at this point yet new people into Vail.

We're focused on taking the people at Breckenridge and Heavenly and we're focused on taking the people who are already in the resort and giving them something more to do, something that makes their experience at Vail better obviously creates long-term better loyalty and better guest return.

But certainly in these early first couple of years, we're really targeting that existing fairly significant visitor base in these resorts. So that's good news. The bad news is, yes, we aren't booking. We aren't really tracking lodging bookings in summer to be an indicator yet for our Epic Discovery activities.

So it's more -- this is something that will have a sense of really more later in July and in August in terms of how things are going. But we feel very, very positive in terms of overall summer visitation certainly, I think there's a lot of indications that summer travel particularly car travel is going to be robust.

We're seeing a very strong visitation in the national park. I would imagine that will be true certainly for us in Grant Teton; I think that will be true in Rocky Mountain national park in Colorado as well. I have no doubt that will be true in Lake Tahoe.

So, I think certainly summer visitation and summer tourism travel I think is in a good spot which bodes well for us..

That sounds, great. And good luck..

Thank you..

Next question comes from Chris Agnew with MKM Partners..

Thanks very much. Good morning. I was wondering to what extent if at all are you impacted by recent minimum wage legislation and also with tighter labor markets, are you anticipating above average labor cost pressure in 2017. Anything in particular you'd call out? Thanks..

Great. So, yes, so we certainly, we are impacted to the extent that any state or certainly Federal Government raises minimum wage. But as you may know, last year we instituted our own companywide minimum wage of $10 and committed to increase that with increases in CPI.

So I think there are certain areas where the minimum wage in California could affect a couple, some of our folks slightly differently than this. But we feel like by making that decision last year that has really set us up quite well to ensure that we are in compliance and candidly out of head of most companies on that area.

I would say we think that given the strength of the economy and the strength of the economy and markets in our particular resorts, we think that retaining and recruiting talent and people in general all across our entire all of our properties is one of our most important priorities.

I think labor costs this past year absolutely grew and were higher than if you looked at the previous year because we took on a number of initiatives in so many different area of our company whether it was wage, changes or bonuses to help incent and ensure that we feel like we are competitively paying all of our employees.

And we absolutely assume that will continue for next year and that's factored into our business plans and something that is really top of mind for us to make sure that we can continue to deliver the experience that we need to for our guests..

Great. Thank you. And one more question. You talked about the growth story of Park City, which is clear to see visiting Investor Day. But part of the story is development at the base at Park City and canyons.

Any update in progress and thoughts with respect to those developments?.

So at the canyons, the development land at the canyons is owned by a third party. We work closely with them and they have a lot of activity going on.

We obviously are not privy to everything but from what we can see there's certainly a fair amount of momentum and we're hopeful that over the next couple of years we see some new development, new projects both actually of all different kinds of product types.

And so I think that was one of the things that attracted us to canyons in the first place was that there was a significant amount of undeveloped real estate that had already been zoned for density and we think over the next number of years assuming the market stays solid, we think that's a big opportunity for Park City in total on that canyons area.

The base of Park City we are actively in discussions with the community there about what is the right type of development for that site, what makes sense, and we're continuing those discussions.

That would be a project where we would certainly bring in a third party developer, it's not something we would do ourselves, but we're trying to make sure obviously it is the base of the resort and so we are very keenly focused on exactly what the design is and how that project would ultimately benefit the community.

There are a number of areas we would like to see benefits come we want to make sure the project helps with transit with affordable housing, with parking all of those things and so we're working hard to make sure whatever we come up with and consultation with the city does all of those..

Great. Thank you..

Great..

We have no further questions in the queue at this time. I'd like to turn the conference back over to our host, Rob Katz for any additional or closing remarks..

Thank you, operator. This concludes our fiscal third quarter 2016 earnings call. Thanks to everyone who joined us on the conference call today. Please feel free to contact Michael or myself directly should you have any further questions. Thank you for your time this morning and goodbye..

That does conclude today's conference. We thank you all for your participation..