Robert Katz - Chief Executive Officer Michael Barkin - Chief Financial Officer.

Shaun Kelly - Bank of America Felicia Hendrix - Barclays Chris Woronka - Deutsche Bank Ryan Sundby - William Blair Brennan Matthews - Berenberg.

Good day. And welcome to the Vail Resorts First Quarter Fiscal 2019 Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to Rob Katz. Please go ahead, sir..

Thank you. Good morning, everyone. Welcome to our fiscal first quarter 2019 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 filings. 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, December 7th, 2018. 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 website at www.vailresorts.com. So, with that said, let's turn to our first quarter fiscal 2019 results.

Overall, we were pleased with our results in the first fiscal quarter. Perisher performed very well with outstanding conditions generating record results for the Australian winter season with strong visitation and revenue growth across the business.

Our consolidated results from Perisher were negatively impacted by the strong US dollar which created an approximate $2 million resort-reported EBITDA headwind from currency translation in the quarter on a constant currency basis as compared to the prior year's results.

Whistler Blackcomb summer business performed well with strong results from its world-class mountain biking operations and summer activities including the new Cloudraker Skybridge which was very popular with sightseers.

Our US Epic Discovery business continues to grow and generate strong financial returns on a capital we invested and performed in line with our expectations for the quarter. Our lodging business produced another strong first fiscal quarter with continued success from our properties at Grand Teton Lodge Company and at our Colorado and Utah resorts.

Turning now to our 2018/2019 North American pass sales for our resorts and early season indicators.

As we approach the end of our selling period, season pass sales for the North American ski season are up approximately 21% in units and approximately 13% in sales dollars through December 2nd, 2018 compared to the prior-year period ended December 3rd, 2017.

These results include all military pass sales and pass sales from Stevens Pass and Triple Peaks in both periods and are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.77 between the Canadian dollar and the US dollar to the current period and prior period for Whistler Blackcomb pass sales.

Growth in our total season pass sales dollars was lower than our unit growth given the inclusion of the new military Epic Pass which is available at a substantial discount to our Epic Pass. The average price increase on all non-military passes was approximately 3.3%.

Excluding sales of military passes to new purchasers who were not pass holders last year, season pass sales increased approximately 8% in units and 10% in sales dollars over the comparable period in the prior year. We are very pleased to see double-digit revenue growth in our season pass program after a very strong record performance last year.

For the year and excluding sales of military passes to new purchasers who were not pass holders last year, we achieved solid growth in our Colorado, Destination, and Whistler Blackcomb markets while experiencing declines in both the Northern California and Utah markets.

Excluding sales to the Northern California and Utah markets and sales to new military pass holders who were not pass holders last year, our season pass unit growth was up 11%. We were pleased to see very strong growth in our northeast market benefiting from the impact of the inclusion of Stowe, Okemo, and Mount Sunapee on our passes.

Overall, we achieved solid growth in new pass holders this year even excluding the significant number of new military pass holders. This growth in new pass holders is particularly notable following the record new pass holder growth we achieved in the prior two years.

We also saw solid growth in our renewing pass holders and a stable renewal rate outside of our Tahoe and Utah markets which saw a modest decline.

Excluding sales to new military pass holders, our revenue growth as compared to unit growth was slightly lower than in previous years as we continue to broaden the penetration of our pass program to products designed for lower frequency guests.

Our military pass program delivered nearly 100,000 new pass holders to our program, representing an incredible opportunity for our company to make our resorts more accessible to those who have served their countries in the armed forces as well as their families.

This significant expansion of our pass holder base creates a meaningful business opportunity for our company while building tremendous loyalty with these new guests, including military and Epic Australia passes, we expect our total season pass holders this year will exceed 925,000, representing an incredible group of highly loyal and passionate guests.

We were also very pleased to announce earlier this week a long-term pass partnership with Rusutsu Resort in Japan. Rusutsu is one of Japan's largest and most well-renowned resorts located in Hokkaido, the legendary destination for Japan's famous powder skiing.

Beginning with the 2019/2020 season, the Epic pass, Epic Local pass, and Epic Australia pass will offer five consecutive complimentary days with no blackout dates. This long-term partnership combined with our existing partnership with Hakuba Valley creates an unparalleled connection between the best resorts in Japan, Australia, and North America.

Overall, lodging bookings for the season ahead are trending in line with prior year bookings. Based on historical averages around half of the bookings for the winter season have been made by this time. Our early season results have been encouraging with strong conditions across our western US and north-eastern US resorts.

Our Colorado resorts have had a particularly strong start to the season with early snow and cold temperatures conducive to snowmaking which allowed each resort to open several days earlier than initially expected with significantly improved conditions relative to last year.

As of today, our Colorado resorts are experiencing the best early season conditions for open terrain since the 2010/2011 season. And Vail Mountain has over 5,000 acres or over 90% of the terrain open.

Our resorts in Tahoe and Utah have opened with typical conditions for this time of year while Whistler Blackcomb's early season has been more challenging with limited snowfall to date. Our northeast resorts have started strong with Stowe and Okemo opening earlier than in prior years.

Importantly, we were able to complete the core system integrations across our acquired resorts on their respective opening days to further enhance the guest experience in our first year of operating these resorts.

We are thrilled to welcome guests to all of our resorts for the 2018/2019 ski season as it kicks off with several transformational enhancements to the guest experience.

Our $42 million transformational investment at Whistler Blackcomb is nearly complete bringing a 43% increase capacity collectively across the new Blackcomb Gondola and Emerald and Catskinner chairs. At Park City, we have continued to enhance the family food and service experience for our guests.

In the canyons area of Park City, we created a world class beginner area with improved grading, snowmaking, and lift service. We also completed two significant dining experience enhancements with the expansion of Cloud Dine and the renovation of the Park City Mid-Mountain Lodge.

At Heavenly, we upgraded the Galaxy lift allowing us to reopen 400 acres of high quality, intermediate terrain this season. At Perisher, we recently began work on upgrading the Leichhardt chairlift, as well as surrounding snowmaking improvements for the 2019 Australian ski season.

Now, I would like to turn the call over to Michael to further discuss our financial results and our fiscal 2019 outlook..

Thanks, Rob. And good morning, everyone. As Rob mentioned, we are pleased with our first quarter performance. Resort net revenue was $219.9 million in the first fiscal quarter, a decrease of $0.3 million compared to the prior year.

Resort reported EBITDA was a loss of $72.5 million in the first fiscal quarter which compares to a resort reported EBITDA loss of $54.1 million compared to the prior year.

Fiscal 2019 first quarter resort reported EBITDA includes $6.6 million of acquisition and integration related expenses and an incremental loss of $2.6 million from off-season operations at the resorts acquired during the quarter, as well as approximately $2 million of headwind from currency translation related to operations at Perisher which the company calculated on a constant currency basis by applying current period foreign exchange rates to the prior period results.

Net loss attributable to Vail Resorts was $107.8 million for the first quarter of fiscal 2019 or a loss of $2.60 per diluted share as compared to a net loss of $28.4 million or a loss of $0.71 per diluted share for the same period in the prior year.

Net loss for the first quarter of fiscal 2019 includes the after tax effect of acquisition and integration related expenses of $4.9 million and an incremental loss of $3.6 million from off-season operations at the resorts acquired during the quarter, as well as approximately $1 million of headwind from currency translation related to operations at Perisher calculated on a constant currency basis as compared to the prior year's results.

Included in the first quarter of fiscal 2018 was a tax benefit of approximately $51.8 million or $1.29 earnings per diluted share related to employee exercises of equity awards primarily related to the CEO's exercise of expiring stock appreciation rights. Our balance sheet at quarter end remains very strong.

We ended the quarter with $141 million of cash on hand, $120 million of borrowings under the revolver portion of our senior credit facility, and total long-term debt including long-term debt due within one year of approximately $1.5 billion.

As of October 31st, 2018, we had available borrowing capacity of $206 million under the revolver component of our senior credit facility. In addition, we had $155.1 million available under the revolver component of our Whistler Blackcomb credit facility.

Our net debt was 2.3 times trailing 12 months total reported EBITDA which is higher than the prior quarter due primarily to the addition of $265.6 million of incremental term loan borrowings associated with the resort acquisitions during the quarter.

I am also very pleased to announce that our board of directors has declared a quarterly cash dividend on Vail Resorts' common stock of $1.47 per share, payable on January 10th, 2019 to shareholders of record on December 27th, 2018.

Additionally, the company repurchased approximately $50 million of stock during the quarter at an average price of $252.66. Now turning to our outlook for fiscal 2019.

Given our first quarter results and the indicators we are seeing for the upcoming season, we are reiterating our resort reported EBITDA guidance for fiscal 2019 that was included in our September earnings release. Based on the assumptions incorporated at that time including foreign currency exchange rates.

That said, the North American ski season has just begun with our primary earnings period still in front of us. I'll now turn the call back to Rob..

Thanks, Michael. We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. We will announce our complete capital plan for calendar year 2019 in March 2019. But we are pleased to announce our signature investments plan for the 2019-2020 ski season.

We're excited to announce a significant investment in our snowmaking systems in Colorado that will transform the early season terrain experience at Vail, Keystone, and Beaver Creek.

Investments in state of the art, energy efficient snowmaking technology combined with infrastructure upgrades and expansions all subject to US bar service approval are planned to help drive an earlier, more predictable opening date and help maintain high quality conditions throughout the season.

We are planning to upgrade and expand Vail Mountain's snowmaking system with expectations for the mountain to open at least one week earlier each year and with a much better terrain package which will enhance the consistency of the experience for Thanksgiving and the early season with more beginner and intermediate terrain available.

The proposed project would significantly expand the snowmaking capacity on Vail Mountain with investments in pumping infrastructure and 387 new high-efficiency snowmaking guns.

The investment would add 152 acres of new and enhanced snowmaking terrain including bringing snowmaking to the Midvale Mountaintop Express chair four pod area providing higher elevation terrain that would consistently offer a superior early season experience.

We are also planning to upgrade Keystone's snowmaking system to a state of the art, automated, energy efficient system that we expect will allow the resort to make more snow during early season snowmaking windows, bringing forward Keystone's opening day by up to three weeks each year, enabling Keystone to be positioned to be the first resort to open in the United States each season and with the most skiable terrain.

At Beaver Creek, we are planning to expand the snowmaking system at Red Buffalo Park.

The highly successful beginner terrain enhanced last year with a new detachable lift to ensure more reliable, early season terrain in a key ski school area and creating the opportunity to target more than 3,300 vertical feet of top to bottom skiing and riding on opening day each year.

In addition to these snowmaking enhancements, we are highly focused on investments that will substantially improve the guest experience across our resorts, including companywide technology and service enhancements that will move guests as quickly through the purchasing process as possible, so they can be on the slopes faster.

Among the most important technology investments we are making is our plan to increase lift ticket express fulfillment capacity by 40% through new mobile technology across our 17 North American resorts to allow skiers and snowboarders who purchase tickets in advance to bypass the ticket window entirely.

With this new technology, guests will go directly to designated lines at our base area chairlift where they will get their lift access media from our mobile ticket agents and head right into the lift lines to start their ski day.

Also new for the 2019/2020 winter season, season pass holders will be able to pre-purchase pass benefit tickets online including buddy and ski with a friend tickets and leverage the new BOMO [ph] express fulfillment at the base of our lift, bypassing the ticket window Eliminating guest wait times is a core commitment of our company and can offer a dramatic improvement to the guest experience.

At Park City, we will continue to build on the momentum we have achieved at the largest resort in the US. A new permanent Tombstone barbecue restaurant will complete the suite of transformative dining improvements and the resorts' commitment to culinary excellence.

The new restaurant will include 50 indoor seats, a beer bar, and a full kitchen at this critical intersection on the canyon side of the resort.

At Breckenridge, we are planning to make a one-time investment to transform the guest experience at the base of Peak 8 with new ski school and child care facilities, as well as an improved ticket and retail rental experience.

We will be acquiring and building out space within the new Grand Colorado on Peak 8 which was built on a land parcel we sold in fiscal 2017. The improved facilities and layout will dramatically improve the experience of this popular base area at the most visited mountain resort in the US.

These one-time real estate investments will total approximately $7 million in calendar year 2019 and are the results of the $9.3 million land sale at Breckenridge in fiscal 2017.

At Beaver Creek, we plan to completely renovate the children's ski school to improve the experience for the entire family from sales and registration to rental fitting to better serve our guests at one of the most successful ski schools in North America.

At Perisher, we will complete the new Leichhardt lift that is replacing a T-bar and the snowmaking investment that will support terrain connections and improve the consistency of conditions for beginner and intermediate skiers.

We'll be investing and planning for strategic projects for the next several years to get the necessary regulatory approvals for major lift, restaurant, and terrain expansion opportunities.

Among these planning projects is the signature McCoy Park terrain expansion at Beaver Creek which was recently approved by the US bar service, and we hope to open for the 2020/2021 ski season. McCoy Park will provide guests with great beginner and intermediate skiers skiing in one of the most idyllic settings in Colorado.

Our capital plan includes several key investments for companywide technology enhancements that will enhance our scalability, guest service, and marketing efforts. We will be completing the final stage of our point of sale modernization project which will reduce transaction times and improve the guest experience.

We will also be investing in technology to automate our data driven marketing efforts to more efficiently and effectively communicate with our guests and take advantage of the extensive data we aggregate and use across our business.

We also plan to make significant one-time investment across the recently acquired resorts of Crested Butte, Okemo, Mount Sunapee, and Stevens Pass. We plan to spend approximately $7 million in the first phase of a two year, $35 million investment program.

At Stevens Pass, we plan to replace and upgrade the Daisy and Brooks lift, both of which serve critical terrain for beginner and intermediate skiers and snowboarders and renovate on-mountain restaurants to provide an updated experience.

At Okemo, we plan to upgrade two on-mountain restaurants, Sugar House and Summit Lodge to offer new concepts and menus, as well as an updated look and feel to interior finishes and furnishing.

The calendar 2019 capital plan includes $3 million of investment related to our sustainability commitment focused on energy efficiency opportunities in snowmaking, as well as other electrical and lighting applications. We plan to spend approximately $6 million on integration activities across recently acquired resorts.

Investments in additional summer activities will be approximately $2 million in calendar 2019 as we complete work on a major zipline at Breckenridge.

Our capital plan for calendar 2019 will be approximately $139 million to $143 million excluding one-time items associated with integrations, the one-time Triple Peaks and Stevens Pass transformational plan, summer capital, real estate related capital, and reimbursable investments.

Our total capital plan would be approximately $175 to $180 million including items noted above for integration and acquisition, summer capital, real estate related projects and approximately $13 million of reimbursable investments associated with insurance recoveries, intended improvements.

We'll be providing further detail on our calendar year 2019 capital plan in March 2019. Our attention to service and our commitment to delivering an outstanding guest experience across our network continue to be the focus of our company's efforts.

I'd like to thank all of our employees for the passion, hard work, and commitment to creating the experience of a lifetime for our guests which, as always, lies at the center of our success. We hope that you all enjoy a fun and safe season ahead. At this time, Michael and I would be happy to answer your questions.

Operator, we are now ready for questions..

Thank you. [Operator Instructions] And we will take our first question from Shaun Kelly with Bank of America. Please go ahead..

Hi, guys. Good morning. Rob, maybe we could just start off with some of the details you gave. You gave a lot of color and more than you typically do about the breakdown on the way the pass sales period came together. So, I just wanted to start with maybe the softness on Utah and Tahoe.

Could you just give us a little bit more about what you think might have driven some of that softness? Is it weather and just the fact that you had a couple light seasons out there in snowfall, especially in Utah? Is it potentially any impact from the introduction of the competitive pass offering with Ikon out there?.

Yeah. I think on Utah - I think number one, obviously, Utah did have a very tough season last year. So, local frequency on passes obviously was down. So, I think that hurt us. I think there's no doubt that Ikon has a strong product for that local, Utah skier. So, I would imagine that had an impact as well.

I think overall, Utah's not a huge market for us compared to most of the other markets. I think in Tahoe, which is obviously a much bigger market for us, you know, important to note last year, right at this time, we disclosed very strong growth in Tahoe last year. So, one, I think we were lapping very strong growth.

Two, last year, we had a very tough year in Tahoe. So, again, on the frequency side, I think we were hurt by that as well. And then this year, I think as we went into the end of the selling season in especially our November deadline, very tough weather, including the fires. Conditions were not great. They've now actually very recently improved.

But I think through certainly most of that November time period, not great conditions out there as compared to certainly Colorado. And so, I think that hurt us as well. I think on the Ikon side when we look at our - we sell primarily four different products out there.

We actually saw our best performance on the Epic and Epic Local product in Tahoe which would be the products that really compete with Ikon. Where we saw most of the softness was in the Tahoe Value and Tahoe Local products which are priced well below the Ikon competing products.

So, always hard for us to know exactly what impact one thing is versus another.

But right now, at Tahoe, yeah, we're not - we're seeing this more of an endemic issue, a little bit of lapping, and a little bit of the challenging weather at the end of the - challenging weather last year and then some challenging weather and unique dynamics in the San Francisco market in November..

And just as we think about the magnitude of pass sales overall, so, last quarter, nine to 12 growth without the acquisition. So, nine I think on the core numbers, so, nine on units, 12 on dollars. This quarter decelerating a little bit, but that now includes the acquisitions.

Can you give us any sense on both first of all, what you think was happening with the core XC [ph] acquisitions? Did the acquisitions really contribute much? And then second of all, I mean, was this pretty much in line with your underwriting or when you guys said relatively consistent, were you surprised at anything in just the overall period including maybe the weakness here that you called out or anything else that stuck out to you about the trends you saw?.

Yeah. I think as we were going into the fall, I think we knew that we had a number of different trends that would be going - our program has grown so much right now over 900,000 passes across so many different markets that we're always dealing with different dynamics.

And we try and factor all of those together you know, kind of come out with our overall color for the results. And I think last time, we felt that we would be relatively stable, meaning it could be up a little, could be down a little kind of from where we were.

I think one of the things that is a positive, obviously, is the growth that we get from the acquisitions which we saw. We also inherit the pre-existing season pass programs for all four of those resorts which we then put into the base number for us. So, that obviously drags down for the prior year. So, that obviously drags down growth as well.

So, we have those competing dynamics. I think we felt that we were seeing good trends in the northeast. And actually, that was by far our best performing market, very much aligned with our expectations. So, we feel very good about that. The Colorado market was also - we saw very solid growth in a mature market for us.

So, this, I would say, absolutely achieved our expectations from the partnership, certainly, with Telluride and from having Crested Butte. I think Whistler, we actually saw solid growth there, but we're really expecting more. So, I would say that was a market that there's probably some disappointment in.

I do think the just very challenging weather up there with poor conditions, you know, we just lost some growth that I think we were hoping to get there. And then overall, on destination, I think we do feel good about the solid growth we had. And yeah, we are lapping two years, especially last year, of very, very strong growth in destination.

Given the size and scope of our program, the kind of penetration that we've been able to achieve, there's no doubt that as we continue to broaden the program, that next skier, that next marginal skier is a lower frequency skier and probably a little less loyal.

So a little bit tougher to get into the program, probably going to come into a product that's a little lower priced. The other side of it which is quite heartening for us is the benefit of getting that skier into our program is actually so much higher than getting the very loyal 50 day a year skier.

And so, actually, every time we keep moving the program out, we actually feel like we are dramatically improving the stability, the security, and the loyalty that we have in our guests..

Last question for me. But you also gave some incremental color around the impact or the overall experience on a blended average price increase. So at 3.3%, a little lower, and then the spread, obviously, between units and dollars. But those numbers probably being a little lower than what we've seen in the past.

Can you just walk us through the mix shifts on maybe some of the - I think it's really kind of following up on that last point, but maybe the mix shift from some of the frequency card products that are not maybe the full Epic pass.

Is that what's impacting that price spread or what else? Was it the inclusion of the acquisitions? Just what were some of the key factors in the pricing - blended average price numbers that we saw?.

Yeah. I think a combination.

So, I'd say you have - on the one hand, you've got - I think we typically always see kind of compression on the spread between units and revenue as we get later into the selling season because we typically do sell a lower frequency product as we get further out into the selling season because they are the least – the most undecided, so to speak, of all the guests that we're trying to get.

And I think this year, as we get further and further into that market, we - dynamic. And I think we saw it again this year. Not a huge surprise. I mean, we kind of knew that overall going in. But I think it's trend that as we continue to grow the program - and we talked about this I think on a number of calls in the past.

We really are focused on this overall revenue number. How much revenue are we moving to be committed before the season? And in that respect, we're going to kind of bring everything we can to bear to try to drive.

And we felt really good about 10% revenue growth excluding military and then 13% revenue growth including military on this huge program in a market that is not a high growth market, to begin with.

So, we feel like that's kind of - we're a little less focused on if we're taking a three-day skier what price they're paying to come into our program and much more focused on getting those skiers into our program..

Great. I'll jump back in the queue. Thank you..

And we will take our next question from Felicia Hendrix with Barclays. Please go ahead..

Hi. Good morning. Thank you.

Rob, I'm just wondering, is there any kind of silver lining in terms of the weaker sales that you're seeing in season passes, especially in Tahoe, since that was coming more from perhaps some of the base being distracted by the fires and also the challenging weather? Because I would think that as things improve, and particularly if Tahoe has a good season and if Utah has a good season, would you see an uptick in at the window ticket sales?.

Yeah. I think we absolutely see a relationship. And I think if you look back historically, you see that relationship between - as we move people into season passes, we are pulling them out of that lift ticket window. And so, if we see lower growth, we can see those folks show up.

A little bit of that depends upon what the conditions look like for the season. So, certainly, in a market right now like Colorado, I think it certainly bodes well for us to pick up incremental visitors and guests buying day lift tickets because the conditions are so strong.

The reason why we do like moving people to season passes obviously takes some of that condition risk out of our results. But there's no doubt that I think if we see Colorado, if we see Tahoe - and there is some positive news if you look on the weather front right now. Yeah.

There's no doubt that if it improves over Christmas, then that's obviously an opportunity for us to get those guests and still get them up on the mountain..

Okay. Thanks. And then if we just look at your season pass sales as a whole, it seems like most of the regions generally were strong with the exception of the two that you called out. So, if you had to give us or if you could give us a big picture perspective - I know this is tough, and you're not going to quantify it.

So, perhaps directionally, how much do you think just overall like you're bumping up against competition or Ikon versus just the more fundamental factors like you mentioned, growing off of a higher base, bringing in lower frequency skiers, that sort of thing?.

Yeah. I would say I think - one is I would say we think Ikon's got a great product for the resorts that they have in that network. And I think that their entry has really helped, actually, the overall market.

I think there is no doubt that they've brought greater awareness and I think helped carry the message around, if you're going to ski, you should really consider a season pass. And I am sure there's no doubt that in certain spots that they may have had an impact on us.

But I guess I would say yeah, that our results are much more a function of our own drivers than competitive dynamics. I mean, we don't have perfect information on that. So, that's not an assessment that we have tremendous analytics on because we don't have all the data.

But I would say when I look at all the different pieces across all of our different markets, yeah, this is much more about how we continue to broaden our program with that lower frequency. How do we continue to get better at our marketing. All the things that have driven us in the past I think are ultimately at the center of how we drive results..

Okay. That's helpful.

And then just given your size now, should we look to season pass sales growth more in this range in the mid to high-single-digit range on a go-forward basis?.

Yeah. I guess we're not giving future guidance at this point, and we haven't in the past. But I guess I would say that we feel very confident in our ability to continue to broaden the program, to continue to move material percentages of our revenue from the lift ticket window to an advanced product to a season pass. We feel very confident in that.

We felt confident in that going into this year I think. But it is - there's no doubt that its going to be - we're going to be focused on how much revenue we're moving. The program will have to continue to innovate and to continue to be more sophisticated and targeted in terms of how we bring in additional folks.

But that's actually why we build the marketing engine and approach that we have..

Right. And then just final one for me just on Whistler.

By what date or time do you need to see normal snow conditions there to meet your guidance?.

I don't know that we can give a level of specificity on that because in part right we've got multiple regions that'll all be moving on their own. So I don't know that we can isolate one region out and say how it will impact it. I do think there's plenty of opportunities still for Whistler to have a strong season.

And obviously, Whistler does have a good chunk of business that's coming from outside of Canada. And so, a lot of those visits - trips are booked already. And so, I think there's a real opportunity for a late fill-in for them. At this point, I would say more of an issue on just the early season results, a little bit of an impact on pass sales.

But at this point, we're not making any assessments on Christmas because there's still plenty of time for that..

Okay. Great. Thanks so much..

Thanks..

Our next question will come from Chris Woronka with Deutsche Bank. Please go ahead..

Hey. Good morning, guys.

Want to ask you if you have any early indications or early reads on ancillary spend by some of the new military pass holders or the less frequent folks that you've been selling some of the new product pass too, just if there's any kind of early indication on whether they're spending more or less at the resorts when they get there..

I guess I'd say we don't really have - I think as it relates to the lower frequency destination guests that they spend in line with our other destination guests. So, yeah, a huge opportunity every time we bring somebody in to - yeah, in terms of the total revenue package that they would offer.

On military, I think it's a little too early for us to give any insight on exact spending. That said, we're seeing pretty good visitation early on and a lot of enthusiasm.

And we think as we've identified - we believe this is a tremendous opportunity for our resorts to really make this strong connection with that group and a real business opportunity to bring so many new people and their families to our resorts. And we are expecting ultimately we will see good spend from those groups..

Okay. Great. And then I know you mentioned overall, hotel bookings are kind of in line with prior year for the season. I was wondering if you could maybe break that apart a little bit between Christmas, New Year's, and then also thinking about Easter and spring break since we have the bigger calendar shift on Easter.

We're a few months further along then when you last updated guidance. Just wanted to see, on the hotel side, if there is any discernible patterns between those two seasons..

Yeah. I don't think we're going to give more color by season because not only does it come out by season, but then it's by season, by resort. And we have enough resorts and enough markets that I think we're more comfortable at this point just giving overall direction.

I would say we feel like bookings support, obviously, the guidance that we've put out. It's important to remember that last year at this time we actually had pretty good bookings going into especially the Colorado and Utah markets. Obviously, the skier visits didn't pan out.

So, for us, as we look to have bookings in line, the big opportunity for us is now with good conditions, actually getting people who are at the resort and have already booked, actually getting a higher frequency from them during their trip..

Okay. Great. And then just wanted to ask what the capital plans you laid out for 2019/’20 season. I guess, in terms of bigger picture on capital expenditures, do you think it might tend to be more lumpy going forward? Or maybe a better word is larger going forward.

And what makes you decide to ramp up the investment further if you do decide to do that?.

I think this year, a little bit of a culmination of things that all hit at the same time in terms of some of these real estate investments, some of these reimbursable investments, the integration capital. So from that standpoint, I think this is probably more unusual in terms of all of those things happening at the same moment.

And we intend to still circle back to our core guidance for capital as we go forward and certainly will explain any kind of differences. That said, we do intend to be aggressive on making improvements at the resorts.

I think on the snowmaking side, we really feel like this is not only an investment in the early season for those guests who go, but it's actually an investment in our season pass program.

So, we do see that having a better experience and a more comprehensive experience at our resorts earlier helps as we try and convince a lot of those late-deciding folks as to whether or not they want to come. And so, we do see this as an opportunity to really move the needle on something that matters to our season pass program..

Okay. Very good. Thanks, Rob..

Our next question will come from Ryan Sundby with William Blair. Please go ahead..

Yeah. Hi. Thanks for taking the questions. Just wanted to follow up on the last question, actually.

Do you see the investments making - is it more important to get that extra week or three weeks for Keystone open earlier? Or is it more about better consistency around the holidays for the core visitor?.

Definitely more about earlier. So, I would say that we really are making a push here I think with this investment to say that yeah, we're going to have a better product, open earlier. And we do think that it's very much - a lot of those skiers who come are season pass skiers.

And so, we do see the opportunity to really make a statement about almost truly an investment. And we've got now over 900,000 season pass holders. And this is an investment, really, in the loyalty in that program, and we think we will see a real benefit from that. I do think all of these things though, of course, help Thanksgiving too.

And so, I think this allows for a more robust Thanksgiving period which can drive additional lift ticket business and ancillary business which we think can allow these investments to have a pretty big payoff, especially if you're in a year like you were last year. And Christmas certainly can help. But that's probably not where the focus is.

Usually, Christmas is a pretty consistent offering for us across the network..

Okay.

And is there cementing a cost that goes with this or are they pretty efficient?.

They are very efficient. There is some cost certainty that comes with it. But I don't think material to the overall results for the company in terms of operating cost..

Got it. And then with the addition of Rusutsu in Japan, now you have a partner in each of the major - the two ski areas. Do you feel like that gives you enough in that region or would you like to add more flags as you go forward? Any color there would be great..

I think we believe this is a - we're always, of course, open and looking for new opportunities, and we will continue to do that. But we do feel that this is a very strong combination.

And having really just a world class resort like both on Honshu and on Hokkaido really makes, as we said, a powerful connection and combination between Australia, Japan, and North America. So we feel - while we'll always be on the look for new opportunities, we feel like this is a great place to start..

Great. Thanks for that. Thanks for the color..

Thanks..

And our next question will come from Brennan Matthews with Berenberg. Please go ahead..

Hi. Thank you for taking my question.

I just wanted to ask if you guys could maybe comment on the health of your core customer and if you're seeing anything different between your destination guest and maybe some of the more local skiers?.

When you say the health of the customer, what do you mean?.

Do they look, I guess do they seem pretty comfortable with their financial situation, are you seeing you know, just overall, just trying to gauge if there could be any potential slowdown on the horizon.

Are they early guests, are they spending as much as they have on ancillary items?.

It's a little early on the spending side to weigh in on that. But I would say that we're not seeing evidence of our core customer reducing their spend. I'm not sure we have the kind of breadth of data that we would need to have to make that determination.

But I think when we look certainly - we're at a stable renewal rate on our passes across, again, such a huge program when we see significant growth in revenue, double-digit growth in revenue, those are pretty good indicators to us that there's still good health in the consumer that we have. And we see lodging bookings in line with prior year.

That's I think a strong statement, when we see strength in Perisher and their results and strength in first quarter in lodging. So, with whatever data points we have, I think they're pointing in a positive direction. But I don't know that we could comment on the breadth of all the things that might be impacting people..

Okay. Thank you very much..

And there are no further comments or questions at this time..

Thank you, Operator. This concludes our fiscal first quarter 2019 earnings call. Thanks to everyone who joined us today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this morning, and good-bye..

Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now disconnect..