Good Conditions At Vail

Like buying spring hats in the winter, big-name investors are snapping up shares of the largest ski complex in North America in the summer. Not that skiers are flocking to resorts in greater numbers. On the contrary. The total number of "skier days" during the 1996-97 season slumped 2.8%, to 52 million, from a year ago. But the pros like Vail Resorts--where visits to its four premier resorts jumped 5%.

"It will be even more of a blockbuster next year for Vail," says investment manager Ron Baron, president of Baron Asset fund, which has a 13% stake in Vail. The stock, priced at 22 when Vail Resorts went public in February and now trading at 25, is undervalued, based on the company's huge growth potential, says Baron.


He notes that Vail's new chairman and CEO, Adam Aron, tripled the sale of season passes to Colorado residents in his first year at Vail. Aron is "an award-winning, top marketing executive with senior experience" at Hyatt Hotels, United Airlines, and Norwegian Cruise Lines, says Baron. The company, which operates Vail Mountain and Beaver Creek, a family-oriented resort, acquired three other resorts this year: Breckenridge, Keystone, and Arapahoe Basin.

CEO Aron plans to spend $74 million in 1997 to improve and expand the facilities. The expenditures will not only increase skier volume but pump up revenues at its retail and restaurant facilities, says Jason Ader, entertainment analyst at Bear Stearns.

Ader figures cash flow will grow to $88 million in 1997 and to $100 million in 1998, up from 1996's $72 million. His near-term target for Vail: 31.