Vail breaks ground on $500M redevelopment

Publication: Denver Business Journal; Date: 05/27/2004

Vail-based Vail Resorts Inc. (NYSE: MTN) broke ground Thursday on the first part of a $500 million, off-mountain redevelopment project at Vail ski area.

The five-year project, called "Vail's New Dawn," will upgrade the Vail Village and LionsHead base developments. The resort owner's development arm, Vail Resorts Development Co., is overseeing the improvements.

Initial work involves building a new park and an underground parking structure at Vail Village. The garage is being built to relieve traffic congestion in the oldest part of the village, and the park should add to the area's aesthetics.

"After years of discussion and planning, these projects, once completed, will help to ensure Vail's future as the preeminent ski resort in North America," Adam Aron, Vail Resorts' chairman and CEO, said in a statement. " ... These projects are expected to generate a significant increase in real estate, lodging and ski-related profitability in the next several years."

Vail Resorts recently has struggled financially.

For the first half of its fiscal year ended Jan. 31, the company reported a 3 percent drop in revenue from 2003's same period to $350.9 million, according to Yahoo!Finance. It also suffered a net loss of $32.1 million, compared to an $8.4 million loss last year.

Vail Resorts attributed those losses to lower real estate revenue, nearly $6 million in costs for mold remediation and $36.2 million in charges for retiring debt early, according to Yahoo!Finance.

The new parking garage will be located on a half-acre next to the Christiania Lodge and include 109 underground spaces and 25 street-level spaces. Of the underground spaces, which are available for purchase, 101 already have been sold, according to Vail Resorts. Prices range from $100,000 to $135,000, on a deeded fee-simple basis.

Future "Vail's New Dawn" projects include construction of a new skier services facility at the base of the Vista Bahn Chairlift, a new spa and more rooms at the Lodge at Vail, the Lodge at Vail Chalets and a luxury ski club.

LionsHead's improvements will include a new pedestrian plaza and village, including a new RockResorts hotel; skier services; restaurants; stores; and an outdoor ice rink. The area's streetscape will be redone, and a new skier bridge and residential units added.

Vail Resorts owns a majority stake in Denver-based RockResorts LLC. Olympus Hospitality Management owns the rest of the resort hotel company. RockResorts owns and manages 10 hotels, including the Lodge at Rancho Mirage in California, Pines Lodge and Keystone Lodge in Colorado, and Snake River Lodge & Spa in Wyoming.

In addition to the Vail ski area, Vail Resorts owns the Breckenridge, Keystone and Beaver Creek ski resorts in Colorado as well as Heavenly in Lake Tahoe on the California-Nevada border.