New share strategy doesn't help Grand's slump

ASC's real estate sales slump continues

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— The latest push to sell interval ownership in condominiums at the Steamboat Grand Hotel and Conference Center failed to take hold.

American Skiing Co., owner of the hotel, reported this month that its combined real estate sales during the third fiscal quarter that ended April 27 total $5.6 million. Sales were $7.6 million in the same period last year. All of those sales can be attributed to the Steamboat Grand and the Canyons Grand Summit in Park City. The Steamboat property accounted for $2.15 million on 47 individual transactions.

The numbers were disappointing in light of a fresh approach the company took to marketing one-eighth shares in the hotel instead of the quarter shares marketed since the Grand opened in October 2000. ASC officials hoped the lower price point of the smaller ownership share would be more in line with prevailing market conditions.

"The decrease in real estate revenue at Steamboat and The Canyons resulted from the impact of continuing disruptions related to the company's real estate restructuring effort, weakening economic conditions and the difficulty some potential buyers experienced in obtaining financing for fractional real estate purchases," CEO B.J. Fair said.

The Steamboat Grand is now 54 percent sold out, according to ASC's third-quarter earnings report. That compares with 51 percent in late December 2002. Former company sales executive Jenny Ochtera said at that time the accumulated sales at the Grand totaled $45 million.

ASC posted a real estate loss of $4.8 million last quarter, compared with $5 million in the third fiscal quarter of 2002.

Revenues from ASC's six ski resorts were off 1.6 percent in the third quarter, taking some of the steam out of a ski season that had gotten off to an improved start in the last two months of the second quarter. Resort revenues February through April totaled $122.1 million, compared with $124 million last year.

However, when the first nine months of fiscal 2003 are taken into account, resort revenue was up about $8.5 million. Those gains can be attributed to strong early season traffic at ski areas in New England and the Rockies. Steamboat was up in December and January.

The snow came early and stayed well into the spring at ASC's New England resort, propping up the third-quarter numbers, Fair said. But, The Canyons in Utah had a poor snow year and still posted a 16 percent gain in skier visits with a total of 287,000.

Killington, Vt., was up 10 percent to 1.04 million skier visits. Killington surpassed Steamboat's 1,001,020 skier visits. Steamboat was flat compared with the preceding ski season.

ASC's efforts to rejuvenate sales at the Steamboat Grand this year were supported by funds from Textron Corp., the lender that financed construction of the hotel. ASC's terms with Textron were renegotiated in 2002. The new infusion of cash was used to provide the Grand with a new 15-person sales staff.

The hotel sales team was able to offer new purchasers 24 months without association fees and, for the first time, the ability to convert their ownership in the Grand into points redeemable at other resorts managed by Resort Condominiums International.

The new one-eighth share lowered the entry price for a studio condo to $19,900. For that amount, owners are entitled to occupy a unit matching the one they purchased for seven weeks of the year. Another option is to turn some of those weeks back to hotel management to generate cash flow.

Routt County's online database of real estate deeds shows that only two of the 47 buyers between Jan. 1 and May 1 went for the low end.

Most of the sales were between $50,000 and $70,000. The Grand's eighth share ranged upward to $170,000 for one of 48 penthouse shares and $240,000 for a share of a five-bedroom unit measuring 3,700 square feet. The largest single transaction was for $389,000.

ASC successfully negotiated more favorable terms from its creditors in 2002, but still has more than $300 million in net debt. That includes about $105 million in real estate debt.

The company has separated its resort and real estate operations.

-- To reach Tom Ross call 871-4205

or e-mail tross@steamboatpilot.com

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