A Sept. 11 letter to the troops
As was my letter to you about a year ago at this time, this letter will be long, heartfelt, and hopefully relevant to your lives.Who can forget the importance of these words in American history upon the attack at Pearl Harbor, as President Franklin Delano Roosevelt sadly proclaimed that, “Yesterday, December 7, 1941 is a day that will live in infamy.”Far more moving and more memorable to many of us who were not born in Roosevelt’s time, on September 19 a year ago, George W. Bush stood before our Congress and delivered a uniquely historic and brilliant address to the nation. On that night, the president of the United States said:”Tonight, we are a country awakened to danger and called to defend freedom. Our grief has turned to anger, and anger to resolution. Whether we bring our enemies to justice, or bring justice to our enemies, justice will be done. … We have seen their kind before. They are the heirs to the murderous ideologies of the 20th century. By sacrificing human life to serve their radical visions – by abandoning every value except the will to power – they follow in the path of fascism, Nazism and totalitarianism. And they will follow that path all the way to where it ends: in history’s unmarked grave of discarded lies. … Our response involves far more than instant retaliation and isolated strikes. Americans should not expect one battle, but a lengthy campaign, unlike any other we have ever seen. …”President Bush continued: “Americans are asking: What is expected of us? I ask you to live your lives, and hug your children. I know many citizens have fears tonight, and I ask you to be calm and resolute, even in the face of a continued threat. I ask you to uphold the values of America, and remember why so many have come here. … I ask your continued participation and confidence in the American economy. Terrorists attacked a symbol of American prosperity. They did not touch its source. America is successful because of the hard work, and creativity and enterprise of our people. These were the true strengths of our economy before September 11th, and they are our strengths today.”He concluded: “Great harm has been done to us. We have suffered great loss. And in our grief and anger we have found our mission and our moment. The advance of human freedom – the great achievement of our time, and the great hope of every time – now depends on us. Our nation – this generation – will lift a dark threat of violence from our people and our future. We will rally the world to this cause by our efforts, by our courage. We will not tire, we will not falter, and we will not fail. … It is my hope in the months and years ahead, life will return almost to normal. We’ll go back to our lives and our routines, and that is good. Even grief recedes with time and grace.”How can one be more eloquent than that?Two thingsIt may not be my place to do so, but I for one and speaking from the heart, can think of no better or more fitting way to remember the one year mark of September 11, 2001, than to ask each of you to do two simple things. First, in your own way, once again think of those stricken innocents and fallen heroes who were lost that day, and of those families who were so tragically touched by such evil attacks. Some of you will want to do so collectively with your families, friends, co-workers or religious congregations. Others will want to do so personally and privately. It does not matter how or in what specific way you remember, just that you take the time to do so.Second, in the coming days and weeks and months, continue to reflect on the sentiments expressed in the presidential address to the nation that has been excerpted above. The world changed a year ago today. As citizens in a democracy, you will be asked, and your voices will be heard, as to how the United States should navigate the complex minefield that now faces our nation, our people and our way of life in troubled and unsettled times.EACH ONE OF US IS STILL AFFECTED, IN OUR OWN LIVES AND AT OUR PLACE OF WORK, EVERY SINGLE DAYWhat certainly is my place is to talk to you about what unites us all directly – that is, our common and collective employment with the many businesses owned or managed by Vail Resorts. All of us devote much of our waking lives to our jobs, derive much of our satisfaction from our professional accomplishments and the esteem in which we are held, and define much of ourselves by the jobs and careers and lifestyles we have chosen. And since nothing in life is more important than family, it too is important that from our employment we receive the income each of us uses to sustain ourselves and nourish our families.SuccessesIn his remarks just after 9/11, President Bush asked that we return to our normal lives, and to recommit ourselves to restoring the economic engine of American prosperity through “the hard work, and creativity and enterprise of our people.” So, it seems oddly patriotic on this saddest of days to talk to each of you about what has happened to your company in the course of this past and unprecedented year.Enormous good was accomplished and progress made by Vail Resorts, your company, this past year, thanks to the tireless, dedicated and skilled efforts of so many of you. At our resorts and our hotels and in our headquarters offices, we managed, coped and toiled so well, even though we all were under great stress, sacrifice and uncertainty all year long. Our collective success was the result of your individual performance. Our common adaptation to a tough new reality was the result of your personal agility and flexibility in dealing with change that was forced upon us all.At our ski resorts, the quality of service and joyous vacation experiences you offered our guests were unparalleled. As a result, our resorts fared brilliantly in the SKI magazine resort rankings released just days ago. Vail No. 1 (11 times in 15 years), Beaver Creek No. 5 (ahead of Aspen!), three of the top 10 are ours, so are five of the top 20. Vail Resorts’ commitment to quality is known and respected throughout our industry as we dominate the lists of the best mountain resorts on the continent.Our excellence in mountain, dining, retail, ski school and recreation activity makes us the leader in our universe, and should be a source of pride for each of you. Interestingly, the summer appeal of these resorts is growing exponentially. (Hardly surprising, given the locals’ chant, “I came for the winter, but stayed for the summer.”) And who amongst us fails to share the excitement of our May purchase of Heavenly, broadening our reach outside Colorado and into new territory? As we look to the coming season, we have bold new initiatives, none bigger than the addition of Breckenridge’s new Peak 7 ski terrain. With some luck, too, Keystone will receive normal snowfall, the lack of which plagued our efforts all last year.In our hospitality operations, our company in just one year has transformed itself. We acquired the Lodge at Rancho Mirage in Palm Springs and RockResorts, and folded some of our best properties into this storied historic brand. Look for new advertising for RockResorts on the Web, and soon in Travel & Leisure and Conde Nast Traveler magazines. “The Difference is Legendary,” we will proclaim for our luxury resort hotels. We will stress the heritage of RockResorts, and the authenticity of its various resort hotels– which are uniquely indigenous and connected to the individuality of their locales. We also bought, manage and are renovating to widespread praise the Vail Marriott. And here is quite a boast: In my admittedly biased opinion, the new Ritz-Carlton, Bachelor Gulch, which Vail Resorts helped design and of which we own half, will as early as year one be the finest mountain resort hotel in the western hemisphere. The Ritz-Carlton opens in a few months, in time for the traditional Christmas-New Year’s peak holiday season.Whether at our new RockResorts, or at Vail Resorts Lodging Company’s many other Colorado hotels and condominium projects, hospitality has become a core competency of our company in a very short time.Our real estate group, too, had yet another sterling and record year. Bachelor Gulch property continues to sell at astronomical prices. Our new Red Sky Ranch golf community, opened in June by former President Gerald Ford, by all accounts is a smash hit. The Town Council in Breckenridge unanimously approved a dramatic plan to build a new base community at Peaks 7 and 8. Plans for a renaissance in new ski and lodging facilities in Vail Village and Vail’s Lionshead met with great praise. More of Keystone has tastefully been developed. A new development project at the golf course owned by the Grand Teton Lodge Company in Jackson Hole has also met with instant sales success in the marketplace.And looking at our company as a whole, we have handled our finances conservatively and prudently. Like virtually all companies, we have debt. But we have kept ours at very manageable levels. Because of the decisions we have made and continue to make day in and day out (some of which are easy ones and others that are far tougher), the viability of Vail Resorts is simply not at risk. Many companies in the U.S. travel and ski resort industries desperately wish that they could say the same.That’s the good news, and there is lots of it.DifficultiesUnfortunately, there is much bad news too. September 11 and the resulting reluctance of Americans to travel hit Vail Resorts hard. Skier visits were well down, meaningfully below last year. Financially, the first six months of our August to July fiscal year were soft, and our financial results were badly hurt by September 11 travel fears. The February to April quarter was surprisingly strong, but the entire U.S. travel and tourism industry has suffered this summer, especially in the Western United States, due to fires, drought and an anemic U.S. economy. Stock market jitters, big public company bankruptcies and corporate corruption (not in our company, thankfully) certainly do not help. Since more than half of all Americans now own common stocks either directly as savings, or in their retirement and 401K plans, hiccups on Wall Street cause hardship on Main Street.U.S. securities laws prevent me from prematurely announcing our 2001-02 year end results to you in this letter. But there are some who have predicted that we will announce that the cash we generated from our operations, known as EBITDA, will be down from last year; or that our profitability, known as Net Income, may be down from last year too. The mere thought, whether true or not, that we may have fallen behind last year’s performance is bad enough, regardless of how well or poorly our actual performance may have been. I can say nothing on this subject now, but you can draw your own conclusions that in any case the fiscal year just ended was not a stellar year.While your company is so strong financially that our actual survival was never in question, nonetheless we faced much risk in many areas broadly throughout our company. Had reservations not rebounded by mid-year, the entire year would have been quite perilous in many respects and with potentially sweeping negative ramifications. Fortunately, as the year unfolded, we had a much better sense that the year may turn out to be bad, but not devastating. And it was a tough year, but the most dire downside cases did not occur.It is not at all fun to deliver bad news to so many for whom I have so much respect and appreciation, nor to share personally in its magnitude. But that is the reality of this post 9/11 world. However, there is one saving grace for all of us. For in the grand scheme of things, our problems pale in comparison to those who lost loved ones on 9/11, or those who have friends or relatives continuing to put their lives at risk by serving in the U.S. military.In short, no matter how distant and remote our homes may have been from ground zero; no matter how idyllic the setting of our mountain, desert and seaside resorts; all of us have seen our love of country and our lives affected by the aftermath of September 11.Not over yetWouldn’t it be nice if on this day one year after, that the tough times were over and behind us. But be honest with yourself and you know that is not the case. I do not wish to needlessly alarm or frighten any of you. But here is what we all know, any of which could cause pain in our nation or cause yet another slowdown in vacation travel to our kind of resorts:Yesterday, NBC News reported that for the first time ever, the United States designated itself “to be at high risk of terrorist attack. On the eve of the anniversary of last year’s deadly strikes, the Defense Department ordered the deployment of antiaircraft missiles around the nation’s capital.” A looming threat of terrorism is not helpful.War has even a worse impact. Tomorrow, the president of the United States is scheduled to make a major policy address to the General Assembly of the United Nations. In that speech to the world, he will make the case why he believes the United States should go to war with Iraq, perhaps as early as the midst of this coming ski season. (He has already stated that military action would not be commenced prior to the November elections.)The economy is very weak. As a result, businesses and consumers alike have been cutting back on spending for months. Businesses are likely to not entertain as grandly at our resorts this winter.Consumers may tighten their belts and limit their spending somewhat on mountain dining, ski school and retail purchases, as was the case throughout much of last year. Fewer and smaller groups may hold meetings at our hotel properties across the country. If the economy stays this soft, we may see fewer vacationers at our resorts than we might like, or they may limit their spending.United Airlines, the second-largest U.S. airline and Colorado’s largest airline, has threatened to declare bankruptcy in September or October. US Airways, the sixth-largest U.S. airline, already has declared bankruptcy. Even though these carriers are expected to fly through Chapter 11, service and flight schedules, not to mention the public’s eagerness to choose these airlines, may be affected. What’s more, all major airlines are imposing draconian restrictions, rules and fees which will make leisure travel more inconvenient, less flexible and more expensive.The Western U.S. has faced a severe drought this year. While Vail Resorts has entered into many contractual agreements over the years to secure water rights for just such times, and hasinvested heavily in advanced snowmaking systems, we nonetheless do need natural snowfall to offer the consumer the quality of product expected from us. A continued lack of precipitation this winter would do our company no favors.Terrorism. War. Recession. Difficulty in Traveling by Air. Drought. Now that is one depressing combination!Of course, always the optimist I, things just might work out. There has not been another successful major terrorist incident in a year.Successful diplomacy certainly could and usually does avert war. As interest rates remain low, the economy could improve overnight.Airplanes will fly despite bankruptcy filings. And it has been snowing in these mountains for millions of years, so let’s hope we see a lot of snow this winter too. Only time will tell.So what shouldVail Resorts do?As you look ahead to these uncertainties, are you a pessimist? Or are you an optimist? Either way, there is a wise old adage that should guide us all: “Hope for the best. Plan for the worst.” Never have truer words ever been spoken. That is exactly what we must do now.Because revenues certainly have a risk of being weak this year, we need to aggressively look for corresponding ways to save in our expenses. Every company, every year says control costs.But this year, Vail Resorts – facing what we face – cannot afford to make this an empty platitude. We have no choice. We must go down this road, and we must deliver.Making the task harder, we must do this while still being true to our virtues, that we genuinely and sincerely care about four constituencies – our guests, our employees, our communities and our shareholders. We will have to find creative ways to reduce various expenditures to the extent that we can, but only to the extent that is wise. We must and will resist expense cuts that would put our product or reputation or franchise at meaningful risk. And, we must strive in that effort to minimize to the greatest degree humanly possible any negative impact on each of these four groups, as well as to balance our efforts across all four groups evenly and fairly.Fortunately, while we will have to cut, we will not have to slash our expenses. We may be looking to reduce our already budgeted expenses (which right now are scheduled to increase considerably this year) by only 2-4 percent. That means we still will be spending 96-98 percent of our currently budgeted expenses, and that in turn means our expenses will still increase considerably year-over-year – but just not by as much.For a company as innovative, skilled, and as interested in progress as is ours, finding ways to cut our costs is not what many of us especially want to devote our efforts doing. But this post-9/11 world demands that this be among our highest priorities this year, right now, like it or not. For sure, we will work hard and creatively to stimulate revenues. Similarly, we will work passionately to take care of our guests and provide them with great vacation experiences. And we will work with even greater determination to make sure our employees are proud of their choice to work within the Vail Resorts umbrella.But cost reduction and cost control will be a mantra heard over and over and over again throughout our company over the next twelve weeks, and then throughout all of the year.Cost control. Cost control. Cost control. There can be no lack of clarity in this message. And it is not as if you have not been working hard to reduce costs these past several years. But this year, we will have to deal with this issue more squarely than any recent time before.Sad to say, but true, that is what these times require.What can youdo to help?Since cost control has to be a very high priority for our company this year, as a result of the troubling external climate, each of you has a role.If you spend money on behalf of the company, look at your own cost center to see how you can save a buck or two or three, or four or more – without taking needed resource away from our guests or your fellow employees foolishly.If you do not have spending authority yourself, but you see ways in which you think your company is wasting money, tell your supervisor, and his or her supervisor, and his or her supervisor.And if that doesn’t work, tell your department head, or resort chief operating officer or hotel general manager. Or tell me, or any other officer. Our company needs your eyes and ears and minds to help root out any wasteful or unnecessary spending.9/11/2002The world changed a year ago today. The events we all remember far too vividly have affected our country and our countrymen. They have changed our priorities. They created new challenges for us to face a year ago. They create new challenges for us to face even today.Looking closer to home, Vail Resorts is a great company, one that is widely respected. That is so, because of the efforts of each and every one of you. As a result, I know we can count on you to do what’s right for our company.So, if our collective effort at Vail Resorts is in your good and capable hands, then my closing thought can be broader, and is this: No one can say better today, on this most momentous of days, than that which the president of the United States said to all the people a year ago:”Live your lives, and hug your children. … Be calm and resolute. … Uphold the values of America, and remember why so many came here.”
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VAIL — The lift operator in the maze at Vail Village’s Gondola One tilts his head back and hollers: “Masks up please!”