Vail Resorts: Pass price cut has been a success

Vail Resorts earlier this year cut 20% from the price of all its Epic Pass products. The results have been impressive.

The move “exceeded our expectations,” Vail Resorts CEO Rob Katz said during a Thursday earnings call with analysts. As of Sept. 17, pass sales of all types have jumped 42% over the previous year. The increased sales have resulted in a 17% increase in sales volume for the same period.

Incoming company CEO Kirsten Lynch, currently the company’s chief marketing officer, told analysts that the sales increases fall into one of three categories: people buying more expensive passes than they purchased last season, people who bought single-day lift tickets buying passes and new Vail Resorts customers.

“All three sub-segments are incredibly strong,” Lynch said, adding that data doesn’t yet indicate how many new customers were conquests from other resort companies or first-timers to snowsports.

This season’s pass prices — now roughly equivalent to prices for the 2015-16 season — are bringing more people into the company’s “advance commitment” category, which has become an increasingly important element of Vail Resorts’ revenue picture.

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Lynch said the company’s “reset” regarding prices is intended to drive customer growth, with the goal of making pass sales 75% or more of lift revenue.

While pass sales are booming, the COVID-19 pandemic is still echoing through the company’s business model. Vail Resorts Chief Financial Officer Michael Barkin said the company’s outlook for the 2022 fiscal year, which began Aug. 1, assumes “no COVID impacts for the coming season,” with a few exceptions.

The biggest of those exceptions is business outside of the United States. Whistler Blackcomb in Canada could continue to be affected by that nation’s border closures. In addition, Barkin said the company’s analysis expects a slower recovery in group business. That can affect the company’s ski school, equipment rental and food and beverage operations.

Katz said the jump in pass sales is part of an encouraging outlook for long-term growth. That, in part, is why the company announced Thursday its biggest-ever capital improvement program for 2022. The program will see the company spend between $315 and $325 million next year, about $150 million more than an average year.

“We believe this is the right time for the company” to launch such and ambitious plan, Katz said, adding the company will return in 2023 to its more typical capital spending.

Thursday’s call was Katz’s 63rd and final quarterly earnings call. While Lynch will move into the CEO’s role starting Nov. 1, Katz will assume the role of executive chairperson and will continue to be involved in company strategy and leadership development while moving out of day-to-day operations.

Katz added that Lynch has helped drive the company’s growth, and has a track record of building strong teams.

“It’s the right time for me to take a step back,” Katz said. “And it’s the right time for (Lynch) to step into the CEO role.”