Vail Resorts reports losses in second quarter
Skier numbers dip, but ski school, dining, lodging report sharp declines
While skier numbers have mostly held firm, other aspects of Vail Resorts’ skiing business have been hit hard so far this season.
In a Thursday afternoon conference call reporting results for the second quarter of the company’s fiscal year, CEO Rob Katz and Chief Financial Officer Michael Barkin talked about the company’s performance and fielded questions from market analysts.
While many of the company’s business operations have declined significantly from the same period in the previous fiscal year, some fared better than others.
Destination visitors declined only slightly at the company’s U.S. mountain resorts from 57% of the total to 53% of visitors.
That slight decline comes as the firm’s lodging revenue dropped more than 45% compared to the previous year. The lodging decline was attributed primarily to COVID-19-related “operational restrictions and limitations” at the company’s lodging properties.
International visits’ steep decline
Among the hardest-hit segments of the company’s business was international visitation at Whistler Blackcomb in Canada. That nation has largely closed its borders to visitors during the pandemic, which dropped international visitors at Whistler from 48% of the visitor total to just 15% during this fiscal year.
While the pandemic has hurt the business, the percentage of skier visits by pass holders has increased from the same period last year, from 59% to 71%.
While the company’s business has declined, the company still has plenty of liquid assets, including $1.4 billion in cash on hand. Katz attributed the company’s financial position to both guest loyalty and a “thoughtful, disciplined approach to expenses.”
The company’s COVID-inspired efficiencies may be a one-season phenomenon.
Replying to a question from analyst Sean Kelley, Katz said it’s probably “a little bit early” to know if any of those efficiencies will be implemented in the future.
While Katz acknowledged there will be some takeaways from this season’s operations, the current season “isn’t something we’d replicate.”
Pass programs essential
As he has for some time, Katz focused on the company’s various pass programs as a way to bring financial stability to a largely seasonal product. Katz said shorter-term passes can move people from spur-of-the-moment trips to more planned mountain adventures.
Given the drop in international visits to Whistler, analyst Paul Golding asked Katz if the company is rethinking its approach to acquisitions.
Katz replied that Whistler’s performance this season won’t change the company’s view that different resorts provide skiers with a “diversity of opportunity.” In fact he said, the company’s view about the need for geographic diversity has been reinforced this season.
Katz said that relatively new programs including Epic Rewards and Mountain Rewards are hard to evaluate this season, given the difficulties of operations in general.
While Vail Resorts has been focused on financial discipline during the pandemic, the company does have a capital improvement plan in place this year.
That plan includes a 250-acre terrain expansion at Beaver Creek’s McCoy Park, a new quad lift at Breckenridge, replacement of the four-place Peru lift at Keystone with a six-place chair and replacing the Peachtree lift at Crested Butte with a three-person fixed-grip lift.
The total capital plan should add up to between $135 million and $140 million.
Given the times, Katz said he’s “very pleased” with company’s performance this season, adding that there have been “no ongoing disruptions” at any of the firm’s 34 North American resorts.