Vail Resorts’ $15M gift to employees and other bright spots from Thursday’s call to investors
Company has had stronger than expected results so far this season
Vail Resorts revenues were better than expected amid the challenges of the season, and as a result, the company intends to share some of those revenues with employees.
Vail Resorts CEO Rob Katz in a call to investors on Thursday ended his prepared remarks with a token of gratitude expressed toward any of the company’s employees who may have been listening in on the call.
“I want to take a moment to thank all of our employees for their tireless dedication to deliver a safe, exceptional experience for our guests this year, despite the challenges of the COVID-19 pandemic,” Katz said. “We have had stronger than expected results, and our employees have been a primary reason for this success.”
Katz said Vail Resorts will deliver a bonus of approximately $15 million in total to thank the more than 28,000 year-round and seasonal workers who are not part of other annual bonus programs.
“I’m deeply grateful for the commitment our teams have demonstrated day in and day out to navigate a truly unusual season,” he added.
The bonuses range from $1,500 to $100, depending on number of hours worked this season.
“Together, we have ensured a safe experience for all during a worldwide pandemic – when almost every other major activity has been shut down,” Katz told employees in a letter issued March 4. “It has been a season like no other, and I want to express my sincere gratitude.”
Vail Resorts relationship with its workers doesn’t often make nationwide news, but this season, criticism of the company’s labor practices received an unexpected platform.
The New Yorker magazine, which enjoys a massive nationwide base of dedicated readers, printed a quote from public lands scofflaw David Lesh in January about how Vail Resorts “treats customers and employees like (excrement).” The quote was used as part of a larger story about Lesh.
Vail Resorts refused to comment on the New Yorker quote. But on Thursday, Katz discussed measures which the company expects will be welcome by both customers and employees.
The payment to employees will be a “one-time, end of season bonus“ for this year, Katz said, but a planned boost to customer service could be more long lasting.
Katz said the company is “continuing to invest in resources and technology to improve our customer service experience, including significant staffing increases in our call centers and self-service technology that will provide our guests the ability to better manage their own accounts.”
The employee bonus comes as a result of employees executing resort openings during COVID-19 without adding additional costs to those operations.
“I think we went into the season obviously preparing for a very challenging environment, so I think as we prepared, we took a pretty thoughtful and disciplined approach in terms of where we would set our expense levels, and as we saw revenues greater than expected, we were able to manage through that without seeing a lot of expense or material expense of the season,” Katz said on Thursday. “And I think that was an amazing job by all of our teams across the company.”
EBITDA projections up
Vail Resorts is doing better than expected in its earnings before interest, taxes, depreciation, and amortization (EBITDA), which bodes well for the company’s overall financial health.
The company-issued guidance for the nine months ending April 30 expects resort reported EBITDA to be between $560 million and $600 million, assuming current regulations.
When compared to an illustrative example issued as commentary in September for the season’s 2020-21 outlook, which used resort net revenue declines of 30% to show a reported EBITDA of $400 million for fiscal year 2021, the new numbers project a significant increase in profits.
On Thursday, Katz said resort reported EBITDA margins for fiscal 2021 second quarter and fiscal 2020 second quarter were within 1 percentage point of each other at 40.3% and 40.9%, respectively, while resort net revenue declined by $240.1 million over the same period.
“These results reflect our rigorous approach to cost management, and we exceeded our expectations for profitability at these revenue levels, relative to the illustrative model previously outlined in our September 2020 earnings release,” Katz said on Thursday.