Vail Resorts’ 2020 fiscal income declines by 67%
Company CEO: Some reasons for optimism even as visitation declines expected into winter
- 67.2%: Decline in Vail Resorts revenue in the 2020 fiscal year compared to 2019.
- 18%: Gain in pass sales through Sept. 20 compared to the previous year.
- 850,000: Total sales of various Epic Pass products through Sept. 20.
- $80-$85 million: Reduction in capital spending plans for the 2020 year.
The COVID-19 pandemic has hit hard everywhere. Vail Resorts is no exception.
Vail Resorts CEO Rob Katz Thursday hosted a quarterly earnings call that also wrapped up the company’s 2020 fiscal year. That period runs from Aug. 1 — July 31.
Following the March 15 shutdown of the company’s North American resorts and a summer with fewer visitors, Vail Resorts’ net income was $98.8 million for the 2020 fiscal year. That’s a decline of 67.2% from net income in the 2019 fiscal year.
Katz noted that the income declines were partially offset by eliminating quarterly dividends to stockholders and the May sale of $600 million worth of unsecured bonds with a maturity date of 2025.
Katz said the visitation declines seen since March are expected to linger into the winter, at least in some form.
Even with the flood of COVID-related bad news, Katz said there are reasons for optimism.
Strong pass sales
Pass sales, driven in part by company-issued credit to those who held passes for the 2019-2020 season, are ahead of the pace set in 2019.
Sales are up 18% in total units, but down 4% in dollar volume.
And, Katz said, the company expects total sales, which end in December, may eventually match total sales in 2019, although he expects the pace will slow through the fall.
Katz fielded a greater-than-usual number of questions from analysts after he and Vail Resorts Chief Financial Officer Michael Barkin had finished their presentation.
Many of those questions focused on the company’s reservation system for the coming winter season.
Katz said the company first implemented a system over the summer at the Perisher resort in Australia.
That system was implemented quickly, Katz said, and improved over the course of the southern hemisphere’s ski season.
That reservation system was a kind of dress rehearsal for the company’s 34 North American resorts, Katz said.
“The insights we’ve taken (from Perisher) allowed us to hone our operating plan… to a much greater level of sophistication,” he said.
Katz also fielded several questions about how the reservation system might affect mountain capacity over the coming winter.
Capacity vs guest experience
Katz noted that the North American resorts operate only a few days per season at full capacity.
While lifts may not be running at full capacity, Katz said the company anticipates having all its lodging rooms available, pending local regulations.
Not fully loading lifts and restrictions at on-mountain restaurants have to be balanced with the guest experience, Katz added.
“We need to make sure we’re not creating a bad guest experience or safety issue,” he said.
To ensure a good experience, Katz said Vail Resorts plans to follow its usual practice of opening as much terrain and as many lifts as possible.
The company usually hires a number of foreign workers on seasonal visas. Those visas won’t be available this season.
Katz said the company expects to hire North American workers due to elevated unemployment levels in the restaurant and resort industries.
But fewer employees may be needed in some parts of the company’s operations.
Katz said drive-up guests may supplant those who fly in for vacations. That could affect ski schools and lodging.
That impact could be felt most keenly at Whistler Blackcomb. That resort generally receives as many as 50% of its visitors from outside Canada, which still has border restrictions in place.
Analyst Paul Golding asked Katz whether he expected this season’s pass discounts would be carried forward to future seasons.
“I think this is more of a unique situation,” Katz said, adding that the company is assuming a move back to the system in place before COVID hit. Katz said the company is counting on a “very loyal” group of skier and riders and demand to get outside.
Vail Daily Business Editor Scott Miller can be reached at firstname.lastname@example.org.
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Are we seeing more bears because there are more bears on the valley floor, or because we’re all spending more time at home? It could be a bit of both.