Vail Resorts lowers earnings expectations for 2023, cites too much and not enough snow in different parts of the United States
Visitation company-wide is up 3.6% over last season
Vail Resorts issued its fiscal 2023 second-quarter earnings results on Thursday, telling analysts the company is pleased with its improvement in guest experience over last season, but disappointed in variable weather conditions that have required the company to lower its financial expectations for this year.
Weather disruptions across the company’s 26 eastern U.S. resorts, as well as resorts in the Tahoe area, impacted both operating days and visitation and drove increased operating costs, the company told investors.
“Season-to-date results at our eastern U.S. resorts continue to be negatively impacted by periods of both unseasonably warm and extreme cold weather, which disrupted operating days, impacted demand and increased operating costs,” said Chief Financial Officer Angela Korch. “Across our Eastern U.S. resorts, over 25 percent of planned operating days for the 2022-23 ski season were negatively impacted by extreme weather events, including many days with full or partial resort closures.”
Grass was still visible on the slopes at some of Vail Resorts ski resorts in the East into January, said CEO Kirstin Lynch.
“These resorts, in this grouping in the East, are virtually 100% reliant on snowmaking, and in order to do snowmaking, you need cold temperatures,” Lynch said.
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The opposite problem occurred on the other side of the country, where too much snow created problems at Vail Resorts’ Lake Tahoe properties, Lynch said. As a result of the issues in the western and eastern United States, Vail Resorts updated its fiscal 2023 revenue projections for investors, predicting its net income to be between $282 million and $328 million and earnings before interest, taxes, depreciation, and amortization to be between $831 million and $859 million, down from the $321 million to $396 million net income and $893 million to $947 million EBITDA predicted at the end of the first quarter.
Lynch said Vail Resorts properties in the East are more reliant on walk-up lift ticket purchasers, something that affects revenue during low-snow years.
In the East, “there’s still a large percentage of visitation that occurs on lift tickets, and that is part of the reason why we saw an impact from the limitations on our operations — and a significant impact — because of that reliance on lift tickets,” Lynch said.
With the company now predicting a reduced income of $39 to $68 million less than originally expected, approximately $43 million of that reduction will come from the resorts in the East, Lynch said. The majority of the impact occurred after the peak holiday season, “and we had expected it to improve, and instead it actually got worse,” she said.
“What happened here with the East is exactly why we have been focused on passes, it’s exactly why the strategy of moving as many of our guests into a pass is so critical,” Lynch said. “In the East in particular, we have products and pricing that have already launched into the marketplace, and the goal is to use our data to be segmented and targeted to convey the benefits of moving from a lift ticket into an advanced commitment product.”
The remainder of the predicted $39 to $68 million income reduction comes from the disruptions in the Tahoe area, Lynch said.
The bright spots for this season occurred in Canada, Colorado and Utah, Lynch said, where skier visits have been strong and are expected to remain that way.
At Whistler Blackcomb in Canada, “we have seen a very strong return of destination visitation,” Lynch said. “Incredible momentum, a return of international visitation, and all of the trends and indicators continue to support that we should be set up for a strong rest of the season at WhistlerBlackcomb.”
Traffic impacts have been reported in Whistler, with British Columbia’s Highway 99 seeing bumper-to-bumper traffic throughout the “Sea-to-Sky” corridor on the weekends. In late January, the @riseandalpine Instagram account, which tracks conditions in Whistler, reported a 1.5-hour commute from Creekside Village to Whistler Blackcomb, a 3-mile journey that takes seven minutes with no traffic.
The strong demand for skiing in Whistler helped boost Vail Resorts’ season-to-date total skier visits, which are up 3.6% compared to the prior year, despite the weather impacts to the eastern U.S. resorts and the Tahoe area. While Vail Resorts doesn’t release individual skier-day data, Vail’s busiest day of the season according to cars in town came on Feb. 24, when 541 cars spilled out of the parking garages and onto the town’s South Frontage Road.
In Colorado, “we continue to be pleased with the results that we’re seeing in that segment, and believe we are set up for a strong spring,” Lynch said. “The conditions are fantastic, the timing of Easter is actually very conducive to vacations occurring over spring break, so I think we’re set up in a good spot.”