Vail Resorts reports net loss of 44% for first quarter
Resort operator reports better news regarding pass sales
The COVID-19 pandemic has taken a toll on Vail Resorts’ bottom line.
On Thursday, the global ski resort giant reported a net loss of $153.8 million for the first quarter of its current fiscal year that ended Oct. 31, 2020, a decrease of 44.4% compared to the first quarter of 2020. The company’s fiscal year runs from Aug. 1-July 31. It is currently in its 2021 fiscal year, even though it’s still 2020.
In its release, Vail Resorts stated its business has been challenged by COVID-19 related limitations, restrictions and closures, and provided season pass sales results. In a Thursday afternoon earnings call with analysts, Vail Resorts CEO Rob Katz said the company’s summer visitation was “well below” historic levels.
There was better news regarding pass sales.
Season pass sales through Dec. 6 of this year for the North American ski season increased approximately 20% in units and were flat in sales dollars as compared to the period in the prior year through Dec. 8, 2019, with sales dollars for this year reduced by the value of the redeemed credits provided to North American pass holders as a result of a shortened season last winter.
Katz said sales of all passes for North American resorts should exceed 1.4 million, exceeding the company’s expectations, with “strong growth” in all categories. Many of those customers bought passes for the first time, and weren’t in the company’s database. Katz said those first-time buyers present an opportunity for the company in coming seasons.
While pass sales are good news, Vail Resorts Chief Financial Officer Michael Barkin the company won’t offer guidance about the full fiscal year. Barkin said the company expects further declines in operations including international guests — much of the customer base at Whistler Blackcomb — as well as food and beverage and ski school.
Despite the declines, Barkin said the company still has $614 million in cash, adding that the company expects to have “sufficient liquidity” to operate into the 2021-2022 season, even if some resorts are shut down due to COVID-19.
Katz added that the company still has plans to spend between $100 million and $115 million on capital improvements across its resorts.
Plans in Colorado incude adding 250 acres of beginner and intermediate terrain at McCoy Park in Beaver Creek, upgrading to a high-speed quad lift serving Peak 7 at Breckenridge and replacing the two-person Peachtree lift at Crested Butte with a three-person lift.
“We remain committed to reinvesting” in the resorts, Katz said, adding that the company’s full capital plan will be released in March of 2021.
Some of that improvement will include upgrading the company’s call centers and “guest contact” centers, which Katz acknowledged were overwhelmed by a fourfold increase in queries over the past six months.
What about the future?
Analyst Sean Kelley of Bank of America asked Katz about the prospect of retaining pass holders in coming years.
Katz replied that the credit from 2019-2020 season passes “clearly helped” with pass sales, particularly among low-frequency skiers who used the Epic Day passes.
But, like most of the business environment today, Katz said the company faces a host of unknowns.
“We’re in the middle of a very uncertain travel environment,” Katz said, adding that he believes the most important thing going forward will be retaining core customers and introducing new people to the pass programs.
“We’re quite positive about where the program’s going,” Katz said.
Kelley also asked Katz about the prospects of further restrictions and possible shutdowns at resorts, particularly in California and Vermont.
Katz said the company will have to navigate ever-changing restrictions across its resorts.
But, he added, “all our communities and companies are partnering to bring down case loads,” adding that the shifting landscape puts “tremendous strain” on everyone in the company.
“That’s the advantage of having a number of resorts,” Katz added. “Each of the resorts, as they go through (restrictions), can be a leader (for the rest of the company).”
Analyst Felicia Hendrix of Barclays asked Katz if the company had yet seen much in the way of guest satisfaction scores.
Katz replied it’s too early to spot trends for this season. But, he added, “Anecdotally, people are thrilled to be outside, and the chance to have friends and family together. Everybody wants to still come out.”
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