Visitation, pass sales up, but profits down for Vail Resorts in 2023 fourth quarter

Vail Resorts was happy to report an increase in pass sales over the prior year period in its fiscal year 2023 fourth-quarter earnings call on Thursday.

The strong pass sales were cited in the company’s latest fiscal year 2024 projection — Vail Resorts is expecting nearly $1 billion in earnings over the next year — but there are some potential headwinds that were also mentioned in Thursday’s discussion with analysts.

Some of those potential issues were seen in the fourth quarter of fiscal year 2023 and have carried over into the first quarter of 2024, which began Aug. 1, with Vail Resorts CEO Kirsten Lynch saying labor costs, a bad weather year in Australia and reduced demand for the company’s North American summer operations have affected profits.

---

---

Chief Financial Officer Angela Korch said inflation is also a factor that could have an impact in the months to come.

So far in 2023, pass product sales for the upcoming 2023-24 North American ski season have increased approximately 7% in units and approximately 11% in sales dollars as compared to the period in the prior year through Sept. 23, 2022, Vail Resorts reported on Thursday.

---

---

Vail Resorts reported record visitation at its ski resorts during March and April of 2023, contributing to a record ski season in North America.

“The return to normal staffing levels enabled our mountain resorts to deliver a strong guest experience resulting in a significant improvement in guest satisfaction scores, which exceeded pre-COVID levels at our destination mountain resorts,” Lynch said.

But the season wasn’t without its challenges, which were referenced several times in the call. While the company accounts for weather challenges, last year’s challenges were extreme, Lynch said.

“We were down to grass in January at some of our ski areas, and that we can’t predict,” Lynch said, in reference to Vail Resorts’ ski areas in the Eastern United States.

The Australian winter season, which ran from June to September, also saw below-average snowfall and snowmaking temperatures that limited terrain availability, Lynch said.

This summer, North American operations have underperformed expectations due to “lower demand for destination mountain travel,” Lynch said, “which we believe was primarily driven by a broader shift in summer travel behavior associated with the wider variety of vacation offerings available following various travel restrictions in the prior two years, and weather-related operational disruptions.”

Many of Vail Mountain’s summer amenities were not offered to guests this year.

Reduced demand for summer visitation is not expected to continue in the long term, Korch said.

“We expect that to normalize over time,” Korch said. “We don’t think that that’s a permanent shift in behavior.”

Heading into winter 2023-24 in North America, Vail Resorts will cap off a $180 million to $185 million investment in calendar year 2023, with Keystone’s 555-acre Bergman Bowl expansion set to open this season, and a new high-speed quad replacing the existing two-person 5-Chair lift on Peak 8 in Breckenridge.

The company’s My Epic Gear program, a rental delivery idea that was met with skepticism in Vail, will also be tested out on a limited number of pass holders this season at Vail, Beaver Creek, Breckenridge, and Keystone, Lynch confirmed on Thursday.

My Epic Gear will use a foot-scanning feature in the company’s new My Epic App to recommend the optimal boots and insoles for guests and is part of an overall effort to increase resource efficiency through technology at Vail Resorts.

The company also uses a data-driven approach to hiring and talent development, Korch said.

“We see opportunities, going forward, in terms of resource efficiencies, and one of the key assumptions that we have in our strategies and our priorities in FY 24 is workforce management, and rolling out workforce management across all 37 of our resorts,” Korch said. “Beyond that, also continuing to invest in guest self-service, which creates efficiencies as well as automation.”

---

Want the news to come to you? Get the top stories in your inbox every morning. Sign up here: VailDaily.com/newsletter

---

Korch said all of this should help the company achieve profit margins of higher than 30% in the future.

“I feel very good about the 31 percent margin that we’re going to achieve, and believe that there is opportunity going forward, given the scale of the business,” Korch said. “And the investments we’ve made in integrated networks will give us the opportunity to unlock some additional margin expansion in the future.”