Vail Resorts reports skier visits are down for start of the season
CEO acknowledges early-season challenges as company releases key metrics
Vail Resorts reported Friday that its skier visits at its North American resorts from the beginning of the season through Jan. 2 are down 1.7% from the prior year, and down 18.3% compared to the same period in the 2019-2020 season.
Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 25.9% compared to the prior year and down 4.6% compared to the 2019-2020 season.
Vail Resorts CEO Kirsten Lynch, in the company release, said that this season’s metrics are outpacing the prior year, as expected, due to the greater impact of COVID-19 and related limitations and restrictions during the 2020-2021 season.
She also acknowledged that challenging early-season conditions that led to delayed openings and limited terrain offerings across North America hurt the company’s bottom line for the current season through Jan. 2.
“Relative to the comparable periods in both fiscal year 2021 and fiscal year 2020, results across our destination resorts improved following Christmas as conditions improved between Christmas and New Year’s Day,” Lynch said. “The storms during the holiday period created disruptions on certain key peak days that negatively impacted our results, particularly at our Tahoe resorts, which were each fully closed between one and three days during the peak holiday period.”
She also mentioned that Whistler Blackcomb, despite favorable conditions, continues to be negatively impacted by COVID-19 related travel restrictions on international visitors and that conditions at Eastern U.S. ski areas were challenged and inconsistent through the holiday period with limited natural snow and variable temperatures.
“Although overall visitation was negatively impacted by the poor conditions, particularly among our local guests, our season pass sales results significantly mitigated the impact of the challenging start to the season on lift revenue and highlighted the stability created by our advance commitment strategy,” Lynch said in the release.
Still in ‘recovery mode’
Tom Foley, a senior vice president of business process and analytics of Inntopia, a longtime analyst of resort area lodging, said the numbers released Friday weren’t terribly surprising, adding that resort economies are still in “recovery mode” after the big drops seen 12 months ago.
Foley noted that while lodging occupancy is seeing gains in the early part of the season, that doesn’t necessarily translate to people on the mountain.
Foley said places where there are other activities and amenities — think Vail as opposed to Copper Mountain — seem to be seeing a lot of “people visiting in an exploratory manner.”
Those guests aren’t necessarily interested in skiing, Foley said, but are often taking an “urban escape” for dining, shopping, and being outside in cool weather.
A challenging winter
As a result of delayed openings at certain resorts, Vail Resorts in its release said some pass product revenue will be recognized in the third quarter of fiscal year 2022 that would have otherwise been recognized in the second quarter. Excluding this impact, season-to-date lift ticket revenue was down 0.6% compared to the fiscal year 2020 season-to-date period.
Ski school revenue is up 59.1% and dining revenue is up 64.7% compared to the prior year season-to-date period. Relative to the comparable period in fiscal year 2020, ski school revenue and dining revenue are down 25.2% and down 45.1%, respectively. Retail/rental revenue for North American resort and ski area store locations is up 36.3% compared to the prior year season-to-date period, and down 19.5% versus the comparable season-to-date period in fiscal year 2020.
“In addition to the impacts associated with the challenging conditions, we believe that the significant acceleration of COVID-19 cases associated with the omicron variant has negatively impacted our results along with the broader travel sector as we expect certain guests reconsidered travel plans and were impacted by related flight cancellations,” Lynch said. “The impact of COVID-19 cases amongst our employees and the related employee exclusions from work resulted in further challenges in an already difficult staffing environment. Relative to the comparable season-to-date period in fiscal year 2020, our ancillary lines of business have experienced revenue declines in excess of the declines in visitation, particularly in food and beverage, which has experienced an outsized impact related to numerous operational restrictions.”
Lynch, in an email sent to Vail Resorts employees on Tuesday, said employees who stick with the company through the end of the season will receive a $2 per hour bonus for all hours worked after Jan. 1. The company also implemented a holiday bonus for employees.
The cost to the company for the bonuses is an estimated $20 million, Lynch said in Friday’s release.
“It is unusual to take these actions in the middle of the season, but this is an unusual season,” Lynch told employees in an email.
The full payout of the end-of-season bonus will occur in May. Employees must work through their season-end date to be eligible — and the bonus is for this season only. Lynch, in the email to employees, said Vail Resorts will review employee compensation at the end of the season.
“These bonus programs are specific to this year and the unique challenges of this season,” Lynch said.
Lynch acknowledged that Vail Resorts workers have carried an extra burden this season.
“Staffing was always going to be tight given the global labor shortage, but the acceleration of omicron, late snow, and many other factors created particularly challenging impacts for our operations teams,” she said. “We were all hoping this season would be more ‘normal,’ however, as we went through the busy holiday period, it became apparent that we are still navigating the impacts of this pandemic.”
Vail Resorts, to start the 2018-19 ski season, increased its minimum wage from $10 per hour to $12.25 per hour in Colorado, California and Utah. Three years later, to start the 2021-22 season, Vail Resorts announced it was increasing its starting wage to $15 per hour in Colorado, Utah, California and Washington.
In an earnings call in December, Lynch said the company was happy with its current wage level at $15 per hour.
“We feel good about that wage increase,” Lynch said.
But Vail Resorts received a barrage of bad press to start 2022 — a Change.org petition titled “Hold Vail Resorts Accountable” alleges mismanagement of the Stevens Pass ski area in Washington state, failure to treat employees well, failure to pay a livable wage, and failure to deliver the a proper ski experience. The petition has received 39,500 signatures and counting. Tales of bad guest experiences over the holidays have made headlines from coast to coast.
Last week, Wall Street financial corporation Truist Financial published an opinion referencing labor problems at Vail Resorts.
“(Vail Resorts) may need to bite the bullet and raise wages even higher in order to bring the quality of the product back to its historically excellent levels,“ wrote Patrick Scholes with Truist.
The Seattle Times also published a piece on Friday saying pass purchasers were “getting cheated” this season due to overcrowding and a lack of terrain openings. Later that day, Lynch sent an email to employees saying “it is clear that there are actions that need to be taken this season.”
“While the challenging season-to-date conditions and COVID-19 related dynamics put downward pressure on overall results, we anticipate that the stability created by our season pass business, the relative strength of our destination visitation over the holidays, and recently improved conditions and results will lead to improving results for the remainder of the season,“ Lynch said in Friday’s release.
John LaConte and Scott Miller contributed reporting.
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