Vail Resorts lost $203 million in ski and lodging earnings in the fiscal year that ended in July, a rare downturn for the ski resort operator hit hard by the COVID-19 pandemic.
The company reported $503.3 million in resort earnings for its fiscal 2020, a 29% decline from the previous year. The company cited early resort closures as the pandemic erupted, credits awarded to pass holders who missed the last month of skiing and the slow rollout of summer activities at its ski resorts.
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In September last year, Vail Resorts told investors it expected its fiscal 2020 resort earnings to fall somewhere between $778 million and $818 million. That was up from $707 million the previous year and indicative of the annual growth the company has seen in the last eight years.
In a relatively somber presentation on Thursday, Vail Resorts chief Rob Katz also reported $98.8 million in income, a 67% decline from the previous year and it’s lowest income since 2014.
But in a bit of good news, skiers are buying the company’s Epic Pass for the coming season. Pass sales are up 18% compared to the prior year through Sept. 20. Revenue from pass sales is down 4%, though, as a result of credits to skiers whose season was cut short. Without deducting those credits, pass sales revenue through Sept. 20 would be up 24% compared to last year.
Shortly after closing its 34 North American resorts on March 15, the company estimated the early closure would cost the company $180 million to $200 million in resort earnings.
On April 1, two weeks after closing all 34 of its North American ski areas, more than 200 ski shops and its stable of luxury hotels, Vail Resorts slashed its summer spending by $80 million to $85 million, suspended quarterly dividends and cut salaries for employees and executives. Later that month, the company announced the pass credits. Those credits delayed the recognition of about $118 million in season pass sales revenue to the second and third quarters of the company’s fiscal 2021. That means the credits also subtracted $118 million from the company’s earnings in fiscal 2020.
In June the company announced it had saved $40 million with furloughs, salary reductions and other cost-savings after the shutdown, which whittled the expected impact of the pandemic closures closer to $140 million.
But the summer was not strong for Vail Resorts. Resort earnings for May, June and July fell $43 million compared with last summer, due largely to travel restrictions around its North American resorts, closures at the Canadian border that limited international travelers’ access to the company’s Whistler Blackcomb resorts in British Columbia, and the early closure of two of its three Australian ski areas.
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Still, Katz said, visits rebounded at the company’s North American resorts in July. That bodes well for winter, he said.
“We believe this speaks to the current preference of travelers for outdoor experiences, locations they are familiar with and, for many, the option to drive to our resorts,” Katz told investors on Thursday.
The Epic Pass sales so far this season is another positive sign for Vail Resorts. Since the Epic Pass debuted in November 2008, the company has grown the number of passes and pass revenue exponentially. Last year the company sold 925,000 Epic Passes, which range from full-access to limited-access to single-day passes.
Here’s a glimpse of some of the company’s metrics over the last 12 years, including year-over-year growth in the number of Epic Passes sold and the related sales revenue.
Katz promised it would be business as usual at his resorts this winter, with teams “opening as many lifts and as much terrain as possible,” while prioritizing the health and safety of guests and employees.
Last month Katz announced a reservation system for skiers in 2020-21, with pass holders getting early access. That will “enable a safe and successful ski season,” he said, but warned investors that the operating plans for the coming season “will negatively impact our fiscal 2021 results.”