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Vail Resorts losses continue as pandemic impacts stretch into ski season

North America’s largest resort operator posts 50% revenue decline but a record 1.4 million sales of its Epic Passes. Vail Resorts chief Rob Katz warns investors of “a very challenging season ahead.”

The sun breaks through the trees as seen from Keystone’s Montezuma Express chairlift on December 7, 2020. (Andy Colwell, Special to The Colorado Sun)
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Vail Resorts, the largest ski area operator in North America, reported continuing and growing losses as the pandemic threatens travel and haunts the coming ski season. 

The company reported a 50% decline in revenue for the first three months of its fiscal 2021, which ended Oct. 31, compared with the same period last year. But the company sold a record  1.4 million Epic Passes, marking a 20% increase over last season. Earnings from those sales were flat compared to the previous year though, as the company set aside $121 million to reimburse passholders because of the early end to last season, in March. 

Vail Resorts’ CEO Rob Katz said the record number of pass sales showed strong demand for the company’s resorts, which include Colorado’s Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte Mountain Resort. 

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Katz said pass sales in Colorado mirrored last year, but sales in Utah, California and British Columbia grew and the company had “strong sales” of its Epic Day Pass. 

“We are in the middle of a very uncertain travel environment. In the middle of COVID-19, where there is a lot of risk, we were able to retain a lot of core customers and actually gain a lot of new customers,” Katz told investors on Thursday. 

While resort revenue for the quarter was $131.5 million, down 50% from last year’s $263.6 million, its earnings from ski and lodging operations fell only 24% to $94.8 million. Katz credited the smaller drop in earnings to “disciplined and rigorous cost controls” — including cuts in wages and salaries — in recent months.

The company’s stock hovered near all-time highs on Thursday, closing at $291.44, up from the previous day. 

Vail has a load of cash on hand, with $614 million in cash in the bank and $587 million in available credit. That cache can fund operations through the 2020-21 season, Katz said, “even in the event of extended resort shutdowns.” Increased restrictions on skier capacities in Summit County have led the resort company to cancel some reservations at Breckenridge and employee passes are suspended this week at all four of its resorts in Eagle and Summit counties as the ski areas wait for snow to open more terrain.

In more positive news, Katz said the growth in the number of skiers who are new to Vail Resorts buying the Epic Day Pass bodes well for the future and “will accelerate our ability to move guests into advanced commitment.”

Katz also announced a capital spending plan for 2021, but with specific details set to land in March. He did say that deferred investments for 2020 were on the books for next year, with $110 million to $115 million in spending to include a 250-acre expansion into Beaver Creek’s McCoy Park, a new four-seat lift at Breckenridge’s Peak 7, a new 6-seat chair replacement at Keystone and a new three-seat lift replacement at Crested Butte Mountain Resort. 

When asked about what Vail Resorts’ Colorado hills would look like if the pandemic dial is cranked to the extreme risk Level Purple, Katz said he was “not 100% clear.” 

He said Vail Resorts is in communication with county and state officials “on an ongoing basis” with “very high-frequency dialogue.”

The sun breaks through the trees as seen from Keystone’s Montezuma Express chairlift on December 7, 2020. (Andy Colwell, Special to The Colorado Sun)

“Both are critical players,” Katz said. “Both Summit and Eagle counties are working very intensely to bring down the caseload.”

Vail Resorts in September reported $503.3 million in resort earnings for the full fiscal 2020, a 29% decline from the previous year. Before the pandemic, the company had told investors it expected earnings for the year to fall somewhere between $778 million and $818 million. The early closure of resorts and the pandemic’s impact through the summer cost the company more than $200 million. 

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The company declined to offer guidance for the fiscal year, which it usually does at the end of the first quarter, when season pass sales are winding down. Those pass sales traditionally give the company an accurate projection of expected travel for the season. But this year, Katz warned investors of “significant negative financial impacts” to the company’s ski school and dining business. He also warned of more declines as destination travel withers in the pandemic and the company expects limited international business and sales of daily lift tickets.

“There is no doubt that operationally this will be a very challenging season ahead,” a subdued Katz told investors.  “Broadly speaking, we feel really good about where we sit, given, again, the environment we are in.”


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