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Vail Resorts thrills investors with lower-than-expected coronavirus losses

The operator of 34 North American resorts on Thursday reported declines in income, revenue and visits. But the losses aren’t as bad as investors anticipated, so the company’s stock price hit an all-time high.

Keystone visitors are pictured at the River Run Village base area on Saturday, Dec. 12, 2020. (Andy Colwell, Special to The Colorado Sun)
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Not as bad as expected.  

That was the theme Thursday as Vail Resorts CEO Rob Katz told investors about declines in revenue, income and visits so far in the 2020-21 ski season. 

Vail Resorts reported $147.8 million in income through January for the second quarter of its fiscal 2021, a drop of 28% compared to the second quarter of fiscal 2020. Revenue of $378.3 million marked a 27% decline for the same three months of the 2019-20 season. Skier visits for its 34 North American resorts through March 7 are down only 8.2% compared with the same period last season.

Katz said he was “very pleased” with the results, noting that none of the company’s North American ski areas have endured any “major ongoing disruptions” during the pandemic. As snow finally arrived in January and February, resorts saw visitation climb and lift ticket sales increase, Katz said. 

Destination traffic “proved more stable than expected,” Katz said. Skiers who travel from afar to ski at Vail Resorts’ hills accounted for 53% of the company’s visits, down from 57% in the same period last season. 

That stability likely means Vail Resorts’ Colorado and California resorts drew big numbers of vacationers, considering Whistler-Blackcomb, the company’s most trafficked hill with about 2 million visits a winter, saw destination travel collapse as Canada shut out international visitors. At Whistler, which is popular with skiers from overseas, the number of destination guests accounted for only 15% of all visits so far this season, compared with 48% in the previous season. 

The company’s revenue from ski school, dining, retail and lodging collapsed this season. Ski school is down $46.4 million, or 45% from 2019-20. Dining is down $43.9 million, or 58%. Retail and rental revenue is down $43.6 million, or 33%. Lodging revenue is down $34.6 million, or 46%. Add in lift ticket revenue and the company reported revenue for the November-through-January quarter fell $240 million compared with the same period in 2019-20. That’s good news for a ski resort operator enduring both pandemic travel restrictions, capacity limits and a tough snow year, Katz said. 

Skiers and snowboarders are pictured at the base of Vail Mountain’s Born Free express chairlift on December 18, 2019. Andy Colwell, special to the Colorado Sun

“There is no doubt we outperformed many other aspects … of travel and leisure,” he said. 

Katz said the resort operator plans to spend between $135 million and $140 million this summer on upgrades and maintenance. Projects that stopped last year when the pandemic throttled the company’s business will start this summer, including a 258-acre expansion into Beaver Creek’s McCoy Park, a new lift at Breckenridge’s Peak 7, and lift replacements at Keystone and Crested Butte Mountain Resort. The company also directed $15 million toward end-of-season bonuses for its 28,000 seasonal and full-time workers. 

After Vail Resorts in December sold $575 million in debt to institutional investors, the company is sitting on more than $1.4 billion — yes that’s a ‘b’ — in cash, plus $599 million in available credit. That pile of money led many investors on Thursday’s call to ask about acquisitions. (They ask that a lot and Katz never delivers, saying the company is “always looking,” and, when pressed, narrows potential acquisitions to “North America, Europe and Asia.”) 

“We are very cognizant that we have been successful with acquisitions over a long period of time but that we have to always be disciplined,” Katz said. “It’s about the right place at the right time. We remain just as committed as we were before to the benefit strategic acquisition of resorts can provide.”

With better than expected earnings and strong season pass sales this season  — the company sold 1.4 million Epic Passes for 2020-21, up 20% from the previous season — investors are happy with Vail Resorts. The company’s stock price has lingered at an all-time high for the last three weeks and trading early Friday pushed the stock price above $320. That’s up from around $145 in mid-March 2020, when Vail Resorts closed all 34 of its resorts because of the coronavirus.

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