SAM Magazine—Broomfield, Colo., Jan. 14, 2022—Vail Resorts reported a drop in visitation and an uptick in revenue for the season-to-date period ended Jan. 2, 2022. The depressed visitation numbers, in particular, sit in juxtaposition to the portrait in the news of epic lift lines and crowded slopes at the company’s resorts over the Christmas holiday. Observations in the report about the “challenging staff environment” may offer some explanation for the discrepancy.
Total skier visits were down 1.7 percent year-over-year—essentially flat with the heavily restricted 2020-21 season—and down 18.3 percent compared to the 2019-20 season-to-date period.
While lift ticket revenue, which includes an allocated portion of season pass revenue, was up 25.9 percent year-over-year, it was down 4.6 percent compared to two years ago. Ancillary revenue trended along similar lines. Compared to last year, ski school revenue was up 59.1 percent and dining revenue was up 64.7 percent. Compared to 2019-20, though, ski school revenue and dining revenue were down 25.2 percent and 45.1 percent, respectively.
“Relative to the 2019-2020 North American ski season, the 2021-2022 North American ski season got off to a slow start with challenging early season conditions that were worse than our expectations, resulting in delayed openings and limited open terrain that persisted into the first week of the holidays ending Dec. 26, 2021,” said Vail Resorts CEO Kirsten Lynch.
In addition to weather, Lynch points to Covid exclusions, limited international travel, and flight cancellations for the depressed revenue and visitation numbers compared to two years ago. Food and beverage, in particular, “has experienced an outsized impact related to numerous operational restrictions,” said Lynch.
“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,” said Lynch. That strategy has been the subject of intense scrutiny lately, with many suggesting that the 76 percent increase in pass sales compared to the 2019-20 season has compounded operational challenges at the company’s resorts this season.
Staffing shortages have also been pervasive across the country, and Vail Resorts is no exception. In a nod to the current labor situation, Lynch said in the report, “Given the challenging staffing environment, exacerbated by Covid-19 related work exclusions, we implemented both a holiday and end of season bonus for our employees, the cost of which we estimate at $20 million, and which we believe will positively impact staffing through the rest of the season in conjunction with expected declines in COVID-19 work exclusions."
Last week, Wall Street trader Patrick Scholes, with Truist Financial, published an opinion that referenced staffing challenges at Vail Resorts, saying the company “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.”
This latest VR report remains optimistic about the 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,” said Lynch.
Even with the estimated $20 million impact from the bonus program, VR expects to finish the fiscal year within the estimated $785 million to $835 million EBITDA guidance range issued on Dec. 9, 2021.
The reported ski season metrics are for VR’s North American destination mountain resorts and regional ski areas, and exclude the results of its Seven Springs acquisition and Australian ski areas.