Vail Resorts Q2 Earnings Down, Skier Visits Up

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SAM Magazine—Broomfield, Colo., March 9, 2023—Vail Resorts reported a decrease in its second quarter earnings (EBITDA) of approximately 1 percent from the prior year for the November through January period, with the company’s profitability impacted primarily by increased operating costs from abnormal weather conditions. Vailhn However, skier visits, ancillary revenue, and guest satisfaction were all up for the season-to-date period, through March 5.

The company is lowering its guidance for fiscal 2023 from $321 million to $396 million of net income and $893 million to $947 million of resort reported EBITDA to between $282 million and $328 million net income and between $831 million and $859 million resort reported EBITDA.

"The weather disruptions in the East and in Tahoe impacted both operating days and visitation and drove increased operating costs,” said CEO Kirsten Lynch about the lower guidance.

Vail Resorts’ “Eastern” U.S. resorts—which include VR’s 26 Midwest, Mid-Atlantic and Northeast resorts—in particular are expected to underperform initial expectations by approximately $43 million, with the majority of the underperformance occurring after the peak holiday period.

“Our Eastern U.S. resorts have a significantly lower proportion of skier visits in advance commitment products relative to our Western destination mountain resorts,” said Lynch, “and the financial results this year further strengthen our resolve to continue to drive guests into an advance commitment product, particularly in our Northeast markets.”

The company launched its 2023-24 Epic Pass suite on March 7, with the Epic Pass and Epic Local Pass increasing in price roughly 8 percent over last year. Lynch reflected that the increase was in line with the company’s historic pricing models. “We have historically always priced slightly ahead of inflation and that is what you see us doing here as well.”

Vail Resorts remains committed to its advanced purchase strategy. “While we are disappointed to be lowering guidance for the fiscal year, we know that the financial impact to the company of weather and travel disruptions was greatly mitigated by our advance commitment products, which provide an incredible value to the consumer and much greater stability to our company and our communities,” said Lynch.

As the positives go, total skier visits through March 5 increased 3.6 percent compared to fiscal year 2022 for the same period, with strong early season local visits in Colorado, Utah, and Tahoe. Destination visits in the Rockies and to Whistler Blackcomb also continued to rebound.

Total lift revenue increased 2.5 percent compared to the prior year season-to-date period. Ski school revenue was up 27.6 percent, and retail/rental revenue for North American resort and ski area store locations was up 21.2 percent.

Dining revenue also rebounded. It was up 37.2 percent compared to the prior year season-to-date period, but nonetheless underperformed against estimates, according to Lynch. She said there was still work to be done to change the habits customers had developed during the seasons where Covid restrictions limited food and beverage services.

“We believe that ancillary is a big opportunity for us,” said Lynch. Rental was identified as a particular area for growth, with more details about the company’s ancillary strategy to be shared at Vail Resorts’ annual investors’ conference.

Lynch attributed the overall growth in ancillary revenue to the company’s investment in staff. “Normalized staffing levels” also drove a “significant improvement in guest satisfaction scores, which have exceeded pre-Covid-19 levels at our destination resorts,” said Lynch.

In response to a question about negative media attention around reduced hours for J-1 employees in Colorado, Lynch noted, “On average, the hours for J-1 employees are on target.”

“We do not guarantee hours,” she added, noting that as operators of ski resorts, the company had to adjust and flex based on demand.