SAM Magazine—Broomfield, Colo., March 15, 2022—Vail Resorts, Inc. (VR) saw visits and ticket revenues rebound from a slow early season, with totals returning to pre-Covid levels, according to the company's second quarter results. Results for ancillary lines of revenue, such as snowsports school and F&B, remained below pre-Covid levels. 

Revenue and visitation. VR's second quarter ended Jan. 31, but the company presented comparison results through March 6 to more fully quantify its year-to-date performance. Results improved in January and February relative to the peak holiday period. Compared to the mostly-pre-pandemic period two seasons prior (through March 6, 2022, and March 8, 2020, respectively), season-to-date total skier visits rose 2.8 percent, and total lift revenue climbed 10.3 percent. Lynch noted that weekend and holiday visitation were flat to 2020, but midweek visits increased by nine percent.

Ancillary lines of business experienced less of a recovery. Relative to the comparable period in fiscal year 2020, ski school revenue and dining revenue were down 8.9 percent and 27 percent, respectively. Retail/rental revenue for North American resort and ski area store locations slid 2.8 percent. All those totals were up from 2021. Season-to-date ski school revenue rose 60.2 percent; dining revenue, 75.7 percent; and rental/retail, 40.7 percent.

Compared to pandemic-restricted 2021, VR's Q2 net income was $223.4 million, up from $147.8 million in the prior year. This year's Q2 net income was two percent down from 2020, VR said. 

Commenting on the fiscal 2022 second quarter results, Lynch said, "Visitation trends and demand for the experience at our resorts remain encouraging, particularly with destination guests."

Pass strategy. She added, "For the season-to-date period ending March 6, 2022, 69 percent of our visits came from season pass holders compared to 56 percent of visits in the same period in fiscal year 2020. We remain committed to our strategy to move lift ticket purchasers into advance commitment products, which offers benefits to our guests, and stability to our employees, our communities and our company."

The company sold 2.1 million Epic Pass units for 2021-22, up 76 percent compared to the pre-Covid 2019-2020 season. That led to crowding concerns among consumers and in the news. Lynch said that those record pass sales did not correlate to record visit days, though. “Pass growth does not equal visitation. Pass holders spread their visits across many resorts and different time periods,” she said. “The outcomes of visitation we are seeing are very aligned with our strategy.” 

Pricing for the 2022-23 Epic Pass has not been made public yet. A 20 percent drop in the pass price last year was described as a strategic reset. Going forward, said Lynch, VR intends to continue to strategically manage pricing decisions, taking macroeconomic conditions into account. 

Staffing. As has been widely reported, VR's early-season results suffered from labor shortages that were compounded by Omicron illnesses; during the earnings call with market analysts, Lynch said that some VR areas saw more than 10 percent daily absences during the Christmas/New Year's holiday period. 

To help address the long-term employee shortage, VR said it was raising the minimum wage and adjusting other salaries to attract and retain employees (see our earlier report, "Vail to Invest $175 Million in Pay Increases, Housing, HR"). The increase in wages and the return to normal staffing levels will represent an approximately $175 million increase in expected labor expense in fiscal 2023 compared to fiscal 2022 expected labor expense.

A return to "normalized levels" of visitation across the VR portfolio as Covid wanes further, Lynch said, would offset the investment in employees. Returning to normal visitation—especially at VR's Australian resorts and Whistler/Blackcomb—would bring in an additional $100 million, Lynch said. It would also mean an additional $75 million in ancillary revenues. The inclusion of recently acquired Seven Springs, Pa., is expected to contribute $7 million in EBITDA, for a total of $182 million. These totals do not include any forecasted growth in fiscal 2023, she added.

Liquidity and cap ex. With a strong liquidity position, including $1.4 billion in cash, VR also increased its cash dividend, to $1.91 per share beginning with the dividend payable on April 14, 2022 to shareholders of record as of March 30, 2022.

Regarding calendar year 2022 capital expenditures, Lynch said, "We are committed to continually increasing capacity through lift, terrain, and food and beverage expansion projects and are making a significant one-time incremental investment this year to accelerate that strategy." As VR said last fall, it plans to invest $315 million to $325 million across its resorts, excluding one-time investments related to employee housing development projects and real estate related projects. That includes roughly $180 million for 21 new or replacement lifts at 14 resorts.

In addition, VR plans to spend about $12 million related to the Seven Springs acquisition.