Like just about every other person and entity, Vail Resorts has had a tough spring.<\/p>\n
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Vail Resorts on Thursday afternoon released its earnings report for the third quarter of its fiscal year, February through the end of April. That\u2019s usually the company\u2019s most profitable quarter, but operations were short-circuited by the worldwide outbreak of the COVID-19 virus and the March 15 shutdown of all Vail Resorts\u2019 North American resorts.<\/p>\n
The company took a 47.8% decline in net income during the quarter compared to the previous year. Total net revenue declined 27.5%.<\/p>\n
In a statement, Vail Resorts CEO Rob Katz said that the decline in third-quarter revenue began in the first two weeks of March, stating that, \u201cWe experienced a negative change in performance that we believe was due to the impact of COVID-19 on traveler behavior.\u201d<\/p>\n
The statement adds that the company actually expected a steeper drop in net revenue. The statement notes that the company expected a third-quarter decline of between $180 million and $200 million in resort reported EBITDA (earnings before interest, taxes depreciation and amortization). Results weren\u2019t that bad, to the tune of about $40 million, the report states.<\/p>\n
While Vail Resorts suffered a bad quarter, Katz said he\u2019s optimistic about the future in a Thursday earnings call.<\/p>\n
Katz noted that the resorts expect to be open for summer operations and the Australian ski season by late June or early July.<\/p>\n
And, speaking to analysts on the conference call, Katz said there are indicators of a \u201ctremendous passion and enthusiasm to get back.\u201d<\/p>\n
For now, though, Katz said the company is counting in large part on drive-up visitation.<\/p>\n
\u201cConsumer sentiment seems to be the shorter the distance the better,\u201d Katz said.<\/p>\n
Katz added that the company believes it can see good results from future pass sales. An April 27 announcement offered credits for a 2020-21 pass to those who bought passes for the 2019-20 season. Those credits can be up to 80% for season pass holders who didn\u2019t use their passes this past season.<\/p>\n
The company also introduced Epic Coverage to replace third-party pass insurance.<\/p>\n
Katz told analysts that while the travel and recreation industry, in general, is in a \u201cconstantly moving environment,\u201d Vail Resorts is focused on the guest experience in an era of social distancing.<\/p>\n
Katz noted that Vail Resorts\u2019 operations in general put people outside on large mountains. But, he added, the company is paying attention to \u201cpinch points\u201d including lifts and restaurants.<\/p>\n
Analyst Sean Kelley of Bank of America asked Katz about the company moving its pass-sale deadlines.<\/p>\n
Katz noted that the company does a \u201chuge percentage\u201d of business based on deadlines. While it\u2019s too early to see trends, Katz reiterated his optimism that skier and riders want to ski and ride.<\/p>\n
\u201cAnecdotally, we\u2019re getting good response from many passholders,\u201d Katz said. \u201cPeople understand this is a tough moment.\u201d<\/p>\n
And, while there may be fewer people on the mountains this winter, Katz said those who do come can expect \u201cthe full mountain experience.\u201d<\/p>\n
That mountain experience starts this summer at the company\u2019s resorts in Australia. Katz said the experience at those resorts will help the company plan for winter in North America.<\/p>\n
Analyst Chris Waronka of Deutsche Bank asked how the current labor and housing environment might affect the company\u2019s operations this winter.<\/p>\n
Katz acknowledged that there could be \u201ceased pressure\u201d on local labor and housing markets, which could present a \u201csmall opportunity\u201d for the company.<\/p>\n
\u201cWe\u2019ll use this (opportunity) to make sure we stay out ahead,\u201d Katz said. \u201cWe probably will have an easier time fully staffing.\u201d<\/p>\n
That staffing will include the company\u2019s hourly full-time employees, all of whom were furloughed shortly after the March 15 resort shutdown.<\/p>\n
\u201cWe have a goal of getting those employees back to work,\u201d he said.<\/p>\n
This story is from the Vail Daily. Vail Daily Business Editor Scott Miller can be reached at\u00a0smiller@vaildaily.com<\/a>.<\/em><\/p>\n