Park City Mountain Resort helped carry Vail Resorts through a tough 2nd quarter. Things might get worse for the company as they prepare for the impacts of the COVID-19 novel coronavirus
During a Monday conference call with investors Vail CEO Rob Katz spoke to the results of the 2nd Quarter for the mountain resort company. Katz noted the quarter had areas of challenges and areas of high performance. Katz highlighted the challenges in the Pacific Northwest region of North America, where Whistler Blackcomb and Stevens Pass experienced the lowest snowfall in over 30 years through December 2019. Visitation continued to struggle throughout January in total visitation at Pacific Northwest resorts was down 14% compared to the prior year’s 2nd quarter. Meanwhile visitation started slower in Vail’s western state resorts but improved starting around the holiday period.
“The improvement continued through January though Colorado was modestly below our expectations for the post-holiday period, partially offset by strong performance at our Park City Resort,” Katz said.
He noted that the northeastern resorts in Vail’s family had a good season in part due to the addition of 17 ski areas through the company’s acquisition of Peak Resorts.
Net income attributable to Vail Resorts was $206.4 million for the 2nd quarter of 2020, compared to $206.3 million in the same period in the prior year.
Vail announced that according to results through March 1st, and indicators of the year as of that date, the company is projecting to be $20 million below the midpoint of a guidance range previously issued on a January 17th report. That’s excluding any identified impact from coronavirus.
With the impact of coronavirus looming over the tourism industry Vail pulled back their January 17th guidance report. Vail CFO Michael Barkin spoke about the latest measures by the company as the COVID-19 Coronavirus begins to impact travel in the U.S.
“In the week ended March 8, 2020, we saw a marked negative change in performance from the prior week,” Barkin explained. “With destination skier visits modestly below expectations and we expect this trend to continue and potentially worsen in upcoming weeks. We intend to provide updated commentary on our results by March 18, 2020.”
In the call Katz was asked about the disappointing results for post-holiday skiing.
“Some disappointment about the early season not being as strong as the previous season,” Katz continued. “But the truth is, I think we felt very good going into it. And then, as we came out of it, I think we saw, Park City continue to perform very well. And then, we did see some sluggishness. It’s hard to say exactly what that was. Is that overall travel industry sluggishness that I think has continued throughout this year, even before we got the coronavirus? Is it the ski industry kind of comping a better year last year? I’d say across our resorts, we saw more strength in Beaver Creek and in Keystone, and softer results in Vail and Breckenridge. So, it wasn’t really completely across the board, but it was enough that it added to the issue -- the primary issue again was Whistler Blackcomb”’
Katz also responded to questions about why the company had chosen to withhold a decision on issuing an increase in dividend to stockholders until June.
“The marketplace is shifting quickly,” Katz said. “I think also a sense that obviously the coronavirus impacts are certainly being felt particularly within the travel industry, and that’s obviously the industry we’re in. I think there was a sense that we could -- we’ve had a very consistent track record of increasing the dividend, but we could wait a quarter to see how this plays out before making any definitive decision on an increase or the amount of increase.”
Katz said Vail remains confident in the strong cash flow generation and stability of their business model.
