Q3 2021 Vail Resorts Inc Earnings Call
Good day and welcome to the Vail resorts third quarter 2021 earnings call.
Today's conference is being recorded.
At this time I would like to turn the conference over to Rob Katz CEO. Please go ahead.
Thank you good afternoon, everyone and welcome to our fiscal 'twenty 'twenty, 1 third quarter earnings Conference call. Joining me on the call. This afternoon is Michael Barkin, Our Chief Financial Officer before we begin let me remind you that some information for body. During this call may include forward looking statements, which are based on certain assumptions and are subject to a number of risks and uncertainties are described in our.
Our SEC filings and actual future results may vary materially forward looking statements in our press release issued this afternoon, along with our remarks are made as of today June 7.2021, and we undertake no duty to update them and actual events unfold. Today's remarks also include certain non-GAAP financial measures reconciliations for these measures are provided in the tables included with our press release, which along with our quarterly report on.
Form 10-Q were filed this afternoon with the SEC are also available on the Investor Relations section of our website at Www Dot Vail resorts Dot com, so with that said, let's turn to our fiscal 'twenty 'twenty, 1 third quarter results.
Given the continued challenging operating environment as a result of COVID-19, we're very pleased with our overall results for the quarter and for the fall 'twenty 'twenty 2021, North American ski season for us.
<unk> continued to improve as the season progressed, primarily as a result of stronger destination visitation at our Colorado, and Utah resorts, including improved lift ticket purchases relative to fiscal 'twenty 'twenty, 1 second quarter results. Excluding peak resorts total visitation at our U S destination mountain resorts and regional ski areas for the third quarter.
With only 3 per cent compared to the third quarter of fiscal 2019, Whistler Blackcomb performance continued to be negatively impacted due to the continued closure of the Canadian border to international gas, including gas from the U S and was further impacted by the resort closing earlier than expected on March 32021, following a provincial health order it.
By the government of British Columbia wished for block homes total visitation for the third quarter declined nearly 60% to the third quarter of fiscal 2019 well.
Rob visitation of lift revenue trends improved throughout the quarter, our ancillary lines of business continued to be more significantly and negatively impacted by COVID-19 related capacity constraints and limitations, particularly in food and beverage and ski school, we maintain disciplined cost controls throughout the quarter and continued operating our ancillary lines of business at reduced capacity.
Good day.
Now I would like to turn the call over to Michael to further discuss our financial results and fiscal 'twenty 'twenty 1 outlook.
Thanks, Rob and good afternoon, everyone as Rob mentioned, we're very pleased with our overall results for the quarter and for the full 2020, 'twenty 'twenty, 1 north American ski season.
As a reminder, in the prior year, we announced the early closure of the 2019.2020, North American ski season first year is lodging properties and retail rental stores as a result of the COVID-19 pandemic beginning on March 15th 2020. These actions had a significant adverse impact on our results of operations for.
For the third fiscal quarter of 2020.
Additionally, the ongoing COVID-19, pandemic and the resulting limitations and restrictions on our operations continued to have an adverse impact on our results for the third fiscal quarter of 2021.
Net income attributable to Vail resorts was $274.6 million for $6.72 per diluted share for the third quarter of fiscal 'twenty 'twenty, 1 compared to net income attributable to Vail resorts of $152.5 million for $3.74 per diluted share in the prior year.
Reported EBITDA was $462.2 million in the third fiscal quarter, which compares to resort reported EBITDA of 300 and for $4 million in the same period in the prior year.
The increase was primarily due to strong north American pass sales growth for the 'twenty 'twenty 'twenty 'twenty, 1 ski season, including the deferral impact of approximately $129 million of past product revenue and $2.9 million of related to for all costs from the third fiscal quarter of 'twenty 'twenty 2 fiscal 'twenty 'twenty 1.
As a result of the password or credit offered to 2019, 'twenty 'twenty North American past products holders as well as improved non pass visitation due to the company operating for the full U S ski season in the current year with particularly strong demand at our Colorado and Utah destination resorts.
Resort reported EBITDA margin for the third quarter was 52% exceeding both the prior year period of 43, 9% and fiscal 2019 third quarter of 52 per cent.
These results reflect a rigorous approach to cost management as well as a higher proportion of lift revenue relative to ancillary lines of business compared to prior periods.
Now turning to our outlook for fiscal 'twenty 'twenty, 1 net income attributable to Vail Resorts, Inc. Is expected to be between $93 million and $139 million for fiscal 2020..1 we expect our resort reported EBITDA for fiscal 2020, 1 will be between $530 million and $570 million and we.
Expect the resort reported EBITDA margin for fiscal 'twenty 'twenty, 1 will be approximately 28.9% using the midpoint of the guidance range.
Our guidance assumes all of our operations are open and aligned with current health and safety protocols and capacity restrictions current demand trends continue we experienced normal weather conditions throughout the Australian ski season in North American Summer season, and there is no impact from potential COVID-19 related shutdowns or lockdowns the guidance.
Specifically assumes no impact from potential demand or operational disruptions associated with the current Lockdowns in Victoria, Australia.
We continue to maintain significant liquidity, our total cash and revolver availability as of April 30th 'twenty 'twenty, 1 was approximately $2 billion with $1.3 billion of cash on hand $419 million of U S revolver availability under the Vail Holdings credit agreement and $203 million of revolver of <unk>.
<unk> under the Whistler credit agreement as of April 30th 'twenty 'twenty, 1 our net debt was 2.8 times trailing 12 months total reported EBITDA.
We remain confident in the strong cash flow generation and stability of our business model and we will continue to be disciplined stewards of our capital with a focus on high return capital projects continuous investment in our people and strategic acquisition opportunities.
While we are not reinstating the dividend this quarter, we remain committed to returning capital to shareholders and our board of directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the appropriate time to reinstate the dividend.
I'll now turn the call back over to Rob.
Thanks, Michael.
We're very pleased with the results for our season pass sales to date with our Starlink strong enthusiasm for the enhanced value proposition of our past products driven in part by the 20% reduction in all past prices for the upcoming season.
<unk> product sales through June <unk>, 'twenty 'twenty, 1 for the upcoming 'twenty 'twenty, 1 'twenty 'twenty 2 north American ski season increased very significantly as compared to the sales through June 2nd 'twenty 'twenty for the 'twenty 'twenty 'twenty 'twenty, 1 north American season ski season, due to lack of any spring sales deadlines in 2020.
As a result of COVID-19, making the year over year comparison for the spring 2020 results not relevant for performance trends.
Compared to held for the 20th 19.2020, North American ski season through June for 2019 path product sales for the <unk> 'twenty 'twenty, 1 'twenty 'twenty 2 season for <unk>.
<unk> 'twenty 'twenty, 1 increased approximately 50% in units and 33% in sales dollars pass product sales or adjusted to include peak resorts pass sales in both periods and eliminate the impact of foreign currency by applying an exchange rate of 83 cents between the Canadian dollar and U S. Dollar in both periods for Whistler Blackcomb.
As a reminder, power product sales for the full selling season through December 6 'twenty 'twenty as compared to the full selling season through December 8.2019 increased approximately 20% in units and approximately 19% in sales dollars relative to <unk>.
Season to date pastel products relative to see to date path product sales for the 20th 19 Twenty-twenty season through June for 2019, we saw very strong unit growth with our renewing pass holders and even stronger unit growth in new pass holders, which includes guests in our database, who previously purchased lift tickets for Pat.
But did not buy a pass from the previous season and guests who are completely new to our database. We saw our strongest unit growth in our destination market, particularly in the northeast and also had very strong growth across our local markets compared to the period ended June for 2019 effective path price decreased 10% as compared to.
<unk> 20 per cent price decrease we implemented this year. We believe this highlights how our lower price has increased the propensity of pass holders to spend a portion of the new discount to purchase higher value pouch product.
We expected that the price reduction would result in higher past renewal rate increased trade up to higher value passes and drive incremental guests to our network. We are encouraged that each of these trends is evident in the season to date. Our sales result, which we believe supports our expected results for next year as well as the expected long term debt net of increase in <unk>.
Guests lifetime value.
The past results to date exceeded our original expectations for the impact of the 20% price reduction. However, we still have for the majority of our past selling season ahead of us and it is not yet clear. If these trends will continue through the fall we will provide more information about our pass sales results, including comparisons to Paso result for the 'twenty 'twenty 'twenty 'twenty, 1 North American ski.
Season in our September 'twenty 'twenty 1 earnings early in.
In addition, we are very pleased with the ongoing threat of the Epic Australia pass, which end on June 15th 2021 are up approximately 43% in units through June 1st 'twenty 'twenty, 1 as compared to the terrible period through June for 2019, representing significant growth. Following the acquisition of Falls Creek and have them in.
April 2019, given the COVID-19 related Lockdowns in Victoria, Australia, we will be monitoring any impacts on the epic Australia pass sales.
Our commitment to reinvesting in our resorts and the guest experience remains 1 of our high priority as previously announced this summer and fall we will be completing several signature investments subject to regulatory approvals and Colorado. We are moving forward with the 250 acre lift served terrain expansion in the signature Mccoy Park area of Beaver Creek.
Further differentiating our resorts high end family focused experience.
We also plan to add a new for person high speed lift at Breckenridge to service to serve the popular peak 7 replace the Peru lifted Keystone with a 6 person chairlift and replace the Peachtree left across the view for the new 3 person fixed grip left at Okemo, we plan to complete a transformational investment including upgrading the quality.
Tim left from a 4 person to a 6 person chairlift and relocating the existing for person quantum left to replace the Green Ridge 3 person fixed script share with these investments will greatly improve uplift capacity further enhance the guest experience and complete our $35 million tactical plan for Triple peaks were.
We remain highly focused on investments that will further our companywide technology now for them to support our data driven approach guest experience and corporate infrastructure as part of these efforts we are continuing to invest in resources and technology to improve our customer service experience, including significant staffing increases and Mark all centers and self service technology debt.
We'll provide our guests the ability to better manage their own accounts.
We will also continue to invest in ongoing maintenance capital to support infrastructure across our resorts as we head into next year, we know that talent and staffing will be critical for our success as it always does and we have announced that we will be raising our minimum entry wages, and Colorado, Utah, Washington, and California for 15.
$10 per hour, while also making material increases and be entry wages of our eastern resorts, which will be set based upon their local market dynamics.
This will be our largest discretionary investment in operating expense for next year, which we believe will be offset by a portion of other savings we will carry from this year internationally.
As we transition to summer operations at our North American resorts I would like to take a moment to thank all of our employees for their passion and tireless dedication to delivering a safe an exceptional experience to our guests during for 'twenty 'twenty 'twenty 'twenty, 1 north American ski season, despite the incredible challenges of the COVID-19.
Pandemic I am deeply grateful for the commitment of our teams continued to demonstrate throughout these unprecedented circumstances at this time, Michael and I would be happy to answer. Your question. Operator, we are now ready for questions.
Thank you if you would like to ask a question. Please signal by pressing star 1 on your telephone keypad. If you were using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
<unk> Press Star 1 to ask a question.
We'll take our first question from Shaun Kelley with Bank of America.
Hi, Good afternoon, everyone I just wanted to start on obviously the pass sales.
Rob there are a couple of data points in there that were really interesting I wanted to start with the product mix. If you could talk a little bit about the beating of it sort of that that effective price statistic, you gave the 10% and how that sort of lined up versus the kind of down 17, GAAP debt, we see there a sort of a like for like difference in that or or or.
Could you just help explain that a little bit more clearly.
Yeah. It's really just you know I think when you do the the percentage rights. If you take our units up 50% right and then taken a P. P down 10% you wind up with revenue up 33%. So that's a little bit how the math works, but what I would say is that the you know I think what we saw was something that you know we.
We did expect which is that people trading up from lower price products for higher price products, and we saw a material increase and kind of what I would call like the net tradeoff. So every year, we have people who trade up from 1 product to another or trade down from 1 plus product for a lower price path product.
As they renew and this year. We you know we saw a material increase in that net number which you know does not surprise us and that obviously you know significantly ameliorated the.
The decline that 20% you know kind of price reduction.
And the revenue.
Got it and just the other question I have is the sort of cadence on the balance of the season from here, sometimes you give a little color, but it's obviously very early in the period that we have remaining.
Can you just help us think through some of the puts and takes on what kind of what's coming when you think about the sort of bigger deadline that you had set last September.
The introduction of some of the new products and that has made things a little bit more back half loaded.
Just kind of how should investors sort to be prepared for these numbers to balance out across the season, and then specifically you're a mark on the majority of the past selling season ahead of you is that just a comment in day is like literally there's the majority of the day left or is that in terms of relative to your historical mix you you actually sell more than the majority of your products.
In the remainder of the period.
Yeah, I think it's.
Actually I haven't counted the days, but I think it's both to isolate but it's definitely more focused on historically, we do more pass sales past memorial day than before but what I would say that would be on the balance of the season. Obviously last year, we had a very significant labor day or it wasn't exactly labor day, but in September deadline, I think this year.
When we report results in our September earnings release, you will largely be comped.
From last year now I think last year, certainly we had a another driver right. If those sales in September which was that the credits that we issued 2 people last year expired. So if you're a renewing pass holder who had a huge a reason to renew last September in the September there'll be a price increase.
Or there were spring pass sales, which gave you spring benefit for probably for many people modest significant is a credit that was there last year. So that'll be something that's not exactly comps even when we get to the end of September I think the new information that we are the new products that we put out.
Do you think yeah low in order to the benefit of the second half of the season, especially the more limited resort option on Epic day pass and I do think you know last year as we talked about at the end of the year. We we did a lot of new business in Epic day pass all day.
These are folks that typically tend to buy in the fall, we definitely see that be the predominant selling season for optic day pass, though again I think that offers an opportunity as we go into the fall.
And I think maybe the only other thing is obviously the price reduction created a fair amount of enthusiasm in the spring and you know how much of that may have pulled some sales either renew words or even new people into the spring day out we won't know until we actually get through the fall, but I think there are some trends that go both ways as we head into the rest of the flow.
Onto them.
Thank you very much.
Thank you. Thanks, Shaun. Thank you we'll take our next question from Ben Chaiken with Credit Suisse.
Hey, How's it going on.
On M&A you guys saw a lot of growth from in the past outside of just returning customers.
<unk>, presumably from some new geographies as well does this inform your view of M&A in any way that that's worth highlighting you know honestly not like whether you want to do it or not but more so like are there any geographies that are any more or less compelling after getting a look at the most recent past data up 15 units.
But you know I think I think we feel like you know that the dynamics that debt. We glean from our results to date I think support you know our approach in the past around Pos sales, but yes. As you mentioned I think when we are.
When we've done M&A before we open up new markets. There, obviously, we're bringing on that for that resort historical Pos sales, but then typically we can grow on top of that right and I think you've seen that you know pretty clearly for most of the acquisitions that we've done in part that's also because we're picking our markets very selectively knowing.
You know, where we believe we can have an impact by having local resort knowing the market. That's there. So I don't think that means that any resort, we would buy necessarily has that impact, but we're pretty thoughtful about it and disciplined about it. So I would say that our results to date I think just really reconfirm that strategy that we've had.
And our approach to M&A remains the same which is we absolutely are aggressively looking for opportunities in different markets that we think will add value, but we're going to remain disciplined.
And only do things that we think you know we're really makes a difference.
Got you. Okay. That's helpful. I just felt like it sounded like there was a lot of strength from passes sold in the northeast and didn't know if that made it even that much more convicted on the geography for us.
That's kind of where I was going with it.
Oh, I mean, yeah, I would say, we certainly have a lot of conviction by geography at the same time, Yeah. I think we also have a lot of resorts in the geographies. So I think we're always looking at which resort, which would be additive versus just the buckets, where we see the incremental opportunity and it doesn't mean that Egypt by more resorts in exactly the same geography. So.
In our minds right, it's like it's important to be selective and so yes, there's no doubt that we have a lot of conviction about the northeast and the mid Atlantic for that matter and.
And we feel like they've added you know to our to our efforts greatly and at the same time, yeah, we've got to pick the right opportunity.
Got you that's Super helpful. And then 1 more if I may just break it sounds like there was a lot of strength in both both the returning past customers as well as the new pass holder side of things.
On the new pass holders is there any way to break this down like.
Like how much came from basically new to the database entirely as well as returning old past customers versus the conversion from single day to to pass that didn't make sense I can try and say it differently.
No no no I understand that obviously, we yes, we have that data and we have that insight, but we're not providing specifics on that but I would say I think we saw a lot of strength across all of those pieces right. So I think we saw strength on lapse pass holders people, who wants for a powerful just for ups coming back I think we saw strength on.
People, who were lift ticket buyers previously either last year before that and we also saw strength.
You know, what we might call prospect somebody Who's mountain our database. So you know I think that the.
A lot of strength in new you know, which was terrific to see especially in the spring because typically we see more of that strength in.
In the fall and so it was great to see it year, whether some of that again like I said earlier was pulled forward.
You know or will be additive to what we do in the fall is not clear, but either way for positive for us because we always want to move folks as early into the selling cycle is the count.
Thank you very much I appreciate it.
Yeah. Thank you.
Thank you we'll take our next question from Jeff <unk> with Stifel.
Hey, great. Thanks afternoon, everyone. Thanks for taking our questions.
I wanted to follow up on that on the question right. There on the new pass holders based specifically on the on the customers that are completely new to your database just curious what have you learned.
Rob this new cohort as they enter the database or are there any interesting differences here versus the existing pass holder base.
Any high level high level color, there would be would be helpful.
Yeah at this point I mean I think.
Yeah, we're not we're not going to share break downs on kind of demo details on those folks.
But I would say it was it was.
Fairly broad based in terms of the strength there.
That we've seen.
And I think we'll probably have more information on that by the time, we get to the selling ended the selling season and maybe even more information as we go through the season itself and see how their behavior translate throughout the season. So you.
At this point I don't think there is any specific thing to share.
But just yeah, the broad based strength that we saw in that.
In the overall cohort of new people coming in.
Okay, Great understood and then for my follow up you know I recognize there's likely depends in part on how the past selling season trends this year.
Wanted to just get some initial thoughts on how you might think about pricing for the epic pass next season and beyond now that you've sort of reset the baseline with a 20 per cent cut do you think that you might return to more ratable call. It mid single digit price inflation moving forward on this new lower base or do you think based on some of your recent learnings that you know.
Something more tempered, maybe inflationary or something like that might better drive.
This next lab advanced commitment conversion.
Yeah, I think we definitely saw this the price decision this year as the discreet opportunity and we felt like we it was a substantive change in and 1 that.
Aligned to the data.
We were looking at and you know I think we've also candidly we do believe in the long run that having a rateable approach to pricing doesn't it make sense and I think when you look over the previous.
You know 12 years that we've got the Africa, but certainly with our approach and I don't think the pricing decision. This year net thoroughly changes that view I think it was more that we have the data and we felt like we could have a reset.
And yeah I'm not that's.
That's the broad takeaway, but of course, we're not committing at this point to what our price. It will be you know in the future.
But yeah I don't think people should read the decision this year necessarily takes us away from our longer term approach of providing more ratable and price stability to to our gasoline.
Okay, Great. That's really helpful color I appreciate it thanks guys.
Sure.
Yeah.
Thank you. Our next question comes from Brent Montcourt, sorry mentor with J P. Morgan.
Hey, good afternoon, everyone and thanks for taking my questions.
My first question is just on the competitive landscape I mean, Michael.
I think we're all sort of assuming at this point that icon isn't going to match the price cut.
And I know your retention data that you have so far is it was really strong do you guys think debt you are.
Gaining share at all from their system, maybe losing share at the high end, maybe a little bit on the margin what what's your sense from the data.
Yes, very hard to tell I think.
I think there's been an opportunity over the last number of years that has icon came into the market you know.
I think the past market grew quite a bit and I think it was a real positive for the overall industry and you know I I like to think that obviously our decision. This year ultimately will bring even more people into the pouch market providing.
Providing more stability to the overall industry.
After icon came in in March that you know, we continue to see very strong growth in pass sales in our own products.
Obviously, you have insight into how they performed this year.
So I think what I would say we feel good I think we feel like we've made real progress.
Every category that we were hoping to and you know are aligned with all of the strategies and opportunities that we felt were there when we first launched.
The new approach and so are so good at all about that but yeah.
Hard for me to comment on a market share dynamic because I am not aware of their trending.
Okay. Thanks for that Rob and then.
Just on the balance sheet.
1.3 billion of cash on hand.
What are the priorities for this excess cash and what does the board.
Need to see before real re implementing a dividend is it.
Is it temporarily hindered or tied to potential M&A opportunities like in terms of just keeping plenty of dry powder or is there how should we really think about about that.
Yeah, Thanks, I think.
Our capital allocation priorities continue to be quite consistent which is continuing.
Continuing to reinvest in the business and Youre in the in our comments, Rob outlined some of the ways in which we're investing in in the resort in technology in the coming year, which will continue to prioritize I think certainly second is strategic investment opportunities and so you know we do feel like we will.
Continue to be aggressive on acquisitions is as Rob said and I think we also feel like with the with the current state of the balance sheet and the liquidity that we have and the access for the capital markets. We certainly have a lot of flexibility.
To pursue those acquisitions, so feel like we're in a very comfortable spot with that.
And I think as as I mentioned earlier, you know we're going to be focused on the dividend is as we look at the outlet outlook and obviously, we feel very good about you know the businesses performance and the outlook as we've described it but we'll continue to monitor that with the board as.
We go into the next the next quarters and evaluate that relative to the dividend.
Got it thanks for all the helpful color guys. Thanks.
Thanks.
Thank you we'll take our next question from Chris will Ranke with Deutsche Bank.
Hey, good afternoon, guys. Thanks for taking the questions.
I guess, given given where you appear to be on an.
When volume given your initial pass sales update and I know, it's early you have a lot more to go but it sounds like it's well ahead of your own internal expectations is there any.
<unk> refreshed thoughts about.
Having to move to some kind of a more permanent reservation system or any other thoughts on how this is going to impact capacity next season.
Yeah, you know I don't know it doesn't really change our view we don't.
Now assuming that nothing changes on COVID-19, we're not anticipating having a reservation system for accessing our mountain.
And we feel very good about the experience for next year, we do have a lot of things that will be in the works and we'll be talking more about as we get into the fall.
Around how we manage capacity better a lot of things that we learned.
Over this last year, but I think it's always important to remember that you know a lot of the folks that are that we're seeing the growth from of course are coming from people who were previously paid lift ticket holders are renewing pass holders. We're also seeing growth people just upgrading our path in terms of buying a higher value path.
So all of those things are critical we also see householders spread their visitation out of the season.
Especially some of our key time periods of course, there's limitations when it comes to lodging and other pizza. So what we tend to see is that for people with passive.
We'll adjust their vacation.
Christmas rate.
Moving to the 23rd or 'twenty for us in 'twenty no for.
We're moving from the.
And even on the first and you can look back on the third those things are all hugely incremental to us some great opportunities and so and I think are actually positive for the resort and positive for the entire ecosystem in the community, which is to try and continue to spread the capacity out throughout the season.
And so no we feel very good about this and are feeling good about absolutely be experience for next season, and a lot of things, including new left and new process improvements that we're going to have that debt I think will make it a yeah. You know the experience for lifetime, which is of course, our commitments every day.
Okay great.
You've obviously given Pete given pass holders are really nice value proposition on lift tickets.
But any.
Opportunity to take pricing on on some of the list price in your menu pricing on things like ski school dining given how strong the consumer and the economic environment.
It'll be in the fall.
Yeah, I think we.
Yeah, we price all of these products independently and for many of the product for price really at the resort level based on our local unique dynamics at each resort has.
And I think you know that debt, even if sometimes we lean in a little bit more aggressive on price in some areas, we still try and keep to my earlier comments are more ratable more consistent approach to price increases.
We feel like that that's important we don't we don't want to see huge gyrations.
And certainly there are other products out there.
Certainly like the room rates on our hotels that'll move quite a bit rate we.
Week to week month to month day of the week based on the season that ran in price. We're following the rest of the hotel market in that respect, but a lot of our other products. We tend to yeah. You know kind of search certainly in a strong economic environment will be a bit more aggressive.
But nothing that for that.
That would gyrate, because we don't think that that's good for the overall consumer experience.
Okay very helpful. Thanks, Thanks, guys.
Great. Thanks.
Thank you we'll take our next question from Patrick shows with the Truest Securities.
Hi, good evening.
A couple of questions here.
In light of Mount Snow now instituting paid parking.
For parking lots that were formerly free for the upcoming season 2 questions in this regard.
Will you be expanding the paid parking initiative to other resorts and along those lines will there be any other initiatives for parts of the ski experience that may have been free in previous seasons, which could now become a tack on charged for the skier visits. Thank you.
I'm sure you know I think you know each 1 of our resorts goes through their own assessment.
You know as I, just mentioned certainly on pricing.
I think with parking you know that that is a component that we do think is sometimes important for certain resort at certain times to help RASM capacity I mean, it's not you know in the end of the day we want.
We want to Incent people to car pool, we want to Incent people to take.
Other forms of transportation when they can.
And we do use that at a number of our some of our resorts have paid parking at the base some of them don't I'd say more and more you're seeing.
Not just.
US as the resort operator, but many of our communities instituting paid parking I think youre seeing that.
Outside the resort environment and many city so to US it's really just 1 component of parking for us is not a it's.
It's not a bit moneymaker at whatsoever. So in terms of it being material to our overall financial performance or valuation for the company. It's not at all it's really something that is used by the local resort to 2.
To assess how to best manage.
For the capacity.
And so we take it on a resort by resort basin.
Okay, I guess, what I was more meaning that this is sort of a new tack on charge will there be.
Yeah.
Other tack on charges for this coming season that you're working on you know not not just debt that resort.
But items that maybe had again in the past.
And been free for usage.
Yeah.
You know again every every resort looks at.
At each of their.
Dynamics. It makes decisions that are important to manage the capacity at their own unique resort. Obviously, you know to the extent that we're making the changes we always like to try and get those out as early as possible.
And yeah. So you know to the extent that those come up obviously, we'll communicate them when we do but again not really material to the old understood performance here and not something not something that I would see that is.
No it's definitely not a strategy of ours at a corporate level it's real.
Local kind of unique decision by decision and even on parking we have parking lots of cross sell of our resort some of them may add a charge for parking to help manage capacity some of them remain free so we take a.
Kind of situation by situation approach.
Okay. I was just curious that for some part of like the macro strategy to make up.
The discount pass price by adding on additional items.
No no unfortunately that debt.
It's a market that's not the pocketed.
I'm not going to do it and yes, we're really more focused on all of those things we talked about upfront in terms of how we drop off for us.
Understood and then just.
Quick question here.
You had mentioned.
Instituting a $15 minimum wage some of your resorts what was the comparable wage.
Last season for those resorts.
Hey, Robert.
Yes, some of the resort.
Where I think you know obviously in California, we probably were the highest in Washington.
But the low, California, and Colorado, and Utah somewhere around the mid 12 for 12.50, an hour was our lowest entry wage. So you know for especially for those 2 resorts is a pretty meaningful increase and you know again, it's there'll be resort by resort in the east, but they'll also see some pretty meaningful increases non entry wage as well.
Okay.
Thank you for the update.
Sure.
Yeah.
Thank you we'll take our next question from David Katz with Jefferies.
Hi afternoon. Thanks.
Thanks for taking my question congrats on the quarter.
Covered a lot of ground already with respect to patches.
And I wanted to just touch on M&A and specifically the international piece of it because it does come up for them.
Pretty frequently about Europe, or Asia, which you know the discussion goes back a long time, what are the sort of puts and takes for gating factors aside from just finding the right partner the right price at getting some international exposure going and the follow up to it as you know.
Whether there you know.
How much leverage there would be toward your domestic business for North American business as a result of it.
Yeah, I think you know it is.
I think many many people you know probably forget but it was similar in the U S. When you go back 10 or 20 years in terms of.
The challenge of trying to do M&A, even here in North America, and I think we stuck at it.
You know, we're pretty disciplined and diligent about it I think we're able to make some real progress I think the same is true internationally and in some cases.
You know even more challenges given some of the local.
Connection to many of the resorts and and of course, so much of the national price just like we have here in the U S debt that exists for these resorts and so it's important I think that you can find the right person who wants to partner or sell the resort.
That you know we are the right.
Buyer or partner for that resort and we have the rate plan that goes forward and I would say you know we in part also been quite busy E rate in the U S and of course in Australia over the last decade, and so while there's no doubt that we've been having these conversations and of course, if it hasn't been as front and center as some of the opportunities that we were trying to pursue and then.
Of course, it would be great here and then when Covid hit so I think coming out of Covid I feel like we have we still have this opportunity its very critical to us.
We know that it's a critical strategic direction, and especially because you know that their unique specific opportunities that still exist for North America is obviously less so today than 5 years ago, and we know that that that's an area that we want to focus on I think.
And yes quite confident that we will get there, but again, we're going to be disciplined about that and make sure that we use our capital and our time wisely around it.
In terms of increments holiday I think no doubt doing cutting into and.
Rita would have immediate benefit.
Think too to our connection between Australia.
Japan, Canada, and the U S and so I think that would.
B a stronger immediate boost.
In Europe, I think less so because we don't see those same visitation patterns on the other hand the market in Europe is much bigger so the longer term opportunity I think in Europe is quite strong but of course, it will take more time.
To get going and it is more about creating.
Our unique platform in Europe on a standalone basis that you know have been some overlap as we've highlighted with the U K the U S.
And and even and certainly in South America and other.
Growing parts of the world economy.
Oh, yeah, very much still on the radar and obviously.
It just hasn't been front and center as much as some other thing you know over the last couple of years.
Got it thank you very much.
Yeah. Thank you.
Thank you. Our next question comes from Arent, that's less SKU with Exane BNP Paramount.
Good afternoon. Thanks for taking my question I wanted to follow up on Patrick's question with regards to the minimum wage increase curious to know what youre seeing in the labor market is there enough talent out there to hire and do you anticipate that the U S border will reopen and you can potentially higher foreign talent as well for the upcoming season.
I think it's definitely a challenging labor market right now I think you know I think.
Thomas back credit was.
For Covid hit and so I think youre seeing some of that pick up as we come out of the pandemic I think for us.
It's certainly a concern for the summer it's not as big a concern of course as it is for us in the winter.
We are hopeful that we will be able to return to bring workers from abroad through R. J 1 student.
Pizza program and the HCV program for certain select position.
As we did in the past.
But obviously, we're also very committed to continuing to grow.
And improve all of our recruiting efforts and the routes that was something that I think was credit goal, even with the staffing challenges of the couple of years before COVID-19.
We continue to improve our both our competitiveness and the way we went about recruiting and that helped us quite a bit as we went into.
The 19 in the 'twenty ski season.
And I think we're gonna be leveraging a meeting on that again as we go into next year and obviously felt that it was critical for us to have a more aggressive entry wage and an increased wages even above that level. So.
So not only are we getting talent, but getting the best talent and.
Getting that getting kind of out front of of the current trends.
Very helpful. Thank you and then as a follow up for 1 to ask about Australia, I think the guidance specifically assumes no impact from the Lockdowns just curious to know with boots on the ground there what youre seeing with your 3 resorts are across Australia.
Why was there no impact assumed in guidance for for Q and then on the.
In terms of unit growth I think the passes were up 43% on a 2 year stack.
Anything anything interesting you like to share with regards to that just the breakdown for consumer is that also similar to what you saw in the U S. So far.
Yes, I would say 1 I think.
Per share opened and so.
I think we're seeing.
Good enthusiasm and engagement in new South Wales.
You know the Sydney market 2 per share and so I think feeling very good about that and I think you know it's hard to say, obviously I don't want to prejudge, what's going to happen in Victoria and in the Melbourne market, but.
They did relax some of the restrictions for the rest of the state outside of Melbourne.
And you know right now we are planning to open on schedule.
Of course, it's subject to as you know.
As things unfold, there, but we're optimistic I think we feel like there's a good opportunity for us to have a very good season, all across all 3 resort and I think the E. Yeah. It's broad base strength. So I would say that you know obviously with that kind of unit growth you know where.
We are seeing growth across lots of different markets and consumer segments and yeah feel good I think there is it similar in some ways to the pent up demand that you have here I think you also were very competitive in terms of the way we price our products in Australia like we are here.
And obviously the border in Australia is closed so travel outside of Australia is more limited and so you know, we're anticipating stronger domestic travel for the country at least for the time being.
Very helpful. Thank you very much and best of luck.
Yeah. Thanks.
Thank you we'll take our next question from Paul Golding with Macquarie capital.
Thanks, so much for taking my question.
The first question I have is around ancillary services coming back I was just wondering if you could give some color on how the experience are either for dining or or.
Or other ancillary services has been.
Maybe more efficient or the user experiences has been digitized just trying to get a sense of what margin impact could look like I'm conscious of the ancillary services being lighter through COVID-19, but low margin.
This quarter coming in where it was.
And then I have a follow up on labor after that.
Yeah, I think on margin, it's important to remember right that part of the margin improvement. This year was of course by us being disciplined around cost. Some of it was also because we did really well in the highest margin business, which is what they get and had more challenges than lower margin businesses now our ancillary businesses are actually all high <unk>.
Arjun.
It's lower margin than the flow through rate you got from ticket sales I think we absolutely learned quite a bit.
Particularly about I'd say, our dining business, our F&B business.
And absolutely intend to implement a number of <unk>.
Improvements in opportunities as we go into next year, I'd say round efficiency not really around you don't necessarily cost if this the battleground process efficiency.
And I think using having the reservation system that we did have for all of our dining for most of our dining a stop pushing on this past year I think gave US a lot of insight on a lot of factors that we didn't know before so I think we can use that even if we don't use the reservation system in the same way again or we can actually use that data as we go into net.
Stephen So we feel very good about that and I think we certainly saw I think you know on ski school, obviously that business operated more close to either we couldnt have the capacities and we didn't have the opportunity for class sizes, we didn't have the opportunity for lunch.
With the instructor.
In most cases and so I think those were those were takeaways from the guest experience. Unfortunately for this year, but I think we.
I would say that.
The experience itself.
Much closer to.
You know what it is has been historically, so I think good takeaways and insights on that but probably not as much given the huge disruption that we saw on F&B.
Thanks for that Rob and then on on Labor with the current backdrop, just wondering if the bulking up on.
Customer experienced staff.
Mark.
Transitory trend, where youre going to plateau, just because of how many new pass members are onboarding in the COVID-19 disruption or is that something that you see just is it just for the business.
Just sort of sticking around long term.
Yes, I think I think the commitment to it and the investment is obviously going to stick around I think we're not we're not going to go backwards to where we were before.
And you know because I feel you know yeah.
Where we were understaffed in under resorts and a lot of different areas and of course this past year was a unique.
Year debt you know in terms of the complexity with credit and with Covid and unique epic coverage situation for all of which I think made it more challenging, but but you know as we've been clear and as I've been clear. Obviously, we are behind on that and that was the that was a mistake you know that the debt we have to correct. So I think going forward, yeah, we likely will not see the.
Same complexity, hopefully because the environment will be more stable, but theres no doubt debt.
We operated over this laptop zone deadline, which was quite strong in a lot of people obviously coming into the deadline.
You know when we had great response times, both on the phone and or.
Rooms, and so that I think bodes well for as we go to the future. We don't want to move backwards on that we want to make sure that we stay within well within industry standards.
And best practices on that Oh, yeah, that's not something we're going to give up on.
Alright, thanks, so much.
Yeah. Thank you.
Thank you we'll take our next.
Next question, sorry, excuse me.
Yes, we'll take our next question from Ryan Sundby with William Blair.
Yeah, Hi, good afternoon.
So we have a question here.
Rob maybe you have an example, you can lean on for a resort to see bad weather for a couple of treatments.
When you look at the challenges that what's your sales for the past year and a half now with reported restriction for the early resort closures do you have any concern about daily action.
Of that reported either next year or beyond.
I guess can you starting to see a resort lease maybe share behind the relevance for cedar.
For the season.
Yeah really no concerns about that at all I think.
Whistler is yeah, 1 of the most.
<unk>.
Our resorts in the world.
And.
With.
And experience on so many levels that's really unparalleled.
That and a long history no.
We feel very good debt with the border opening and obviously you know with with good weather, which by the way you know of course. Unfortunately, we didn't have a border that people could cross but the.
Snow quality this year was certainly better than the previous year.
No we feel quite confident actually in Whistler as long term future in both the resilience of the resort.
And in the strength that Whistler will continue to show I think again, it's not obviously the mountain.
Our largest ski mountain in North America.
The community itself and the vibrancy and uniqueness of vacuum unity is also another huge draw for people in terms of why they come.
And yeah, the access that people have from different market outside the U S.
And certainly Asia, and Australia, we don't see that moving at all I think again prior to Covid. They were awesome, making good inroads in Mexico are something that we were helping to support for and South America. So you know it's.
It's just truly 1 of the gems right anywhere in the world and now.
It's not something where we're not concerned at all that it is going to Miss a beat once once we really get past.
Current challenges of Covid.
Okay great.
Sure.
There were any kind of long term.
Thanks for your question.
Sure.
Yeah.
Thank you as a final reminder to ask a question. Please press star 1 take our next question from Alex <unk> with Baron Berg.
Hi, Good afternoon, guys. Thanks for taking my questions. My first question pertains to the resumption of the capital projects you outlined there's plenty of headlines about supply chain and employment constraints. These days have you seen major price increases in material and labor costs that can impact the capex assumptions you outlined earlier this year.
And then do you think it could impact your budgeting for next year.
Yeah, I don't think yeah, we're not we're not I think those dynamics that you're highlighting are real and theirs.
There is something we're always looking at but I don't see that as at this point is something that's going to impact. The overall budgeting that we gave for this year I think you know as we go into next year.
Possible like we obviously, we don't know yet until we get there but.
They can be and for us, it's something that we're still going to be aggressive on reinvesting in our resorts and you know theres no doubt that as we come out of Covid.
There's going to be opportunities continued opportunities for us to improve lifts and restaurants add new terrain, where we can.
<unk> improved the experience you know all of that and I think you know if we do see some inflation that could be an impact but that won't deter us from continuing to make these investments.
Okay understood. That's helpful. And then secondly, a less discussed topic is your real estate segment. Obviously the housing market is pretty robust right now and many of your mountain communities are seeing impressive price increases is it possible to see a bit more optimistic or opportunistic strategy with the real estate portfolio in these types of.
Cycles.
You know I think we currently.
Love to see that the current strength in these markets for Wilhelm.
Our debt.
By the way a number of projects that where we have sold the land to developers those developers are working on either getting approvals for their projects are actually working on construction are getting their projects off the ground and so we're hopeful that the current market will absolutely help with that.
And yeah, I think to the extent that there are other projects that debt that sit out there we could absolutely use the current market to attract and engage with new developers, obviously, we're not going to really go into the development business on our own.
I think it's critical to continue to invest in affordable housing we think each of our communities. This is another issue that I think is a barrier for many of our communities in some of these projects can can certainly have.
You know debate about whether whether where they should be or how this should be done, but our hope is and we remain committed to putting capital behind and real focus on also getting.
Portable and employee housing project is done to ensure that the resorts remain a livable and accessible to a wide range of people.
Okay. That's great. Thank you Rob.
Okay.
Thank you at this time I would like to turn the call back over to Rob Katz for closing remarks.
Thank you operator.
This concludes our fiscal 2021 third quarter earnings call. Thanks to everyone, who joined US today. Please feel free to contact me or Michael directly should you have any further question. Thank you for your time today and goodbye.
This concludes today's call. Thank you for your participation you may now disconnect.
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