Q1 2022 Vail Resorts Inc Earnings Call
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Good day and welcome to the Vail Resorts first quarter 2022 earnings call. Today's conference is being recorded at this time I'd like to turn the conference over to Kirsten Lynch Chief Executive Officer. Please go ahead ma'am.
Thank you good afternoon, everyone welcome to our fiscal 2022 first quarter earnings conference call.
I'm pleased to be with you today on my first earnings call as Chief Executive Officer.
Joining me on the call. This afternoon is Michael Barkin, our Chief Financial Officer.
Before we begin let me remind you that some information provided during this call may include forward looking statements that are based on certain assumptions and.
And are subject to a number of risks and uncertainties as described in our SEC filings and actual future results may vary materially.
What were looking statements in our press release issued the factor level along with our remarks on this call are made as of today December nine 2021, and we undertake no duty to update them as actual events unfold.
Today's remarks also include certain non-GAAP financial measures reconciliations of these measures are provided in the tables included with our press release, along with our quarterly report on Form 10-Q were filed this afternoon with the SEC and are also available on the Investor Relations section of <unk>.
Our web site Www Vail resorts dotcom.
With that said, let's turn to our fiscal 2022 first quarter results.
We are pleased with our results for the quarter, which exceeded our expectations.
Performance at our Australian resorts during the first quarter was negatively impacted by COVID-19 related limitations and restrictions, including stay at home orders and periodic resort closures throughout the quarter, we weren't able to reopen our Australian resorts for the last few weeks of the ski season, resulting in phase.
Your ability relative to our expectation.
Our Tahoe resorts were negatively impacted by the caldor fire, which resulted in the early closure of our summer operations in the region.
Side from these unique challenges, we continued to see strong demand throughout the quarter, which we believe highlights our guests' continued desire for outdoor experiences.
Turning now to our 2021 2022 north American season pass sales and early season indicators.
Past product sales for the North American ski season increased approximately 47% in units and approximately 21% in sales dollars through December five 2021 as compared to the period in the prior year through December six 2020 without deducting.
For the value of any redeemed credits provided to certain north American pass holders in the prior period.
Cast product sales through December 5th 2021 for 2021 2022 north American ski season increased approximately 76% in units and approximately 45% in sales dollars as compared to the sales for the 20th 19 2020, North American ski season through December.
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With past product sales adjusted to include peak resorts pass sales in both periods.
Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of 78 fence between the Canadian dollar and the U S. Dollar in all periods for Whistler Blackcomb pass sales.
We are very pleased with the results of our season pass sales, which continue to demonstrate the strength of our data analytics capabilities and the compelling value proposition of our past past products.
Driven in part by the 20% price reduction in passes for the 2021 2022 season.
We expect that the total number of guests on all advanced commitment products. This year will exceed $2 1 million.
Including all past products for our North American and Australian resorts Rep.
Representing an increase of approximately 700000 pass holders from last year and an increase of approximately 900000 pass holders from two years ago.
For the full pass sales season, we saw strong unit growth from renewing pass holders and significantly stronger unit growth from new pass holders, which includes guests on our database, who previously purchased lift tickets or passes but did not buy a pass in the previous season as well as guests who are.
Completely new to our database.
Our most significant unit growth was from our destination markets, particularly in the northeast and we.
We also had very strong growth across all of our local markets.
We have focused on growing our destination pass holder base as we have expanded our network and over the course of the last two years, we have nearly doubled the number of advance commitment gas from those markets.
Our absolute unit growth was led by our core epic pass and epic local pass products.
And we also saw very strong growth from our epic day pass products, including strength in our new Epic day pass limited products, which offer a lower price point for guests not planning to ski at select resorts as we continue to refine our product offer offering to help move more guests into advanced commitment products.
Compared to the period ended December six 2020 effective passed price decreased 17%. Despite the 20% price decrease we implemented this year and the significant growth of our lower priced epic day pass products.
Which continue to represent an increasing portion of our total advanced commitment products sales.
We significantly outperformed our original expectations per pass sales relative to the estimates we provided when we announced the 20% price decrease in our passes which.
Which was driven by the significant increase in new pass holders and guests trading up to higher value passes.
We are encouraged by the indicators of demand heading into the 2021 2022 north American ski season, with strong leisure travel demand indicators.
Our strong pass sales provide visibility into the robust demand for guests to visit our resorts in the year ahead lodging bookings at our U S resorts for the upcoming season are trending ahead of pre COVID-19 levels for the 2019 2020 season, while lodging bookings at Whistler Blackcomb are lagging.
2019, 2020 bookings, which we anticipated due to the impact of travel restrictions and international visitors to the resort.
Based on historical averages around half of the bookings for the winter season have been made by this time, though it is important to note that our lodging bookings represent a small portion of the overall lodging inventory around our resorts.
Our early season conditions have been challenging across the network, resulting in delayed opening and limited opening open terrain.
Many of our resorts are very recently experiencing snowfall in colder temperatures that had been more conducive to snow, making which we expect will allow us to expand our open terrain soon.
Despite the challenging early season conditions. The success of our advanced commitment strategy allows us to secure a significant amount of our demand and revenue ahead of the season, which creates significant stability for our business.
We remain dedicated to continuing to improve the guest experience reduce wait times and communicate transparently with gas, especially given the excitement and demand for travel this coming season.
As announced on November 16th we have taken additional steps to prioritize the iron Mountain experience pass holders this season.
<unk> limiting lift ticket sales during the three most popular holiday periods.
Flooring, a new operating plan, which includes significantly improving how efficiently we load lifts and gondolas.
Launching a new daily forecast of Lyft line wait times and the epic mixed app.
And investing in new lifts and expanded terrain to reduce wait times in order to ensure skiers and riders have an experience of a lifetime at our resorts. This season.
We are thrilled to welcome guests to all of our resorts as the 2021 2022 north American ski season kicks off with several transformational enhancements to the guest experience.
In Colorado, we completed a 250 acre lift serve terrain expansion in the signature Mccoy Park area of Beaver Creek further differentiating the resort's high end family focused experience.
We also added a new four person high speed lift at Breckenridge to serve the popular peak seven.
Place the Peru lift at Keystone is a six person high speed chair left and replace the Peach tree left at crested Butte with a new three person fixed script left.
At Okemo, we completed a transformational investment, including upgrading the quantum lift to replace the Green Ridge three person fixed script chairlift.
In addition to these investments that will greatly improve uplift capacity.
We have invested in companywide technology enhancements, including a number of upgrades to bring a best in class approach to how we service our guests through our customer service channels.
Now I would like to turn the call over to Michael to further discuss our financial results, our fiscal 2022 outlook and the seven Springs acquisition announcement.
Thanks, Kristen and good afternoon as Kieran mentioned, we are pleased with our first fiscal quarter with our first fiscal quarter performance net loss attributable to Vail resorts was $139 $3 million for the first quarter of fiscal 2022 compared to a net loss attributable to Vail resorts.
$153 $8 million in the same period in the prior year.
Resort reported EBITDA was a loss of $108 $4 million in the first fiscal quarter, which compares to resort reported EBITDA loss of $94 $8 million in the same period in the prior year.
Both periods continued to be negatively impacted by COVID-19, and related limitations and restrictions. Additionally.
Additionally, the prior year period included the recognition of $15 $4 million lift revenue associated with the expiration of the credit offers that were made to 2019 2020 pass product holders in connection with COVID-19 related closures.
We remain focused on our disciplined approach to capital allocation.
Our liquidity position remains strong and we are confident in the free cash flow generation and stability of our business model.
Our total cash and revolver availability as of October 31, 2021 was approximately $2 1 billion with $1 $5 billion of cash on hand $417 million of revolver availability under the Vale holdings credit agreement and $220 million of revolver.
<unk> under the Whistler Blackcomb credit agreement.
As of October 31, 2021, our net debt was two six times trailing 12 months total reported EBITDA and we exited the temporary waiver period under the Veil Holdings credit agreement effective October 31 2021.
I'm also pleased to announce that our board of directors has declared a cash dividend on bell resorts common stock the.
The dividend will be 88 cents per share of common stock and will be payable on January 11, 2022 to shareholders of record on December 28, 2021.
This dividend payment that equates to 50% of pre pandemic levels consistent with our prior quarter cash dividend and reflects our continued confidence in the strong free cash flow generation and stability of our business model. Despite the ongoing risks associated with COVID-19.
Our board of directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the level of our quarterly dividend going forward.
Moving now to our fiscal 2022 outlook.
Given our first quarter results and the indicators we are seeing for the upcoming season, we are reaffirming our resort reported EBITDA guidance for fiscal 2022 of $785 million to $835 million that was included in our September earnings release.
Based on the assumptions incorporated at that time, including foreign currency exchange rates.
Our guidance includes an estimated $2 million of acquisition related expenses specific to seven springs, but does not include any estimate for the closing cost operating results or integration expense associated with the seven Springs acquisition, which is expected to close later this winter.
We are encouraged by our very strong pass sales heading into the season, our favorable first quarter results.
And the strong demand, we are seeing across leisure travel and in our U S booking trends.
Important to note that our growth in pass sales is expected to be partially offset by reduced lift ticket sales as we continue to successfully convert guests from lift tickets to pass products.
Additionally, we anticipate modest offsets from limited and lift ticket sales during the three most popular holiday periods across our North American resorts to prioritize access for pass holders.
Early season conditions have been challenging resulting in delayed openings and limited terrain across many of our resorts and we anticipate that these conditions will have a negative impact on our results leading up to the holidays, but the north American ski season has just begun with our primary earnings period still in front of us.
There continues to be uncertainty regarding the ultimate impact of COVID-19 on our business results in fiscal year 2022, including any response to changing COVID-19 guidance and regulations by the various governmental bodies that regulate our operations and resort communities as well as changes in travel and consumer behavior.
Resulting from COVID-19.
Our guidance for fiscal year, 2022 assumes normal weather conditions.
Excuse me it assumes normal weather and conditions from the holiday period onward.
No impact from incremental travel or operating restrictions associated with COVID-19 that could negatively impact our results the.
The company revised its segment reporting to move certain dining and golf operations from the lodging segment to the mountain segment consistent with how those operations or manage.
The expected results of this reporting revision is a shift of approximately $6 million from lodging reported EBITDA to mountain reported EBITDA for our fiscal 2022 guidance relative to our guidance that was included in our September earnings release.
This shift has no impact to unexpected net income attributable to Vail resorts or resort reported EBITDA.
We were thrilled to share our announcement yesterday that we entered into an agreement to acquire seven Springs Mountain resort hidden Valley ski resort and Laurel Mountain ski area in the Pittsburgh, Pennsylvania area.
Seven Springs is a leading regional destination in Western Pennsylvania, serving guests in Pittsburgh, Cleveland, Washington, D C and Baltimore.
These resorts create yet another opportunity for us to bring skiers and riders into the Vail resorts network, providing guests with the opportunity to ski close to home and a world class destination resorts on the same house product.
We will be acquiring seven springs for a purchase price of approximately $125 million.
Subject to certain adjustments, we estimate that seven springs will generate incremental annual EBITDA in excess of $15 million and the company's fiscal year ending July 31, 2023, which includes.
Approximately $5 million for the 418 rooms, Slopeside hotel and its associated conference facilities in lodging operations.
Ongoing capital expenditures associated with the seven springs operations are expected to be approximately $3 million per year.
We plan to add access to the three resorts to our epic pass products for the 2022 2023, North American ski season.
The transaction is expected to close this winter.
Now I'll turn the call back over to Kieran.
Thank you Michael as announced in September we are excited to be proceeding with our ambitious capital investment plan for calendar year, 2022 of approximately $318 million to $328 million across our resorts to significantly increase lift capacity.
D and enhance the guest experience as we drive increased loyalty from our guests and continuously improve the value proposition of our advanced commitment products.
The plan includes the installation of 21, new or replacement lift across 14 of our resorts and a transformational lift served terrain expansion at Keystone.
The updated lift upgrade plan includes two incremental replacement lift at Jack Frost and Big Boulder in Pennsylvania to provide increased capacity and improved guest experience at our resorts.
All of the projects in the plan are subject to regulatory approvals.
In addition to these lift upgrade and terrain expansion projects. We are excited to announce additional details on our investment plans not previously highlighted in our September announcement.
We continue to remain highly focused on developing and leveraging our data driven approach to marketing and operating the business.
Our planned investment include network wide scalable technology that will enhance our analytics.
E Commerce and guest engagement tools to improve our ability to target our guest outreach personalized messages and improve conversion.
We will also be investing in broader self service capabilities to improve guest online experience and engagement.
In addition, we are excited to announce a $3 $6 million capital investment plan and Vail resorts commitment to zero initiative, including targeted investments and high efficiency snowmaking heating and cooling infrastructure.
And Whiting to further improve our energy efficiency and make meaningful progress toward our 2030 goal.
We expect our capital plan for calendar 2022 to be approximately $315 million to $325 million, excluding approximately $3 million of one time items associated with real estate related capital and excluding any capital expenditures associated with the.
Seven Springs acquisition, which remains subject to closing.
This is approximately $150 million above our typical annual capital plan based on inflation and previous additions for acquisition and includes approximately $20 million of incremental spending to complete the one time capital plans associated with the peak resorts and Triple peaks.
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Including one time real estate related capital our total capital plan is expected to be approximately $318 million to $328 million.
We will be providing further detail on our calendar 2022 capital plan in March 2022.
I am honored and excited to lead this company and culture that I love so much.
I'm, especially grateful to the more than 55000 employees, who make vail resorts So special.
Our attention to service.
And our commitment to delivering an outstanding guest experience across our network continues to be the focus of our company.
I would like to thank all of our employees for their passion hard work and commitment to creating the experience of a lifetime for our guests, which as always lies at the center of our success.
I am also incredibly proud of our company's commitment to inclusivity.
Environmental sustainability and supporting our resort communities.
All of which are highlighted in our most recent epic promise progress report that is available on our website.
I would like to extend a special welcome to the team members of seven spring hidden Valley and Laurel Mountain.
We are excited to have you join the Vail resorts family and we look forward to welcoming you to our network of resorts later this winter when that transaction closes.
We hope that you all enjoy a fun and safe season ahead.
At this time, Michael and I will be happy to answer questions. Operator, we are ready to take questions.
Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Press Star one to ask a question I'm pleased to note will be limiting today's questions to a single question and a single follow up and with that we take our first question from Shaun Kelly of Bank of America. Please go ahead.
Great. Thank you and good afternoon Kierston welcome glad to have you on board.
Thank you Sean.
Maybe just start Austin I mean.
I'm going to go with a strategic one.
The.
The past reaction was obviously exceptional and I think the results sort of speak.
Peak for themselves did you were pretty clear that this outperformed your expectation. So so my first question would just be can you talk about how maybe the reaction and what youre expecting for traffic.
And movement around the resorts through the season, how does it impact a little bit your longer term investment planning, obviously, you have a big capital initiative already outlined for the coming calendar year, but even beyond that are there things you think you need to do to now accommodate this just much bigger program in this much bigger level of demand and just how do you think.
That plays out strategically.
Thanks, Sean we are yes incredibly pleased with the results of our season pass sales I think it's important to remember that while we exceeded our expectations a portion of the pass holders are coming from people, who are already coming to our resorts.
And that we're moving them into an advance commitment.
Overall strategically we are very focused on creating a scalable subscription model and guests lifetime value moving people into a pass.
As you know creates stability retention frequency ancillary capture and our ultimate vision long term is to achieve 75% or more of our total lift revenue in advanced commitment.
When we think about there that there are significant benefits to our business our employees our communities as well as the value we provide to gas and doing that.
The second part of your question about the guest experience is obviously key to enabling all of those pass holders to have an experience of a lifetime. What you saw US do this past year is make some deliberate steps and investments and decisions that will enable that X.
<unk> and I do think what I would anticipate over the next few years is that you will continue to see us do that specifically on capital investments.
This year, we have new terrain and new left we just announced a significant new investment for next year and it's incumbent on us to continually be looking at that experience and where the investments make sense.
The other piece of it is the operating plan that we announced earlier this season, which is how do we use the data.
We have about our operations to create the best experience on the mountain, including the most efficient loading of our less how do we use technology to give transparency to our guest.
All of those actions I would anticipate that we will continue to be focused on looking at the data we have and investing our resources, where we feel is most appropriate to create the best experience.
Thank you and then I guess as my follow up.
Just wanted to ask a little bit without retention rate. So obviously, there's two variables here and you were very clear that the new pass holder side was.
It was a big upside surprise, but what do you think that retention from repeat.
<unk> was that in line with your expectations and sort of how does that feel relative to what you saw last year.
It was in line with our expectation Sean we saw strong performance from renewals, which we expected where we really over delivered the expectations was in new and trade up new being guests that are lapsed that did not have a path.
Oh come on a lift ticket last year, but came in for the past program this year and.
And trade up which is people basically spending a portion or all of the discount into a higher price paths or more frequency, but renewals were strong and right on our expectations.
Next we go to the line of Laurent a vessel that school with peak power of Bot Exane. Please go ahead.
Hi, guys. This is Dan you answer Laura Thanks for taking my question.
Maybe to expand a little bit more on the composition of the incremental cost sales.
You mentioned, it's less Concord, all passed or is that maybe it's left and the new people to the system.
You said the large partner in the conversion from list, but can you maybe help quantify or give us kind of a ballpark estimate.
Hugh.
Those guests that are new to the database and how do you think that mix of.
Incremental pass sales evolved do you think the new people kind of.
Grow from here or how do you think about that.
Yeah, we are.
And over and over delivery versus our expectations on new and it really is a combination of when we say new some of those guests are new into our database some of them used to be on a lift ticket so they're new to it being a pass holder from our lap, meaning they came and pray.
Near years on a path for our lift ticket and came back to us.
What we saw from a market perspective is real strength and every single one of our local geographies and really importantly, our destination passes over the past two years nearly doubled.
So what you can see from that is the <unk>.
Type of guest that is understanding the value proposition of being in a past and is willing to actually commit in advance.
Is exactly the mix of guests that we would want to have.
Okay got it and then maybe as a follow up.
I think this moves seem like you're tracking a lot of gas. So it feels like you should be gaining market share just wondering what are your expectations for sure is when do you think.
Competition has to kind of react to this.
And I think I know one.
Advantages that you own all of the resorts, where some of the other classes maybe don't have that.
You can't react the same way on price, but just wondering how you're thinking about market share and how that can evolve.
It is always difficult for us to tell if we're growing share because we really only have our own data, but clearly what we're seeing is more and more guests are willing to commit in advance and I actually think that's good for the entire industry.
We think that we are really well positioned in the market because of what you just said our owned and operated network and the value proposition of our passes and actually also all of the different the broad portfolio of past products that enable people.
All to opt into advanced commitment based on what fits their needs in terms of frequency and access.
So while I can't say or really.
Comment on market share I can tell you where I feel we are and I think we're in a good position and physicians really well in the market.
Next we go to the line of.
Ben Chaiken with credit Suisse. Please go ahead.
Hey, How's it going.
Hi, Pat.
I might try the past question a little differently is there a way to ballpark how much the trade up.
Buyer contributed to the overall past growth.
And then one more I know, we we don't disclose that but I would what I would say is if you look at our what we've already shared in the release on effective pass price or effective pass price was down 17% percent.
Despite a 20% price reduction and an increasing mix of epic day pass, which has a lower price past product. So while I can't give you the exact amount. They contributed I think you can.
And for that.
We had strong trade up that would have enabled our effective past price to only be down 17%. Despite those two other factors.
Gotcha that makes sense and then on the on the seven Springs transaction. It seems very logical from a personal perspective, but just curious if there's any if you can share any historical data points around maybe destination visits from the Pittsburgh Baltimore area or whatever it might be appropriate I guess, just bottom line like what data.
Points.
Even teams saw it made this group of assets fit well in our portfolio.
Yeah, I'll start answering that which is strategically you know our approach to acquisition has really been to think about our business as our network of resorts and you've seen us making acquisitions.
Ski resorts outside of major metropolitan areas, specifically, because that is where the population density resides that is where there are significant.
Gears and riders currently but also in the future for skiing and riding and so seven springs for US strategically is a really important acquisition because it links to a major market of Pittsburgh and also serves gas and other major markets like Cleveland.
Washington D C and Baltimore and this is very consistent with our strategy and approach for acquisitions.
Next we go to the line of Chris <unk> with Deutsche Bank. Please go ahead.
Hey, good afternoon, everyone.
Welcome to <unk>.
Happy to have you.
At the front of the company.
I was just curious what as I was going through.
Thanks.
Going through the release I think you guys.
This quarter did not put the kind of the EBITDA margin.
Margin at the bottom if you had done that last quarter with the initial guidance so even though your resort.
Your EBITDA guidance for fiscal 'twenty twos unchanged I'm curious as to whether you are you have made any changes in your kind of revenue assumption that was embedded in the guidance last quarter.
Yeah, Hey, Chris Thanks, Yes, no updates to the sort of margin, which is why it's not included.
Okay, Okay fair enough and then.
The follow up is really going back to the.
Going back to the seven Springs, and I know you mentioned $15 million of EBITDA in fiscal 'twenty, three and I think historically right. When you make acquisitions when you bring the epic pass and there it is.
It seems like it takes you get a bigger benefit a couple of seasons. After that is that right. So the $15 million probably does not include a full benefit of having the epic pass installed there.
Yes, I think thats, the right way to think about it which is that.
We're trying to do is provide visibility into the first full year of operations under.
After the acquisition, which will be which will be FY 'twenty three for US was with seven springs, and we do think that even in year. One there will be benefits anytime that we announce a deal like this and it's curious sin mentioned, certainly we think that the strength of the brand and experience at seven Springs offers.
And the proximity to Pittsburgh.
Fact that it's not just the data skiing.
Resort, but actually offers.
A lodging options. So it's really a regional destination that yes, that's going to be this was a big announcement for that region.
But as you suggested we will be of course looking to ramp that up over time, we tend not to provide.
Specific forecast on that.
But.
That would also be consistent with what we've seen with similar acquisitions in the east is that we do have a multiyear ramp up.
Next we go to the line of Patrick Shoals with Trish Security. Please go ahead.
Hi, good evening everyone.
Bit of a I guess, an operational type of question here you talked about.
So it sounds like Youre going to be limited.
Lift ticket sales during holiday period.
I'm on many of your marketing and distribution list and I haven't seen that noted any anywhere how do you plan to communicate that to.
Potential customers and families ahead of time, you know I could imagine that could be a really.
That could go horribly wrong, if people are expecting on their expensive ski vacation staying at the four seasons and they expect to buy holistic and all of a sudden they can't how logistically that work. Thank you.
Thanks for the question, we okay I understand that correctly, yes.
If I understand what you're what.
Alex is going to be work. Thank you.
Yeah, I think you understand that correctly, we announced a lift that we are limiting lift tickets for very select time periods December 21st through January 2nd January 14th through the 17th in February 18th through the 27th only on those.
Specific days.
We did announce that via a press release, social media and we have also sent emails to.
All of the guests that are in our database to make them aware of it. It is also on our website.
And so if someone goes and by the way.
Many of those days are still actually available and there is not inventory sold out. So if a guest goes on our website to buy a lift ticket they will actually see on the calendar for that particular resort, whether or not there is lets ticket inventory available on that day or not and really.
Ultimately what our broad message is is that.
We really want our guests to purchase in advance whether that's on a path or that's buying their lift tickets in advance online and that is the best approach for all of our guests.
Okay.
Yeah.
Next we go to the line of David Katz with Jefferies. Please go ahead.
Hi, Good evening, everyone welcome Kristian and thanks for taking my questions.
With respect to the acquisition congrats on that.
I was just wondering one is there anything qualitative to share in terms of the return opportunity.
With that mountain.
How many more.
Would you say.
Notionally out there.
You can continue that.
Executed on this rollout.
Sure. Thanks, Thanks for the question David Yeah, I think.
We feel really good about the return profile of the acquisition of seven Springs, and it's two sets of resorts I think that.
I think the key.
This acquisition is similar to what we've done in the past, which is that we're very selective and targeted.
In the in the resorts that we look out to acquire and seven Springs really hits all of the criteria that we look for particularly as it relates to our regional destinations closer urban areas.
<unk> explained.
Earlier, and so yeah, I think when you look at it from.
Our scale perspective.
It's a sizable resort.
Attracting guests for multiple major metropolitan areas.
We think that just in year, one that will generate $15 million of EBITDA, which if you just do the multiple math on that is very attractive for us from the get go in as I described earlier certainly with all of these deals. We certainly look to continue to expand the impact both from a guest experience perspective, but also financially and as you saw.
To integrate resorts like this into the network, we've seen great success with that in the past and we would expect to see that again with with seven springs.
So we're very excited about it both from the network perspective and also financially.
The.
I think that the the question is.
Other acquisitions in North America, we absolutely think that there's additional opportunities for us as I think we've been quite clear with our expansion both in terms of destination resorts and regional and urban resorts over time, we certainly believe that we have to be very very selective as we look at that.
And so we will continue to be targeted in that way.
As it relates to the specific numbers now we're not going to obviously disclose.
Any specific targets or what we see the university in but I think I think seven Springs is another example of our ability to find very attractive opportunities in North America and of course, we're also continuing to look internationally.
Understood and a final.
As a quick follow up with your accelerated Capex program that's out there the incremental.
<unk> hundred 50.
Is it fair to assume that.
Qualitatively speaking when you pencil that spend.
You're sort of year to year free returns on that or.
At least consistent with what you've done in the past and I guess, what I'm really getting at is probably better than what you would normally see on your normal capex.
Yes, I mean, we're not providing specific guidance on returns relative to the capital, but I would say that as <unk> seen in the past we've held ourselves to a high return on our capital certainly I think that.
The capital on lift upgrades in particular that we're focused on what the incremental spend.
Coming in the next year really ties into the broader growth of the company as you look at the expansion of.
Right the pass holder base, which we've talked about.
The success that we've had in growing our overall.
<unk> and what we expect in terms of the demand outlook that I think <unk> highlighted and so we certainly see it as right how do we how do we deliver the return holistically across the business and of course, we prioritize the projects that we think will deliver the highest return.
Ultimately for the business, so we're not providing specific financial outlooks relative to.
The capital itself, but certainly holding ourselves to.
Similar return profiles that we've held ourselves to in the past.
Next we go to the line of Jeff schedule with Stifel. Your line is open.
Hey afternoon, everyone. Thanks for taking the questions Chris I appreciate.
All the commentary on lodging bookings and some of the forward demand.
<unk> I'm just curious if you look at the past week or two have you noticed any.
Volatility in the bookings specifically for the Christmas holidays, given all the news flow that's coming out around.
Hi, Thanks for the question.
I can't report that we've seen any material changes right now are.
What we see is strong leisure travel demand.
Pass sales being one of those indicators as well.
But I have not seen any other changes at that time.
Okay, Great very helpful. And then for my follow up I wanted to drill onto the labor cost side of the equation.
Of your peers did recently raised their minimum wage again.
After hiking it already back in September.
At least for the question you can either $15 right that you said back in July the 10 destination resorts does that still feel right given out a labor market trended into that peak October November hiring period or should we expect some continued inflationary pressure into the season.
Is that was that already baked into your guidance.
Thanks.
Okay.
Thanks, Yeah, we did announce a significant wage increase in July and we feel good about that wage increase we are certainly not immune to the challenges that some of the industry and the travel and leisure sector overall are facing.
Staffing is our top priority we are incredibly focused on.
Our approach for hiring retention, how we prioritize allocation of our.
Labor and resources and at this point in time, we are just very focused on the guest experience and delivering what is needed for this upcoming season.
Next we go to the line of Ryan Sundby with William Blair. Please go ahead.
Yes, hi, thanks for taking my question.
Going back to the comments on guest spending back to discount this year and she did a higher priced passes or increased frequency.
The key takeaway from that.
These price points that would've otherwise.
<unk> before the discount.
I guess kind of viewing this as playing with house money just like to hear any thoughts I mean, what's kind of dragging that spend.
Well I you know I don't we don't have specific responses back from our guests on exactly why they decided to spend back the discount we did assume that there would be some psychology associated with that and some trade up when we originally announced this back in March.
I would say that it has exceeded our expectations in terms of the trade up and I think there is there are multiple hypotheses you could have as to why I don't think I can definitively say what was going on in our guest's mind to get there I think the thing I'm really pleased about is with the price.
Discount our absolute unit growth was led by core epic and epic local which is those are the most expensive passes in our portfolio. So the absolute unit growth to occur in those products.
Is really I think maybe a signal of the access.
And the frequency with which our guests want to come and enjoy the outdoors and skiing and riding. This season, we saw strong percentage growth and epic day pass as well, which is a great sort of entry level into our advanced commitment and gives people some level of customization.
But right now I could not say definitively what the rationale was for that that trade up other than Ah and enthusiasm and excitement and a feeling maybe that the value proposition of the path is so strong that they are willing to put some of their own discount back in to get.
Sure.
Got it that's great color and then can you just help us understand how important the pre holiday season period here is in terms of the full year contribution of the year, just trying to get a better understanding.
Hello, its slow start.
Behind your initial expectations.
Yeah as I mentioned.
In the earlier part of the call. Your early season has been the conditions have resulted in some delayed opening unlimited terrain.
Please today actually we just announced that heavenly and Kirkwood in Tahoe are opening this Saturday, which is very good news.
And this is not the first time, we've experienced these kinds of early season conditions. It is a relatively small portion of our revenue for the ski season, and our primary earnings period is really still in front of us.
This concludes our question and answer session will be returned to Kirsten Lynch for closing remarks.
Thank you operator. This concludes our fiscal 2022 first quarter earnings call. Thank you to everyone, who joined US today. Please feel free to reach out to me or Michael directly should you have any further questions. Thank you for your time this afternoon and goodbye.
Thank you. This concludes today's teleconference. We thank you for your participation you may disconnect your lines at this time.
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