Q3 2024 Viad Corp Earnings Call
simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. David Long, you may begin your conference.
Thank you for watching!
Good afternoon and thank you for joining us for VIAB's 2024 Third Quarter Earnings Conference Call. During the call, you will hear from Steve Moster, our President and CEO, Ellen Ingersoll, our Chief Financial Officer, and David Barry, President and future CEO of Pursuit.
As they discuss their business performance and outlook, they will reference specific pages from our earnings presentation, which is available on the Investors section of our website.
And before I turn the call over to Steve, I would like to draw your attention to pages 2 and 3 of our presentation, which contain important disclosures regarding the use of non-GAP measures and forward-looking statements that we will provide during the call. And now, I'll turn it over to Steve, who will start on page 4 of our presentation.
Steve Moster: Thanks Kerry, and thanks to all of you for joining our call. I'd like to start off by discussing our three key business highlights and updates.
Steve Moster: First, I'm happy to report that both Pursuit and GES delivered very strong performance during the third quarter.
Steve Moster: Pursuit suggested EBITDA came in near the high end of our guidance range.
Steve Moster: Outside of Jasper we continue to see strong demand for our attractions and lodges and the iconic locations in which we operate.
Steve Moster: DES's adjusted EBITDA was above our guidance with impressive revenue growth and margin improvement.
Steve Moster: We successfully serviced our major non-annual shows during this quarter and remain focused on discipline cost management.
Steve Moster: Second, I'm also pleased to announce that we recently completed a $15.9 million dollar tuck-in acquisition for Pursuit's Glacier Park collection to expand our successful offering in that area.
Steve Moster: And third, we are on track to complete the transformative sale of GES by the end of the year. This transaction will establish pursuit at a pure play, high growth, and high margin business.
Steve Moster: Standalone Pursuit will have the financial flexibility and the balance sheet to accelerate its refresh build by growth strategy and capitalize on its substantial growth prospects in the hospitality and attraction space.
Speaker Change: And now, I'd like to turn the call over to Ellen, who will review our third quarter financial performance. Ellen?
Ellen Ingersoll: Thanks, Steve. I'll start on page 6 with our consolidated third quarter results.
Ellen Ingersoll: Revenue of $455.7 million increased 25% year-over-year. Consolidated adjusted EBITDA of $103.1 million increased $16.9 million. And adjusted net income improved by $15.5 million.
Ellen Ingersoll: are GAAP-basis net income attributable to VEOD of $48.6 million, with $7.3 million higher than the 2023 third quarter, primarily reflecting stronger performance at GES, partially offset by non-cash impairment charges and consulting costs related to the pending sale of GES.
Ellen Ingersoll: As shown on page 7, Pursuit delivered third quarter revenue of $182.3 million, adjusted EBITDA of $86.3 million, and an adjusted EBITDA margin of 47.4%.
Ellen Ingersoll: Revenue in adjusted EBITDA was down $4.7 million and $5.5 million, respectively, from the prior year due to temporary closures and disruption caused by wildfire activity in Jasper National Park.
Ellen Ingersoll: Our Jasper Lodges and Attractions experienced a revenue decline of $21.9 million year-over-year, which was largely offset by 13% revenue growth from our experiences outside of Jasper National Park.
Ellen Ingersoll: On a same-star basis, which excludes the JASPER properties, attractions ticket revenue grew 16% and room revenue grew 9%, driven by strong, effective ticket prices and ADRs, as well as increased demand for our experiences.
Ellen Ingersoll: As shown on page 8, GES delivered consolidated revenue of $273.4 million, adjusted EBITDA of $20.2 million, and an adjusted EBITDA margin of 7.4%.
Ellen Ingersoll: Consolidated Revenue and Adjusted EBITDA were up $94.5 million and $22.2 million respectively from the prior year reflecting strong growth at both SPIRO and GES exhibitions.
Ellen Ingersoll: Spyro revenue of $82.2 million increased 40% year-over-year, primarily due to strong client spending on major non-annual shows, which added $34 million of revenue to the quarter.
Ellen Ingersoll: GES Exhibitions revenue increased 60% primarily due to about $71 million of revenue from major non-annual shows, which outperformed our expectations.
Ellen Ingersoll: Next on page 9, we generated $110 million of cash from operations.
Ellen Ingersoll: spent $15 million on capital expenditures and repaid $94 million of debt during the third quarter.
Ellen Ingersoll: We ended the quarter with total liquidity of nearly $230 million and no borrowings on our revolver.
Ellen Ingersoll: Our total debt was $398.2 million, and our total net leverage ratio was 1.7 times.
Ellen Ingersoll: Now I'll cover our 2024 Outlook on page 10 starting with GES.
Ellen Ingersoll: Based on stronger-than-expected performance year-to-date in 2024 and favorable underlying demand trends, we are revising our prior full-year guidance ranges.
Ellen Ingersoll: At GES, we now expect to achieve adjusted EBITDA of $90 to $95 million, up from previous expectations of $85 to $95 million.
Ellen Ingersoll: Additionally, we've narrowed our adjusted EBITDA range for the pursuit business to $87 to $92 million.
Ellen Ingersoll: These guidance ranges do not attempt to incorporate any business interruption recoveries as the timing and amounts of such recoveries are uncertain at this stage.
Ellen Ingersoll: Thus far, we've recovered approximately $6 million of insurance proceeds, including $4.7 million received during the third quarter.
Ellen Ingersoll: These proceeds were used to cover property damage and costs we incurred for the protection and restoration of our Jasper businesses.
Ellen Ingersoll: We are actively engaged with our insurance carriers to understand the extent of additional insurance proceeds we should receive.
and we will continue to provide updates as appropriate.
Speaker Change: Now, David and Steve will provide further insight into our business performance at Pursuit and GES. David?
David: Thanks, Ellen. I'll start with a quick update on Jasper's reopening following the wildfire activity. As you're already aware, we lost one structure to the fire, our Maleen Canyon Wilderness Kitchen.
David: Fortunately, all of our other facilities are intact and we were able to reopen seven out of eight hotels in Jasper during the third quarter.
David: Road access to our Moline Lake Cruise attraction was not restored until after the end of the operating season, making it impossible for us to reopen that attraction this year.
David: Pyramid Lake Lodge remains closed as we repair some minor damage from fire protection efforts and this property will reopen prior to the busy holiday season.
David: Our attractions and hospitality experiences at the Columbia Ice Field reopen on August 9th once the Ice Field Parkway road closure was lifted.
David: We were very pleased with the number of attraction visitors that came through during September, and it was only down about 5% from 2023.
David: With all of our lodges back online, we expect to resume more typical guest occupancy levels as we head into the upcoming ski season in Jasper.
David: Our Jasper room night reservations on the books for the fourth quarter are about 90% of the prior year, and our first quarter 2025 reservations are tracking slightly higher than 2024 as of this same time last year.
David: The booking pace is encouraging and demonstrates the perennial demand for this iconic destination.
David: There are several market drivers that give us confidence in Jasper's return to historic business levels. So firstly, Jasper sits at a really important crossroads for leisure travellers visiting the Canadian Rockies.
David: For our tour and travel partners, Jasper is key to successful multi-state journeys as it is perfectly located in a beautiful national park and facilitates tour and travel guests overnighting on a multi-destination itinerary.
David: Secondly, the temporary reduction of 18% of Jaspers hotel room inventory is going to cause compression in the marketplace.
David: It will take several years for those 400 hotel rooms lost to fire to be rebuilt.
David: We have several seasons of compression ahead as demand from our tour and travel partners shows no sign of lessening.
David: Thirdly, there's a concerted effort from the municipal, provincial, federal governments and Parks Canada to bolster the return to travel to Jasper.
David: We expect this marketing energy to be powerful in saying to the world that Jasper is open for business.
David: Now let's discuss Pursuit's year-to-date results and the strong performance we've delivered.
David: For revenue, on page 12, you can see that we delivered year-to-date revenue growth of 4% overall and 14% when adjusting for the third quarter fire impact in Jasper.
David: The strong demand for iconic locations and unforgettable, inspiring experiences, combined with our proven Refresh Build by Growth strategy and relentless focus on improving the guest experience, enables us to drive increased visitation and improve rates.
David: So let me talk a little bit about our attractions performance on page 13. Our year-to-date total attractions ticket revenue of $137 million grew 12% year-over-year on a 5% increase in visitors and a meaningful improvement in effective ticket prices.
David: When adjusting to remove Jasper Attractions from the third quarter, our ticket revenue growth was 21%, driven by dynamic pricing and our investments to enhance and grow our guest experiences.
David: A great example of this is Sky Lagoon in Iceland. In 2021, we completed construction on a very successful attraction, which has surpassed all of our expectations.
David: We quickly recognized that demand for Sky's signature experience was exceeding our capacity.
David: We saw an opportunity to expand that premium experience to drive incremental revenue and a really improved guest experience.
David: I'm happy to report that we completed that expansion in August and saw an immediate list in September with 13% year-over-year growth in visitation and 16% growth in effective ticket price.
David: We're very pleased with the performance of this iconic attraction and look forward to building on its success.
David: Additionally, our new Flyover Chicago attraction, which opened in March, continues to contribute to our visitation growth and receive excellent reviews.
David: In addition to the phenomenal Chicago film, guests can now also enjoy our legendary Iceland film as we drive repeat visitation with compelling content.
David: I'll also call out to the Banff Gaondalat and their team, which continues to deliver standout performance as a must-do attraction in Banff, offering incredible mountaintop views, elevated dining, interpretive experiences that pay homage to the history and culture of Banff National Park.
David: So let's switch to hospitality next on page 14, pursuits year-to-date room revenue, excluding our temporarily closed Jasper Lodging in the third quarter, grew about 8% year-over-year.
All geographies outside of Jasper deliver growth and room revenue.
David: Same store rep par also grew 8% year-over-year, which was driven by capturing higher ADRs while maintaining strong occupancy levels.
David: Our pricing power strength is enabled by perennial demand for our experiential travel destinations, our unrealizing focus on providing a great guest experience, and seasonal compression in our markets.
David: Taking a look at Adjusted EBITDA, we'll look on page 15 and discuss our Adjusted EBITDA. Our team did an incredible job maximizing Adjusted EBITDA during a pretty challenging third quarter and hustled to hold our year-to-date results nearly flat in the prior year.
David: Full Year 2024 Adjusted EBIDTA is also expected to be nearly in line with 2023 despite the JASPER wildfire impact.
David: In 2025, we expect to deliver a just-to-DVDA greater than $100 million after absorbing approximately $12-13 million stand-alone public company costs.
David: which we expect will be our normalized run rate basis cost level after transition costs have wound down.
David: In 2025, we will continue to benefit from consumer travel trends, prioritizing experiences, the return of international visitation to our destinations, and the recovery in Jasper.
David: The sum of these factors, combined with a great guest experience, will enable us to demonstrate the full earnings power of Pursuit's collection of experiences.
David: Long-haul travel, trade, visitation of Canada continues to build, and we're seeing growth across markets around the world, including Asia.
David: We're very pleased to report that our two attractions at the Columbia Icefield, which were some of the most impacted by the disruption of long-haul international travel trade visitation during the pandemic, saw visitors increase about 27% year-over-year in the first half of the year.
prior to the closure of Jasper National Park.
David: This is quite encouraging, and we expect to see continued visitation growth in 2025.
David: We expect that all of our Jasper attractions and lodging properties will operate at full capacity in 2025 with a strong rebound.
David: Jasper's Maligne Lake and Icefield Parkway remain stunning examples of natural beauty in the Canadian Rockies.
David: And the Jasper Town site is getting back to business with a strong focus on supporting the recovery of sections of town that were damaged by fire.
David: As a reminder, approximately 97% of Jasper National Park's 2.8 million acres were spared from the wildfires.
David: So with plenty of beautiful park to explore, and about 18% of the overall Jasper Hotel bed base offline due to fire damage, we expect strong demand for our lodging properties in 2025.
David: Jasper remains an important itinerary inclusion for travel trade and other long-haul travelers visiting the Canadian Rockies.
David: So for an update on Refresh, Build, Buy, let's move to page 16 and talk about how we will accelerate our growth with our proven investment strategy, Refresh, Build, and Buy.
David: Refresh Build Buy enabled us to triple our revenue from 2015 to 2023 at a 15% compound annual growth rate by realizing strong returns on our investments.
David: And the pending sale of GES will give us a strong financial foundation to unlock our growth potential and meaningfully scale pursuit through acquisitions and organic growth opportunities.
David: We've maintained an active acquisition pipeline of iconic experiences that we can now pursue with vigor, knowing we'll have the financial capacity to transact for the right deal.
David: Just this week, we closed on a great $15.9 million tuck-in acquisition for our Glacier Park collection.
David: The acquired businesses include the Apgar Lookout Retreat and Eddy's Cafe and Mercantile. Apgar Lookout Retreat and Eddy's are located adjacent to our existing 48 rooms in Apgar Village on a rare piece of privately held land inside Glacier National Park.
David: bordering McDonnell Creek, and just steps from the shore of beautiful Lake McDonnell.
David: AFGAR Lookout Retreat's six high-end accommodation units are brand new and they're beautiful and they're a step above all the other lodging experiences in the West Glacier area.
David: Ed East is well positioned to offer food and beverage and retail merchandise to the approximately one million park visitors that come through APGAR as they explore Glacier National Park.
Speaker Change: This acquisition is a perfect complement to our Apgar Village Lodge, and based on anticipated synergies, we believe that we can achieve an effective purchase multiple of about 7.5 times adjusted EBITDA.
Speaker Change: Another example of a buy investment is the Jasper SkyTram. We previously announced an agreement to acquire this attraction. Enclosing has been delayed as we work with the seller to assess impacts of the wildfire activity in Jasper.
Speaker Change: The tram itself is operational today with some minor repairs that are underway.
Speaker Change: This is a great strategic fit for pursuit. We remain committed to adding it to our Banff-Jasper collection and are working diligently to sort out the various insurance impacts and work towards an efficient close.
Speaker Change: We're also strongly interested in expanding our collections to new geographies that will help balance out our seasonality and diversify our footprint.
Speaker Change: The world is a big, beautiful place, and our growth aperture is wide.
Speaker Change: Additionally, and importantly, we've identified approximately 20 actionable organic refresh and build opportunities within our existing geographies that represent a total investment of about $200 million.
Speaker Change: These are growth investments we can make in our well-instrumented and high-performing properties to improve and enhance the guest experience.
much like the Sky Lagoon expansion I discussed earlier.
Speaker Change: will provide more insight into these specific opportunities as they move into execution.
Speaker Change: So through a combination of steady organic growth investments, opportunistic acquisitions, and an obsessive focus on hospitality, culture, and guest experience, we have our sights set on delivering ongoing growth and strong shareholder returns.
Speaker Change: So as I conclude my remarks, I just want to say a big thank you to the thousands of team members across Pursuit for bringing their best every day. Steve, back to you.
Steve Moster: Thanks, David. Before we open up the call for questions, I want to provide a quick update on GES and the pending sale of that business to Truling Capital.
Steve Moster: I want to start by thanking the GES team for their dedication to consistently delivering excellent results for our clients and shareholders, and for the extra energy invested to ensure a successful sale transaction.
Steve Moster: Page 18 highlights the financial success that GES has achieved and the strong execution of the team to drive margin expansion and revenue growth.
Steve Moster: We continue to see strong demand for exhibitions and experiential marketing services.
Steve Moster: And the GES team is laser-focused on executing our clients' experiences and delivering double-digit revenue growth with an EBITDA margin of about 9% in 2024.
Steve Moster: Our efforts to transform GES's cost structure and leverage our industry-leading position have set GES up for ongoing success under TruLink's ownership.
Steve Moster: As noted on page 19, we're on track to complete the sale of GES to Trulink on December 31st.
Steve Moster: As a standalone business within Trulink's business portfolio, GES will gain greater execution flexibility and access to capital to invest in the company's existing service offering while pursuing growth both organically and through strategic acquisitions.
Speaker Change: And for VOD shareholders, this transaction will unlock our high-growth, high-return pursuit business as a pure-play company with stronger growth prospects, a strong balance sheet to fund growth, and a proven management team ready to continue executing.
Speaker Change: The proceeds from this transaction will allow us to reset our capital structure.
Speaker Change: We intend to fully retire VEOD's high-cost Term Loan B and revolver debt, and put the excess cash on our balance sheet to fund near-term growth initiatives for pursuit.
Speaker Change: The combination of very low leverage, excess cash, and a new undrawn revolver will give Pursuit immediate firepower to accelerate growth and enhance shareholder value through our proven Refresh Build by Strategy.
Speaker Change: This is a very exciting next chapter for VEOD, soon to be renamed PURSUIT.
Speaker Change: I want to extend a huge thanks to all the team members across GES, SPIRO, VIAD, and PURSUIT for their efforts to deliver the best possible results and help us reach this pivotal milestone.
Speaker Change: And thank you to our shareholders for your continued support. It's been an incredible journey and we're very excited about what Pursuit can accomplish in the near future. With that, let's open up the call for questions.
Speaker Change: At this time, I would like to remind everyone in order to ask a question, first start, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
Thank you for watching.
Speaker Change: The first question comes from Tyler Battery. Your line is now open.
Speaker Change: Good afternoon, thank you. So my first question is actually on the flyover side of things. Can you talk a little bit more about flyover Chicago?
Speaker Change: is Chicago at this point a positive contributor to EBITDA. And then a little bit more big picture when you look farther out. I mean, do you still see Flyover, the platform overall as a growth engine for you? Is it still something that you think that makes sense in this new pursuit entity?
Speaker Change: Hi, Tyler. A couple of things. So yes, Chicago is on a positive track and doing well.
Speaker Change: As we look into the future, as I mentioned in previous calls, we're working on stabilizing all of those businesses and getting them to optimum performance.
Speaker Change: You know, they take a long time to build, they take a long time to come out of the ground. We're very proud of the experiences that we have.
Speaker Change: They have tremendous guest satisfaction ratings. We're going to work to optimize them, but we do not plan on deploying capital into creating future flyover locations right now. We've got lots to focus on on the iconic location side of the business.
Speaker Change: Okay, perfect. I'm switching gears to Jasper, and I think you gave a lot of very helpful
details there. I'm interested if you can talk...
a little bit more about the tour travel.
Speaker Change: side of things. I'm not sure if there's any incremental details, anecdotes, et cetera, that you could provide. Just given the conversations you're having with some of those folks, I'm not sure when they look towards 2025, if their plans have changed.
Speaker Change: at all, given the wildfires. And I'm also interested on the long-haul side of things. We need to go towards next year.
Speaker Change: Is there the possibility that we start to recover some of that lost business? And I'm not sure any details in terms of numbers.
Speaker Change: you could provide, just trying to frame out what that might look like next year in terms of the impact of some of that long-haul visitation coming back.
Speaker Change: Yeah, I mean, we view it as a return to normal. We have strong demand from our tour and travel partners.
Speaker Change: Remember that we're immersed in this as a company, right? We experienced the fires, we evacuated guests and everything else. But on a world scale, this is something that happened very quickly in a blip of news. So our initial modeling anticipates the 2025 travel trade revenue in Jasper.
Speaker Change: to be up about 12% from the 2023 year, which is encouraging. We don't see anyone dropping Jasper on itineraries.
Speaker Change: As I mentioned in my remarks, one thing that's important to know is if you've got itineraries that you've booked with guests coming all across Western Canada, you need Jasper as a pivotal overnight destination.
Speaker Change: because of where it sits geographically between the other main centers of tourism. So, you know, the demand for Jasper is strong. What's actually a little bit tough right now is that you've got, you know, 18% or 400 keys that have come out of inventory.
Speaker Change: And so now, tour and travel partners who had booked those hotels over time are scrambling to be able to fill their itineraries.
Speaker Change: So I anticipate that our mix of tour and travel actually might be a little overweight as we work to accommodate demand through the summer of 2025. But we see no lessening of demand, we see no...
Speaker Change: impact of stay away from JASPER. It needs time to recover. We see the opposite that people are excited to come. They want to support JASPER. That reflects in the first quarter pacing that we're seeing in lodging where we're actually tracking you know ahead there. So we're encouraged by what we're seeing in terms of recovery.
Speaker Change: Taylor, if I may, I just have one more thing. Go ahead.
Sorry, during our earlier remarks, we
Speaker Change: We did talk about how much revenue was down in JASPER during the third quarter year over year. It might give you a bit of a sense of what recovery could look like. And again, you know, 23 probably wasn't the strongest of years for us, but the year over year dip from JASPER in the third quarter was about $22 million in revenue.
Thank you.
Okay, okay, great. And thank you for highlighting that.
Speaker Change: I think the last question for me, and we'll keep it more...
Just generic, I know.
Speaker Change: I mean, I'm asking for guidance and I can't give guidance for next year.
Speaker Change: trying to think through the EBITDA margin and you know maybe a stabilized EBITDA margin if you were. I think in the past you'd kind of given some, I don't want to call them targets per se, but given some aspirations in terms of what you think EBITDA could be like at Pursuit. So I just wanted to see if we could revisit those please and just talk about you know where you think EBITDA margin at Pursuit could go in the future.
Speaker Change: You know we anticipate that without you know factoring in the the public company burden that we will be on the 30% mark for 2025.
Speaker Change: And, you know, we're working through the process now as we integrate some things and work on the business transition, but we're enthusiastic of where Pursuit's margin is going to be and feel good about that going forward.
Speaker Change: Okay, great. I'll leave it there. Thank you for the detail.
Thanks, Tyler.
Speaker Change: The next question comes from Brian Mayer with the company B Reilly. Brian, your line is now open.
Thank you and good afternoon. Just a couple from me.
Speaker Change: As it relates to Jasper and the lack of those four-footed rooms, is it safe to assume that you should be running...
Speaker Change: pretty close to full occupancy for the next couple of quarters as construction crews and cleaning up and displaced residents, you know, all need a place to stay. I mean, how should you think about that relative to prior years?
Speaker Change: You're going to have some seasonality, Brian, and as an example, for instance, you know, construction workers potentially going home on weekends and and other things back to where they live and then coming back during the week. So it will be a little lumpy, but I think what's important to note is if you think to next summer,
Speaker Change: given that you have that removal of rooms, you're going to have very significant compression for summer 2025 in the Jasper market.
Okay, and.
Speaker Change: is it relates to modeling, right? So it's nice that you're making this very clean.
Speaker Change: separation on 1231. So I'm assuming, this is a silly question, we're just going to model out GES.
Speaker Change: through the end of the year. Think it out, pursue the stand-alone starting January 1st. But where do we put the action-related costs? Are they all going to be completed in the fourth quarter? Is there going to be some spillover into the first quarter? And can you quantify that across quarters?
on the transaction...
Speaker Change: On the transaction related costs, most of the costs will be in 24, some of them will spill over into 25. So, we're going to have some transition costs for IT, we're going to have some cash retention awards in 25, but most of the costs will be in 24.
Speaker Change: And can you give us a zip code on those numbers? Is it a couple million? Is it 10 million? Is it 5 million? Like how should we be thinking about that?
Speaker Change: Right, so the transaction cost that we talked about relating to what will come out of the proceeds was about $20 million.
Speaker Change: And is it safe to maybe do 15 million in the fourth and 5 million in the first, something along those lines?
Speaker Change: No, it would be about $20 million as of year-end and then another $5 to $6 million in 2025.
Speaker Change: Okay, perfect. And then the insurance proceeds from JASPER, I was pleased to hear that you're already receiving money there. I think you said $4.7 million in the third and $6 million total to date. Where do we find that on the P&L?
Speaker Change: the proceeds that came in. So some of it is offset against the impairment. So right now we have the, we have
Speaker Change: How much is on the balance sheet? 6.7 million in our receivables, all the proceeds.
Speaker Change: Everything is on the balance sheet. There's nothing that's at the piano.
other than impairment.
Speaker Change: We had an impairment and then we had recoveries that offset that on the P&L, but you're not going to see any on the P&L currently. It's all on the balance sheet.
Speaker Change: So as we recover BI going forward, you'll see that as a separate line item on the P&L.
Speaker Change: Going forward, I guess, starting the fourth quarter, first quarter. Right.
Speaker Change: Starting in the fourth quarter, any proceeds we receive, we'll break that out on the P&L.
Okay, perfect. Thank you. That's all for me.
Speaker Change: Your next question comes from Alex Furman with the company Craig Harlem Capital Group. Alex, your line is now open.
Alex Furman: Hey guys, thanks for taking my question. David, it seems like every quarter this year, you know, we've kind of heard about the Sky Lagoon being really strong demand and different measures you're taking to capture that demand and no matter what you do it seems like there's just there's just more and more demand there. I was wondering if you could maybe give us a little bit of a sense for those of us that haven't been out there. Can you describe to us kind of what is the opportunity to expand on that property? Is there enough space in the area to potentially build a boutique hotel to leverage all of the demand and the strong location there? Really impressive results in the third quarter from Sky Lagoon. Just wondering, you know, how
Alex Furman: how much more there could be to go there as you look at the future.
Speaker Change: Sure, I'd be happy to walk you through some stuff. So a couple of things to remember, right, just to recenter on what we've actually done.
Speaker Change: At Sky Lagoon, we realized that as things continued and momentum was building,
Speaker Change: that the higher end experience, which is called SKUL, which is the whole turf house experience
Speaker Change: between the steam shower, and the salts, and the salt scrub, and the sauna, and all of the different aspects of cold plunge, and so on. It had a throughput issue, and it was incredibly popular, but we were turning guests away from a higher-end product because we had throughput issues.
So, the first problem we solved was to make...
the whole experience in the Turf House,
Speaker Change: and just magnificent. So now instead of one sauna that seats 50 beautiful people staring at the ocean, there's two.
Speaker Change: and there's a combination of just improvements to that facility. What that allows you to do is to sell more of our higher-end product, which is the Ritual, and to really encourage guests. And it drives length of visitation, it drives guest satisfaction levels, and so on.
Speaker Change: Remember that it's an OPCO and PROPCO partnership, right, where we work with our Icelandic partners who are the landowners there, so there are opportunities for development.
Speaker Change: And it would be something we might consider, we may not consider as time goes on. So no commitment today as to what we might be envisioning there, other than there continues to be opportunity to expand the product.
Speaker Change: continue to have opportunity to work on the various brand aspects of it, but we're really really pleased with how the design and operational efforts have brought it to fruition.
Speaker Change: Okay, that's that's really helpful. Thank you, and then if I could just follow up on Jasper
Speaker Change: and the Canadian Rockies. It seems like you now have a pretty good handle, at least for the off-season here, of how demand is shaping up and what that's looking like in the new world, in which a lot of your competitors are offline for a few years.
Speaker Change: Curious what you're seeing in terms of rates and then even even more importantly, I guess I'm curious to what extent
Speaker Change: The dent of supply of hotel rooms in Jasper is impacting the rest of the region. Are you seeing more people booking in Banff and elsewhere in the Rockies? Curious if that could potentially drive more overnight guests to Waterton Lakes or even to Golden.
Thank you for watching!
Speaker Change: Well, I think the interesting thing, Alex, is that recovery is happening very quickly.
Speaker Change: So, 7 out of 8 hotels in Jasper are back open and hosting guests and excited to do it. We have Pyramid Lake Lodge undergoing a few repairs, but it'll be open for the Christmas holidays and we anticipate a busy winter season. Our pacing for the first quarter.
Speaker Change: for that part of the ski season is doing well, so.
Speaker Change: We think we're going to have continued demand, and that's going to drive, you know, obviously, pressure and compression within the market that we'll work to adjust to. It will take several years for those 400 keys to be rebuilt.
And so what's important is we're focused on...
Speaker Change: You know, how do we provide the support to our tour and travel partners, provide great experiences for guests, and make the needed improvement.
Speaker Change: that we're doing. Our Q4 rates are up from this time last year and so we're excited about that and we anticipate that we'll have continued rate growth through the beginning of 2025 and obviously through summer 2025.
Thank you.
That's great. Thank you very much.
So welcome, and you need to go to Iceland.
Yeah, for sure.
Thank you for watching.
Thank you for watching!
Speaker Change: Again, if you would like to ask a question, it is star followed by one.
Speaker Change: There are no further questions at this time. Steve Moster, I turn the call back over to you.
Steve Moster: Alright, that concludes our call for today, so thank you very much for your interest in our business and we will talk to you at the end of the next quarter. Thanks so much.
Steve Moster: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.
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