Is Vail group financially secure?
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Reading their report I have to admit that I was surprised that, after two years of Covid troubles, they still had the cash to do a share buyback and pay a dividend and buy a Swiss ski resort. When I compare that to the finances of other tourist and leisure related business such as operators of theme parks, cinemas, cruise lines, etc. I really do wonder what they did diffferently to apparently generate all that cash when other businesses in the sector where hemorrhaging money.
100% and Katz was upfront about that when he purchased Perisher. They need to run the Oz resorts efficiently to maintain profit and provide an experience that will ensure people buy an EPIC Pass again next year.
As a sample size of one, as a long time Falls skier VR has had no negative effect on my skiing experience and have maintained season pass pricing cheaper than I was paying 20 years ago. I'm happy.
Until you're a family wanting kids ski lessons at Hotham, or you're a 1 week per year skier/ski family...
Will be interesting to see if there's an Aussie backlash next season
Dropping the price of the 2021-22 N. American Epic passes lead to selling a lot of them. Those were all bought before staffing shortages and lack of snow during the Dec holiday period caused negative press and major complaints on social media about long lift lines and crowded slopes at destination resorts. The issues at resorts in the northeast came later in the season after bad rainstorms, coupled with severe staff shortages that impacted snowmaking and the opening of lifts.
The summer of 2021 was pretty busy at 4-season ski resorts in the USA. There was a plenty of pent up demand. Not that many people flying for vacations yet, but road trips were quite popular.
Must say the dividend was a surprise. Although I don't follow VR stock much.
And as long as the numbers buying Peic Australia passes are strong and the conversion to overseas patronage of Vail resorts is good I doubt they'll do much more than the basics. Replacements of snowmaking and lift infrastructure when they become run down enough to cause a legitimate operational or safety concern.
Vail must have huge debts , I am interested to see what happens as interest rates rise and their debt contracts come due.
I'll be paying attention with interest. VR bought Falls and Hotham in 2019. Then the pandemic shut ski resorts and everything else down in 2020. Given that the COO for Australia with lots of experience at Perisher left VR in early 2022, not surprising that there is little being said about future major projects. Not that it matters, but I've never had an Epic pass because I'd rather ski at Ikon/MCP resorts in the USA when I fly to ski at destination resorts in the Rockies. I don't live in an American region (midwest, northeast) that would make an Epic pass for local skiing worthwhile.
The parking structure project at Hotham seems pretty expensive. Obviously behind schedule, but that's not VR's fault.
December 2021 (Australia)
Building for future - Mt Hotham News
By CHRIS EPSKAMPTHE days of battling steep icy surfaces and sheltering from the frigid winter storms behind your car to get into ski gear at Mt Hotham’s Loch Car Park appear to be numbered. Anyone familiar with the car park will have noted...
mthothamnews.publish.net.au
I've been paying attention to the small hills that VR ended up with when Peak Resorts was bought in the USA in 2019. The resorts with slopeside lodging (Mount Snow, Hunter) serving New England and New York City markets in the northeast got plenty of attention, as was true when Peak owned them. Nothing happened quickly at the small hills where Peak Resorts started out in the midwest.
The replacement of the summit triple at Attitash in New Hampshire (serves Boston) was finally announced in 2022. That lift needed to be replaced a decade ago, but Peak didn't have the financial resources for a project at a small resort in New England that only serves advanced trails.
In 2022, VR also started major projects at a pair of bump hills in Ohio. Brandywine and Boston Mills only serve local folks who live in and around Cleveland. I stopped by for a look on the drive back from an early season trip to Wolf Creek in Colorado that included my ski buddy who lives in Ohio. The Boston Mills hill is far smaller than my home hill in northern Virginia. I would guess a run from the top would take a minute at most. It's in a national park and a 30-min drive from downtown Cleveland.
September 2021
Brandywine, Boston Mills ski resorts to get new chairlifts for 2022-23 season
The local investment was included in a larger announcement from Vail Resorts, which said it will spend $320 million next season across 14 properties.www.cleveland.com
Umm, a weird thing I see in this thread is an idea of some strategy to buy a resort or three in Australia, in an effort to then get more Australians to come ski at the companies main resorts in the US.
That is so dumb it’s hilarious. They bought profitable businesses. The question is return on investment, Perisher historically returns about 20mil a year. I assume it’s the same equations eleswhere
Thanks. While I check out the Australian resort threads every so often, I mostly am looking at pictures.
Given that VR bought small successful ski areas/resorts in the USA in order to entice more Americans to buy a N. American Epic pass, doesn't seem that far fetched that owning resorts in Australia is another way to encourage Australians to choose Epic resorts when they want to ski the USA or Canada. Meaning people who have been making the long flight across the Pacific for a while, not people who only ski in Australia, New Zealand, and/or Japan. I've read trip planning threads around here where Epic resorts are the only option being considered when flying to Salt Lake City. Even though there are five well known resorts in/near SLC on Ikon, plus Powder Mountain.
The first acquisitions of the "urban" ski resorts were in 2012. The markets served are Chicago, Detroit, and Minn./St. Paul. The midwest has a a long tradition of people who ski locally at small ski areas/resorts who also take one or more ski vacations in the Rockies per season. When VR bought Peak Resorts, the target markets were Boston, New York City, Philadelphia, Washington DC/Northern Virginia, plus cities in Ohio. VR just bought the three ski areas/resorts near Pittsburgh. None of the VR seven locations in Pennsylvania have trails that take an intermediate longer than 5 minutes to finish. While the small VR locations are busy on weekends and holidays, without the Epic pass strategy there wouldn't be much reason to take on management of so many diverse small mountains. Adding revenue from summer activities in another consideration.
Perisher and Vail at the time of purchase laid out in very unambiguous terms the primary driver of the move was to entice more skiers to Vail resorts in the US. Not sure why they'd just make that up and state it repeatedly in media at the time. Of course Perishers profitability sure would have helped make the decision easier.
We are a very well recognised inbound ski market by the Nth American resorts. We play a reasonable role in their otherwise quiet January market. Attracting Aussies overseas on the Epic Pass was absolutely a motivator behind Vail’s expansion into Australia.
Spend time in a US destination resort in Jan. You will soon realise how many of us are over there skiing.
More than Japan?
Many of my friends do ski OS, I am an outlier in that I can basically ski, but don't (yet). But many of them like France, or AK, or Canada etc. I just think it is not enough of a number to make economic sense as a reason, but I have been wrong before!
Australians seem to me to have a weird exaggerated impression of our place in this world, which is just slightly ahead of NZ, haha!
On its own maybe not enough of a reason but as you pointed out Perishers profitability and the fact that cash flow comes in the North American off season might help in combo, I'm guessing though. Maybe also timing with Australia's peak skier numbers in Jan due to our summer school holidays as absentskier pointed out. That time is still a bit of a low point in North America once Christmas and NY is done with their peak not coming till Feb/March, so increasing Aussies in Jan might help even out numbers and revenue to some degree.
Whistler however is not called 'Little Australia' for no reason. They have a term there for Aussies, JAFA.
Nah, its a sham story they tried to sell to the market and analysts. Deals always go down better when there is a synergy to sell. It just doesn't stack up though, the numbers don't work. When you look at the conversion rate of Epic Australia passes to actual trips, then work out potential spend on Vail products, factor in vails profit margin etc, in a best case scenario you are talking about maybe a couple of million bucks additional profit. However, the thing is a significant portion of those people previously were going anyhow pre epic pass, and would have spent the money in Vail resorts, and also would have bought tickets. So you have to discount that out. Even looking at it in the rosiest possible way, it is very marginal from a net cash flow perspective. Admittedly there are probably some advantages to them by the way they book revenue and account for expenses, shuffling digits around on paper, but from a cash flow perspective, a big no from me.
However, they did buy very profitible cash cows in the resorts here, which have done very well for them.
The last few times I've ridden the Japanese resorts in just pre pandemic, the exaggerated impression of our importance seems valid. We seemed to be the overwhelming majority of foreign visitors in the resorts (Hakuba, Myoko and Furano).
I think people are over estimating and underestimating the effect.
Whistler is little Australia because of the number of workers, it’s an easy year round resort to work where as other resorts are shorter term (or where before biking). And JAFA wasn’t coined in Whistler, I heard the term back packing Asia in the 90’s and I’m sure it was used well before then. If I had to guess I’d say JAFA comes from Bali.
On the numbers, if every skier who skied in Australia skied only in whistler I don’t believe we would put a dent in their skier numbers. Whistler has 2 million visitors (that’s visitors not skier days), across all Australian resorts we had 2.357m skier days in 2019, if we assume the average is five days per person that’s less than 500,000 Aussie skiers and not all would go to North America. Maybe 15,000 to Canada, this is a guesstimate based the number of air Canada and Qantas flights to Vancouver by size of plane.
Don’t get me wrong I think Vail make money on Aussie skiers because it doesn’t take a lot, if 5000 skiers spend 10,000 at vail resorts on accommodation and food that’s $50m in revenue, so it’s not insignificant.
But we are cream not target!
For the Aussies who fly to N. America and use an Epic pass, don't they usually stay for at least a week? Perhaps a week at one location and another week at another?
In January after the New Year's holiday period is over, folks who live in N. America and Europe are unlikely to plan a ski vacation until February or March. While the holiday weekend mid-Jan is busier in the USA, there are plenty of American Epic holders who only go for 3-4 days. Europeans interested in Epic destination resorts want better snow conditions than usually exist in January.
Cream with money to spend midweek will be welcome any time by a ski resort.
Fair to say there is very little marketing to Epic pass holders in the USA about the Aussie ski resorts. Just no one who lives in the Rockies or Pacific coast is expected to be interested in planning a multi-day ski vacation at one of the small mountains in the midwest and east owned by VR.
AIUI Vail's model is more a real estate one, just like McDonald's. They are trying to get every slice of the skiing dollar, so lift passes are the gateway to accommodation, gear rental, etc.
Ski school, food & bev etc etc. Give away the razors and sell the blades.
Don't know about the situation in Australia, but VR moved away from building and operating lodging during the tenure of the CEO before Katz. The founder of Vail--the resort itself--thought he'd make a fortune from real estate. Clearly VR still owns slopeside lodging. From what I've observed in the last decade, coming up with ways to generate revenue during the "green season" is a higher priority than selling real estate or improving winter lodging revenue for most destination resorts. Alterra and Boyne partner with other companies in the hospitality industry for new lodging options. So does VR.
Up until around 2014, ski resorts based on terrain on national forest land in the USA were not allowed to build revenue generating stuff like ziplines or alpine slides. Many small resorts on private land in the midwest and east were 4-season resorts from their founding 40-60 years ago. Boyne Mountain in northern Michigan is a good example. As is my home mountain in northern Virginia, Massanutten. Massanutten open in the early 1970s with ski slopes based on 100% snowmaking, an outdoor pool, a 9-hole golf course, and lodging at the resort but not slopeside.
Katz spend a lot of time, energy, and political influence helping to get the law passed that allowed the U.S. Forest Service to approve requests for summer activities that required building on national forest service land. The political leaders of Colorado were very actively involved in that effort.
I don't have an Epic pass, but I'm getting promotional emails about summer offers from having an Ikon pass for 2022-23. I would guess similar emails are being sent to people on the Epic e-list in N. America. Discounts on lodging are being pushed right now because interest is less than the last couple summers because of pent up demand. Fears about inflation and high gas prices are clearly a factor for Americans thinking about a vacation June-August 2022.
I recognise that people stay more than a week, normally 2-4 I was simply playing the numbers to highlight the point.
The thing is people were staying for 2-4 weeks prior to the epic australia pass. The question is how many new people have been lured by the pass, who wouldn’t have otherwise gone. Also how much revenue has been lost through ticket sales from people who were going regardless, that would have been made if people did not have free epic pass tickets.
I agree with some of the other comments, airlines and non Vail owned accomodation providers have probably had as much, or if not more, lift in profits than Vail.
Agreed but that has to be offset by the “value chasers” people who look to the pass to extend the value by getting tickets o/s.
For the record I think Epic passes had their place, they changed ski hills from seasonal affairs to offering stable reliable income. But they came at a price “housing”. People want value, look at this forum, we count skier days, whose ticket cost less. I was one, I brought a pass (not epic) starting as a week skier, the pass allowed me to bring forward the expense, then it was, let’s add a few days and a weekend, now 10 years on we chase 30 plus days and overseas.
Point is that has changed as cheap passes have created a massive housing issue.
I understand this is a side shift from the debate just explaining my stance to say I’m not for Epic.
As i said the Australia. market is cream. On the argument for quieter months, do people think the resorts care? They have the resort revenue from the tickets all we do is help cover cash flow.
Agree. The Epic pass business model has always been about selling more tickets, on the premise of perceived value, including visiting other resorts. That model is exactly the same for the Epic Australia pass as USA.
The business model relies on the fact that the majority do not extract value. For one reason or another they ski less than expected. People on this forum are outliers.
Agreed but don’t forget if you get a pass and ski the minimum days, say a week ski trip, the pass still has value.
The value is in the organisation I.e tickets sorted and paid, allows you to spread costs
The two fancy high-speed lifts VR planned to build at Park City will be delayed at least a year. A few locals got the Park City Planning Board involved in the approval process, meaning they found a way to keep the needed approval from happening in time to remove the old lifts in order to build the proposed lifts.
June 16, 2022 (USA)
Park City Lift Projects Blocked
The Park City Planning Commission voted 3-1 tonight to grant an appeal of two approved lift projects at Park City Mountain. First announced in September 2021, the new Eagle six pack would have feat…
liftblog.com
Learn how to deal with a 60 year old drunk Swiss farmer who has sat at the same T bar for the last 40 years watching people fall over
.
You forgot to mention the part where his job is untouchable.Learn how to deal with a 60 year old drunk Swiss farmer who has sat at the same T bar for the last 40 years watching people fall over .
Vail will like the low wage they can pay him while the Swiss government tops him up to 80% of his summer wage.
To their credit they didn't come into Australia and try to make it the US. They listened and learnt and provided knowledge where required.
They actually learnt a lot more than they expected about running ski resorts through Perisher.
Provided they adopt the same process in Europe they should be successful.
Haven't listened to this interview with Bill Rock, COO Rocky Mountain Region and Exec. VP of Mountain Div., yet but Stuart's interviews are always good. Since moving from Snowshoe in West Virginia (long before Alterra bought Intrawest) to VR, Rock has been in charge of Northstar and Park City before moving to corporate headquarters a few years ago. He was well liked by folks who went to Snowshoe regularly when he was there for about five years.
Podcast #90: Vail Resorts Rocky Mountain Region COO and Mountain Division EVP Bill Rock
Listen now (69 min) | “People have gotten really good at gumming up the works.”
www.stormskiing.com
Australians are the largest inbound destination tourism group for North American ski resorts. Locking a big chunk of them into Vail products even before they get on a plane is worth a lot more than the 20M that Perisher nets.
The silliness of VR's transitions after acquiring small mountains in the USA is continuing in Pennsylvania (PA). There are two ski resorts and a day ski operation in a state park that were under the local same ownership (Seven Springs, Hidden Valley, Laurel Mountain). VR closed the deal a few months ago. So far, there has been little communication to former Passholders and property owners. Apparently the websites for the three locations were completely down for a while. Presumably because the conversion to Epic-style websites and backend databases was in progress.
Given that people in the region haven't been that happy with how the transition went for the three PA ski resorts near Washington DC, the folks on the DCSki.com are pretty pessimistic. VR got those locations (Roundtop, Whitetail, Liberty) when they acquired Peak Resorts.
Rough and ready calculations.
40,000 epic pass sold to NSW Perisher customers, fair assumption given the known numbers
Lets assume 10% of those actually visit USA resorts (generous assumption), 4,000 people. Looking at that another way, pre covid 1.3M ozzies visited USA pa, around 500,000 from NSW. Overall 5% of Australians are known to be skiiers, so the assumption of 4,000 Perisher Vail pass holders out of the 500,000 total seems plausible to me.
Lets assume every one of those spends $5k on non ticket Vail products, food and beveridge, lessons, rentals, lodgings, retail, so family of 4 for example spends $20k on those. That is very generous, giving that at some of the most popular destinations Vail has very little cut in lodgings, and people eat and stay at non Vail owned places. However, that makes $20M revenue
Lets assume Vail makes 20% profit margin on those sales. That is pretty generous, Vails actual USA operational ebit margin is lower, but that makes $4M profit.
Very nice number, but not worth a lot more than the $20m profit from Perisher.
If that all seems a bit rubbery, think of it this way. 100% of Perisher customers generate $20m profit. Only a certain percentage of those are epic pass holders, and only a percentage of epic pass holders travel to the USA. How is a much smaller number travelling to the USA magically going to generate more than the $20m profi 100% of customers generate at home?
People forget that the Australian resorts are cash cows, amongst the most profitable in Vails whole portfolio. Don’t get me wrong, the synergies are real. Epic australia passes are sold on the idea that people are getting something extra for “free”, and the aspiration they will use it. Those that do travel to USA do generate nice extra earning for Vail. That allowed Vail to pay a larger multiple for the Oz businesses than they otherwise might have done.
However, the premise that somehow the USA flow through profits dwarfs the Australian operations profits clearly does not stand up to scrutiny.I think your 10% of pass holders going to the US is way too high, I reckon it would be lucky to be more than 2%. Out of all the skiers I know there is only that goes to the US and she is a Thredbo skier anyway. With Japan being the preferred destination for Australian skiers because of its convenience I think the US doesn't enter most people's radar. Have you seen the exchange rate lately?
As an aside, a couple of years ago I was taking to a senior manager who is now the CEO of one of the Vail resorts, he had just come back from a holiday in the states. I asked him did he he go to the Vail resorts over there, he said no, even with the staff discount and epic pass they were way too expensive for him.
I dont think we will know how Vail is going til the last minute if it fails due to rising interest rates ,so we can speculate all we like , no one is going to warn us.
Whistler is a VR property. There's the draw. Loonie more or less at par with the Oz buck most of the time.
But you would buy a coffee shop where your current customers take their holidays and leverage their loyalty and product confidence to go to your coffee shop when they are on holidays.I just remember reading something about one rationale for the Vail purchase of Perisher was as another resort to funnel overseas visitors into. My reading of that was not north American ski savvy visitors, rather I suspect markets to our north in similar timezones. But not Japan. But I suspect the Australian accommodation scenario with club lodges etc has made booking overseas visitors almost impossible. And that potential market has seemingly been told to stay away from Oz in any case, by their own govt.
Fair to say that although VR and Alterra mentioned Japan and Europe a bit in marketing materials for Americans when encouraging people to buy/renew Epic or Ikon passes, Australia didn't show up. Meaning in the few years after Perisher was bought and before the pandemic started in 2020.
The same is true for the small "urban" ski areas in the American midwest, northeast, as well as Stevens Pass for Epic passholders. The goal is to get people who live near those mountains to buy Epic for local use and for at least one ski vacation to a destination resort at a destination resort. For folks in the Pacific Northwest, that means W-B or the Rockies. No one expects someone who lives in Boston or NYC to travel to ski at a bump in the midwest.
