It has been a winter of discontent for many Epic Pass holders, whose ski experience at Vail Resorts’ 40 mountains have been impacted by long lift lines and employee shortages driven by COVID-19. The company’s financials also disappointed in its second-quarter earnings, released after the market closed Monday.
Vail posted revenue of $906.5 million for the three months ending Jan. 31, up 32% over the COVID-19 impacted prior year quarter, while earnings per share of $5.47 rose 51%. However, both figures fell short of analyst expectations of $960 million and $5.70.
“The confluence of storm cycles, staffing challenges and the spike in Omicron variant cases created challenges through the holiday period impacting our resorts’ ability to fully open terrain as planned and negatively impacting the guest experience during that time,” Kirsten Lynch, Vail Resorts CEO, said in a release announcing the results. “Despite numerous measures taken ahead of the season, including an investment in wages, available staffing was below targeted levels heading into the holidays, consistent with challenges faced by the broader travel and leisure industry at that time.”
Lynch, who took over from longtime Vail CEO Rob Katz Nov. 1, said some resorts had more than 10% of employees unable to work at one time, due to COVID-19. Washington-based Stevens Pass has experienced some of the biggest challenges. Vail’s struggles gave birth to the “epicliftlines” Instagram account, which has attracted nearly 50,000 followers.
Lynch also provided an update on skier metrics through March 6. Total visits rose 11.7% compared to the prior year season-to-date and 2.8% from 2020. Lift ticket revenue, which is largely derived from its Epic Pass product that launched in 2008 to cover all Vail Resorts mountains, increased 21% versus 2021 and 10.3% the year prior. Ski school and dining revenue, both hammered by the pandemic, increased 60% and 76% respectively, but it was still off from 2020.
Vail cut the price of its Epic Pass by 20% for the 2021-22 season, and skiers snapped up the passes, which cost $799 for unlimited access to 38 mountains (a single day holiday ticket costs as much as $239 at Vail Mountain.) In December, the company said it expected to sell 2.1 million passes, up 700,000 from the previous year. “It is important to highlight that our season pass unit growth of 47% for fiscal year 2022 created significant revenue stability in a period with challenging early season conditions and COVID-19 impacts,” said Lynch.
Vail is sensitive to the idea that it sold more passes than resorts could handle, contributing to the lift lines. It reiterated Monday that holiday and weekend skier visits were flat, and the 2.8% increase in skier visits was a result of 9% bump on weekdays.
Before the season, Vail announced an increase of its minimum wage to $15 per hour at many locations. Monday, the company said it will be increasing its minimum wage to $20 for the 2022-23 season. “We are looking at making our resort talent our strategic priority, and being a leader in comp, hiring, investing in their development and career opportunities,” Lynch said during the company’s Monday earnings call.
Vail Mountain skiers got a dose of good news last week when its parent company announced plans for its namesake mountain to stay up an additional week, along with six other of its locations. The new May 1 close date will make for Vail’s longest continuous season in its 59-year history, according to resort officials. The company is also planning major on-mountain upgrades with 21 new lifts at 14 resorts planned ahead of the 2022-23 season at a cost of roughly $330 million.
The stock closed Monday at $242, down 36% from its high in November.
