Vail Resorts presents plan to investors as stock climbs from 1-year low |

Vail Resorts presents plan to investors as stock climbs from 1-year low

Annual Investor Day event gives Wall Street analysts a look at the company that owns Breckenridge, Keystone and 38 other ski areas

John LaConte
Vail Daily
Skiers load the McCoy Express Lift on Jan. 10 at Beaver Creek. Vail Resorts’ stock has rebounded somewhat in recent days following the announcements of wage hikes across the company for next season.
Chris Dillmann/Vail Daily

Vail Resorts on Tuesday issued projections to the stock market analysts who have been assigned to follow the company in its annual Investor Day presentation.

The presentation comes at about the midway point of Vail Resorts’ third fiscal quarter of 2022, a quarter in which analysts have been mostly favorable, despite challenges following the bad press the company received for being understaffed at many of its North American ski resorts during the 2021-22 season. The staffing challenges contributed to guest dissatisfaction, Vail Resorts has conceded.

The company’s stock (NYSE: MTN) plunged following the negative attention, reaching a one-year low of $221 per share on March 7 after the stock hit $376 at one point in November.

MTN has rebounded somewhat in recent days, closing at $263 on Tuesday. A March 15 announcement detailing how the company plans to staff up for next season, along with the launch of Vail Resorts’ Epic Pass for next season, has come as welcome news to investors.

At Tuesday’s Investor Day event, analysts were briefed on the company’s future plans, including what Vail Resorts calls its subscription strategy of obtaining advance commitment from prepurchased passes, along with the company’s commitment to reinvestment in its business model.

Patrick Scholes with Truist Securities published a report following the event, in which he pointed out that Vail Resorts is now much more aware of the challenges it will have in getting its resorts to full capacity ahead of next season.

“After listening to (Tuesday’s) presentation, it seems clearer to us that MTN was partly a victim of their own success as they noted 2021-22 pass sales well exceed their own expectations and subsequently were caught flat-footed when it came to servicing these extra pass holders,” Scholes wrote. “The good news for MTN is that they have eight months to work on being properly staffed for next ski season and, unlike a year ago, are obviously far more aware of the challenges with staffing.”

Capacities and capabilities

Fiscal year 2022 has demonstrated the strength of Vail Resorts’ business model in obtaining advance commitment via prepurchased passes, the company told investors.

That business model prompted “shifts in guest behavior,” according to Vail Resorts.

With the majority of ski season composed of off-peak days, “significant excess capacity exists at our resorts during these off-peak days,” according to Vail Resorts’ presentation. “Most of our resorts utilized excess capacity in FY22, growing visitation Monday through Friday and non-holidays.”

In Vail, the parking garages filled often on weekdays in January and February, a trend that was once more common Friday through Sunday. On two separate Mondays, a Wednesday and two Thursdays in February, the town of Vail was forced to allow free parking on the South Frontage Road to allow the excess vehicles in town.

But while the town of Vail has found ways to accommodate the excess vehicles, not all the roads surrounding Vail Resorts properties are as capable in that regard.

Scholes said those problems were not addressed Tuesday.

“Infrastructure issues such as long traffic jams to get to some of MTN’s resorts and lack of parking really have not been addressed,” Scholes wrote. “Such issues, amongst others, have drawn significant negative media attention (both traditional and social media). Arguably while there is only so much MTN can control … as it relates to crowded mountain access roads and the like, travel times (traffic jams) contribute to the overall skier experience. We would like to see MTN more proactively address such infrastructure issues.”

Acquisitions and assurances

Vail Resorts’ commitment to reinvest in its business model includes not only a larger-than-ordinary capital plan to install lifts, it also includes a commitment to invest in its workforce, which company leaders have admitted was lacking in 2021-22.

In addition to those spending items, Vail Resorts will also increase its quarterly cash dividend to $1.91 per share, the highest it has ever been. (Prior to the pandemic, Vail Resorts’ dividend reached $1.76 per share, which was the previous high.)

In the company’s March 15 earnings report, Chris Woronka with Deutsche Bank asked whether there are any other plans for the company’s excess cash on hand.

“You’ve put through a nice dividend increase this quarter, you’ve given us your capital plan, which is above your historical average, but we think you’re still going to generate a lot of cash and have cash on the balance sheet,” Woronka pointed out in asking the future plans of Vail Resorts officials.

Vail Resorts acquired three properties with the purchase of Pennsylvania ski areas Seven Springs, Hidden Valley and Laurel Mountain in December 2021, and Vail Resorts Chief Operating Officer Michael Barkin said the company will continue to focus its capital allocation where it has in the past, including more acquisitions.

Barkin said acquisitions are part of a continuous strategy for the company, which is always interested in “finding opportunities to continue to expand the network.”

In Vail Resorts’ presentation, the company said it will target “high impact destination resorts and very selective regional ski areas that enhance the network for guests.”

The specific criteria Vail Resorts is examining in targeting new resorts includes “location/accessibility, brand, network connectivity, guest demographics, guest experience, absolute price and purchase multiple, preference for operational control, utilize select pass partnerships where additive to our network,” according to Tuesday’s presentation.

In a February opinion, Truist Securities stated that before Vail Resorts starts acquiring more resorts, “We would like to see it get the operational issues straightened out, especially at its more recently acquired resorts.”

Scholes, on Tuesday, said investors will take a wait-and-see approach to next season when it comes to staffing.

“Realistically, despite MTN’s assurances today, it will not be until early-mid December, once the ski season gets underway, that we will get a good indication if MTN’s resorts will be properly staffed,” Scholes wrote.

Support Local Journalism

Support Local Journalism

As a Summit Daily News reader, you make our work possible.

Now more than ever, your financial support is critical to help us keep our communities informed about the evolving coronavirus pandemic and the impact it is having on our residents and businesses. Every contribution, no matter the size, will make a difference.

Your donation will be used exclusively to support quality, local journalism.