Vail Resorts CEO Rob Katz has provided an update on the current situation of the company regarding COVID-19.
The Company is set to furlough the majority of their U.S. year-round hourly employees for at least a month, Katz will be foregoing his full salary for the next six months and the Board of Directors will also be foregoing 100% of their cash compensation during this period.
Only days ago Katz and his wife Elana Amsterdam, New York Times bestselling author and founder of Elana’s Pantry, announced a donation of more than $2.5 million to provide immediate support for both Vail Resorts employees and the mountain towns where the Company operates.
Katz also indicated that any capital spending will be deferred for all new chair lifts, terrain expansions and other mountain and base area improvements. This could impact Perisher’s new $19 million 6 seat chair that currently has a Development Application (DA) lodged. There has been no confirmed timeline for Perisher’s new chair at this stage, but it raises questions of when this project may go ahead once approved by the planning department.
“We continue to find ourselves living through an unprecedented time as the situation with COVID-19 grows more challenging, with everyone across our planet now dealing with very real and significant health risks and impacts,” said Rob Katz.
“This crisis has hit the travel industry particularly hard. Currently, all of our mountains, lodging, retail, and transportation businesses are shut down and it is becoming less clear when things will start to reopen again. We reported two weeks ago that the early closure of our North American operations will cost the Company at least $180 million to $200 million in lost profitability in our third quarter ending April.”
Vail Resorts share price has also taken a hit in the past month. From a high of US$302 in September 2018, the price as of yesterday was US$141.00 after a pre corona virus high of US$255.00 in mid January, 2020.
The Full Statement.
BROOMFIELD, Colo., April 1, 2020 /CNW/ — Vail Resorts, Inc. (NYSE: MTN) today provided an update on its response to the evolving impact of COVID-19 on its business.
Rob Katz, Chief Executive Officer, said, “The circumstances surrounding COVID-19 are unprecedented and the financial impact to our Company and the broader travel industry has been significant. Following the difficult decision to close our North American mountain resorts, retail stores and lodging properties for the remainder of the 2019/2020 North American ski season, we have quickly transitioned to evaluating the longer-term impacts for our Company and our resort operations. While we will continue to assess our ability to reopen select resorts for late-season skiing, we are keenly aware that the current travel restrictions may stay in place beyond that timeframe and could ultimately impact the timing of our ability to open our North American resorts for their summer season and our Australian resorts for their winter season. And once we are able to reopen, we assume weaker travel demand may continue, impacting our fourth fiscal quarter of 2020 and our first fiscal quarter of 2021.
“The Company went into this challenging time period with a strong financial position and based on recent events, we are currently incorporating more challenging scenarios into our planning for our fourth fiscal quarter of 2020 and the first fiscal quarter of 2021. As mentioned in our March 18, 2020 press release, we are taking additional proactive steps to align our capital spending and return of capital approach to ensure that we remain positioned for long-term success. We are also taking steps to address our operating costs and the inability of many of our employees to perform their roles in the current environment.
“We are reducing our capital plan for calendar 2020 by approximately $80-$85 million, with the vast majority of these savings coming from the deferral of many of our discretionary capital projects. We are planning to defer all new chair lifts, terrain expansions and other mountain and base area improvements, while continuing with the vast majority of our maintenance capital spending.
“In this moment, we believe that maintaining liquidity is in the best long-term interests of the Company and our shareholders, and, as such, the Company’s Board of Directors has made the decision to suspend our quarterly cash dividend for the next two quarters, preserving over $140 million of liquidity for our business. We remain committed to returning excess capital to shareholders and will re-evaluate decisions on capital allocation in December 2020. The Company’s previously announced dividend payment occurring on April 9, 2020, is not affected by this suspension.
“To ensure we can navigate the financial challenges ahead and because of the reality of their inability to work at their locations, we have made the difficult decision to furlough the majority of our U.S. year-round hourly employees for at least a month, and potentially longer depending on when we are able to reopen our operations. We will be continuing healthcare coverage for these employees, including covering the entire cost of their healthcare premiums and hope to bring these employees back to work as soon as possible. Additionally, we will be implementing a six-month salary reduction for all U.S. salaried employees, with reductions beginning at 5% and rising to 25% for our top executives. As CEO, I will be foregoing my full salary for the next six months and our Board of Directors will also be foregoing 100% of their cash compensation during this period. We also may announce potential changes for our Canadian-based and Australian-based employees, but our approach will be based on the unique challenges faced by those resorts and any other local considerations.
“We have also communicated with our season pass holders and indicated that we have heard their frustration about the early closure to the 2019/2020 ski season and are committed to identifying an approach for them that acknowledges this past season and retains their loyalty for the future. We intend to share more details about our season pass plans with our guests by the end of April and are deferring all auto-renew charges and all spring deadlines for Buddy Tickets into May.
“This is one of the most challenging times many of us can remember, and it is disappointing to announce these changes, especially those impacting our employees. However, we also recognize that the impacts of the current crisis have certainly hit the travel industry and our Company quite hard. We believe that the actions we are announcing today will allow the Company to maintain cushion on our liquidity and financial covenants under our credit facilities through the upcoming quarters and position the Company for success in the future. I am evermore grateful for the commitment and loyalty of our employees, guests and community members during this challenging time.”
Lionshead Village at Vail. PHOTO: Jack Affleck
About Vail Resorts, Inc. (NYSE: MTN)
Vail Resorts, Inc., through its subsidiaries, is the leading global mountain resort operator. Vail Resorts’ subsidiaries operate 37 world-class mountain resorts and urban ski areas, including Vail, Beaver Creek, Breckenridge, Keystone and Crested Butte in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher, Falls Creek and Hotham in Australia; Stowe, Mount Snow, Okemo in Vermont; Hunter Mountain in New York; Mount Sunapee, Attitash, Wildcat and Crotched in New Hampshire; Stevens Pass in Washington; Liberty, Roundtop, Whitetail, Jack Frost and Big Boulder in Pennsylvania; Alpine Valley, Boston Mills, Brandywine and Mad River in Ohio; Hidden Valley and Snow Creek in Missouri; Wilmot in Wisconsin; Afton Alps in Minnesota; Mt. Brighton in Michigan; and Paoli Peaks in Indiana. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyo. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN). The Vail Resorts company website is www.vailresorts.com and consumer website is www.snow.com.