Vail Resorts Cancels Capital Improvements, Slashes Payroll
The COVID-19 coronavirus has cost the company hundreds of millions of dollars.
Thursday, April 2, 2020, NewEnglandSkiIndustry.com
Quantum 4 at Okemo, previously slated for replacement
In a letter released yesterday, Vail Resorts CEO Rob Katz announced sweeping cuts as the international resort operator feels the devastating financial impact from the COVID-19 coronavirus.
Already estimating that the company will see $180-$200 million in lost profits by the end of April, Katz now deems May through October operations to be at risk, which account for more than 20% of its revenue stream.
Advanced pass sales (the popular Epic Pass) provided nearly half a billion dollars in revenue for Vail in fiscal 2019 out of two billion in total revenue. With economic uncertainty confronting consumers, advanced pass sales may be significantly impacted.
All previously announced lift and trail improvements have been deferred. In December 2019, Vail announced plans to install a 6 person bubble and relocate a 4 person bubble at Okemo. It is not known if the company will proceed with the installation of RFID at its recently acquired Peak Resorts areas.
Virtually all hourly employees will be furloughed, while salaried employees will see pay cuts between 5% and 25%. Health insurance will still be provided, however the company will not match 401K retirement contributions.
In addition, the company will not pay June or September dividends to shareholders, nor will it provide a salary to Katz or the Board of Directors during the next six months. Vail's stock closed at $141.33 per share on April 1, down from $251.67 on February 16.
Katz also stated that "these challenges may force us to materially delay or cancel our upcoming summer season" and that "more measures might be needed."