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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the Vail Resorts Fiscal Yearend 2021 Earnings Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Rob Katz. Please go ahead, Sir.
Thank you, operator. Good afternoon, everyone. Welcome to our fiscal 2021 yearend earnings conference call. I am excited to have Kirsten Lynch, our current Chief Marketing Officer and incoming Chief Executive Officer join Michael Barkin, our Chief Financial Officer and me on the call today.
Before we begin, we remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings, and actual future results may vary materially. Forward-looking statements in our press release issued this afternoon along with our remarks on the call are made as of today, September 23, 2021, and we undertake no data to update them as actual events unfold.
Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the table included with our press release and along with our annual report on Form 10-Q we filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.
So with that said, let's turn to our fiscal 2021 and fourth quarter results. Given the continued challenges associated with COVID-19, we are pleased with our operating results for the year. Our results highlighted our data-driven marketing capabilities, the value of our pass products, the resiliency of demand for the experiences we offer throughout our network of world-class resorts and our disciplined cost controls.
Results continue to improve as the 2020, 2021 North American ski season progressed, primarily as a result of stronger destination visitation at our Colorado and Utah resort. Excluding peak resorts, total skier visitation at our US destination, not resorts and regional ski areas for fiscal 2021 was down only 6% compared to fiscal 2019, which would Blackcomb performance with disproportionately impacted due to the closure of the Canadian border to international guests, including guests from the US and the resort closing earlier than expected on March 30, 2021, following a provincial health order issued by the Government of British Columbia.
Were sort of Blackcomb, total skier visitation for fiscal 2021 declined 51% compared to fiscal 2019, our ancillary lines of business were more significantly and negatively impacted by COVID-19 related capacity constraints and limitations throughout the 2020, 2021 North American ski season. We generated a resort reported EBITDA margin of 28.5% driven by our disciplined cost controls as well as a higher proportion of lift revenue relative to ancillary lines of business compared prior periods. For the fourth quarter, we are pleased with the strong demand across our North American summer operations, which exceeded our expectations and we believe highlights our guests continued affinity for outdoor experiences.
In Australia, we experienced strong demand trends at the beginning of the 2021 Australian ski season. However, subsequent COVID-19 related stay at home orders and temporary resort closures negatively impacted financial results for the fourth quarter by approximately $8 million relative to our guidance expectation issued on June 7, 2021. Fourth quarter results were also negatively impacted relative to our June 7, 2021 guidance by a onetime $13.2 million charge for a contingent obligation with respect to certain litigation matters.
Now I'll turn the call over to Kirsten to provide an update on our season pass sales.
Thank you, Rob and good afternoon, everyone. I am pleased to be joining our earnings call today and look forward to speaking more regularly with our investors and analysts as we move towards the CEO transition on November 1. We are pleased with the results of our season pass sales to date, which continued to demonstrate the strength of our data-driven marketing initiatives and the compelling value proposition of our pass products driven in part by the 20% reduction in all pass prices for the upcoming season.
Pass product sales through September 17, 2021 to the upcoming 2021, 2022 North American ski season increased approximately 42% in units and approximately 17% in sales dollars as compared to the period in the prior year through September 18, 2020, without deducting for the value of any redeemed credits provided to certain North American pass holders in the prior period.
To provide a comparison to the season pass results released in June, pass product sales through September 17, 2021 for the upcoming North American ski season increased approximately 67% in units and approximately 45% in sales dollars as compared to sales for the 2019, 2020 North American ski season through September 20, 2019 with Pass product sales adjusted to include peak resort, pass sales in both periods. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of 0.79 between the Canadian dollar and US dollar in all periods for Whistler Blackcomb pass sales.
We saw a strong unit growth from renewing pass holders and significantly stronger unit growth from new pass holders, which includes guests in our database who previously purchased lift tickets or passes, but did not buy a pass or a lift ticket in the previous season, as well as guests who are completely new to our database. Our strongest unit growth was from our destination markets, including the Northeast. And we also had very strong growth across our local markets.
The majority of our absolute unit growth came from our core epic pass and epic local pass products and we also saw even higher percentage growth from our epic day pass products. Compared to the period ending September 18, 2020 effective pass price decreased 17%, despite the 20% price reduction we implemented this year and the significant growth of our lower price, epic day pass products, which continue to represent an increasing portion of our total advanced commitment product sales. We're very pleased with the performance of our Pass product sales efforts to date, which exceeded our original expectations for the impact of the 20% price reduction, particularly in the growth of new pass holders and in trade ups as we are seeing from pass holders into higher priced products.
As we enter the final period for pass product sales, we feel good about the current trends we are seeing. However, it is important to point out that we know a portion of the growth we have seen to date represents certain pass holders purchasing their pass earlier in the selling season and then in the prior year period, and we saw strong growth in the late fall in the prior year period due to concerns about COVID-19 including questions about our resort access as a result of our reservation system. Given these factors and the other changing economic and COVID related dynamics, it is difficult to provide specific guidance on our final growth rates, which may decline from the rates we reported today.
Now, I would like to turn the call over to Michael to further discuss our financial results and fiscal 2022 outlook.
Thanks, Kirsten and good afternoon, everyone. As Rob mentioned, we're pleased with our results for fiscal year 2021. As a reminder in the prior year, we announced the early closure of the 2019, 2020 North American ski season for our ski areas, lobbying properties and retail and rental stores as a result of the COVID 19 pandemic beginning on March 15, 2020. These actions had a significant adverse impact on our results of operations for fiscal year 2020.
Additionally, the ongoing COVID-19 pandemic and the resulting limitations and restrictions on our operations continued to have an adverse impact on our results for fiscal year 2021, including the early closure of Whistler Blackcomb on March 30, 2021, and stay at home orders and periodic resort closures impacting our ski areas in Australia. Net income attributable to Vail Resorts was $127.9 million or $3.13 per diluted share for fiscal year 2021 compared to net income of $98.8 million or $2.42 per diluted share in the prior fiscal year. Resort reported EBITDA was $544.7 million for fiscal year 2021, an increase of $41.3 million compared to fiscal year 2020.
Fiscal 2021 includes the impact from the deferral of $118 million of pass product revenue and related deferred costs from fiscal 2020 to fiscal 2021 as a result of the credits offered to 2020, 2021 North American pass product holders, a one-time $13.2 million charge for a contingent obligation with respect to certain litigation matters and approximately $2 million of favoribility from currency translation from Whistler Blackcomb, which the company calculated on a constant currency basis by applying current period for an exchange rates to prior period results.
Moving now to our fiscal 2022 outlook, we're encouraged by the robust demand from our guests, the strength of our advanced commitment product sales and our continued focus on enhancing the guest experience while maintaining our cost discipline. Our guidance for net income attributable to Vail Resorts is estimated to be between $278 million and $349 million for fiscal 2022 and we estimate resort reported EBITDA for fiscal 2022 will be between $785 million and $835 million.
Using the midpoint of the guidance range, we estimate resort EBITDA margin for fiscal 2022 to be approximately 32.1%, which is negatively impacted as a result of COVID-19 impacts associated with Australia in the first quarter of fiscal 2022 and the anticipated slower recovery and international visitation and group in conference business. The guidance assumes normal weather conditions, a continuation of the current economic environment and no material impacts associated with COVID-19 for the 2021, 2022 North American ski season or the 2022 Australian ski season, other than an expected slower recovery for international visitation, which is expected to have a disproportionate impact at Whistler Blackcomb and group and conference business, which is expected to have a disproportionate impact in our lodging segment.
At Whistler Blackcomb, we estimate the upcoming winter season will generate approximately $27 million lower resort reported EBITDA relative to the comparable period in fiscal 2019, primarily driven by the anticipated reduction in international visitation. Fiscal 2022 guidance includes an expectation that the first quarter of fiscal 2022 will generate a net loss attributable to Vail Resorts between $156 million and $136 million and resort reported EBITDA between negative $118 million and negative $106 million.
We estimate the negative impacts of COVID 19 in Australia and the associated limitations and restrictions, including the current lockdowns will have a negative resort reported EBITDA impact of approximately $41 million in the first quarter of fiscal 2022, as compared to the first quarter of fiscal 2020. We are providing guidance for the first quarter of fiscal 2022, as a result of these negative impacts of COVID-19 in Australia and we do not intend to provide quarterly guidance on a go-forward basis.
Despite this significant investment we made by increasing our minimum and entry wages this year, and the headwinds that we expect to face from Australia, Whistler Blackcomb and our group in conference business, we are expecting to drive margin expansion in fiscal 2022 through continued cost discipline, including significant cost savings that are a continuation of our focus on operating as efficiently as possible coming out of COVID-19.
Our liquidity position remains strong and we confident in the free cash flow generation and stability of our business model. Our total cash and revolver availability as of July 31, 2021 was approximately $1.9 billion with $1.2 billion of cash on hand $418 million of revolver availability under the Veil holdings credit agreement, and $195 million of revolver availability under the Whistler Blackcomb credit agreement. As of July 31, 2021, our net debt was three times trailing 12 months total reported EBITDA.
Given our strong balance sheet and outlook, we are pleased to announce that the company plans to exit the temporary waiver period under the Veil Holdings credit agreement effective October 31, 2021, and declared a cash dividend of $0.88 per share payable in October 2021. The dividend payment equates to 50% of pre-pandemic levels and reflects our continued confidence in the strong free cash flow generation and stability of our business model, despite the ongoing risks associated with COVID-19. Our board of directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the level of our quarterly dividend going forward.
I'll now turn the call back over to Rob.
Thanks, Michael. As previously announced, we are on track to complete several signature investments in advance of the 2021, 2022 North American ski season. In Colorado, we are completing a 250 acre lift serve terrain expansion and the signature McCoy park area Beaver Creek, further differentiating the resort's high-end family focused experience. We are also adding a new four person high-speed lifted at Breckenridge to serve the popular peak seven, replacing the Peru lift at Keystone with a six person high-speed chairlift and replacing the Peachtree Lift at Crested Butte with a new three-person fixed gripped lift.
At Ehimo [ph] we're completing a transformational investment, including upgrading the Quantum lift to replace the Green Ridge three-person fixed-grip chairlift. In addition to these investments that will greatly improve uplift capacity, we are continuing to invest in company-wide technology enhancements, including investing in a number of upgrades to bring a best-in-class approach to how we service our guests through these channels
We are encouraged by the outlook for our long-term growth and the financial stability we have created. The success of our advance commitment strategy, the expansion of our network and our focus on creating an outstanding guest experience remain at the forefront of our efforts. Toward that end, we are launching an ambitious capital investment plan for calendar year 2022 across our resorts to significantly increase lift capacity and enhance the guest experience as we drive increased loyalty from our guests and continuously improve the value proposition of our advance commitment products.
These investments are also expected to drive strong financial returns for our shareholders. The plan includes the installation of 19 new or replacement lifts across 14 of our resorts and a transformational expansion at Keystone, as well as additional projects that will be announced in December 2021 and March 2022. All of the projects in the plan are subject to regulatory approvals.
At Keystone we are planning a significant terrain expansion into Bergman Bowl, which will create an incremental 555 acres of lifts serve terrain and provide a significant capacity increase to the resort with a new six person high-speed lift. We are also planning to renovation and expansion of the outpost restaurant with an incremental 300 indoor seats and 75 outdoor seats. At Vail, we plan to significantly upgrade the capacity and experience for guests in the legendary Blackcomb. We plan to replace the existing four person high-speed game Creek Fall lift with the new six person high-speed and we also plan to install a new four-person high-speed Sundown Express lift.
These investments will provide guests with better circulation and an additional lift to move between the back bowls and the front side of the mountain with better access to the line and base area. At Whistler Blackcomb we plant a meaningfully increase capacity and circulation from the creek side base area by replacing the six person Creekside Gondola with a new eight person Gondola and replacing the existing four person high-speed red lift with a new six person high-speed lift.
At Park City, we plan to significantly enhance capacity at the Park City base area and improve mid-mountain capacity in circulation. We plan to install our first eight person high-speed lift replacing the current six person silver load lift. We also plan to install a new six person high-speed eagle left replacing two existing lifts to significantly improve the guest experience from the Park City base area for beginners and for our ski school guests.
At Breckenridge, we plan to replace the existing 3% fixed grip rips ride lift with a new four-person high-speed lift. This upgrade will improve the beginner and ski school experience at peak eight with increased out of bay circulation capacity, along with easier loading and unloading. We expect our capital plan for calendar year 2022 will be approximately $315 million to $325 million excluding any real estate related capital or reimbursable investments. This is approximately $150 million above our typical annual capital plan based on inflation and previous additions for acquisition and includes approximately $20 million of incremental spending to complete the one-time capital plan associated with the peak resorts and Triple Peaks acquisition.
Given our recent financing and strong liquidity, the outlook for our business driven by the growth of our advanced commitment strategies and the tax benefit in 2022 from additional accelerated depreciation on US investments, we believe this is the right time for our company to make a significant investment in the guest experience at our resorts and expect this one-time increase in discretionary investments will drive an attractive return for our shareholders. Additional details associated with our calendar year 2022 capital plan can be found in our capital press release that was issued today.
We also intend to return our capital spending to our typical long-term plan in our calendar year 2023 capital plan with the potential for reduced spending, given the number of projects we would complete in calendar year 2022. We will be providing further detail on our capital plan in December 2021.
As we prepare for the upcoming North American ski season, we want to acknowledge our teams and community that have been affected by the Caldor fires around Lake Tahoe and express our deepest appreciation for all of the hard work completed by our team and all of our partners on the ground. We are incredibly grateful for the collective efforts of the firefighters, first responders, community members and our employees who work tirelessly to protect our Tahoe resorts and surrounding communities. We remain focused on the safety and wellbeing of our employees as we support the recovery effort of the greater Lake Tahoe area.
This will be my 63rd and final earnings hall, and I could not be prouder about where the company stands today and how it's positioned for the future. Throughout my time as CEO, one of top priorities has been to identify and prepare a CEO for the next chapter in the company's growth and success. And I'm fully confident that Kirsten is that person. As Chief Marketing Officer, for more than 10 years, Kirsten has been responsible for the transformation and success of Vail Resorts data-driven marketing efforts, and is a primary driver of the company's growth, stability and value creation. Kirsten is also an incredibly skillful leader and developer of talent and has had an amazing track record of building very strong teams. With our company, just having navigated the most challenging period in its history and coming out stronger than when it began, this is the right time for me to take a step back and play a different role at Vail Resorts and the right time for Kirsten to step into the CEO role, to continue driving the strategy and growth of the company.
I'm very excited to remain fully active and engaged in Vail Resorts' key strategic decisions and activities as Executive Chairperson and I'm very proud that we are continuing to focus on our strategy of internal leadership development across all levels of the organization. I'm fully confident in the depth of our entire management team, and I'm very excited for this next chapter in the company success story.
I do want to take a moment to thank all of our employees, guests and our broader community for your partnership and support throughout my more than 15 years as CEO. It has been an honor to be a part of an incredible group of leaders across all levels and locations of our company. When I look across the company and see how much has changed and how much we have accomplished, it reminds me what an incredible journey it has been, a true experience of a lifetime. At this time. Kirsten, Michael and I would be happy to answer your questions.
Operator, we are now ready for questions.
Thank you. [Operator instructions] Our first question will come from Shaun Kelley with Bank of America.
Hi, good afternoon, everyone. Welcome to Kirsten and Rob, congratulations, thanks for everything you've done here. It's been a pretty amazing run across 63 quarters. So congrats on everything. Maybe we could just lead off a little bit, I would love to hit on, obviously you give a ton of color on the pass side, would love to hear your thoughts on just given all of the movement, the pull forward, everything else that's kind of going on here. I think you've given us your broad take on where trends sit today, but, help us think about maybe the pros and cons of where -- what might you get things to either accelerate or decelerate for the kind of the remainder of the season. And then if you could also just talk a little bit about on the ancillary spending side, what are your expectations heading into the season as you think about the full year outlook you gave on the guidance?
Sure. Kirsten, you want to take the question on Tahoe?
Sure. Hi Shaun. Thank you. We're really encouraged by the trends that we're seeing Shaun. I think very positive in terms of renewals particularly strong on new, which would certainly indicate that we're bringing new people into the pass program and new people to Vail Resorts and to be a part of our network. The other trends we're seeing while we were up very strong across all of our local markets, destination, very strong and then the other dynamic is trade up, which is very strong.
It is really hard with the dynamics that are coming for the rest of the season to know exactly how this is going to turn out, but I'd say those fundamentals are very encouraging. Key dynamics that impact the rest of the selling cycle are pull forward. As I mentioned, we do know that a portion of our sales to date are people who pulled forward into this earlier time period. Also very strong sales as you know, last year in this remaining time period that we will be lapping and then COVID dynamics and economic dynamics that could all impact what the trends look like for the rest of the year, but the core fundamentals of our strategy and the behaviors that we're seeing from our guests associated with that strategy are very encouraging.
Thanks, Kristen. Mike, do you want to take the ancillary question?
Thanks, John. Yeah, I think, built into our guidance is yeah, is after two pretty challenging years on the ancillary front, given the constraints that we've had relative to, COVID a return to a more normal state of affairs for the ancillary business. So, I think that's really underlying our overall guidance assumptions and that definitely includes what we're assuming across our ancillary businesses and ski school food and beverage and retail rental.
I think to the positive for us, certainly, have the epic mountain rewards program in place, which we haven't really had a full year yet of benefit of that and certainly with the strong pass sales anticipate that being a benefit to us on the ancillary side. I would just note that as we talked about in terms of the international headwind and that returning slower as you know, international tend to be high spending guests. And so particularly at Whistler Blackcomb and the guidance that we provided around some of the challenges we expect there that will come through in the ancillary business as well, which is included in those numbers.
Great. That was two and one. So I will heal the floor. Appreciate it, everyone.
And our next question will come from Ben Chaiken with Credit Suisse.
Hey, how's it going? Lifts are one of the investments where tracking an ROI is tricky, at least that's my interpretation over the years. What did you see in the business, or what was your thought process to ramp this up because it sounds like a majority of the spend is going to be on the lift side. Is there a competitive angle? Is it maybe growth in volume from a skier visitation perspective? Just any color, any incremental color will be super helpful and Rob congrats and Kirsten, you've been around forever. So I don't know if welcome is appropriate, but we're all excited. So thanks.
Sure. I'll take that one. I think, our view is that certainly lifts are one of the signature components of the experience with any of our resorts. And, we've always tried to be at the forefront of ensuring that our reducing wait time and reducing the lift ride time and, we do feel like we are positioned for continued future growth and the right way to support that over the long term is to make sure that we're continuing to invest in our guest experience. And so that's always been, I think the core philosophy of our company is that, we're looking to get advanced commitment, but we're also looking to take the growth that we get in that program. And obviously put it back into our resorts and we think lifts are really at the critical pinch point of that in terms of really unlocking a much better guest experience as we look to the future.
And I would say, yes, it is, of course it's hard to track an ROI and a specific lift, but we understand that that helps support the value proposition that we're providing people that obviously can support future price growth in our products, including our passes. It can also support future growth in visits. And again, we feel like there's this unique moment coming out of COVID with the company in such a strong relative position that it's an opportunity for us to make a statement to our guests network-wide right. So obviously this announcement today is about investing in the total network that we're offering the pass network that we're offering to our guests. And we feel like we've reached a point where we can start to do this and move the needle both on guest experience and on our business.
Got it. That makes sense. I appreciate it. Thank you.
And our next question will come from Laurent Vasilescu with Exane BNP Paribas.
Oh, good afternoon. Thank you very much, Kirsten, Michael, for taking my questions. I want to take a longer-term question here, but with the 20% cut this year, which drove obviously pass sales up significantly year over year in a tier stack, how do we think about pricing going forward for the out years? Could we envision further price cuts with increased subscription model, or are you happy with where your TAM is your total addressable market? And do you foresee that pricing could actually kind of tick up from here?
Kirsten, do you want to take that?
Yeah. Thanks for the question. As you know, we have a long history of taking consistent price increases on our pass business. The decision that we made this past year was really a discrete opportunity to do a reset, to drive long-term guests lifetime value and bring more guests into the program as we work toward our vision to achieving 75% or more of our revenue in an advanced commitment. The lever of taking price increases is certainly a lever that is absolutely still available for us going forward from this new baseline that we've created from this reset.
Very helpful. Thank you. And then the question from, sorry, did I cut you guys off? Maybe Michael, if I have a question you're on G&A, I think you talked about cost saving initiatives and you can flush that out a little bit more and just on the G&A, 4Q is up $20 million or 34% on two-year stack. Was that more one time in nature or just, how do we think about the G&A line going forward for the year?
Yeah, I think, certainly one of the things that we've been focused on over the last year and a half has been being as resource efficient as possible. Certainly, one of the areas where we do continue to invest over time is in our centralization efforts and so as we try to find a resource efficiency, there are movements between some of the cost line items but yeah, I think that, across the overall cost structure and I think you see that in terms of the margins that we're to, yeah, I think we've taken a very significant effort and looking for opportunities for resource efficiency. Really taking a lot of the lessons that that we've learned over the course of COVID and applying those to places where we feel like we can get savings.
That being said, I would just call out that, we're also as we've announced previously making some very significant investments in in our frontline wages which is an area where we continue to invest. Specifically to the G&A and in Q4, what you will see is that the $13 million litigation reserve is in there. And so that's probably the biggest driver of that variation.
And our next question will come from Chris Woronka with Deutsche Bank.
Hey, good afternoon, everyone. And congrats to Rob and Kirsten on the new roles. Was hoping to maybe triangulate with pass revenue a little bit. I understand that there is a lot different than 2019, but was wondering if there a way to kind of get at, if you didn't sell another lift ticket all year where you might be now versus where you were in 2019. If that question makes any sense.
Yeah, I guess what you're -- I'll maybe let Michael chime in on it. I think we're obviously not providing specific guidance on the breakout of lift revenue, but Michael, I don’t know if you want to give any color on that, obviously we're making progress on that front.
Sorry, Chris, can you repeat that for me? I'm not sure. I totally followed.
Yeah, just trying to get a sense. Obviously there's more revenue on the books than there was in 2019 lift ticket revenue. I'm trying to get a sense for what percentage of lift -- of ultimate lift ticket revenue realized in fiscal '19 was kind of on the books at this point just now versus…
Oh, you're saying in terms of our pass sales cadence point. We don't -- we actually -- we don't disclose that as to kind of the pacing of kind of the percent of lift revenue on the books. That is something that we disclosed many years ago, but we actually have stopped doing that. So unfortunately we can't provide color on that.
Okay. Fair enough. Switch gears a little bit on the capital allocation. Obviously good to see dividend coming back, I guess the question being, you're probably going make as much EBITDA, this coming year as you did, or more than you did in '19, you're resetting dividend to half and then, nothing yet, like a us on share repurchase. So is there just a thinking that it's, you also have a bunch of cash obviously on the balance sheet, so is there just a thinking that let's be conservative and see how this plays out or is there something else that has to happen before you get the full dividend and maybe some share buybacks coming in?
Yeah, I would say that our capital allocation priorities remain very much the same as they have been over time, which is reinvesting in the business first. Certainly the acquisition opportunities that we continue to pursue and then returning excess capital to shareholders. And I think, when we looked at this holistically, certainly we feel like the increased one time capital plan that Rob went through the details of, is a pretty significant capital allocation opportunity for us at this moment to really improve as he was saying the guest experience across the network. And I think, yeah, we are coming out of COVID with an outlook based on the pass sales that Kirsten went through, certainly what we see as the business outlook overall and the balance sheet that we have as an opportunity to head into the season. Yeah announcing a reinstatement of the dividend.
As to the level of the dividend, yeah. I think we feel like this is an appropriate level to come back out with a dividend as I mentioned, the board will, will absolutely continue to look at the right level for the dividend. Usually we make those have historically made those decisions in March. So we're coming out ahead of the season with this given the time, piece. And so that's, that's largely where we stand on that. I think, as it relates to share repurchases, as you've seen historically, we've largely used dividends as the primary means of regular capital return to shareholders. And I think, plan to continue that. As it relates to repurchases, we continue to take a more opportunistic stance on that.
And moving on to Patrick Scholes with Truist Securities.
Great thank you. Good evening, everyone or afternoon. First question is last quarter you had talked about raising your starting wages, hourly wages to $15 an hour. Do you think that at this point that is enough to fill the positions?
Yeah, I think we think it was a, you know, pretty significant move for many of our resorts. You know, I think the bulk of our resorts saw close to a $3 increase per hour. So we certainly think it's a major statement. It's a critical investment in our employees and ensuring that we get the right talent and staffing that said, obviously this is, broadly across the us is obviously a lot of challenges around staffing. And so, whether those two things will ultimately be enough, it's a hard to say, but, we feel good about where we sit right now in terms of our hiring process going into next season, it's still early, but, we feel like certainly without that investment, we think we would've struggled to a much greater degree.
And so, we feel like this puts us in an opportunity to get to the other side of, but given the rapidly changing dynamics in the hiring market, it's hard to say for sure exactly how it'll play out. And I do have, no doubt that staffing will continue to be a challenge this season as it was in many previous seasons. And I think, there are other factors in addition to wages like affordable housing, that's critical in our company, you know, the out front on that as well. But, but at this moment, yeah, we feel good about how we're going into the season in terms of ensuring that we can provide the right experience to our go.
And moving on to David Katz with Jefferies.
Hi afternoon, everyone. Rob, congrats on the great tenure and for certainly doing the last name well and best of luck. I wanted to ask about the CapEx program. Often done a lot of homework around these kinds of large scale investments and perhaps I wonder if there was any further backup or detail that you could share around the decision of the size and scale of it, survey work or anything to that end from your satisfaction scores and how much and where etcetera.
Yeah, I think the great opportunity that we have across most of our resorts and certainly all of our large resorts is with our epic mix time application that provides people real time you know, lift line, wait times we actually have insight as to the wait times that every single one of these lifts at those resorts, you know, across the entire year. And so we bring that into the mix as we start to then say, okay, where do we have the, the longest wait times? Where can we reduce that? We obviously, our course are looking at our GX scores, which, which ask questions about right lifts and their experience on, on lives. We also have all the anecdotal evidence you know, that each of our resorts have and all the, you know, all of our leaders have across those resorts.
And so we kind of take all that together and identify where do we think we can have the biggest impact on addition, in addition to that, we're also layering on, where our path folders like to ski and what are the most important resorts to hassles when they're looking at the network as a whole. And so we're kind of combining that information to come up with a prioritized list and no surprise, even though there are a lot of lifts, this is really, the largest scale program I think anybody's ever undertaken in the industry.
There are a lot of lists obviously that are still out there that we and done. So, we've included what we really consider to be the highest ROI, top priorities for this resort. And we've gathered them together to really make a statement to our guests about the commitment that we have to the guest experience and really invest in the network that we really, which is that our resorts individually are completely unique and they provide a unique experience, but of course, we like to come together as a team and figure out like where's the most important places for us to invest, to make the overall experience across all resorts, the best that can be
Understood. And just as a follow up to that, do you have any information or any means of measuring, you know, the sort of primary competitors and what their wait times look like, or what their satisfaction scores look like and what drives them?
No, we don't so, a lot of this, I think one of the benefits though, that we have at important remember is that, you know, we, we have 37 resorts, 34 resorts in north America. So we get to look at detailed information across all of these resorts who are right in many ways, competitors with each other. And so that gives us a tremendous amount of detail around how we make these decisions, because we can compare and contrast on exactly the same and information and platform certainly on lifts, but also on every other aspect of our business. It's one of the real opportunities that we see for the future is that we can take the same analytics that we've been using to drive incredibly successfully, our marketing and our pass business we can do to drive our operations.
And even, I think last year was a great opportunity for that, because we could go to our resort leaders and say, hey, we're looking at information across, you know, 10 different resorts that have similar constructs of 10 different lifts that are similar. And Hey, some of you are doing X, some of you are doing Y or seeing the results for them. And they can, when I say we, they like the resort leaders themselves get together to really do that. So we don't get the information from our competitors, but we've got enough. We think insight to do an amazing job of kind of best practicing all of our operations sincere.
And our next question will come from Jeff Stantial with Stifel.
Thanks for taking my questions here. First off, I do want to echo my peers I've in and say, congrats on tremendously successful tenure Rob, and a well-earned transition to chairmanship and congratulations to you well, Kirsten. Looking forward to working together more closely moving forward.
So, just a couple questions here. I wanted to start on pass sales. How are you guys thinking about the impact from the healthy consumer and the results reported thus far, just with the savings, the stimulus folks making up for lost modifications last season. How much is this playing a role in the growth versus the more at attractively priced product. I do recognize it's difficult to parse these dynamics out, but just any thoughts here would be helpful.
Sure. Kirsten, you want, just talk to that.
Yeah. I think it's hard to parse out as you highlighted Jeff. Exactly what all the different dynamics are. I certainly am encouraged by so many different factors moving in our favor in terms of the strategy that we put in place on the 20% price reduction and what we had intended. And I think two really important dynamics that are particularly encouraging is new and people trading up.
So bringing new people into the program and then trade up, meaning people are taking the discount and spending the discount on a higher level pass or more days, how much that's being impacted beyond the 20% price reduction is, is hard to know and parse out. But I certainly think that the 20% price reduction, as well as the incredible network of resorts that we have and the investments that we've made into those resorts and the guest experience have to be the primary driver of the business impact.
Okay, great. That's helpful. And then for my follow up, I was hoping to drill into the guidance here a little bit. You provided context for the impact of enclosures in Australia during the first quarter, the impact, to the international business, largely at Whistler, it looks like otherwise guidance assumes a fairly normal operating environment. Is it fair to take the $785 million to $835 million, add back to $27 million and the $41 million [ph] for those two impacts and look at that as a sort of non-COVID impacted normalized EBITDA baseline for moving forward or are there other puts and takes to consider?
Yeah. Michael, do you want to take that?
Yeah, sure. Thanks for the question, Joe. Yeah, I think the I think that the right, so we, we set the guidance where we obviously expect it will come out and then yes, it call out those three specific think items. The two that you mentioned Whistler black home during, you know, essentially the winter season coming up, PRI primarily as a result of the international headwinds that we anticipate facing.
Obviously as folks have followed the challenges that we faced relative to, to lockdowns and resort closures in Australia as you noted about an expected 41 million just in Q1 there, and then an expectation that there will be some headwinds as well in the, the group and conference side, which will largely hit the lodging business. Again, difficult to quantify that.
So we not put a number on that, so yeah, and of that expecting a normal year. So I think that it, it is fair to assume that in the absence of those changes, the baseline would've been at those higher levels I think important to note that the comparison points that we were providing for both Whistler and Australia relative to getting back to actuals from the last, kind of full season that we had. So for Australia that would've been the first quarter of 2020, and for Whistler the winter season of 2019. And not assuming anything beyond that.
Okay, great. Both helpful and encouraging. Thanks very much and congrats again, Rob and Kirsten.
And we'll go to Brandt Montour with JPMorgan.
Good afternoon, everyone. Thanks for taking my questions and congrats to Rob Kirsten. Quick question on the pass dynamics for this fall upcoming season. And, and I think I understand, the two that you mentioned, which is the pull forward obviously the tough comp last year. Is there any reason to expect a difference in mix for this upcoming fall season in terms of low frequency versus high frequency year over year?
Kirsten, you want to take that?
Yeah. Thanks, Brandt. Yeah, we generally see different dynamics in the spring versus the fall. As we get closer to the season starting, we tend to see more new versus renew and we tend to see people coming into our epic day pass products as that vehicle for coming into the program. So there is a, there is a different dynamic that happens in spring versus fall.
Okay. Thanks for that. And just as a follow up for maybe for Michael, when you think about guidance, and I know you're looking for something like a normal year for North America you guys just put out a release about COVID protocols and requiring masks for activities indoors. I guess what gives you confidence that that's not going to impact consumer spend and in F&B and other ancillary in indoors, but then again, obviously consumers are spending a lot right now, so maybe it's a wash. How do you think about those two dynamics?
Yeah, I think that you know, clearly we're going to be very focused on continuing to ensure that the health and safety of both our guests and our employees, which was really about the announcement you know, that we put out earlier this week. I think that, you know, the primary difference between last year and this year is really about capacity. And last year with the various COVID protocols that we put in place, there was you know, quite a significant reduction in and capacity.
And that really hit as you saw in our numbers our food and beverage business, where we had to limit seats and outlets and things like that, as well as in ski school where we had a number of limitations relative to what we could serve. And so in the guidance this year, there is an assumption that, that those capacity and res will be returned or that capacity will be returned to normal.
Obviously as you said, there's puts and takes as to, you know, kind of you know, where consumer demand is any potential impacts for COVID 19. But at this point we are planning to have full capacity at our resorts with the, with the vaccinate requirements that we did outline which should not impact capacity at this time. So that's the approach that we took to planning for it this year.
And our next question will come from Paul Golding with Macquarie Capital.
Thanks so much. Rob, congrats on an incredible run and Kirsten congrats on the new rule. I was wondering if you could give some color on and this might be for Michael given earlier questions, how the, the international and conference guest or resort her visit sort of margin profile compares to the, the standard destination domestic desk or just how they to each other so that there's some comparison to 2019 of a baseline.
Sure, and we don't provide kind of specifics by, you know, guest segment, but, but directionally you know, I think a couple things on the international side, I think first and foremost there are differ in our international mix by resort. And so as we've talked about for many years, actually going back to the time when we did the Whistler deal one of the benefits of Whistler is that it is a significant international destination and, and has a bigger mix of international guests in normal periods than most of our us resorts. And so, as there was result of that, that's why we called out the disproportionate impact at whistle black home. I think that as it relates to their spending, you know, I think the, you know, broad strokes, the, the international guests will likely tend to stay longer.
So have more days skied and in many cases will be a higher spending guest, particularly as it relates to ancillary businesses. And so we've certainly, you know, built that assumption into our guidance and, and of course called that out specific to the impact at Whistler as it relates to the conferencing group business you know, like many lodging businesses, that's an important part of the kind of hotel and conference center side of the business.
That being said, one of the benefits that we have is that we have a mix of both property management businesses, as well as owned and operated properties. And so it's certainly an important piece of the lodging profile for us. Additionally, as you would imagine conferencing group can drive quite a bit of food and beverage spending in particular with the banquets and conferences and the like, and so that's really what we've built into our expectations for the lodging business, which is you know, a, a slower recovery there as we're seeing more broadly in leisure trends, you know, not just from our company, but, but real the sector from what we're seeing
Really appreciate the color. And then as a sort of a wishlist follow up here Kirsten, you mentioned the trade up component of the epic boost and the new program participants out of the new program participants. Is there any color you can give, whether from survey data otherwise or around if there's a proportion that's new to ski versus coming from competitors, but already a skier.
Thanks for the question. I can't give any color on, if they're new to skiing, we do look get new in a couple of different ways. There are lapsed pass orders, meaning people who had a pass years ago or two years ago, but not last year and bringing them back into the portfolio there's laps paid, which would be someone who has shown up at one of our resorts on a lift ticket in the past, but not had a pass, and we're bringing them into the program and then there's brand new.
And as you know, we have a very robust database of guests and guest behavior. So we can look at well who's brand new showing up in our database for the first time. All three of those sub segments of new are performing incredibly strong, meaning bringing people back into the program, converting lapsed, lift ticket people to a pass, and then brand new people that we have not seen on a lift ticket or a pass ever. All three of those are actually performing very strong.
I cannot tell you at this point, some point in the future, maybe we will do research among the new group to our database to, and better what their behavior was before. But at this point in time in this phase of the selling cycle, we don't know how many of those came from a competitive pass or just took up the sport of skiing.
And our next question will come Ryan Sundby with William Blair.
Yeah. Hey, thanks for taking my question. And let me add the congratulations to Rob Kirsten there. I guess following up a bit on Paul's question there I think at the Analyst Day Kirsten, the idea was that the change in pass pricing would not have an overall impact on pass revenue and total revenue given the opportunity to capture new pass buyers, which you just talked about, higher renewal rates, incrementalizing spends, I guess now we've seen the growth through the first two pricing periods here. Do you still see this as a, as a neutral outcome for this year? Because it's, it's hard for us to know. I think how much you're shifting on to how much it's incremental to overall 10.
Yeah. Thank you for the question. What I would say is that our sales have exceeded our original expectations and our generating more incremental revenue than we had expected, and those were results are factored into our guidance. So we are, yeah, very encouraged that some of the assumptions that we originally made and shared at the investor's conference are turning out at this point in time, more positive than what we had originally assumed.
Okay. State between, can you just help walk us through that Delta? And clearly the price decrease is the big piece there, but I think there's positives in sort of trade up, but maybe negatives in terms of pass mix. So any kind of color on the puts and takes would be great.
Yeah. I think you said it. Yes. I think you said it exactly right. The positive overarching message is, even though we decreased our pass price by 20%, we are seeing our effective pass price only decrease by 17%, which I think is very encouraging. It's a reflection of trade up, but there's other dynamics in there as well, such as mix and mix shift as we move through the selling cycle price increase. And so, yeah, there are other factors in there that are impacting our effective pass price. I think on a macro level, the 20% price decrease resulting in only a 17% decline effective pass price is very encouraging for us.
Thank you. And that does conclude the question-and-answer session. I'll now turn a conference back over to you for any additional remarks.
Thank you, operator. This concludes our fiscal 2021 yearend earnings call. Thanks to everyone who joined us today. Please feel free to contact me Kirsten or Michael directly should you have any further questions? Thanks for your time today and goodbye.
Thank you. And that does conclude today's conference. We do thank you for your participation. Have an excellent day.