$175 million for staff is 30% more per hour, capital projects announced, too
By Karen D. Lorentz
Vail Resorts recently announced a $20 per hour minimum wage for all 37 of its North America resorts, effective for the 2022-23 ski-and-ride season. The company also announced capital improvement projects total of over $300 million, which is $150 million above the typical annual capital plan, according to Vail CEO Kirsten Lynch.
In its second quarter fiscal report, conference call, and a March 14 letter to workers, Lynch acknowledged several challenges, which the additional investments will address. The company was on the receiving end of both employee and customer complaints, which made the news across the country as frustrations and anger were expressed on the internet, as well as a challenging start to winter conditions and the labor shortages that afflicted most U.S. businesses.
Employee-focused initiatives
At Okemo, the new minimum wage represents a $5 per hour increase from this season for entry-level workers like food and beverage and lift attendants, notes Communications Manager Bonnie MacPherson.
“Entry-level ski patrollers and maintenance team members will start at $21 per hour. To ensure career and leadership wage differentials, Vail Resorts is also increasing wages for non-entry level hourly team members,” she added.
“The increases for staffing represent an annual investment of $175 million, which will go up incrementally each year as costs rise,” MacPherson said. The average wage increases across our hourly employees in North America will be 30%,” she added.
The additional $175 million includes spending $4 million to improve human resource operations by adding 66 additional personnel to the HR team, an almost 50% increase to the size of that team which is effective immediately according to MacPherson.
The HR investment addresses issues that arose when Vail Resorts centralized many functions to its corporate headquarters and did away with HR directors at individual resorts. This caused a slower response time to local issues, which varied from housing or transportation problems to labor shortages. (Similarly, the U.S. Forest Service learned that on-site expertise is beneficial years ago after having to revise their centralization of HR to New Mexico headquarters and experiencing nationwide problems.)
“We are committed to providing our employees with the support they need directly and efficiently, especially with hiring, onboarding, payroll, and case management,” Lynch said of the HR changes.
“In my first 100 days as CEO, I have had the opportunity to reflect on what is important, and what our company must focus on as we move forward. Our top priority must be to support and invest in our employees — their wages, benefits, HR support, housing and career development. Our employees’ passion is what makes our resorts so special and our guests’ experience memorable,” Lynch said of the new direction.
The expanded employee-focused initiative includes a commitment to accelerate progress on affordable housing, updated perks and benefits, and an enhanced focus on career development.
The company’s leadership development program is being expanded to include seasonal frontline workers. That will enable anyone who joins an area for a season to have “the chance to build a career with Vail Resorts or move across resorts,” Lynch said of enabling employees “to build long-lasting careers in the snow sports industry.”
“To reflect the changing dynamics in today’s labor market, we are doubling our merit increases for year-end, from an average of 3% to an average of 6%, effective October 2022 for salaried employees. Each team member’s merit will continue to be differentiated based on their performance. We will continue to assess market compensation to determine further adjustments as appropriate,” Lynch said in her letter to staff.
MacPherson said the various initiatives address labor shortages so as to increase staffing levels to pre-pandemic levels and will provide for the best possible guest and employee experiences. Providing for career development and developing succession leadership are also important goals, she added.
Capital investments
Vail Resorts is also increasing its capital projects budget for 2022 to over $300 million, which includes $180 million for 21 new lifts at 14 resorts and some major terrain expansions.
In the East, four lift upgrades will “transform the on-mountain experience with improved access to much of the terrain that our guests love most,” MacPherson said.
At Stowe, the replacement and extension of the existing fixed-grip triple to a high-speed six-passenger lift will increase uphill capacity by 100% and eliminate a steep hike to the base of the lift while offering beginners and intermediates better access to lower level terrain choices, MacPherson said.
Mount Snow will replace the Sundance and Tumbleweed triples with “one high-speed six-passenger lift to improve access to underutilized terrain and alleviate pressure from other lifts in the main base area, increasing uphill capacity by nearly 70%. The existing fixed-grip Sunbrook quad is being replaced with a new high-speed quad to shorten the 14-minute ride time by approximately 30% and will result in better utilization of the Sunbrook terrain, MacPherson noted.
Okemo, Vail Resort’s third Vermont resort, received a replacement quad and a new six pack for 2021-22.
The replacement of the two double-double chairs with one fixed-grip quad will improve reliability and enhance the guest experience at Attitash in New Hampshire, MacPherson added.
Improved quarterly results
While it was a challenging and slow start to this year’s winter conditions with uncooperative weather patterns and negative press reports compounding various issues such as labor shortages, the company’s resorts have shown improvements in visitation and revenues compared to the fiscal 21 season, which encompassed some impacts of the Covid-19 epidemic. Financial results also showed improvements over the 2020 fiscal year, which saw a month of winter impact due to Covid.
Among highlights:
- $223.4 million net income attributable to Vail Resorts for its second fiscal quarter of 2022.
- Season-to-date through March 6, 2022, total skier visits were up 11.7% compared to the prior year season-to-date period and up 2.8% compared to fiscal 2020 period.
- Season-to-date total lift ticket revenue, including an allocated portion of season pass revenue for each applicable period, was up 21% compared to the prior year season-to-date period and up 10.3% compared to fiscal 2020 period.
- Season-to-date ski school revenue up 60.2% and dining revenue up 75.7% compared to the prior year season-to-date period but relative to fiscal year 2020, ski school and dining revenues were down 8.9% and 27.0%, respectively.
- Retail/rental revenue for North American resort and ski area store locations was up 40.7% compared to the prior year season-to-date period, and down 2.8% versus the comparable period in fiscal 2020.
Lynch observed that 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.
However, “the growth in pass units did not drive dramatic increases in visitation, as the Company is shifting lift ticket guests into advance commitment products,” Lynch said.
The “growth in visitation in the period ending March 6, 2022, compared to fiscal 2020, occurred on weekdays and non-holiday periods, which were up approximately 9% in visits, compared to weekend and holiday periods, which were approximately flat in visits,” Lynch noted.
She added that “69% of our visits came from season pass holders compared to 56% of visits in the same period in fiscal year 2020” and that VR remains committed to “a strategy to move lift ticket purchasers into advance commitment products, which offers benefits to our guests and stability to our employees, our communities, and our Company.”
The company’s board of directors approved an increase in the quarterly cash dividend to $1.91 per share beginning with the dividend payable on April 14, 2022 to shareholders of record as of March 30, 2022.