Vail Resorts was struggling, now it is in a perfect storm.

[marzNC]

Blister podcast just interviewed Chris Diamond a week ago. Interesting listen. I haven't read the book yet, but I want to.

I have Ski Inc. 2020 but haven't got Ski Inc. yet. Definitely will listen to the podcast soon.

April 13, 2020, Blister
https://blisterreview.com/podcasts/ski-inc-2020-the-current-state-future-of-the-ski-industry-ep-126

TOPICS & TIMES​

Background: from bartender to CEO (3:26)​

What led you to write SKI INC? (14:24)​

Why did you write SKI INC. 2020? (26:30)​

Chess Match: Vail / EPIC Pass vs. Alterra / IKON (35:38)​

How will COVID-19 affect the ski industry? (44:02)​

The future of independent ski resorts? (49:54)​

Predictions: future acquisitions & industry trends (55:22)​

 

[marzNC]

VR and other ski resorts in Australia are still hoping to open at some point in late June or July. The snow is usually best in July and August. VR owns Perisher, Falls Creek, and Mount Hotham. Thredbo is on Ikon. Selwyn was destroyed by the recent wild fires so wouldn't have been open in any case.

April 20, The Sydney Morning Herald (Australia)
Snow resorts plough on for bumper ski season despite instructors' doubts
https://www.smh.com.au/national/sno...spite-instructors-doubts-20200411-p54j06.html

 

[vickie]

But, after a quick search of a couple of the larger resorts, season passes are on par with what they were before the US adopted, what I'll call, the "Vail Model"....Chamonix at $1400USD, St. Anton at $1000 and Mortiz at nearly $2000

Subsidies and discounts seem to be a part of the American culture. The postal service did it, telephone companies. I recall learning in Germany that they didn't offer a discount for a magazine subscription. It cost more to have it delivered every month than to buy it at a newsstand because you paid for both the product and the delivery. My hair stylist there cost more than others in the same shop because he was a Master. Prices seemed more aligned to the product and/or service, not enticements and deals.

 

[gingerjess]

Subsidies and discounts seem to be a part of the American culture.

They definitely are. Does anyone remember a few years back when JC Penney tried to get rid of fake "discounts" and "sales" and just sold items for a consistently reasonable price? It flopped in a HUGE way; people were too used to being able to feel like they had gotten amazing deals to put up with it.

 

[skibum4ever]

Here's a truly amazing announcement from Vail Resorts about next season's pass:

https://www.pugski.com/threads/vail-resorts-announces-19-20-pass-holder-credits-and-‘epic-coverage’-for-20-21-season.19760/

 

[gingerjess]

Here's a truly amazing announcement from Vail Resorts about next season's pass:

https://www.pugski.com/threads/vail-resorts-announces-19-20-pass-holder-credits-and-‘epic-coverage’-for-20-21-season.19760/

Wow, thanks for linking! I think this is pretty much everything I could've asked for from Vail, and then some. The discount for existing passholders is great, and the coverage plan seems incredibly comprehensive.

 

[ski diva]

Just started a thread Vail's announcement. You can find it here.

 

[skibum4ever]

Just started a thread Vail's announcement. You can find it here.

Feel free to consolidate my multiple posts. I saw this first on FB, looked for it on SD, then found it on Pug. I was so excited that I posted it in several relevant threads.

Thanks.

 

[marzNC]

Vail Resorts came up with a way to have more money available in the next couple years.

April 29, Yahoo! Finance
Ski Resorts, a Virus Hot Spot, Win Reprieve in Credit Market
https://finance.yahoo.com/news/ski-resorts-virus-hot-spot-220258733.html
" . . .
A group of lenders led by Bank of America Corp. granted the operator of ski resorts in Vail and Whistler a two-year break on key debt covenants, paving the way for the company to raise $600 million with a new bond offering.

The waiver for Vail Resorts, Inc., which extends until Jan. 2022, is one of the longest banks have granted to companies suffering as a result of the Covid-19 pandemic. That suggests the company believes it may take as long as two years for business to return to normal.
. . .
Vail received some $5.8 billion in orders for the bond, or nearly ten times the final amount of the offering, according to people with knowledge of the matter. The company had initially targeted a $500 million deal.

In another sign of strong demand, the notes priced at a yield of 6.25%, down from early conversations of as much as 7%, the people said, asking not to be named because the discussions are private.
. . ."

 

[ilovepugs]

Vail Resorts came up with a way to have more money available in the next couple years.

April 29, Yahoo! Finance
Ski Resorts, a Virus Hot Spot, Win Reprieve in Credit Market
https://finance.yahoo.com/news/ski-resorts-virus-hot-spot-220258733.html
" . . .
A group of lenders led by Bank of America Corp. granted the operator of ski resorts in Vail and Whistler a two-year break on key debt covenants, paving the way for the company to raise $600 million with a new bond offering.

The waiver for Vail Resorts, Inc., which extends until Jan. 2022, is one of the longest banks have granted to companies suffering as a result of the Covid-19 pandemic. That suggests the company believes it may take as long as two years for business to return to normal.
. . .
Vail received some $5.8 billion in orders for the bond, or nearly ten times the final amount of the offering, according to people with knowledge of the matter. The company had initially targeted a $500 million deal.

In another sign of strong demand, the notes priced at a yield of 6.25%, down from early conversations of as much as 7%, the people said, asking not to be named because the discussions are private.
. . ."

that’s good. I don’t have time to read their disclosures... did the article mention how much Vail’s credit line with BAML is?

 

[gingerjess]

The high demand for the bond is interesting, but makes sense—Vail has a ton invested in assets that are useful for basically nothing but what they're already being used for. So, even though they're going through a liquidity crisis at the moment, buyers probably feel confident that creditors won't force a liquidation; there's very little that could be recovered compared to more traditional businesses. What's a bank going to do with dozens of long-term leases from the National Forest Service and the chairlifts installed on them?

 

[marzNC]

that’s good. I don’t have time to read their disclosures... did the article mention how much Vail’s credit line with BAML is?

Does this address your question? It's at the end of the article: "The company closed all of its North American resorts for the season in mid-March and has already drawn down its bank credit lines. It expects to have $1.2 billion in liquidity following the bond sale, it said."

 

[marzNC]

What's a bank going to do with dozens of long-term leases from the National Forest Service and the chairlifts installed on them?

Agree that a bank would have little interest in trying to sell any ski resort that VR owns. I remember a saying from decades ago . . . something about if you want a business loan then ask for $1 million instead of $100,000 and then you'll end up with a "partner" instead of just a "lender."

 

[ilovepugs]

More on Vail and its debt situation:S&P Global gives Vail Resorts a negative outlook on its bond offering ... once the proceeds of the bond are received, it will have about $1.1 billion in liquidity, but the ratings agency is very skeptical about earnings from next season. Guess that’s why they’re trying to sell as many Epic Passes as possible for the cash infusion to weather next season. In a way, if Vail has to shut down next season, they’re borrowing from the following season which is pretty smart for a short term move.