Projecting $40M in savings from new tax law, Vail Resorts will increase employee minimum wage
March 8, 2018
BROOMFIELD — Thanks to new U.S. tax law, Vail Resorts will increase its minimum wages at its U.S. and Canadian resorts, and has announced a 40 percent increase in its quarterly dividend to shareholders.
During a Thursday, March 9, Vail Resorts CEO Rob Katz said the company will see a cash savings of about $40 million in the 2018 calendar year. The savings will allow the company to increase its minimum wage in the U.S. from $11 per hour to $12.25 per hour. In addition, the Vail Resorts Board of Directors recently approved an increase in the quarterly dividend paid to shareholders. That dividend will be $1.47 per share — up from $1.053 per share — beginning with the dividend payable on April 11 to those who hold stock as of March 27.
Katz said the “investment in wages is critical” in an era of low unemployment and rising prices.
The wage and dividend announcements came during what company officials call a “challenging” snow year, with lower-than-average snowfall at most of the firm’s U.S. ski resorts.
Despite the snowfall, Katz said the company’s focus on destination visitors has help maintain the strength of the bottom line.
Across the company, mountain revenue is up 2.6 percent from the same quarter in the 2017 fiscal year. Still, revenue has declined in other company divisions including lodging, dining and transportation.
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OPTIMISM FOR SPRING
Still, February snowfall has helped bolster conditions in Colorado, California and Utah, Katz said, adding that the company expects that snow to bolster spring skiing.
Katz also announced the company will spend about $100 million in capital projects in this calendar year.
The capital plan includes upgrades to the snowmaking system on Vail Mountain, and spending $2 million for energy efficiency improvements at the resort. The efficiency upgrades are part of a company effort to have a zero environmental impact by 2030.
The capital plan also includes $40 million for upgrades at Whistler Blackcomb, part of a $50 million capital plan. The improvements at Whistler Blackcomb include a gondola running from the base area to the top of Blackcomb Mountain. That gondola will provide a 47 percent increase in uphill capacity.
Other improvements include upgrading the resort’s Emerald Express lift from a quad to a six-person lift.
Improvements at Park City include upgrading a fixed-grip lift to a quad lift to access beginner and intermediate terrain at The Canyons, and upgrading dining at the Cloud Dine on-mountain restaurant.
The quarterly earnings calls are open to questions from financial analysts.
Shaun Kelley, a senior research analyst at Bank of America, asked Katz about the IKON Pass recently unveiled by Alterra Mountain Company. That company owns Steamboat and Winter Park in Colorado, as well as Deer Valley in Utah. The firm also owns resorts in California, Vermont, West Virginia and Canadian resorts in Ontario, British Columbia and Quebec. Alterra also has partnerships with 14 other resorts in the U.S. and Canada.
Katz said Vail Resorts has for several years been competing with other pass systems.
“We welcome competition in the industry; it’s better for skiers and riders,” Katz said, adding that Vail Resorts believes it Epic Pass products remain the best in the industry.
Over the past several weeks, Vail Resorts has announced its own partnerships, including Telluride and resorts in Japan’s Hakuba Valley.
Anthony Powell of Barclays Capital asked Katz if Vail Resorts had considered acquiring resorts instead of entering into partnerships.
Katz said some resort operators aren’t interested in acquisition, “something we respect,” he said.
But, Katz added, the core of the Epic Pass program is Vail Resorts-owned resorts, saying that ownership is “critical” in building a broad-based pass program.
And, Katz said, the company has been “pleased” with the response to the company’s various pass announcements in recent weeks. That been particularly true of the Epic Pass offering to active-duty and military veterans as well as their spouses and dependents. Prices for that pass start at $99 for active-duty and retired personnel and go to $499 for veterans and dependents.
Between the military pass and new partners, Katz said, “There’s real upbeat movement about what we’re doing.”
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, firstname.lastname@example.org and @scottnmiller.