Today, Vail Resorts announced the cancellation of all their lift construction projects for 2020. Some of the ski resorts Vail had intended on giving new lifts included Breckenridge, Beaver Creek, Keystone, and Okemo. The company made the decision as a response to the dramatic decline in their revenue stream due to the COVID-19 crisis. The mega-corporation expects this decrease in revenue to continue into 2021, and they have announced a drastic reduction in expenses.
Beaver Creek was planning a major expansion into McCoy Park and Okemo was anticipating a brand new bubble six-pack for Jackson Gore, The Lift Blog reports. Both Breckenridge and Keystone were also planning on installing new chairlifts to increase uphill capacity in high traffic areas of their resorts. Vail said in a press release a few weeks ago that they expect to lose somewhere around $180 million to $200 million in March and April alone due to early resort closures brought about by the coronavirus.
As the impacts from COVID-19 continue, it's becoming less clear when our business may reopen. Because of this and to ensure we navigate the financial challenges ahead, we have made some difficult decisions that affect our employees. More from our CEO: https://t.co/7EmbUl3v0c pic.twitter.com/CDcwtUYqQ7
— VailResorts (@VailResorts) April 1, 2020
CEO of Vail Resorts Rob Katz also announced today that the company would be making a large reduction in expenses over the next few months. In a public letter, Katz said it’s becoming less clear when the company’s mountain, lodging, retail, and transportation businesses will be able to reopen, Vail Daily reports.
In mid-March, Vail Resorts gave thousands of employees a 10-day notice to vacate their employee housing. This caused outrage among employees as they had to be out by March 27th, 2020.
Vail has 55,000 employees. On March 31, 2020, Katz sent out a letter to his employees detailing the company’s current plan with dealing with the COVID-19 pandemic.
Katz wrote that Vail will furlough most hourly employees, and all salaried employees in the U.S. will receive a reduction in pay, according to Vail Daily.
CEO of Vail Resorts Rob Katz’s letter to his employees below:
We continue to find ourselves living through an unprecedented time as the situation with COVID-19 grows more challenging, with everyone across our planet now dealing with very real and significant health risks and impacts. This crisis has hit the travel industry particularly hard. Currently, all of our mountains, lodging, retail, and transportation businesses are shut down and it is becoming less clear when things will start to reopen again. We reported two weeks ago that the early closure of our North American operations will cost the Company at least $180 million to $200 million in lost profitability in our third quarter ending April.
I am very hopeful that both the economy and travel will return to normal by the time our North American winter season opens eight months from now. However, we also need to remember that we have substantial business operations set to open over the next few months – our Australian winter season, Grand Teton Lodge Company, as well as our lodging, retail, and summer mountain operations at our North American resorts, which collectively represent more than 20% of our total revenue. With the very real possibility that the global stay-at-home orders could be extended, and travel reduced regardless, our business in May through October is at risk. We will work hard to reopen as soon as practical, but much of this is now outside of our control.
Because of these realities and to ensure that we can navigate the financial challenges ahead, we are taking certain measures, including some that will unfortunately affect each of our U.S. employees:
- We are furloughing nearly all of our U.S year-round hourly employees as of April 4, 2020, for at least the next one to two months, without pay, but with full healthcare coverage for any impacted employee currently enrolled (the Company will pay all premiums).
- We are implementing a six-month salary reduction for all U.S. salaried employees that starts at 5% for those up to Grade 27, 7.5% for Grades 28/29, 10% for Grades 30/31, and then rises up to a 25% reduction for our most senior executives.
- I am giving up 100% of my salary during the next six months.
- We are eliminating 100% of the cash compensation for members of our Board of Directors for six months.
- We are suspending the Company’s 401(k) match for the next six months.
- We are reducing our capital expenditures by $80-$85 million, with the intention to defer all new chair lifts, terrain expansions and other mountain improvements, while protecting the vast majority of our maintenance capital spending.
- We are eliminating our June and September dividends to shareholders, saving the Company more than $140 million.
I recognize this is very disappointing news to be receiving and I had hoped we would not have to take this action. But with each passing week, the financial consequences have become more apparent. To our year-round hourly employees, I am so disappointed that the vast majority of you have not been able to work these past three weeks and I assure you we will end the furlough as soon as possible once we have clarity on our business reopening. To our year-round salaried employees, who are working from home, in many cases harder than ever, I truly am sorry to have to ask you to give even more by accepting a salary reduction – we are asking everyone to accept some sacrifice so that we weather this storm together and are ready to come back strong for next winter. For those of you with questions, your leader will be reaching out to discuss the situation with you over the coming days.
I am sure many of you are wondering if these actions will be enough. Will there be more changes coming? Once again, if I am honest with myself, I have to give the toughest answer for any CEO – I really don’t know. It’s possible that things could quickly improve. But it’s also possible these challenges may force us to materially delay or cancel our upcoming summer season. In that case, more measures might be needed.
I have made decisions over the last few weeks that I never could have anticipated in my nearly 30 years working in the ski business. I recognize the impact of today’s decisions on you, and I do not take them lightly. I am humbled and grateful for your passion and dedication to each other, our communities and our industry – it’s what makes our sport and this Company so special. Please know, I am fully committed to help steward our Company and our entire industry forward so we can all continue to thrive in the mountains for years to come. During this challenging time, please continue to prioritize your health, safety and wellbeing.
The company will furlough nearly all U.S. year-round hourly employees starting April 4 for at least one to two months, Vail Daily reports. This includes 706 employees in Summit County. These employees will be without pay, but those who are already enrolled in the company’s health insurance program will retain their coverage, and Vail will pay the premiums, according to Vail Daily. Katz’s salaried employees in the U.S. will see a 5% to 25% salary reduction for six months based on their pay grades, with the 25% salary reduction being for senior executives.
Fundamental changes are on the horizon for Vail Resorts during this challenging time, as with virtually every business in the ski and travel industries. CEO of Rob Katz is having to adapt his company as best as he can — like many of us — and has even said that he will be giving up 100% of his salary and will be eliminating cash compensation for the Board of Directors during the next six months.
Katz, and his wife, Elana Amsterdam, will also donate $2.5 million in immediate emergency relief grants that will benefit more than a dozen local organizations providing critical services in locations where Vail own resorts:
- Eagle County, CO
- Summit County, CO
- Gunnison County, CO
- Park City, UT
- Lake Tahoe, CA
- Whistler, B.C
- Stevens Pass, WA
- Jackson Hole, WY (home of Grand Teton Lodge Company)
Recipients of the Katz Amsterdam Charitable Trust COVID-19 Emergency Relief Grants include:
State of Colorado:
- Help Colorado Now: $250,000 to support non-profits across Colorado that are providing critical services during this public health crisis
Eagle County, Colorado:
- Eagle Valley Community Foundation: $200,000 to support basic needs and mobile food bank services that help community members across the county
Summit County, Colorado:
- Family Intercultural Resource Center: $100,000 to support the organization’s mobile food bank and mental health and social service navigation
- The Summit Foundation: $100,000 to the Summit County Cares Fund to support non-profits serving the most vulnerable populations and providing critical resources to community members
Crested Butte, Colorado:
- Community Foundation of Gunnison Valley: $50,000 to the Foundation’s COVID-19 Response and Recovery Efforts that support non-profits who provide critical services to those impacted
Summit County, Utah:
- Park City Community Foundation: $200,000 to support the Community Response Fund that will deploy resources to health and human services community organizations that serve vulnerable populations disproportionately affected by the COVID-19 outbreak
South Lake Tahoe, California:
- The El Dorado Community Foundation: $150,000 to the Foundation’s Coronavirus Relief Fund that will support families in need and non-profits that provide critical basic need and other social services to the community
North Lake Tahoe/Truckee, California:
- Tahoe Truckee Community Foundation: $100,000 to the Foundation’s COVID-19 Emergency Response Fund that supports non-profits across the region to serve the critical needs of those impacted by the coronavirus.
Whistler, British Columbia:
- Whistler Community Services Society: $100,000 CAD to support the organization’s mobile food bank, mental health services, and social service outreach efforts
- The Whistler Blackcomb Foundation: $100,000 CAD to the Foundation’s COVID relief fund that will support non-profits across the Sea-to-Sky corridor as they meet the most critical needs of community members
- Vermont Community Foundation: $150,000 to support several non-profits in three communities that provide food services, basic needs, and critical social services to community members
Stevens Pass, Washington:
- Upper Valley Mend: $50,000 to support the organization’s food bank program and other critical social services to those in need
Jackson, Wyoming (Grand Teton Lodge Company):
- Community Foundation of Jackson Hole: $50,000 to the Community Emergency Response Fund to support local non-profits helping those directly impacted by COVID-19.
All Vail Resorts Communities
- Epic Promise Employee Foundation: $1 million to establish a new fund to provide additional assistance to Vail Resorts employees due to the impacts of COVID-19.