Ski industry fallout from the global pandemic continues. Vail Resorts today announced the deferral of lift construction projects slated for Beaver Creek, Breckenridge, Keystone and Okemo due to a dramatic decline in revenue, which is expected to continue into fiscal year 2021. The suite of projects was first announced last December, the same month COVID-19 first appeared in Wuhan, China. While the virus spread across Asia, lift manufacturers were gearing up to build lifts that now won’t happen this year. Beaver Creek had planned a major expansion into McCoy Park and Okemo earmarked a new bubble six pack for Jackson Gore. Both Breckenridge and Keystone planned new chairlifts to increase uphill capacity in high traffic areas.
Vail said weeks ago coronavirus will cost the company between $180 and 200 million in March and April alone. Eliminating lift construction, terrain expansions and discretionary base area improvements will save the publicly-traded company $80 to 85 million while allowing the vast majority of maintenance capital projects to proceed. “The circumstances surrounding COVID-19 are unprecedented and the financial impact to our Company and the broader travel industry has been significant,” noted Rob Katz, Chief Executive Officer of Vail Resorts. “We are taking proactive steps to align our capital spending and return of capital approach to ensure that we remain positioned for long-term success.” Other steps revealed today include the furlough of nearly all year-round hourly employees, suspension of the company’s shareholder dividend, salary reductions for non-hourly employees and elimination of cash compensation for the CEO and board of directors.
The decision to postpone lifts is a blow to both major lift manufacturers but particularly Leitner-Poma, which like Vail itself, is Colorado-based. The firm had been awarded contracts to build three detachable chairlifts and move another this summer. Doppelmayr USA had planned to install the two machines at Beaver Creek.
As goes Vail, often go others. While I’m hopeful some lifts (and the jobs that come with them) are safe, more deferrals are possible. Rival Alterra Mountain Company planned to add only two lifts this year, both six place chairlifts at Mammoth Mountain. The privately-held group has not announced any changes to its capital plan thus far. In tough times, every company is understandably revisiting capital budgets and commitments, however.
The sudden onset of such deep uncertainty in this critical period of the lift production cycle is unprecedented. With the elimination of Vail Resorts projects for 2020, announced US and Canada complete new lifts stand at 24, fewer than Doppelmayr built by itself last year.
Lift Blog 
Will these projects happen in 2021/2022?
LikeLiked by 1 person
It will likely depend on how season pass sales go this summer, and the start of next season…
LikeLike
Expected but still shocking:(
LikeLike
Wow. I was kind of hoping the Breck Peak 7 in-fill lift would still proceed since it frankly should’ve been added when they opened Peak 6.
For selfish reasons, I hope they delay the Pali Chair replacement at A-Basin since I wasn’t able to make my annual pilgrimage there and have my final time on that lift. I should’ve been there this weekend.
At this point with where the world has gone in the past month, I’ll just be damn happy to get out on skis next season at this rate.
LikeLike
Since these were likely ordered back in December, I bet a lot of the equipment was already manufactured. Maybe they’ll be able to sell the lifts to other mountains at a discount. If that happens, it might help rebound the number of new lifts built.
LikeLike
They could also just hold onto the equipment for a season for installation next year (assuming . . .). They’ve probably already committed/spent that money, but don’t want to incur the cost of installation, which of course is a significant portion. Unless they really need the cash, it likely makes more sense simply to hold/store the built equipment for a year – it’s not like it goes bad or depreciates more quickly in storage containers or a warehouse vs. on a lift.
LikeLike
Vail Resorts has also likely contributed millions into these lifts already (down payments).
Alterra only has three installations this year (2 a Mammoth, 1 at Sugarbush), so I wonder if they will proceed with both or throw in the towel. Boyne will be very interesting to watch, though I would assume that Kanc 8 and Swift Current 6 (both D-Line and depend a lot on Doppelmayr’s Wolfurt manufacturing facility) are both on the rocks. I don’t think Powdr announced anything for this year. I would think that MCP will proceed with the Telemix at Arizona Snowbowl. ORDA will probably cancel it’s projects (again).
Then there’s the independent mountains. Magic *might* finish the Black Line Quad. Removal of Rangely at Saddleback is well underway. I’m not sure about Timberline Mtn, or anything else.
LikeLike
Independent mountains could get a scorching deal out of this. Just depends if they have the cash reserve. However, the other factor is if nonessential construction is shut down by the states. It is in New York where I live.
As for ORDA, they were going to order super late and one of the options for the contractor was to install all 3 lifts in 2021. Last I heard, it was going to be cheaper to do the two lifts in 2020 and one in 2021, but neither Skytrac nor Doppelmayr were hitting the end dates ORDA wanted. I would guess at this point, they are more likely to do all 3 in 2021, unless maybe ORDA buys the fixed grip quad that was headed for Beaver Creek.
LikeLike
The Sugarbush lift is likely being funded entirely by Green Mountain Valley School.
LikeLiked by 3 people
Magic would be very lucky to get BLQ done for opening day next year. They likely still need to splice the rope, install bull wheels, and get the chairs on there. And after that they still need to have it load tested and all that jazz.
LikeLike
The work left for the BLQ should only take a couple months, so even if they do not start until June/July, I think they will finish by Thanksgiving. They also have contractors already in place and ready to go. However, given it is Magic and they are not known for being on-time, I completely understand the reluctance to say it will be done.
LikeLike
From what I have heard Mammoths two 6 packs are going to be D-line lifts as Alterra wanted both with direct drives and those are only offered on the D-line.
If supply lines are shut down, I think only Skytrac has the ability to source a lift entirely from suppliers in the US.
LikeLike
Even Skytrac is dependent on lead time for 480v electrical gear like motor controllers, VFDs, and transformers. Supply chains for those items are being seriously disrupted right now.
LikeLike
Storm Skiing Podcast is doing a series on the effect of COVID-19 on the ski industry.
Second episode was with Stephen Kircher of Boyne Resorts: https://skiing.substack.com/p/covid-19-and-skiing-podcast-2-boyne
LikeLiked by 1 person
Stephen doesn’t say it straight out but it is sounding like all Boyne lift projects are on hold.
LikeLike
He mentioned that the projects would only be postponed if the construction season is shortened or the economy does not adequately rebound. Boyne is in a very similar situation to Alterra as I mentioned below.
LikeLike
He said that they don’t want to risk removing a lift if the replacement could be delayed significantly, the final decision will need to be made shortly as the existing lifts will need to be out by June for construction purposes, so yes they have not postponed projects and they may have ordered early enough not to be impacted but I would not be surprised if it goes south.
LikeLike
Budgets are tight everywhere right now, and while this isn’t good news, it’s understandable. Everybody keep your heads down and stay safe, and we’ll all come out the other side ok. Skiing will live on.
LikeLike
This is unfortunate but expected from a public company like Vail. Vail is estimating a $180-$200 million negative impact from COVID-19 and they were planning on spending $210-$215 million on capital improvements. The logical outcome is to cut capital improvements as much as possible and then cover the remainder of the negative impact with wage cuts and early termination of seasonal employees. For the stockholders, who are the people Rob Katz has to answer to at the end of the day, this minimizes COVID-19’s impact on yearly profits. Private companies, like Alterra/Boyne/Powdr, do not have to deal with a shareholder revolt due to lower earnings, and they are therefore better positions to simply accept the blow should their owners choose to do so.
The other factors, which equally impact every ski operator, are construction suspension and the economy. At the moment, no lift can be disassembled, manufactured, or installed due to government policies. There is no consensus on how long these policies will stay in place, but May/June is a moderate estimate. Not allowing the lift replacement process to start until June 1 cuts a big hole in the small construction window these resorts already have in order to have the lifts ready to go for opening day. From a cost perspective, the pricetag rapidly increases once the season begins due to mountain traffic, and going into a second construction season brings up the cost even more. On top of that, a lift that is vital for skier flow around the mountain must be ready to go by opening day or mid-December at the latest. Additionally, it is unknown how the economy will bounce back from this recession, which could cause skier visits to slump next year.
I fully expect most projects at other conglomerates to go through given they have a long enough construction window. However, for a public company like Vail, or an independent mountain now facing cash shortages, this makes complete sense.
LikeLike
Alterra still has investors to answer to, just because they are not pubicly traded, there are layers of investors, I think they will follow suit and cancel and capital improvements for next season.
LikeLiked by 1 person
Alterra is majority-owned by KSL, with the Crown Family owning the remainder of the company. A few select individuals (CEO Rusty Gregory, lead sponsor Mikaela Shiffrin) have very small, symbolic shares and the Crown Family has an investment in KSL, but that is the ownership structure of Alterra. The Crown Family is worth $5-$10 billion and focused on skiing, not maximizing profitability, while KSL, as a private equity fund, is only focused on increasing Alterra’s long term valuation to sell it down the road. Construction season constraints, especially at Mammoth where an early November opening is the norm, will be their biggest challenges.
LikeLike
True but they also likely have significant debt payments to make and lack of cash flow will impact their confidence in investing. Sort of like what happens at home when you lose your job, you pull in spending because you are worried about mortgage payments, credit card payments, etc.
LikeLike
There really is no difference between a publicly-traded company and one that is privately held.
Leadership or the owner has to make decisions that are in the best interest of shareholders, investors, or the owner himself.
Vail isn’t canceling projects or laying off seasonal staff simply because they’re a publicly-traded company. They’re doing so because the economic disaster of this situation has forced them to do so.
LikeLike
You might be right about Vail’s reasoning but there is, in fact, a significant difference in how publicly traded vs closely held companies approach these decisions. Shareholders in a publicly traded can become non-owners in about two minutes. Private equity investors are typically locked in for a period of time. So Alterra theoretically has more breathing room. But the math on how lifts payback their costs are the same no matter who owns it.
LikeLike
In terms of lifts not being able to be disassembled, someone needs to let Saddleback know that Maine has an order to stay at home, and all non-essential businesses are supposed to be closed… They are actively disassembling the Rangely double…
LikeLike
I foresee this as the first of many deferrals. Even the resorts that can still cope with the budget will hold off because of construction complications this summer, and I predict severe restrictions on international travel until a vaccine is widely available, which most likely won’t be for next ski season, which will really affect the large resorts. Some projects may still go ahead as the manufacturers might offer a deal too good to pass up trying to keep their own operations surviving.
LikeLike
With the exception of whistler and possibly Banff, international visitors are a minuscule portion of skier visits in North America so that won’t be a factor in visitation next season. However, if people are still reluctant to fly next winter it will impact western resorts that rely on skiers coming from the east or Midwest so colorado and Utah might feel some pain. A bigger issue will be trying to recruit resort employees from overseas who may be unable to secure visas or be reluctant to take jobs in countries that don’t have a handle on covid-19 (that might be the US).
LikeLike
The furloughing of that many year round employees plus pay cuts when they return seems like much more important news than some new lifts not being built but I make a living working on ski lifts not writing about them
LikeLike
The lifts represent jobs too Mike. Welders, electricians, engineers, salespeople, people who put them up, people who make haul ropes, people who make engines…
LikeLiked by 5 people
To comment on your clear sarcasm in that last sentence. Peter makes a living working on one of the most famous ski lifts in North America so pretty sure he has a firm grasp on what an impact this will have. Also, it’s called Lift Blog not Ski Blog or Job Blog. This website and article is focusing on the ski lift component of this announcement, as it should.
LikeLiked by 2 people
Without the people to care for them there’s no reason to build or have ski lifts. Sorry but sweatwater gondola is not one of the most famous lifts even at JHole
LikeLike
Brendan- anyone in the ski industry, especially those of us who work in it full-time as Mike does, understands the implications of cancelled lifts. Mike’s point is that we make a living working on existing lifts, and right now no-one is working. VR employees have it worse as they’re not only furloughed, but expected to take a pay cut when they return, whenever that may be. I’d be willing to be that new lifts are the furthest thing from their minds right now. You’re right that this blog is about lifts but perhaps less condescension is in order.
LikeLike
This is to be expected. Sad, but expected. God bless us all.
LikeLike