News Roundup: Mask Up

News Roundup: Switzerland to Italy

News Roundup: Working Capital

News Roundup: Graduation Season

 

Following Cancellations, How Will Lift Construction Recover?

When Vail Resorts spelled out its suspension of operations in mid-March, the shutdown was hoped to last only a week.  Fifty days later, all 37 resorts remain shuttered and the company has borrowed more than a billion dollars to weather a possible extended recession.

Almost immediately, Vail Resorts postponed discretionary capital improvement projects including seven new chairlifts.  Vail is just one of numerous operators of lifts facing epic challenges due to COVID-19.  The impacts trickle down to suppliers, particularly global suppliers of large machinery like the Leitner Group and Doppelmayr.  While the two major lift manufacturers are of similar size and structure, their customers are incredibly diverse, from mom and pop outfits to governments, NGOs and Fortune 100 companies.

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As regular readers of this blog know, the lift business is not the same as the ski business.  Leitner-Poma, Skytrac and Doppelmayr USA have all completed projects for non-ski venues recently such as theme parks, zoos, stadiums and cruise ports.  Not only are these projects making up an increasing share of contracts, they tend to be large in scope and often include lucrative operation and maintenance deals.  Some of these non-traditional customers are in even worse shape than the ski business, more dependent on high guest densities and air travel.  Put another way, there is little chance the Walt Disney Company, Carnival Corporation or the Miami Dolphins would have signed to build their recent lift projects in today’s environment.  So-called “point of interest” projects may disappear entirely for a few years.

One bright spot could be urban transport.  The Portland Aerial Tram and Roosevelt Island Tramway have both remained operational throughout the pandemic, albeit at reduced capacity (the Portland Tram carries health care workers to three different hospitals and is about as essential as it gets.)  Large aerial tramways have been ceding market share to monocable, 2S and 3S gondolas, a trend which will probably accelerate with new personal space concerns.  With gondolas, each person or family can take their own cabin unlike on trains or buses.  There are lots of great concepts for urban gondolas in North America and infrastructure spending programs could finally get one or two off the ground.  Mexico already has a large urban gondola system in operation with two more under construction.

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News Roundup: Shovel Ready

  • Lift construction resumes in New Zealand, where resorts are optimistic they can open next month with social distancing.
  • The Forest Service commences scoping for Lutsen Mountains’ big expansion, which would include seven new chairlifts.
  • You can also submit comments on Keystone’s Bergman Bowl project starting today.
  • The State of New York partners with Skytrac and Leitner-Poma for three fixed grip quads – two for Gore and one at Whiteface.
  • Vail Resorts provides last season’s Epic Pass holders with 20-80 percent credits and introduces free refund coverage for next winter.
  • Silver Mountain joins the Powder Alliance, Schweitzer exits.
  • Vail Resorts says goodbye to many Peak Resorts employees as planned before COVID-19.
  • The Burnaby Mountain Gondola project could benefit from an infrastructure push in Canada.
  • Wolf Creek planned to reopen this weekend but an executive order late last night extended the closure of Colorado ski areas through May 23rd.
  • Valemount, BC considers building a community ski hill.
  • I’m not an accountant but I think this filing reveals Vail Resorts has agreed with creditors not to make capital improvements of more than $200 million per year or undertake any mergers/acquisitions through January 2022.
  • Vail is also borrowing $600 million through the sale of bonds.

News Roundup: Adventure Assurance

  • Highland readies for mountain bike season with new chairs acquired from Nashoba Valley.
  • Alterra makes modest changes to Ikon in light of recent events: delaying price increases by a month and increasing renewal discounts.  Late today, the company added Adventure Assurance, permitting purchasers to defer their 2020-21 Ikon value to a 2021-22 pass if desired.
  • The Forest Service expects to have a decision on Keystone’s Bergman Bowl expansion by December.
  • Residents in opposition to Mexico City’s Cablebús Line 1 win an injunction stopping some construction.
  • The Colorado Sun goes inside the decision to close Colorado’s ski industry five Saturdays ago.
  • Saddleback decides to decommission Sandy alongside Rangeley and Cupsuptic.  Old chairs are for sale at $2,000 apiece.
  • A class action lawsuit is filed against Vail Resorts alleging fraud, misrepresentation and false advertising for this spring’s early closures.
  • Sinclair Oil Company may be exploring a sale although the firm’s two ski resorts (Snowbasin and Sun Valley) would not be included.
  • Doppelmayr may build a unique triangle shaped gondola in Australia.

News Roundup: Ripple Effect

  • Saddleback demolishes the Rangeley double to make room for its upcoming high speed quad.
  • Debt-laden Ski Granby Ranch lays off all its employees and won’t issue refunds to guests with canceled vacations.
  • The $2.2 trillion phase three stimulus package passed by Congress doesn’t include assistance specifically for ski areas but there is hope phase four might.
  • Vail Resorts borrows more than $500 million from existing lines of credit in order to increase its cash position and maintain financial flexibility during the outbreak.
  • While many Leitner-Poma staffers work from home, a skeleton crew continues production.
  • Even in hard-hit Italy, one major lift customer plans to commence construction as soon as the immediate health danger has passed.
  • Many Doppelmayr employees are also working from home and production continues in Wolfurt.
  • Aspen Snowmass intends to complete all capital projects as planned this summer including the $10.8 million Big Burn chairlift.
  • Vail Resorts CEO Rob Katz personally donates $2.5 million to mountain community charities and an employee assistance fund.
  • Yet another lift project cancelled by Vail Resorts: replacement of Peachtree at Crested Butte this summer.
  • NSAA estimates costs from early closings and lost pass sales will exceed $2 billion in the United States and forecasts capital spending will plunge 50 percent this year.
  • Magic Mountain’s Geoff Hatheway offers a small ski area perspective on COVID-19.
  • Coronavirus may impact the review timeline for Snow King Mountain’s proposed expansion and other projects on Forest Service lands.
  • Katharina Schmitz officially takes the reigns of Doppelmayr USA from Mark Bee, who retired on March 31st.
  • Boyne Resorts estimates $22 million in lost revenue as a result of this winter’s abrupt end.
  • The Vietnamese developer behind both the world’s longest and tallest 3S gondolas plans another island-hopping 3S in the country’s north.

Vail Resorts Cancels All 2020 Lift Construction

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.

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McCoy Park, Beaver Creek’s deferred terrain expansion, would include two new lifts and 15 trails.

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.

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The second largest Vail project this summer was to be replacement of Quantum Four at Okemo with a larger bubble lift.  The existing quad was slated to move over to Green Ridge.

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.

News Roundup: In This Together

  • Citing the pandemic, Hermitage Club founder Jim Barnes seeks to delay today’s auction of resort assets.  A judge orders the auction to proceed at 10:00 am via telephone.
  • A group intends to sue to stop the State of Alaska from awarding a new lease of public land to Arctic Valley Ski Area.
  • For the first time since it opened, the Disney Skyliner gondola lines are completely devoid of cabins.
  • Vail Resorts reveals Coronavirus will cost at least $180 million and the company is reviewing preciously announced capital expenditures including six planned lifts.
  • The Indy Pass will include at least 47 resorts for 2020-21.
  • Though the Alaska cruise ship season is delayed until at least July 1st, Icy Strait Point still plans to welcome passengers aboard its new gondola system.
  • The website is live for Saddleback 2.0.
  • Timberline Mountain now plans to unveil its reopening lift plans early next week.
  • Construction continues on New Zealand’s first D-Line and a three station gondola at Thredbo, Australia.
  • One of Colorado’s Senators asks the Forest Service to waive remaining 2020 rent payments for 122 ski areas located on National Forest lands.
  • Skyline Investments, owner of two ski resorts and many other hospitality businesses, reports record revenue but warns Coronavirus will have significant impacts including the possible closure of resorts through summer.
  • Skytrac is the low bidder for all three quads proposed for Gore and Whiteface Mountains.