EAGLE — Vail Mountain is more than halfway through the 2021-22 season, and operations are resuming with the opening of Earl’s Elevator at Blue Sky Basin on February 11.

Vail spokesman John Plack said the mountain still intends to operate the dedicated lift in its new Avanti skill area at some point this season.

It’s a better case scenario late than ever for the namesake property of Vail Resorts, a publicly traded company that has come under fire for shortcomings in its ski operations this season. The diminished guest experience was noted by many who visited Vail Resorts properties in 2021-22, from average Joe skiers to analysts covering the company’s stocks on Wall Street.

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Skiers have complained about lift lines, lack of parking, lack of availability for lessons, lack of on-mountain dining options and, most importantly, lack of lift openings, which the company acknowledged having contributed to lengthening the lift lines in other lifts.

Residents shared concerns about low wages, the removal of middle management positions from the company that eliminated institutional knowledge in operations, and the lack of housing in mountain communities.

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And analysts pointed out that the stock was pulling back a bit. Vail Resorts (MTN) stock started 2022 at around $330, from a high of $372 in November, and has been holding at around $275 for the past two weeks, which is lower than it has been for most of the last year.

“Still some uncertainty about how they will finish this season given the well-documented labor shortages,” said Tyler Batory, an analyst who covers Vail Resorts stocks for investment bank Janney Montgomery. Scott. “There are also concerns about next season as they have to do something to adjust the operations.”

Hotels used a different strategy

Janney in mid-January pegged a future value of $335 on MTN, meaning the company expects Vail Resorts stock to reverse its current price and hit $335 sometime in the future. the future.

Batory on Feb. 15 said Janney’s view on MTN hadn’t changed since the $335 future value was issued in January. But Patrick Scholes with investment banking firm Truist Securities issued a new advisory on Feb. 9, moving the company’s price target on MTN from $322 to $302.

Scholes was among the first analysts to address labor and staffing challenges in the travel and leisure industry, noting in April that “the industry is suddenly experiencing major challenges when it comes to hiring, rehiring and hourly staff”.

In its Feb. 9 advisory, Scholes said Vail Resorts’ strategy of focusing on volume over price, in hindsight, hasn’t worked well this season in a tight labor environment. In March, Vail lowered the price of its season tickets by 20%, which contributed to a 76% increase in season ticket sales during the 2019-20 season. Scholes examined this ski industry strategy alongside another travel and leisure industry: the American full-service hotel industry.

“In comparison, the US full-service hotel industry (collectively) did the opposite of MTN, as prices rose about 7% in January compared to January 2019, while occupancy fell by ‘about 30% from January 2019,’ Scholes wrote. . “While the hospitality industry certainly has its own labor issues, we cannot think of any specific large company (such as Hilton, Hyatt, Marriott) that has received negative media attention for discontent customers to the degree of MTN.”

Another analyst assigned to MTN shares, Jeffrey Stantial of Stifel Financial, agrees with Scholes’ initial target price estimate of $322. Stantial, in a January advisory, said investors had long worried about overcrowding at Vail Resorts properties “even before the step-wise growth in pass unit sales driven by the 20% price drop. “, noting that the concern was “a key debate” after the Vail Resorts Investor Day event in 2021. The annual Vail Resorts Investor Day offers analysts a chance to glean key insights while skiing at properties in Vail Resorts, but the event was held virtually in 2021 and will be virtual again in 2022.

“The counter-argument here is that historically MTN has operated well below peak attendance levels for much of the ski season, while high discretionary spending in the CY22 investment plan should significantly improve capacity. of ascent,” Stantial wrote. “Nevertheless, we see the risk that the rise of high-profile criticism of customer experience will force MTN to reassess either the pace of progress towards its strategic pass sales target (75% of lift pass revenue) or the staffing staffing and/or capital investment needed to make it happen – particularly if Ikon chooses to match Epic’s pricing next ski season (and thus raising concerns about “pass swaps “).

The speculation of higher wages for next season is also what prompted Truist Securities to lower its price target in February, Scholes said, as the company expects mountain revenue for l 2023 decrease by $12 million and costs increase by $38 million.

“Our cost increase assumes MTN raises wages for the 2022-23 ski season, which we believe they will need to do to avoid ‘epic negative media attention’ again next season,” Scholes wrote.

Scholes also suggested Vail Resorts put on hold one of the key growth strategies it’s employed over the past decade, mergers and acquisitions, suggesting Vail Resorts “digest what you’ve got” before buying. more ski areas. Ten years ago, Vail Resorts had six ski areas; today the company has 40.

“Before MTN begins acquiring other stations, we would like it to address operational issues, particularly at its more recently acquired stations,” Scholes wrote. “We hope MTN will address these issues at its upcoming Investor Day on March 22 and provide an action plan on what they intend to do with staff and employee housing.”

Scholes also drew attention to MTN’s catch-22 situation in making skiing affordable over limiting crowds, saying investors sympathize with Vail Resorts as the company has been under pressure for years to make skiing more inclusive.

“Now that the company has made the ski pass even more affordable, they kind of find themselves in a ‘damn if you do, damn if you don’t’ situation,” Scholes wrote. “While we don’t claim to know the answer to finding the right balance between price and customer experience, we believe that improving staffing and the housing situation is a necessary step in the right direction. “

This story comes from VailDaily.com.