Vail, CO

Vail Resorts experiences "growing pains," labor issues

Matt Whittaker

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People at Peak 8 with skiers, lifts and slopes on February 04, 2011 in Breckenridge near Vail, Colorado, United States.(Photo by EyesWideOpen/Getty Images)

By Matt Whittaker / NewsBreak Denver

(Broomfield, Colo.) This ski season, a global labor shortage has added to Vail Resorts woes as the Broomfield-based leisure and hospitality company tries to integrate newly purchased Pennsylvania properties into its holdings.

Late last month Vail Resorts completed a $118 million purchase of Seven Springs Mountain Resort, Hidden Valley Resort and Laurel Mountain Ski Area. That adds potential Epic Pass members from Pittsburgh, Cleveland, Baltimore and Washington and brings the company's tally of resorts worldwide to 40.

While the deal makes sense financially on paper, the "devil's in the details," said Patrick Scholes, an analyst who covers lodging and experiential leisure companies for Truist Securities. "They've been having some labor challenges" and are "experiencing some growing pains."

It seems that is the case with Vail's three new resorts, even though the company hasn't owned them for very long. As of Thursday afternoon, there were nearly 90 open positions among the three Pennsylvania resorts.

Employee shortage around the world

Vail Resorts is hardly alone in having trouble finding workers. As the global economy reopens, employers feel the pinch, especially for jobs that require interactions with people.

In the leisure and hospitality industry, as of Aug. 23, at least 1.7 million workers who lost their jobs since the last quarter of 2019 switched to jobs in a different sector or left the workforce entirely, according to auditing and consulting firm Deloitte.

Workers shifting away from ski resort work has been compounded by employees calling in sick because they've caught COVID-19.

"The impact of COVID-19 cases amongst our employees and the related employee exclusions from work resulted in further challenges in an already difficult staffing environment," said CEO Kirsten Lynch, who took the helm in November.

To lure new workers over the summer, Vail Resorts said in June it would raise its minimum wage from $12.50 an hour to $15. In addition to a holiday bonus, this month the company also announced a $2-per-hour end-of-season bonus for work done between Jan. 1 and April 15. The bonuses will cost the company $20 million, Lynch said.

Acquisition could help flagging share price

The Pennsylvania deal fits the hub-and-spoke strategy Vail Resorts has been employing where the company acquires regional ski areas that may not have much growth potential in themselves but that broaden the Epic Pass's reach and marketing database, said Jeff Stantial, an analyst with Stifel Financial Corp.

There are "always integration risks, but these guys are seasoned acquirers at this point," he said.

In a note to investor clients, analysts with Jeffries Financial Group said they think the Pennsylvania acquisition will add $3 to $5 to Vail Resorts's share price once the new resorts are integrated into the company's portfolio in 2023. Vail said it plans to add the resorts to its Epic Pass for the 2022-2023 season.

The company's shares have been trending downward, falling below $290 from a November high of more than $370. Poor snow conditions seem to have also been weighing on the stock in addition to COVID-19-thinned crowds and a shortage of labor.

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

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