Vail Resorts, Inc. has released a statement on its response to the evolving impact of COVID-19 on its business.
The company, like so many others, is closing its properties with an unknown relaunch date. It is furloughing the majority of its employees for at least a month while enacting pay cuts for the others. And it is reducing its capital plan for the current calendar year by $80-85 million.
Actions taken by Vali Resorts are not only reflective of the situation at hand, but also those taken by the rest of the hospitality industry. Hotels, even big name brands, are closing down their doors. Cruise lines are suspending operations and bolstering liquidity. But, in spite of this, many look forward to the future, through it remains uncertain.
Here Are Some Highlights From The Statement
Rob Katz, Chief Executive Officer, said, "Following the difficult decision to close our North American mountain resorts, retail stores and lodging properties for the remainder of the 2019/2020 North American ski season, we have quickly transitioned to evaluating the longer-term impacts for our Company and our resort operations. While we will continue to assess our ability to reopen select resorts for late-season skiing, we are keenly aware that the current travel restrictions may stay in place beyond that timeframe and could ultimately impact the timing of our ability to open our North American resorts for their summer season and our Australian resorts for their winter season. And once we are able to reopen, we assume weaker travel demand may continue, impacting our fourth fiscal quarter of 2020 and our first fiscal quarter of 2021.
Cutting Costs
"We are reducing our capital plan for calendar 2020 by approximately $80-$85 million, with the vast majority of these savings coming from the deferral of many of our discretionary capital projects. We are planning to defer all new chair lifts, terrain expansions and other mountain and base area improvements, while continuing with the vast majority of our maintenance capital spending."
"In this moment, we believe that maintaining liquidity is in the best long-term interests of the Company and our shareholders, and, as such, the Company's Board of Directors has made the decision to suspend our quarterly cash dividend for the next two quarters, preserving over $140 million of liquidity for our business. We remain committed to returning excess capital to shareholders and will re-evaluate decisions on capital allocation in December 2020. The Company's previously announced dividend payment occurring on April 9, 2020, is not affected by this suspension."
A Furlough
"To ensure we can navigate the financial challenges ahead and because of the reality of their inability to work at their locations, we have made the difficult decision to furlough the majority of our U.S. year-round hourly employees for at least a month, and potentially longer depending on when we are able to reopen our operations. We will be continuing healthcare coverage for these employees, including covering the entire cost of their healthcare premiums and hope to bring these employees back to work as soon as possible. Additionally, we will be implementing a six-month salary reduction for all U.S. salaried employees, with reductions beginning at 5% and rising to 25% for our top executives. As CEO, I will be foregoing my full salary for the next six months and our Board of Directors will also be foregoing 100% of their cash compensation during this period. We also may announce potential changes for our Canadian-based and Australian-based employees, but our approach will be based on the unique challenges faced by those resorts and any other local considerations."
For the full statement, visit http://news.vailresorts.com/corporate/vailresorts/letter-from-vail-resorts-ceo-to-us-employees-on-covid-19-business-impacts.htm
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