Vail Resorts Inc (MTN) Q1 2021 Earnings Call Transcript

Good day and welcome to the Vail Resorts First Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Rob Katz, CEO. Please go ahead, sir.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2021 first quarter earnings conference call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer. Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions that are subject to a number of risks and uncertainties as described in our SEC filings and actual future results may vary materially. Forward-looking statements in our press release issued this afternoon along with our remarks on this call are made as of today, December 10, 2020, and we undertake no duty to update them as actual events unfold. Today's remarks include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included with our press release which, along with our quarterly report on Form 10-Q, were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com. So with that said, let's turn to our fiscal 2020 first quarter results. Our results for the first quarter continued to be negatively impacted by COVID-19 in Australia. Hotham and Falls Creek remained closed for the entire quarter following the issuance of stay-at-home orders by the Victorian government on July 8, 2020, resulting in a significant decline in revenue compared to the prior year period. At Perisher, visitation trends improved relative to July 2020 as available terrain increased, but results continued to be negatively impacted by COVID-19 and related capacity constraints. In North America, our U.S. resorts experienced improved demand from leisure travelers throughout the quarter relative to the fourth quarter of fiscal 2020, but summer visitation remained well below historical levels. At Whistler Blackcomb, demand remained significantly below prior year levels due in part to travel restrictions, with the Canadian border remaining closed the entire quarter to international guests, including guests from the U.S. We continued to maintain disciplined and rigorous cost controls throughout the quarter to partially mitigate the reduced revenue levels. Resort net revenue for the first quarter declined $132.1 million compared to the prior year while Resort Reported EBITDA declined only $18.1 million over the same time period, reflecting cost reductions driven by a combination of reduced seasonal labor and expenses as well as significant overhead cost-saving actions. First quarter Resort net revenue includes the recognition of approximately $15.4 million of lift revenue related to the September 17, 2020 expiration of unredeemed credits offered to 2019/2020 North American pass holders, for which we deferred a total of $120.9 million of revenue from our prior year pass sales which would have otherwise been recognized during fiscal 2020. We expect to recognize the remainder of the deferred revenue associated with the Credit Offer as lift revenue primarily during the second and third quarters of fiscal 2021. Turning now to our 2020/2021 North American season pass sales. As we approach the end of our selling period, season pass sales for the North American ski season increased approximately 20% in units and were flat in sales dollars through December 6, 2020, compared to the prior year period ended December 8, 2019, with sales dollars for this year reduced by the value of the redeemed credits provided to 2019/2020 North American pass holders. Without deducting for the value of the redeemed credits, sales dollars increased approximately 19% compared to the prior year. Pass sales results are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.78 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales. Pass sales are reduced by the amount of Epic Coverage refund requests processed through December 6, 2020, but do not include any estimated reductions for future Epic Coverage refunds. We are very pleased with the growth in our season pass program, particularly given the challenging circumstances surrounding the impacts of COVID-19. We expect that the total number of guests on all advanced purchase passes this year will exceed 1.4 million including all passes for our North American and Australian resorts, demonstrating the significant loyalty of our guest base and the strong demand for our mountain resorts. Since September, pass sales exceeded our expectations, primarily driven by continued strong demand from destination guests and significant growth in pass sales to guests who were not previously in our database, particularly in lower frequency Epic Day Pass products. For the full pass sales season, we saw very strong unit growth broadly across our Destination markets. We also saw solid unit growth in our Utah, Northern California, and Whistler markets; and in Colorado saw comparable performance to last year. The primary driver of our unit growth was from renewing pass holders given the credit incentive offered for renewing guests, but we also saw strong growth in new pass holders, with particularly strong growth in pass sales to guests who were not previously in our guest database. We saw strong growth in our Epic Pass and Epic Local Pass products and very strong growth in our Epic Day Pass products, demonstrating both the guest loyalty we have created in our core programs and the success of our long-term strategy to move new and less frequent guests into our pass products. While we expect that some of our Epic Day Pass growth may be a result of the circumstances surrounding this season, we also believe that the growth from new guests into our pass products this year will accelerate our ability to move guests into advanced commitment into the future. The success of our total program this year has been supported by the value proposition of our pass products and the steps taken to address the current environment, including our pass holder credits, extended deadlines, reservation system, new Epic Coverage program included with the purchase of every pass product for no additional charge, continued data-driven marketing efforts, inclusion of Peak Resorts in our network, and a second year offering our broader Epic Day Pass products. The safety of our guests, employees, and communities continues to be our top priority. As previously mentioned, we implemented operating procedures that we believe will enable us to operate safely across our 34 North American ski resorts throughout the season, including the implementation of a reservation system for our guests. Currently, the reservation system, which opened to pass holders on November 6, 2020, and lift ticket purchasers on December 8, 2020, continues to have available capacity for almost all days during the core season across our resorts. The reservation systems and our contingency planning around our operations have positioned us to react quickly to the changing circumstances surrounding COVID-19 restrictions across our resort jurisdictions, which we expect will continue throughout the season. Now, I'd like to turn the call over to Michael to further discuss our financial results, liquidity, and fiscal 2021 outlook.

Thanks, Rob. Good afternoon, everyone. As Rob mentioned, our results for the first quarter were significantly impacted by COVID-19 and the resulting impacts to our Australian and North American mountain resorts. Net loss attributable to Vail Resorts was $153.8 million or a loss of $3.82 per diluted share for the first quarter of fiscal 2021 compared to a net loss attributable to Vail Resorts of $106.5 million, or a loss of $2.64 per diluted share in the prior year. Resort Reported EBITDA was a loss of $94.8 million in the first fiscal quarter, which compares to Resort Reported EBITDA loss of $76.7 million in the same period in the prior year, primarily as a result of the negative impacts of COVID-19. Our liquidity position remains strong to mitigate further disruptions from the impacts of the COVID-19 pandemic. With total cash and revolver availability as of November 30, 2020 of approximately $1.2 billion, with $614 million of cash on hand, $419 million U.S. revolver availability under the Vail Holdings Credit Agreement, and $169 million of revolver availability under the Whistler Credit Agreement. As of October 31, 2020, our net debt was 4.1 times trailing 12 months total reported EBITDA. We continue to expect to have sufficient liquidity to fund operations through at least the 2021/2022 ski season, even in the event of extended resort shutdowns. Now turning to our outlook for fiscal 2021. Given the uncertainty COVID-19 has created for travel demand, operating restrictions, and the ultimate visitation to and spending at our resorts, the company will not be providing full year guidance for fiscal 2021 at this time. That said, we are very pleased with the results of our season pass sales and the strong foundation of visitation and revenue that creates heading into the season. Given the challenging dynamics associated with COVID-19, we continue to expect material declines in visitation to our resorts and associated revenue declines in fiscal 2021 relative to our original expectations for fiscal 2020 primarily as a result of expected declines in visitation from non-pass lift ticket purchases due to reduced destination visitation with more material declines specifically among international guests. While we expect that mandated capacity limitations will have a negative impact on our visitation during peak periods, we expect the primary driver of visitation declines for the North American ski season to be a result of reduced travel demand. We expect additional negative impacts to visitation in select regions where heightened restrictions exist, including Whistler Blackcomb, given Canadian border closures and domestic travel guidance, and Vermont as a result of the quarantine policy for out-of-state travelers. We also expect significant negative financial impacts on our ancillary lines of business, materially in excess of the decline in visitation as a result of significant COVID-19 limitations and restrictions, particularly in food and beverage and in ski school. In food and beverage, we have recently reduced capacity at our restaurants and have limited many of our on-mountain restaurants to grab-and-go options. In ski school, we have reduced group sizes and at many resorts eliminated full day and other select lesson types in response to COVID-19 limitations and restrictions. Since the start of COVID-19, disciplined cost management has been a primary focus, with significant actions taken to date to tightly manage our costs with reduced revenue expectations. We implemented operating plans that actively manage our expenses while maintaining a high-quality experience for our guests, and we remain confident in our ability to deliver against the cost structure variability previously outlined in our September 2020 earnings release. I'll now turn the call back over to Rob.

Thanks, Michael. We remain committed to reinvesting in our resorts, creating an experience of a lifetime for our guests and generating strong returns for our shareholders. We plan to maintain a disciplined approach to capital investments, keeping our core capital at reduced levels given the continued uncertainty due to COVID-19. We will announce our complete capital plan for calendar year 2021 in March 2021, but we are pleased to highlight several signature investments planned for the 2021/2022 North American ski season, which were previously deferred from calendar year 2020 as a result of COVID-19 and are subject to regulatory approvals. In Colorado, we plan to move forward with the 250-acre lift-serviced terrain expansion in the McCoy Park area of Beaver Creek. The new lift-accessed beginner and intermediate bowl experience is a rare opportunity to expand with highly accessible terrain in one of the most idyllic settings in Colorado and will further differentiate the high-end, family-focused experience at Beaver Creek. At Breckenridge, we plan to install a new four-person high speed lift to serve the popular Peak 7. This additional lift will further enhance the guest experience at the most visited resort in the U.S. and will significantly increase guest access and circulation for the intermediate terrain on Peaks 6 and 7. At Keystone, we plan to replace the four-person Peru lift with a six-person high speed chairlift in order to increase capacity out of a key base area of the resort and improve guest access, circulation, and experience at one of the top-performing resorts in the U.S. At Crested Butte, we plan to replace the two-person fixed-grip Peachtree chairlift with a new three-person fixed-grip lift that services beginner terrain at the base of the resort and will improve uplift capacity. Additionally, we plan to improve the grading of the terrain serviced by the Peachtree lift to create a more consistent experience for our beginner and ski school guests. At Okemo, we plan to complete a transformational investment including upgrading the Quantum lift from a four-person to a six-person high speed chairlift, relocating the existing four-person Quantum lift to replace the Green Ridge three-person fixed-grip chairlift. These investments will greatly improve uplift capacity, further enhance the guest experience and complete our $35 million capital plan for Triple Peaks. We will also continue to invest in company-wide technology enhancements to support our data-driven approach and corporate infrastructure which will improve our scalability and efficiency as we work to optimize our processes, business analytics, and cost discipline across the network. In particular, we intend to invest in a number of upgrades to the infrastructure of our guest contact centers and bring a best-in-class approach to how we service our guests through these channels. Our call centers and chat functionality were not well suited to handle the more than fourfold increase in call and chat volume we saw over the past six months, which created a challenging experience for our guests. We will also continue to invest in ongoing maintenance capital to support our infrastructure across our resorts. We plan to spend approximately $4 million on integration activities, primarily related to Peak Resorts. In total, we expect our capital plan for calendar 2021 will be approximately $110 million to $115 million, excluding one-time items associated with integrations and $11 million of reimbursable investments. Including these one-time items, we expect our total capital plan will be approximately $125 million to $130 million. We will continue evaluating our calendar year 2021 capital plan as the season progresses, including potential opportunities to increase the planned level of investments and will be providing further detail and updates in March 2021. We remain confident in the long-term prospects of our business model that is built on the loyalty of our guests, the strong line of our season pass products that provide access to our irreplaceable network of world class resorts, and a sophisticated data-driven marketing approach we use to communicate with and attract our guests. Our strong capitalization positions us to continue to invest in our people, our resorts, and the guest experience while remaining flexible to manage through the evolving circumstances caused by COVID-19. I would like to thank all of our employees for their passion, hard work and commitment to creating a safe, exceptional experience for our guests. While this always lies at the center of our success, it has never been more tested than over the challenges of the past nine months, and in what lies ahead for the upcoming season. I take tremendous pride in our team's full engagement in balancing the new needs and requirements of all our various stakeholders in an ever-changing internal and external environment. While nothing we do is ever perfect and it can always be improved, it's very clear how all of your efforts consistently remain guided by the same core values that have been at the center of our company since its founding. At this time, Michael and I would be happy to answer your questions. Operator, we are now ready for questions.

We'll take our first question from Felicia Hendrix with Barclays.

The first question I have is on your upside surprise on the season pass sales. As you outlined, the major difference between your original expectation was the destination demand and then the new demand particularly in the day passes. Just wondering, is there any way to kind of parse through that, like when you were when you gave the guidance for where you thought season pass sales would end up in last quarter, what were you expecting to happen and what was different? I mean, if you just give us more information, and you told us what was different, but if you can kind of parse through that? And then also, I see that you just extended the cutoff date for the pass over also. Why?

Regarding the first point, we identified two main components. One was the renewal pass holders. We anticipated a decrease in renewals from September through December compared to last year, and that prediction turned out to be correct. The second aspect involved assessing the conversion rates of individuals from our database, whether they were last year's pass holders or had purchased tickets. We're still aligned with our expectations there. The most challenging factor to forecast was the potential new customers not in our database, as we lack historical data on them. Each year, we attract new customers, but this year, due to restricted lift ticket availability, we were concerned we might lose some of them. Additionally, with the impact of COVID-19, we recognized that these individuals typically have a lower likelihood of converting. Therefore, we approached this with caution given the current environment. Ultimately, it was this group that contributed significantly to our performance in September, especially with the Epic one to three day products, which are only in their second year. We had high expectations for this product upon its launch, and it was gratifying to see it perform well despite its newness and the pandemic challenges. As for the pass deadline, it remained set for December 6th, but we did extend the opportunity by about a week for customers to select their Epic Coverage priority reservation days, allowing them more time to make their choices regarding coverage.

And then just can you remind us for Whistler, what percentages of that is, of your visitation and/or EBITDA? And then overall, what percentage of your, I guess, visitation is destination versus local?

Yes. We don't break out by resort at this point, because of the nature of the Epic Pass being allocated across the entire network. If you look at where Whistler was when we did the deal, roughly about half of their business came from the U.S. or international. So it was about half domestic Canada and about half non-Canadian. And that's about as much as we can provide at this point.

And then just on the overall company, what percentage of your visitation is destination versus local?

Yes, we haven't updated that with Peak, so I don't have a new number for you. For our destination resorts, in our last numbers, we were slightly over half on destination compared to local.

We'll take our next question from Shaun Kelley with Bank of America.

Rob, just to kind of stick with the first part of the last question. Wondering if you could just give us a little bit of color when you talk about this new customer cohort that sort of came into the pass. I mean, I know you don't know that much about them, but I think you've broken them down a little bit by the type of product, it seems like they're most attracted by the one to three-day product. But are they regional or destination in nature just for that new cohort or kind of what are you thinking about how valuable that group set could be kind of going forward even after the season?

Yes, we see them as primarily destination guests coming from various markets across the country. The positive aspect for us is that we had already designed and introduced this product last year, allowing us to implement our marketing strategies even without their contact information. We've intensified our outreach channels. This product has proven to be perfectly suited for the current market. Many of these individuals were clearly planning trips and may have aimed to secure a few days at an attractive value upfront, enabling them to access the reservation system early. They might extend their stay as the season progresses, and we'll gather more insights as time goes on. I believe the Epic Day Pass launch aligns perfectly with our expectations, and for those committed to visiting, this product has presented a noteworthy opportunity. More broadly, it seems that people interested in winter vacations find the outdoor experience particularly appealing.

My second question is a bit more theoretical. Looking ahead to next year, if travel returns to normal by the next ski season, what are your thoughts on how the retention rate might play out? This year, the combination of the discounts and reservations worked well for retaining existing customers. Do you believe this elevated level can be sustained? Have you learned anything that supports this? Or do you expect a return to historical levels, and what are your reasons for that?

Yes, it's still a bit early for us to have final views on this as we are still analyzing the results from just over a week ago. However, it's clear that the credits were beneficial. They especially aided low-frequency skiers during the COVID year and helped retain high-frequency skiers for seasonal products due to the minimum 20% credit. The early benefits were significant. Nonetheless, we should not overlook the uncertain travel environment we are currently facing. A more normal environment for selling would be greatly advantageous, allowing us to focus on restrictions, customer experience, and aspects like Epic Coverage that weren't as critical this year. It's hard to predict how everything will balance out next year, but the key takeaway is that during COVID-19, we managed to retain our core customers and even introduced new ones to the program. Having data on these new pass holders significantly enhances our ability to market to and retain them in the future. The prospects we brought in had no previous credit or discounts; they received the same product as everyone else. Overall, we feel very positive about the outcomes, although we'll have more insights as we move into next year. We conclude this selling season with optimism about the program's direction.

Could you discuss the recent headlines about Lake Tahoe and the potential stay-at-home orders in California? I'm curious about how this might affect your overall operations, especially in densely populated urban areas. You mentioned Vermont earlier, which has quite complex policies. Can you share what you know about the regional or local operational challenges and how you're managing these issues at the resort level for the upcoming season based on the current information?

Sure. I think we will need to navigate changing restrictions and new regulations at every resort and community throughout the season. Currently, many of these changes are imposing further restrictions on activities both for guests and what we can offer at the resort. However, I believe we can also expect some positive trends as the season progresses, which may lead to some loosening of restrictions. Our communities and company are focused on collaborating to reduce the case load everywhere. I anticipate we'll experience both challenges and improvements during this time. From an operational standpoint, this situation places significant strain on the company and its employees. One advantage we have is our preparation, including an advanced reservation system and central teams that are continually monitoring the situation and engaging with local regulators and public health officials. This allows us to utilize the information effectively and adopt best practices since we learn from experiences in locations like Tahoe and apply those insights elsewhere. Having multiple resorts and a centralized approach benefits us by enabling each resort to take the lead when new restrictions are enacted. While I believe we're well-prepared, it's clear that this season will be operationally challenging.

We'll take our next question from Chris Woronka with Deutsche Bank.

I wanted to ask about how the mechanics are going to work on the reservation system event. Someone can't get a reservation on the day that they want. Does that trigger a refund process? Or just how does that work?

The system operates in a specific manner, and it's important to keep in mind the terms and conditions available on our website. In summary, we provided our pass holders the chance to make reservations up to December 7. If they were unable to secure the dates they desired, they were able to request a refund by that same date. We will review any requests we receive to ensure they comply with the terms and conditions before addressing them with the guests. Going forward, if guests find themselves unable to make a reservation for their preferred date, this situation alone will not trigger a refund.

Okay. Very helpful. And then I realize it's still very early in the season. But as you kind of comb through your databases and where folks are showing up or making reservations, is there any hard data yet to validate the thesis that people are staying closer to home and folks from New York are going to Vermont more so than they're maybe going to Vail. Again, I know it's early and you haven't really hit the peak holidays yet. Is there anything out there to kind of figure out the magnitude of how close to home people are staying?

Yes. It is indeed too early to make any assessments on that. However, based on the reservation data we are analyzing, it seems that our destination customers are definitely considering travel to the West. The majority of reservations are in our largest Western resorts, particularly since Whistler isn't an option for many people in the U.S. This situation likely increases interest in our Colorado and Utah resorts. For now, we will observe how this unfolds. Currently, given the strong momentum we've noticed across our destination markets, many of these markets lack local skiing options. Therefore, these individuals are willing to fly or drive longer distances to reach our resorts.

We'll take our next question from Laurent Vasilescu with Exane BNP Paribas.

On the last call, an illustrative example was given that if resort revenues declined 30% for fiscal year 2021, we can expect Resort EBITDA to be about $400 million. I was just curious, any updated thoughts on that framework as we progress through the fiscal year?

No. At this time, no updates to it. As I mentioned in our earlier remarks, and in the release, I think we've stayed very, very focused on our cost discipline, and I think managed through that. I think you can see the results of that in our Q1 results and certainly remain committed to managing through that as we go into the season here. And no changes to the illustrative example that we provided in September.

It's great to hear. Shifting focus, I'm curious if COVID creates an opportunity to gain market share or possibly acquire some standalone entities that may not be performing well and have a similar financial situation to yours. Any thoughts on that?

I find it difficult to predict. I believe the situation will unfold in the next 12 to 18 months. Historically, after destabilizing events, we've observed that once things stabilize, people often become more interested in strategic discussions. During periods of instability, it's usually more challenging to engage in those conversations. However, as we emerge from these situations, opportunities tend to present themselves. Looking back at previous experiences, particularly after the '08 and '09 recession, we were able to pursue various strategic initiatives both internally and externally. We're focused on positioning the company to capitalize on whatever opportunities arise. Our access to capital has been a strong point and may be even more distinct at this time. It's vital for us to leverage this strength to ensure we don't miss any opportunities in the next year.

And then lastly, I know this is a little over a year out, but Beijing will be hosting the Winter Games and I believe Whistler is a sizable market for the Chinese consumer. How are you positioning yourself to leverage the games to track more visitations from Asia whether that's with your mountains in North America or maybe Australia and maybe some of the partnerships you have in Japan?

Yes. I believe this is one of the main reasons why we found Whistler to be such an appealing acquisition. We recognized that, in the long term, they have a strong connection with the Asian market, arguably the best in North America, which presents a significant opportunity for us to take the lead. At the resort level, numerous initiatives have been undertaken to enhance language services, food offerings, and relationships with travel providers and wholesalers in China to boost business. Of course, we faced challenges during COVID with travel restrictions, but once the pandemic is behind us, we are committed to revitalizing all these efforts. Additionally, exploring partnerships and possible acquisitions in Japan is crucial. We see real potential in this area, as evidenced by trends already observed in Australia. Ultimately, the Chinese market represents one of the largest global opportunities in the industry, and all of our strategic decisions are aimed at capitalizing on that trend.

We'll take our next question from Patrick Scholes with Truist.

Question for you. I see that Eagle County is in the orange designation for COVID in Colorado and Summit County is in the red designation. Has the governor told you what would happen if those move to the highest level, purple? Would that impact the ability to run your lifts?

Yes, we are in regular communication with both local county and state officials, but we don't have any additional information beyond what is already posted in the regulations. Decisions will ultimately be made at both the state and county levels, which are crucial for determining the next steps. I believe both Summit County and Eagle County are working hard to reduce the caseload and achieve a downward trend. Eagle County aims to maintain its current orange status, but whether that will be feasible remains to be seen. Summit County is also hoping to transition from red to orange. There is a lot of effort being put in at every level, but the specifics of the outcomes or regulations if they move to the highest level, purple, are still uncertain.

We'll take our next question from David Katz of Jefferies.

I've had a number of discussions of late around certain areas where there's an unusually high, right, and not at all surprising, number of people either buying or renting homes in areas like near your largest mountains? And presumably, over the long-term, that population growth, right, if it remains permanent, is helpful. But I'd love to hear just a bit more thought about what happens in the near-term? And then longer term, what you may be seeing along those same lines about people moving there and any evident impact on what you've published in results so far?

Yes, I think we would all agree that we are witnessing strong demand for resort properties, likely the strongest we've seen since 2008 or 2007. People are seeking opportunities to be outside of major cities, largely due to COVID. How this evolves remains to be seen, but I believe the work-from-home trend, supported by video and other technologies allowing remote work, will continue. This trend may extend to education as well, particularly in higher education. If people can position themselves in vacation destinations more evenly throughout the year rather than just during peak times, it would significantly benefit the resort industry and our company. We still face challenges in shifting people from peak to off-peak times. However, if they are less tied to their jobs or schools and can work or study remotely, this could lead to more equitable travel throughout the season. Such a shift may present a significant opportunity for the vacation industry, especially for us, as we emerge from the COVID situation.

In the very near term, I apologize for the short-term question, which might have some uncertainties, but 30 or 60 days from now, if the mountain is open, there could be situations where someone is unable to fulfill their reservation. They might have missed a reservation opportunity or made one but still can't get to the mountain. I assume there is some flexibility within the program as it is designed. What I'm essentially asking is whether we might have any credits that could roll over into next season as well.

Yes. At this point, we believe we have done our best to ensure comprehensive coverage and address many of the likely scenarios during the season. We hope that this will provide support for our guests. However, like any year, it won't be a perfect solution and may not solve everyone's issues. Currently, we feel the program is strong and will be accessible when needed. It's important to note that the season is long, and we are just at the beginning. Our pass products are available throughout the season, which offers multiple opportunities for trips. This approach means we are addressing more than just a single situation, and we feel positive about our current position.

We'll take our next question from Paul Golding with Macquarie Capital.

I was curious if you could share any information from the database regarding how many single day lift ticket customers upgraded to Epic. I am trying to understand whether the concern about not getting priority without the pass influenced this trend and encouraged people to move to the pass network.

Yes, at this stage, it's a bit too early in our process to have all the insights perfectly aligned. I can't comment on the specifics, but I have noticed the dynamics with individuals who are completely outside our database and the strength we see in that area. I’m sure that the urgency around obtaining a priority ticket was important to them. However, many of these individuals joined towards the end, and not all of them have made their reservations. I believe the value proposition played a significant role in this. It's worth noting that last year, when we didn't offer the pass, the Epic Day Pass performed strongly due to the value it provided. We are observing similar patterns now, likely with some additional support. I have no doubt that these individuals, if they hadn't purchased the pass, would have been our most probable lift ticket customers. At this time, I don't have further details to share regarding the exact conversion rates for each guest type, as there are numerous variables, including different product types and geographical factors. This is a topic we will analyze in depth as we prepare for next year.

Got it. And then just a follow-on to that around the database. As you were going into the end of the selling season, is there any insight you can give on volumes or integration progress of any Peak database uniques that you're able to carry over successfully and that you've been able to retarget or anything around essentially what the like-for-like there is as far as you being able to integrate more uniques into your own process?

I can't really share specifics on that, but what I would say is, I think we feel very good about this first year, right, with having Peak fully in the program and feel good about our results in the Northeast, I think, especially given some of the restrictions that are in Vermont. And we feel like we had a good first year with Peak, a good first year with the database. I think what we've seen with other acquisitions is that often we see an acceleration in the second and third year because the data that we're getting, a lot of the history is added. Tougher for us to fully integrate than when we generated ourselves and have kind of cleansed ourselves and all of that. So I think that's an opportunity for us as we go forward. But yes, I feel good about that first year with Peak.

We'll take our next question from Alex Maroccia with Berenberg.

Just one moment.

Alex, we're actually having a bit of a hard time hearing you. You're breaking up a little bit.

Is it any better now?

It is. Thank you.

Yes, no problem. Last quarter, you were still waiting on 75,000 or so online forms to process. So you can get a sense of how many people were going to downgrade their passes and deal with some other random issues. Can you just give us a sense of how many ended up downgrading? And just in general, what you're seeing across the portfolio?

Yes. Regarding the forms, we managed to convert a significant number into a pass product, but not all of them. There were several individuals whose requests we couldn't fulfill, which might have led some to choose not to proceed. However, overall, the forms contributed positively to our results, though it did not match the total we announced in September, which was not unexpected. As for downgrades, I do not believe they were a significant factor this year. The effective pass price was more influenced by a large influx of new customers purchasing well-frequented products, which lowered the average yield, rather than any major downgrade issues.

We'll take our next question from Ryan Sundby with William Blair.

I guess, just a follow-up on Paul's question going back there. When you look at the 20% increase in pass units for the year, as you look at that shape of growth here for the year, does that pace change at all during the final couple of weeks as we started to see COVID cases rise throughout the country?

No, we did not observe any significant impact on the program overall. We definitely noticed stronger performance outside the Northeast compared to within it. However, we still experienced good growth in the Northeast. It's unclear whether that was due to timing or restrictions. We did not see any material decline or change in our trajectory as we approached the final deadline, and nothing we observed could be attributed to COVID. That said, we believe that there will still be a noticeable impact on total visitation to the resort from both pass holders and paid ticket holders while these COVID restrictions remain in effect, but that remains to be confirmed.

Okay. That's super helpful. And then Rob, just were there any key learnings or anything that surprised you in Australia that you can carry over here into the U.S. as you start with the season for this year?

I believe there were several important lessons: first, it's essential to be as prepared as possible. Given the unique circumstances, it’s challenging to anticipate everything that might occur. However, one significant takeaway was that improving our systems allowed us to operate effectively, no matter what situation arose. We also noticed that there was still demand in Australia, even during the pandemic, with people wanting to visit the resort and purchase passes. This gave us the assurance that if we allowed people sufficient time and applied our credit approach, similar to what we introduced in Australia, it would benefit the business. Additionally, we gathered numerous insights from our Australian resort that aided our planning, analyzing data related to pass sales, visitor turnout, food service, and ski school operations, which gave us an edge. When we opened Keystone as our first resort, all 34 of our North American resorts were quickly learning from its operations, as well as from Breckenridge. Our mountain operations team is doing an excellent job of leveraging these insights, which is very encouraging as we navigate this challenging environment.

We'll take our next question from Felicia Hendrix with Barclays.

I have a follow-up question. I understand it's still early in the season, so you might not have a lot of data yet, but I was curious about any insights you can share regarding your satisfaction scores, especially considering the current restrictions and the anecdotal feedback we've been hearing.

Oh with guests? Yes, I think it's definitely too early to comment. Anecdotally, I believe there are many people who are excited to be outside skiing, viewing it as a great opportunity for family and friends to come together. Many of the individuals I know are accustomed to skiing, and everyone still wants to visit whatever resort they can. Having limited options for an extended period of time has made people eager to pursue this activity with their families. There is definitely discussion around mask-wearing. We are making every effort to enforce strict compliance with face coverings, but like everyone else, we expect this will remain a challenge throughout the season. However, we now have more alignment than ever with our local community partners regarding the measures that need to be in place. People also understand that there are certain things we cannot deliver, and they accept that. One thing we mentioned in our release and will discuss further is that many people are reaching out to our call center and trying to connect with our reservation agents. We have been overwhelmed and do not yet have the infrastructure to fully support that, which has been the biggest challenge we have faced in guest services. We plan to address and resolve this issue but were unable to do so in time for this fall. Broadly speaking, we feel very positive about our position, especially considering the current environment we are navigating.

Thank you. This concludes today's question-and-answer session. I would like to turn it back to management for closing remarks.

Thank you, operator. This concludes our fiscal 2021 first quarter earnings call. Thanks to everyone who joined us today. Please feel free to contact me or Michael directly should you have any further questions. Thank you for your time this afternoon, and goodbye.

This concludes today's call. Thank you for your participation. You may now disconnect.