Good afternoon and welcome to the Vail Resorts Fiscal Third Quarter 2024 Earnings Call. Today's conference is being recorded. I will now turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. You may begin.

Thank you. Good afternoon, everyone. Welcome to our fiscal 2024 third quarter earnings conference call. Joining me on the call this afternoon is Angela Korch, 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 and 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, June 6, 2024, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included in 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. Let's turn now to our fiscal 2024 third quarter results. Given the unfavorable conditions across our North American resorts for a large portion of the 2023-2024 North American ski season, we are pleased to see improved results in March and April, with visitation across our Western North American resorts in particular, benefiting from improved conditions. While pass product visitation returned as expected, as we communicated in April, lift ticket visitation did not return to typical historical guest behavior for the spring, primarily at Whistler Blackcomb, which was down significantly relative to the prior year period. Despite these challenges, the company grew resort net revenue and resort reported EBITDA to record levels in the third quarter, supported by the stability created from our advanced commitment strategy, operational execution excellence, and continued strong growth in ancillary spending per skier visit across our ski school, dining, and rental businesses at our resorts. Our results through the 2023-2024 North American ski season highlight both the stability provided by our Season Pass program and the investments we have made in our resorts and employees. The winter season included significant weather-related challenges with approximately 28% lower snowfall for the full winter season across our Western North American resorts compared to the same period in the prior year and limited natural snow and variable temperatures at our Eastern U.S. resorts, which comprise our Midwest, Mid-Atlantic, and Northeast resorts. For the 2023-2024 North American and European ski season, total skier visits declined 7.7% as compared to the prior year period, which we believe was driven by a combination of unfavorable conditions and broader industry normalization post-COVID following record visitation in the U.S. during the 2022-2023 ski season. Skier visitation from lift ticket guests, which is refundable and not committed in advance of the season, was particularly impacted, declining 17% compared to the prior year period. Despite the decline in visitation, ancillary spending was strong across our ski school, dining, and rental businesses at our resorts. Resort net revenue for the second and third quarter combined period increased 1% and resort reported EBITDA increased 6% over the prior year, supported by our advanced commitment strategy, strong growth in guest ancillary spending per visit, and continued cost discipline. Now I would like to turn the call over to Angela to further discuss our 2024 outlook.

Thanks, Kirsten, and good afternoon, everyone. As Kirsten mentioned, we were pleased to see improved results in March and April. Net income attributable to Vail Resorts was $362 million or $9.54 per diluted share for the third quarter of fiscal 2024, compared to net income attributable to Vail Resorts of $325 million or $8.18 per diluted share in the prior year. Net income for the third quarter of fiscal 2024 includes approximately $37 million of pre-tax expense associated with the change in the estimated fair value of the contingent consideration liability related to our Park City Resort lease, compared to approximately $46 million of pre-tax expense in the third quarter of the prior year. Additionally, net income for the third quarter of fiscal 2024 and fiscal 2023 includes the after-tax effect of acquisition and integration-related expenses of approximately $1 million and $100,000, respectively. Now turning to our outlook for fiscal 2024. While late-season results improved, we now expect resort reported EBITDA to be between $833 million and $851 million on a comparable basis with our prior guidance issued on March 11, 2024, which included $4 million of acquisition-related expenses specific to Crans-Montana, but excluded the closing costs, operating results, and integration expenses associated with Crans-Montana. The reduction relative to the guidance provided on March 11, 2024, is primarily from lift ticket visitation not returning to typical historical spring behavior as expected in the March and April period, primarily at Whistler Blackcomb. Along with lowered expectations for the fourth quarter of $9 million, primarily related to the demand outlook for our Australian resorts. In addition, with the closing of the acquisition, we now expect Crans-Montana to contribute negative $12 million of resort reported EBITDA for fiscal 2024, including negative $9 million from the acquisition closing and integration expenses, and negative $3 million from operating results in the fourth quarter. Including the full impact of Crans-Montana, the company now expects net income attributable to Vail Resorts to be between $224 million and $256 million and resort reported EBITDA to be between $825 million and $843 million. Resort EBITDA margin is expected to be approximately 28.9% at the midpoint of the guidance range and excluding the impact of Crans-Montana, the resort EBITDA margin would be 29.2% in fiscal 2024 at the midpoint of the guidance range. The updated outlook for fiscal 2024 assumes a continuation of the current economic environment and normal weather conditions and operations throughout the Australian ski season and North American summer season, both of which begin in our fourth quarter. The guidance assumes an exchange rate of $0.73 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada and an exchange rate of $0.66 between the Australian dollar and the U.S. dollar related to the operations of Perisher, Falls Creek, and Hotham in Australia. An exchange rate of $1.10 between the Swiss franc and U.S. dollar related to the operations of Andermatt-Sedrun and Crans-Montana in Switzerland. Our balance sheet remains strong, including total cash and revolver availability, as of April 30, 2024, of approximately $1.3 billion, with $705 million of cash on hand and $625 million of combined revolver availability across our credit agreements. As of April 30, 2024, our net debt was 2.4 times trailing 12 months total reported EBITDA. In addition, we opportunistically extended the maturity dates on a substantial amount of our debt subsequent to quarter end. On May 8, 2024, the company completed an offering of $600 million aggregate principal amount of 6.5% senior notes due 2032. We used the net proceeds from these notes to fund the redemption of the entire amount of $600 million, the 6.25% senior notes due 2025, on May 15, 2024. Additionally, the company completed an amendment of its failed holdings credit agreement to extend the maturity of the $969 million term loan and $500 million revolver from 2026 to 2029. The company also repurchased approximately 0.3 million shares at an average price of approximately $217 for a total of $75 million during the quarter. For the nine months ended April 30, 2024, the company repurchased 0.6 million shares for approximately $125 million. We have approximately 0.8 million shares remaining under our authorization for share repurchases and remain focused on returning capital to shareholders, while always prioritizing the long-term value of our shares. Additionally, the company declared a quarterly cash dividend on Vail Resorts' common stock of $2.22 per share. The dividend will be payable on July 10, 2024, to shareholders of record as of June 25, 2024. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guests and employee experience, high-return capital projects, strategic acquisition opportunities, and returning capital to our shareholders through our quarterly dividend and share repurchase program. As previously announced on May 2, 2024, the company closed on the purchase of its second European resort, Crans-Montana for a purchase price of CHF97.2 million or $106.8 million. After adjustments for certain agreed-upon items, including a CHF4 million reduction in the purchase price to account for the timing of closing after the winter season. The company acquired an 84% ownership stake in the entity that controls and operates all the resorts' lists and supporting mountain operations, including four retail and rental locations. The company also acquired full ownership of SportLife AG, increasing from the previously announced 80% ownership stake, which operates one of the ski schools located at the resort, and full ownership of 11 restaurants located on and around the mountain. This world-class resort spans over 1,400 meters or approximately 4,600 feet of skiable vertical terrain, and 140 kilometers or approximately 87 miles of trails. Located in the Valais Canton of Switzerland, Crans-Montana is approximately 2.5 hours from Geneva and less than four hours from Milan and Zurich. The valuation for the entirety of the resort operations was CHF118.5 million including approximately CHF7 million of debt that will remain in place and adjusted for purchase price adjustments to account for seasonality and closing timing. Vail Resorts anticipates that the resort will generate approximately CHF5 million of resort reported EBITDA in the fiscal year ending July 31, 2025, the first full year of operations under the company's ownership. We expect significant EBITDA growth over time from the inclusion of the resort on the Epic Pass products, network synergy, and investments in the guest experience. Subject to the timing of capital project approvals and completion, Vail Resorts is planning to invest approximately CHF30 million over the next five years in one-time capital spending to elevate the guest experience. Normal annual maintenance capital spending is expected to be approximately CHF3 million. Now I'll turn the call back over to Kirsten.

Thank you, Angela. Pass product sales through May 28, 2024, for the upcoming 2024-2025 North American ski season decreased approximately 5% in units and increased 1% in sales dollars as compared to the period in the prior year through May 30, 2023. Pass sales dollars are benefiting from the 8% price increase relative to the 2023-2024 season, partially offset by the mixed impact from the growth of Epic Day Pass products. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.73 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb Pass sales. Pass product sales for this past season, the 2023-2024 North American ski season, have grown 62% in units and 43% in sales dollars over the past three years. Pass product pricing has increased 25% from spring 2021 to spring 2024. We believe the spring pass sales results for guests committing for winter 2024-2025 were impacted by the industry decline in visitation following a record 2022-2023 U.S. ski season. The decline in units relative to the prior year season-to-date results was primarily driven by a decline in new pass holders. The primary source of new pass holders in the spring are lift ticket guests that visited in the prior winter season. This past season, lift ticket visitation declined due to weather and did not fully return to typical behavior after conditions improved, creating a smaller audience as the primary source of new pass holders in the spring. For renewing pass holders, the company achieved strong unit growth among the company's most loyal tenured renewing pass holders, guests who have had a pass for three years or more. Spring renewals for lower-tenured pass holders, including first-time and second-year pass holders, demonstrated lower renewal rates in the spring, which may reflect delayed decision-making to the fall. Overall, renewing pass holder product net migration was positive, and Epic Day Pass product experienced modest unit growth driven by the strength in renewing pass holders. The majority of our pass selling season is ahead of us, and we believe the full year pass unit and sales dollar trends will be relatively stable as compared to the spring results. We will provide more information about our pass sales results in our September 2024 earnings release. Epic Australia Pass sales end on June 12, 2024, and are down approximately 22% in units through May 29, 2024, which we believe is primarily a result of the historically poor conditions during the 2023 ski season in Australia. The Epic Australia Pass has grown 43% in units over the past three years. Our commitment to reinvesting in our resorts and the guest experience remains one of our highest priorities. As previously announced, we expect our capital plan for calendar year 2024 to be approximately $189 million to $194 million, excluding $13 million of incremental capital investments in premium fleet and fulfillment infrastructure to support the official launch of My Epic Gear for the 2024-2025 winter season at 12 destination and regional resorts across North America, $11 million of growth capital investments at Andermatt-Sedrun, $1 million of reimbursable capital, and investments at Crans-Montana, which we expect will include $3 million of maintenance capital expenditures and $2 million associated with integration activities. Including My Epic Gear premium fleet, fulfillment infrastructure capital one-time investments, and investments at Crans-Montana, our total capital plan for calendar year 2024 is now expected to be approximately $219 million to $224 million. In closing, we greatly appreciate the loyalty of our guests that visited across all of our mountain resorts this past season and the continued loyalty of our pass holders that have already committed to next season. With the North American and European ski season coming to an end, I would like to especially thank our frontline employees for their passion and dedication to delivering an experience of a lifetime to our guests. Our employees are the core of Vail Resorts' mission to create an experience of a lifetime, and we are all looking forward to the ski and ride season at our three mountain resorts in Australia. At this time, Angela and I will be happy to answer your questions. Operator, we are ready for questions.

And we'll take our first question from Shaun Kelley with Bank of America.

Hi, good morning or good evening, everyone. Thank you for taking my question. Kirsten, Angela, I would like to explore further the past behavior you've observed. Could you provide some insights on the feedback you're receiving from guests in the new pass cohort and the younger group that did not renew this period? Historically, you have done well in encouraging early activity during the pass sales season, and there are some concerns that the current trend might decline. Understanding the behavior, including why they may have delayed decisions, and any feedback you’ve gathered from this early pass period would be helpful.

Yes, thank you, Shaun. I think what we see with our renewing pass holders is different behavior depending on their tenure. Very pleased to see that our most loyal tenured renewing pass holders, those that are three years or more had strong unit growth. When we look at the renewals for those lower-tenured pass holders, first-time pass holders or second-year pass holders, as I mentioned, they did demonstrate lower renewal rates. This particular audience, we tend to see can be impacted by conditions in their decision-making and the timing of when they renew because they had been in many cases accustomed to making their decision about their ski vacations closer to the season. When we look at this group, we tend to see that there is still a strong volume of them that make decisions in the fall. The guest experience scores that we have among this audience are quite strong. So I can't tell you with certainty what decision-making they're going to have. What I would say is that it is possible that there is a delayed decision-making because we have seen that behavior with this audience in the past.

That's helpful, and thank you for the additional details. My follow-up question concerns your mention of post-COVID normalization in the release. A lot of the recent activity seems related to new pass holders and visitation trends. Without that customer base, which has been impacted by weather, how does post-COVID normalization play a role? Could you elaborate on what you mean by that? Additionally, how do you differentiate between these two influencing factors?

Yes, thanks for the question, Shaun. We do believe this past season overall that conditions and a post-COVID normalization are both material factors impacting this season and we can see that when we look at the conditions and the guest behavior when conditions were challenging versus when conditions improved and where results improved or did not improve or the behavior was there. And we mentioned this before when it came up in March that it's very hard to say if there's a normalization given the season is not over. With the season being over, it's easier for us to look back and be able to see where the behavior recovered and where it did not with conditions to say that normalization is a component of that. When we look at the impact on spring pass sales, as I mentioned, the single biggest impact on our spring pass sales is new pass holders and that is driven by lift ticket guests, and that behavior or that size of that audience is down significantly, which is impacting then our ability to convert them into new pass holders. I would also highlight though in this context that that is not the only source of new pass holders. It is the primary source of new pass holders in the spring coming off of the season. Conversion to lift from lift ticket guests is the primary source. As we head into fall though, we also see new pass holders being driven by prospects as well as lapsed pass holders and lapsed lift ticket guests. But for this springtime period, we do believe that the industry normalization is impacting pass sales because it is impacting the size of that audience. We also look at, will pass holders who visited during good conditions and during poor conditions and what is their conversion rate to a pass and can see that conditions are a factor, but they are not the primary factor.

Thank you. Our next question comes from Jeff Stantial with Stifel.

Hi, great. Good afternoon. Kirsten. Angela, thanks for taking our questions. Maybe starting off, I'll just try to ask Shaun's first question in a slightly different way. So, Kirsten, you talked a lot about soft lift ticket demand this past season impacting your conversion from lift to Epic passes during the spring selling season, to me that seems like more of a spring headwind and going to ease up as the selling season progresses. You also talked about potential for some conversions of less tenured pass holders to accelerate in the summer and in the fall selling season. So I guess, can you just help us reconcile those two comments with the expectation for trends to remain stable to the levels you just reported through the remainder? In other words, is it fair to conclude you're being a bit conservative with that comment? Just any color there would be helpful. Thanks.

Thank you, Jeff. There are several factors at play that influence behavior differently in the spring compared to the fall. It’s possible that new or second-year pass holders may change their decision-making as the season progresses, as we've observed in the past. It's important to note that the 8% decline in the U.S. ski industry aligns with our own 8% drop in visits, which limits the number of guests who may transition to taking a pass. We believe this will continue to affect us throughout the selling cycle, which is why we anticipate consistency in trends. There will be some variations, and while we are facing challenges with lift ticket sales this spring, we might see improvements with past and potential customers in the fall. However, we do not expect significant changes for the remainder of the selling season.

Okay, perfect. That's very helpful commentary. Thank you for that. And then for my follow-up, I wanted to double-click on some of the softness in the lift ticket visitation later in the season this year. You called out specifically Whistler Blackcomb as showing the most headwinds here. I guess, could you expand on that a little bit more? Is there anything in terms of nuances to that resort that might explain it? Is it higher fly to traffic? Just anything that sort of explains the nuances that you're seeing with that resort versus more of your U.S. resorts?

Yes. When we were looking at conditions, we saw conditions improve in our U.S. Rockies Resorts earlier than we did at Whistler Blackcomb; those results stayed very challenged for longer, so that's number one. Number two, this resort is destination visitation is very important to the success of that resort. And three, lift ticket visitation is very susceptible to weather conditions. When we started heading into spring, we had noted that conditions were improving and we expected pass visitation because we have the data and we can tell who's pre-committed that we believe that then those guests will use their pass, and we saw that actually happen, Jeff, that the pre-committed guests returned as we expected them to. On Lift tickets, we didn't expect that we were recouping what had been lost earlier in the season. We had expected typical spring historical guest behavior and we did not see that with the improved conditions, and in particular at Whistler, where the conditions dragged on longer and the lift ticket visitation is highly susceptible to conditions and variable, which is why we're very oriented to pass, we see the impact. I think there is also border restrictions that impacted Whistler Blackcomb during that post-COVID era and could be potentially some normalization impacts happening there as well.

Thank you. Our next question comes from Ben Chaiken with Mizuho.

Hi, how's it going? You noted the decline in passes was largely driven by lower new pass holders with that pool being primarily window ticket guests. I guess it's very reasonable that the pool is smaller given the poor weather, but when you look at the penetration of that pool of single-day window guests who subsequently decided to purchase a pass, was it consistent with what you would have expected just at a smaller scale, better or worse? Thanks.

I'm sorry, Ben, can you reframe your question just to make sure I'm understanding exactly what you're asking me?

Sure. Sure. You were saying that one of the larger reasons for the decrease in the pass was lower new pass owners and that the major pool for that was window guests from the previous season. I'm saying it's very reasonable that that pool is smaller given the poor weather, but of the people who did purchase, of the window guests who did subsequently purchase a season pass, is the penetration in line with what you would have expected, better or worse? And if that didn't make sense, we can catch up later.

No, I got it. So it is both impacts. The biggest and largest impact on our year-over-year past sales in the spring for new is the size of the audience in the lift ticket guess that there was a decrease. We do also see an impact in conversion relative to what we would have expected, but that is not the primary driver. It is the size of the audience that is the primary driver of the decline year-over-year.

Got it. Okay. That's helpful. And then as you think about the evolution of the pass, I would assume there's been a lot of destination customers who are now part of the pass program who were not there three or four years ago. You mentioned some lower tenure guests who tend to renew closer to the season. Do you think the pass needs to evolve in any way to extend or smooth the seasonality of the pass? In other words, would it make sense to add partnerships, retail or otherwise, that add demand for the pass outside of the core season, in essence, extending the demand and utility of the pass outside of the core season? Just would love your thoughts there. Thanks.

Yes, I think to the extent that the company could have advanced commitment for the ski season and other experiences or utilization of the pass beyond the ski season, that would be the real benefit to our company. We do provide access to summer experience on the pass, but I'd say we're constantly looking, Ben, at new ideas and opportunities to make that proposition even more valuable and compelling to our guests. I do think the dynamics between spring and fall have shifted and changed over time as the composition of our pass holders has changed over time between destination, local decision-making, the behavior is different and whether you're long-tenured and very loyal versus you're a newer pass holder coming in, and that has caused shifts between spring and fall decision-making.

Thank you. Our next question comes from Laurent Vasilescu with BNP Paribas.

Good afternoon. Thank you for taking my question. The press release mentions that Epic Australia Pass sales have decreased by 22% in units, mainly due to weather conditions. Kirsten, can you share some context on how severe the weather has been in Australia this season thus far? Could this serve as an early indicator of how the U.S. might respond if adverse weather persists over the next few seasons? Additionally, are there any insights from Australia that you could apply when providing guidance for FY '25 next quarter?

Australia has experienced highly variable seasons. Two years ago, there were record-high conditions, followed by a very poor season last year. This reflects a significant contrast between two years. I believe this is impacting decision-making regarding the Epic Australia Pass. Additionally, there are unique economic factors in Australia. Unlike our North American resorts, many of our Epic Australia pass holders frequent local resorts. In North America, there are various options available; for instance, if you're in San Francisco and conditions are tough in Tahoe, you can easily go to Park City, Whistler, or Colorado. However, in Australia, when winter conditions are poor, options are more limited. This creates a unique situation where local visitation is more prevalent and destination guests are not traveling to ski at our Australian resorts. In North America, the greater variety of choices provides more geographic diversity that helps stabilize business even in challenging conditions.

Very helpful. And in terms of my second question, Kirsten, Angela, your dividend payout ratio is at 100% on a trailing 12-month basis, can you discuss what's the ideal payout ratio going forward? Or asked another way, how do you prioritize your capital allocation strategy across the different avenues for shareholder returns?

Thank you, Laurent. We have consistently focused on our capital allocation priorities, with the dividend being our main approach. We don't have a specific payout ratio in mind. Instead, we assess where our free cash flow is being generated and how the underlying fundamentals have enabled us to meet our capital allocation priorities, including reinvesting in our resort experience and enhancing the employee experience. Our balance sheet is in a strong position, allowing us to pursue mergers and acquisitions similar to what we recently did with Crans-Montana. We also consider the return of capital to shareholders, prioritizing the dividend while being opportunistic about returning capital through share repurchases.

Okay, very helpful. Thank you very much.

Thank you. Our next question comes from Megan Alexander with Morgan Stanley.

Hi, good afternoon. Thanks so much for taking our questions. Maybe a follow-up just on the lift ticket visitation again. I know I think you said it was down 17% from that window lift ticket. It's obviously clear weather was a big headwind to that customer, but I'm just curious your thoughts on whether price is having any impact, and the reason I ask is, your largest competitor did recently say something to the tune of you won't see us taking prices on lift tickets anymore. So just bigger picture, would love to kind of get your thoughts on your pricing strategy more broadly and whether you think potentially there could be some room for some changes, maybe something like dynamic pricing. I understand the goal is to push people to the advanced commitment, but at the same time, you're talking about the lift ticket guests being the funnel for that. So I'm just trying to understand how you think about the pricing strategy and the ability to kind of retain and acquire more guests.

Thank you, Megan. As I mentioned in the spring, our primary source of new pass holders comes from last season's lift ticket guests. However, when examining the complete pass selling cycle, we find that our new pass holder sources also include past lift ticket guests, former pass holders, and prospective customers. We have a comprehensive database that helps us understand these guests, including details about where, when, and how frequently they ski, which allows us to engage with them personally. Regarding lift ticket pricing, our strategy is intentionally designed to encourage guests to make advanced commitments, which provides us with stability compared to the unpredictable choices associated with refundable products like lift tickets. We've developed a product line that facilitates a strong transition from lift tickets to the Epic Day Pass, enabling guests to choose from one to seven days. We initiated this in what I believe was FY '19, aiming to capture guests who ski less frequently, and we have seen significant success. As I noted earlier, we've increased our pass product sales by 62% in units and 43% in sales dollars over the past three years, with the Epic Day Pass playing a vital role in that growth. Additionally, we offer a diverse portfolio of resorts, some local, some regional, and some destination. For newcomers to the sport, purchasing tickets for local resorts is more common than flying to a destination resort. We provide an affordable lift ticket option along with introductory programs to support those new to the sport at local resorts, and then as they progress, they can move to regional and destination resorts. Currently, our data suggests that the decline in lift ticket sales is influenced by weather conditions, but there’s also an impact from industry trends. I do not believe that the 17% decline is linked to lift ticket pricing, as we typically transition guests to the Epic Day Pass rather than them simply deciding to leave the sport.

That's really helpful. Appreciate the color. And then maybe just a follow-up to what you just said at the end there, how should we think about visitation for 2025, I guess, both from an industry perspective and from Vail perspective? I guess from the industry, you're going to be lapping a pretty challenging weather season, but perhaps there was some normalization, so you don't necessarily get a full recovery. And then from Vail's perspective, at this point, pass units down 5%, you have just less people on the mountain skiing just as a result of that. So I guess just any way to think about how kind of the net of all of these factors should impact next year? Does anyone factor kind of have more weight over the others?

Yes, we believe that both weather conditions and normalization are important factors affecting visitation, although we haven't quantified them yet. We'll provide more details in September when we discuss our volume and visitation expectations. Regarding industry normalization, it's difficult to determine if it's fully complete or if it will extend into next year. Observing the travel and leisure sector and the ski industry's performance, it appears that, particularly in skiing, things are generally returning to a more normalized trend, similar to what is being observed in travel and leisure.

Thank you. Our next question comes from Patrick Scholes with Truist.

Hi, good evening, everyone. I've been hearing recently that Icon unit sales are increasing, showing mid-single-digit growth year-over-year. I'm interested in your thoughts on why there might be a discrepancy between your results and theirs. It's possible that their addition of new areas, like Blue and Camelback, along with Crystal returning to the full Ikon, plays a role. Is there anything else that could explain the differences between the two? Thank you.

Thanks, Patrick. Yes, I can't really comment on anyone else's pass results or Ikon's pass results since they don't have public disclosures of their results and the drivers. What I can do is share, I think some context that is always a helpful reminder, which is life-cycle of a business or a product and where our business was in its early days and the types of guests that we were converting were the high-frequency, high committed guests, and now our pass has been existing in existence for significantly longer than their passes. So I think it would make sense as you've seen us evolve and launch new products to go after new addressable markets, not just the high-frequency, most committed skiers, we have expanded dramatically the growth of our pass business going into less committed or lower frequency skiers and riders. And if for context, if you think about when their pass started versus when ours did, I'd say it's hard to compare the two because where we are in the stage of the product life-cycle is dramatically different and the types of guests and the products that we offer are dramatically different. But mostly, I'd say, it's that life stage piece that I think is likely a key difference.

Okay. Thank you. And then my follow-up question also, this one is a bit more of a high-level question. There's certainly debate in the ski community and subsequently with investors regarding what is the better operating strategy to go with. You folks seem to have more of a centralized out of Broomfield as it relates to mountain operations and HR, whereas your main competitor leaves it up more to the local resort to make decisions. I guess in your opinion, why is your methodology the superior one? Thank you.

Thanks, Patrick. Well, if we're talking about centralized versus decentralized, I think there's something important to clarify about this because I think there's a misunderstanding or misperception about this. What we have centralized as a company are support functions to our mountain operations, support function. That would be things like HR, finance, marketing, procurement, accounting. What's not centralized is operations. Operations' decisions are decentralized into the resorts. Our operators are responsible for decisions about terrain, about labor, about safety, about the running of the resorts. That is not centralized for us. And I can't really comment on how that compares to Alterra, but I think it's important to qualify that operations is not centralized for our company. That said, why do I think it's good that we have centralized HR, finance, marketing, those functions, because we can have better cost efficiency and provide more support and have consistency in the support that we provide. We don't need every mountain resort to have their own procurement team or accounting team or HR or finance team when we can have a team that really is centralized and is providing the support for every one of our mountain resorts in order to enable the success of our mountain operations. So I do think that strategy is very successful. And I also think and believe that having our decision-making in mountain operations reside in the resorts and mountain operations is also the right approach and I don't anticipate that changing.

Thank you. Our next question comes from David Katz with Jefferies.

Good afternoon, everyone. Thanks for taking my question. I appreciate it. Can we just drill down a little bit on Switzerland and how we think about expectations for pass sales there? Obviously, it's a ramp, but my sense is that you've included some of that in your underwriting, and would just love to hear your thoughts there.

Hi, David. Thank you for your question. I believe that Switzerland, along with all of Europe, presents a significant opportunity for us. As you mentioned, it's a gradual process, and we are very optimistic. Over the past couple of years, we've established two owned and operated resorts there, and it's crucial for us to continue building a strong network to fully unlock the potential, similar to what we've experienced in North America. We started with a few resorts, expanded our network, and then began to see a boost in pass sales. I do anticipate growth in Europe by owning Crans and Andermatt-Sedrun and forming excellent partnerships there. I don't expect this to drastically change our trajectory; rather, it will be a gradual process over time, akin to the early days of Epic Pass when we began with just six or seven resorts and steadily expanded. That's the vision we have and the growth potential we see, especially since the skier market in Europe is substantial. There are few networks of resorts and multi-resort passes that provide the kind of access, value, and stability that we can offer. However, this is certainly a long-term growth strategy that will require time.

Understood. And as my follow-up, I wanted to ask about the new app and any data points, any learnings, any benefits, anything that's knowable there would be great.

Thank you. Yes, the new app is progressing well according to our expectations. I am particularly pleased with one of the key innovations in the app, which are Mobile Pass and Mobile Lift Ticket. We believe these features enhance the guest experience by reducing their time spent in ticket lines and waiting for passes to arrive by mail. Additionally, they help to minimize plastic and RFID waste and costs, all of which has been delivered as anticipated in the first year. Most importantly, the experience with the base lift met our expectations for the guests. We are expanding this into Whistler Blackcomb, and my goal for next season is to increase adoption among our guests, encouraging more of them to use their phones for Mobile Pass and Mobile Lift Tickets, as well as accessing crucial information through My Epic Assistant, which we will be piloting. This will also provide future cost efficiencies for us. Overall, everything is on track with our expectations, and I am excited to see how guest adoption develops in the second year, especially since people are increasingly using their phones for everything.

Thank you. Our next question comes from Chris Woronka with Deutsche Bank.

Hi, thanks. Good afternoon, everyone. So first question is kind of on the hotel side. I know when you guys initially talk about guidance in September, you typically look at what you've got on the books on the hotel side and I know it's really for peak periods. But as you look back now at the end of the ski season, were those hotel bookings, do they offer the same level of predictive value that they used to or that you expect or do we just have to say that the weather is impacting things more than the initial hotel bookings?

Thank you for the question, Chris. As we enter the season, we focus on pass sales as our primary indicator, while also considering more immediate factors like holiday period lodging bookings. It's something we continuously monitor. This year, we observed that many resort markets did not fill as anticipated, which relates to ongoing trends in travel behavior and conditions affecting lodging occupancy. Specifically, we experienced a decline in occupancy of about 4 points in the winter season for resort communities.

Okay. Thanks, Angela. And then follow-up is kind of as we look out to next year and we think about the Epic Gear launch, right, being more fully available and taking into context your comments about renewal rates and the fact that you're doing better with folks who have been with you for a while, would that change any of your very preliminary views on what you think about Epic Gear uptake in participation rates or do you think you have a lot of confidence in that given that you're doing well with your renewing pass holders? Thanks.

Thanks, Chris. I'm optimistic about our assumptions regarding My Epic Gear, but we'll certainly review and adjust them as we prepare our budget for next year. The advantage of the My Epic Gear business is its universal appeal; everyone requires gear. It's essential, not optional. Therefore, we must persuade our guests that our subscription model is a superior choice for either owning or renting gear, as it offers convenience and access to the latest equipment. This concept is very convincing because gear is a necessity for everyone. Considering the potential market for it, it is substantial, which underscores the opportunity we have. Whether customers are long-time or new, I believe it's a very attractive offering, and it's up to us to demonstrate this to our guests.

Thank you. Our next question comes from Brandt Montour with Barclays.

Hi, good evening, everyone. Thank you for accommodating me. Regarding the comments on COVID normalization, Kirsten, I apologize if this was already addressed, but did that comment encompass overall travel demand, which you've mentioned? Additionally, does it reflect a change in consumer behavior towards peak travel periods, such as weekends and holidays? This was a beneficial trend for you early in the COVID period. Is it possible that this is now or could become a challenge that adds more pressure on your business operations?

We did not observe a significant shift back into peak periods this past season. In the years following COVID, as we've increased pass sales, we noticed a tendency for people to travel during off-peak times, and we continue to see strong performance during those periods compared to peak times. There are natural limitations during peak times, including higher prices. I don't currently see any signs of a shift in that regard in our data. What we're noticing overall is that consumer travel behavior has shifted dramatically year-over-year since COVID. Many travel and leisure companies have mentioned signs of normalization, often indicating a headwind coming from last year's peak. When examining the ski industry, last year's peak visitation doesn't seem to be matched this season, even with favorable conditions. The ski industry appears to be down 8%, which aligns with the normalized trends we expect. Right now, I'm not detecting significant shifts between peak and off-peak periods.

That's very helpful. I have another question regarding the competitive landscape. Based on publicly available information from your competitor, Alterra, it appears that their initial and mid-season pass prices are widening compared to yours, which is the widest level since their launch. I'm interested in your thoughts on this from a strategic positioning perspective. Are you concerned that they may be trying to establish themselves as a higher-tier product than yours? The reason I'm asking is that not all skiers contribute equally to profitability, so how do you view this competitive positioning?

I feel confident about our competitive position based on our guest research and their perceptions of Epic Pass, which we closely monitor. I am also optimistic about our growth. We have grown a mature business in pass sales, achieving 62% growth in units and 43% growth in dollars over the past three years. Now, over 70% of our visits are booked in advance, and this is our strategic focus, which likely differs from our competitors. For us, it’s crucial to create stability given the impacts of weather, and to guide people toward a pass. We have many loyal, long-term pass holders and have also gained new ones. Our goal remains to continue this trend. We know that pass pricing is sensitive, and we have considerable data on how price affects the decision between lift tickets and passes. Since our last price reset, the price of the Epic Pass has risen about 25%, and we will continue to adjust it while monitoring price elasticity closely. Our objective is not to shift people back to lift tickets because that would lead to an unstable revenue stream in a high fixed-cost business. Despite facing 28% less snowfall this winter and an 8% decrease in visits, we still saw revenue increase by 1% and EBITDA grow by 6%. While we keep an eye on our competitors, our business strategies and goals differ significantly from theirs.

Thank you. And this concludes the Q&A portion of today's call. I would now like to turn the call back over to Kirsten Lynch for closing remarks.

Thank you, operator. This concludes our fiscal 2024 third-quarter earnings call. Thanks to everyone who joined us today. Please feel free to contact me or Angela directly should you have any further questions. Thank you for your time this afternoon. Goodbye.

This concludes today's Vail Resorts fiscal third-quarter 2024 earnings call and webcast. You may disconnect your lines at any time and have a wonderful day.