Good day and welcome to the Vail Resorts First Quarter 2021 Earnings Call. Today's conference is being recorded. [Operator Instructions]. 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 and 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 the 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 has 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, or 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 -- lift-served 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. .

[Operator instructions]. 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?.

So I guess on the first piece, what I would say is, we -- I guess there were two components. One component was, the renewal pass holders. And we felt like, we were going to -- we had pulled forward a lot of renewals. And that we were not going to see as many renewals from September through December, as we did last year. And that turned out to be true.

I think the second piece is, time to assess the conversion of people who were in our database, either in our last pass or pay ticket last year or last paid ticket, in trying to assess their propensity to buy a pass this year. And I’d tell you, we're, again, largely in line with that.

I think the hardest thing for us to forecast was people who are not in our database at all, so we don't really have any history on them to assess. We do obviously call new people in every year. Obviously, there was a case to be made that because of lift tickets being more restricted this year, then maybe we would lose some of those folks.

And on the other hand, because of COVID-19, these would typically be lower probability conversion opportunities for the company. And so I think we were just conservative about that, given the environment we were going into.

And ultimately, it was really that group that drove a lot of the upside from our expectations in September that we saw, particularly in the Epic one to three day products, and obviously, that product is only in its second year. We had high hopes for that product when we launched it to do exactly what it did this year.

But again, hard to always tell when something is that new and even harder when you're in the middle of a pandemic. But obviously, we're quite pleased to see that. On the pass deadline, the pass deadline was scheduled to be December 6th and it was kept at December 6th.

I think the only thing that we did was we extended for about a week the opportunity for people to pick their Epic Coverage priority reservation days, so that we just gave people a little more time to even make the selection in terms of how Epic Coverage would work for their situation..

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 actually haven't updated that with Peak. So I don't have a new number for you on that. We were -- for our destination resorts, we skewed a bit over half on destination versus local in our last numbers that we put out..

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. I would say, very much a destination guest. We certainly do know that. And I think coming from a broad array of markets across the country. And I think this is, again, something -- I think the good news for us was obviously, we had already put -- designed this product, introduced it, put it forward last year.

So we had marketing approaches, even though we didn't have their contact information. Obviously, we have upped their channels that we try and reach people. So we had that out there. And I think it turned out to be exactly the right product for this market right now in that. I think a lot of these folks were planning clearly to take a trip.

They -- I don't know whether they were only planning to come for a couple of days or maybe they are planning a potential longer trip but figured they would lock in a couple of these days upfront at an attractive value for them, and obviously, be able to get into the reservation system early. So they may add days as the season goes on.

I think we'll learn all that as the season progresses. But again, I would say, this was when you talked about the Epic Day Pass when we launched it, this was really exactly what we were looking for. And I think no doubt that, that a pandemic, for those people who are committed to coming, clearly, this is a product that was an opportunity.

And I think more broadly, it certainly appears as though for people who are looking to take some kind of trip over the winter and have potential interest in a winter vacation, I just think this being outside, being outdoor into an experience that they may be aware of clearly resonated..

Second question would just be like, this one is a little bit more theoretical, but if we fast forward to next year and travel has returned or is kind of by and large normal by next ski season, what are your thoughts around how you think the retention rate could play out? Because this year, obviously, between both the discount of what you saw on the -- or the credit, I should say, on what you gave coming out of last season, combine with I think the reservation pattern and a variety of other things, it worked really well on your ability to retain existing people.

Do you think this can stay at an elevated level? Have you learned some things about this? Or would you expect it to mean revert closer to historical levels? And sort of why -- kind of why are you thinking what you're thinking?.

Yes. I think it's still probably a little bit early for us to have kind of final views on this because we're still digesting and analyzing, obviously, the results that ended just a little over a week ago. But what I would say is that I think no doubt that there were the credits clearly helped.

And I think, in particular, it helped with people who were low frequency steers during the COVID year. And certainly helped -- I think we accelerated and certainly helped retain, I think, some of our high-frequency skiers for season products because of the minimum 20% credit.

And obviously, it certainly helped as that people understood that there was a benefit to getting in early. On the other hand, it's really important to not overlook this. We are in the middle of a very uncertain travel environment.

And so on balance, I think there'd be huge benefit, I think, to us in having a more normal environment that we would be selling into, where the focus on all restrictions, understanding the experience, understanding things like Epic Coverage, which typically are nowhere near as important as it was this year.

I think all of that would allow us to honestly flex a little bit more in other areas. So how that balances out next year, I think that's certainly a little bit hard to say right now.

But I mean, to me, the most important thing is that in the middle of COVID-19 when I think a lot was at risk, we were able to retain, right, the core customers and actually introduce new people into the program.

And as you know, having their data, having them as a pass holder once, obviously dramatically improves our ability to market to them and to retain them for the future. So I think -- and a lot -- and by the way, the prospects that we brought in, these people who were not in our guest database before, there was no credit for them.

Obviously, there was no discount offered to them. They were getting the same product as everybody else. So I think on balance, we walk away from this, feeling very good exactly how the math will work out. I think what we've seen, and we'll have probably more to say about as we go into next year.

But I think we leave this selling season quite positive about where the program is going..

Last thing I would have would just be, could you just talk a little bit about -- there were some headlines out regarding Lake Tahoe this morning, possible kind of stay-at-home orders in California and how that could impact sort of the broader operating activities.

But I imagine it’s something we're going to have to struggle with possibly around the portfolio, given some dense urban town. You talked about Vermont a little bit, which is some -- I think it’s a very confusing policies.

So can you just talk a little bit about kind of what you know right now on some of the like regional or local operational challenges and kind of how you're exactly contending with this or dealing with it at the resort level just for the season kind of as it comes or based on what you know right now?.

Sure. And I would say, number one, yes, I do think that we will be having to navigate these ever-changing restrictions and new regulations throughout the portfolio at every resort, with every community in every locale throughout the season.

And I do think that right now, certainly, a lot of those changes are ones that are making further restrictions, right, on the kind of activities that people can do and then what we can do at the resort. But I think we also should assume that there's probably going to be some positive trends too at some point during the season.

So we may see some loosening as well. And I know all of our communities and our company are focused on partnering, right, to obviously bring down the case load everywhere. So in the end, I think we'll see kind of both sides of this.

And I think from an operational standpoint, no, it's one of the reasons why I said what I said at the end of my remarks about our employees. I think this does put tremendous strain and challenge on the company as a whole and everybody, right, to try and address this.

I think we have -- the one advantage that I think we have is, we went in with a lot of preparation, a lot upfront, the reservation system. We have a number of central teams that are constantly monitoring everything that's going on, that are heavily engaged with all of these local regulators, local public health, all of that.

And so we can use that information, and we can obviously also take a kind of best practice approach because we understand. We've already seen what's going on in Tahoe or something like that shows up somewhere else, and we know how to address it and we can immediately put that in place.

And that's a real advantage, I think, by having a number of resorts and having the central approach that we have because it's central from the standpoint that we can kind of push it up. And actually, each of these resorts, as they go through whatever new restriction gets enacted, they become really the leader of that for the rest of the company.

So I feel like we're well prepared, but there's no doubt that this is going to be operationally a very challenging season ahead..

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?.

So the way the system works -- and again, I'm going to, of course, caveat anything on this to the terms and conditions, of course, on the program that are on our website. But in shorthand, what I'd say is, yes, we had a time period through December 7, where people -- all of our pass holders have the opportunity to go out and get reservations.

And to the extent that they were not able to get the days that they wanted, they have the opportunity to then get a refund through December 7. And so to the extent that they did, they're not something that obviously, we're going to now review. And we'll look at obviously what comes in and make sure that the alliance is with all terms and conditions.

And then we'll, of course, follow through with the guests on that. Going forward, from here forward, if they can't make a new reservation that they want, that in and of itself does not create a refund event..

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. I think it's a little -- it's definitely too early to make any assessments of that. I do think -- from some of the reservation data that we're looking at, I don't -- I think that our destination guys are absolutely looking to potentially travel to the West.

And there's no doubt that the biggest numbers of reservations, of course, are in our biggest Western resorts and especially where Whistler is not an option really for many people within the U.S., I think that, that, of course, will put more interest, I think, in our Colorado and Utah resort. So at the moment, I think we'll see how this plays out.

But right now, given the strong momentum that we saw, again, broadly across our destination markets, right, many of our destination markets, most of our destination markets don't have an option for them to ski close to home. So obviously, these are folks who are willing to either get on a plane or drive a longer difference out to 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..

That's great to hear. And then shifting focus here. Does COVID -- just curious, does COVID create an opportunity to take share or even potentially acquire some standalone mountains that might not be in good shape. Might have the same balance sheet that you have.

Any thoughts on that front?.

I think it's hard to say. I think that will play out over the upcoming 12 to 18 months. I think we have seen in previous events that are sometimes destabilizing that as after things stabilize, that people are sometimes is interested in having strategic discussions again.

Again, I think, usually in the middle of the instability, sometimes tougher to have those discussions. But I think as you come out of the other side, I think that's where there's an opportunity.

And I think for us, we certainly -- when we look back historically, we were able to do a lot of things, both internally and externally on the strategic side coming out of the '08, '09 recession. And I think we're very focused on positioning the company to be able to make the most of whatever opportunities are out there.

And certainly, our capital liquidity and access, right, to capital, yes, it has been a strength, maybe it's a more differentiated strength right now. And so, leveraging that to make sure that we can -- we don't miss anything over the next 12 months, I think, is critical..

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 think it's one of the primary reasons why amongst many that Whistler was such an attractive acquisition opportunity because we knew that long-term, they had such a good connection -- the best connection, I think, in North America with the Asian market that we felt like that was an opportunity for us to really lead the way.

And I think at the resort level, there are many things that the resort has done on many fronts, whether it's around language or food or relationships with travel providers and wholesalers in China to continue to drive that business. But of course, we're a little bit on hiatus and pause during COVID and some of the travel restrictions.

But I think once COVID is behind us, that's something we're absolutely going to reenergize all of those efforts. And yes, I think an opportunity both through the partnerships and ultimately, potentially through acquisitions in Japan is critical. I think yes, there's a real opportunity, and they've seen that already in Australia.

So again, I think the China market is one of the -- maybe the best, right, biggest global opportunity in the entire industry and all the moves that we make for the company strategically are oriented around making sure that we can get benefit from 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. I mean, no, we -- obviously, we're in communication at both the local county and state level on an ongoing basis, high-frequency dialogue. But other than what is out there in the regulations that are posted, no, we don't have additional information.

And it isn't just -- it's obviously decisions that are -- that would be made at both the state level and at the county level. So both of those would ultimately be critical players in terms of whatever decisions are made if we move beyond that.

What I can say is, I think, obviously, both Summit County and Eagle County are working very intensely to bring down the caseload and to get to a decreasing slope and I know that Eagle County is very focused as we are keeping them in orange for right now. Whether that's possible, we'll see.

And I know Summit County is looking obviously to hopefully move from red to orange. So again, a lot of work going on, on every level, but exactly what the outcome will be or what the regulations would be if they move to the purple at this point? Yes, not 100% clear..

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, certainly, we would agree. I think we're seeing very strong demand, right, for resort properties and a lot of transactions in many ways probably the strongest demand we've seen since 2008 or 2007. And I think, yes, people are looking for opportunities to be critically outside of many of the big cities because of COVID.

How that shifts out, -- hopefully, we put COVID behind us, that's enough, I'm not sure. But I would say this, I think the work-from-home trend, right, using video technology and other technologies so that people can work remotely, it would seem like that trend is clearly going to continue on some level.

I think that's probably going to be true on some level for schooling, particularly in the higher education.

And so to the extent that people are able to put themselves in vacation spots, on a more balanced way throughout the year and not just cluster into these peak times, I mean, that would be a huge benefit to, I think, the resort industry and obviously, to our company.

We still obviously do struggle to move people out of peak times and into off-peak times. And to the extent that they're not as tied down to their job or potential school and can do things remotely, then obviously, that would -- whether it's to buy real estate or it's just that people will travel in a more even way throughout the season.

I think that could represent a major opportunity coming out of the COVID dynamic to the entire vacation industry, but particularly for our company..

And with respect to the very near term, and apologies for the short-term question, which may bear some unknowns, should we find ourselves 30, 60 days down the road.

And there are circumstances where the mountain is open, but for whatever reason, a person can't fulfill, right? They may have missed a reservation opportunity, but they -- or made one, and they can't fulfill, right? I can't get to the mountain. I assume that there's some latitude within the program as it's laid out.

And what I'm essentially getting at is the prospect that whether we would have any credits rolling into next season as well, potentially..

Yes. I think at this point, our view is that we tried our very best to make other coverage comprehensive and to address many of the most likely scenarios throughout the season. And yes, we're hopeful that, that will be -- provide a support for our guests. No doubt like in any year, it won't be a perfect solution.

And it won't necessarily solve everybody's problem. But right now, obviously, we feel like it's a strong program that I think will be available to people when they need it. And I also think that in the end, we're going to have -- obviously, it's a long season. We're just at the very beginning.

And I think a lot of our pass products -- all of our pass products are basically available throughout the season. And so that really gives people multiple opportunities to potentially take a trip. So I think that also helps in that. We're not just talking about one situation. So at this point, I think that we feel good about where we are on that front..

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

So I was wondering if there was anything from the database that you could share around how many -- or what proportion of single day lift tickets -- lift ticket customers traded up into Epic.

Just trying to understand to what extent maybe if you have any color on this, the dynamic, Rob, that you were talking about earlier, maybe fear of not being able to get that priority without the pass contributed to a tailwind for you and tiering people up into the pass network?.

Yes. I think at this point, again, a little too early in our process to have all those insights perfectly dialed.

And so I don't think -- I wouldn't comment on exactly the specific on it, but I guess, I would say just seeing the dynamic with cross -- with people who are not in the database right at all and seeing the strength we have there, I'm sure that the urgency in terms of getting a priority ticket was important to them.

Now that said, I'd also say that a lot of these folks came in towards the end. Not every one of them has made their reservations. And so I also have no doubt that part of this was the value proposition, a big one.

And so it's important to remember that last year, obviously, when we didn't have [pass that good], Epic Day Pass was a very strong performer for us because of the value that it offered. And so I think we're seeing that again now, no doubt helped somewhat.

And I've no doubt that these are folks who, in the absence of buying the pass would have been obviously our most likely lift ticket customers.

But -- yes, I don't have any additional information at this point to share on kind of the exact conversion for each guest type because they're actually are quite a lot of them and quite a lot of dynamics, both by product type, by -- for this year, product type the last year for geography and all those different points.

So that's one of the things we'll obviously spend quite a bit of time on before we go into 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 [Technical Difficulty].

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. What I would say that I think on the forms piece, we were able to convert quite a few of those folks into a pass product but not everyone. I think there were a number of people who were -- whatever they were interested in, whether -- or their form or whatever they were requesting wasn't something that we could ultimately fulfill.

We doubt that some people maybe decided not to proceed. But actually, I think in total, the forms were a nice contributor to our numbers, but it wasn't the total that we announced in September, which isn't a huge surprise to us. I think on the downgrade, no, I don't think downgrading was a material driver.

This year, I think the effective pass price or the difference between units and revenue was much more impacted by the fact that we had a lot of new people coming into very well frequency products. And that brought down the kind of average yield, but it wasn't necessarily that we saw huge 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. I mean, so we did not see any kind of impact broadly on the program. I think that we definitely saw better strength in outside the Northeast than inside the Northeast, I think, at the end. But as whether that's -- that has something -- I mean, obviously, we still saw very good growth in the Northeast.

So whether that was just timing or whether that was because of restrictions, I don't know, but we did not see any material decline or change in trajectory as we went into the final deadline that we -- at all, and certainly nothing that we would attribute to what we're seeing on COVID.

Now that said, I think in terms of ultimate visitation to the resort from either pass holders or paid ticket holders, it's still our belief that we will see a material impact there while these COVID restrictions are in place. But again, I guess that's to be seen..

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 season for this year?.

one, be prepared as best as you can.

Obviously, this is such a unique environment that it's really tough to be prepared on everything and to try and forecast everything that could happen, but I think we felt like one learning was, yes, the better we could get on systems, the better we could get to operate through whatever environment was thrown at us, it was critical.

I think we also saw in Australia that, that there was still demand. Even in the middle of the pandemic there, there was still demand to come to the resort. There was still demand for passes.

I think that gave us confidence that if we gave people the right time, if we again leaned on our credit approach, at the coverage, something that we introduced in Australia too, that ultimately, those things would really help the business.

And then I think insight, we took a lot of insights from all kinds of things from our Australian resort that I think really helped us plan.

So there are a lot of data points that we took from -- especially compared to that we used, whether it was on pass sales, whether it was on who was going to show up, who wasn't, whether it was on how to do food service, whether it’s how to ski school. So I think all of that gave us an advantage.

And by the same token, we opened Keystone as our first resort, and I think all 34 of our resorts in North America were immediately getting learnings from Keystone and Breckenridge open, immediately getting learnings from Breckenridge.

So I think our mountain ops team is doing a terrific job of really using this as, yes, who can we learn from what? So that's, again, very positive, I think, for us as we try and navigate the tough environment..

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

I actually did have a -- that's a follow-up. Look, I know it's really early in the season, so you might not have that much data, but I was just wondering, given all the restrictions, we hear certain anecdotal things.

So just wondering if you could talk about your satisfaction scores so far to the extent there are any?.

Oh with guests? Yes. I think it's definitely too early. Tough to comment on. I think we -- I think -- but anecdotally, I think there are a lot of people. One, who are thrilled to be outside to be skiing, people who are just looking at this as a great opportunity for them, their family, their friends to be together.

I mean, again, I think a lot of the people who I know talk to over time, I mean, these are obviously people who are more accustomed to skiing, everybody still wants to come up or go to whatever resort they can go to.

So I think having have limited options over a long period of time, I think people feel like this is one that they want them and their family to still pursue. There's definitely chatter about mask wearing.

We are doing our very best to have very strict compliance with face covering but obviously, just like everybody else, that is a -- that's going to probably remain a challenge over the whole season.

But I think we now have the most alignment we've ever had with all of our local community partners in terms of -- yes, it's clear, there'll be -- these are things we have to do. I think people also understand that we can't -- that there are certain things we can't deliver, and I think they get that.

I think one of the things we mentioned in the release and we're going to talk about a little bit more as the -- we have a lot of people with questions that are calling our call center, trying to talk to our reservation agents and things like that. We've been overwhelmed and really don't have the infrastructure to fully support that.

I think that's been a -- probably the biggest challenge on the guest service side that we've seen. One that we're obviously going to address and fix and just couldn't do that in time for this fall. But I would say, broadly speaking, we feel really good about where we sit, given, again, the environment that we're dealing with..

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..