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

Thank you. Good afternoon, everyone. Welcome to our fiscal 2021 third quarter earnings conference call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer.

Before we begin, we 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 with our remarks on the call are made as of today, June since 2021, and we undertake no data 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 table included with our press release, which, along with our quarterly report on Form 10-Q we 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 2021 third quarter results.

Given the continued challenging operating environment as a result of COVID-19, we are very pleased with our overall results for the quarter and for the full 2020, 2021 North American ski season.

Results continued to improve as the season progressed, primarily as a result of stronger destination visitation at our Colorado and Utah resorts, including improved lift ticket repurchases relative to the fiscal 2021 second quarter results. Excluding Peak Resorts' total visitation at our U.S.

destination mountain resorts and regional ski areas for the third quarter was only a down 3% compared to the third quarter of fiscal 2019.

Whistler Blackcomb's performance continued to be negatively impacted due to the continued closure of the Canadian border to international guests, including guests from the U.S., and was further impacted by the resort closing earlier than expected on March 30, 2021, following a provincial health order issued by the government of British Columbia.

Whistler Blackcomb's total visitation for the third quarter declined nearly 60% to the third quarter of fiscal 2019.

While visitation and revenue trends improved throughout the quarter, our ancillary lines of business continue to be significantly and negatively impacted by COVID-19-related capacity constraints and limitations, particularly in food and beverage and ski school.

We maintained disciplined cost controls throughout the quarter and continue operating our ancillary lines of business at reduced capacity. Now I would like to turn the call over to Michael to further discuss our financial results and fiscal 2021 outlook..

at Tue Jun 8 23:54:00 2021 ] or $6.72 per diluted share for the third quarter of fiscal 2021 compared to net income attributable to Vail Resorts of $152.5 million or $3.74 per diluted share in the prior year.

Resort reported EBITDA was $462.2 million in the third fiscal quarter, which compares to resort reported EBITDA of $304.4 million in the same period in the prior year.

The increase was primarily due to strong North American pass sales growth for the 2020-2021 ski season, including the deferral impact of approximately $120.9 million of pass product revenue and $2.9 million of related deferral costs from the third fiscal quarter of 2020 to fiscal 2021 as a result of the passover credits offered to 2019-2020 North American pass product holders as well as improved non-pass visitation due to the company operating for the full U.S.

ski season in the current year with particularly strong demand at our Colorado and Utah destination resorts. Resort-reported EBITDA margin for the third quarter was 52%, exceeding both the prior year period of 43.9% and fiscal 2019 third quarter of 50.2%.

These results reflect our rigorous approach to cost management as well as a higher proportion of lift revenue relative to ancillary lines of business compared to prior periods. Now turning to our outlook for fiscal 2021. Net income attributable to Vail Resorts, Inc. is expected to be between $93 million and $139 million for fiscal 2021.

We expect the resort-reported EBITDA for fiscal 2021 will be between $530 million and $570 million, and we expect the resort-reported EBITDA margin for fiscal 2021 will be approximately 28.9% using the midpoint of the guidance range.

Our guidance assumes all of our operations are open and aligned with current health and safety protocols and capacity restrictions. Current demand trends continue.

We experienced normal weather conditions throughout the Australia's East season and North American summer season, and there is no impact from potential COVID-19-related shutdowns or lockdowns. The guidance specifically assumes no impact from potential demand or operational disruptions associated with the current lockdowns in Victoria, Australia.

We continue to maintain significant liquidity. Our total cash and revolver availability as of April 30, 2021, was approximately $2 billion, with $1.3 billion of cash on hand, $419 million of U.S. revolver availability under the Vail Holdings credit agreement and $203 million of revolver availability under the Whistler Credit Agreement.

As of April 30, 2021, our net debt was 2.8x trailing 12 months total reported EBITDA.

We remain confident in the strong cash flow generation and stability of our business model, and we will continue to be disciplined stewards of our capital with a focus on high-return capital projects, continuous investment in our people and strategic acquisition opportunities.

While we are not reinstating the dividend this quarter, we remain committed to returning capital to shareholders, and our Board of Directors will continue to closely monitor the economic and public health outlook on a quarterly basis to assess the appropriate time to reinstate the dividend. I'll now turn the call back over to Rob..

at Wed Jun 9 04:41:00 2021 ] We also plan to add a new 4-person high-speed lift at Breckenridge to service -- to serve the popular peak 7, replace the Peru lift at Keystone with a 6-person high-speed chairlift and replace the Peachtree lift at Crested Butte with a new 3-person fixed grip lift.

At Okemo, we plan to compete a transportational investment, including upgrading the Quantum lift from a 4-person to a 6-person high-speed chair lift and relocating the existing 4-person Quantum lift to replace the Green Ridge 3-person fixed grip chairlift.

These investments will greatly improve uplift capacity, further enhance the guest experience and complete our $35 million capital plan for the season. We remain highly focused on investments that will further our company-wide technology enhancements to support our data-driven approach, guest experience and corporate infrastructure.

As part of these efforts, we are continuing to invest in resources and technology to improve our customer service experience, including significant staffing increases in our call centers and self-service technology that will provide our guests the ability to better manage their own accounts.

We will also continue to invest in ongoing maintenance capital to support infrastructure across our resorts. As we head into next year, we know that talent and staffing will be critical for our success, as it always is.

And we have announced that we will be raising our minimum entry wages in Colorado, Utah, Washington and California to $15 per hour while also making material increases in the entry wages of our Eastern resorts, which will be set based upon their local market dynamics.

This will be our largest discretionary investment in operating expense this year, which we believe will be offset by a portion of other savings we will carry from this year into next year.

As we transition to summer operations at our North American resorts, I would like to take a moment to thank all of our employees for their passion and tireless dedication to delivering a safe and exceptional experience to our guests during full 2020/2021 North American ski season, despite the incredible challenges of the COVID-19 pandemic.

I'm deeply grateful for the commitment our teams continue to demonstrate throughout these unprecedented circumstances. 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 Shaun Kelley with Bank of America..

I just wanted to start on, obviously, the pass sales. Rob, there are a couple of data points in there that were really interesting.

I wanted to start with the product mix, if you could talk a little bit about the meaning of sort of that effective price statistic you gave, the 10%, and how that sort of lines up versus the kind of down 17% gap that we see.

Is there a sort of a like-for-like difference in that? Or could you just help explain that a little bit more clearly?.

Yes. It's really just, I think, when you do the percentage, right, if you take our units up 50%, right, and then take an EPP down 10%, you wind up with revenue up 33%. So that's a little bit how the math works.

But what I would say is that the -- I think what we saw was something that we did expect, which is that people trading up from lower-priced products to higher-priced products. And we saw a material increase in kind of what I would call, like, the net trade up.

So every year, we have people who trade up from one pass product to another or trade down from one pass product to a lower-priced pass product as they renew.

And this year, we saw a material increase in that net number, which does not surprise us, and that obviously significantly ameliorated the decline, the 20% kind of price reduction and the revenue with that..

Got it. And just the other question I have is the sort of cadence on the balance of the season from here. Sometimes you give a little color, but it's obviously very early in the period that we have remaining.

Could you just help us think through some of the puts and takes on kind of what's coming when you think about the sort of bigger deadline that you had set last September, the introduction of some of the new products, and that has made things a little bit more back-half loaded.

Just kind of how should investors sort of be prepared for these numbers to balance out across the season? And then specifically, your remark on the majority of the pass selling season ahead of you.

Is that just a comment in days like literally, there's the majority of the day left? Or is that in terms of relative to your historic mix, you actually sell more than the majority of your products in the remainder of the period?.

Yes. I think it's -- actually, I haven't counted today, but I think it's both potentially, but yes, it's definitely more focused on, historically, we do more pass sales past Memorial Day than before.

But what I would say, though, is, yes, on the balance of the season, obviously, last year, we had a very significant Labor Day -- or it wasn't exactly Labor Day but in September deadline. I think this year, when we report results in our September earnings release, we will largely be comped from last year.

Now I think last year, certainly, we had another driver, right, of those sales in September, which was that the credits that we issued to people last year expired. So if you were a renewing pass holder, you had a huge a reason to renew last September.

And this September, there'll be a price increase or there were spring pass sales, which gave you spring benefits, but probably for many people, not as significant as the credit that was there last year. So that will be something that's not exactly comp even when we get to the end of September.

I think the new information that we've -- the new products that we've put out, if you think, yes, well, in order to the benefit of the second half of the season, especially the more limited resort option on Epic Day Pass. And I do think, last year, as we talked about at the end of the year, we did a lot of new business in Epic Day Pass.

These are folks that typically tend to buy in the fall. We definitely see that be the predominant selling season for Epic Day Pass. So again, I think that offers an opportunity as we go to the fall. And I think maybe the only other thing is, obviously, the price reduction created a fair amount of enthusiasm in the spring.

And how much of that may have pulled some sales either renewers or even new people into the spring, we won't know until we actually get through the fall, but I think there are some trends that go both ways as we head into the rest of the selling season..

We'll take our next question from Ben Chaiken with Credit Suisse..

On M&A, you guys saw a lot of growth from -- in the past, outside of just returning customers, I would guess, presumably from some new geographies as well.

Does this inform your view of M&A in any way that's worth highlighting? Obviously, not like whether you want to do it or not, but more so like are there any geographies that are any more or less compelling after getting a look at the most recent pass data of 15 units?.

I think we feel like the dynamics that we gleaned from the results to date, I think, support our approach in the past around pass sales. But yes, as you mentioned, I think when we -- when we've done M&A before and we open up new markets, obviously, we're bringing on that resort's historical pass sales.

But then typically, we can grow on top of that, right? And I think we've seen that pretty clearly for most of the acquisitions that we've done. In part, it's also because we're picking our markets very selectively, knowing where we believe we can have an impact by having a local resort, knowing the market that's there.

So I don't think that means that any resort we would buy necessarily has that impact, but we're pretty thoughtful about other than difference about it. So I would say that our results to date, I think, just really reconfirm that strategy that we've had.

And our approach to M&A remains the same, which is we absolutely are aggressively looking for opportunities in different markets that we think will add value, but we're going to remain disciplined and only do things that we think will really make a difference..

Got you. Okay. That's helpful. I just felt like it sounds like there was a lot of strength from passes sold in the Northeast. I just didn't know if that made -- if you're even that much more convicted on the geography or not, that's kind of where I was going with it..

I mean, yes, I would say we certainly have a lot of conviction on the geography. At the same time, yes, I think we also have a lot of resorts in the geography. So I think we're always looking at which resort would be additive versus just looking at where we see the incremental opportunity.

And it doesn't mean that you should buy more resorts in exactly the same geography. So in our minds, right, it's like -- it's important to be selective. And so yes, there's no doubt that we have a lot of conviction about the Northeast and the mid-Atlantic, for that matter. And we feel like they've added to our efforts greatly.

And at the same time, yes, we've got to pick the right opportunity..

Got you. That's super helpful. And then one more, if I may. Just break -- it sounds like there was a lot of strength in both the returning pass customers as well as the new pass holder side of things.

On the new pass holders, is there any way to break this down? Like, how much came from basically new to the database entirely as well as returning old pass customers versus the conversion from single day to pass? If that didn't make sense, I can try and say it differently..

No, no, I understand. And obviously, yes, we have that data, and we have that insight, but we're not providing specifics on that. But I would say, I think we saw, yes, a lot of strength across all of those pieces, right? So I think we saw strength on lapsed pass holders. People who once were pass holders for us coming back.

I think we saw strength on people who were lift ticket buyers previously, either last year or before that. I think we also saw strength what we might call prospects, somebody who's not in our database.

So I think that a lot of strength in new, which was terrific to see especially in the spring because, typically, you see more of that strength in the fall. And so it's great to see it here, whether some of that, again, like I said earlier, was pulled forward or will be additive to what we do in the fall, it's not yet clear.

But either way, it's a positive for us because we always want to move folks as early into the selling cycle as we can..

We'll take our next question from Jeff Stantial with Stifel..

I wanted to follow up on the question right there on the new pass holders base.

Specifically on the customers that are completely new to your database, just curious, what have you learned about this new cohort as they enter the database? Are there any interesting differences here versus the existing pass holder base? Just any high-level color there would be helpful..

Yes. At this point, I mean I think, yes, we're not going to share breakdowns on kind of demo details on those folks, but I would say it was fairly broad-based in terms of the strength that we've seen.

And I think we'll probably have more information on that by the time we get to the selling -- end of the selling season and maybe even more information as we go through the season itself and see how their behavior translate throughout the season.

So at this point, I don't think there's any specific thing to share, but just, yes, the broad-based strength that we saw in that overall cohort of new people coming in..

Okay. Great. Understood. And then for my follow-up, I recognize this likely depends in part on how the past selling season trends this year, but I wanted to just get some initial thoughts on how you might think about pricing for the Epic Pass next season and beyond.

Now that you've sort of reset the baseline with a 20% cut, do you think that you might return to more ratable, call it, mid-single-digit price inflation moving forward on this new lower base? Or do you think based on some of your recent learnings that something more tempered, maybe inflationary or something like that might better drive this next level of advanced commitment conversion?.

Yes. I think we definitely saw this -- the price decision this year as a discrete opportunity. And we felt like we -- it was a substantive change and one that's aligned to the data that we were looking at. And I think we've also candidly -- we do believe in the long run that having a ratable approach to pricing doesn't make sense.

And I think when you look over the previous 12 years that we've had the Epic Pass that certainly was our approach. And I don't think the pricing decision this year necessarily changes that view. I think it was more, yes, that we had good data, and we felt like we could have a reset.

And yes, I'm not -- that's the broad takeaway, but of course, yes, we're not committing at this point to what our pricing will be in the future. But yes, I don't think that people should read the decision this year necessarily takes us away from our longer-term approach of providing more ratable and price stability to our guests and to the product..

Our next question comes from Brandt Montour with JPMorgan..

So my first question is just on the competitive landscape. I mean I think it's -- I think we're all sort of assuming at this point that Icon isn't going to match your price cut. And I know the retention data that you have so far is really strong.

Do you guys think that you are gaining share at all from their system, maybe losing share at the high end, maybe a little bit on the margin? What's your sense from the data?.

Very hard to tell. I think there's been an opportunity over the last number of years that as Icon came into the market, I think the pass market grew quite a bit, and I think it was a real positive for the overall industry.

And I'd like to think that, obviously, our decision this year ultimately will bring even more people into the pass market, providing more stability to the overall industry. And after Icon came in and launched, we continued to see very strong growth in pass sales in our own products. Obviously, we have no insight into how they performed this year.

So I think what I would say, we feel good. I think we feel like we made real progress in almost every category that we were hoping to and aligned with all of the strategies and opportunities that we felt were there when we first launched the new approach.

And so we feel good at all about that, but yes, it's hard for me to comment on market share dynamics because I'm not aware of their trending..

Okay. And then just on the balance sheet, you have $1.3 billion of cash on hand.

What are the priorities for this excess cash? And what does the Board need to see before reimplementing the dividend? Is it temporarily hindered or tied to potential M&A opportunities, like in terms of just keeping plenty of dry powder? Or is there -- how should we really think about that?.

Yes. Thanks. I think our capital allocation priorities continue to be quite consistent, which is continuing to reinvest in the business. And in our comments, Rob outlined some of the ways in which we're investing in the resort and technology in the coming year, which we'll continue to prioritize.

I think, certainly, second is strategic investment opportunities. And so we do feel like we will continue to be aggressive on acquisitions, as Rob said.

And I think we also feel like with the current state of the balance sheet and the liquidity that we have and the access to the capital markets, we certainly have a lot of flexibility to pursue those acquisitions. So feel like we're in a very comfortable spot with that.

And I think as I mentioned earlier, we're going to be focused on the dividend as we look at the outlook. And obviously, we feel very good about the business' performance and the outlook, as we've described it, but we'll continue to monitor that with the Board as we go into the next quarters and evaluate that relative to the dividend..

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

I guess given where you appear to be on volume, given your initial pass sales update, and I know it's early, and you have a lot more to go, but it sounds like it's well ahead of your own internal expectations.

Is there any refreshed thoughts about having to move to some kind of more permanent reservation system? Or any other thoughts on how this is going to impact capacity next season?.

Yes. I don't -- no, it doesn't really change our view. We don't -- assuming that nothing changes on COVID-19, we're not anticipating having a reservation system for accessing our mountains. And we feel very good about the experience for next year.

We do have a lot of things that will be in the works, and we'll be talking more about as we get into the fall around how we manage capacity better, a lot of things that we learned over this last year.

But I think it's -- always important to remember that a lot of the folks that are -- that we're seeing the growth from, of course, are coming from people who were previously paid lift ticket holders or renewing pass holders. We're also seeing growth in people just upgrading their pass in terms of buying a higher value pass.

So all of those things are critical. We also see pass holders spread their visitation out there throughout the season, especially in some of our key time periods. Of course, there's limitations when it comes to lodging and other pieces.

So what we tend to see is that people with passes will adjust their vacation, even at Christmas, right, moving to the 23rd and 24th and 25th or moving from the -- ending on the 1st, ending on the 2nd or 3rd. Those things are all hugely incremental to us and great opportunities.

And so -- and I think are actually positive for the resort and positive for the entire ecosystem and the community and just to try and continue to spread the capacity out throughout the season.

And so no, we feel very good about this, and we're feeling good about absolutely the experience for next season and a lot of things, including new lift and new process improvements that we're going to have that I think will make it, yes, the experience of a life time, which is, of course, our commitment to every day..

Okay. Great.

And you've obviously given pass holders a really nice value proposition on lift ticket, but any opportunity to take pricing on some of the list pricing or menu pricing on things like ski school or dining given how strong the consumer and the economic environment should still be in the fall?.

Yes. I think we -- yes. We price all of these products independently. And for -- many of the products are priced really at the resort level based on the local unique dynamics that each resort has.

And I think that even if sometimes we lean in and are a little bit more aggressive on price in some areas, we still try and keep, to my earlier comments, a more ratable, more consistent approach to price increases. We feel like that's important. We don't want to see huge gyrations.

And certainly, there are other products out there, certainly like the room rates on our hotel move quite a bit, right, week-to-week, month-to-month, day of the week based on the season that we're in. And of course, we're following the rest of the hotel market in that respect.

But a lot of our other products, we tend to -- yes, kind of certainly in a strong economic environment, we'll be a bit more aggressive, but nothing that would gyrate because we don't think that that's good for the overall consumer experience..

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

at Wed Jun 9 04:41:00 2021 ] A couple of questions here. In light of Mount Snow now instituting paid parking for parking lots that were formally free for the upcoming season, I have 2 questions in this regard.

Will you be expanding the paid parking initiative to other resorts? And along those lines, will there be any other initiatives for parts of the ski experience that may have been free in previous seasons, which could now become a tack-on charge for the skier visits?.

Sure. I think each one of our resorts goes through their own assessment, as I just mentioned, certainly on pricing. And I think with parking, that is a component that we do think is sometimes important for certain resorts at certain times to help ration capacity. I mean it's not -- in the end of the day, we want to incent people to carpool.

We want to incent people to take other forms of transportation when they can. And we do use that at a number of our -- some of our resorts have paid parking at the base, some of them don't. And I'd say, more and more you're seeing not just us as the resort operator, but many of our communities instituting paid parking.

I think you're seeing that outside the resort environment in many cities. So to us, it's really just one component. It's -- parking for us is not a -- it's not a big moneymaker whatsoever. So in terms of it being material to our overall financial performance or valuation of the company, it's not at all.

It's really something that is used by the local resort to assess how to best manage the capacity. And so we take it on a resort-by-resort basis..

Okay. I guess what I was more meaning that this is sort of a new tack-on charge.

Will there be other tack on charges for this coming season that you're working on, not just that resort, but items that maybe had, again, in the past been free for usage?.

Again, every resort looks at each of their dynamics and makes decisions that are important to manage the capacity of their own unique resort. Obviously, to the extent that we're making changes, we'd like to try and get those out as early as possible. And yes, so to the extent that those come up, obviously, we'll communicate them when we do.

But again, not really material to the overall performance here. Not something that I would see that is -- no, it's definitely not a strategy of ours at any corporate level. It's a local kind of unique decision-by-decision. And even on parking, we have parking lots across some of our resorts.

Some of them, yes, may add a charge for parking to help manage capacity. Some of them remain free. So we take a kind of a situation-by-situation approach..

Okay. I was just curious if this was some, yes, part of like the macro strategy to make up in the discount pass price by adding on additional items..

No, no. Unfortunately, that's not the -- that's not going to do it. And yes, we're really more focused on all those things we talked about upfront in terms of how we drive pass prices..

Understood. And then just one quick question here. You had mentioned instituting a $15 minimum wage at some of your resorts.

What was the comparable wage last season for those resorts? How much percentage?.

Yes. Some of the resorts were -- I think it's -- obviously, California, probably were the highest. Washington, a little bit below California. And Colorado and Utah, somewhere around the mid-$12, $12, $15 an hour was our lowest entry wage. So especially for those 2 resorts, it's a pretty meaningful increase.

And again, it will be resort by resort in the East, but they'll also see some pretty meaningful increases in the non-entry wage as well..

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

at Wed Jun 9 04:47:00 2021 ]?.

at Wed Jun 9 04:48:00 2021 ] In terms of incrementality, I think, no doubt, doing something in Japan would have immediate benefit, I think, to our connection between Australia, Japan, Canada and the U.S. And so I think that would be a stronger immunity boost. In Europe, I think, less so because we don't see those same visitation patterns.

On the other hand, the market in Europe is much bigger. So the longer term opportunity, I think, in Europe is quite strong, but of course, it will take more time to get going. And it's more about creating a unique platform in Europe on a stand-alone basis that have been some overlap as we've highlighted with the U.K. and the U.S.

and even in -- certainly, in South America and other growing parts of the world economy. So yes, very much still on the radar and obviously, just hasn't been front and center as much as some other things over the last couple of years..

Our next question comes from Laurent Vasilescu with Exane BNP Paribas..

I wanted to follow up on Patrick's question with regards to the minimum wage increase. Curious to know what you're seeing in the labor market. Is there enough talent out there to hire? And do you anticipate that the U.S.

border will reopen and you can potentially hire foreign talent as well for the upcoming season?.

I think it's definitely a challenging labor market right now. I think in some respects, right, it was before COVID hit. And so I think you're seeing some of that pick up as we come out of the pandemic. I think for us, it's certainly a concern for the summer. It's not as big a concern, of course, as it is for us in the winter.

We are hopeful that we will be able to return to bringing in workers from abroad through our J-1 Student Visa program and the H-2B program for certain select position as we did in the past. But obviously, we're also very committed to continuing to grow and improve all of our recruiting efforts in the U.S.

That was something that I think was critical, even with the staffing challenges of the couple of years before COVID. We continue to improve our -- both our competitiveness and the way we went about recruiting, and that helped us quite a bit as we went into the '19 and the '20 ski season.

And I think we're going to be leveraging and leading on that again as we go into next year, and obviously, felt that it was critical for us to have a more aggressive entry wage and increased wages even above that level. So yes, not only are we getting talent, but getting the best talent and getting kind of out front of the current trend..

Very helpful. And as a follow-up, I wanted to ask about Australia. I think your guidance specifically assumes no impact from the lockdown.

Just curious to know with boots on the ground there, what you're seeing with your 3 resorts across Australia? And why was there no impact assuming guidance for 4Q? And then on the -- in terms of unit growth, I think the passes were up 43% on a 2-year stack.

Anything interesting you'd like to share with regards to that, just the breakdown of the consumer? Is it also similar to what you saw in the U.S.

so far?.

Yes. I would say, one, I think Perisher opened. And so I think we're seeing good enthusiasm and engagement in New South Wales and the Sydney market to Perisher. And so I think feeling very good about that. I think it's hard to say.

Obviously, I don't want to prejudge what's going to happen in Victoria and in the Melbourne market, but they did relax some of the restrictions for the rest of the state outside of Melbourne. And right now, we are planning to open on schedule. Of course, it's, yes, subject to as things unfold there, but we're optimistic.

I think we feel like there's a good opportunity for us to have a very good season all -- across all 3 resorts. And I think the, yes, broad-based strength. So I would say that, obviously, with that kind of unit growth, we're seeing growth across, yes, lots of just markets and consumer segments. And yes, I feel good.

I think it's similar in some ways to the pent-up demand that you have here. I think we also were a bit very competitive in terms of the way we price our products in Australia, like we are here. And obviously, the border in Australia is closed. So travel outside of Australia is more limited.

And so we're anticipating stronger domestic travel for the country, at least for the time being..

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

The first question I have is around ancillary services coming back.

I'm just wondering if you could give some color on how the experience, either for dining or other ancillary services, has been maybe more efficient or the user experience has been digitized? Just trying to get a sense of what margin impact could look like, conscious of the ancillary services being lighter through COVID, but margin this quarter coming in where it was.

And then I have a follow-up on labor after that..

Yes. I think on margin it's important to remember, right, that part of the margin improvement this year was, of course, by us being disciplined around costs. Some of it was also because we did really well in the highest margin business, which is lift ticket, and have more challenges in lower-margin businesses.

Now our ancillary businesses are actually all high-margin businesses. They're just lower margin than the flow-through that we get from ticket sales. I think we've absolutely learned quite a bit, particularly about, I'd say, our dining business, our SMB business.

And absolutely, we're going to implement a number of improvements and opportunities as we go into next year, I'd say, around efficiency, not really around necessarily cost efficiency but around profit efficiency.

And I think using -- having the reservation system that we did have for all of our dining -- or most of our dining establishments for the past year, I think, gave us a lot of insight on a lot of factors that we didn't know before. So I think we can use that.

Even if we don't use the reservation system in the same way again, we can actually use that data as we go into next season. So we feel, yes, very good about that. And I think we certainly saw, I think on ski school, obviously, that business operated more close to we couldn't have the capacity and we didn't have the opportunity for class sizes.

We didn't have the opportunity for launch with the instructor in most cases. And so I think those were takeaways from the guest experience, unfortunately, for this year, but I think we -- but I would say the business -- the experience itself is much closer to what it has been historically.

So I think good takeaways and insights on that, but probably not as much given the huge disruption that we saw on F&B..

And then on labor with the current backdrop, just wondering if the bulking up on customer experienced staff, is that more a transitory trend where you're going to plateau just because of how many new pass members you're onboarding and the COVID disruption? Or is that something that you see just for the business just sort of sticking around long term?.

Yes. I think the commitment to it and the investment is obviously going to stick around. I think we're not going to go backwards to where we were before and because I feel, yes, we were understaffed and under resourced in a lot of different areas.

And of course, this past year was a unique year that in terms of the complexity with credits and with COVID and unique Epic coverage situation, but all of which, I think, made it more challenging. But as we've been clear, and as I've been clear, obviously, we are behind on that, and that was a mistake that we have to correct.

So I think going forward, yes, we likely will not see the same complexity, hopefully, because the environment will be more stable. But there's no doubt that we operated over this last pass selling deadline, which is quite strong, and a lot of people obviously coming into the deadline.

And we have great response times, both on the phone and on our chat room. And so that, I think, bodes well for us as we go to the future, and we don't want to move backwards on that. We want to make sure that we stay within -- well within industry standards and best practices on that. So yes, that's not something we're going to give up on..

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

Rob, maybe you have an example you can lean on for a resort that's seeing bad weather for a couple of seasons.

But when you look at the challenges that Whistler has seen in the past almost 1.5 years now, with the border restriction, the early reserve closures, do you have any concern about getting back to that resort either next year or beyond? And I guess, can you certainly see the resort leads, maybe share of mind developments to the season -- the camp visits for a season or 2?.

Yes. Really no concerns about that at all. I think Whistler is, yes, one of the most spectacular resorts in the world. And with an experience on so many levels, that's really unparalleled, that and a long history.

No, we feel very good that with the border opening and obviously, with good weather, which, by the way, of course, unfortunately, we didn't have a border that people could cross, but snow quality this year was certainly better than the previous year.

No, we feel -- we're quite confident actually in Whistler's long-term future and in both the resilience of the resort and in the strength that Whistler will continue to show. I think, again, it's not obviously the mountain. It's the largest ski mountain in North America.

It's the community itself and the vibrancy and the uniqueness of that community is also another huge draw for people in terms of why they come. And yes, the access that people have, some different markets outside the U.S. and certainly, Asia and Australia, we don't see that moving at all.

I think, again, prior to COVID, they were also making good inroads in Mexico, something that we were helping to support and South America. So it's just truly one of the gems, right, anywhere in the world. And it's not something -- we're not concerned at all that it's going to miss a beat once we really get past the current challenges of COVID..

[Operator Instructions] Take our next question from Alex Maroccia with Berenberg..

First question pertains to the resumption of the capital projects you outlined. There's plenty of headlines about supply chain and employment constraints these days.

Have you seen major price increases in material and labor costs that can impact the CapEx assumptions you outlined earlier this year? And then do you think it could impact your budgeting for next year?.

Yes. I don't think -- yes, we're not -- I think, as those dynamics that you're highlighting are real, and there's something we're looking at, but I don't see that at this point is something that's going to impact the overall budgeting that we gave for this year.

I think as we go into next year, possible, like we -- obviously, we don't know yet until we get there. But I think in the end, for us, it's something that we're still going to be aggressive on reinvesting in the resorts.

And there's no doubt that as we come out of COVID, there's going to be opportunity -- continued opportunity for us to improve lift in restaurant, add new terrain where we can, improve the experience, all of that. And I think if we do see some inflation, that it could be an impact, but that won't deter us from continuing to make these investments..

Okay. Understood. That's helpful. And then secondly, a less discussed topic is your real estate segment. Obviously, the housing market is pretty robust right now, and many of your mountain communities are seeing impressive price increases.

Is it possible to see a bit more opportunistic strategy with the real estate portfolio in these types of cycles?.

I think we certainly love to see that the current strength in these markets will help our -- we have, by the way, a number of projects that where we have sold the land to developers, and those developers are now working on either getting approvals to their project or actually working on construction or getting their projects off the ground, et cetera.

We are hopeful that the current market will absolutely help with that. And yes, I think to the extent that there are other projects that fit out there, we could absolutely use the current market to attract and engage with new developers. Obviously, we're not going to really go into the development business on our own.

We also think it's critical to continue to invest in affordable housing.

We think each of our communities, this another issue that I think is a barrier for many of our communities, and some of these projects can certainly have debate about whether -- where they should be or how they should be done, but our hope is in our -- we remain committed to putting capital behind and we'll focus on also getting affordable employee housing projects done to ensure that the resorts remain livable and accessible to a wide range of people..

Thank you. At this time, I would like to turn the call back over to Rob Katz for closing remarks..

Thank you, operator. This concludes our fiscal 2021 third 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 today, and goodbye..

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