Extreme forecast: Vail Resorts officials say they are assuming a “return to normal weather conditions” this winter, but what does that mean?

The timing wasn’t great — in a recent call with investors, Vail Resorts officials said the company’s earnings projections for next season included an “assumed benefit of a return to normal weather conditions.”

But the conversation took place on Thursday afternoon, just hours before Hurricane Helene made landfall, reminding Americans that weather conditions in recent years have been anything but normal.

Vail Resorts CEO Kirsten Lynch and COO Angela Korch had some explaining to do to investors. It was the first time analysts could hear from Vail Resorts officials since the close of the 2024 fiscal year on July 31, and the company beat original earnings forecasts by more than $100 million.

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Lynch said one of the main factors in the target being missed was severe weather conditions.

“Skier visits were down 9.5% year-over-year due to unfavorable conditions at our North American and Australian resorts,” Lynch said.

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Lynch said another factor was also at play, what she called the industry’s “post-Covid-19 normalization,” which occurred in 2023-24 “after record visits in North America during the 2022–2023 ski season.”

However, in this record year of visits, Vail Resorts also did not provide its original earnings forecast, and company officials also cited severe weather conditions in explaining to investors why the company lowered the guidance from the range of $893 million to $947 million issued in December 2022.in the range of $831 million to $859 million, released in March 2023.

A year earlier, in January 2022, Vail Resorts also stated that the season had a slow start due to challenging early season conditions that were worse than expected.

In January 2021, Vail Resorts reported that its resorts in Colorado, Utah and Tahoe experienced well below average snowfall levels during the holiday season, impacting visitation.

And in 2020, “Performances at Whistler Blackcomb and Stevens Pass were below expectations due to poor early season conditions that continued through the holiday season,” former general manager Rob Katz said at the time.

Despite this widespread reticence, Vail Resorts continues to assume the weather will return to what it calls “normal” when presenting its latest revenue forecasts to investors.

David Katz of Jeffries Investment Bank asked Lynch what “normal” meant.

“How do we think about normal weather and is there a new normal that maybe we should be thinking about?” – David Katz asked.

“We always try to budget assuming normal,” Lynch said. “Normal means: Will there be really good days? Will there be really bad days? Will there be windy days? A few frosty days? A few cold days? Some days with lots of snow? A few days with light snow?

That’s all right, Lynch said.

However, “we have no way of forecasting extreme weather conditions,” she added. “We cannot predict when it will happen or where it will happen. So normal weather accounts for weather variability for us, but something significant or extreme happens that we really can’t predict.”

While the company may not assume anything extreme will happen on the weather front in the near future, it does rely on the extreme externalities occurring throughout the climate in the form of greenhouse gases and their impact on the environment.

In a recent article in Bloomberg NewsLynch was quoted commenting on the company’s efforts to purchase more resorts, especially in Europe, to protect against climate change.

“Geographic diversity helps maintain stability in the face of climate change,” Lynch said.

Barclays Investment Bank’s Brandt Montour asked Lynch about these comments, asking whether the company is currently pursuing mergers and acquisitions offensively or defensively.

“Does (diversification) change your return goals or underwriting barriers when you think about what you would be willing to pay for prime assets in Europe?” Montour asked.

Lynch said Bloomberg focused on diversification in her comments as if it was a new strategy.

“But actually, diversification and geographic diversification have been part of our (mergers and acquisitions) strategy for a very long time,” Lynch said. “We always take this into account when making acquisition decisions – the impact of weather on the location of resorts. We will take the same approach in Europe as well, taking this into account and trying to make sure that as we expand and grow in this country, we take into account the geographical location or the impact of weather and climate change on the resorts we visit. I am interested in taking over.”