Q4 2023 Vail Resorts Inc Earnings Call

Participants

Angela Korch; Executive VP & CFO; Vail Resorts, Inc.

Kirsten A. Lynch; CEO & Director; Vail Resorts, Inc.

Brandt Antoine Montour; Research Analyst; Barclays Bank PLC, Research Division

Charles Patrick Scholes; MD of Lodging, Gaming and Leisure Equity Research & Analyst; Truist Securities, Inc., Research Division

Chris Jon Woronka; Research Analyst; Deutsche Bank AG, Research Division

Jeffrey Austin Stantial; Associate ; Stifel, Nicolaus & Company, Incorporated, Research Division

Laurent Andre Vasilescu; Research Analyst; BNP Paribas Exane, Research Division

Megan Christine Alexander; VP; Morgan Stanley, Research Division

Shaun Clisby Kelley; MD in Americas Equity Research & Research Analyst; BofA Securities, Research Division

Unidentified Analyst

Presentation

Operator

Good afternoon, and welcome to the Vail Resorts Fiscal 2023 Fourth Quarter Earnings Call. Today's conference is being recorded. (Operator Instructions). I will now turn the call over to Kirsten Lynch, Chief Executive Officer of Vail Resorts. You may begin.

Kirsten A. Lynch

Thank you. Good afternoon, everyone. Welcome to our fiscal 2023 year-end earnings conference call. Joining me on the call this afternoon is Angela Korch, our Chief Financial Officer.
Before we begin, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings, and actual future results may vary materially.
Forward-looking statements in our press release issued this afternoon, along with our remarks on this call, are made as of today, September 28, 2023, and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measures. Reconciliations of these measures are provided in the tables included in our press release, which, along with our annual report on Form 10-K, were filed this afternoon with the SEC and are also available on the Investor Relations section of our website at www.vailresorts.com.
Let's turn to our fiscal 2023 and fourth quarter results. Given the significant weather-related challenges this past season, we are pleased with our overall results for this year with strong growth in 2022, 2023 North American ski season visitation and spending compared to the prior year, further supported by the stability created by our advanced commitment products. The return to normal staffing levels enabled our Mountain resorts to deliver a strong guest experience, resulting in a significant improvement in guest satisfaction scores, which exceeded our pre-COVID levels at our destination mountain resorts.
Visitation growth was achieved through strong growth in pass sales, the addition of Andermatt-Sedrun in Switzerland, the full year impact of Seven Springs Mountain Resort, Hidden Valley Resort and Laurel Mountain Ski Area acquired December 31, 2021, and record visitation and resort net revenue in March and April. Ancillary businesses, including ski school, dining and retail/rental experienced strong growth compared to the prior period when those businesses were impacted by capacity constraints driven by staffing and in the case of dining by operational restrictions associated with COVID-19.
Our dining business rebounded strongly from the prior year, though underperformed expectations for the year as guest dining behavior did not fully return to pre-COVID levels following 2 years of significant operational restrictions associated with COVID-19. Our overall results through the 2022, 2023 North American ski season highlight the stability of the advanced commitment from season pass products and a season with challenging conditions including travel disruptions during the peak holiday period, abnormal weather conditions, which significantly reduced operating days, terrain availability and activity offerings across our 26 Midwest, Mid-Atlantic and Northeast resorts and severe weather disruptions at our Tahoe resort. This past season, approximately 75% of skier visitation at our North American resorts, excluding complementary visits from pass holders who committed in advance of the season. which compares to approximately 72% for the 2021-2022 North American ski season.
Results in our fourth quarter declined from the prior year, primarily driven by the company's fiscal 2023 investments in employees as well as below average snowfall and snowmaking temperatures, that limited terrain availability during the Australian winter season. North American summer operations also underperformed expectations driven by a combination of lower demand for destination mountain travel which we believe was primarily driven by a broader shift in summer travel behavior associated with a wider variety of vacation offerings available following various travel restrictions in the prior 2 years and weather-related operational disruption.
Turning now to our 2023, 2024 season pass sales. Advanced commitment continues to be the foundation of our strategy, shifting guests from short-term refundable lift ticket purchases to a nonrefundable commitment before the season starts in exchange for a greater value. We are pleased with the results of our season pass sales to date, which demonstrates the compelling value proposition of our pass products, our network of mountain resorts and our commitment to continually investing in and delivering a strong guest experience.
Through September 22, 2023, North American ski season pass sales increased approximately 7% in units and 11% in sales dollars as compared to the period in the prior year through September 23, 2022. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and the U.S. dollar in both periods for Whistler Blackcomb pass sales.
Relative to the 2022, 2023 season, the company achieved strong loyalty among its pass holders with particularly strong pass sales growth from renewing pass holders while also growing pass sales among new pass holders. The company successfully grew units across destination, international and local geographies with the strongest unit growth in destination markets, including the Northeast, and across all major pass product segments with the strongest growth -- product growth in regional pass products and the Epic Day pass product as lower frequency guests and local Northeast guests continue to be attracted by the strong value proposition of these products. The business also achieved positive growth in the Midwest and Mid-Atlantic which, after challenging conditions last season highlights the stability of our advanced commitment program, loyalty of our guests and significant opportunity to drive past penetration in the Midwest, Mid-Atlantic and the Northeast.
Cash sales dollars continue to benefit from the 8% price increase relative to the 2022, 2023 season, particularly offset -- partially offset by the mix impact from the growth of Epic Day Pass products. As we enter the final period for season pass sales, we expect our December 2023 growth rate may moderate relative to our September 2023 growth rates given the impact of moving purchasers earlier in the selling cycle.
We continue to prioritize advanced commitment as the best way for guests to access our mountain resorts. Similar to prior season, lift ticket sales will be limited during the 2023, 2024 season in order to prioritize guests committing in advance with season passes and to preserve the guest experience at each resort. We expect these lift ticket limitations will further support our resorts and communities on peak days and we do not anticipate that the limitations will have a significant impact on our financial results, consistent with prior seasons. As a reminder, no reservations are required at any of the resorts on the Epic Pass for pass holders other than at our partner resort Telluride.
Now I would like to turn the call over to Angela to further discuss our financial results and fiscal 2024 outlook.

Angela Korch

Thank you. As Kirsten mentioned, given the significant weather-related challenges this past season, we are pleased with our results for the fiscal year 2023. Net income attributable to Vail Resorts was $268.1 million or $6.74 per diluted share for fiscal year 2023 compared to net income attributable to Vail Resorts of $347.9 million or $8.55 per diluted share for fiscal 2022.
The decrease in net income attributable to Vail Resorts compared to the prior year was primarily due to the large gain on disposal of fixed assets in fiscal 2022 and an increase in fiscal 2023 expense associated with a change in the estimated fair value of the contingent consideration liability related to our Park City resort lease. Resort reported EBITDA was $834.8 million in fiscal year 2023 compared to resort reported EBITDA of $836.9 million in the prior year.
Now turning to our outlook for fiscal 2024. As we head into our fiscal year, we are encouraged by the strength in advanced commitment product sales and remain committed to delivering a strong best experience while maintaining cost discipline. We expect meaningful growth for fiscal 2024 relative to fiscal 2023, with strong resort EBITDA margin. Our guidance for net income attributable to Vail Resorts is estimated to be between $316 million and $394 million for fiscal 2024. We estimate resort reported EBITDA for fiscal 2024 will be between $912 million and $968 million. We estimate resort EBITDA margin for fiscal 2024 to be approximately 31% using the midpoint of the guidance range.
Fiscal 2024 guidance includes an expectation that the first quarter of fiscal 2024 will generate net loss attributable to Vail Resorts between $191 million and $168 million, and resort reported EBITDA between negative $154 million and negative $104 million. At the midpoint of the guidance range, first quarter fiscal 2024 resort reported EBITDA assumes a negative impact of approximately $46 million compared to the first quarter of fiscal 2023, excluding exchange rate impacts, primarily driven by cost inflation, which includes $7 million impact of our fiscal 2023 employee investment, which went into effect in October of 2022, lower results from our Australian resorts from the continuation of the weather-related challenges that impacted terrain in the fourth quarter of fiscal 2023 and lower results from North American summer operations from the continuation of the lower demand for destination mountain travel experienced in the prior fiscal quarter.
Relative to fiscal 2023, fiscal 2024 full year guidance also reflects the negative resort reported EBITDA impact of approximately $3 million as a result of the company's exit of its retail and rental locations in Telluride and Aspen in fiscal 2023.
The guidance assumes a continuation of the current economic environment, and normal weather conditions for 2023, 2024 North American and European ski season and the 2024 Australian ski season. The guidance assumes an exchange rate of $0.74 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, an exchange rate of $0.64 between the Australian dollar and U.S. dollar related to the operations of Perisher, False Creek and Hotham in Australia and an exchange rate of $1.10 between the Swiss Franc and the U.S. dollar related to the operations of Andermatt-Sedrun in Switzerland.
The current fiscal 2024 exchange rate assumptions result in an expected $5 million negative impact relative to fiscal 2023 results and an expected $10 million negative impact relative to our original fiscal 2023 guidance provided in September of 2022.
While we are cognizant of the broader macro economic outlook remains uncertain, which we will continue to monitor heading into the upcoming season, we believe that we will continue to benefit from the stability and resilience of the business model particularly with the strength, scale and affordability of our advanced commitment products and the diversification of our resort network. Our balance sheet remains strong, and the business continues to generate robust cash flow. Our total cash and revolver availability as of July 31, 2023, was approximately $1.2 billion, with $563 million of cash on hand, and $646 million of combined revolver availability across our credit agreements. As of July 31, 2023, our net debt was 2.7x trailing 12 months total reported EBITDA. The company declared a quarterly cash dividend of $2.06 per share of Vail Resorts common stock that will be payable on October 26, 2023, to shareholders of record as of October 10, 2023.
During the quarter, the company repurchased approximately 400,000 shares of common stock at an average price of $247 for a total of approximately $100 million, including the shares repurchased during the fourth quarter, the company repurchased a total of approximately 2.2 million shares of common stock during the fiscal 2023 at an average price of approximately $229 for a total of $500 million, leveraging the capital we've raised opportunistically over the past few years at a low cost of debt to capitalize on an opportunity to repurchase shares at an attractive valuation.
We remain committed to returning capital to shareholders and intend to maintain an opportunistic approach to future share repurchases. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience, high-return capital projects, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase program.
Now I'll turn the call back to Kirsten.

Kirsten A. Lynch

Thank you, Angela. We remain dedicated to delivering an exceptional guest experience, and we'll continue to prioritize reinvesting in the experience at our resorts, including consistently increasing capacity through lift, terrain and food and beverage expansion projects. As previously announced, the company expects to invest approximately $180 million to $185 million in calendar year 2023, excluding onetime investments related to integration activities, deferred capital associated with previously delayed projects, reimbursable investments associated with insurance recoveries and growth capital investments at Andermatt-Sedrun.
At Keystone, we plan to complete the transformational lift-served terrain expansion project in Bergman Bowl, increasing lift-served terrain by 550 acres with the addition of a new 6-person high-speed lift. At Breckenridge, we plan to upgrade the Peak 8 base area to enhance the beginner and children's experience and increased uphill capacity from this popular base area. The investment plan includes a new 4% high-speed 5-chair to replace the existing 2-person fixed-grip lift as well as significant improvements including new teaching terrain and a transport carpet from the base to make the beginner experience more accessible.
At Whistler Blackcomb, we plan to replace the 4-person high-speed Fitzsimmons lift with a new 8-person high-speed lift.
At Stevens Pass, we are planning to replace the 2-person fixed script care chairlift with a new 4-person lift, which is designed to improve out of base capacity and guest experience.
At Attitash, we plan to replace the 3-person fixed-grip Summit Triple lift with a new 4-person high-speed lift to increase uphill capacity and reduce guest time on the longest lift at the resort. We currently plan to complete these lift projects in time for the 2023, 2024 North American winter season.
The company is planning to pilot My Epic Gear at Vail, Beaver Creek, Breckenridge and Keystone for a limited number of pass holders during the 2023, 2024 North American ski season which will introduce a new membership program that provides the best benefit of gear ownership with more choice, lower cost and no hassle. My Epic gear provides its members with the ability to choose the gear they want for the full season or for the day from a selection of the most popular and latest ski and snowboard model and have it delivered to them when and where they want it, guaranteed with free slope side pick up and drop off every day.
In addition to offering the best skis and snowboards, My Epic Gear will also offer name brand, high-quality ski and snowboard boots with customized insoles and boot fit scanning technology. The entire My Epic Gear membership from gear selection to boot fit to personalized recommendations to delivery will be at the members' fingertips through the new My Epic app. My Epic Gear will officially launch for the 2024, 2025 winter season at Vail, Beaver Creek, Breckenridge, Keystone, Whistler Blackcomb, Park City Mountain, Crested Butte, Heavenly, Northstar, Stowe, Okemo and Mount Snow and further expansions are expected in future years.
The company is also planning to introduce new technology for the 2023-2024 ski season at its U.S. resorts that will allow guests to store their pass product or lift ticket directly on their phone and scan at lifts hands-free eliminating need for carrying plastic cards, visiting the ticket window or waiting to receive a pass or lift ticket in the mail. Once loaded on their phones, guests can store their phone in their pocket and get scanned hands-free in the lift line using Bluetooth Low-Energy technology, which is designed for low energy usage to minimize the impact on a phone's battery life. In addition to the significant enhancement of the guest experience, this technology will also ultimately reduce waste of printing plastic cards for pass products and lift ticket and RFID chips as part of the company's Commitment to Zero.
For the first year of launch to ensure a smooth transition, the company will provide plastic cards for passes and lift tickets to all guests. And in future years, plastic cards will be available to any guests who cannot or do not want to use their phone to store their pass product or lift ticket.
We are also excited to announce the launch of our new My Epic app, which will include mobile pass and mobile lift tickets, interactive trail maps, real-time and predictive lift line wait time, personalized staff, My Epic Gear and other relevant information to support the guest experience. The company is also investing in network-wide scalable technology that will enhance our analytics, e-commerce and guest engagement tools to improve our ability to target our guest outreach, personalized messages and improve conversion.
Including $10 million of deferred capital associated with previously delayed projects, $4 million of reimbursable investments associated with insurance recoveries, $1 million of onetime investments related to integration activities and $9 million of growth capital investments at Andermatt-Sedrun, our total capital plan for calendar year 2023 is expected to be approximately $204 million to $209 million.
In addition to this year's significant investments across lift, expanded terrain and enhanced guest-facing technology, we are pleased to announce some select projects for our calendar year 2024 capital plan with the full capital investment announcement planned for December 2023.
At Whistler Blackcomb, we plan to replace the 4-person high-speed Jersey Cream list with a new 6-person high-speed lift. This lift is expected to provide a meaningful increase to uphill capacity and better distribute guests at a central part of the resort.
At Hunter Mountain, we plan to replace the 4-person fixed-grip Broadway Lift with a new 6 person high-speed lift and plan to relocate the existing Broadway lift to replace the 2-person fixed-grip e-lift providing a meaningful increase in uphill capacity and improved access to terrain that is key to the progressive learning experience for our guests.
At Park City Mountain, we expect to engage in a planning process to support the replacement of the Sunrise lift with a new 10-person gondola in partnership with the Canyons Village Management Association in calendar year 2025, which will provide improved access and enhanced guest experience for existing and future developments within Canyons Village. These projects are subject to approval.
In closing, we greatly appreciate the loyalty of our guests this past season and the continued loyalty of our pass holders that have already committed to next season. With our Australia winter season coming to a close, I would like to thank our frontline employees for their passion and dedication to delivering an experience of a lifetime to our guests, and we all look forward to a great upcoming winter season in the U.S., Canada and Europe.
At this time, Angela and I will be happy to answer your questions. Operator, we are now ready for questions.

Question and Answer Session

Operator

(Operator Instructions) We'll take our first question from Shaun Kelley with Bank of America.

Shaun Clisby Kelley

Maybe just to lead off, we've gotten a lot of requests to get a little bit more color on sort of the breakdown of what's happening in the fiscal first quarter here. So the question here is just could you give us a little bit more color on the $46 million, specifically how much of that contribution is sort of from Australia and how much is a little bit more recurring on the -- or possibly recurring on the U.S. resort disruption there as it relates to just changing visitation patterns?

Kirsten A. Lynch

Yes. Thank you, Sean. Thanks for the question. Related to fiscal year '24 in Q1, we do have some unique items that are impacting us. In Q1, we have inflation and the impact of -- including the impact of our employee investment, the Australia winter conditions impact and then, to a lesser extent, our North American summer impact as well. When we look at that in total, that is a big impact for us on the fiscal year. When you take out that Q1 impact and look at the rest of the year for winter, I think we feel quite good about the fiscal year plan and the margin that we expect to deliver as a result.

Shaun Clisby Kelley

Okay. And then my follow-up would just be maybe a little bit more color on that remainder of the year. And Kirsten, we talked about this before, obviously, you've experienced some weather volatility over the last number of years. And I think you typically guide to normal season conditions. Is there -- would you consider this a similar policy to how you approach this before? Is there any more conservatism baked in here just given the weather volatility we've experienced and especially coming off this past season where things were particularly rocky?

Kirsten A. Lynch

Yes, you're absolutely right, Sean, and we had a lot of disruptions this past season. We are planning for normal. Again, obviously, weather disruptions are very hard to predict. I think the way we approach our guidance range is it assumes normal condition across our resorts, which leads upside for strong weather conditions and downside for challenging weather conditions.
And there's normal conditions and normal disruptions like wind hold, but an example of something abnormal would be like what happened to us in the East. It is really -- so yes, we are guiding our guidance range to normal conditions and our business model, as you know, is very focused on trying to mitigate those impacts with our geographic diversity, advanced commitment, getting as many guests as we can committed in advance of the season, investing in snowmaking and our Commitment to Zero and our sustainability actions as well.

Operator

Our next question will come from Laurent Vasilescu with BNP Paribas.

Laurent Andre Vasilescu

I wanted to ask about ancillary services. They've been impacted over the last few years. I just -- I know you guys don't guide to it, but just kind of how are you thinking about that business recovery. Is there a benefit maybe from inflation from food inflation, beverage inflation? Any kind of inflation on that as we think about this year?

Kirsten A. Lynch

Yes, we are expecting, Laurent, strong growth across our ancillary businesses with particular focus on F&B. As I highlighted in the remarks, F&B grew significantly last year but did not return all the way to pre-COVID. We know that we delivered a strong guest experience and that we are recovering from significant restrictions that were put on our dining business in the years following COVID, including a requirement for reservations a requirement for vaccines, reduced menu options. So as we think about that business, we expect to continue on a strong growth trajectory for that dining business, and we're very focused on building awareness of all of the unique food variety offerings we have, building awareness among our more than 2 million pass holders that we had last year about the 20% discount that's a part of the loyalty benefits that they have as pass holders, which certainly helps mitigate some of those inflationary prices. And we have the new My Epic app that we'll be launching where we can start to talk to our guests one to one about our ancillary businesses through the app, which we also hope will give us the opportunity to have some personalized communication to help build awareness and bring people back into restaurants and continue that growth trajectory that we've been on.

Laurent Andre Vasilescu

Okay. Very, very helpful. And then -- sorry, I'm going to follow up on Shaun's question because it is a question that we're asking about that $46 million in the comments, it is primarily driven by cost inflation. It sounds like it's primarily over half. Is that the right way to think about it? Because it sounds like you want to quantify kind of in the ballpark over half. And is that something that we should think about as we model the quarters out.

Angela Korch

Laurent, it's Angela Korch. Just -- yes, on the Q1 piece of this, right, you can think about it, I think, as one, we always have investment in our Q1, right? We're always seeing the kind of cost pieces for the whole season without as much of the revenue that comes through in the rest of the season. So if you look at the expense structure and what we pointed to, you should assume, right, the inflation on that cost structure. We called out specifically the wage investment from prior year because that went into effect in October. So there is a piece of that, which is the $7 million that is from that wage investment that's continuing into this year.
And then on top of that, right, there's the demand side, which for Australia, we're seeing kind of that continued impact from challenging conditions that we saw in our fourth quarter. And if you recall last year, we had actually a very strong year in Australia and very good conditions. So we kind of went from one extreme into a very warm weather period for Australia, which resulted in less terrain open and earlier closures of terrain than we would normally see. And then in North America, to a lesser extent, right, we are continuing to see some of that shift in demand patterns that we saw in the fourth quarter.

Operator

Our next question will come from Jeff Stantial with Stifel.

Jeffrey Austin Stantial

Maybe starting off here. I wanted to drill in a bit more on some of your commentary and the headwinds that you discussed for the North America summer operations. It does seem to fit some of the narrative we've heard from the airlines and some other leisure businesses. But I'm curious, how do you think about this headwind and what you're seeing over the summer as it relates to more of the upcoming ski season? And I guess what I mean by that is there anything that you can see in your bookings data or otherwise that sort of gives conviction that this is -- or this unwinding of kind of consumer wallet share gains you saw is mostly just an off-season impact as opposed to also potentially bleeding into the ski season. Wondering if that makes sense.

Kirsten A. Lynch

Yes. Thank you, Jeff. We are seeing in our North America summer demand, some of that shift in summer travel behavior that you've heard about in the broader marketplace. And certainly, when you look at broad market data for Western Mountain Resorts and the lodging occupancy does reflect over the summer declines versus 2019. As we think about -- so we do feel that our business was impacted and a part of those shifting consumer behaviors. As we look forward to winter though, I think summer and winter businesses are very different, attract very different guests. And I think the key indicator for demand to look at for this upcoming winter season is our season pass business. And our results are very strong on our season pass business with strong unit growth and strong dollar sales growth, strong renewals being the key driver of that, also incremental growth with new pass holders and seeing growth in every geography, destination, international, all of our core local geographies as well and across all product segments. So when I look at indicators for winter, I would take our past sales as the strongest indicator for winter versus summer which has very different guests and behavior associated with it.

Jeffrey Austin Stantial

Great. That's really helpful. And then for my follow-up, maybe kind of adding on to some of the questions earlier, but focusing more -- so the cost inflation piece, that first bucket within the $46 million. I know you quantified $7 million from annualizing the employee investment that you made last year. I guess -- it sounds like there's more to that bucket than just the $7 million. So if that is the case, can you just provide some color on, I guess, what that is? And I guess, kind of why you're, I guess, quantifying it or spelling it out. Is it something above and beyond just more -- kind of normal typical wage inflation or cost inflation? Or just -- could you just frame that out or provide some color on kind of what besides that $7 million sits within the cost inflation that you cited?

Angela Korch

Jeff, yes, on the cost inflation, there in Q1, right, we always have inflation before the revenues, as I was mentioning. And so I think what you should think about is you can see from inflation data that's out there, what a normal inflation would be on our expense structure. And then for us, right, there are some investments that we always typically make in Q1 ahead of the season. And so I would point you toward the full year margin guidance of 31% where you can see how those impacts are really playing out in terms of some of the demand pieces and things we're quantifying for Q1 specifically, but then how that is expected to kind of level out throughout the season.

Jeffrey Austin Stantial

Okay. So in other words, it's more of just a timing mismatch as opposed to kind of anything structurally out of the norm? Is that fair to say?

Angela Korch

Correct. And that's something that we normally see right in our Q1 ahead of winter season in North America.

Operator

Our next question will come from Matthew Boss with JPMorgan.

Unidentified Analyst

This is John on for Matt. So your resort EBITDA margin forecast for next year, it's more or less in line with the prepandemic levels. Can you break down the inflation better on the cost side for that or any investments to build out the ancillary revenue streams this year? Like said in another way, is there any structural hurdle to margin expansion multiyear?

Kirsten A. Lynch

So on our margin expectations for FY '24, we -- in FY '22, we had some anomaly margin expansion because of the labor shortage this year coming into FY '24, we're expecting a strong margin at 31% at the midpoint. And I think when we look at it, I think we look at winter margin looks very strong and positive, we are seeing feeling pressure because of the Q1 assumptions that we just walked through. We see opportunities going forward in terms of resource efficiencies. And one of the key assumptions that we have in our strategies and our priorities in FY '24 is workforce management and rolling out workforce management across all 37 of our resorts. Beyond that, also continuing to invest in guest self service, which creates efficiencies as well as automation. So I feel very good about the 31% margin that we're going to achieve and believe that there is opportunity going forward given the scale of the business, the investments that we've made in integrated network that give us the opportunity to unlock some additional margin expansion in the future.

Operator

Next, we have a question from Patrick Scholes with Truist.

Charles Patrick Scholes

I'm sort of beating this 10-Q guide to death here, but is it fair to say that $40 million to $46 million, 1/3 of that was just weakness in Australia around $15 million. Just trying to get some granularity on that one.

Angela Korch

Patrick, yes, we did not put forward the exact drivers of all 3 pieces, I think. The point we're giving out, though, the Q1 guidance is just to also showcase right, there are some just normal headwinds we have in Q1. The midpoint in total, the one piece we haven't talked about is we're -- the midpoint is about $50 million off of prior year, right? There is an FX component, which we pulled out of the $46 million. And then in addition, right, cost inflation and the investment in wages. I would say Australia and North American demand, you can look to kind of some of the trends we were seeing in Q4 and continuation of some of those pieces.
The other thing I would point you to, just for the full year margin, and I think this is just the important point of, right, like in the guidance in the 31%, right, when the revenue flows through on the fixed cost business, we are absorbing these cost pressures despite the Q1 headwinds.

Charles Patrick Scholes

Okay. One or two other questions here. Last year between when you did the first pass and unit update, you lost about 3 to 4 points of growth. And then on the most recent earnings call, you had sort of a high level. Noted you expected a deceleration between the June which with the numbers you gave in June and now, we haven't seen that. Is this to be taken out, hey, things are actually better than expected? Or maybe there's something in the -- just the sales program this year versus last year that will sort of delay that deceleration. How should we think about that?

Kirsten A. Lynch

I think that -- I feel very good about where we are on past sales right now, and we are guiding that they may moderate for the full year because it is pretty typical for our growth rates to moderate as we go through the sales cycle. And that guidance that we provided wasn't specific to the September time period, but as it relates to the full year and what our expectations are for the full year, we are, as you know, constantly working to pull our guest decision-making earlier and earlier in the sales cycle, which can impact the sales that occur and the growth rates that occur later in the selling cycle.
Also, as we move through the selling period later in the selling period tends to be focused on more new pass holders making decisions versus our loyal renewing pass holders. And so there can be more variability in the forecasting around our new product sales, which we generally see those growth rates decline later -- lower -- later we get in that selling cycle.
But nothing structurally that is concerning about our past sales. I actually feel like we're in a great spot given we see incredibly strong loyalty and renewals, and that's really driving the growth where we are right now, growth across all the geographies and growth across all of the product segments.

Charles Patrick Scholes

Okay. And then just one last, a very high-level question here. How much conservatism do you think is baked into your earnings forecast? I know you call out your sort of normal weather conditions. But I think you have such a geographic diverse spectrum of resorts here that it doesn't seem there's ever anything normal. And I'll relate that to, say, the cruise side. I cover the cruise lines. And they always take in a pretty hefty degree of -- in normal times, degree of conservatism. As they say, there's always something in some market that goes well. I mean they actually expect that to happen. How much conservative room, if any, is in there? Because it just seems like every year, the -- if it's not the Northeast, it's Utah, and if it's not Utah, it's Canada. How much conservative for something weather to happen because it will happen. It always happens. So your thoughts on this?

Kirsten A. Lynch

Yes. We strive to put out a guidance and a forecast that is very balanced with a reasonable opportunity for upside and downside on it and really striking a balance. On the normal weather impact, I agree with you, there's always something that happens. And we factor that in. The pieces that are not assumed because we obviously can't predict them is when it is something so abnormal such as what happened this past year where we were down to grasp in January at some of our ski areas. And that can -- that we can't predict and that we are not assuming in the forecast as we have no way to do that. But we do try to strike a real balance on the fact that there will always be some variability.

Operator

Our next question will come from [R. Matthews] with Jefferies.

Unidentified Analyst

I know you touched on this a little, but could we get some further color on how you're thinking about labor outlook. I guess is there more pressure on cost per employee in the recent past?

Kirsten A. Lynch

I'm feeling very good about our labor situation and where we are in terms of wages. Last year, we made a big investment in our employees wages, benefits, affordable housing, leadership development. And where we are right now is we are ramping up staffing. It's early, but we're ramping up staffing for this season and feeling good about where we are in terms of retaining employees and attracting new highly qualified top talent frontline employees. And I think from a wage perspective, I feel good about our wages and our starting wages being competitive in order to attract the strong frontline talent that we need for this upcoming season. So that -- what we've assumed in the budget, I feel good about and that we can deliver against it as it relates to staffing and where we are on our wages.

Operator

Our next question will come from Chris Woronka with Deutsche Bank.

Chris Jon Woronka

So I guess, without asking for any cheat codes to the model, how are you guys thinking about the number of the increase in ski -- presumed increase in skier visits for this upcoming season. I'm asking it relative to kind of -- we kind of know where you are in season pass sales. We know what the price increase was. We add all that up, and we think we get to a lift ticket revenue. I guess as we think about ancillary, just trying to get a sense as to -- you obviously had 12% growth last fiscal year. What are you anticipating? Is it something in the range of low single, mid-single, high singles or any way to get a sense?

Angela Korch

Chris, we don't really give out specific guidance on the skier visit forecast for the guidance. And so what I will just tell you, though, as you should think about, right, the past sales growth which is our best indicator right now of our expectations for this year, you've seen over time how that right has translated into kind of visitation growth. Last year, I would just call out, I think just to point out what you're quoting, right, does have some changes year-over-year with Seven Springs acquisition and the acquisition of Andermatt-Sedrun. So you'd want to normalize for those types of items. But generally, the ski industry has been relatively low growth in terms of the visitation. And I think where you've seen us really deliver for our guidance, as you'll see the revenue translation from our growth in ancillary and our growth and capture with our advanced commitment strategies.

Chris Jon Woronka

Okay. That's helpful. I thought I had to try. And then just kind of revisiting the -- this is really more of a longer-term question, right, because you've covered your margin expectations for this upcoming year. But on the employee housing front, there's a lot of moving parts, right, in some of your local markets in terms of housing, has anything kind of changed since last year in terms of how you're thinking about potentially trying to help folks get more -- or find more available housing in future years?

Kirsten A. Lynch

I would not say that there is a material change in our focus and that this is a priority for us. Affordable housing is a crisis in so many geographies, as you know, and in our mountain communities continues to be challenging and a crisis in many places. It is not an easy problem to solve. We are committed to making investments. We made some great progress last year. We've also run into obstacles, and we continue to stay diligent and focused on investing in this.
I would say, when you look at our staffing this past year, we did get fully staffed despite a tight labor market and despite the challenges of affordable housing. It does not mean that we're going to let up our intense focus on continuing to make progress, but it's also important to note that it is possible for us to get fully stacked as we work through these challenges in partnership with our communities in partnership with other developers and partners. But I'd say we're in the same spot and suspect we will be for a while because it's a significant challenge.

Operator

Our next question will come from Brandt Montour with Barclays.

Brandt Antoine Montour

Nice pass results by the way. My first question is housekeeping and then I have another question. The first one is the $7 million employee investment you called out. I know we kind of talked about. I just want to make sure I understand that, that's not onetime, right, since that is sort of the tail end of the $175 million for last year that was also not onetime, right? Is that the right way to think about it?

Kirsten A. Lynch

That's correct, Brandt. That is -- the employee investment impact in this year is the impact of the timing of when the employee investment was implemented last year. And so we've got 2 months of impact incrementally hitting this year, and that investment is in our cost structure going forward.

Brandt Antoine Montour

Okay. Perfect. And I think -- I'm not going to ask you what Australia was because I think more people have asked that. I think the reason why everyone wants to know that it's because they want to take that number and add it back on your guidance and say, this is the earnings power of the company in a stabilized basis. And so I'm going to ask it a slightly different way and say, if I look at your last year's original guidance, and I rebase it for FX and I make the other adjustments that you called out. And then I look at the sort of midpoint of this year's guidance with what I think is a fair adjustment for Australia. I get to sort of an 85% what I would think is a same-store EBITDA growth number. And so I guess the question is that what you think the growth profile of the business is? Or do you think it's better? Or what do you say to that?

Angela Korch

Brandt, so yes, I would just comment on a couple of things there. So yes, the adjustments that we called out last year on FX with the sale of the retail rental outlets, completely agree with how you're thinking about that as it relates to adjustments from last year. And then the go-forward growth of the business, really, there are the 3 things that we're pointing to for Q1 that are -- one being cost inflation, which I think you can estimate how much on our cost structure in Q1, that piece is. And then the rest of that is the demand piece.
And it is I think, a factor to normalize and to think about because last year, right in Australia at this time, as part of our guidance, we knew right, we have seen the strength going through the Q4 and then into the Q1 when we issued the guidance last year, and we saw a very strong -- there was some pent-up demand in Australia that we commented on and talked about right after the COVID restrictions and we had a really favorable weather conditions in Australia in their prior winter season. And this year, we're seeing the opposite and some of that correcting. And that is a piece that I think is very different year-over-year and impacting our growth. And that's why we're calling out this impact.
And then to a lesser extent, I think the North American demand patterns, right, we are seeing this shifting and behavior of -- that we've heard from a lot of other competitors, right? And a lot of leisure companies shifting to urban international and cruise type of alternative vacations over the summer. Again, that is very different travel behavior than what we're -- we see in our winter customer and our winter base. And so that is just an impact that we've had -- that hit us in Q4, which you see in the results. And also, we're just pointing out that has continued into Q1 and we expect that to normalize over time. We don't think that, that's a permanent shift in behavior and that's another piece that we expect to return back to normal.

Operator

Our last question will come from Megan Alexander with Morgan Stanley.

Megan Christine Alexander

Most of mine have been answered at this point. But you talked about strong pass sales growth from renewing holders. Could you maybe just give us some color on what you saw with year 1 renewals versus multiyear pass holders?

Kirsten A. Lynch

Yes. We are seeing -- I mean the primary driver of our growth right now that we're reporting is primarily driven by the loyalty of our pass holders, and we're seeing strong renewals across all different levels of our pass holders versus prior year, which we are thrilled with because it's critical to success of the past program to have that loyalty and those renewals while we're also going after new pass holders and bringing people in.
I will share also an interesting piece that is -- when we look at new pass holders, Megan, we look at people that are brand new coming to Vail Resorts, people converting from a lift ticket, but we also look at people who used to be pass holders, what we would call lapsed pass holders from any prior years in the past, it could be from a year ago, 2 years ago, 5 years ago, 8 years ago. And we are achieving strong growth -- significantly strong growth among that population. People who used to be pass holders that are now coming back to us.

Megan Christine Alexander

Awesome. Super helpful. And then maybe just one clarification on your answer to Brandt's question. Is it -- is the impact that you're seeing in Australia? Is there an impact from lapping the pent-up demand? Or was that more of a last year impact? And so we would get all of it back next year. I don't know if that makes sense, but I just want to understand if there is an impact from the lap that you're seeing? Or it's really just the weather this year.

Angela Korch

Megan, yes, I think there -- it's a little bit of a normalization piece is what I would say, right? So we did have some of that pent-up demand in the prior year and very good conditions and just a really strong finish to the season in the prior year. And in this Q1, right, we're seeing the opposite where we've had very warm temps that have led to the terrain closures. And so right, it's a little bit of both, I would say, right, very different extreme conditions that we're seeing from the prior year to this year.

Operator

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

Kirsten A. Lynch

Thank you, operator. This concludes our fiscal 2023 year-end earnings call. Thank you to everyone who joined us today. Please feel free to contact me or Angela directly should you have further questions. Thank you for your time this afternoon. Goodbye.

Operator

Thank you, ladies and gentlemen. This concludes today's Vail Resorts Fiscal 2023 Fourth Quarter Earnings Call and Webcast. You may disconnect your line at this time, and have a wonderful day.