Viad Corp

NYSE:VVI

Earnings Call Analysis

Strong Q2 Performance and Revised Outlook Amid Wildfire Disruptions

Viad Corp's Q2 2024 exceeded expectations with an 18.2% revenue increase. GES's adjusted EBITDA surpassed guidance due to strong revenue and margin improvements, prompting a full-year outlook raise to $85-$95 million. Pursuit also performed well, but wildfire disruptions in Jasper impacted operations. If Jasper reopens by September 3, Pursuit's adjusted EBITDA is expected to be $80-$95 million, down from $92.6 million in 2023. Despite uncertainties, the company forecasts a consolidated full-year EBITDA of $151-$176 million, up from $147 million in 2023.

Strong Second Quarter Performance Amid External Challenges

Viad Corp has demonstrated a robust financial performance in the second quarter of 2024, with revenues increasing by $58.2 million, or 18.2% year-over-year. This growth was attributed to various segments within the company, particularly its subsidiary, Pursuit, which saw revenue growth of $12.7 million, or 14.4%. This increase is largely driven by a 20% surge in attraction ticket revenue, indicative of a rebound in visitor numbers as well as higher ticket prices. Notably, the newly opened FlyOver Chicago attraction contributed notably to this uptick, showcasing the company's ability to attract customers to innovative experiences【4:1†source】【4:11†source】.

Guidance Adjustments Reflecting Wildfire Impact

While the overall performance was impressive, Viad was forced to provide a sobering outlook due to ongoing wildfires affecting operations at Jasper National Park. The firm has reduced its full-year guidance for Pursuit's adjusted EBITDA to between $80 million and $95 million, down from the previous projection of $92.6 million from 2023. This guidance accounts for an estimated EBITDA impact of $20 million to $25 million resulting from operational disruptions caused by the fires. Full-year consolidated EBITDA expectations now range from $151 million to $176 million, bolstered by strong performance from its other segments【4:6†source】【4:11†source】.

Significant Revenue Growth for GES

The General Exhibition Services (GES) segment reported substantial revenue growth of $45.5 million, or 19.6%, in the second quarter, with adjusted EBITDA rising by $17.6 million. When stripping out the impact from major nonannual events, revenue growth would be an impressive 26%. This strong performance, coupled with a higher-than-expected adjusted EBITDA margin of around 12% for the first half of the year, has allowed Viad to increase full-year guidance for GES's adjusted EBITDA to a range of $85 million to $95 million, a significant jump from $68.2 million in 2023【4:0†source】【4:10†source】.

Future Growth and Strategic Investments

Looking ahead, Viad is optimistic about its growth trajectory, particularly for GES. The company plans to capitalize on its existing contracts and anticipated increased spending from corporate clients in the exhibitions sector. They expect to see double-digit revenue growth for the year as major nonannual shows contribute an additional $85 million to $90 million in revenue【4:10†source】【4:13†source】. Furthermore, Viad is investing approximately $20 million in its Refresh, Build, Buy strategy aimed at expanding Pursuit’s offerings, including efforts to enhance existing attractions and explore strategic acquisitions【4:19†source】.

Operational Resilience Amid Challenges

Despite the challenges posed by the wildfires, Pursuit's core attractions and hotel properties remain largely intact. With only about 18% of hotel inventory in the Jasper region affected, the company is optimistic about a swift recovery. The management anticipates an influx of tourists rerouted from Jasper to Banff and expounded on robust demand trends across its other properties. The effective dynamic pricing strategy has also contributed to strong visitor attendance beyond Jasper【4:11†source】【4:19†source】.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon. My name is Joel, and I will be your conference operator today. At this time, I'd like to welcome everyone to Viad Corp's Second Quarter 2024 Earnings Conference Call. [Operator Instructions]

Thank you. Carrie Long, you may begin your conference.

[Carrie Long, executive]

Good afternoon, and thank you for joining us for the 2024 Second Quarter Earnings Conference Call. During the call, you will hear from Steve Moster, our President and CEO; Ellen Ingersoll, our Chief Financial Officer; and David Barry, President of Pursuit, who will each be referencing specific pages from our earnings presentation.

Presentation, which is available on our website, contains important disclosures regarding non-GAAP measures that we'll be referring to during the call, including adjusted EBITDA and adjusted net income. Additionally, certain statements made during the call, which are not historical facts, may constitute forward-looking statements. Information concerning business and other risk factors that could cause actual results to materially differ from those in the forward-looking statements can be found in our annual, quarterly, and other current reports filed with the SEC.

And now I'd like to turn the call over to Steve, who will start on Page 4 of our earnings presentation.

[Steven Moster, executive]

Thanks, Carrie, and thanks to all of you for joining our call. I'm happy to report that our second quarter results exceeded our prior guidance with both GES and Pursuit delivering very strong performance. GES's adjusted EBITDA was above our guidance, with impressive revenue growth and margin improvement. And based on the strength that we are seeing at GES, we're raising our full year outlook for GES's adjusted EBITDA. Pursuit's adjusted EBITDA came in near the high end of our guidance range, as we continue to see strong demand for our attractions and lodges and the iconic locations in which we operate.

Entering the third quarter, we had every reason to believe Pursuit would deliver on our prior guidance range for the full year. The peak summer season was off to a strong start and our advanced bookings pointed to a healthy year-over-year growth for the second half of 2024. However, our operations in Jasper National Park are currently being impacted by wildfire activity. As we previously disclosed by 8-K, the park was closed and evacuated on July 22. The majority of the park, including the town of Jasper, remains closed as authorities continue to work to control the fire and restore critical services to the Jasper town site.

Our hearts go out to the Jasper community and all who have been impacted. And we're incredibly thankful to the many first responders, firefighters, and our team members for their work to protect lives, homes, businesses and infrastructure. We will cover the latest updates on the Jasper wildfire and our outlook assumptions later in the call.

Right now, I'd like to turn the call over to Ellen, who will review our second quarter financial performance. Ellen?

[Ellen Ingersoll, executive]

Thanks, Steve. I'll start on Page 6 with our consolidated second quarter results. Revenue increased $58.2 million, or 18.2% year over year. Consolidated adjusted EBITDA increased $21.5 million and adjusted net income improved by $17.4 million. Our GAAP basis net income attributable to Viad was $18.4 million higher than the 2023 second quarter, primarily reflecting stronger business performance, partially offset by higher depreciation expense.

As shown on Page 7, Pursuit's second quarter revenue grew $12.7 million, or 14.4% year over year, and adjusted EBITDA increased by $4.2 million. Pursuit's revenue growth was led by attraction ticket revenue, which increased 20% due to a 15% increase in visitors and higher effective ticket prices. Our new FlyOver Chicago attraction that opened in March was a big contributor to the visitor's increase.

Pursuit's adjusted EBITDA increase primarily reflects revenue growth and margin improvement. As shown on Page 8, GES delivered consolidated revenue growth of $45.5 million, or 19.6%; adjusted EBITDA growth of $17.6 million; and very strong margin performance during the second quarter. When adjusting to exclude the $11 million unfavorable impact of major nonannual shows, GES's second quarter year-over-year revenue growth was $56.2 million, or about 26%. Excluding the impact of major nonannual events, Spiro's revenue grew $31.7 million, or about 47%, versus the 2023 second quarter, driven by strong spending from new and existing corporate clients. Excluding the impact of major nonannual events, GES Exhibitions' revenue grew $24.2 million, or about 16%, versus the 2023 second quarter, primarily due to new client wins and underlying growth.

Next on Page 9, we ended the 2024 second quarter with a strong liquidity position with $490.9 million of debt, and our leverage ratio was 2.4x, which is below the low end of our target ratio range of 2.5x to 3.5x.

Now Steve and David will provide further insight into our business performance at GES and Pursuit. Steve, back to you.

[Steven Moster, executive]

Thanks, Ellen. Now let's switch over to GES and review the multiple revenue growth levers on Page 11. Starting with GES Exhibitions on the left, you will notice that we are driving higher revenue per net square foot of event space through our ability to increase price, capture more same-show spend through additional services, and overall higher spending trends. We expect that the return of same-show square footage to pre-pandemic levels, which is currently about 10% below 2019, will create a tailwind on overall revenue growth into 2025. Both higher revenue per net square foot and increasing the event size will have high flow-through to EBITDA.

On the right-hand side of the page is Spiro, our experiential marketing agency. We expect to increase our experiential marketing revenue at a high-single to low-double digit through expanding our client roster and selling additional services to our existing clients. Spiro is a trusted strategic and creative branding partner. As one of the few experiential marketing agencies with end-to-end capabilities and global reach, we are well positioned for growth. And I'm very happy to share that we have now reached a total of 64 new client wins since launching Spiro as a discrete experiential marketing agency within GES in early 2022.

Additionally, we're seeing substantial year-over-year growth in our existing client spending. Corporate clients are prioritizing experiential marketing services to connect customers with their brands in a powerful way. We are encouraged by the favorable trend we are seeing overall and robust demand within the industry. In-person live events and other forms of experiential marketing provide an important channel for companies to drive new business, network with key stakeholders, and receive education about relevant topics trending within their industries.

On Page 12, you can see GES's overall revenue growth trajectory. GES delivered significant revenue growth in the first half of this year. When adjusting to remove the impact of major nonannual events, GES's consolidated revenue grew by 16% year-to-date compared to 2023. For GES Exhibitions, that growth rate was about 10%, driven by underlying growth and new client wins. U.S. exhibitions' same-show revenue grew about 5% year-to-date compared to the prior year. For Spiro, the adjusted growth rate was about 29% year-to-date, driven by our success winning new clients and growing revenue from existing clients.

The second quarter was particularly strong due to a high volume of new business wins. As we highlighted on our last call, the most significant new event was the McDonald's 2024 Worldwide Convention in Barcelona, which is one of the largest client projects Spiro will deliver this year. And it is a terrific example of the power of the GES collective, where Spiro provided the cutting-edge creative and strategy and was supported by flawless execution from GES Exhibitions.

The third quarter will see incremental revenue of about $85 million to $90 million from our major nonannual shows, including IMTS and MINExpo, which are held in September. While the creative and strategy work for these events started a year in advance, the team is currently finalizing all operational plans and working directly with our clients and partners. With only a month or so to go, both shows are tracking in line with our expectations. These favorable trends, along with strong major nonannual show schedules, give us confidence in our outlook for double-digit full year revenue growth. The GES team is laser-focused on executing our client experiences in the second half of this year.

Now, let's take a look at Page 13 and discuss our adjusted EBITDA margin expansion. I'm thrilled with the results that we've seen from our efforts to drive margin improvement at GES. We achieved a 12% adjusted EBITDA margin for the first half of the year, which is up 290 basis points year-over-year. On previous calls, I've talked about the transformation of GES's cost structure and the impact the changes would have on our margin profile. GES's performance in 2024 provides clear evidence that the business can achieve higher margin as revenue increases.

We continue to expect to deliver on adjusted EBITDA margin of about 8.5% for the full year, and GES remains focused on disciplined cost management and efficiency gains from our Lean productivity initiatives to drive additional benefit in years to come. As I mentioned earlier, based on the strength we are seeing in the business and our outperformance for the first half of 2024, I'm very pleased to announce that we are raising GES's adjusted EBITDA guidance by $5 million and now expect to be in the range of $85 million to $95 million.

Now, on Page 14, let's talk about GES's exciting plans for 2025 and continued profitable growth. GES is projecting flat revenue growth into 2025 despite the unfavorable impact from major nonannual shows. The team is focused on 3 levers for next year: moderate price increases, continued growth in net square footage of event space, and net new client wins of about $25 million. GES has a clear line of sight to approximately 90% of annual reoccurring revenue due to our long experience serving our largest clients as a trusted partner for their exhibition and event needs. Our relationships are generally structured under longstanding MSAs with corporate clients and contracts to show organizers to produce their exhibitions with 90% retention rates.

GES Exhibitions is already selling and winning events for 2025 and beyond. The team recently won contracts for several large North American clients, including the International Association of Amusement Parks and Attractions, the Institute of Food Technologists, and the Congress for Neurological Surgeons. And Spiro continues to add to its client roster and work with existing clients to support them across a wider spectrum of experiential marketing activities. We feel confident in our ability to reach our targeted net new client wins for next year. Our proven track record of success and our ability to execute globally across both the exhibitions and experiential marketing sectors puts us in a unique position as a leader in the industry.

And now I'll turn the call over to David to discuss Pursuit.

[David Barry, executive]

Thanks, Steve. So I'll start off by discussing the wildfire in Jasper National Park, which remains active. So we're very grateful to the firefighters, first responders, Parks Canada team members, as well as the team members from the municipality of Jasper for their heroic efforts, as well as for the tremendous support Jasper has received from across the province, the nation, and around the world.

Our community, our team, our incoming guests, and the restoration of Jasper remain our top priorities. So over the past 10 days or so, we've concentrated on aiding those impacted by the fire by providing emergency accommodation, meals, essential supplies, transportation, and the rebooking of many inbound trips. We're also working to secure housing solutions for our team members and those involved in reentry efforts.

So while about 30% of the Jasper town site has experienced significant devastation from the fire, 70% of the town, including homes, businesses, and hotels, were thankfully untouched by fire and are intact. All critical municipal infrastructure was successfully protected, and power is being restored as authorities work hard to reopen. We're also relieved that all Pursuit hotels and experiences in the Jasper town site, as well as our Pyramid Lake Lodge, Miette Mountain Cabins, and Maligne Lake Boat Cruise were not reached by fire.

Our known property losses have been limited to the Maligne Canyon Wilderness Kitchen, a restaurant and retail operation about 4.8 kilometers, 3 miles, outside the town of Jasper. Work remains to be done for safe reentry to the Jasper town site. And Parks Canada communicated that if current conditions continue, visitor services in the park are expected to resume September 3.

However, we're optimistic the southern area of Jasper National Park, which has not been threatened by fires, will reopen soon. And it is our understanding that the existing road closure of the Icefields Parkway could be lifted in the coming days, opening up access to the Columbia Icefield Glacier Adventure, the Glacier Skywalk, and the Glacier View Lodge. The Pursuit team has responded incredibly to this situation and is prepared to resume operations as soon as authorities will allow. And we look forward to being able to restart our Jasper operations and our commitment to Jasper is unwavering, and we will continue to support the people and rebuilding efforts for as long as it takes. We're looking forward to providing great hospitality experiences to our guests once again in Jasper National Park when we're able.

Now I'd like to discuss Pursuit's first half of the year performance, which set new records, and the strong demand trends we're seeing across our collections of experiences. So I'll start with our attractions performance on Page 16. Pursuit's attractions ticket revenue grew 21% to $62 million year-to-date. This was driven by strong increases in visitors, which were up 14%, and growth in our effective ticket prices. Our same-store ticket revenue grew about 16% year-over-year, with significantly higher effective ticket prices. Additionally, our new FlyOver Chicago attraction, which we opened in March, was a meaningful contributor to the impressive increase in visitors. We're really pleased with our first 4 months of operation and the very favorable reviews that we've been getting. Our one-of-a-kind point-of-interest attractions saw robust demand, and we benefited from our effective dynamic pricing strategy.

Next on Page 17, Pursuit's room revenue grew 8% to $32 million year-to-date, which was driven by demand and capturing higher ADRs. All geographies delivered growth in room revenue, with standout performance from our Canadian lodges as international travel to the destination is on the rise. The strength in our hospitality metrics is driven by perennial demand for our experiential travel destinations, our focus on providing a great guest experience, and seasonal compression in our markets.

Page 18 shows our lodging booking pace versus 2023, and this is looking solely at our properties outside of Jasper. And as you can see, room revenue on the bookings from our properties that are not impacted by fire closures is still pacing well ahead of last year.

So just for a second, let's talk about what makes Pursuit so special and resilient. First, our point-of-interest attractions and lodging properties are located in remarkable places with strong perennial demand, and everyone in the world loves a beautiful view.

Second, our experiences have strong competitive moats in locations with significant barriers to entry. During peak summer season, our lodges reach nearly full occupancy with high demand and market compression. Our range of ideally located lodging product provides robust cross-selling opportunities with our attractions.

Third, we align our pricing with the value that we provide. So our strong guest reviews and net promoter scores reinforce our balanced approach to pricing and value perception. So while we may have uncertainty in the near term, our future remains bright.

Now let's move to Page 19 and talk about our journey to meaningfully scale Pursuit through our successful Refresh, Build, Buy strategy. We have an exciting pipeline of organic and inorganic investment opportunities to help accelerate our growth into the future. In 2024, we're investing approximately $20 million into Build and Refresh projects within our existing collections. This includes our newest Build investment, FlyOver Chicago, as well as other smaller Refresh investments at well-instrumented and high-performing existing experiences where we see opportunities to generate incremental throughput and pricing power.

For example, we're in the process of upgrading capacity of our top-tier offering at Sky Lagoon to meet growing guest demand in Iceland. We've identified many additional opportunities to expand our scale and market share in existing geographies through tuck-in acquisitions and other growth investments. An example of this is the Jasper SkyTram, which is a one-of-a-kind asset and a great strategic fit for Pursuit. We previously announced an agreement to acquire this attraction, but have not yet closed on the sale due to the wildfire activity in Jasper. We remain very interested in adding it to our Banff Jasper Collection, and we'll be assessing any wildfire impacts prior to closing. We're also keenly interested in expanding our collection to new, counter-seasonal geographies that will balance out our seasonality and diversify our footprint. The world is a big place, and our growth aperture is wide.

So, as I conclude my remarks, I just want to say thank you once again to firefighters, emergency workers, Parks Canada teams, and the municipality of Jasper for their extraordinary efforts in this emergency. And lastly, and probably super-importantly for us, a big thank you to the thousands of team members across Pursuit for bringing their best every day.

Ellen, over to you.

[Ellen Ingersoll, executive]

Thanks, David. Now I'll cover 2024 outlook on Page 21, starting with GES. GES delivered stronger-than-expected results for the first half of 2024, and the third quarter is looking strong. Based on that, we are increasing our full year EBITDA guidance range for GES to $85 million to $95 million, which is significantly above the $68.2 million in 2023. For the third quarter, we expect GES's adjusted EBITDA to be in the range of $15 million to $19 million, versus negative $2 million in the 2023 third quarter. This strong growth reflects the benefit of approximately $85 million to $90 million from nonannual show revenue.

If not for the Jasper wildfires, we would have been in a position to raise our consolidated full year guidance, with key performance indicators for Pursuit also trending very well. While it is challenging to predict the behavior of an active wildfire, Parks Canada is currently messaging a reopening date of September 3. Assuming that date holds, we estimate the EBITDA impact to Pursuit could be somewhere around $20 million to $25 million.

Based on that scenario, we are reducing our full year guidance for Pursuit adjusted EBITDA to $80 million to $95 million, as compared to $92.6 million in 2023. And our guidance for Pursuit's third quarter adjusted EBITDA is $75 million to $90 million, as compared to $91.8 million in the 2023 third quarter. As a result of these revisions, our consolidated full year EBITDA guidance range is now $151 million to $176 million, which is stronger than our 2023 adjusted EBITDA of $147 million.

Clearly, there is a great deal of uncertainty in our guidance ranges for Pursuit. We are doing our best to provide a realistic range based on what we know now, and we will provide updated guidance as appropriate. We are actively engaged with our insurance carriers regarding the fire impacts in Jasper. Our policy limits are sufficient to cover our known property damage and our estimated loss of profits. However, I want to caution that our ability to recover business interruption is tied to property damage. It will be highly fact-determinative based on what we learn when we are able to thoroughly inspect our properties alongside our insurance adjusters. Much work needs to be done to understand the extent of potential insurance proceeds, and again, we will provide updates as appropriate.

Steve, back to you.

[Steven Moster, executive]

Thanks, Ellen. In closing, I want to thank our talented employees for their commitment and drive to deliver the best possible results for our clients, guests, and shareholders. And with that, we will open up the call for questions.

[Operator]

[Operator Instructions] The first question comes from the line of Tyler Batory with Oppenheimer.

[Tyler Batory, analyst]

Appreciate all the detail here, and I understand it's a difficult, fluid situation in terms of what's going on in Jasper, but that's where I want to start with, with my questions. I know you disclose Banff Jasper Collection revenue. In a given year, are you able to break out how much is Banff, how much is Jasper? And then along with that, in terms of a guidance reduction, did you see any impact on cancellations in Banff in July when the wildfire started in Jasper?

[David Barry, executive]

Yes. So first, I'll start on the cancellation point. We really haven't seen any material cancellations, Tyler, at all. What you have actually happening in Banff is there's compression as people are rerouting guests from Jasper. And so, again, all of our major tour and travel partners actively have guests in the geography. And so, folks are moving from Jasper to Banff as itineraries change and the business volumes in Banff will only get greater.

We really don't break out revenues and profits between Banff and Jasper. And again, what I can tell you is that the challenge with the situation in Jasper, there are some positive elements to it. One, obviously, we're very empathetic to those that have lost their homes and those that have lost their businesses, as this is really a significant factor for them. But when you look at the number of, say, hotel rooms, you're looking at basically 18% of hotel rooms in Jasper have been affected, leaving 83% of hotel rooms in Jasper unaffected.

So as we work to reopening, everyone is focused on that. We still don't have access to the site, but that will improve in the days ahead. And also, we have some indication from Parks Canada that it will be a matter of days, not weeks, before the Icefields Parkway is able to extend all the way up to Tangle Falls, which would allow the reopening of the Glacier Skywalk, the Columbia Icefields Discovery Center, and the Glacier View Lodge, which we expect to be imminent.

[Tyler Batory, analyst]

And then it's a positive, Parks Canada talking about reopening September 3, which seems pretty soon. Any sense for -- are you seeing guest bookings for that day? Are people canceling significantly, given this news? Are you proactively trying to discuss or talk with guests that have stays for September into October? I know there's still not a lot that you know, but I'm just trying to get a sense of what's in the guidance, what you're expecting after this September 3 date, and just some of the moving pieces and assumptions around that perspective and that outlook.

[David Barry, executive]

First, let me start with the conversations that I've been having over the last 15 days. So I've had the great pleasure of reconnecting with our tour and travel partners, and I've talked to all of our major tour and travel partners across the globe together with our senior sales folks. And so, what's important to know there is that there's a tremendous commitment to Jasper. And I think the way to think about it is to think of Western Canada as a big geography in which folks are traveling and folks are traveling from Vancouver, they're traveling all the way through the Canadian Rockies on a specific itinerary. So our tour and travel partners are all very enthusiastic about the return to business, and they're excited to bring business back to Jasper the moment that they've got the green light. So that's a tremendous positive.

And today in Jasper, as an example, cleanup teams and owners of the essential businesses like gas stations, drug stores, grocery stores, are all mobilizing and have been granted access to their particular businesses, which helps us travel to a point of reopening. And so, each of those steps as we accelerate along the way, we do have guests that have shifted itineraries, but we've also had a tremendous amount of guests that have wanted to call and just provide a donation to those affected in Jasper. So I would say guest enthusiasm remains high.

Remember, this is a very different situation than many of us saw with the horror of fire in Lahaina, where an entire town was wiped out. This is 30% of the town is affected. Imagine one side of the street you have buildings that have been destroyed, but on the other side of the street, you have basically flower baskets still hanging in the window. And so you have a tremendous amount of property that is untouched, 70% of town, 30% of property that has been destroyed, and a focus on rebuilding.

So we anticipate the return to business will be sooner, and everyone is working in that regard towards that outcome. There's no guarantees yet. We have had some favorable weather in the last few days in terms of rain, so wild land fires are more controlled. All of the fire within the town of Jasper, obviously, is well under control and there's no active fires at all within the town site. And the team is focused on managing traffic. The highways have reopened east to west for commercial traffic, so there's actually commercial traffic and rail flowing through the town of Jasper. And also, just a final reminder, all the essential services in Jasper municipal infrastructure remain intact, water, sewer, hospital, town hall, essential services, fire station, et cetera, are all intact. So as tough as this outcome has been, I think that everyone's managing to a positive end result with what they're facing.

[Tyler Batory, analyst]

I'll switch gears to GES side of things. The margin there was tremendous in the quarter, so really nice to see that. Was there anything one time that was driving that? And I'm interested just a commentary in terms of the full year and next year sounds consistent with what you said in the past, which is obviously not a bad thing. But I'm just wondering how much conservatism could be in that full year commentary, just given how strong the first half was and how strong the second quarter was as well.

[Steven Moster, executive]

I'm very pleased with both businesses. You saw we had significant incremental revenue over prior year and a really good flow through to the bottom. A lot of that is a lot of the work that the team has done in prior quarters around the cost structure in preparing for a higher margin business as revenue continues to recover and grow. So there's no one specific thing that drove.

Obviously, we talked about just a minute ago about McDonald's being a contributor in the quarter. That's a large project that happened in the quarter. But there were other wins and other growth within Exhibitions and within Spiro clients. So overall, just a really strong continuation of the trend that we've seen where corporate clients are spending more and tradeshows continue to increase in their size. And both of those lead to really high flowthrough to EBITDA margin.

And then in terms of our outlook for next year, like you said, we've been consistent in terms of what we believe will happen. We're a quarter more into or a quarter closer to 2025. And during the call, I wanted to highlight a couple of the wins that we've had. Those are a great indication of the momentum that both businesses have and really help us close that net new win gap between here and 2025. So I feel good about where the year is headed, obviously. We're ahead of schedule. And as I look at 2025, we're reaffirming what we project '25 will look like.

[Operator]

The next question is from the line of Bryan Maher with B. Riley.

[Bryan Maher, analyst]

Maybe for Ellen, to start off, you said some things about the business interruption insurance and the lost profit coverage. And I didn't quite understand the business interruption being tied to property damage. Can you give us a little more color on how to think about that?

[Ellen Ingersoll, executive]

Sure. The business interruption kicks in if we have property damage at the hotels, and that doesn't mean fire necessarily. It could be smoke damage, it could be other water damage to the hotels. So what we have to do is we have to go in and assess what, if any, damage we have to our hotels and then that determines our business interruption route. But it's going to be a long process, Bryan. There's a lot to figure out there.

[Bryan Maher, analyst]

Yes. I'm sure Tyler and I, and others, have had experience with hurricane issues in Florida and the Caribbean with the hotels companies that we cover. So I know this can drag out literally a couple of years. When you think about lost profit, though, does the insurance company, though, look at maybe the fact that you may pick up incremental profit if your Banff both hotels are packed because people aren't going to Jasper, or does that have to stay totally separate?

[Ellen Ingersoll, executive]

That's a good question, and that's going to be something that we'll have to talk to our insurance companies about. And we're not even close to that point yet. But it'll be a process, and we will strive to keep our Jasper properties separate and make sure that we get whatever's owed to us on the business interruption side related to those properties.

[Bryan Maher, analyst]

Maybe shifting gears for David. The FlyOver Chicago, good news that that opened up strong. Are there any key takeaways as to the opening of Chicago versus what you experienced in Las Vegas? And is there any update on Toronto?

[David Barry, executive]

Yes. So let me start first with Chicago off to a roaring start, really pleased with that. I think, let's be honest, Chicago is a less competitive market than Las Vegas in terms of attractions. And so, I would just say that the market dynamics are much more similar to Vancouver than they are to Las Vegas. So Chicago and Navy Pier attracts a significant number of visitors. And then also the content and story is really compelling. It's a very soulful, emotional journey and a flight through Chicago that's pretty exhilarating, use of drone technology, et cetera. So it's just really compelling content, a tremendous location, a market that's adapted well to the FlyOver model and is performing really well, and we're happy with that.

Let me switch channels to Toronto. So obviously, this has been one of the most popular and longstanding questions on earnings calls, and appreciate everyone's patience. We're in the final stages of executing a mutual agreement with the landowner, Canada Lands, to terminate our lease for that site. And it's come just from several years of working through the planning and permitting for the FlyOver Toronto project. Given the escalation of costs and the explosion of construction in Toronto and the many challenges, it just became clear that this was the best outcome for us and for the landowner to terminate the lease. We're really excited to have done the work with FlyOver that we've done, and we've grown to 4 platforms, and we're just focused on growing visits across our existing locations with our compelling attraction content.

[Bryan Maher, analyst]

Shifting gears to Iceland and the volcanic activity that was the topic of conversation a quarter ago. Has that subsided and is business at your competitor getting back to usual? Can you give us any color there?

[David Barry, executive]

I won't speak so much to the business of my competitor, but I will mention that just for us, obviously, we're having a great summer in Iceland. Iceland is going to be on a track for record visitation in 2024. It's performed really well. It is true, the volcanic activity ebbs and flows. Right now, it all appears calm on the peninsula in Iceland. But again, seeing great visitation, great support, fantastic guest reviews, and we're excited to launch the enlargement of The Ritual at Sky Lagoon, which is our highest end product, gives us tremendous capacity addition to really host guests and provide a great experience. So Iceland's in good shape.

[Bryan Maher, analyst]

Well, we're all looking forward to the Investor Day in Iceland to be coming. Maybe last for me, maybe back to Ellen and sorry, Steve, to leave you out of it this time. But Tyler got my question on GES. When we think about your new numbers for Pursuit consistent with the thought that you won't get reopened in Jasper until September 3, if, in fact, you get Columbia Icefield open in a matter of days or a week, is there then upside to what you're showing us now for Pursuit numbers for the third quarter should that happen?

[Ellen Ingersoll, executive]

Our current assumptions assume what David talked about us getting the Icefield opened sooner than September 3. So I would say, I wouldn't count on a lot of upside, but the whole situation is so fluid, Bryan, that we could have some upside or some downside. It just depends on where we're at. And if the September 3 date holds, if [indiscernible] does open in a week. But the assumptions that go into our guidance are what David talked about.

[Operator]

The next question is from the line of Alex Fuhrman with Craig-Hallum.

[Alex Fuhrman, analyst]

Wanted to follow up more on the issue going on in Jasper. Given the pretty significant impact to your business this year and the town site, I know obviously a lot of uncertainties remain this year. But as you think about next year, do you think it would be prudent for analysts to be building in some level of conservatism that it could perhaps be something of a multiyear recovery until you're back up to what you would have done this year without the wildfire? Or is there hope that if there's guests returning to the town site as early as this season, that next year could be pretty close to a full season for you?

[David Barry, executive]

Yes, Alex, I think where I'll start with that is that a reminder that we have been fortunate through this experience that our hotel properties are intact. They're located at the eastern end of town. So our neighbors as well as ourselves are sitting in a situation where our hotel properties are intact.

Our neighbors to the Southwest obviously have lost their hotel properties, which represents about 18% of the availability of lodging in Jasper. In my discussions with our tour and travel partners, demand is very strong, and we expect that to continue. So as you look ahead, we may face the opposite issue rather than it taking more years to recover, I think recovery could be accelerated just due to compression in lodging because there are so many different tour and travel partners that are seeking accommodation for their itineraries. And when you eliminate 18% of a lodging bed base within a particular town, it pushes compression into the other properties.

The other thing that's important is that Jasper itself as a national park is 11,000 square kilometers. The fire -- fires, multiple fires, has affected basically 340 square kilometers, so 3% of the total of Jasper National Park. When you think of that in hectares, which is an interesting math, but 11,000 square kilometers is 1,100,000 hectares. The size of fires is 34,000 hectares, so roughly 3%. So what you know from all of this is that 3% of the visuals or 3% of the things that guests come to see have been affected. And a lot of these fires are outside the view angles of where guests are traveling.

So although we don't know all the details yet, I can tell you that the visual impact, the strength of the Icefields Parkway, Jasper remains strong in terms of its ability to attract visitors from around the world, and in discussions with our tour and travel partners, we see strong, sustained, confident demand for '25, '26, '27.

[Alex Fuhrman, analyst]

And then just as it relates to this year, as you think about the range of outcomes and what's in your guidance, does the low end of guidance still contemplate guests coming back to your hotels in the Jasper town site this year? Can you just help us work through the range of expectations and just how much housing would you have for your employees if you're able to have guests back next month?

[David Barry, executive]

A wise President always defers questions of guidance to the CFO, so I'll start with housing. Question on the housing is that we have team members, obviously, that are spread out over quite a distance. And we're doing a couple of different things for our team members: one, we're providing a steady stream of ongoing communication, financial support, mental health resources, housing, shelter, food, et cetera. That's the first thing. Second is team members are excited to get back to work. So as they return to Jasper, if you think about it, if you're a family of 3, living in a lovely hotel room is going to be fun for about the first 4 days, and then you're going to want some other form of temporary housing. So the Alberta government, together with Parks Canada, is mobilizing to create those kinds of housing options. And then you're going to have a period of rebuild, so you'll have a variety of different construction workers, et cetera. And then you have overwhelming guest demand. So I think all of these things are going to contribute to it being busier than we anticipate.

And I'll defer to Ellen on the guidance question.

[Ellen Ingersoll, executive]

Sure. And Alex, I'll just say on the guidance, we have a set of key assumptions that we use to formulate the guidance and then put a range around that. So any one of these assumptions could be better or worse. But this is our best estimate right now, and then we put the range around that.

[Operator]

[Operator Instructions] The next question is from Will Brunemann with Northcoast.

[Will Brunemann, analyst]

So I was just curious, in your conversation with companies, are you seeing any hesitancy to spend on exhibits or events produced by Spiro? And then I have a couple of follow-ups if that's all right.

[Steven Moster, executive]

Sure. Well, we have seen very strong corporate spending at Spiro, both for what we would call brand activations and corporate events, but also for exhibit programs for those corporations to attend tradeshows. So, as we've talked about for the last few quarters, it's been a steady, consistent growth in corporate spending from our clients. That's led to our performance and outperformance relative to our expectations for the quarter, for sure.

[Will Brunemann, analyst]

And then I was going to ask when it comes to M&A opportunities, would Viad be open to acquisitions for the GES business? And then on top of that, are you guys seeing any pricing concerns for GES in the pricing environment?

[Steven Moster, executive]

I'll start with the pricing environment. So we are in a mode where we are pricing according to the quality and the capabilities that the team has and the product that we deliver. And so we continue to see price increases in the industry, as we have for the last couple of years. And I don't see any change in that, at least for the near future.

In terms of M&A, our strategy and our capital allocation has been clear. For the last several years, we have been dedicated to growing and scaling Pursuit through the Refresh, Build, Buy strategy that we have in order to scale Pursuit and give Viad more options into the future. Doesn't mean that we wouldn't look at things at GES, but from a priority perspective, our priorities remain the same, which is scaling Pursuit.

[Will Brunemann, analyst]

Okay, and then just one last thing, maybe you already touched on this, but if the park opens back up, Jasper opens back up in 2025, but your visitation is compromised because of the fire, could you receive potentially insurance proceeds for that or anything along those lines?

[Ellen Ingersoll, executive]

So from an insurance perspective, what we're doing right now is assessing the damage that we would have to the hotels and what business interruption would come from that. The business interruption would be tracked. So it would look at '24 and '25, and this will be a many-month process that we'll go through with our insurance carriers. So yes, we will look at that as we go through this process. Obviously, the further away you get from the fire and the implications that David talked about, the further away you get, the less that we would be expecting insurance proceeds, but we will look at it until the business interruption case subsides.

[Operator]

Thank you. There are no further questions at this time. Steve Moster, I turn the call back over to you.

[Steven Moster, executive]

Thanks, Joel. And thanks to everybody for joining us for our earnings call today. We look forward to giving you an update in the near future. Thanks so much.

[Operator]

This concludes today's conference call. You may now disconnect your lines.