Viad Corp

NYSE:VVI

Earnings Call Analysis

Viad Corp's Strong Q3 Performance and Future Growth Plans

In the third quarter of 2024, Viad Corp reported a 25% revenue increase year-over-year to $455.7 million, with adjusted EBITDA rising to $103.1 million, up $16.9 million. Pursuit’s adjusted EBITDA hit $86.3 million, nearing the high end of guidance, while GES's adjusted EBITDA outperformed expectations. The company announced a $15.9 million acquisition to enhance their offerings. Looking ahead, revenue growth is expected to be robust, with consolidated full-year EBITDA guidance raised to $163-$172 million. Pursuit anticipates a stable EBITDA margin of 30% by 2025, capitalizing on the upcoming recovery in the Jasper market post-wildfires.

Strong Third Quarter Performance

In the third quarter of 2024, Viad Corp reported a 25% increase in revenue year-over-year, totaling $455.7 million. This robust growth was attributed to strong demand in their Pursuit and GES segments. Pursuit's adjusted EBITDA reached an impressive $86.3 million, maintaining a high margin of 47.4%, despite temporary disruptions in Jasper due to wildfires. GES also delivered exceptional results, with an adjusted EBITDA margin of 7.4% and a significant revenue increase of 60% driven by major exhibitions.

The Impact of Wildfires on Jasper's Performance

While Pursuit showed strong overall performance, it faced challenges in Jasper National Park where revenue declined by $21.9 million year-over-year. This was primarily due to wildfire-related closures, which temporarily affected seven out of eight hotels. Despite this, the overall demand for attractions outside Jasper remained strong, with a 13% growth in revenue driven by effective ticket pricing and increased visitor engagement.

Future Growth Initiatives and Strategic Transactions

Viad Corp is on track to complete the sale of GES to Truelink Capital at the end of December 2024. This transformation will allow Viad to focus on Pursuit as a high-growth, high-margin business. The proceeds from this sale will be used to retire high-cost debt and fund growth initiatives. Viad expects the successful execution of its 'Refresh, Build, Buy' strategy to create substantial growth opportunities within Pursuit.

2024 and 2025 Guidance

For the full year of 2024, GES's adjusted EBITDA is now projected to fall between $90 million and $95 million, up from earlier guidance of $85 million to $95 million. The Pursuit segment is expected to achieve adjusted EBITDA between $87 million and $92 million. Overall, the consolidated full-year adjusted EBITDA guidance range has been revised to $163 million to $172 million, reflecting a significant increase from the previous year's adjusted EBITDA of $147 million. Looking ahead, Pursuit anticipates achieving an adjusted EBITDA greater than $100 million in 2025.

Recovery and Market Conditions in Jasper

Despite the challenges faced in 2023, interest in Jasper remains strong, particularly among tour and travel partners. The company projects a 12% increase in travel trade revenue in Jasper for 2025 compared to 2023. With a temporary reduction of 18% of the hotel rooms due to fire damage, the current market dynamics are expected to create upward pricing pressure, leading to a resurgence in occupancy rates as recovery efforts continue.

Acquisition Strategy and Expanding Offerings

Viad recently completed a $15.9 million acquisition to enhance its Glacier Park Collection, which includes premium accommodations and dining options for park visitors. This acquisition aligns with Pursuit's strategy to grow its footprint in iconic travel destinations. Moreover, Viad indicated an active pipeline of about 20 investment opportunities aimed at boosting guest experiences, with a total expected investment of around $200 million.

Optimizing Existing Assets for Enhanced Guest Experience

Pursuit has reported strong performance in attractions such as Sky Lagoon, which saw a 13% year-over-year increase in visitation after an expansion. The company is keen on optimizing existing venues to maximize growth potential. The successful reopening of attractions and hotels paired with focused improvements indicates a committed effort to boost overall guest satisfaction and operational efficiency.

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon. My name is Jaya, and I will be your conference operator today. At this time, I would like to welcome everyone to the Viad Corp.'s Third 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 Viad's 2024 Third 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 and Future CEO of Pursuit. As they discuss their business performance and outlook, they will reference specific pages from our earnings presentation, which is available on the Investors section of our website. And before I turn the call over to Steve, I would like to draw your attention to Pages 2 and 3 of our presentation, which contain important disclosures regarding the use of non-GAAP measures and forward-looking statements that we will provide during the call. And now I'll turn it over to Steve, who will start on Page 4 of our presentation.

[Steve Moster, executive]

Thanks, Carrie, and thanks to all of you for joining our call. I'd like to start off by discussing our 3 key business highlights and updates. First, I'm happy to report that both Pursuit and GES delivered very strong performance during the third quarter. Pursuit's adjusted EBITDA came in near the high end of our guidance range. Outside of Jasper, we continue to see strong demand for our attractions and lodges and the iconic locations in which we operate. GES' adjusted EBITDA was above our guidance with impressive revenue growth and margin improvement. We successfully serviced our major non-annual shows during this quarter and remain focused on disciplined cost management. Second, I'm also pleased to announce that we recently completed a $15.9 million tuck-in acquisition for Pursuit's Glacier Park Collection to expand our successful offering in that area. 



And third, we are on track to complete the transformative sale of GES by the end of the year. This transaction will establish Pursuit at a pure-play, high-growth and high-margin business. Stand-alone Pursuit will have the financial flexibility and the balance sheet to accelerate its Refresh, Build Buy growth strategy and capitalize on its substantial growth prospects in the hospitality and attraction space. And now I'd like to turn the call over to Ellen, who will review our third quarter financial performance. Ellen?

[Ellen Ingersoll, executive]

Thanks, Steve. I'll start on Page 6 with our consolidated third quarter results. Revenue of $455.7 million increased 25% year-over-year. Consolidated adjusted EBITDA of $103.1 million increased $16.9 million and adjusted net income improved by $15.5 million. Our GAAP basis net income attributable to Viad of $48.6 million was $7.3 million higher than the 2023 third quarter, primarily reflecting stronger performance at GES, partially offset by noncash impairment charges and consulting costs related to the pending sale of GES. As shown on Page 7, Pursuit delivered third quarter revenue of $182.3 million, adjusted EBITDA of $86.3 million and an adjusted EBITDA margin of 47.4% Revenue and adjusted EBITDA were down $4.7 million and $5.5 million, respectively, from the prior year due to temporary closures and disruption caused by wildfire activity in Jasper National Park. Our Jasper Lodges and attractions experienced a revenue decline of $21.9 million year-over-year, which was largely offset by 13% revenue growth from our experiences outside of Jasper National Park. 



On a same-store basis, which excludes the Jasper properties, attractions ticket revenue grew 16% and room revenue grew 9%, driven by strong effective ticket prices and ADRs as well as increased demand for our experiences. As shown on Page 8, GES delivered consolidated revenue of $273.4 million, adjusted EBITDA of $20.2 million and an adjusted EBITDA margin of 7.4% Consolidated revenue and adjusted EBITDA were up $94.5 million and $22.2 million, respectively, from the prior year, reflecting strong growth at both Spiro and GES Exhibitions. Spiro revenue of $82.2 million increased 40% year-over-year, primarily due to strong client spending on major non-annual shows, which added $34 million of revenue to the quarter. GES Exhibitions revenue increased 60%, primarily due to about $71 million of revenue from major non-annual shows, which outperformed our expectations. 



Next on Page 9, we generated $110 million of cash from operations, spent $15 million on capital expenditures and repaid $94 million of debt during the third quarter. We ended the quarter with total liquidity of nearly $230 million and no borrowings on our revolver. Our total debt was $398.2 million, and our total net leverage ratio was 1.7x. Now I'll cover our 2024 outlook on Page 10, starting with GES. Based on stronger-than-expected performance year-to-date in 2024 and favorable underlying demand trends, we are revising our prior full year guidance ranges. At GES, we now expect to achieve adjusted EBITDA of $90 million to $95 million, up from previous expectations of $85 million to $95 million. 



Additionally, we've narrowed our adjusted EBITDA range for the Pursuit business to $87 million to $92 million. As a result of these revisions, our consolidated full year EBITDA guidance range is now $163 million to $172 million, which is up from our 2023 adjusted EBITDA of $147 million. These guidance ranges do not attempt to incorporate any business interruption recoveries as the timing and amounts of such recoveries are uncertain at this stage. Thus far, we've recovered approximately $6 million of insurance proceeds, including $4.7 million received during the third quarter. These proceeds were used to cover property damage and costs we incurred for the protection and restoration of our Jasper businesses. We are actively engaged with our insurance carriers to understand the extent of additional insurance proceeds we should receive, and we will continue to provide updates as appropriate. Now David and Steve will provide further insight into our business performance at Pursuit and GES. David?

[David Barry, executive]

Thanks, Ellen. I'll start with a quick update on Jasper's reopening following the wildfire activity. As you're already aware, we lost one structure to the fire, our Maligne Canyon Wilderness Kitchen. Fortunately, all of our other facilities are intact, and we were able to reopen 7 out of 8 hotels in Jasper during the third quarter. Road access to our Maligne Lake Cruise attraction was not restored until after the end of the operating season, making it impossible for us to reopen that attraction this year. Pyramid Lake Lodge remains closed as we repair some minor damage from fire protection efforts, and this property will reopen prior to the busy holiday season. Our attractions and hospitality experiences at the Columbia Icefield reopened on August 9 once the Icefield Parkway Road closure was lifted. We were very pleased with the number of attraction visitors that came through during September, and it was only down about 5% from 2023. With all of our lodges back online, we expect to resume more typical guest occupancy levels as we head into the upcoming ski season in Jasper. 



Our Jasper room night reservations on the books for the fourth quarter are at about 90% of the prior year, and our first quarter 2025 reservations are tracking slightly higher than 2024 as of this same time last year. The booking pace is encouraging and demonstrates the perennial demand for this iconic destination. There are several market drivers that give us confidence in Jasper's return to historic business levels. So firstly, Jasper sits at a really important crossroads for leisure travelers visiting the Canadian Rockies. For our tour and travel partners, Jasper is key to successful multistate journeys as it is perfectly located in a beautiful national park and facilitates tour and travel guests overnighting on a multi-destination itinerary. Secondly, the temporary reduction of 18% of Jasper's hotel room inventory is going to cause compression in the marketplace. It will take several years for those 400 hotel rooms lost to fire to be rebuilt. We have several seasons of compression ahead as demand from our tour and travel partners shows no sign of lessening. 





Thirdly, there's a concerted effort from the municipal, provincial, federal governments and Parks Canada to bolster the return to travel to Jasper. We expect this marketing energy to be powerful in saying to the world that Jasper is open for business. Now let's discuss Pursuit's year-to-date results and the strong performance we've delivered. For revenue, on Page 12, you can see that we delivered year-to-date revenue growth of 4% overall and 14% when adjusting for the third quarter fire impact in Jasper. The strong demand for iconic locations and unforgettable inspiring experiences, combined with our proven Refresh, Build, Buy growth strategy and relentless focus on improving the guest experience enables us to drive increased visitation and improved rates. 





So let me talk a little bit about our attractions performance on Page 13. Our year-to-date total attractions ticket revenue of $137 million grew 12% year-over-year on a 5% increase in visitors and a meaningful improvement in effective ticket prices. When adjusting to remove Jasper attractions from the third quarter, our ticket revenue growth was 21%, driven by dynamic pricing and our investments to enhance and grow our guest experiences. A great example of this is Sky Lagoon in Iceland. In 2021, we completed construction on a very successful attraction, which has surpassed all of our expectations. We quickly recognized that demand for Sky's signature experience was exceeding our capacity. We saw an opportunity to expand that premium experience to drive incremental revenue and a really improved guest experience. 





I'm happy to report that we completed that expansion in August and saw an immediate lift in September with 13% year-over-year growth in visitation and 16% growth in effective ticket price. We're very pleased with the performance of this iconic attraction and look forward to building on its success. Additionally, our new FlyOver Chicago attraction, which opened in March, continues to contribute to our visitation growth and receive excellent reviews. In addition to the phenomenal Chicago film, guests can now also enjoy our legendary Iceland film as we drive repeat visitation with compelling content. I'll also call out to the Banff Gondola and their team, which continues to deliver standout performance as a must-do attraction in Banff offering incredible mountain top views, elevated dining, interpretive experiences that page to the history and culture of Banff National Park. 





So let's switch to hospitality next on Page 14. Pursuit's year-to-date room revenue, excluding our temporarily closed Jasper Lodging in the third quarter, grew about 8% year-over-year. All geographies outside of Jasper delivered growth in room revenue. Same-store RevPAR also grew 8% year-over-year, which was driven by capturing higher ADRs while maintaining strong occupancy levels. Our pricing power strength is enabled by perennial demand for our experiential travel destinations, our unrelenting focus on providing a great guest experience and seasonal compression in our markets. 





Taking a look at adjusted EBITDA, we'll look on Page 15 and discuss our adjusted EBITDA. Our team did an incredible job maximizing adjusted EBITDA during a pretty challenging third quarter and hustled to hold our year-to-date results nearly flat to the prior year. Full year 2024 adjusted EBITDA is also expected to be nearly in line with 2023 despite the Jasper wildfire impact. In 2025, we expect to deliver adjusted EBITDA greater than $100 million after absorbing approximately $12 million to $13 million of stand-alone public company costs, which we expect will be our normalized run rate basis cost level after transition costs have wound down. 





In 2025, we will continue to benefit from consumer travel trends, prioritizing experiences, the return of international visitation to our destinations and the recovery in Jasper. The sum of these factors, combined with a great guest experience will enable us to demonstrate the full earnings power of Pursuit's collection of experiences. Long-haul travel trade visitation at Canada continues to build, and we're seeing growth across markets around the world, including Asia. We're very pleased to report that our 2 attractions at the Columbia Icefield, which were some of the most impacted by the disruption of long-haul international travel trade visitation during the pandemic, saw visitors increase about 27% year-over-year in the first half of the year prior to the closure of Jasper Natural Park. This is quite encouraging, and we expect to see continued visitation growth in 2025. 





We expect that all of our Jasper attractions and lodging properties will operate at full capacity in 2025 with a strong rebound. Jasper's Maligne Lake and Icefield Parkway remain stunning examples of natural beauty in the Canadian Rockies. And the Jasper Town site is getting back to business with a strong focus on supporting the recovery of sections of town that were damaged by fire. As a reminder, approximately 97% of Jasper National Park's 2.8 million acres were spared from the wildfires. So with plenty of beautiful park to explore and about 18% of the overall Jasper hotel bed base offline due to fire damage, we expect strong demand for our lodging properties in 2025. 





Jasper remains an important itinerary inclusion for travel trade and other long-haul travelers visiting the Canadian Rockies. So for an update on Refresh Build, Buy, let's move to Page 16 and talk about how we will accelerate our growth with our proven investment strategy, refresh, build and buy. Refresh Build Buy enabled us to triple our revenue from 2015 to 2023 at a 15% compound annual growth rate while realizing strong returns on our investments. And the pending sale of GES will give us a strong financial foundation to unlock our growth potential and meaningfully scale Pursuit through acquisitions and organic growth opportunities. 





We've maintained an active acquisition pipeline of iconic experiences that we can now pursue with vigor, knowing that we'll have the financial capacity to transact for the right deal. Just this week, we closed on a great $15.9 million tuck-in acquisition for our Glacier Park Collection. The acquired businesses include the Apgar Lookout Retreat and Eddie's Cafe and Mercantile. Apgar Lookout Retreat and Eddie's are located adjacent to our existing 48 rooms in Apgar Village on a rare piece of privately held land inside Glacier National Park, bordering McDonald Creek and just steps from the shore of beautiful Lake McDonald. Apgar Lookout Retreat's 6 high-end accommodation units are brand new and they're beautiful, and they're a step above all the other lodging experiences in the West Glacier area.





Eddie's is well positioned to offer food and beverage and retail merchandise to the approximately 1 million park visitors that come through Apgar as they explore Glacier National Park. This acquisition is a perfect complement to our Apgar Village Lodge and based on anticipated synergies, we believe that we can achieve an effective purchase multiple of about 7.5x adjusted EBITDA. Another example of a buy investment is the Jasper SkyTram. We previously announced an agreement to acquire this attraction and closing has been delayed as we work with the seller to assess impacts of the wildfire activity in Jasper. 



The tram itself is operational today with some minor repairs that are underway. This is a great strategic fit for Pursuit. We remain committed to adding it to our Banff Jasper Collection and are working diligently to sort out the various insurance impacts and work towards an efficient close. We're also strongly interested in expanding our collections to new geographies that will help balance out our seasonality and diversify our footprint. The world is a big, beautiful place, and our growth aperture is wide. Additionally, and importantly, we've identified approximately 20 actionable organic refresh and build opportunities within our existing geographies that represent a total investment of about $200 million. 



These are growth investments we can make in our well-instrumented and high-performing properties to improve and enhance the guest experience, much like the Sky Lagoon expansion I discussed earlier. We'll provide more insight into these specific opportunities as they move into execution. So through a combination of steady organic growth investments, opportunistic acquisitions, and an obsessive focus on hospitality, culture, and guest experience, we have our sights set on delivering ongoing growth and strong shareholder returns. So as I conclude my remarks, I just want to say a big thank you to the thousands of team members across Pursuit for bringing their best every day. Steve, back to you.

[Steve Moster, executive]

Thanks, David. Before we open up the call for questions, I want to provide a quick update on GES and the pending sale of that business to Truelink Capital. I want to start by thanking the GES team for their dedication to consistently delivering excellent results for our clients and shareholders and for the extra energy invested to ensure a successful sale transaction. Page 18 highlights the financial success that GES has achieved and the strong execution of the team to drive margin expansion and revenue growth. We continue to see strong demand for exhibitions and experiential marketing services. And the GES team is laser-focused on executing our clients' experiences and delivering double-digit revenue growth with an EBITDA margin of about 9% in 2024. 



Our efforts to transform GES' cost structure and leverage our industry-leading position have set GES up for ongoing success under Truelink's ownership. As noted on Page 19, we're on track to complete the sale of GES to Truelink on December 31. As a stand-alone business within Truelink's business portfolio, GES will gain greater execution flexibility and access to capital to invest in the company's existing service offering while pursuing growth both organically and through strategic acquisitions. And for Viad shareholders, this transaction will unlock our high-growth, high-return Pursuit business as a pure-play company with stronger growth prospects, a strong balance sheet to fund growth, and a proven management team ready to continue executing. The proceeds from this transaction will allow us to reset our capital structure. 



We intend to fully retire Viad's high-cost Term Loan B and revolver debt and put the excess cash on our balance sheet to fund near-term growth initiatives for Pursuit. The combination of very low leverage, excess cash, and a new undrawn revolver will give Pursuit immediate firepower to accelerate growth and enhance shareholder value through our proven Refresh, Build, Buy strategy. This is a very exciting next chapter for Viad, soon to be renamed Pursuit. I want to extend a huge thanks to all the team members across GES, Spiro, Viad and Pursuit for their efforts to deliver the best possible results and help us reach this pivotal milestone. And thank you to our shareholders for your continued support. It's been an incredible journey, and we're very excited about what Pursuit can accomplish in the near future. With that, let's open up the call for questions.

[Operator]

[Operator Instructions] Your first question comes from Tyler Batory.

[Tyler Batory, analyst]

So my first question is actually on the FlyOver side of things. Can you talk a little bit more about FlyOver Chicago, FlyOver Las Vegas, where we are in the ramp of those 2 assets? Is Chicago at this point, a positive contributor to EBITDA? And then a little bit more big picture, when you look further out, I mean, do you still see FlyOver the platform overall as a growth engine for you? Is it still something that you think that makes sense in kind of the new Pursuit entity?

[David Barry, executive]

Tyler, a couple of things. So yes, Chicago is on a positive track and doing well. As we look into the future, as I mentioned in previous calls, we're working on stabilizing all of those businesses and getting them to optimum performance. They take a long time to build. They take a long time to come out of the ground. We're very proud of the experiences that we have. They have tremendous guest satisfaction ratings. We're going to work to optimize them, but we do not plan on deploying capital into creating future FlyOver locations right now. We've got lots to focus on, on the iconic location side of the business.

[Tyler Batory, analyst]

Okay. Perfect. And then switching gears to Jasper, I think you gave a lot of very helpful details there. I'm interested if you can talk a little bit more about the tour travel side of things. I'm not sure if there's any incremental details, anecdotes, et cetera, that you could provide. Just given the conversations you're having with some of those folks, I'm not sure when they look towards 2025, if their plans have changed at all given the wildfires. And I'm also interested on the long-haul side of things. When you look towards next year, is there a possibility that we start to recover some of that lost business? And I'm just sure any details in terms of numbers you could provide just trying to frame out what that might look like next year in terms of the impact of some of that long-haul visitation coming back.

[David Barry, executive]

Yes. I mean we view it as a return to normal. We have strong demand from our tour and travel partners. Remember that we're immersed in this as a company, right? We experienced the fires. We evacuated guests and everything else. But on a world scale, this is something that happened very quickly in a blip of news. So our initial modeling anticipates the 2025 travel trade revenue in Jasper to be up about 12% from the 2023 year, which is encouraging. We don't see anyone dropping Jasper on itineraries. 



As I mentioned in my remarks, one thing that's important to note is if you've got itineraries that you've booked with guests coming all across Western Canada, you need Jasper as a pivotal overnight destination because of where it sits geographically between the other main centers of tourism. So the demand for Jasper is strong. What's actually a little bit tough right now is that you've got 18% or 400 keys that have come out of inventory. And so now tour and travel partners who had booked those hotels over time are scrambling to be able to fill their itineraries. 



So I anticipate that our mix of tour travel actually might be a little overweight as we work to accommodate demand through the summer of '25. But we see no lessening of demand. We see no impact of stay away from Jasper, it needs time to recover. We see the opposite that people are excited to come. They want to support Jasper. That reflects in the first quarter pacing that we're seeing in lodging, where we're actually tracking ahead there. So we're encouraged by what we're seeing in terms of recovery.

[Ellen Ingersoll, executive]

Tyler, if I might add one more thing.

[Tyler Batory, analyst]

Go ahead.

[Ellen Ingersoll, executive]

Sorry, during our earlier remarks, we did talk about how much revenue was down in Jasper during the third quarter year-over-year, might give you a bit of a sense of what recovery could look like. And again, '23 probably wasn't the strongest of years for us. But the year-over-year dip from Jasper in the third quarter was about $22 million in revenue.

[Tyler Batory, analyst]

I think the last question for me, and maybe I'll keep it more generic because I know -- I mean, I'm asking for guidance. I know you can't give guidance for next year. Just trying to think through the EBITDA margin and maybe a stabilized EBITDA margin, if you will. I think in the past, you had kind of given some, I don't know, call them targets per se, but given some aspirations in terms of what you think EBITDA could be like at Pursuit. So I just wanted to see if we could revisit those, please, and just talk about where you think EBITDA margin at Pursuit could go in the future?

[David Barry, executive]

We anticipate that without factoring in the public company burden that we will be on the 30% mark for 2025. And we're working through the process now as we integrate some things and work on the business transition, but we're enthusiastic of where Pursuit's margin is going to be and feel good about that going forward.

[Operator]

The next question comes from Bryan Maher with the company, B. Riley.

[Bryan Maher, analyst]

Just a couple for me. As it relates to Jasper and the lack of those 400 rooms, is it safe to assume that you should be running pretty close to full occupancy for the next couple of quarters as construction crews and cleanup and displaced residents a place to stay? I mean how should we think about that relative to prior years?

[David Barry, executive]

I think you're going to have some seasonality, Brian. And as an example, for instance, construction workers potentially going home on weekends and other things back to where they live and then coming back during the week. So it will be a little lumpy, but I think what's important to note is, as you think to next summer, given that you have that removal of rooms, you're going to have very significant compression for summer 2025 in the Jasper market.

[Bryan Maher, analyst]

Okay. And as it relates to modeling, right, so it's nice that you're making this very clean separation on 12/31. So I'm assuming -and this is a silly question, we're just going to model out GES through the end of the year, then it out pursuit of stand-alone starting January 1st. But where do we put the transaction-related costs? Are they all going to be completed in the fourth quarter? Is there going to be some spillover into the first quarter? And can you quantify that across quarters?

[Ellen Ingersoll, executive]

On the transaction-related costs, most of the costs will be in '24. Some of them will spill over into '25. So we're going to have some transition costs for IT. We're going to have some cash retention awards in '25, but most of the costs will be in '24.

[Bryan Maher, analyst]

And can you give us a ZIP code on those numbers? Is it a couple of million? Is it $10 million? Is it $5 million? Like how should we be thinking about that?

[Ellen Ingersoll, executive]

Right. So the transaction costs that we talked about relating to what will come out of the proceeds was about $20 million.

[Bryan Maher, analyst]

And is it safe to maybe do $15 million in the fourth and $5 million in the first, something along those lines?

[Ellen Ingersoll, executive]

No, it would be about $20 million as of year-end and then another $5 million to $6 million in 2025.

[Bryan Maher, analyst]

Okay. Perfect. And then the insurance proceeds from Jasper, I was pleased to hear that you're already receiving money there. I think you said $4.7 million in the third and $6 million total to date. Where do we find that on the P&L?

[Ellen Ingersoll, executive]

The proceeds that came in. So some of it is offset against the impairment. So right now, we have -- how much is on the balance sheet? $6.5 million -- we have $6.7 million in our receivables. We have all the proceeds. Everything is on the balance sheet. There's nothing that's hit the P&L other than impairment. We had an impairment and then we had recoveries that offset that on the P&L. But you're not going to see any on the P&L currently. It's all on the balance sheet. So as we recover BI going forward, you'll see that as a separate line item on the P&L.

[Bryan Maher, analyst]

Going forward, I guess, starting in the fourth quarter, first quarter?

[Ellen Ingersoll, executive]

Right. Starting in the fourth quarter, any proceeds we receive, we'll break that out on the P&L.

[Operator]

Your next question comes from Alex Fuhrman with the company, Craig-Hallum Capital Group.

[Alex Fuhrman, analyst]

David, it seems like every quarter this year, we've kind of heard about the Sky Lagoon being really strong demand and different measures you're taking to capture that demand. And no matter what you do, it seems like there's just more and more demand there. I was wondering if you could maybe give us a little bit of a sense for those of us that haven't been out there. Can you describe to us kind of what is the opportunity to expand on that property? Is there enough space in the area to potentially build a boutique hotel to leverage all of the demand and the strong location there? Really impressive results in the third quarter from Sky Lagoon. Just wondering how much more there could be to go there as you look at the future?

[David Barry, executive]

Sure. I'd be happy to walk you through some stuff. So a couple of things to remember, right? Just to reenter on what we've actually done. So at Sky Lagoon, we realized as things continued and momentum was building that the higher-end experience, which is called Suel, which is the whole turf house experience between the steam shower and the salts and the salt scrub and the sauna and all of the different aspects of cold plunge and so on, it had a throughput issue, and it was incredibly popular, but we were turning guests away from a higher-end product because we had throughput issues. So the first problem we solved was to make the whole experience in the turf house incredibly beautiful, larger and just magnificent. So now instead of sauna that seeds 50 beautiful people staring at the ocean, there's two. And there's a combination of just improvements to that facility. 



What that allows you to do is to sell more of our higher-end product, which is the ritual and to really encourage guests, and it drives length of visitation, it drives guest satisfaction levels and so on. Remember that it's an OpCo and PropCo partnership, right, where we work with our Icelandic partners who are the landowners there. So there are opportunities for development, and it would be something we might consider, we may not consider as time goes on. And so no commitment today as to what we might be envisioning there other than there continues to be opportunity to expand the product, continue to have opportunity to work on the various brand aspects of it. But we're really, really pleased with how the design and operational efforts have brought it to fruition.

[Alex Fuhrman, analyst]

Okay. That's really helpful. And then if I could just follow up on Jasper and the Canadian Rockies. It seems like you now have a pretty good handle, at least for the off-season here of how demand is shaping up and what that's looking like in the new world in which a lot of your competitors are offline for a few years. Curious what you're seeing in terms of rates? And then even more importantly, I guess, I'm curious to what extent the dent of supply of hotel rooms in Jasper is impacting the rest of the region? Are you seeing more people booking in BAM and elsewhere in the Rockies? Curious if that could potentially drive more overnight guests to Waterton Lakes or even to Golden?

[David Barry, executive]

Well, I think the interesting thing, Alex, is that recovery is happening very quickly. So 7 out of 8 hotels in Jasper are back open and hosting guests and excited to do it. We have Pyramid Lake Lodge undergoing a few repairs, but it will be open for the Christmas holidays, and we anticipate a busy winter season. Our pacing for the first quarter for that part of the ski season is doing well. So we think we're going to have continued demand, and that's going to drive, obviously, pressure and compression within the market that we'll work to adjust to. 



It will take several years for those 400 keys to be rebuilt. And so what's important is we're focused on how do we provide the support to our tour and travel partners, provide great experiences for guests and make the needed improvements that we're doing. Our Q4 rates are up from this time last year. And so we're excited about that. And we anticipate that we'll have continued rate growth through the beginning of '25 and obviously, through summer '25.

[Alex Fuhrman, analyst]

That's great. Thank you very much.

[David Barry, executive]

You're welcome. And you need to go to Iceland?

[Alex Fuhrman, analyst]

Yes, for sure.

[Operator]

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

[Steve Moster, executive]

All right. That concludes our call for today. So thank you very much for your interest in our business, and we will talk to you at the end of the next quarter. Thanks so much.

[Operator]

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.