December 14, 2012 - 8:55am EST by
2012 2013
Price: 24.53 EPS NA NA
Shares Out. (in M): 21 P/E NA NA
Market Cap (in $M): 517 P/FCF NA NA
Net Debt (in $M): -122 EBIT 44 0
TEV (in $M): 439 TEV/EBIT NA NA

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  • Travel
  • Leisure
  • Hotels
  • trade show
  • Duopoly



Viad Corp (“VVI”) owns and operates two unrelated businesses which are currently undervalued and if separated, would create significant shareholder value.  The Marketing and Events Group (“MEG”) services the exhibition and events industry in North America, the United Kingdom, Germany and the United Arab Emirates.  The Travel & Recreation Group (“T&R”) services the tourism industry in North America.

MEG specializes in all aspects of the design, planning and production of trade shows and, to a lesser extent, other face-to-face events, immersive environments and brand-based experiences.  MEG is the #2 player in the U.S. with an approximate 35% market share in the duopolistic U.S. tradeshow management market.  VVI is the market share leader in Canada, UK, Germany and the UAE. 

T&R owns and manages unique hotels, attractions and transportation services/packaged tours in three distinct tourist areas: 1) Waterton-Glacier International Peace Park, which encompasses Glacier National Park in Montana and Waterton Lakes National Park in Alberta, Canada; 2) Banff National Park in Alberta, Canada and 3) Denali National Park and Preserve in Alaska. 


Investment Thesis

Marketing & Events business and the Travel & Recreation business are both undervalued, but unrelated; separation creates immediate value 

–        Travel & Recreation business has high defensibility and scalability; attractive to both industry and private equity buyers at >10x EBITDA given high market share, “contra” seasonal programming, and scalability through additional acquisitions

–        Valuing the Travel & Recreation business at 10X EBITDA (or roughly $350MM) and backing out NOL of $92MM implies a 1.6x EBITDA multiple for the Marketing & Events business.

Marketing & Events (GES portion) business has a stable #2 market share in the U.S.; significant ongoing rebound in profitability

-         2011 Revenue and EBITDA of $841MM and $28MM, respectively.

–        GES and Freeman control ~80% of the top 250 tradeshows in the U.S. through long term contracts and 90% customer retention.

–        U.S. business profitability has been impacted by economic slowdown, unfavorable labor contracts, and ongoing losses from (formerly separated division) Exhibitgroup/Giltspur/Becker business that since been restructured.

–        Management has removed over $50 Million of costs during past three years: current labor contracts favorably renegotiated; recently announced headcount reductions; continued warehouse consolidation

         > This year completed consolidations in San Francisco and Chicago totaling ~300k square feet) (and ~900k square feet over the past 3 years)

=> GES profitability masked by ExhibitGroup losses; reported numbers understate current run rate of the business


Marketing & Events International is highly profitable with strong #1 market share positions in each of its markets (Canada, UK, Germany, UAE)

–        2011 Revenue and EBITDA of $219 MM and $16 MM, respectively

–        Dominant share in the U.K. given collapse of #2 competitor, EMAP

Business Overview – Segments


MEG accounted for 89% ($841MM) of revenue and 51% ($28MM) of EBITDA in FY 2011.  It is a global leader in producing some of the largest and most prestigious tradeshows and exhibitions.  Show retention rate is 90+% and the typical contract length is 3-5 years.  Current revenue backlog is over $1 billion.  Additionally, the largest single show provides less than 5% of Marketing & Events annual revenue, so there is no significant customer concentration. 

MEG’s U.S. segment can be dis-aggregated between trade show management (“GES”) and Exhibitor Services (“ES”).   GES produced $451MM(1) revenue in FY 2011 and has a strong number two market share position in trade show management behind Freeman (privately held) with a ~50% market share.  GES provides planning, installation, and dismantlement of some of the largest tradeshows in the U.S. (i.e., International CES, International Manufacturing Technology Show and Mine Expo).  The customers are primarily the show organizers.

ES had $181MM(1) revenue in FY 2011 and includes exhibit design, construction, storage and management as well as on-site support and attendee feedback.  ES also provides experiential marketing services which includes retail kiosk design and traveling exhibit management.  The market is highly fragmented and mostly local/regional. 

MEG’s U.S. segment accounted for approximately 67% ($631MM)of revenue and 21% ($11MM) of EBITDA in FY 2011.  The U.S. segment has full-service operations in every major exhibition market in the U.S, including in Las Vegas, Chicago, Orlando, New York City, Los Angeles and San Francisco. In each of these locations, the Company is a leading service provider, servicing some of the most important events in its industry.  During 2011, this segment provided services to over 1,500 exhibitions and events and more than 166,000 exhibitors.  Customers are typically Fortune 500 companies. Base same show revenues (shows that occur in the same quarter, same city each year) increased 8.1% for the first nine months of 2012.  There have been nine consecutive quarters of same show growth.

MEG’s International segment accounted for 23% ($219MM) of revenue and 31% ($16MM) of EBITDA in FY 2011.  This group has facilities in Canada, UK, Germany and the UAE and is a market share leader in all four markets with dominant share in the UK.  The International segment provided services to over 650 exhibitions and events which represents more than 58,000 exhibitors.  This segment provides tradeshow management and exhibitor services to customers who are generally Euro 500 companies.  The Company delivered event services for the 2012 London Summer Olympic and Paralympic Games in more than 20 venues throughout London.


T&R accounted for 10% ($102MM) of revenue and 48% ($25MM) of EBITDA in FY 2011.  This group owns and manages unique hotels, attractions and tours in three distinct areas:  1) Waterton-Glacier International Peace Park, which encompasses Glacier National Park in Montana and Waterton Lakes National Park in Alberta, Canada, 2) Banff National Park in Alberta, Canada and 3) Denali National Park and Preserve in Alaska.  The Company has high market share in Banff National Park and surrounding area and is dominant in Glacier National Park.  T&R’s strategy is to drive utilization across its various properties through the bundling of lodging and attractions while leveraging an increasingly centralized reservation system.  T&R continues to purchase additional hotels and attractions where it can leverage existing operations and drive utilization.

T&R Hospitality revenues have grown at a 3-year CAGR of 15.1% from $28.2MM in 2009 to $37.4MM in 2011.  This is due to an increase in RevPAR (2) from $124 to $131 and an increase in room count, from 924 to 1,161.  The 2012 acquisition of Banff International Hotel (162 rooms) and the 111 rooms that were under renovation at Many Glacier Hotel have provided additional growth.  Attractions revenues have increased due to an increased number of passengers and increased revenue per passenger.  Passenger volume increased from 775K in 2009 to 874K in 2011.  Revenue per passenger increased from $37.85 in 2009 to $42.30 in 2011.  Transportation revenues increased from $12.1MM in 2009 to $14.8MM in 2011, and Package Tour revenues have increased from $9.8MM in 2009 to $17.4MM in 2011.

The following chart highlights T&R’s key owned and managed properties:



# of













Banff area (Canada)


$20.7 (2)


Owned Hotels:


Banff International Hotel


Banff Natl. Pk.





Glacier View Inn


Jasper Natl. Pk.





Mount Royal Hotel


Banff Natl. Pk.





Managed Concessions:


Ice Field Tours


Banff Gondola


Banff Lake Cruise





Tours (bus, rail, etc.)


Events (Corporate Events, Management Services)


Glacier Discovery Walk (to be  completed in 2013)


$12.0 (3)


Glacier Park (Montana/Canada)






Glacier Park Lodge


East Glacier





Grouse Mountain Lodge


Glacier Natl. Pk.





Prince of Wales Hotel (Leased thru 2052)


Waterton Lakes Natl. Pk.





St. Mary Lodge & Resort


Glacier Natl. Pk.





Managed Concessions (U.S. Park annual contract):


~$3MM (of the $4.8MM)


Lake McDonald Lodge


Glacier Natl. Pk.



Many Glacier Hotel


Natl. Pk.



Rising Sun Motor Inn


Glacier Natl. Pk.



Swift Current Motor Inn


Glacier Natl. Pk.



Village Inn Motel


Natl. Pk.



Bus Tours


Retail Shops & Food and Beverage Operations


Denali (Alaska)


Owned Hotels


Denali Backcountry Lodge

Denali Natl. Pk.





Denali Cabins

Near Denali Park


(1) RevPAR defined as revenues from room sales divided by the number of rooms available. Amount shown represents simple average of all T&R hospitality properties.

(2) Total EBITDA for all of Canadian Operations; Does not include Banff International Hotel which was acquired in 2012

(3) Budgeted amount of construction project to be spent in 2012







Banff National Park is located in Alberta, Canada and is Canada’s oldest National Park.  There have been more than 4 million visitors to Banff National Park every year since 1996.  In the Banff area, T&R owns the following hotels: Banff International Hotel (162 room hotel), Mount Royal Hotel (136 room hotel) and Glacier View Inn (32 room hotel) located on the Columbia Icefield between Lake Louise and Jasper National Park).  Jasper National Park had 1.9 million visitors in 2011. 

The Company also manages Brewster, a tourism service operator in Western Canada.  Brewster offers attractions, transportation services and corporate/event management.  Brewster’s attractions include the Banff Gondola, tours of the Athabasca Glacier on the Columbia Ice Field and the Banff Lake Cruise operations. The Banff Gondola transports visitors to an elevation of over 7,000 feet above sea level offering an unobstructed view of the Canadian Rockies.  The Gondola had approximately 475K passengers in 2011.  Ice Field Tours provide the opportunity to ride in an “Ice Explorer” vehicle designed for glacier travel.  There were about 315K passengers in 2011.  Lake Cruises offer boat tours, small boat rentals and charter fishing on Lake Minnewanka.  There were 33K visitors in 2011.  Other offerings include Tours (by bus and rail) and Corporate Events and Managed Services. 

The Glacier Discovery Walk is a new attraction that will provide for a guided experience focusing on the ecosystem and history of the Columbia Icefield area.  Construction on the Glacier Discovery Walk began in July 2012 and will be completed in mid-2013.

Glacier National Park is located in Waterton-Glacier International Peace Park, which encompasses Glacier National Park in Montana and Waterton Lakes National Park in Alberta, Canada.  According to the U.S. National Parks Service, there were 1.9 million visitors in 2011 and 2.1 million visitors YTD through October 2012 at Glacier National Park.  This is among one of the most visited National Parks in the United States.  Waterton Lakes National Park has annual visitation of 425K (Source: Parks Canada).  In Glacier National Park, T&R owns the following hotels:  Glacier Park Lodge (161 room hotel), Grouse Mountain Lodge (145 room resort hotel) and St. Mary Lodge & Resort (115 room hotel).  Prince of Wales Hotel (86 room resort hotel) is operated under a 42 year ground lease with the Canadian government through 2052. T&R manages the following properties and attractions: Lake McDonald Lodge (100 room hotel), Many Glacier Hotel (215 room resort hotel), Rising Sun Motor Inn (72 room hotel), Swift Current Motor Inn (88 rooms in cabins) and Village Inn Motel (36 room hotel).

The Company is the largest concessionaire in Montana’s Glacier National Park and has been the chosen concessionaire in Glacier National Park since 1980.  The concession contract covers all services (food/beverage, retail operations, transportation services) provided within Glacier National Park. Of the 1,017 total hotel rooms available in Glacier National Park, 510 are operated under the concession contract.  The other 507 rooms are provided by T&R’s owned hotels.  The original 25-year contract relating to the concessionaire services was set to expire on December 31, 2005, but has been extended on a year-to-year basis through December 31, 2012.  The U.S. National Park Service will likely extend the concession for one year in 2013.  The Company did participate in a bidding process for a new contract that could be for 10, 15 or 20 years and will commence once the one year extension expires in 2013.  While management feels that it is in a good position to win, the loss of the contract would only impact EBITDA by $3MM per annum.

Denali National Park and Preserve is located in Alaska. There were 406K visitors in 2011 and 388K visitors YTD through October 2012 (U.S. National Parks Service). T&R owns Denali Backcountry Lodge (42 guest rooms) on six acres inside Denali National Park and Preserve and Denali Cabins (46 guest cabins) on six acres near the entrance to Denali National Park and Preserve.  These owned properties are one of three in holdings in Denali National Park and Preserve. The Lodge operates day trips, package tour sales, marketing program and daily motorcoach service between Anchorage and Denali National Park and Preserve.  These properties allow VVI to use its operational expertise and expand the Company’s national park footprint into Alaska.


Losing concession contract with Glacier National Park

Contract loss would impact annual EBITDA by approximately $3MM.  If a new concessionaire were selected by the U.S. National Park Service, Glacier Park’s remaining business would consist of its operations outside of Glacier National Park: Prince of Wales Hotel in Waterton Lakes National Park, Alberta, Canada; Grouse Mountain Lodge, located in Whitefish, Montana, which is near Glacier National Park; St. Mary Lodge & Resort, located in St. Mary, Montana, which is located outside the east entrance to Glacier National Park and Glacier Park Lodge in East Glacier, Montana.  If Glacier Park loses the concessionaire contract, the entity would be entitled to an amount equal to its possessory interest of $25 million which is the value of the structures acquired or constructed, fixtures installed and improvements made to the concession property at Glacier National Park during the term of the contract (contract began in 1980). 

Macroeconomic risks

A macroeconomic downturn could impact the number of visitors to the National Parks and have a negative effect on the Travel & Recreation business.  During the downturn, the median decline in attendance of the National Parks was (4.3%).  Travel & Recreation Revenue declined from $86.6MM in 2008 to $75.3MM in 2009, a decline of (13.1%).  2011 Travel & Recreation Revenue was $101.8MM.  A decline of (13.1%) from this level would result in $88.5MM Travel & Recreation Revenue.

Additionally, a downturn could have a negative effect on the Marketing & Events Group.

In the U.S. in 2009, the number of exhibitors declined (10.4%) and the number of attendees declined (7.1%).  Revenue dropped (29.4%) from 2008 to 2009.  A (29.4%) downturn from $840.6MM in MEG 2011 Revenues would result in MEG Revenue of $593.7MM. 


The Company has continued top line and bottom line growth since the downturn.  Catalysts for increased share price include continued margin improvement, share repurchases, hotel property acquisitions and separation of the two businesses.

(1)    AOF Estimates based on available segment and geographic disclosure from 2009 -2011. Actual results, if available, could be substantially different.

(2)    RevPAR defined as revenues from room sales divided by the number of rooms available. Amount shown represents simple average of all T&R hospitality properties

I do not hold a position of employment, directorship, or consultancy with the issuer.
I and/or others I advise hold a material investment in the issuer's securities.


Continued margin improvement

Share repurchases

Hotel property acquisitions

Separation of the two businesses

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