Viad (VVI) Q4 2019 Earnings Call Transcript

Viad (VVI 1.55%)
Q4 2019 Earnings Call
Feb 06, 2020, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Viad Corp. fourth-quarter earnings call. [Operator instructions] This call is being recorded. [Operator instructions] May I introduce your speaker for today, Carrie Long.

Please go ahead.

Carrie Long -- Director of Finance and Investor Relations

Good afternoon, and thank you for joining us for Viad's 2019 fourth-quarter and full-year earnings conference call. During the call, you will be hearing from Steve Moster, our president and CEO; and Ellen Ingersoll, our chief financial officer. 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 and quarterly reports filed with the SEC.

We'll be referring to certain non-GAAP measures during the call, including income or loss before other items, adjusted segment EBITDA and adjusted segment operating income or loss. Important disclosures regarding these measures, including reconciliations to net income or loss attributable to Viad can be found in Table 2 of our earnings press release, which is available on our website at www.viad.com. Now I'd like to turn the call over to Steve.

Steve Moster -- President and Chief Executive Officer

Thank you for joining us on today's call. Pursuit and GES delivered solid revenue growth for the 2019 fourth quarter and full year, and we expect significant growth in 2020 from both businesses. Pursuit had an exciting year, and I'm very proud of the many growth opportunities the team has worked diligently to create and execute successfully. We continue to pursue a Refresh, Build, Buy growth strategy by refreshing our existing experiences to maximize revenues, building new experiences with economies of scale and scope and buy strategic assets that drive guest experiences.

We are leveraging two growth platforms within Pursuit, its iconic locations and its flyover attractions to become the world's leading provider of experiential adventure travel. And we have made great progress accelerating growth within each of these platforms during 2019 within our iconic locations, we completed several significant growth projects to refresh, improve and expand our collection of world-class experiences. I believe Maligne Canyon and Maligne Lake in Jasper, we refreshed the food and beverage and retail offerings and increased ancillary revenue per visitor. At our Windsong Lodge in Alaska, we built a 36-room expansion and increased cross-selling of our nearby popular and high margin Kenai Fjords marine sightseeing tour attraction.

At the Columbia Icefield, we rebranded and renovated our Glacier View Lodge to create a premium all-inclusive hospitality experience with exclusive activities at our nearby Glacier Adventure and Glacier Skywalk attractions. This Glacier View resort was recognized as one of Fodor's five best hotels in Canada. Near Glacier National Park, we built the West Glacier RV park and Cabin Village, which is ideally situated at the west entrance of the park and adjacent to our existing amenities in West Glacier. Each of these growth projects has enhanced the guest experience, improved our market position and maximized our returns for this year and beyond.

On the acquisition front, we completed three transactions during 2019 within our iconic locations platform. The first was the tuck-in acquisition of the Belton Chalet in West Glacier. The second was the purchase of a 60% controlling interest in the Mountain Park Lodges seven hotel properties in Jasper National Park in early June. These 735 guest rooms represent 31% of the lodging market and are ideally situated near three of our attractions.

We experienced very strong results during our first season operating these properties, and we see a meaningful opportunity to accelerate revenue growth through our revenue management and refresh efforts going forward. Finally, in July, we announced that we acquired a 51% controlling stake in an Icelandic entity that will operate a new geothermal lagoon in Iceland. This all-season attraction will have an ideal oceanfront location and close proximity to downtown Reykjavik. Development efforts are under way, and we expect to open the new sky lagoon in 2021.

We also continue to realize growth in our existing assets from our revenue management efforts and our commitment to excellent guest experiences. We maximize revenue by managing price and filling capacity based on our understanding of who our guests are, when they can visit and what experiences they are seeking. We have developed our own ability to improve quality and experience at our previously refreshed Mount Royal Hotel and Banff Gondola attraction. The Mount Royal Hotel has climbed to the No.

2 hotel in Banff on TripAdvisor and is capturing strong growth in RevPAR. The Banff Gondola now boasts the No. 1 ranking on TripAdvisor for both attractions and restaurants in Banff, and we continue to deliver year-over-year growth in revenue per visitor. Pursuit's other growth platform, flyover attractions, offers an accelerating plant ride with state-of-the-art technology that gives the feeling of flight with full motion seating over incredible scenery on a large spherical screen with special effects featuring wind, mist and scent.

We acquired our first flyover attraction, FlyOver Canada in Vancouver in December 2016, as an established and proven concept, generating high margins with an opportunity to grow. Using this cutting-edge technology and our operational expertise, we see expanding flyover attractions around the world as a meaningful and profitable growth strategy. In late August, we opened our second flyover attraction, FlyOver Iceland in Reykjavik, which has already achieved the No. 2 rating on TripAdvisor.

We also have two additional flyover attractions in development. FlyOver Las Vegas is expected to open in 2021 and FlyOver Canada in Toronto is expected to open in 2022. We designed each flyover attraction with a seat capacity to meet the demand of the local tourism market. FlyOver Las Vegas and FlyOver Canada Toronto will be our largest thus far at 80 seats each, which is based on the significant visitation to these markets.

Across both platforms within Pursuit, our strong hospitality culture differentiates us and is a key to our success. Engaged team members create extraordinary guest experiences, which ultimately drives long-term profitable growth. Our positive guest feedback and improved financial metrics also support that we know how to position our properties in the market effectively. Going forward, we continue to seek value-enhancing opportunities to grow Pursuit through our Refresh, Build, Buy strategy.

We have a strong pipeline of high quality bucket list experiences in iconic locations with perennial demand that we are diligently pursuing. And we're actively evaluating other visually iconic locations with strong visitation to continue expanding the FlyOver platform. And now I'll ask Ellen to comment a little bit on Pursuit's financial results. Ellen?

Ellen Ingersoll -- Chief Financial Officer

Thanks, Steve, and good afternoon, everyone. For the fourth quarter, Pursuit's revenue was $21.7 million, up $6.5 million from the prior year reflecting incremental revenue of $3.8 million from acquisitions completed during 2019, $1.6 million revenue from FlyOver Iceland and other organic growth. Pursuit's fourth-quarter adjusted segment EBITDA declined by $1.2 million, primarily reflecting additional costs to support the ongoing growth of Pursuit. Pursuit delivered full-year revenue of $222.8 million, up 20.3% from 2018.

This growth came from acquisitions. On an organic basis, Pursuit's revenue grew $19.8 million or 10.7%. Our various refresh and build investments contributed approximately $10 million in organic revenue growth and our same-store revenues grew at a mid-single-digit rate. Pursuit's full-year adjusted segment EBITDA grew 18.3% to $81.2 million.

And the acquisitions of Mountain Park Lodges and Belton Chalet contributed adjusted segment EBITDA of $9.5 million with the remaining growth being driven by our organic revenue growth. And back to you, Steve.

Steve Moster -- President and Chief Executive Officer

Now let's switch gears and talk a little bit about GES. GES is making great progress against our strategic objectives to simplify our business, grow our profitability long term and transform into the preferred full service provider for live events. Our hard working team is focused on serving our clients, driving profitable revenue growth and managing our costs. As a testament to our commitment to providing the best customer service experience for our clients, the GES national service center achieved the J.D.

Power certification for phone support for 11 consecutive years and became the first company to receive the J.D. Power certification for chat support this year. I am very proud of our employees and their dedication to providing service excellence. One of the ways that we can simplify our business is to standardize our product offering in a manner that drives client satisfaction and ease of execution.

This year, we introduced a new, modern, standardized registration counter system for check-in at our events that has created delivery efficiencies and received a very positive client feedback. In addition, GES launched Exhibit Ready. A new exhibit rental offering, which serves a turnkey solution for corporate clients exhibiting at trade shows with smaller footprints. ON Services, our U.S.

AV company launched Scenic Ready, a new turnkey scenic design solution that combines a lightweight recyclable aluminum framing system with high impact graphics, digital content and lighting to create a custom stage design that decreases setup time. We continue to look for additional ways to meet the needs of our clients more efficiently and effectively. Another way that we can simplify our business is to rationalize our facilities. During the year, we strengthened our operational efficiencies through consolidating facilities in Las Vegas and various other small U.S.

operations, reducing our facility footprint in Canada and streamlining our organizational structure. These actions will enhance our ability to serve our clients and help improve our cost structure for years ahead. Within our largest market segment, exhibitions and conferences, we continue to grow same-show revenue at low single digits, and we expect this trend to continue into 2020. We have seen softness from two industry sectors, retail and auto, and we believe these sectors have stabilized at lower growth rates than the rest of the industry.

This year, our revenue was impacted by negative show rotation of about $15 million from nonannual shows that took place in 2018. In 2020, our revenue will benefit from about $100 million of positive show rotation, driven largely by three major nonannual events that will all occur in 2020. CONEXPO-CON/AGG occurs every three years during the first quarter. IMTS occurs every two years during the third quarter.

MINExpo occurs every four years during the third quarter. Our team is very excited and gearing up for a big year of activity. As a global leader in the exhibition and conference segment, GES is leveraging our relationships with corporate marketers and existing capabilities to penetrate the large, higher growth and margin corporate event market. The team is making great progress against the strategic goal and increased revenue from corporate events by 11.8% year over year during the 2019.

We partnered with many major brands like Bell Helicopter, Halliburton, Lockheed Martin, Boeing, Saudi Aramco, Mile Komatsu, Hermal, Starbucks and CloudBees. During the fourth quarter, we renewed business with JDA, Ream, Pfizer, as well as one new business with Greensphere, Summit Aviation, Fresh Food Group and Andus. We continue to see strong demand from corporate marketers to create engaging and immersive brand experiences at events. We're encouraged by our early success penetrating this important segment of the market, and we see significant runway ahead.

And now I'll turn it over to Ellen for some financial commentary. Ellen?

Ellen Ingersoll -- Chief Financial Officer

Thanks, Steve. For the fourth quarter, GES's revenue was $299.6 million, up $17.9 million or 6.3% from the prior year. Approximately $5 million of this revenue growth was the result of positive show rotation with the remaining growth coming primarily from new business wins and same show growth. Setting aside the impact of show rotation, both the North America segment in the EMEA segment realized mid-single-digit revenue growth during the quarter.

GES's fourth quarter adjusted segment EBITDA increased by $1.2 million from the 2018 quarter, primarily driven by higher revenue, partially offset by accruals for performance-based incentives earned in 2019. And as a reminder, GES did not achieve a short-term incentive payout for 2018. GES delivered full year revenue growth of 3.4% or $38 million. Adjusting for the $15 million impact of negative show rotation and the $11.2 million impact from unfavorable exchange rate variances, GES's full-year revenue grew by about $64 million.

This reflects mid-single-digit growth within both the North America segment and the EMEA segment due to new business wins and underlying business growth. As Steve mentioned, we realized strong revenue growth of about 11.8% within the corporate event market segment, while our U.S.-based same-show revenue from exhibitions and conferences grew at a low single-digit rate of 1.3%. GES's full-year adjusted segment EBITDA declined $6.2 million from 2018, as accruals for performance-based incentives earned in 2019 more than offset the flow-through on revenue growth. GES's adjusted segment operating income declined to a lesser degree, due to lower depreciation and amortization.

GES is already a business with low capital intensity, and we continue to seek ways to streamline the business and improve our operating leverage across the network. During the fourth quarter, we identified opportunities to improve the asset utilization, cost structure and margin profile of our U.K.-based audiovisual services business. This business has historically served the U.K. market in a fairly diverse manner with clients ranging from corporates to venues to exhibitions and conferences across the U.K.

Going forward, we intend to be more selective about how we service clients in this market so that we can maximize asset utilization serving higher profitability account. We recorded a pre-tax asset impairment charge of $5.3 million during the fourth quarter, primarily related to our review of this U.K.-based business. For Viad as a whole, we reported full-year consolidated adjusted segment EBITDA of $152.7 million, which was up 4.4% from 2018 as lower results at GES were more than offset by strong growth at Pursuit. Our consolidated cash flow from operations was $108.1 million for the year.

We reinvested $76.1 million back into the business through capital expenditures, including approximately $35 million for growth projects at Pursuit and about $10 million for margin-driving investments at GES. And we deployed another $92 million toward acquisitions at Pursuit. We continue to maintain a strong balance sheet with a leverage ratio of 2.5 at December 31. Our debt was $342.3 million, and our cash and cash equivalents totaled $62 million at the end of the year.

Our GAAP basis net income attributable to Viad for the 2019 full year was $1.02 per share. This figure includes after-tax charges of $11.7 million related to a union pension withdrawal and $6.4 million related to a legal settlement that we discussed on previous earnings calls as well as restructuring charges of $6.3 million after tax and the asset impairment charge of $4.3 million after tax, which were primarily related to strategic simplification and profit improvement actions at GES. Finally, it included flyover start-up costs and acquisition-related costs totaling about $4.2 million after tax and favorable tax matters of $4.2 million. Our full-year income before other items was $2.48 per share, up 6% from $2.34 per share in 2018.

Our higher per share earnings primarily reflects growth in our adjusted-segment operating income and a lower effective tax rate, partially offset by increases in interest expense and income attributable to noncontrolling interest. And now I will cover our guidance for 2020 before returning back to Steve. For the first quarter, we expect income before other items to be in the range of $0.01 to $0.16 per share, and this compares to a loss-per-share of $0.51 in the 2019 first quarter. This improvement primarily reflects positive show rotation at GES, which we expect will approximate $60 million.

At this point, we have not experienced any meaningful impact on our business from the coronavirus, either in terms of current volumes or future bookings. And while we believe our risk for the first quarter is low given its seasonally slow period for Pursuit, with minimal exposure to long-haul travelers, it is possible we could feel some effect. Overall Pursuit works with about 8,000 touring travel partners in 80 countries. The team worked hard to balance demand between travel partners and source countries so that we're never overweight in one visitor origin.

The majority of our Chinese visitors travel between May and early October. At present, group travel outbound from China is affected by the travel halt, and these inbound numbers are small for us through the end of March. Of our approximately 2.5 million attraction visitors only about 9% are Chinese-based group travelers whose plans could be affected by the travel halt. Because it is difficult to estimate the severity or duration of travel disruptions caused by the coronavirus at this time, our current guidance ranges assume the virus will have minimal impact on either the first quarter or the full year.

For the full year, we currently expect our consolidated adjusted segment EBITDA to increase by about $42 million to $53 million driven by growth at both GES and Pursuit. We expect GES's full year revenue to increase by 11% to 13%, driven by positive show rotation of about $100 million and continued new business wins. We expect strong flow-through on this revenue in the range of about 30% due to the operating leverage that exists with the GES business. We expect GES's full-year adjusted segment EBITDA to be in the range of $109 million to $114 million, as compared to $71.5 million in 2019.

At Pursuit, we expect full year revenue growth in the range of 12% to 17% driven by incremental revenue of $19 million to $21 million from Mountain Park Lodges and FlyOver Iceland, as well as mid-single-digit to high single-digit growth across the rest of our attractions and hospitality assets. We expect Pursuit's adjusted segment EBITDA to grow by about $5 million to $11 million. These ranges reflect a slight reduction in Pursuit's strong EBITDA margin, which is due in part to owning Mountain Park Lodges during its seasonally slower months of January through May when margins are meaningfully lower than the full-year margin for these properties. It also reflects investments to support the ongoing expansion of Pursuit's business.

We expect our full year cash flow from operations to be in the range of $140 million to $150 million. And we expect capital expenditures to be in the range of $93 million to $99 million, which includes approximately $45 million of growth capEx at Pursuit and about $10 million of margin-driving capEx at GES. Additional guidance can be found in our earnings press release. And with that, I'll turn it back to Steve.

Steve Moster -- President and Chief Executive Officer

Thanks, Ellen. In closing, we're pleased with our performance in 2019 and excited about the opportunities that lie ahead in 2020 and beyond. The significant progress we've achieved on our growth initiatives this year has set us up for a bright future with long-term profitability. With respect to the coronavirus, as Ellen mentioned, we have not experienced any meaningful impact on our business thus far.

And we are hopeful that swift progress will be made to treat and prevent the virus ahead of Pursuit's peak summer season. Although it's impossible to predict with any accuracy how our 2020 financial performance will be affected by the coronavirus, we believe that any impact will be temporary. And we still expect to realize significant growth over 2019 with GES' strong show rotation schedule. Importantly, we expect to generate a large amount of operating cash flow during 2020 from about $100 million of positive show rotation revenue at GES that we can reinvest into the business using disciplined capital allocation to drive value.

We lead with a holistic view of our businesses to determine where our investments will generate the highest return to accelerate growth. Pursuit has three future high margin attractions that are expected to open in 2021 and 2022, including FlyOver Las Vegas, the new sky lagoon in Iceland and FlyOver Canada, Toronto. That will also generate significant cash flow and help partially offset the negative show rotation revenue following 2020. Additionally, we have a robust pipeline of iconic experiences with strong returns at Pursuit and substantial runway to capture market share in the higher margin corporate event segment at GES.

We're confident in our growth strategy and committed to maximizing shareholder value. I want to thank the entire Viad team for their hard work and dedication. I'm very proud of what we've already accomplished, and I'm excited about the new growth opportunities that we are actively pursuing. And with that, we will open up the call for questions.

Debbie, can you please open up the line? Thank you.

Questions & Answers:

Operator

[Operator instructions] And our first question will come from Kartik Mehta with Northcoast Research. Your line is now open.

Kartik Mehta -- Northcoast Research -- Analyst

Good evening, Steve and Ellen. Steve, you talked about, obviously, the GES business and the success you're having on the corporate event side. And I'm wondering what percentage of revenue now is corporate events for GES. And what kind of growth would you anticipate for that segment of the business in 2020?

Steve Moster -- President and Chief Executive Officer

Thanks, Kartik. Thanks for the question. So we are very excited about the corporate events segment within GES. I think we mentioned in 2018, it was 14% of our revenue.

And we've seen that growing so 14% of total GES revenue. And we've seen that grow pretty substantially. We kind of forecast significant growth in the coming years. We think we have a pretty good runway.

It has been one of the fastest areas of growth within GES. So we are optimistic about our opportunities. And we're excited about what we can do within that segment.

Kartik Mehta -- Northcoast Research -- Analyst

And then, Steve, as you look at some of the leading indicators for the trade shows that are happening in 2020 and as you are booking out, I imagine in 2020 and not the future, what are some of the metrics you look at? And where do they stand in terms of health for the industry?

Steve Moster -- President and Chief Executive Officer

So I think there's some common metrics that we look at, as well as the entire industry. We will look at the overall square footage for the events, which ties or correlates pretty strong to our revenue within those events. We'll also look at the number of exhibitors and the number of attendees that are at the events. And these are metrics that the industry follows pretty regularly.

They're part of the CEER or Center for Industry Research Report that comes out throughout the year. So those are the metrics we look at. When we look forward, we think that overall the industry is in good health, performing at kind of low single digits. That's what we see from a same-show basis, low single-digit growth.

There are a couple of sectors that we mentioned in 2019, and we still continue to see them grow slower than the rest of the industry, which is the auto industry and retail. Those would be the two that we've identified with slower growth. But overall, we see pretty good growth in the industry overall. And we see some strength from the non-annual events that we have happening in 2020.

Kartik Mehta -- Northcoast Research -- Analyst

And then just one last question, Steve, just on the FlyOver Iceland, any worries at all since they are having a pretty sharp decline in visitors to Iceland in 2019. I'm not sure what they're projecting for 2020. But just any thoughts or concerns at all for the attraction as you move into the primary travel season for 2020?

Steve Moster -- President and Chief Executive Officer

Yes, you know I think that visitation Iceland item still is very popular. And what we've seen with the opening of FlyOver Iceland in September of last year, it is tracking above our expectation in terms of the ramp-up of packs. We are getting phenomenal reviews from our guests on TripAdvisor. And I mentioned during my comments that it's already risen to the second most popular thing to do in Iceland based on TripAdvisor scores.

So I think it is still a strong market in Iceland, and really excited about hitting our stride in 2020 with a full year of activity at FlyOver Iceland.

Kartik Mehta -- Northcoast Research -- Analyst

Thanks, Steve. I really appreciate it.

Steve Moster -- President and Chief Executive Officer

Thanks.

Operator

And our next question will come from Tyler Batory with Janney Capital Markets. Your line is now open.

Tyler Batory -- Janney Capital Markets -- Analyst

Hi. Good afternoon. Thanks for taking my questions. First question, I have is on the guidance for the Pursuit business.

And I am wondering if you can talk a little bit more about the margin and cost in that segments? Are there any areas of expense growth that are worth calling out? Is there anything onetime impacting that business in 2020 on the cost side? And then can you also give a little bit more color on some of the investments that you called out to support expansion of that business?

Ellen Ingersoll -- Chief Financial Officer

Sure. So on the margin, as we talked about, it is one of the bigger items is the full year at Mountain Park Lodges. So the January to May season is lower margin than the rest of the year. We also had some growth projects last year, and we'll have some this year in our food and beverage and retail segments, and those are lower margin than our traction.

So that gets into the mix as well. And then kind of the other thing on the margin side is we are investing in key positions for growth and these include key leadership positions in growth and digital marketing capabilities. So that's kind of on the margin side. Key growth projects for 2020, we will have significant investment in FlyOver Las Vegas and FlyOver Toronto.

We also have some of our hotels having a refresh project, and that includes room refresh and food and beverage as well. So lots of projects going on next year, but the two big ones are investments in FlyOver Las Vegas and FlyOver Toronto.

Tyler Batory -- Janney Capital Markets -- Analyst

OK, got it. That's helpful. And then just also on the revenue guidance in Pursuit. I think you talked about mid-single digit to high single-digit growth ex-acquisitions.

I mean, it is a little bit of an acceleration from the organic growth you saw in 2019. So can you talk a little bit about your expectations for the growth in visitation versus growth in the revenue per passenger, which you think should be growing more quickly?

Steve Moster -- President and Chief Executive Officer

Well, we have had a long runway over the last couple of years, where we have really driven price at some of our attractions in our hotels, as we have improved the overall experience for our guests. And we continue seeing that going forward. We think there will be modest growth on the pack side, the traction, and we think that we can continue to drive ETP at our at our attractions. So that is primarily where we think there is gain.

We also, Tyler, we made a lot of investments in 2019. So whether it's the RV park at West Glacier or at some of the refresh in terms of the food and beverage or some of the refresh of our lodging properties, those are all first year, they all went live in 2019. And I think what you'll see is us continue to be able to grow those into their second year of operation. So what I would say is packs is kind of modest growth.

We believe ETP or pricing is going to be a key lever for us. And then also another key area will be just the second year of some of these refresh and build projects that we did in 2019.

Tyler Batory -- Janney Capital Markets -- Analyst

OK, great. That's very helpful. And then switching gears to the GES business. What are you hearing in terms of the conversations that you're having with some of your corporate accounts, specifically? And is there any slowdown in terms of what those customers are willing to spend on events? Or are things still pretty strong?

Steve Moster -- President and Chief Executive Officer

No, it was really close to a number of events that we did in the fourth quarter. And we continue to see increasing budgets through the fourth quarter. The clients would have a stated budget and decide to add to their budget as the planning process. That went on.

And so I think the brands and the corporate marketers are still getting quite a bit of value out of creating experiences for their guests at these events. And so we see healthy budgets in that area.

Tyler Batory -- Janney Capital Markets -- Analyst

OK, great. And then last question for me. Obviously, there is going to be a lot of cash flow generation coming this year. Any updated thoughts in terms of what you are seeing on the M&A side of things, many opportunities out there on the GES side of things? And what does the pipeline look like? With respect to Pursuit acquisitions, specifically, you're looking at or seeing anything beyond the traditional national parks?

Steve Moster -- President and Chief Executive Officer

Yes, we are obviously excited about 2020. It is a big year for GES. We are also, though we think about 2021 and '22. We have a number of other attractions that come online that will continue to give us some solid free cash flow.

So we are in a position where we want to continue to aggressively grow these businesses. And what I would say is both businesses have strong pipeline in terms of M&A and then Pursuit also has quite a bit in terms of organic opportunities like flyovers that we can organically build. So we are actively pursuing it. We are excited about the opportunity.

And we're set to hopefully deliver on some of that in the coming years and add more shareholder value.

Tyler Batory -- Janney Capital Markets -- Analyst

OK. Great. That's all for me. Thank you.

Ellen Ingersoll -- Chief Financial Officer

And then I want to just circle back with Kartik's question on the corporate events. As a percentage of consolidated revenue, it is 15%. So just wanted to follow-up on that for GES.

Operator

And our next question comes from Steve O'Hara with Sidoti & Company.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

Good afternoon. Hi. Just quickly on the Mountain Park Lodges, the guidance. Just curious, when you guys acquired the properties, you had kind of your expectations at that time.

And are they more or less the same, better or lower? And then you noted there were some start-up costs. Can you just remind me, if those are included in the kind of adjusted operating profit? And what was the number in 2019 for that same start-up costs and things?

Ellen Ingersoll -- Chief Financial Officer

Sure. So Steve, Mountain Park Lodges, about our expectations, they were in '19, and they are for '20. So that holds. The start-up cost, are you talking about Iceland?

Steve O'Hara -- Sidoti and Company LLC -- Analyst

Yes. I think in the press release, there was a talk of $5 million to $6 million of start-up costs expected for Pursuit. Yes, I didn't know if that is for 2020? And is that already taken out of the operating income? Or is that included in the operating income guidance?

Ellen Ingersoll -- Chief Financial Officer

It is. For 2020, it is not included in the adjusted segment EBITDA.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK, OK. And what was the number in 2019?

Steve Moster -- President and Chief Executive Officer

About $2.3 million.

Ellen Ingersoll -- Chief Financial Officer

$2.3 million.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. So you have a pretty good step-up this year with those costs?

Ellen Ingersoll -- Chief Financial Officer

Yes, and we excluded that from our guidance.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

From the EBITDA guidance?

Ellen Ingersoll -- Chief Financial Officer

Right. And some of that, Steve, is noncash lease expense as well. So on some of the flyover cost.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. Because you're paying for the space already over there.

Ellen Ingersoll -- Chief Financial Officer

Correct. Correct.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. OK. And then just...

Ellen Ingersoll -- Chief Financial Officer

Just let me clear this, Steve, sorry. It is an accounting charge, but it is noncash in the start-up cost. So for accounting purposes, we have to straight line the lease costs.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. OK, perfect. That helps. And then just looking at the flyover attractions.

I think a few years ago, you talked about the margins there. Is there any reason to think that these projects wouldn't have similar margins or they'd be any better or worse or that there's been -- maybe what's the right way to think about the margin profile from these attractions going forward or maybe by market?

Steve Moster -- President and Chief Executive Officer

Yes, Steve. We did talk about the margin of FlyOver Canada, Vancouver in 2017. I believe we talked about the results being roughly $10 million in revenue, and roughly, I think, it was 50% EBITDA margin. And the other flyovers are similar in nature.

It varies a little bit, both up and down based on the location and the arrangement that we have. So in the Vancouver market, the location is ideal. The lease arrangement that we have set up is very strong and very favorable for us. And so depending on other locations and what the negotiated lease may be, it may fluctuate a little bit from what you see in Vancouver.

But overall, similar margins. It just varies a little bit based on the location.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. That is helpful. And then maybe lastly, when you talk about visitation and things like that, I assume you have a pretty long -- maybe a longer booking curve, given the length of travel and things like that. But when do you guys start to get a real feel for what the peak season looks like? For Pursuit, I guess, is maybe the more pertinent question.

Steve Moster -- President and Chief Executive Officer

Yes, with Pursuit, think about two types of travelers. You have group travelers, which are booking pretty far in advance. And then you have individual travelers, which you don't get much visibility into. So on the group side, we are at a point where in the first quarter, we are starting to see a lot of the group travel be scheduled and materialize on the books.

But we won't have visibility into those individual travelers until we really hit into Q2 and Q3.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. And is there a way to think about kind of group travel versus individual as a percentage of the total?

Steve Moster -- President and Chief Executive Officer

Yes, as we have talked about, Steve, it really varies by location and even by asset within the location. So it is hard for me to give you a rough breakdown between individual and group visitation.

Steve O'Hara -- Sidoti and Company LLC -- Analyst

OK. And then maybe just a follow-up on previous question with the airport in Iceland. Was there an issue with an airline? I think they were connecting in the Reykjavik or within Iceland, and that seemed to have a pretty detrimental impact on what looked like the visitation numbers or the travel numbers. Or is the visitation down significantly in general?

Steve Moster -- President and Chief Executive Officer

Yes. Steve, there was a low-cost airline called WOW, which I believe was based out of Iceland, but had a lot of routes to Reykjavik. And they went out of business, I want to say, like fall of last year. And a lot of these routes were actually picked up by other airlines.

So what we see from a visitation perspective, and we are new in the market, is that our attraction is doing well and that there is still a vibrant tourism market within Iceland. And we are excited about the market. So we are not currently seeing any impact on our assets from that airline going into bankruptcy.

Operator

We show no further questions in queue at this time.

Steve Moster -- President and Chief Executive Officer

OK. Thanks for your questions and your interest in Viad. We look forward to speaking with you again next quarter. Goodbye.

Operator

[Operator signoff]

Duration: 44 minutes

Call participants:

Carrie Long -- Director of Finance and Investor Relations

Steve Moster -- President and Chief Executive Officer

Ellen Ingersoll -- Chief Financial Officer

Kartik Mehta -- Northcoast Research -- Analyst

Tyler Batory -- Janney Capital Markets -- Analyst

Steve O'Hara -- Sidoti and Company LLC -- Analyst

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