Viad Corp (VVI) Q3 2021 Earnings Call Transcript

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Viad Corp (VVI 2.42%)
Q3 2021 Earnings Call
Nov 4, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Viad Corp Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like the turn the conference over to Carrie Long, Investor Relations. Please go ahead.

Carrie Long -- Investor Relations

Good afternoon, and thank you for joining us for Viad's 2021 third quarter earnings conference call. During the call, you'll hear from Steve Moster, our President and CEO and President of GES; David Barry, our President of Pursuit; 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, quarterly and other current reports filed with the SEC. During the call, we'll be referring to certain non-GAAP measures, including income or loss before other items and adjusted segment EBITDA. Important disclosures regarding these measures, including reconciliations to net loss or income attributable to Viad, can be found in Table two of our earnings press release which is available on our website at viad.com. With that, I'd like to turn the call over to Steve.

Steven W. Moster -- President and Chief Executive Officer President-GES

Thanks, Carrie, and good afternoon, everyone. Thank you for joining us on today's call. During the call, we'll discuss our business performance during the 2021 third quarter, provide some insight into the recovery of our industries and review our financial position. David will provide business updates for Pursuit shortly. And after that, I'll share some business updates for GES, and Ellen will cover our financial results toward the end of the call. But before I turn it over to David, I'd like to thank our entire team for their fantastic job meeting the needs of our clients and guests with great service and operational execution during a challenging quarter of accelerated business activity at both Pursuit and GES. I'm pleased with our performance during the quarter and optimistic about the future of our businesses and industries. We're well positioned for recovery with pent-up demand for iconic and unforgettable leisure experiences and in-person live events. I'd like to now turn the call over to David to discuss what's happening across Pursuit. David?

David W. Barry -- President of Pursuit

Thanks, Steve. Thank you all for joining us. Today, I am very pleased to announce strong 2021 third quarter results at Pursuit. Before going into the details on our performance in the quarter, let me just take a minute to thank our seasonal and year-round team members and leaders across the Pursuit world. Our teams worked tirelessly this summer to deliver on our mission and brand promise of connecting guests and staff to iconic places through unforgettable inspiring experiences. At Pursuit, it's in our DNA to focus on every step in the hospitality profit chain. And we know that when we maintain a strong focus on team member satisfaction, great guest experiences, and the creation of memories, it drives revenue and profit growth. That growth dynamic has never been more evident than today, and I'm very pleased to announce that in the third quarter, Pursuit delivered revenue of $118 million, adjusted EBITDA of $60 million and adjusted EBITDA margins of 51%. Ellen will go into more detail shortly, but for the quarter, Pursuit adjusted EBITDA increased $39.9 million or 202% from the same period in 2020 and reached new records in our Alaska and Montana geographies. And in Jasper, our seven hotels each eclipsed their pre-pandemic third quarter 2019 results. Last quarter, we signaled that the recovery is well underway, and today our financial results affirm our view that the world is healing. The demand for bucket list leisure and hospitality experience is returning stronger than ever.

So now let me share some details regarding our performance in the quarter. Starting first in Alaska. We delivered record third quarter EBITDA as guest demand was undeterred by COVID-driven disruptions to the cruise industry, and our reservations teams worked super hard to handle record-breaking call volumes all-season long. In Seward, our Kenai Fjords tours business, saw revenue grow 14% from 2019 on a 9% increase in passengers and a 5% increase in effective ticket price, as guests and search of glaciers and humpback whales rebounded significantly from 2020. In Denali, our Denali Backcountry Adventure tour also welcomed a record number of passengers, and we leveraged additional capacity to achieve revenue results that were 30% ahead of 2019. Across our five Alaskan hotels, we saw strong demand from the Lower 48 and maintained outstanding guest feedback scores despite a very challenging labor market. Average daily rates were up 6% from 2019 and 32% from 2020. In Montana, we delivered another record season with Q3 revenue and EBITDA outpacing the previous high watermark achieved in 2019. We successfully reopened Glacier Park Lodge in St. Mary Village following their COVID driven closure in 2020 and visitation to the east side of Glacier National Park rebounded strongly in 2021. Net promoter scores at our West Glacier RV Park and Cabin Village achieved an impressive 77.2 and hotel RevPAR increased versus 2019 at seven of nine Glacier Park properties on a same-store basis. And average daily rates increased 8% from 2019. Retail results in Glacier continue to be absolutely remarkable as third quarter revenue was up $12.4 million, with 76% ahead of 2020 and 34% ahead of our previous record we set in 2019. Moving north to Alberta, the Canadian border opened to Americans on August the 9th and to all international visitors on September the 7th.

Almost immediately thereafter, we saw an acceleration of visitation to our attractions and hotel properties in Banff, Jasper and the iconic Prince of Wales Hotel in Waterton. And while the border opening was later than we had hoped, we're proud of what we achieved throughout the quarter. In Banff, we saw a strong net promoter score improvement from 2019 at our Lake Minnewanka Cruise, the Glacier Adventure and Glacier Skywalk attractions while our site seeing business emerged from hibernation to solid demand from international and Canadian guests. We've continued our upward trajectory in F&B offerings and now operate three of the top seven restaurants in the town of Banff, according to TripAdvisor: Sky Bistro in Northern Lights, Alpine Kitchen at Banff Gondola, and Farm & Fire located in our Alcan Avenue hotel. In Jasper, a relentless focus on guest experience helped drive significant improvement in hotel net promoter scores, enabling us to increase average daily rates 22% above the 2019 levels, leading to record third quarter EBITDA. We also operate two of TripAdvisor's top six restaurants in Jasper with The Pines Restaurant located at our Pyramid Lake Lodge and the Maligne Canyon Wilderness Kitchen located just outside of the Jasper Town center. Switching gears now over Pursuit FlyOver attractions. We continue to see very strong signs of recovery in each of the markets in which we operate. In Vancouver, FlyOver Canada reopened on June 18 and immediately saw strong demand that exceeded our expectations and continued throughout the third quarter.

The attraction was sold out for the majority of August, resulting in a 143% year-over-year increase in ride passengers. Our revenue management efforts drove a 26% year-over-year increase to effective ticket prices and ancillary revenue per passenger nearly tripled from 2019. In Reykjavik, FlyOver Iceland benefited from the beginning of the tourism recovery in Iceland as international guest arrivals into the Keflavik Airport rebounded to approximately 60% of 2019 Q3 levels. We've seen steady increases in capture rate of international visitors to Iceland, and we're excited to premier FlyOver The Real Wild West in Iceland actually starting today, and that promises to be popular with international and local guests alike. Let's change gears quickly and talk about the three new attractions we opened in 2021. Pursuit's newest FlyOver attraction, FlyOver Las Vegas, opened successfully on September one and has received overwhelmingly positive reviews, with an average rating of 4.5 stars across the review platforms. In Vegas, we're again seeing the power of diversified attraction content as 45% of our guests to-date have purchased a dual feature ticket, combining the FlyOver The Real Wild West experience with FlyOver Iceland. This results in increased guest dwell time at the attraction, and drives incremental retail and food and beverage revenue. In British Columbia, we're thrilled with the inaugural season at the Golden Skybridge, our newest attraction in Western Canada. The Skybridge opened to the public in early June and quickly rose to the number two position in the sites and landmarks category in Golden BC. 80% of Golden locals have purchased a season's pass, and that shows really strong demand and a high level of interest from our local community.

During the quarter, we opened the Skybridge itself, along with a Tree Top Challenge Course and an exciting quadruple zip line with more experiences to follow in 2022. In Reykjavik, we just celebrated the six-month operating anniversary of the remarkable Sky Lagoon, our new geothermal lagoon attraction inspired by nature in the Icelandic spa culture and located just minutes from the center of Reykjavik. The guest response has been outstanding with 4.7 stars out of five on Google, and we're pleased to have seen an increasing number of international guest throughout the quarter as Iceland has opened its borders and international visitation has increased. In conclusion, this was certainly a season unlike any other. The ongoing COVID-19 pandemic, staffing shortages throughout our operating geographies and unprecedented guest demand in our U.S. locations put our teams to the test. And without question, I can tell you they rose to the occasion. We're exceptionally proud of what we've accomplished in a very challenging year with record results in several geographies, strong guest feedback scores and the opening of three new world-class high-margin attractions with Sky Lagoon, Golden Skybridge and FlyOver Las Vegas. Our success is a testament to our strong execution focus on Pursuit's Refresh, Build, Buy strategy and the power of iconic, unforgettable and inspiring experiences. None of these things can happen though without the significant efforts of our team members around the world who work so hard through a season that I'm sure most of us will never forget. So before turning it back to Steve, let me just share a view into the future as we have some things we're pretty excited about.

First, in the Canadian Rockies, construction is well underway on the new 88-room hotel in Jasper, which we expect to open to the public in early summer 2022. Next we anticipate beginning construction in the first quarter of '22 on our fourth flyover attraction, Flyover Canada, in Toronto, located at an ideal development site and tourism destination at the base of the CN Tower and adjacent to the Rogers Center. And while I can't provide specific details, I'm pleased to share that we have a robust pipeline of organic growth opportunities from within Pursuit, in addition to visibility to some very compelling buy opportunities that we're actively exploring. We're also very pleased to announce the opening of Nightrise at the summit of the Banff Gondola. And those of you who haven't seen the release, Nightrise an immersive experience of light, sound and wonder, is a multisensory winter addition to the guest experience at the summit of the Banff Gondola. Opening December two and running until March 12, this is a really unique winter activity and it merges multimedia, storytelling and nature for a new and inspiring perspective at such an iconic Banff location. Nightrise has been created and developed with Moment Factory, Parks Canada and the Stoney Nakoda Nation, and is a great example of using our Refresh, Build, Buy strategy to drive guest experience and compelling reasons to return and visit our attractions. Finally, we're optimistic that pent-up demand for worldwide travel remains strong. We continue to see strong demand for our U.S. locations and a significant recovery in our businesses in Banff, Jasper, Vancouver and Iceland as borders remain open and guests are free to move about the world. Thank you again to our teams around the world. And now Steve, back to you.

Steven W. Moster -- President and Chief Executive Officer President-GES

Thanks, David. Now switching over to GES. The third quarter was a turning point for GES, with revenue improving from accelerated event activity to $116 million, more than four times the revenue in the second quarter and about half of the revenue in the 2019 pre-pandemic third quarter. The recovery is underway, and I'm pleased to report that in September, GES had its first month of positive EBITDA since the pandemic took hold of the industry last year. We successfully produced over 250 events during the quarter in geographies around the world, including MINExpo in Las Vegas, Association of United States Army event in Washington, D.C., the National Safety Council in Orlando, Gastech in Dubai, and the Defense Security Equipment International Event in London. These events were backloaded into the quarter with 60% of our quarterly revenue coming in September alone. I'm incredibly proud of how our team performed during the quarter and their dedication to creating safe, extraordinary experiences for our clients and customers. We entered the second half of 2021 with a busy schedule filled with events that had postponed from the first half of the year and 2020. Although we benefited from the increased event activity, the Delta variant had a larger impact on the quarter than we had previously anticipated. As we started the quarter, the net square footage being sold to exhibitors, which generally correlates to our revenue, was tracking lower than pre-pandemic levels by about 30%. However, as the Delta variant became more dominant, some exhibitors start pulling out of events, and we saw a small uptick in the number of canceled events during the quarter. For the events that took place, the overall average revenue decline was about 50% compared to pre pandemic occurrences.

Some events were near or above pre-pandemic levels, while others remained significantly below. While the event industry is still dealing with the uncertainty from the Delta variant, we're encouraged by the strength and the recovery in certain locations, industries and clients. Events in the U.K., Europe and the Middle East are benefiting from a higher vaccination rate and experiencing stronger-than-expected net square footage and attendance levels. In North America, we're seeing strength in events for aerospace, industrials and defense. I'm also encouraged by the level of spending by large corporate clients at trade shows. In the third quarter, we saw key clients spending about 138% of pre-pandemic budgets, and I believe this level of corporate spending is a strong bellwether for the recovery of log events. Within our exhibition and conference service line, the third quarter provided us another opportunity to prove out our new low-cost model, and I'm pleased with the results. As discussed on previous calls, we were able to make transformational changes to significantly improve our cost structure, including variablizing more of our cost and reducing fixed costs through network rationalization. During the quarter, our team closely managed our variable costs as we quickly ramped up with event activity. Our freelance labor model allows us the flexibility to scale up and down based on the variable show schedule and avoid adding unnecessary overhead. This was particularly important during the spike of activity we experienced in September. Additionally, the noncore services like carpet cleaning and storage that we outsourced performed well, and I'm very happy with our decision.

In the third quarter, we also had an opportunity to test our reduced network footprint. And I'm happy to report that we are able to produce several California shows by extending the operational reach of our Nevada facilities in Las Vegas and Reno. Overall, we're well positioned for improved profitability as the live event industry continues to recover. Switching over to our brand experience service line. We made significant progress against our strategic goal to grow and expand our work with leading corporate clients. Experiential marketing is a large, fast-growing segment of the corporate marketers budget. We have a significant opportunity to grow in this fragmented market at attractive margins and are positioning GES for ongoing success in this area. Last quarter, we announced that we hired an experienced industry leader, Jeff Stelmach, to lead our brand experiences team. Jeff has created and led several of the industry's most successful experiential agencies. Jeff is working with our experienced and proven team to combine our event, exhibit and AV capabilities into a single integrated client offering, while adding capabilities that will open new revenue streams within the marketing and experiential business industry. In addition, through revised positioning and marketing of these services within the industry and the addition of new talent, Jeff will not only expand the service offering available to our robust list of existing clients, but also open our sales focus to a host of new industry segments and clients. A key part of this strategy includes the expansion of our creative and strategic resource offering.

We have initiated the expansion of our creative and strategic capabilities by starting at the top with the addition of John Triana as Chief Creative Officer. John is an idea-driven creative leader with deep experience in defining overarching strategic direction and creative vision. He has extensive experience working with clients, building and inspiring multidisciplined creative teams to bring big ideas to life across multiple channels. John will lead a global team of creative thought leaders, as he develops a new expanded host of creative and strategic services to enhance offerings to existing and future clients. T.S. does an incredible job delivering a broad range of unique and impactful experiences for our clients, including corporate meeting and events, digital experiences, brand and sports activation, product launches, strategic exhibition program management, corporate customer centers, and consumer pop up events. During the quarter, we had the opportunity to guide our clients through many new engaging experiences. Our U.S. team completed an impressive program for Caterpillar at MINExpo that required moving receiver the size of a two story house and over 3,000 hours to install and dismantle. Also in the U.S., we partnered with Procore to create a fantastic hybrid event and filmed all the content with keynote speakers on a stage that we designed and fabricated. In Dubai, we designed and executed the World Green Economy Summit, an impactful large-scale hybrid event that brought together world leaders as well as thousands of visitors and online guests to pledge a sustainable future for the Middle East. Additionally in Dubai, our teams designed and constructed the Cisco experience center, a six-month long semi-permanent activation with fully immersive content in interactive technology zone. Money20/20, a financial technology show that occurs each year in Amsterdam and Las Vegas, is a terrific example of the power of one GES team. The EMEA and U.S. teams came together to collaborate and create two memorable events for our clients, that each drew a greater number of exhibitors than the prior occurrence. As a testament to the incredible client service and quality of work provided by our talented teams, we have many new business wins and renewals to celebrate. Our exhibition and conference team won new business from the Global Business Travel Association, including event accommodations and AV Services and the Midwest Podiatry Association, as well as renewed business with the PROCESS EXPO and Texas Restaurant Association.

Our brand experience team won new business from Sanofi, one of the top 10 largest pharmaceutical companies in the world as well as renewed business with Northwestern Mutual and National Society of Cutaneous Medicine. I'm really proud of what our teams have accomplished. It's encouraging to see that large-scale events have returned as local restrictions loosened, and people are becoming more willing to gather and travel again. The value created from face-to-face live events is irreplaceable as it is a powerful way to generate sales, drive brand awareness and loyalty, and interact with attendees. We see a bright future ahead as we plan to resume the normal cadence of events scheduled in 2022. I'm thrilled about the heightened live event activity, the transformational changes that we made to our cost structure, and the exciting new growth opportunities ahead for GES. We are reemerging stronger and once again creating the world's most meaningful and memorable experiences for marketers, organizers and event attendees. And now I'd like to turn the call over to Ellen to discuss our financial results in more detail. Ellen?

Ellen M Ingersoll -- Chief Financial Officer

Thanks, Steve. During the third quarter, we experienced an acceleration of business activity at both Pursuit and GES with revenue increasing to nearly four times the level generated in the second quarter and reaching 66% of the amount we realized in the pre-pandemic 2019 third quarter. Pursuit had three new world-class attractions online during its peak summer tourism season, and GES had a strong event schedule, including the previously rescheduled MINExpo. At GES, we realized revenue of $116 million, which improved nearly 370% from the second quarter and reached 53% of the amount generated in the pre-pandemic 2019 third quarter due to increased face-to-face live event activity and the return of large-scale events that were canceled or postponed for most of 2020 and into the first half of 2021. GES adjusted segment EBITDA was negative $4.2 million, which improved by approximately $7.4 million as compared to the prior year, driven by the increase in revenue and the cost structure improvements that we have implemented. As a reminder, the 2020 third quarter adjusted segment EBITDA included a gain of about $13.5 million from the sale of our San Diego facility. When adjusted to exclude this gain from the prior year quarter, our year-over-year improvement in EBITDA at GES was $21 million. That's a flow-through of just over 20% on GES' incremental revenue. At Pursuit, we experienced a year-over-year revenue increase of approximately $68.7 million and reached about 87% of the revenue amount generated in the pre-pandemic 2019 third quarter. Pursuit's third quarter revenue was $117.6 million, and adjusted segment EBITDA was positive $59.6 million. As David mentioned earlier, Pursuit's adjusted segment EBITDA improved by $39.9 million year-over-year. This was largely the result of exceptionally strong visitation from domestic travelers during peak season with our Glacier Park properties posting record performance.

Our Banff and Jasper experiences were challenged by the Canadian border closure, but had an uptick in demand during the quarter after restrictions were lifted to fully vaccinated Americans in early August and to other fully vaccinated international travelers in early September. Additionally, the three new high-margin attractions that we opened this year, the Sky Lagoon, Golden Skybridge and FlyOver Las Vegas, collectively contributed an incremental $7.4 million of revenue during the quarter. I'm pleased to announce that net income and free cash flow turned positive this quarter. I'm encouraged by the demand improvements we're seeing in our industries once local restrictions loosened and people resume traveling and gathering. Our net income attributable to Viad was $15.1 million for the quarter, and our income before other items was $18.4 million, which excludes restructuring charges, attraction start-up costs, acquisition, integration and transaction-related costs and other nonrecurring expenses as applicable. Our cash flow from operations was an inflow of approximately $37 million for the quarter. Our operating cash inflow was lower than our prior guidance, primarily due to the unanticipated impact of the Delta variant. Our team did an excellent job closely managing our costs and maximizing our cash generation wherever possible. Our capital expenditures totaled about $20 million and were more than offset by our positive operating cash flow. Our investments were mainly at Pursuit and included growth capex of approximately $8 million for the FlyOver Las Vegas attraction, which opened as planned on September one.

During the quarter, we paid cash dividends of approximately $2 million on our convertible preferred equity, which were previously paid in kind. Our new credit facility offers more flexible terms and allows us to pay our convertible preferred stock dividends in cash, thereby preventing any additional common share dilution. We ended the third quarter with approximately $111 million in cash and cash equivalents, and we had approximately $78 million of capacity available on our revolving credit facility. On September 30, 2021, our debt totaled approximately $470 million, and this included our $400 million term loan B, our financing lease obligations of approximately $64 million, and approximately $6 million in debt at FlyOver Iceland. We are in an excellent position to continue our growth journey with our strong liquidity, financial flexibility and improving industry demand. We have a solid platform that can scale with us as we execute against our exciting Refresh, Build, Buy growth strategy at Pursuit, including the new 88-room hotel in Jasper and FlyOver Canada, Toronto. We are actively evaluating other high-margin growth opportunities, including acquisitions and iconic locations and new FlyOver locations. And before I turn it back over to Steve for concluding remarks, I'd like to briefly comment on our financial outlook. Within in-person activity improving, we expect that GES' revenue will continue to improve. Based on our current level of bookings and pipeline, we currently expect GES to generate positive EBITDA during the fourth quarter, and we expect that to be partially offset by negative EBITDA from Pursuit during this traditionally slow tourism season. We currently expect a free cash outflow during the fourth quarter in the range of $35 million to $40 million, and this assumes an operating cash outflow somewhere in the range of $20 million and capital expenditures of approximately $15 million, and this includes growth capex for our new 88-room hotel in Jasper.

We will also make our first quarterly term loan B principal payment of $1 million and expect to pay approximately $2 million in cash dividends on our convertible preferred equity. These expectations are subject to the impact of COVID, including the Delta variant. We will continue to carefully manage our cash flows and be strong stewards of our capital to maximize shareholder value. As we look forward to the next few years, we believe that Pursuit same-store revenue will recover faster than GES' due to expectations that leisure travel will return more quickly than business travel. Pursuit will also benefit from incremental revenue from new experiences, both those that did not exist and those that did not have a full year in 2019. GES has a strong backlog of contracted events and an expanded roster of corporate clients. It is evident that there is pent-up demand for both industries. We are excited about the recovery and growth ahead. And with that, I'll turn the call back over to Steve for some concluding remarks.

Steven W. Moster -- President and Chief Executive Officer President-GES

Thanks, Ellen. Our recovery is underway with the acceleration of leisure travel at Pursuit and live event activity at GES. We are reemerging from the pandemic in a position of strength with pent-up demand for our experiences on both sides of the business and a transformed, more profitable GES. We remain focused on our strategy to create extraordinary experiences and strong return for our shareholders. For Pursuit, we will continue to significantly scale the business and drive growth through our proven Refresh, Build, Buy strategy as well as take advantage of economic disruption and opportunities in this space. For GES, we will build on the progress that we've made to-date to improve the margin profile and resume generating strong cash flow through our more flexible cost structure and focus on higher-margin clients and services. We have a clear path to accelerate growth and significantly enhanced shareholder return. Our liquidity position is strong, and we have the financial flexibility to sustain and continue investing in our future. We have high-quality businesses with leading market positions in experiential leisure travel and experiential B2B events. We plan to capitalize on the pandemic disruption to strengthen our leading market positions. Our growth strategy has been proven to be successful, driving strong returns pre-pandemic, and there are tremendous opportunities to continue investing for long-term growth. I'm excited about the great future that lies ahead for our company. Thanks again to our hardworking and dedicated employees who make all of this possible, and thank you to our shareholders for their continued support in Viad. And with that, we'll open up the call for questions.

Questions and Answers:

Operator

[Operator Instructions] We have your first question from Tyler Batory with Janney. Your line is open.

Tyler Anton Batory -- Janney Montgomery Scott -- Analyst

Thank you. Good afternoon. So a couple of questions from me. Maybe I'll start on the GES side. I thank, appreciate all the commentary there. Steve, I'm interested to dive in a little bit more if we could about the future outlook there, specifically in the fourth quarter, how that's looking versus the third quarter. I know you did say you expect positive EBITDA in that business in the fourth quarter. What's your expectation in terms of the revenue side of things? I know that third quarter benefited quite a bit from MINExpo in September. But would you expect fourth quarter revenue to accelerate over the third quarter? And then any other commentary you can provide just generally in terms of the shows that are happening? I know you went through some statistics on net square footage and whatnot. But just interested more your perspective on guest feedback and what you're hearing from folks in the field as they're attending some of these shows in the kind of post-COVID or new normal world, if you will?

Steven W. Moster -- President and Chief Executive Officer President-GES

Yes, Tyler, and that's a good question. So the third quarter, so much of the event activity really happened in September. That's when we saw meaningful event activity for the quarter. You already noted that MINExpo occurred in September. As we look forward -- and I also in my comments, I mentioned that it's about 50% of the revenue in the quarter versus pre-pandemic levels. As we look forward, I see -- I do see the revenue accelerating into the fourth quarter. Despite not having a large show like MINExpo, we have a higher volume of events taking place. And so there's accelerating revenue across a larger base of events that are taking place. I do anticipate over time seeing that pre-pandemic level of revenue returning, but only over time. I think there's still a little bit of uncertainty out in the market. We're encouraged by what we've seen so far. But -- and I do see the revenue accelerating into the fourth quarter and certainly into 2022. It wasn't part of your question, but when I look ahead and into next year, I'm pleased to say that I'm hearing really good things from our show organizers and from our corporate clients about participating events in the next year. And to this point, I really haven't seen any significant cancellations of any large-scale events going into next year. So I'm pleased with the quarter. I'm anxious about getting into the fourth quarter and getting into 2022.

Tyler Anton Batory -- Janney Montgomery Scott -- Analyst

Okay. Great. That's very helpful color. And then this is probably a question for about the GES side of things and Pursuit as well. The labor situation, supply chain, cost inflation. Those are really key topics of conversation right now. Just interested what you're seeing and how you're handling those issues in each of the business segments?

Steven W. Moster -- President and Chief Executive Officer President-GES

David, why don't you talk about the Pursuit side?

David W. Barry -- President of Pursuit

All right, I will. Thanks, Tyler. It's a good question. I think there is a couple of things that are important. One is Canada is relaunching its foreign worker program. So for those that are unfamiliar with that, it's generally young people that are taking a gap here from university and traveling to another Commonwealth country. And that's why you'll hear so many Australian and Kiwi accent in Banff and Jasper. So when the Canadian government has already begun reopening that program and obviously, you've got to be fully vaccinated and able to travel from countries that permit travel. But we're beginning to see that reaccelerate. And then also we're encouraged by the presence of our J-1 Visa workers. Typically in a year, we would hire 500 to 600 international workers that come for a defined period of time. So those programs are restarting. Culture matters, so I think culture really matters. So if you have a strong team member engagement and hospitality culture within your company, then you're going to win in the recruitment battle. So we have struggled in places and rallied hard. And I think our recruitment efforts we've begun earlier. We're ahead of where we've been in any other particular year, and I'm confident we're going to have the staffing and team members in place to have a very successful summer 2022.

And Tyler from a GES perspective, I'll tackle labor and also supply chain. Certainly as the industry has recovered, it's been important for us to find -- to fill key roles across the business. And I feel like the team has done an excellent job filling those roles. Again, from a lot of the show execution, we rely on our union partners for support at the shows. And we have not seen any shortage in labor available to us to execute the events that we've had. From a supply chain perspective, one of the issues we had earlier on was around transportation. You've heard about it across a number of different industries. We were fortunate in that in the last quarter, we really resolved a lot of those issues. And we resolved them going forward as well. So we've made some key partnerships that allow us to have access to transport both here in the U.S. and North America and also in the U.K. So knock on wood, under the current circumstances we're in a really good position as we go into the fourth quarter.

Tyler Anton Batory -- Janney Montgomery Scott -- Analyst

Okay. Great. Maybe one last one from me and then I'll pass it on. In the Pursuit, I'm interested specifically Banff/Jasper for the quarter, the mix of business, locals versus destination, I'm interested how that compared to normal and really just trying to get that at how significant the border reopening was in terms of how many guest were coming, not only from the U.S. in August, but also your internationally when the rules changed in September.

Steven W. Moster -- President and Chief Executive Officer President-GES

Yes, so it was interesting, right? So we're in and when we put plans together, we envision that the borders were open and would be opening in March. How wrong we were. So fast forward to the 7th or 9th of August, whichever the day was and as borders open. So couple of things happen right away. Typically in a year, any historical year, if you go back to 2019, Pursuit would be 50% international visitation into those markets. So obviously, heavily focused on U.S. visitation and coming from North America. So we had a lot of Canadians who the summer before had been trapped in their home province and unable to travel. So Canadians traveled vigorously and with enthusiasm across the country. Second is a large influx of vaccinated U.S. travelers who have been itching to get to the Rockies and see things. So that accelerated immediately. And I think it reflected in a couple of different places, like significant and very strong growth and average daily rate in our lodging businesses in Banff and Jasper in our attraction visits. So it accelerated, it wasn't as early as we hoped it would be, no. But generally, what we've seen is this trend has continued through the fall. We had a very strong October. And then we're looking forward also to a reasonable finish through the end of the fourth quarter. So excited to see the borders reopening and people moving around.

Tyler Anton Batory -- Janney Montgomery Scott -- Analyst

Okay, great. That's all from me. Appreciate the detail. Thanks.

Operator

We have your next question from Kartik Mehta with Northcoast Research. Your line is open.

Kartik Mehta -- Northcoast Research -- Analyst

Steven, I was hoping maybe you can give a little color on the amount of revenue you think you lost because of what happened with Delta variant in the third quarter. I think you said it's a little, but love -- if you could give some perspective, that would be awesome.

Steven W. Moster -- President and Chief Executive Officer President-GES

Well, again, we started into the third quarter, we had -- there are a couple of things that we were seeing within the event. We had seen that floor -- the square footage on a floor, trade show floor, was about 70% of what it was pre-pandemic. As we went through the quarter and the Delta variant became more dominant, that fell down to about 50% of prior period in terms of its revenue and square footage. So there is a leg there or lost opportunity there from the shows shrinking in size. And then the second part was, we did have some cancellations that took place in the third quarter that we weren't expecting. So yes, it's hard to give it a specific number, but I think you can triangulate from where we were -- or some of the thoughts going into the quarter and where we came out, you can triangulate to get to the number. We really -- we see that the cancellations have really slowed down as we go into the fourth quarter and certainly into 2022 where I haven't seen any so far. In terms of square footage, we're seeing solid activity. We think it will be in the neighborhood of what we had in the third quarter, specifically in September, and we're encouraged by that. So hopefully, that helps, Kartik.

Kartik Mehta -- Northcoast Research -- Analyst

It does, it does. And I wanted to ask just on Pursuit. I know one of the things you mentioned was a very strong domestic travel out of Canadian visitors. As we go into 2022, does that cause a difficult comparison for you or are you anticipating that international travelers will be back and you can get to kind of that 50-50 ratio that you've had in the past?

David W. Barry -- President of Pursuit

Yes, it's a good question. I think what's interesting, Kartik, is that definitely there is significant demand as countries and borders open. So remember, like a little bit like the retail business, our seasons, we're working several seasons in advance. So if you look at international demand for countries that know that they can travel, we're showing very strong demand coming into the '22 season. I'll give you two small examples. In Glacier, November of 2020, we were sitting presold on the books about $4.9 million. November of 2021, we're sitting at $7.3 million. In Jasper, November 2020, we were about $3.5 million. We're sitting now this November 2021 at $5.4 million. So the mix of guests will change. The international visitation numbers will increase. And that will come from both the U.S. and countries that are closer, some countries that are still evolving and coming out of situations. So India being one where there's been strong acceleration of vaccines, but it may take one more year for folks to be traveling. But we anticipate that demand for September '22 is going to be significant, and we're doing everything we can to get ready.

Kartik Mehta -- Northcoast Research -- Analyst

And then just one last question and I apologize. But would you be able to repeat your expectations for kind of the cash flow assumptions you've laid out for fourth quarter. I apologize I just missed it.

Ellen M Ingersoll -- Chief Financial Officer

Yes, no worries. Free cash flow, we guided to an outflow of $35 million to $40 million, and that was about $20 million operating cash, $15 million capex. And then we have our term loan B payment of $1 million and our dividends of $2 million. And that $20 million as an operating cash outflow.

Kartik Mehta -- Northcoast Research -- Analyst

All right. All right, thank you so much. I really appreciate it.

Ellen M Ingersoll -- Chief Financial Officer

Thanks, Patrick.

Operator

We have your next question from Bryan Maher with B. Riley Securities. Your line is open.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

Good afternoon and thanks for all that information. It's been quite helpful. I think we touched upon this maybe on the last earnings conference call regarding the potential to extend the season up in Canada a bit to kind of satiate strong vacation, leisure demand. Has that been the case? And how long did you extend it or are you extending it, if that's in process?

Steven W. Moster -- President and Chief Executive Officer President-GES

So we had a really strong October. So typically, the summer season tapers toward the 10th of October. What we were pleased with is we had visitation demand, attraction demand, lodging demand all the way through the month of October, so very strong performance. Non in a position yet, but I'm going to give you the numbers specifically to the month of October. But I can tell you well ahead of our expectations. And then in some cases, as we look in specifically in performance in Jasper, that entire lodging business is going to be significantly ahead of its original plan for the year, which is exciting. And a lot of that coming through this time period. So some properties, Bryan, we're limited because of they're not winterized and other things, and so climate forces you to close them, but definitely, strong attendance and lodging occupancies through the fall.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

Right. And you talked a little bit about labor and the flexing of being variable with labor versus historical plans and the fact that labor unions, I think you said no shortage of labor union ability to get workers. How much of the business relies on labor unions? And in the non-labor union areas, are you having any problems with other sourcing of labor or is it just, for some reason for you guys, not an issue?

Steven W. Moster -- President and Chief Executive Officer President-GES

Bryan, it's a good question. So let me see if I can help clarify some of my earlier comments. A large portion of our -- the work that we do at the event itself in terms of the installation of the event is done through our union partners and we have not seen any shortage in terms of union labor for our events. So I feel really good about that in terms of the availability and supply of union labor. The part that we have flexed are some key roles within the organization where we know it's going to be a bumpy road in recovery that some events will happen, other ones will not. And so we've chosen to go down the path where we have full-time -- or we have employees that worked on a flexible or kind of a freelance model. We'll hire them for the course of the event, but then they come off of our books when the event has passed. And that's been critical as we've seen kind of these spikes and valleys of event happening and not happening. So I'm pleased with how we've approached it. In terms of hiring full-time candidates, like everybody else, it takes a little bit longer to find the right people and a little bit longer to train them and onboard them. But to this point, I think the team has done a really good job of finding the right candidates to bring on to the business at the right time as this recovery is taking place. So recruiting and training, those continue to be challenges that you see across every industry. I think the way the teams handled it has been pretty remarkable.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

Okay. And then kind of extending that a little bit into a margin discussion, clearly you guys have models for the company, similar to myself and other sell-side analysts. Would you say that the recovery margins are kind of progressing as you would have expected? And if not, kind of plus or minus to what magnitude? Is it a couple of percentage points, is it five to 10% points? What's the magnitude of miss versus what you thought maybe a quarter ago?

Steven W. Moster -- President and Chief Executive Officer President-GES

Yes and again, our longer term on the GES side of the business, longer term target is to be greater than 8% EBITDA margin and have flow through on incremental revenue of about 20%. What I can say today is that I'm pleased with the decisions we made in terms of our cost structure. I've seen the changes that we put in place have a positive impact on our overall profitability. I'm also happy with the way revenue is scaling back. Obviously, I'd like to see it come back quicker and the events get back to their pre-pandemic size quicker. But I am pleased with how the business has performed. And I think we're still on track in terms of our target as revenue recovers to pre-pandemic levels to hit the targets.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

Okay. And then one last --

David W. Barry -- President of Pursuit

Go ahead.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

No, I was going to shift gears so go ahead on that one.

David W. Barry -- President of Pursuit

I was going to say I'll pile on to the margin question. So as I mentioned earlier in my remarks, so our margin Q3 EBITDA margin adjusted 51%, so in line with our expectations. And then our mix of guests, so with international travelers return, those numbers go even higher. And so generally people that are on a longer vacation, their spending patterns are slightly elevated from more of a national visitor or a regional Canadian traveling from one place to another. But with us, it really moves with mix of guests. So we're really happy with how quickly things have returned. And you can also sense some energy and I would describe it as celebration of folks that are traveling again, and they've had a chance to save some money over the pandemic period, and they're spending it on things that make them smile in iconic experiences. So yes, we're seeing strong returns to spending levels just in the way that we anticipated.

Steven W. Moster -- President and Chief Executive Officer President-GES

And Bryan, if I can add just one on the GES side. I think it's important to note that our target of 20% flow through on incremental revenue, we were able to hit that in the third quarter year-over-year. So the incremental revenue in the third quarter of 2021 over 2020 had 20% flow through or greater.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

And then just lastly, within the Pursuit division, the opening of Sky Lagoon and now FlyOver Las Vegas, they're clearly important for the growth trajectory of revenues there. Are you -- can you -- will you in the 10-Q, kind of share with us what kind of volumes you're doing at those properties?

Steven W. Moster -- President and Chief Executive Officer President-GES

That's early still, so what I can -- I'll share with you a couple of things. So we -- for 2020, if you look at it, and I'm going to go first on a same-store basis. So I'm excluding Sky Lagoon, Golden Skybridge and FlyOver Las Vegas, just to give you an indication on returns, and I'll mention those. So in 2020, today, we're about 602,000 visitors, 2021 that number was 979 at the end of the quarter, and obviously, it's grown from there so year-to-date 2019, about 2.1 million visitors, 2020, 600,000 and 2021 $1.2 million. So as -- our performance at Sky Lagoon is within our expectations and doing really well and really quite pleased with how that's performing. Golden Skybridge, exceeding expectations in our first year and if you recall, that was a very quick move on our part to get that attraction up and rolling and finished and to be able to open. And then we had a slight delay with kind of health Canada rules. So I'm really happy with how that performed. And then Vegas is building momentum every day. So it's early to really be talking about Vegas yet, but we're excited about how things are performing and what lies ahead.

Bryan Anthony Maher -- B. Riley Securities -- Analyst

Thank you.

Steven W. Moster -- President and Chief Executive Officer President-GES

Thanks, Brian.

Operator

I'm showing no further questions at this time. I would now like to turn it back to Mr. Steve Moster, President and CEO, for any closing remarks.

Steven W. Moster -- President and Chief Executive Officer President-GES

Yes, I just want to say thanks for all of our investors for their support, and thanks for all the employees for making Q3 such a success. We'll talk to you in another quarter. Thank you.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Carrie Long -- Investor Relations

Steven W. Moster -- President and Chief Executive Officer President-GES

David W. Barry -- President of Pursuit

Ellen M Ingersoll -- Chief Financial Officer

Tyler Anton Batory -- Janney Montgomery Scott -- Analyst

Kartik Mehta -- Northcoast Research -- Analyst

Bryan Anthony Maher -- B. Riley Securities -- Analyst

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