Vail Resorts business model tested?

Just before this weekend began, shares of Vail Resorts (MTN) “schussed” down the hill by almost 13% after the company announced weak results from the holiday season.

Even though season-to-date total lift ticket revenue was up 12.2% from a year ago, ski school revenue rose 9.5%, and dining revenue was up 14.8% on a 16.9% rise in the number of skiers, management said that the pre-holiday season from December 1 to December 21 was lower than anticipated as poor conditions and weaker-than-expected short-term bookings hit the company.

Bloomberg Analytics commented: “Vail’s recent acquisitions and new season-pass offerings aren’t enough to sustain demand and will likely hurt its fiscal 2019 growth prospects.” The $99 military pass didn't help either, and CEO Katz admitted that while Vail achieved solid growth in its Colorado resorts and Whistler Blackcomb markets, it experienced declines in both the Northern California and Utah markets, suggesting that the Ikon pass seriously encroached on its rival in these two regions.

What is becoming apparent is that the Ikon and Epic passes might hinder the sport’s growth, as first-time skiers are reluctant to spend more than $100 on a day pass and are unlikely to buy a season pass, thus discouraging more folks from joining the sport.