Wow, I hate to see Vail Resorts take a hard shot to the balls like that!
There’s No Business Like Snow Business
Spencer Jakab hedcut
By Spencer Jakab, Editor, Heard on the Street, WSJ
As investors watch companies catering to lower income consumers struggle–for example, Dollar General and Dollar Tree are among the worst performers this year in the S&P 500–investors have been counting on rich people to keep doing rich people things.
Skiing is one of them. While one might think of golf, sailing or tennis first, a 2006 study showed that the share of wealthy households is highest among alpine skiers. That might be more true today as the cost has risen along with industry consolidation and global warming. Vail Resorts is the leader in that trend, having grown from 10 resorts a decade ago to 42 today in four countries, including iconic ones such as Vail Mountain, Breckenridge, Park City and Whistler Blackcomb.
Vail’s results Thursday evening along with the company’s announcement of a “transformation plan” that would include 14% of its corporate workforce transforming to no longer working for them might be worth paying attention to. While there isn’t snow to ski on yet this time of year, it is prime season for season ticket sales. The prices during the quarter had risen an average of 8% but the units sold fell 3% year-on-year, the company said.
That is coming off a very good post-pandemic run indeed for skiing in the U.S. according to the National Ski Areas Association. A record 65.4 million visits were made during the 2022-2023 season. Skiing is very weather dependent too, of course, but it is hard not to notice a connection between the stock market and the propensity to hit the piste. For example, skiing hit a record in the 2007-2008 season, cracking 60 million for the first time, according to NSAA, and then fell to 57.4 million as a deep recession hit. Likewise, in the 2000-2001 season, with stock-market wealth near a peak, it hit a then-record 57.34 million before falling to 54.41 million a year later, during a recession.
Vail says on its website that prices for its season passes will rise in two weeks but that for now an epic PASS entitling adult purchasers to ski at nearly all of its resorts costs $1,025 while peak day passes are $135. That compares with prices in the $720 to $830 range for a five-day visit to Disney World, for example. Visits from Disney’s more middle class clientele have slipped because of the high cost after years of rising prices and overflowing crowds.
It is easier to expand a chain of amusement parks than to develop a new ski resort–they aren’t making any new mountains–but even skiing could be bumping up against some limits. Merely upper middle class skiers might be thinking twice, and that could become more apparent if paper gains on stocks evaporate.
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