2017-2018 was another snow-challenged winter for Vail Resorts, Inc. (NYSE:MTN), but you wouldn't know it from the company's results. Through the first three quarters of the fiscal year, revenue is up 6% to $1.80 billion, and net income has jumped 73% to $463.6 million. 

Vail is being helped by greater consumer spending and rising demand for vacations and entertainment in North America, but it's a solid expansion strategy and operational changes over the last few years that are driving earnings growth for investors. What's amazing is that there may be more growth ahead if Vail can continue its solid execution long term. 

Skier skiing down a mountain.

Image source: Getty Images.

Whistler changed everything

In 2016, Vail Resorts acquired Whistler Blackcomb Holdings in a deal worth $1.4 billion. The deal diversified Vail's list of resorts, but it also gave the company a new way to guarantee revenue and expand margins long term. 

On the revenue side, Vail starts selling season passes months before the winter season begins, reducing the risk of a bad winter. The company's broadening base of resorts also makes an Epic Pass more attractive to customers, guaranteeing revenue before winter starts and slowly allowing management to raise prices, thus expanding margins. We're already seeing that margin expansion in the company's operations. Not surprisingly, net income has surged as a result. 

MTN Gross Profit Margin (TTM) Chart

MTN Gross Profit Margin (TTM) data by YCharts.

Season passes are now the metric to watch

If the Epic Pass is going to be Vail's value driver long term, investors should watch season pass sale trends to see if the strategy is working. You might think bad winters would slow sales, but that's not the case. Through May 29, 2018, management said pass sales were up 12% versus a year ago on a volume level, and 19% in revenue. 

The sales momentum is great news because it's coming at a time when snowfall is dropping in North America, and winters are getting shorter. If Vail can continue to squeeze more revenue from a short winter season, it will open up opportunities for growth in other seasons. 

Vail Resorts' next phase of growth

Where I see a lot of untapped potential is in turning Vail's resorts into summer wonderlands, especially if summers continue to get longer. In the traditional summer off-season, there's an opportunity to attract customers with great weather, on-mountain adventures, and the same hotel and shopping infrastructure that's available during winter. But Vail hasn't traditionally capitalized on summer, with revenue dropping to as little as a quarter of peak season. 

MTN Revenue (Quarterly) Chart

MTN Revenue (Quarterly) data by YCharts.

With summers getting longer, Vail could see higher returns from investments in infrastructure like zip lines, alpine coasters, golf courses, and much more. Big resorts like Vail and Whistler are growing their summer infrastructure, but there's an opportunity to expand services and make summer a bigger season for all of the company's resorts.  

More growth ahead

Given Vail Resorts' ability to expand margins in the winter and its potential for growth in the summer, I think the company is well positioned for long-term growth. It controls some of the most valuable mountain real estate in North America and has learned to leverage a broad number of resorts into a network that customers can access with season passes purchased months ahead of time. That's a valuable position to be in, and it makes this a stock to own for the long term. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Vail Resorts. The Motley Fool has a disclosure policy.