Vail Resorts (NYSE:MTN) is having a solid ski season. The company's dozen mountain resorts attracted 16.9% more skier visits through Jan. 6 compared to the prior-year period. The best early-season snowfall in Colorado in five years helped drive skiers and snowboarders to the slopes.
But not everything is going right. While Vail Resorts is having no trouble attracting local skiers, it has been having trouble attracting destination and international guests. Vail Resorts cut its EBITDA guidance for the fiscal year back in January because destination guest visitation rates had fallen well short of expectations prior to the holidays. The company's lodging business will feel the impact.
A solution to high prices
While Vail Resorts blamed the guidance cut on guests' concerns about pre-holiday conditions following two years of poor conditions, pricing may be the bigger issue. Vail Resorts has been very successful selling its Epic Pass, a season pass that provides unlimited skiing at its resorts, to frequent skiers. Priced at $699 or $939, depending on the options, the Epic Pass is an exceptional value for those skiing five or more days each season.
But for destination guests who may only be skiing a few days each year, buying lift tickets has been the only viable option. Lift tickets bought at the window aren't cheap. At Vail, the company's namesake resort, a single-day lift ticket goes for a whopping $209. Potential visitors may simply be balking at the overall price to visit a Vail resort.
Vail Resorts is looking to make visits to its resorts more affordable for less-frequent skiers with its Epic Day Passes. Announced on March 5 and available now for the 2019/2020 season, the new Epic Day Passes allow skiers to pay in advance for up to seven days of skiing. Skiers can get a lower per-day price by opting for more days and by accepting restrictions on access during holidays. The pass can be had for as low as $89 per day, depending on the options, a more than 50% discount from the window price at Vail Resorts' pricier mountains.
This new pass accomplishes two things for Vail Resorts. First, the Epic Day Pass must be bought prior to the start of season, just like the company's standard Epic Passes. This locks in revenue for the company ahead of ski season, leaving it less susceptible to volatile weather and less dependent on lift ticket sales.
Second, it makes a trip to a Vail Resort more affordable for infrequent skiers. A once-a-year family trip to Vail, for example, becomes more affordable with the Epic Day Pass. That could help boost visits from non-locals next season, and in turn boost lodging and dining revenue.
Vail Resorts is also contending with increased competition in the form of the Ikon Pass, a similar all-you-can-ski pass that covers a different set of mountains. It's unclear whether competition is responsible for some of Vail Resorts' issues with destination visitors this year, but the Epic Day Pass should help next season.
Vail Resorts' Epic Pass has won the loyalty of frequent skiers, driving the company's growth over the past few years. With the Epic Day Pass, the company is looking to do the same for more casual skiers.