Ski resort operator Vail Resorts (MTN -1.37%) recently reported its latest results, and the company reported that it is selling more seasonal passes than ever before. In this Fool Live video clip, recorded on Sept. 28, Millionacres editor Deidre Woollard and senior analyst Matt Frankel, CFP, discuss why passes can be such a big revenue driver, beyond the obvious reasons. 

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Deidre Woollard: Let's dive into talking about the passes thing because this is really interesting to me in understanding Vail's fundamentals. It's an industrywide shift from this idea of like when I was growing up, you go with the ski slope, you get that little paper ticket-y thing that they'd clip on your parka and off you'd go for the day.

Now for Vail especially, they're doing this massive shift toward passes. It makes sense because it's reliable revenue, obviously, brand loyalty, awesomeness, but it's also more days skied and more of that ancillary revenues. Food and beverage, ski rentals, ski school, things like that. It seems to me like what they've talked about too is that they're really trying to push the lift to passes.

One of the ways I doing that is by changing up the flexibility of the pass. I think when passes first rolled out, there was one pass and you'd pay one sum, and it got you access to everything and there you go. Now, they've really been fine tuning and filtering that so you can get passes depending on your area or depending on weekdays versus weekends or certain things like that that make it more attractive for people.

Matt Frankel: Their Epic Day Pass is one that's really interesting. That one, you get to choose between one and seven days and it gives you access to all of their resorts. If you want your seven days of skiing during the season at Vail Resorts, that's a way to get it. It's not just the seasonal passes now. The economics to the passes, even if it sounds like they are getting less revenue, my wife and I are Disney (DIS 0.44%) annual pass holders. The cost of my pass is roughly seven days of admission. That's what I pay for the entire year.

If I go 20 days, it might sound like I'm getting 13 days for free, but that's 13 days that I'm going that I otherwise wouldn't that I'm spending money at the restaurants, buying my kids a new stuffed animal that they want. The same thing applies here. They're not getting any extra admission, but there's more people renting skis, taking lessons, spending money at the restaurants, using their hotels. One really genius thing about their annual pass, it gives us the holders 20% off lodging and rentals. It encourages someone to spend money every time they go.

It's a strategy that's really starting to work out, as you can see in the chart in front of you, that revenue mix. I think I want to say in 2021, so far, it's even more than 47 percent pass revenue.

Woollard: It's really interesting. You're right, it really does come down to all of those other things that you do when you are there. It also comes down to this idea that there is that stickiness, there is that brand loyalty that if you're a pass holder and you tell your friends you're are a pass holder, "Let's go ski here, it's sticky." People look forward to getting the passes every year and I think that's an important part of it too.

This chart shows more about that pass revenue and you could see how they've slowly done it over time. You've got that little bit of dotted area right there because they had to give discounts on some of the Epic Day Passes because of the pandemic. But they keep launching different types of passes and they're just seeing that strong number. It's great to see that revenue as they keep going.

Frankel: You can see under fiscal year 2020 where they launched the Epic Day Pass that I was mentioning.

Woollard: Yes.

Frankel: For their revenue to barely be down in 2020. How much did they had refund on monthly passes, but revenue really wasn't down that much. Those day passes had a lot to do with it. If you're look under fiscal year 2021 where they launched their Epic Mountain Rewards, that's the program where the pass holders get 20% off all those adjacent things. That's really a boost in revenue. It makes the passes sound more valuable.

Our favorite passes or Disney passes is we get discounts on certain things in the park. We have free parking, for example. It makes the pass itself more valuable, and it encourages people to spend more money every time they go there. It's really a two-for-one in terms of revenue growth. I'd be very surprised that the pass revenue wasn't significantly higher in 2022, assuming the world achieves a more level of normalcy than it is right now.