At first glance, Vail Resorts (MTN -2.68%) may not seem like the safest business, but in reality, it truly is. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on March 25, Fool.com contributor Tyler Crowe outlines the reasons why the mountain resort company is such a steady performer and an attractive long-term investment.
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Tyler Crowe: But I think one that is underappreciated as a safe business that we'll talk about valuation in a minute and adding money, but a safe business is Vail Resorts. It doesn't sound that way because it's discretionary spending recreation. Skiing is an expensive sport, tends to be vacation oriented for a lot of people making that long trip or for the weekend to the thing that's a couple of hours away, or making that week-long trip to Vail or Whistler, some of their more prestige resorts.
But in the terms of safety, the ski resorts are getting to the point where it's impossible to build new ones in the United States. Over the past 30 years, we've actually lost 99 ski resorts in North America. So the dynamics of new supply, it's not coming anywhere. When you're talking about real estate, you can't just put a ski resort anywhere.
It has to be in certain places, it has to have certain resources in terms of water for making snow, you have to have adequate area for lodging and facilities and amenities, and the mountain actually has to be fun and large enough to spread people around. So when you're talking about a business with a geographic advantage that is going to be close to impossible to replicate or upend, it's going to be somebody like Vail Resorts.
Again valuation, you're going to have to really take a hard look at it. It's always priced at a bit of a premium because it is a very good operator, it has a low cost of capital relative to the industry. But, if you're looking at something for the next thirty years, it's hard to see Vail and recreation going away.
