For years, investors have salivated over the potential of Vail Resorts (NYSE:MTN). If occupancy soared during the ski season, the profits would be terrific. If occupancy soared during the summer (Vail is building facilities to attract fair-weather customers), the profits would be terrific. If the value of the terrific real estate were realized, profits would soar.

Those opportunities are still there. In one sense, that's good, but it also explains why the stock trades at less than half its 1997 highs. Investors keep waiting for Vail to unlock the formula to wring the profits out of its opportunities -- and deliver on the big promise of strong earnings.

We're still waiting. Yesterday, Vail reported that revenue for the second quarter declined 0.4%, leading to a loss from operations after charges for debt reduction and mold remediation. An increase in resort revenue, some successful cost savings initiatives, and excellent skier visit numbers were positives. Most importantly, since Vail carries a lot of debt, we learned of steps taken that will lead to $5.7 million in interest savings in the coming years.

But is it up or down from here? Tough call.

To see what can go wrong, look no farther than American Skiing (OTC BB: AESK). Despite a diversified portfolio of ski resorts (including Killington, Sugarloaf, and Steamboat) and real estate development operations to take advantage of the ski operations, the company suffers from heavy debt and even loan defaults. As a result, American Skiing is a penny stock with a market capitalization of $4 million.

Rival Intrawest (NYSE:IDR), meanwhile, is focused on debt reduction (almost $60 million so far this year). Its CFO is projecting free cash flow of $250 million in fiscal 2004. Like Vail, it is refinancing its debt and related charges have hurt short-term earnings. But unlike Vail, the company earned a profit in its most recent quarter after charges. Selling at a fairly modest 18 times earnings, Intrawest would appear to be the better value for investors.

Unfortunately, neither Vail nor Intrawest has managed to deliver margins anywhere near those enjoyed by mainstream lodging companies like Hilton (NYSE:HLT), Starwood (NYSE:HOT), or Fairmont (NYSE:FHR). In Vail's case, at least, what's lacked in margins is made up for in enthusiasm, though management characterizes itself as "cautiously optimistic but not cocky."

On the recent call (transcript courtesy of CCBN StreetEvents), for example, they make my take sound downright negative. Which is healthy, of course. Before investing your money, it pays to get all sides of the story. After all, it's easy to be snow-blinded by world-class assets.

Talk about Vail or skiing in general with your fellow Fools in our Vail discussion board.

Fool contributor W.D. Crotty does not own stock in any companies mentioned.