Brains
Rob Katz, CEO of Vail Resorts, recently gave an interview to the Wall Street Journal where he discussed Vail’s strategic shift from day tickets to season pass revenues, and the subsequent rise in ticket prices and crowding across Vail’s wide collection of ski resorts. The story of the megapass revolution has been told several times over, but details remain murky about how long it took the Epic Pass to catch on, if there were other factors that led to the success of Vail Resorts, and why, despite continued growth, the company’s stock price has decreased almost continuously since 2021.
Vail Resorts has been a publicly traded company since 1997, meaning that it has been required to file quarterly and annual reports with the Securities and Exchange Commission. The financial information contained in those reports, meant to help investors decide if a company is worthy of their investment, also gives insight into exactly how the Epic Pass changed skiing. The data reveal that the Epic Pass took almost five years to catch on, but the wave of ski area acquisitions it launched started an almost ten-year period of explosive growth, peaking just after the pandemic in 2021 when Katz stepped down as CEO. Since then, Vail’s stock price has tumbled year after year, despite continued revenue growth, until today where it sits at a little more than a third of its peak value. The sharp decline, linked by some to deteriorating skier experience at Vail Resorts, has opened up questions about the future of the Epic Pass, and if Katz will be able to respond to some of Vail’s biggest challenges in his second term as CEO.
Looking at Vail’s stock price over the last 20 years, a few distinct time periods jump out. There’s the period from 2005, shortly before Katz became CEO, until 2012, where the price stays confined within a relatively narrow range. Some steady growth shortly after Katz took over was wiped out by a several year decline during the global financial crisis, and the price stayed flat even during acquisition of two more Lake Tahoe resorts, Northstar and Kirkwood. From 2012 to 2018, Vail experienced explosive growth, appearing to be catalyzed by the rising popularity of the Epic Pass, and Vail’s acquisition of several other high-profile ski resorts, in addition to a small empire of ski areas in the Midwest and on the East Coast. From 2018 to the end of 2021, the stock experiences some turbulence, and a huge crash associated with the global pandemic, followed by an enormous recovery, to reach new highs as Katz stepped down as CEO. Since 2021, the stock price has almost continuously dropped, even in the months after Katz returned as CEO.
When the Epic Pass first launched in 2008, season pass sales accounted for only 26% of the total lift ticket revenue. Most skiers bought day tickets, and Vail Resorts accounted for less than 10% of North American skier visits. Vail began a steady multiyear campaign of marketing the Epic Pass, along with raising day ticket prices to encourage more skiers to switch. As Vail bought up more and more large ski resorts, the Epic Pass increased in price, but not substantially. More ski areas to visit made the Epic Pass look like a better and better deal, and the share of revenue from season pass sales has risen steadily, reaching about 65% last year. The blue curve in the plot below shows the fraction of lift ticket revenue coming from season pass products like the Epic Pass. As the Epic Pass increased in popularity, Vail increased its share of North American skier visits, from less than 10% for most of the early 2000’s to around 20% today. Because Vail does not publish skier visit numbers for each of its resorts, it is difficult to determine if the increase is due to Vail simply acquiring more resorts, or if more skiers are choosing to ski at Vail Resorts. Perhaps most noteworthy is the plateau from 2022 to 2024, and a decrease in share of skier visits in 2025.
Digging in to Vail’s annual SEC filings gives an even more detailed view beyond just looking at its share price. Actually, many investors base their decisions to buy or sell based off a company’s annual or quarterly reports, making them closer to an origin story or an explanation for a stock price. Vail Resorts has long focused on three segments of its business, the Mountain Segment, which covers skiing, ski lessons, dining, rentals, and other recreational activities. The Lodging Segment covers business of all of the hotels owned by Vail Resorts, of which many, but not all, are located at Vail-owned ski resorts. The Real Estate Segment covers the development and sale of condos and other properties, again, mostly located near Vail-owned ski resorts. Though Vail’s Lodging and Real Estate Segments are also largely driven by skiing, examining the numbers from the Mountain Segment gives the most insight into how the Epic Pass changed skiing.
Vail is a huge business, now owning and operating over 40 resorts world-wide. Even in 2005, when it owned just five resorts, the Mountain Segment logged over a half a billion dollars in revenue. Normalizing these numbers by Vail’s skier visits each season cuts them down to size, allowing a comparison of Vail’s financial performance from year to year, and a contextualization of the business on the scale of an individual trip to a Vail Resort. First, focus on the blue curve, starting from a value of about $40 per skier visit in 2005. This curve shows the expected ticket price, or the total revenue from selling day tickets, season passes, and other lift products, divided by the total number of skier visits. Since Vail sells so many different kinds of day tickets and season pass products, it can be difficult to determine if revenue growth is from growth in skier visits as a whole, or growth in more revenue per skier visit. The expected ticket price is one way to try to disentangle these two factors. In 2005, Vail Resorts took in an average of $40 each time a skier showed up at one of its resorts for a day of skiing. The day ticket price was more than twice that, at $81, but the expected Ticket Price is far lower because of season pass sales, which accounted for only 20% of all of Vail’s lift ticket revenue. The explanation? Season pass skiers skied a lot, pushing up the total skier visits. Expected ticket prices grew steadily over the next two decades, reaching $85.09 last year. The difference between last year’s expected ticket price and last year’s day ticket prices of well over $300 is staggering. But, day ticket prices have been sent through the roof intentionally to encourage more season pass sales.
The green and red curves plot the total mountain revenue and total mountain expenses per skier visit. Total mountain revenue includes lift ticket revenue, but also money spent on rentals, ski lessons, buying lunch, and other ways skiers can spend money during a day of skiing. Comparing the revenue per skier with the expected ticket price shows that the lift ticket is less than half the revenue Vail collects on average from each skier visit. There are plenty of skiers who buy their season pass, log 50+ days per season, stuff a sandwich into their pocket, and ski all day. But, the data suggest that there are plenty of other skiers who rent all their equipment, take a lesson in the morning, have lunch in the base area, maybe stop for an après drink or two, and buy a beanie or a t-shirt on their way out. This trend has stayed relatively consistent over the last 20 years, despite more and more skiers moving to season passes. Part of Vail’s economic engine is getting skiers to part with their money after they’ve already bought a lift ticket, and the Epic Pass has supported this business model. Convince skiers they are getting a deal on the skiing part of their trip with the Epic Pass, and collect revenue from other sources during the rest of their visit.
Comparing revenue with expenses, the period between 2014 and 2018 immediately jumps out. Revenue increased almost $30 per skier, and the costs stayed essentially flat. This increase in earnings, or the difference between revenue and expenses, is also reflected in the magenta curve in the plot above. This period saw the most explosive growth in Vail’s stock price, from $64 in April 2014, to $295 in August 2018. The growth in earnings per skier and the more than tripling of the stock price is essentially the story of the success of the Epic Pass. However, the stock price after 2018 is nothing short of turbulent, with a crash and impressive recovery during the pandemic, and a long decline in the last few years. Understanding the details of the success of the Epic Pass, and why Vail was able to grow earnings per skier, may give insight into why Vail has struggled in the last few years.
Many of Vail’s more recent ski area acquisitions have been in the Midwest and on the East Coast. Vail bought Mount Brighton, Michigan and Wilmot Mountain, Wisconsin in 2012, Stowe, Vermont in 2017, and Okemo, Vermont in 2018. In 2019, Vail purchased Peak Resorts, which added 17 ski areas throughout the Midwest and East Coast to its portfolio. A frequent visitor to these smaller ski areas might be more likely to go on a Colorado or Lake Tahoe ski trip if their lift tickets are already covered through the Epic Pass. At least part of Vail’s increases in revenue during this period could have been from selling more Epic Passes at these smaller sized ski areas, but the trend started in 2014, and by the time the sale of Peak Resorts went through in 2019, revenue per skier was already beginning to slip.
One common criticism of Vail Resorts has been that the skier experience has steadily degraded over time, and while skiers spend more money on their lift tickets, they are not necessarily getting a better day of skiing. That criticism could explain part of the rise in earnings per skier visit. Vail could spend less time grooming slopes, or keep fewer lifts open during the week, or charge more for food without raising the quality, all of which would either decrease costs or increase revenue without increasing expenses. Vail also likely benefited from some economy of scale, bringing several large resorts and a bunch of smaller ones under the same umbrella can cut down on expenses in certain areas. However, one of the more likely explanations for flat expenses comes from Vail’s labor expenditures.
Between 2012 and 2018, Vail paid roughly $34 in labor costs for each skier visit. Keep in mind, there are typically many more skiers than employees, except maybe when it rains, and each skier’s average of $34 contributes to the wages of ski patrollers, lift operators, ski instructors, cooks, parking attendants, groomers, managers, administrative staff, and everyone else needed to open a ski resort for a day of skiing. Labor costs are almost always the largest part of a ski area’s expenses, and Vail’s labor costs consistently represented around 38% of its total mountain expenses between 2012 and 2018. Vail’s total labor expenditures grew steadily throughout this period, from $203 million in 2012 to $444 million in 2018. As Vail’s workforce grew larger with each new ski area it acquired, its skier visits grew as well, keeping the labor cost per skier visit roughly consistent regardless of any acquisitions. If Vail grows its skier visits by a huge amount, but does not higher any more workers to help staff a busier ski area, the labor cost per skier visit would go down. Though none of Vail’s annual reports state explicitly that it pursued a strategy of keeping wages for seasonal workers low, flat labor costs per skier visit during a period of growing revenue per skier visit and exploding stock price suggests that seasonal workers may have indirectly paid for Vail’s growth during this period.
After 2018, Vail’s workforce began to respond to these fixed labor costs, with a wave of ski patrol and lift mechanic unionization that continues today. Ski patrollers at Canyons Resort have been unionized since 2000, and ski patrollers at Park City unionized a little over a year after Vail’s purchase of Park City. In 2018, ski patrollers at Stevens Pass unionized just a few months after Vail acquired the resort, and in 2021 ski patrollers at Breckenridge successfully unionized, with Keystone ski patrollers narrowly voting down a union. Vail Resorts acquired unions at its major resorts from 2018 onwards almost as fast as it bought up large resorts between 2010 and 2016.
Vail Resorts announced plans for a company-wide minimum wage of $10 per hour, with the intention “to raise this minimum wage by inflation each year going forward,” according to the company’s 2015 annual report. Though mention was made of “wage increases associated with our minimum wage initiatives” in annual reports from 2019 and 2020, SnowBrains was unable to find yearly data on company minimum wages. During this time, the cost of living in mountain communities exploded, far outpacing national inflation rates. Many ski patrol unions have cited low pay and high cost of living as one of the primary motivators for organizing. Ski patrol and lift mechanic unions have been able to secure significantly higher pay, especially for more experienced and skilled workers, suggesting that these workers may have been underpaid for quite some time. In 2022, Vail Resorts announced that it was raising its company minimum wage to $20 per hour the following season. After 2021, labor costs and expenses as a whole increased proportionally with increases in revenue. While Vail may have achieved significant growth as a company in part thanks to keeping wages low for seasonal workers, unions have ensured that wages for the workers they represent keep pace with the work they put in.
While unions succeeded in restoring the proportionality between labor expenditures and revenue, both mountain revenue and earnings per skier continued to grow, dramatically, from 2021 until today. Vail’s revenue growth in the last few years has consistently been the fastest growth in the last twenty years, and a much larger share of that revenue is more dependable, from season pass sales. With this revenue growth in mind, the stock price should still be running up, with similar or even greater momentum than the period between 2012 and 2018. In the last few years, the stock has moved in the opposite direction, plunging to almost decade lows. It is tempting to reach for the pandemic as an explanation, and the stock price did indeed collapse, but the recovery only took a couple of years to reach new highs. Why has the stock price continued to fall, in the face of strong revenue growth?
Many companies eventually transition from growth companies to value companies. Even though value companies may continue to grow their revenues, investors do not expect any big new ideas out of them. Perhaps Vail is transitioning from its growth stage, where it rewrote all the rules on how the ski industry works, to a value stage, where the Epic Pass continues to thrive, but there are no major changes. Or, maybe, the rise of the Ikon Pass has taken the wind out of Vail’s sails, and investors are betting that the Ikon Pass, the Indy Pass, the Mountain Collective Pass, and other pass offerings will continue to eat away at Vail’s market share. It is hard to ignore the negative publicity Vail has received over the last several years over deteriorating skier experience and crowding at its resorts. Katz spoke to some of those concerns in his interview with the Wall Street Journal, but did not offer any insights into how he may address them. It is possible that investors are growing more concerned that skiers may not like Vail, and that strong financials may not overcome a bad reputation.
When Katz returned as CEO in May 2025 the stock price jumped temporarily, but by July the stock price was falling steadily again. Vail faces a completely different set of challenges than it did when Katz started his first term as CEO. While Katz clearly had the acumen to launch and grow the Epic Pass, addressing Vail’s reputation and skier experience, as well as convincing investors that Vail has more room to grow, may require a completely different set of skills. Whether Katz is seeking to reinvigorate the growth of Vail Resorts, or stick the landing as a value company, he will face an uphill battle. Too bad there’s a lift line.
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Because instead of spending money on improving lifts, they are paying out their cash in large dividends while giving management many days of vacation at their resorts. Simple
I noticed an error regarding the years that Vail acquired Northstar and Kirkwood. Northstar was purchased sometime in the summer or fall of 2010, and Kirkwood was purchased two years later in 2012.