Breckenridge, Colorado — Despite some negative headlines, Vail Resorts actually had a solid second quarter. While visits were down this past quarter, revenue was up, including a rise in pass revenue. This has led to a rise in its stock price today during a period where the stock market isn’t doing so hot. Still, there are still skeptics that have concerns regarding Vail Resorts’ future.
Phil Andrews recently released a video describing the challenges that Vail faces. He travelled to Breckenridge Resort to analyze Vail Resorts’ business structure, and whether they can continue to grow despite the lack of new partners and new ski resorts that are emerging in North America. Andrews dives into the permitting challenges that hinder new lifts, new developments, and new ski resorts. He ultimately concludes that Vail Resorts is dealing with the negative network effect, which has led to diminishing returns over the past few years.
For context, the negative network effect is where a product’s value declines as more users buy and use the product. This is demonstrated by increased crowds, a declining quality in the guest experience, and underwhelming customer service. Out of these three, Vail Resorts struggles most with crowds, even if these lift lines have been decreasing over the past few years.
It’s a well-produced video, and does detail the problems that Vail Resorts and other major ski resorts in North America face in the years ahead. This was made before Vail’s most recent earnings report though, so I wonder if those results have changed his perspective.
Image/Video Credits: Taylor Turtle, Maxinomics, Vail Resorts
