Analysts say it may be time for Vail Resorts to raise prices
After two years of the Epic Pass and other discounts and promotions, one Vail Resorts analyst says it’s time for the company to start raising some of its prices again in order to raise revenues.
The company announced its early ski season earnings Wednesday for fiscal 2010, which includes November, December and January earnings. While the resort segment of business, which includes lift tickets, season passes, ski school and on-mountain dining, was up, the company’s lodging and real-estate segments were down.
Vail Resorts chief executive officer Rob Katz said the company has better visibility on the remainder of the ski season, and that visibility includes skepticism that the company can reach its intended goals stated last fall.
Jerry Jones, a local Vail Resorts analyst, said Vail is doing better than its competitors, but the deep discounting it has done in order to get business is going to be hard to pull away from.
“They’re (giving incentives on) the lodging and lift ticket prices to get people to come,” Jones said. “They’ve gotten themselves into a little bit of a fix.”
The company has to weigh whether enough people would still come to the mountain and spend enough money if Vail Resorts raised its Epic Pass and other season pass prices, Jones said. Since a price hike would mean less pass sales, the revenue has to come from somewhere else to make it work, Jones said.
Jones said the prices will have to come up on a step-by-step basis, which he suspects will start to happen.
“The Epic Pass will continue to rise in price on a yearly basis and the discounts on lodging and incentives for ski school will start to rise in price, and if the business continues to come, then they start building back up the revenue” Jones said.
Katz alluded to raising prices in Wednesday’s earnings call. He said as the company sees greater stability in bookings and guests’ spending, it would look at raising prices.
“Last year, we held prices flat –
I think we’ll see that trend start to turn,” Katz said.
Season passes will follow that trend, Katz said, because they’re the “best products for us to start that shift.”
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