In 2022, shares of ski resort owner and operator Vail Resorts, Inc. (MTN, Financial) declined 25.2% and negatively impacted performance by 93 bps. The decline was due to investor concerns that a possible recession will result in a slowdown or decline in growth and would negatively impact season pass sales and earnings. Thus far, Vail has seen no material change in its visitation or visitor spending levels. It continues to generate robust earnings and free cash flow. Season pass sales this season increased at a mid-single-digit rate, enabling the company to be assured of almost a third of its annual revenue before the season even started. Vail continues to invest in its people and resorts. This year it raised its minimum wage to $20 from $15. It also increased its investment budget for all its resorts from $170 million per year to $320 million. This is to increase lift capacity and open acreage to make skiing at Vail an even more outstanding experience. Vail’s strong balance sheet and well-covered dividend should enable it to weather any downturn and allow for further acquisitions and pursuit of other growth opportunities.
From Ron Baron (Trades, Portfolio)'s Baron Focused Fund fourth-quarter 2022 letter.
