Shares of ski resort owner Vail (MTN, Financial) declined 15.5% and hurt performance by 73 bps. The decline was due to investor concerns that a possible recession will result in a slowdown or decline in growth. However, thus far, Vail has seen no material change in its visitation or visitor spending levels and continues to generate robust earnings and free cash flow. It continues to invest in its people and resorts. It accelerated its investment this year by raising its minimum wage to $20 from $15 and increasing its investment in 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 better experience. Season pass sales for the 2022-2023 season increased from record levels last year and the company has more than 60% of lift ticket revenue locked in before the season even starts. Vail’s strong balance sheet should enable it to weather any downturn should one occur while allowing further acquisitions.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2022 letter.
