For the Teluride thing though, I think the interview is only a partial view on the deal. Remember there is one more bulletpoint:
- Telluride Season Pass holders and Telluride Ski & Golf Club members with full winter benefits will receive 50 percent off lift tickets at all Vail Resorts owned mountain resorts.
So I think there is significant money flowing back the other way that they're not talking about, and mins/maxes and caps; and the interviewee is spinning just 1side of 1 individual transaction for exaggeration and effect.
So maybe VR is paying telluride $118; but telluride passholders+telluride corp. maybe paying vail $100+$100 back for their days.
That's a good point. Now, there are a
lot more Epic passholders than Telluride season/life passholders. But yes, Telluride's take might not be that high.
Whether what was said in the CNBC interview by Bill Jensen is true or not is hard/impossible to know. Seems within ball park from other deals I am aware of but hard to know if it’s exactly what he said it is. Frankly it could be more!
Vail feels it’s pass will attract more people if it includes Telluride in its offering. For one they do not want IKON including such a high profile mountain it in its pass. Vail also wants to better understand how Telluride works if it’s considering a future transaction. Vail also wants to gain valuable data attribution from those folks. And of course because it makes money! If you think the margin on Vail’s season passes is 15% then you are sorely mistaken. They are not loosing money on an $900 pass by giving away $120. Why would they not do a JV with a great and unique mountain like Telluride!?
I think a significant chunk of the Epic passholders who visit Telluride will stay for more than one day. But then only some percentage of them will use any at all, and you're right that there are plenty of ways this adds value for Vail that makes it make business sense. I apologize for the lack of clarity in my initial post... it wasn't aimed at the Epic pass, which I
do think is a legitimate long-term project, and they're making smart decisions.
Of course MoviePass and Vail or Alterra are completely different animals. MoviePass is basically done in barely a couple of years while Vail is one of the best run companies around. With all due respect - you either have no idea of MoviePass’ business and/or how Vail or Alterra make money.
Or both
I never heard of MoviePass before reading this thread, so my comments there are entirely based on what you and a couple other posters wrote. I agree that Vail is a well-run company, though I'm sure my insight into how they make money is somewhat limited. Alterra... I hope they have a solid roadmap to profitability, but so far their actions haven't revealed it. I
do know that season pass revenue was a significant piece of the bottom line for most of the different companies they've acquired, and eliminating that revenue stream/turning it into a cost center doesn't strike me as sustainable.
Not sure how you are arriving at your conclusions. Alterra is not loosing money. In fact, it’s ahead of projections on how many passes it has sold. I can’t disclose more on that front but if you don’t believe me just look at Vail’s most recent pass sales metrics - pass sales were barely up 8% (ex military pass) - a huge drop from the last few years. The main reason for that - IKON pass.
Alterra (as it exists now) has been in real operation for just over a month now (sure they might have been in charge for late spring/summer ops at some of their properties, but this is the just the start). So it's awfully early to claim they're not losing money. I don't doubt that they've sold a lot of Ikon passes, it's a great deal for many consumers. Just like $9 for unlimited movies sounds like a good deal for many consumers. And a lot of those Ikon buyers are excited to use their passes at areas owned by other companies.
Telluride/Vail's $118 estimate seems like a rough benchmark (and you said it's in line with the deals you've heard of), so think about what that means for each Ikon pass.
- Someone in the Colorado Front Range bought an Ikon Base pass for $600. This season they ski maybe 5 days at Eldora, 10 days at Winter Park, 10 days at Copper, and three days on a little road trip to Jackson Hole. I really doubt they're paying Powdr $118 per day, but if they were that's $1,770. Jackson's a lot more comparable market to Telluride, and if they managed to negotiate $118 per day, then Alterra's paying them $354. Of course not every front range skier is going to follow that exact breakdown, but if the average is in that ballpark, then each Ikon Base sold on the front range might be reported right now as $600 of revenue, but -$1,500 might be more accurate.
- Someone in Utah bought a full Ikon pass for $800. They used all 7 days at Alta/Snowbird, 3 days at Brighton, and also did a full ski week at Aspen, in addition to skiing Deer Valley and Solitude. Alta and Snowbird are both very protective of their own sales (and their season pass prices have declined as it is); and I think it likely that the delay announcing Solitude's inclusion after the acquisition was due to renegotiation... so I think it's very reasonable to think that Alta/Snowbird are getting something in the ballpark of $118 per day. That's more than $800 right there. Let's just guess and say Brighton's getting $75/day. Aspen's a harder one to guess. It's got the cachet to demand top dollar, but with the Crown company's ownership interests this may well have not been an arms-length deal. If they're getting just $50 per day, then this particular Ikon pass is costing Alterra $601 ($800 selling price - $1,401 to partners).
- A diehard retiree skier back east might hit Stratton most frequently. But he/she decides to take full advantage of this pass, with 3 days each at Sugarbush, Sunday River, Killington, Tremblant, Mammoth, Squalpine, Alta, Snowbird, Steamboat, Revelstoke, and Taos. That's a lot of Alterra skiing. But it's also 21 days at other areas. If that's 21 x $118, then Alterra's on the hook for $2,478.
- And of course, there are skiers and riders out there who will buy the pass and never use it, or only use it at Alterra-owned areas. In which case there's no per-day cost.
Now of course, some of these Alterra partnerships are likely structured differently than the Telluride/Vail agreement. But I suspect when everything's tallied up that Alterra will be paying more to its partners than it made in Ikon revenue. Even if they manage to break even or turn a bit of a profit on Ikon, I suspect there's still at least a $20 million hole in their bottom line compared to prior operators' season pass revenue (Cali4nia + Intrawest's share of RMSP + various other areas' season pass sales). If they end up averaging -$200 each on 100k Ikon products, then that's
another $20 million gone.
Ikon passholders' ancillary spend helps a lot, of course. But some portion of those visits would have otherwise still occurred, just with day tickets added in. I realize that this is relative chump change for Alterra in the current bubble, but $20 million here, $20 million there... sooner or later you're talking real money. And so far I'm not seeing any of that long-term vision of turning their motley collection of resorts into Aspen-like cash cows.
I have no doubt that Alterra's spinning this well for potential investors. But I kind of assume that the MoviePass folks were also spinning their business well. It's not a perfect comparison, but right now Ikon is looking a lot like AMC selling cheap unlimited movie passes that can be used at Regal or Cinemark, too.