‘Sweet spot’ of discount passes
EDITOR’S NOTE: this is part four in a seven-story series looking at the future of skiing and snowboarding. To see past stories, go to http://www.summitdaily.com.
In 1998, Winter Park Resort did something nobody had ever done before in Colorado. It significantly dropped prices, offering a four-person season pass package for just less than $800.
Other major ski areas catering to Front Range skiers responded immediately. At Copper Mountain, a $1,200 pass from the year before was reduced to $800, matching Winter Park’s price. At Keystone and Breckenridge, the two-resort season pass that the previous year had cost $750 tumbled in price – and then dropped some more. It’s now down to under $300.
“Lunacy,” said one ski industry veteran. “The death knell of skiing as we know it,” said others. Ski executives cautiously suggested that prices would begin going back up. But after six years, the discounted prices remain. Consumers are happy, the companies are happy. What’s not to like?
“When will we drop the word discounted?” asked Bill Jensen, chief operating officer at Vail Mountain. Ski area operators, he said, seem to have figured out the “sweet spot” between price and utilization.
Lower prices grow the market
The lower-cost season passes have many virtues. One is the ski areas get consumers to commit money to them early instead of any number of other alternatives.
Rick Kahl, editor of Ski Area Management, a trade magazine, explains that it’s like getting cable television service. You pay in advance of the service.
A relatively minor benefit to operators is that it gives them income in autumn.
Third, ski area operators believe that the cheaper season passes have expanded the market. Adam Aron, chief executive officer of Vail Resorts, describes this as a major gain.
“By our count, close to 200,000 people in the Front Range are buying season passes at one resort or another, not just ours,” he said. “As a result of that, the number of total skiers in Colorado is much higher.”
Aron believes the market is expanding in several ways. Some skiers who had quit have returned to the sport. Others, who might otherwise have quit, are staying. Finally, new skiers and snowboarders are being recruited.
“The number of day skiers can’t be explained by anything other than that new people are coming into the sport,” Aron said.
The children’s ski schools are busiest of all, he added.
Cheaper passes have not cost the resorts money per skier. The average season passholder for Vail Resorts uses the pass between eight and 10 days a year – it has varied over the last five years. Assuming nine visits, that’s $37 per visit for a Colorado Card purchaser.
Having invested in a ski pass several months before, the day skiers are often becoming overnight skiers.
“The single fastest growing market segment at our resorts during the last several years has been what we call the Colorado overnight market, which means skiers who originate within Colorado but come up for the day and then stay overnight,” Aron said.
“It’s double-digit growth – every year,” he added. Because Vail Resorts has diversified so heavily into lodging, that also helps the ski company.
The final part of the picture from the Vail Resorts perspective is market share. With cheaper passes, Vail Resorts and Intrawest are keeping skiers closer to home.
“Our market share of the Front Range has soared as a result of these passes,” Aron said. “You don’t see as many people peeling off to Steamboat, Aspen and Crested Butte, as well as some of the smaller resorts.”
But there’s also another element that has less to do with the bottom line – being liked.
Six or seven years ago, “all ski areas were getting beat up because of the high lift-ticket prices,” said Paul Witt, who was a spokesman for Vail when the buddy passes – a name later trademarked by Vail – were introduced. Ski areas are like people – they want to be liked.
That includes Aron. He recalls that he learned quickly after arriving in Colorado in 1996 that Front Range skiers are price sensitive. He recalls declaring that Vail Resorts would keep skiing and snowboarding affordable to them. Vail Resorts has – and it will, Aron pledged. He doesn’t see prices going up much per year.
In effect, the cheap prices have converted daily lift-ticket buyers into season-pass buyers at the larger resorts along Interstate 70.
Buddy Pass battle
But this pricing-utilization sweet spot has caused sourness elsewhere. Other resorts, particularly those farther from the Front Range, have seen an erosion in business.
“It is good for the skiers, but it’s tough for small ski areas,” said Tom Jankofsky, general manager of Sunlight Mountain Resort, located near Glenwood Springs.
Like most smaller ski areas, Sunlight makes nearly all of its income from lift ticket sales. Sales have been dampened in two ways. First, there is somewhat less business from Colorado’s Front Range. Second, some local skiers – 50 percent of Sunlight’s business comes from the Roaring Fork Valley – are spending more of their ski dollars with Vail Resorts.
If you’re going to spend 15 to 20 days a year, you can get incredible variety at the five resorts offered through the Colorado Card for not much more money than a season pass at Sunlight.
Jankofsky’s story is not gloom-and-doom. The ski area still makes money, he said, but it’s a narrower margin.
At the other end of the I-70 corridor, Ski Loveland has much the same problem. Skier numbers dropped precipitously at first, but after Loveland dropped its prices, skiers and riders have been returning at the old levels.
“Our skier numbers are coming back to where they were pre-buddy pass times,” said Kevin Wright, marketing director.
This bid for day skiers has created new tensions in towns where merchants were accustomed to destination skiers being the entree. This discussion has been most prominent in Vail.
Skier days tumbled during the 1998-99 season. When purchasers of Vail Resorts’ Colorado Pass were offered 10 days at Vail or Beaver Creek, the ensuing crowds were at first welcomed, annoyances and all.
Chief among the annoyances was parking. The town’s two municipal parking structures, with a combined 5,500 parking spaces, filled up more than 30 times one winter, causing cars to spill down along the frontage roads a mile or more in each direction. Many see potential for a car-skier collision; others see an eyesore.
Hoteliers have tended toward unhappiness, as have many retailers. Among the most vocal critics is David Gorsuch, a retailer in Vail since 1966. Vail’s new congestion, he said, will eventually discourage destination visitors.
“The destination guests are our lifeblood and we need to make sure they feel they have received a quality experience,” Gorsuch said.
Vail is getting crowded by its day visitors, he said. “You can only pour so much coffee in a cup.”
With the sport growing so slowly, he added, “we need to protect that clientele.”
Many Vail businesses and other groups have embraced the Front Range traffic. In response to stories that Vail was ambivalent or worse about Front Range skiers, Vail Chamber executive director Kaye Ferry got businesses to pay $400 each to get into a coupon book that was sent to Front Range skiers who had purchased season passes from Vail Resorts.
Front Range skiers are welcome, Ferry said. It’s just a matter of figuring out the parking. Frontage-road parking is not a long-term solution, but building new parking structures is expensive, at $27,000 per stall.
Jim Lamont, executive director of the Vail Village Homeowners Association, sees the turn to the Front Range as only natural while the destination market was down.
Vail coming off this low, he said, will only bounce higher, emerging as “one of the pre-eminent resort cities in the world,” he says. “We already had skiing and now we are a cultural resort, too.”
In Summit County, Breckenridge town manager Tim Gagen said that the community embraced the Front Range market precisely because of its strength at a time when destination skiers were slacking.
In that destination downturn the bar and restaurant businesses remained strong, he said.
But from Aspen to Breckenridge, this recent economic downturn has provoked calls for lessened dependence upon both day and destination tourism. Among those advocates is Jack Taylor, director of the Summit County Chamber of Commerce.
“What I’d like us do is take a hard look at our economic base and find ways to expand that base so that tourism isn’t quite such the economic driver that it currently is,” he said.
Summit County’s tourism businesses, Taylor points out, will be hard-pressed to service the type of retirement-related growth that is expected.
In Old Snowmass, Michael Kinsley at Rocky Mountain Institute argues that instead of expanding the tourism infrastructure, the Roaring Fork Valley should consider subsidizing existing nontourism businesses. He points to the success of Steamboat as an emerging headquarters for non-tourism enterprises such as SmartWool socks.
Wednesday: Inviting diversity onto the slopes.
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