‘Sweet spot’ of discount passes | VailDaily.com

‘Sweet spot’ of discount passes

Allen Best
Daily file photo Skiers park along the South Frontage Road during the busy holiday weekend. Discounted season passes targetted at Front Range skiers and snowboarders, who tend to drive to the mountain, are blamed for increasing parking congestion.

In 1998, Winter Park ski area did something nobody had ever done before at a Colorado ski area. 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 with their own deals. 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 Ð 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 season-pass prices remain discounted. Consumers are happy, the companies are happy. What’s not to like?

“When will we drop the word discounted?” asks Bill Jensen, chief operating officer at Vail Mountain. Ski area operators, he says, seem to have figured out the “sweet spot” between price and utilization.

Market grows

For ski areas, the lower-cost season passes have many virtues. By getting consumers to purchase the passes early, the ski areas get consumers to commit money to them 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 commit in advance how you are going to spend your entertainment dollars.

A relatively minor benefit to operators is that it gives them income in autumn, about three months earlier than they would have gotten it.

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 says. “As a result of that, the number of total skiers in Colorado is much higher.”

The market, Aron says, is expanding in several ways. Some skiers who had quit skiing 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,” says Aaron. The children’s ski schools are busiest of all, he adds.

Being liked

But the ski areas have lost little or no money per skier. The average season pass holder 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 coming up for the day and then staying overnight,” explains Aron.

“It’s double-digit growth – every year,” he adds. 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,” says Aron. “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,” recalls Paul Witt, who was a spokesman for Vail when the buddy passes Ð a name later trademarked by Vail Ð were introduced into Colorado. Ski areas are like people Ð 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 pledges. 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,” says 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 says, 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,” says Kevin Wright, marketing director.

Cup overflows

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 says, 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,” says Gorsuch.

Vail is getting crowded by its day visitors, he says. “You can only pour so much coffee in a cup,” he says.

With the sport growing so slowly, he adds, “we need to protect that clientele.”

Indeed, despite the economic diversification of recent years, skiing remains a key driver – perhaps the top driver – of the economies of Eagle, Pitkin, and Summit counties.

In Vail, for example, about 70 percent of sales taxes are generated during the five months of ski season. No public data exists as to what percentage of winter sales tax revenues destination guests are responsible for, but an educated guess suggests 90 percent.

Welcome mat

Many 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, says Ferry. 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 says, 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 says 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 says.

Business incentives

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 says.

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 non-tourism businesses. He points to the success of Steamboat as an emerging headquarters for non-tourism enterprises such as SmartWool socks.

In the Eagle Valley, a diversification effort by Don Cohen tried, without success, to interest sporting goods manufacturer Cabelas into building one of its museum-type stores. Instead, the company intends to build a store on the western outskirts of metropolitan Denver.

Small mountain see resurgence of skiers

By Allen Best

Special to the Daily

Sharkstooth Ski Area as a business proposition was audacious in every way.

Located between Greeley and Fort Collins, among the bluffs of the Poudre River, it had very little natural snow and not much slope – about 300 feet of vertical. This was almost literally skiing between the cornfields.

Yet, from 1970 to 1986, this tiny patch of man-made white accommodated tens of thousands of skiers from the surrounding towns of northern Colorado. Young and beginners, for the most part, they later advanced to Colorado’s mountain resorts. It was, in sense, a farm team for the major ski areas.

“Rarely do you find the situation where somebody from Cleveland just decides to drive out to Vail for their first ski experience,” says Rob Linde, director of marketing for Eldora Mountain Resort, located a half-hour west of Boulder. “It does happen, but more common is that somebody gets their first experience at a ski area close to where they live.”

Like hundreds of other small ski areas cross the nation, Sharkstooth went out of business. A third of the 735 ski areas that existed in 1983-84 are now shuttered. Many were poorly conceived, often placed in snow-deficient locations. And customers of these smaller resorts merely began spending more time at larger resorts.

Yet the small, feeder resorts played a critical role in the industry. Jerry Jones, a marketing vice president at Keystone from 1973 to 1986, recalls assembling a lift-ticket package for customers at Sharkstooth. Sales to Sharkstooth customers were few, but taken with school programs in Iowa, church groups in Nebraska, and so forth, they provided an important part of Keystone’s business.

“That’s the first time I realized we had better try to be saving these guys, because if we did not, we wouldn’t be having people entering the sport,” he says.

In Colorado, dozens of small ski areas have disappeared – Geneva Basin, Arapahoe East, Squaw and St. Mary’s Glacier, among others. Among the best remembered is Broadmoor, located on the flanks of Cheyenne Mountain, west of Colorado Springs.

Today, the trend has ended and new ski areas are opening – even in Colorado. At tiny Silverton, with a year-round population of less than 1,000, two ski areas have opened in the last several years. Catering to locals is Kendall Mountain, a beginner area. At the other end is the double-black-diamond Silverton Mountain Ski Area.

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