VR model reflects economy | VailDaily.com

VR model reflects economy

Lauren Glendenning
lglendenning@vaildaily.com
Vail, CO Colorado

VAIL – If you get people to buy season ski passes early, the risks become much less when uncontrollable variables such as poor snowfall come into play.

That’s why Chris Woronka, a senior analyst with Deutsche Bank Equity Research who follows Vail Resorts, said the ski company’s recent pass discounts are nothing to be concerned about when thinking about the company’s overall financial health.

“They are running a discount promotion right now, but keep in mind that this discount is coming off of a higher price that they announced back in March,” Woronka said via email. “In general, they want the maximum number of people to buy early. This reduces the risk that poor early-season weather or some other exogenous event discourages folks from buying later.”

Vail Resorts announced its 2011-12 season-pass prices in March, and the Epic Pass price was $50 higher than it was for the 2010-11 season. A few weeks later, the company announced it would drop the price by $20, which provides the perception of a discount, but in reality, the price is still $30 higher than it was last year.

Vail Resorts spokeswoman Kelly Ladyga said the company has not run a discounted price promotion like this before in the spring sales period.

“It’s part of a broader strategy to be more dynamic with our approach to pricing and promotions and always looking for ways to provide more value to our guests and keep them engaged with our resorts,” Ladyga said. “We had record-breaking snow this season, and we’re responding to the excitement our guests had this year with an added incentive to keep the momentum going into next season.”

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In the company’s 2011 investors’ meeting in early April, Chief Executive Officer Rob Katz and Chief Financial Officer Jeff Jones talked about the pricing strategies they established in fiscal year 2010 for fiscal year 2011.

Strategies such as a return to modest price increases included season-pass price increases through the fall 2010 selling season and lift-ticket price increases that fluctuated throughout the season.

Vail and Beaver Creek’s holiday season lift-ticket prices, for example, were $108 in the 2010-11 season, a 10 percent increase from the previous season. Non-holiday prices were $105, a 7 percent increase from the previous season.

Katz and Jones said in the investors’ meeting the company “will further refine the new pricing model in 2012.”

Ladyga said this season’s spring sales period pricing for season passes is anywhere from 8 percent to 14 percent higher, depending on the pass, than prices were last spring. She said the pricing now is not an indication of where season-pass prices will be in the fall.

Vail Resorts collects more than one-third of its lift-ticket revenues before most of the season has occurred, which “mitigates exposure to the most weather-sensitive guest,” according to the investors’ meeting presentation.

The early pass sales also drive strong customer loyalty and generate more spending by guests in other areas.

“The goal is to use the season-pass program to drive overall mountain revenue,” Katz said in the investors’ meeting.

The company’s strategies for growth in fiscal year 2012 and beyond include more investments in its resorts “to drive guest experience, which enables greater price increases,” more digital technology to connect with guests, lodging and retail expansions, the creation of a new summer experience and revenue opportunity and the acquisition of new mountain resorts.

Community Editor Lauren Glendenning can be reached at 970-748-2983 or lglendenning@vaildaily.com.