News » Whistler

pass prices

comment
By Loreth Beswetherick A dirty seasons pass price war that erupted at Colorado ski resorts last year has spread to Eastern U.S. resorts this season and the move has industry analysts divided. Some quarters of the ski industry are hailing the deeply discounted seasons passes — many are selling for US$200, compared to CDN$1,200 at Whistler-Blackcomb — as a breath of fresh air, a new trend in the philosophy of frequent skier product pricing that will help stimulate sagging market growth. They say the industry is finally listening to what skiers have been saying for years — that the sport is too expensive. Not so, say sceptics, like David Perry, Whistler-Blackcomb’s vice president of marketing and sales. Perry said the deep discounting only serves to shift a regional market from one resort to another within the same area. He said the Denver area ski resorts are devouring each other instead of going out to get new skiers. He also said the cheap passes are being snapped up by less frequent skiers who would ordinarily buy other products, like day tickets or express cards. "They are just selling a different product to a customer they already have." Bob Gillen, publisher of the Snow Industry Letter, however, said in a recent Ski Area Management article that the softening of prices across North America will help revive the sport. "Instead of all this defensive posturing, such as comparing lift tickets to golf’s greens fees, smart marketers have begun to drop the price for frequent skiing," Gillen wrote. He said this trend is gathering momentum. Perry, who has been keeping close tabs on the Colorado developments, said price wars are nothing new in the industry and he scoffs at the idea of a trend developing. "I don’t call it a trend. These kinds of pass price strategies have always been a part of the industry and its been cyclical in nature in the different regions and dependent on different circumstances," said Perry. "There are many examples of this kind of thing. It happened in the Okanagan in recent years. It has happened in the Canadian Rockies and it happens in the Eastern U.S. every second year." Perry said it was only when the high-end Colorado resorts joined the bun fight last year that people, and the press, sat up and took notice. "There’s been a lot of media coverage and obviously the industry has been watching very closely." The lid was blown off Colorado pricing last fall. Intrawest’s Copper Mountain started the ball rolling with the introduction of a family pass strategy to attract the family guests it felt were lacking. The pass was sold for US$799 to up to four members of the same family. Winter Park responded and upped the ante by bringing out a US$799 "buddy" pass for four unrelated people. This meant a seasons pass cost individuals around US$200 each as long as they bought in a group of four. "That really opened the flood gates," said Perry. "Vail responded with buddy passes at their Breckenridge and Keystone resorts. Basically you just had to stand in line and grab four people. They had a huge rush." Perry said the strategy, geared to the region’s skiers, actually started to impact the Colorado destination market. "People who were planning a vacation in Breckenridge, for example, were faxing in and buying passes instead of their six-day lift tickets. They were selling passes to people who only used them for a week," he said. "That is not traditionally who you sell seasons passes to. The regional strategy in Colorado took a big swing." The result, he said, was a zero increase in total ticket product yield. In Colorado’s case, there was actually a drop in yield because of poor snow conditions. "Some people are saying if you sell more passes it will bring out the lapsed skier and the industry has been struggling to get people out of their homes and onto the slopes," said Perry. "They feel this is a cure-all, but the sceptics are saying wait and see if it works." He said the question has been left unanswered in Colorado because of the variable of bad snow in the equation last year. Perry feels local wars have not been proved to stimulate market growth either. He said pass price battles in the Okanagan several years ago between Big White, Silver Star and Apex saw seasons passes again sold to less frequent skiers who would have bought other products. "Now they have stabilized at a lower rate and sell a large number of passes to people who ski on average about 10 times a year." And that, said Big White’s VP of guest services, Michael J. Ballingall, is just the way they like it. He said the cheap pass strategy works for them, even though it was a serendipitous discovery spurred by Silver Star’s attempt to steal market share in 1993. He said Silver Star introduced a lower seasons pass rate for Kelowna residents than for Vernon residents. "What they did was try to come into our local market and steal market share," said Ballingall. "We matched their price and through the sheer luck of that philosophy, we quadrupled our seasons pass sales that year. We have stuck to the philosophy ever since and will stick with it for the long term." Ballingall said Big White has increased market share and is maintaining a higher yield even though destination skiers from as far afield as Hong Kong, Australia and Great Britain are buying seasons passes for 10 days of skiing holiday as opposed to other ticket options. He said lapsed skiers have also been prompted to return to the sport. "We have the benefit of hindsight. We have had both strategies in place. When we had the higher seasons pass rate we made less money. When we have the lower rate, we make more." Ballingall said an adult early bird pass at Big White starts at $354 — the cost of which is skied off in less than 10 days. "We always maintain we will be affordable to Kelowna residents. We are their mountain first. We are a destination market second." Perry said that deal is a steal for frequent skiers who ski 20 to 50 times a season. "For them its great, but, for the most part in the industry we look at average utilization and yield. In the Okanagan the average utilization is 10 days and at Whistler-Blackcomb it is traditionally 32 days and we have always priced our passes around the 20-day break-even range," he said. "We believe we provide ticket products to our regional guests at a reasonable price for the product we deliver." Perry said the Whistler-Blackcomb seasons pass base grew by almost 20 per cent last year. "That tells me we are still providing good value. We have not adopted the low-priced seasons pass option, nor do I feel we have to." One reason Whistler-Blackcomb doesn’t have to slash prices is because of no direct regional competition. Perry acknowledged the discount strategy has in fact worked well for Grouse Mountain in competing against Cypress. Grouse came out with a 1999/2000 seasons pass for $200 last spring that was good for the remainder of the 98/99 season. "They got a jump on their competition and they also drew attention to their excellent snow base and the fact they had great spring skiing last year. It was a great strategy for them," Perry said. It put revenue in the bank for weather-dependent Grouse — revenue it doesn’t usually see until the following fall. Perry said similar strategies have also worked for small, non-destination U.S. resorts. Some small resorts have opted to change their entire pricing strategy. "They decided to sell super-discounted passes to everybody — like US$129 — so everybody buys one and they sell no day tickets," said Perry. The small guys, dependent on cash flow, get all their revenue up front and are not dependent on weather for sales. "The money is in the bank and they are happy," said Perry. "They just got it in a different way. For a small operation, it makes perfect sense." The big guns in Colorado, however, are still offering deep discounts and now so are resorts in Massachusetts and New Hampshire, where a pass will set consumers back US$199. "It will be interesting to see what happens in Colorado this year," said Perry. "We are all watching. They obviously didn’t stimulate visitor growth last year. For sure they dropped their yield and they did not get the volume to make up for it." Perry said this season Copper has led the way with a more reasonable, slightly higher-priced pass. He thinks the buddy-style pass rates will start creeping higher and higher until somebody turns around, slashes prices and starts the whole cycle again. "Depending on the players, those cycles can be short-lived or long-lived. I have been in this business a long time and I have seen it play out many times over," said Perry. "There wasn’t a whole lot of thinking going on in Colorado last year."

Add a comment