What if We Aren’t Charging Enough for Lift Tickets and Skiing?

2705 view(s)


September 11, 2013 - Gregg Blanchard

Ask a skier what’s wrong with skiing and they’ll tell you, in a resounding chorus, “it costs too darn much!” What’s the solution? “Lower ticket prices,” they say, “make it more affordable.”

Revenue is a matter of price times volume. If you lower the cost, you have to make up for it in number of skiers. More skier mean longer lift lines (lower skier satisfaction) but more ancillary spend. There’s definitely a balance.
If only we could look to another industry for an example.

The Story
My family is going to Disneyland next year. As we planned the trip, I was informed that a Disneyland pass now cost $92. How could that be? When I went in 2001, I was certain it cost around $45. That’s almost as big of a jump as…wait a second…lift tickets.

Fortunately, many Disney buffs have kept up records of historical ticket prices which is easy because there’s only one Disneyland, CA to keep track of. It also helps that eBay listings of vintage Disneyland tickets have the price and year stamped on them. Unfortunately, such meticulous records are missing for the ski industry. Not so, however, for New England.

While it’s only a corner of the industry, New England Ski History’s record (that includes over 65 resorts for some years) turned out to be a surprisingly accurate reflection of the industry as a whole.

Ticket Prices
So, I decided to look at ticket prices for skiing vs Disneyland. The records I found went back to 1962 – five years after the park opened. Here’s how it shook out leading up to 2010.



What’s crazy to me is how closely the two prices followed each other. That is, until around 2000 when Disney’s expenential growth continued and skiing’s ticket prices started to be a bit more linear.

That’s ticket prices, what about visitation?

Annual Visits
Unfortunately, NSAA didn’t start tracking skier visits for the industry until 1978, but here’s how it looks with the vertical axis in millions and annual skier visits divided by 5 to match the scale of Disneyland.



Both grow at a fairly linear rate, but Disneyland’s line is a bit steeper than that of skiing. Especially when you consider that annual visitation the last few years is 3x what it was during the early 1960s.

Combined: Revenue
So, if you multiple visits by ticket price you get a little thing that’s good to know called revenue. Now, Disney is charging more and growing faster than our “visits / 5″ comparison for skiing, so I suppose it’s no surprise that we see this.



Interesting, no?

What This Means
Now, let’s go back to that initial idea of “lower prices to help the ski industry.”
Just looking at what we have here, Disneyland is raising their prices faster and growing their visitation faster than skiing. Let me say that again, Disneyland is looking for the same families that skiing is and they are growing faster than skiing either because of, or inspite of, exponential growth in ticket prices.

Which leads me back to the beginning. What if we aren’t charging enough for skiing? What if the data are telling us we need to charge more? I’m not saying it’s the answer, but I am saying that before skiers cry “lower prices” again, we should at least consider the data.

» Check out SlopeFillers.com for a complete list of Gregg's posts market analysis

Comments

Disneyland

In the general context of a debate about pricing strategy, Gregg has a good point. It's not about revenue, it's about profit. Margins are very small in skiing. Lots of fixed costs mean that lowering prices compromises your ability to cover your "nut." Insurance, employee costs, utilities...it's a cost structure nightmare. Doesn't matter how many people you put on the hill if you can't pay the bills. Discount skiers are discount consumers, meaning that they don't buy the mountain's other services. They don't buy food, they don't take lessons and they don't come back. Skiing, like Disneyland, is one of those industries where price creates the perception of value. Lower price doesn't always translate into better perceived value and in some cases, it's just the opposite. I think the ski industry is willing to trade off higher prices for lower visit numbers, at least in the short term. Whatever the future holds, like the Disney properties, it won't be lower prices.

Irony

The irony of this comparison is many corporate ski resorts are bringing theme park attractions to the mountains.

The price of skiing

A discussion of this nature is healthy for sure and the ski and snowboard industry should be very very aware of the state of their consumer market. Obviously you theory is just that at this point. Research like this is a tool and usually points out that much more research is needed. I see two major flaws in your theory. 1. You have not considered the supply side of the equation. This is a MAJOR factor in determining price. We need to keep in mind that supply is huge in the ski and snowboard industry. Supply is very limited with Disney. The ski and snowboard industry has always defied the supply / demand curve. If we employed this traditional method of pricing a product a lift ticket would be much lower priced. Had this been done 20 years ago maybe there would be a lot more skiers and snowboarders out there? We'll never know. 2. Although recreational dollars are used in both snowsport resorts and a Disney resort, the comparison is flawed. Ultimately everything outside of basic needs is competing for the same dollar, but skiing and snowboarding attracts a more active recreational guest while Disney caters to a much more passive oriented consumer. Ski and snowboard resort owners and managers, like any other business sector, are concerned with the bottom line. You are correct in suggesting that achieving that bottom line with higher participation numbers might be a healthier long term strategy. Unfortunately it is not as simple as that. You can be sure that this discussion is going on in every management meeting at every resort. The industry will either figure it out or go into decline. With so many ski areas in North America having closed in the past 15 years due to weather or declining interest this is a very real concern. However, some resorts have bucked this trend, while others have not grown nor declined. As in any business, the strong (and creative) will survive. Operations staff and Marketing staff, typically battling internally at resorts for their share of the budget, will need each other more than ever!

Two Completely Different Industries

The analysis makes sense on paper but it analyses like this that have caused the further gentrification of skiing, a sport that has never been cheap. When I was in high school (mid to late 90s) I could afford to go skiing 15-20 times a year with the money I made from a part time job (saving throughout the summer). Now I can't even afford to go 10 times a year at full price. As prices rose I skied less and less and was certainly not happy about it. That's when I decided to buy AT gear. Now I'm back to my 20 or so ski days a year with only 4 or 5 at resorts, and only on discount days. Take a look around at the resorts; look at the parking lot. Who is there? There are fewer and fewer beater cars with teenagers or college kids or the pickups of locals and many more Volvos, BMWs, Mercedes and Lincolns. Regular people are choosing other sports because they can't afford to ski. I used to like going to resorts. I'd meet lots of cool, laid back people out having a good time. There would be locals telling you all the cool spots to ski and where to grab dinner in town afterwards. I went to a resort in far upstate New York last season and there were more people there from New Jersey, Connecticut and NYC than locals...locals can't afford it unless they work there. Ok, I know that was a long ramble but the long and short of it is, NO, skiing is not too cheap unless the goal is to keep people of modest and low income totally out of the sport.

Price Competition

Given that you used average ticket prices in New England I'm assuming that you added the price of all NE resorts then divided by the number of resorts. To make a better comparison you should have added in all comparable amusement parks in the area around Disneyland and averaged the prices. Either that or directly compared Disneyland to the most expensive NE resort. The fact is you are adding in smaller mountains that charge much lower prices because they don't offer as much, aren't as big etc. to get one monolithic lift ticket price to compare to one monolithic Disneyland price. And as others have pointed out, you have to buy or rent equipment to enjoy skiing which you don't have to do at Disneyland. The comparison doesn't work.

Disney vs. Skiing

Well, for the number people this is great! Money, money, money! Come and get it! Let's think about this. Disney: Drive to the park, ride a lift to park center, walk about with the vigor of a slug, potentially eat food that is too expensive and not very good, wait on line, sit in a ride, repeat. Skiing: Drive to the resort, ride a shuttle to the resort center, walk about with heavy boots carrying heavy equipment (heart rate is up), unless you brown bagged it you will eat expensive food that is not very good, wait on line, sit in a ride, get off the ride, breath, interact with the environment, express yourself athletically (good or bad), rely on your physical being to negotiate your way down a mountain, reflect upon the experience repeat - over and over and over again, perhaps even a life time. So, Disney vs. skiing, similar on some aspects, but at some point the greed of property owners and the lack of personal responsibility need to stop. To pay the current prices for a lift ticket is wrong. It is a healthy sport and allows people to experience something larger, life. Greed is killing skiing. It should be available for everyone. Skiing is not Disney. I know there are a lot of Disney fans within the ski industry and you are wrong and probably need to leave the ski industry. As long as the dollar is king, this debate will continue until people have just had enough.

Compare apples to apples

If you want to compare Disney to the ski industry why not look at the true cost to a guest per visit? At least then when you make your opening statement about the problem with skiing is the cost you are looking at the problem. Its not just lift tickets. When a guest goes to Disney how much revenue is there per visit. Then compare that to revenue per skier visit for the ski industry. Then you can talk about how expensive one is versus the other. last I checked if you go to Disney you don't need to rent equipment for everyone in your family ever. You can also navigate the entire park without a lesson. I think in your attempt to make a comparison and an argument (that you back away from in the comments saying you were leaving it as a question) you over simplified the problem. why divide by 5? There are way more than 5 resorts in the US. Ski resorts are not fighting for the same families that Disney is. I worked for Disney. There are a lot of families that go to Disney that will never go to a ski resort. Although a small segment of families that go to Disney are ski resorts target market. I am now intrigued by this and may try to do the analysis myself.

Greed and skiing don't mix

I find this quite disturbing; I live in vail; have grown up and worked in the ski industry; now when I went to school for ski area operations in Leadville; we were told; lift tickets are not where the money is made; if you want to make the resort money; you give away lift tickets wisely. Lodging, food and beverage and real estate are where the money is to be made; example, you give one ticket to someone; then they in turn bring friends and family, who all need lift tickets, plus lodging and food; now say while on that visit, one of those people in those groups gets a free ticket, now they either stay an extra day or two; which means money spent on lift tickets, food and lodging; or they go home and plan another trip to use their free ticket on; so in giving away one (should be no more than $65 a day) $130 ticket you generated $2-3000 in revenue through lodging and food. If anything thing the ski industry should not be looking and comparing with Disneyland, yet at Las Vegas casinos and the way they encourage people to stay and spend money. Skiing is an addiction a passion a life long commitment; some what like golf; if golf didn't have the problem of turning people away, in order to keep it exclusive; would say to use them as a better comparison, however their example will not work.

RE: J Sadis

Thanks for the feedback, J. Though I'd ask you to reread that last paragraph. Notice how I say "what if". These are not conclusions, these are questions. My goal was to get people to take a step back and consider other perspectives. To think outside of skiing at other industries and simply ask "what if". Unfortunately, it looks like all I've got are the same responses that led me to this question in the first place.

Cost of skiing

Don't you want families to come back more then once every 5 years. I think, you answered your own question in your own graph! No wonder the Ski Industry sucks!

not expensive enough? seriously?

vaguely interesting comparison... A good friend of mine works for Disney. He chuckled at the comparison. Snow sport and a Disneyland are completely different experiences with nearly nothing in common. A season's pass to a race track costs more then a seasons ski/board pass, maybe we should look at motorsport too? Without a direct detailed experiential analysis I believe the conclusion to be flawed.

RE Liam Sipsey

I only have a minute, but let me quickly reply to a couple of your points. RE "The bigger picture needs to be looked at though, no one ever has a life long passion for Disneyland." That's a common conception, but actually, they do. just like destination ski resorts, lots of people from out of state visit Disneyland multiple times a year, collect their ticket stubs, and can't get enough of it. Go even further with the amusement park industry and you'll find people who, chasing their passion, travel all over riding roller coasters and rides. RE " the point I am trying to make is that people don't get into this business to get rich. They do it because they love it." This is a great point. But just because you love it doesn't mean you can't run a smart business that is financially stable and love it at the same time. You may not get rich, but without a profit ski areas die. They aren't immune to failure. Finally, keep in mind that nowhere did I say resorts should raise their prices. If they all did that, the industry would be in even more trouble. My goal was to point out that if we look outside of skiing for ideas, we may find them. That may be lowering prices for some or raising prices or others or doing nothing at all.

RE: Bob

Thanks for the feedback, Bob. And yes, I am referring to Disneyland, CA. Keep in mind, however (see the last paragraph of my post), that I'm not saying I've found the answer, I'm simply saying that if we look closely, there may be a perspective here we can learn from. There are actually quite a few similarities though, to your point, they are more in line with destination resorts than smaller ski areas (which would make the local amusement park comparison a good one).. Just like ski resorts, Disneyland relies on season passholders, loyal destination guests, and infrequent (or once-in-a-lifetime) guests. If you want to look for differences, by all means. But if you are willing to see the similarities that exist, I think you'll find an interesting perspective.

bad comparison

If you want to look at the mountain like a factory and the people that visit like units to be processed then yes this logic makes sense. The bigger picture needs to be looked at though, no one ever has a life long passion for disneyland. The last time I heard a ski hill compare their business plan to disney land, ticket prices went up, so people expected more. When they didn't get more they went skiing somewhere else, or decided that skiing was much more expensive than [insert any other sport] and that they would rather do that. Return clientele dropped to nil. Then the department managers were encouraged to hustle the employes harder to cut overhead cost. The employees quit. The managers had no staff and became badly over worked and stopped caring about costumer service. Then the managers quit. Then the CEO quit.... the point I am trying to make is that people don't get into this business to get rich. They do it because they love it. When their beloved ski hill stops looking like a mountain resort and more like a factory. They don't love it anymore. When they don't love it, the guests are treated poorly. The guests don't like paying money to be treated poorly so they don't come back. If you want to make more revenue look to improving costumer service, more ambassadors, free ski tours, paid guest service training, free ski lessons for employees, invest in people's passion. That is where you will get the biggest return. When people have a really great time on the mountain they will come back again and again, it will become a life long passion, then their kids will have that passion too, and their kids too. When they don't, they go to fucking disneyland instead.

Wow

One is forced to make the assumption that the data provided is Disney Land. The one in CA. Not Disney Theme Parks. The only commonality here is recreation. Seems to me amusement parks would have been a better comparison. Another example of a better comparison would have been to compare Vail (the mountain, not the entire company) to Disney Land. Sorry Greg, your hypothesis remains a hypothesis. Good try though. Go back and review the basics of the Scientific Method, and try again.

RE: CRUD

Great points. Remember, though, that YOU may not go to Disneyland every year, but many people do. In fact, many people go to Disneyland every weekend just as a skier would. Disneyland is a theme park just as Squaw Valley is a ski resort. Some people go every week, some people go once in their lifetime. Raising ticket prices for everyone, like you said, would be a very bad idea. But if we'll look closer at the similarities before dismissing the comparison, I think there's a lot we can learn.

RE: Peter Houlihan

I replied to your comment on FB as well, Peter, but I'll share it here as well. First of all, great points and there is nobody saying we should apply it directly to all resorts. That would be an awful idea indeed. I guess I'd reply by saying we need to remember that Disneyland is not the only amusement park in the world just like Vail is not the only ski resort in the world. An out of state family may indeed only go to Disneyland once every three years (as a skiing family in MN might do), but there are thousands of local families with season passes just as there are local families in Utah and NY and Michigan with season passes to local amusement parks. It's not apples-to-apples, but if we look at the place Disneyland holds in the amusement park industry as a whole, destination resorts with strong brands might want to take a closer look. Again, I'm not suggesting that this is the answer for everyone or anyone, I'm simply saying that before we cry "lower prices for all" again, we might want to weigh some different perspectives.

Do people go to Disneyland

Do people go to Disneyland every year? Do they go more than once per year? Do they stop going to Disneyland after a certain age? Are there as many Disneylands as there are mountain resorts out there? Does going to Disneyland require equipment, more auxiliary travel, even just snow tires, etc? The reality is going to Disneyland, even with raised ticket prices, can be cheaper than going to mountain resorts, overall.. I realize for some mountain resorts that Disneyland is indeed their competitor. But, the industry as a whole needs skiers to go every year, multiple times per year, throughout their lives ... I might pay a lot of money to go to Disneyland once, maybe twice. But, to go on a more regular basis, no. At a certain point, you need to have cultivated a lifelong passion, and translated that into repeat business. Yes, I can see revenues rising, and I understand that is the concern in the short term. But, for sustainability of the sport as a whole, all things considered, raising prices exponentially may not make any sense over the long term, IMO ... I see a lot more people heading into the backcountry these days ...

Seriously?

People typically visit Disneyland once or every few years. To get and keep families interested they need to ski several times a year. You want to kill the industry? Apply this kind of faulty logic to ticket pricing.

Post new comment

The content of this field is kept private and will not be shown publicly.

More information about formatting options

CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Enter the characters shown in the image.