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March 2011

Electronic Ticketing

New ticketing systems are leading to an increase in profits and a decrease in payroll and fraud.

Written by Peter Oliver | 0 comment

The horse-drawn carriage, the telegraph, the candle——at some point in time, all technologies disappear into obsolescence, to be superseded by something better. Now, in the winter resort industry, electronic ticketing appears poised to render the good old ticket-on-a-wicket to the technological dust heap.

Electronic ticketing, in one form or another, has begun to announce itself as the technology of the future. According to Mike Bisner, who represents Snow DAG, a developer of electronic-ticketing systems, the technology has already reached a 90-percent penetration level at ski resorts in Europe. He estimates penetration at U.S. resorts currently to be less than five percent, although Mary Anschutz, director of marketing for RTP, a software developer that works with Skidata, suggests the number might be as high as 15 percent. Small potatoes compared to Europe, but clearly the age of electronic ticketing is coming. The times are a-changin’.

Full adoption of electronic-ticketing systems is still a ways off for most U.S. ski areas, but a move from the ticket-and-wicket era has been evolving for a number of years. Many areas have been using bar-coding and scanning tickets as a means of ticket checking and data collection for more than a decade. The transition from there to using bar-coding for on-line ticket sales has been, and will be, a logical next step.

Wachusett Mountain, Mass., is a prime example of an area using bar-coding to develop a healthy business of selling tickets on-line. An on-line purchaser can bring a barcode printout (from his/her home computer) to a ticket window, get it scanned, and receive a ticket for the day. (Simply printing a bar-coded ticket at home won’t work, of course, as printer paper is too flimsy to survive the outdoor winter environment.)

This kind of validation and ticket dispensation could theoretically also be executed at an unmanned kiosk, relieving the customer of the need to go to a ticket window at all and reducing an operator’s labor costs. And that could become feasible soon, if it isn’t already: On-line sales reportedly represent about 30 percent of Wachusett’s total. The area has a daily cap on tickets sold, and on-line sales are essentially reservations, guaranteeing skiers that they won’t be shut out when they arrive at the ticket window.

On-line sales and bar-coding can also be a convenient way for ski areas to join forces with on-line travel agents, packagers, lodging partners, and other potential sales outlets. “This enables you to sell through more channels and partners,” says Anschutz.


THE BIG LEAP: RFID
The bigger jump is the leap from paper tickets to a full-blown RFID (radio-frequency identification) system, involving an installation of access gates and other hardware and a revamping of the whole ticketing process. But such a step is not cheap—Michael McDermott, RTP’s senior vice president of sales, marketing, and product management, estimates that the average start-up costs are roughly $500,000. Depending on the size and complexity of a resort, that number can vary a great deal.

Bisner concedes that “the biggest barrier in the U.S. has been the upfront costs,” and McDermott says that many areas, lacking “a complex-enough resort profile, don’t see the need.” That may explain why those areas that so far have invested in RFID technologies have tended to be larger resorts or resort companies, such as Aspen, Vail, Powdr, and Boyne, with relatively easy access to sizeable credit lines.

Ultimately, though, the electronic-ticketing highway is building toward RFID systems, where encodable credit-card-like cards, with tiny antennas embedded for RFID transmissions, allow for a wide variety of ticketing possibilities and other benefits. In most installations, the skier passes through a turnstile or gate that exchanges info with the card antenna and allows (or denies) access. A card can be read through a skier’s clothing, so there is no need to pull out the card to show to a ticket checker or to pass by hand into a slot or past a scanning device in the gate.

This is not, of course, a technology being exclusively employed at ski resorts. It can be applied anywhere where access control is an issue, including, amusement parks, sporting events, and, as commuters in many urban areas know well, highway toll gates. McDermott believes that perhaps the biggest application of RFID technology is potentially in paid parking lots and garages.

So, why have European resorts been in the technological avant garde? Anschutz explains that RFID provides a way to “track who gets what share of the revenue.” Because so many European resorts are like condo complexes with fractional ownership—at a typical resort, several lift companies might have pieces of the resort-ownership pie—RFID provides precise data about lift usage. Whoever’s lifts get the most skier traffic get the biggest share, and so on down the food chain.

Revenue sharing is obviously not an issue at most U.S. resorts, so what are the benefits for a U.S. ski area operator? Alta installed an RFID system, from the Austrian-based company Axess, four years ago, and Tim Kohl (who bills himself as Alta’s third assistant ticket checker) says, “there is no going back.”

Although the ski area didn’t anticipate it, payroll savings has been one of the big benefits. The RFID installation allowed Alta to cut its ticket-checking staff from 26 to four, says Kohl. With the annual sales of approximately 200,000 RFID cards (on which tickets can be loaded) at $5 apiece, Kohl estimates that Alta recouped its initial investment of between $500,000 and $1 million in the first year. So strictly from a bottom-line perspective, it has proved to be both a cost saver and a revenue generator.

McDermott estimates that typically a ski area can expect to pay off its initial installation investment within about a season and a half, and, “after that, it means an improved revenue stream.”


OTHER BENEFITS
Perhaps the leading benefit that the RFID suppliers tout is fraud reduction. Kohl confirms that the system at Alta has been very effective in nabbing cheaters. Mike Barbone, owner of West Mountain, a small area near Glens Falls, N.Y., installed an RFID system recently, and fraud prevention was a principal reason. Barbone told the local newspaper, The Record: “This won’t pay for itself the first year, but the losses were significant enough to make the investment worth it.”

RFID has also allowed Alta and others to be more creative in ticketing options and add-on sales. Once a customer has an RFID card, everything from a half-day ticket to a season pass, as well as other services such as lessons, food, and rentals, can be loaded onto the card via a home computer or PDA.

With the data that an RFID system can feed into an area’s operations portfolio, an area can respond immediately to operational needs, allocating resources (including personnel) according to the traffic flow indicated by the data. McDermott cites Aspen as a resort with “the single best deployment of these tech­nologies. Aspen has it dialed down to a science.” He praises Aspen not only for using its RFID installations to improve traffic flow in lift-line corrals, but also for creating a more welcoming environment for guests preparing to board lifts.

Bisner points out other ways in which RFID can help improve the skier experience and an area’s relationship with its guests. Access gates can be equipped with small screens where skier photos, welcome messages, area updates, and even personal messages from one skier to another can be seen. And personnel formerly assigned to the often guest-annoying process of checking tickets can be re-assigned to play a more welcoming role. Former ticket checkers can become, in effect, greeters rather than policemen. “The whole customer-service product is made much better,” says Kohl.

There are significant benefits for the consumer, too. Once the user has acquired the RFID card, there is no need to stand in a line at the ticket window—just reload the card at home, or via cellphone on the way to the ski area. And with the info that is stored in the card, number nerds can also go on-line to track runs made, vertical feet skied, and other details.

Ski areas that have made the investment are just beginning to explore the possibilities in developing marketing outreach and building long-term customer relations. Bisner cites the realm of “permission marketing,” also known as opt-in marketing. By signing on electronically, RFID cardholders can agree to throw open a door to allow a ski area to establish a direct and personal electronic link. Promotional offers, conditions alerts, general resort updates, frequent-skier incentives, and other communications can be passed on to customers through the card—and vice versa.


GROWING NUMBERS
RFID installations began at bigger, more financially flush resorts, but the concept is making inroads at mid-size and smaller ski areas as well. McDermott says that recent adopters include Blue Mountain, Pa., Le Massif, Québec, and Stevens Pass, Wash., resorts not quite on the scale of an Aspen or Vail.

RFID proponents also say that the technology can make a lot of sense at smaller mountains with tubing operations (or summer activities like zip lines or Alpine slides). Control gates can help manage traffic, with more precise management of pay-by-the-hour (or session) pricing schemes.

Not all ski-area operators are convinced yet. At least one owner of a large Eastern area remains skeptical about eliminating fraud, and is concerned with an increase instead. “Our guys [ticket checkers] have become really good at catching cheaters,” he says. “And even with gates, you still have to have someone watching for crashers.” In addition, after recently investing in an upgrade in the area’s current scanning system, he is reluctant to invest $25,000 per gate in an RFID system. “Let’s face it—it’s very expensive,” he says.

Furthermore, RFID-card systems may be only a stepping stone along the path of electronic ticketing. Next up could be systems that exchange data for sales, access control, and other functions directly through cell phones or other PDAs. These might do away with cards entirely. “The technology is there to do that,” says Bisner, “but right now the software development is cost-prohibitive.”

He predicts, however, that such technology will start appearing within five years, if not sooner. It’s possible that the RFID card itself will be tossed into the dumpster with those other obsolete devices. Technology is restless, and always a-changin’.