In Boise, the Price of Skiing Matters
Reading and re-reading David Rowan’s report on the Gallup research done this past spring (“New Study: More Skiers, Skiing Less,” SAM, July 1998), we tried to relate the findings to the skier population of Boise and their massive response to our low-priced season-pass initiative, launched almost simultaneously with the Gallup survey. According to the research, “time constraint” was the most important reason for not skiing, cited by 43 percent, with “cost” cited by only nine percent, a fraction as many—statistics that contradicted our program’s success.
We agree that time is an important factor, but would argue that, at least for a local ski resort like ours, cost is a much larger reason than was revealed in the research. We also take issue with the assertion that there are “no competing sports activities in winter that represented any threat whatsoever.” Indeed, we would argue that all three of these reasons—time, cost and competing activities—are interrelated, with “cost” or “value” being the driving force.
We cut our season pass prices by more than half and have now sold eight times as many passes as last year, generating four times the revenue. Price is important, and we have found the sector on the demand curve that is most assuredly price-elastic. But the program’s success also has to do with time availability and competing activities.
Bogus Basin, with its close proximity to Boise, has always been a season-pass mountain. Average usage of season passes has run from a historic high of over 20 times to a recent average of just over 14. The number of passes sold has also been trending down (to less than 3,000 last year) as the price has increased. Day-ticket price increases and competing activities have also driven down visits, so that total skier visit numbers have leveled off at about 200,000; a number we were doing 20 years ago, and well below what one would expect with a doubling of the area population during that time.
There has been some loss of skiers to other resorts, all more than two hours away, but local market research has confirmed our suspicion that the real loss of skiers has been to other recreational activities. Thousands of children are now involved with soccer, basketball and hockey leagues, and the parents are watching and coaching. There are also many new spectator sports opportunities and other activities to use up both money and time. And, even though it is skiing that has been stuck with the high-price reputation, we know that as much money or more can easily be spent on soccer or hockey.
Our new season pass program (see “Season Pass Sales Success,” page 52) acknowledges this competition for money and time. The $199 pass can be skied off in less than seven visits, and the $29 child’s pass in less than four. All of a sudden, price became overwhelmingly important and we sold 23,000 passes, nearly filling out our entire lift revenue budget without selling a single day ticket. We gave our target market a way to do it all without having to make tough either/or choices. They responded in a very reasonable way, showing us that if the price is right, there are incredible numbers of skiers and boarders out there who want to participate, even those who had given up skiing.
Fortunately, we have the capacity to accommodate these numbers. We gather that there may be other underutilized capacity across the industry, and that is the one thing you need if you are going to try this at home.
But Will They Ski More Often?
by Jim Spring, President, National Skier/Boarder Opinion Survey
Price is clearly an obstacle to skiing and if prices were lowered I do not doubt that more people would ski. All research I have seen comes to the same conclusion. However, ski resorts do not lower their prices. Bogus Basin is an exception. Because of constant reinvestment (or something else), ski areas continue to raise prices. Reduce reinvestment in infrastructure and the price of a lift ticket could, theoretically, come down. For years I have argued that the skier is less interested in infrastructure and more interested in the experience.
Now, let’s assume that ski resorts want to increase demand and, at the same time, keep prices the same or increase them. If so, then they have to think of new ways of getting more people to ski without reducing prices. The “no time” findings—not only true of the Gallup research, but also among front-range skiers of Colorado—offer a clue to the solution.
Skiers are saying one of two things. They are saying, as Mike Shirley suggests, that it is the cost of the pass for the expected time available to use it—the value—that has become the deterrent. Or, they are saying that in today’s world the trade-offs to go skiing—what they would give up to go skiing—are not worth the time it takes to ski.
The two postulates are very much the same because they both have to do with value. What Mike is saying is that, by reducing the cost, he can deliver value. Skiing is too expensive at $375 or $500, for example, but he has found the right price at $199.
Based on empirical evidence (flat skier days), Mike is correct. We agree. This has been true for a decade. But since the industry hasn’t budged on pricing, it must think of new ways to entice more people to ski. Market research has found that an increasing number of skiers are saying they have “no time.” If money is less of an obstacle and time is more of an obstacle, then the industry needs to address “no time.” My suggestion requires more effort, but is just as simple: Sell the benefits of the sport rather than reduce prices.
Bogus Basin has a captive local market of skiers within two hours of Boise. Mike Shirley has uncovered what works for the area, assuming he can meet his operating budget and invest in ski school and other products on annual season pass revenues of $4 million. He had the guts to try it and it worked to sell passes. But what he doesn’t yet know is whether or not they really will ski more often—an important point because, if his passholders find they don’t use the season pass at a bargain price of $199, he will face tough pricing choices to re-sell them in 1999-00.
Additional Perspectives from SAM
As background to the above viewpoints, it is worth noting that over the years, and especially recently, a number of areas have experimented with scenarios that have tested whether simple and cheap really is the way to reach the hearts—and wallets!—of skiers.
Several areas in southern California tested the waters last season with reductions and simplification of day ticket prices (see “No Discounts for Some SoCal Areas,” SAM, November 1997). Among others, Spirit Mountain, Minn., and Alta, Utah, have also created variations on the same theme of simple, low-cost pricing. We also refer the reader to page 52, where the startling Bogus Basin experience in marketing to its local market is detailed.
We would also observe that the nuances of research are as important as the raw data. When people are asked in a national telephone survey about constraints, do they really level with themselves? For some, admitting to a cost constraint may come much harder than responding to a proffered price incentive.
Another point to consider: in a statistically balanced national telephone sample, can researchers ever discover the passionate reality of what Mike Shirley found in his local market? We suspect not. Validating Mike’s local research and instinct does not invalidate the national research. It could very well be that the research yields a better snapshot of the destination skier as distributed around national markets than it does of local skiers. And, even if hard to quantify, common sense tells us that local skiers will be more concerned about price than destination skiers.
Finally, we would make the point that many skiers may really mean “hassle” when they talk about “time constraints.” When a Colorado front-range skier points to time constraints, is it more an acknowledgement that the hassle factor of fighting through the traffic back-ups on I-70 are just not worth it, even for skiing.
As we all look for experiential wisdom for the marketplace, we invite readers to join the discussion. This space, as well as the discussion forums on the new SAM Website (www.saminfo.com), are open and ready to share reader’s views, information and experience.
