In a speech delivered in December at “Ski Magazine Week,” held this year at Steamboat, Colorado, the owner of Vail, George Gillett, delivered a tough speech that was on the one hand an indictment of a number of things wrong with the ski industry— bluntly illustrating these ills with examples drawn from Vail and Beaver Creek — and on the other hand a fundamental blueprint of what he proposes to do about them at Vail.
We present some highlights of this long speech, while apologizing for damage done to a forceful and coheisve whole when chopping it into excerpts.
—Ed.
Industry background
“We found an industry that was really in a basic cataclysmic state. Fifteen years ago there were over 1,200 ski areas; today there are less than 600, and of those 600 probably only 400 of them ski significant numbers.”
Gillett commented on the continued expansion of facilities in the face of a reduction of ski areas. “In Colorado the situation is even more specific [than the national one]. In 1985, 35 ski areas operated; the estimate we have today is that we will have 25-27 operating in 1986-87. Of these, the latest count is that 14 are for sale. How many buyers do you think there are for ski areas? . . . At the same time that these are not selling we’ve got dinguses building Adam’s Rib . . . We’ve got excess capacity and people continue to spend millions of dollars to build new areas and expand. And I’m guilty!”
Role of Market Research
Drawing from experiences in his own business empire, Gillett described how, by going out and finding out what the customer really wanted — what the television viewer wanted from the 12 TV stations he bought, and what the housewife wanted in the way of meat from the packing company he bought — he had taken these companies to the top of their respective industries.
He plans to spend a figure approaching a half million dollars on skier market research this year, and reported on what their research over the past two years has shown.
Why do people ski?
“It’s not new, it’s not revolutionary. The number one reason, we found, was Freedom . . . There is no other sport that provides the participant the same kind of Freedom. Tennis? There are sidelines and nets; baseball, you’ve got foul zones; auto racing, you’ve got a track; fishing, you’ve got a stream. The closest sport is flying, and it’s the number one reason why people fly as well.” He pointed out that you don’t find that concept in ski advertising, even in Vail’s — yet.
“We found that 30 percent of the population of the Front Range were former skiers. And here we were spending millions of dollars . . . trying to create new skiers in Charlotte, NC and Nashville, TN, and sitting a hundred miles from our front door were several million people who had skied . . . They clearly are a more easily re-captured group.”
Why people don’t ski?
The biggest reason, according to his research, is alternate vacation opportunities. Others included fear, cold (comfort), safety, concern for speed, complexity. Cost was seventh. He commented on all the emphasis on speed in how we present the sport, and how that contrasts with the public’s admission of fear, of concern for safety and speed.
Gillett uses videotaping as a research tool. For instance, ski families going on ski vacations to Vail from different parts of the country are followed by videotape in order to study the hassles faced from the time they leave their homes through the unwelcoming Stapleton Airport experience to the confusing arrival at Vail’s “transportation center.”
To change at Vail and Beaver Creek
“When you try to ski at Beaver Creek the first thing you encounter is a gate manned by people that look like they’ve got Uzzis. Checkpoint Charlie! Then, in our infinite wisdom, we tell them, ‘No, no, turn around, bad boy. Go park in the parking lot.’ This is supposed to be a premier resort and we now insist that you get on a diesel chugger and take you up the mountain on a bus.
“The fact is that before we bought Vail you couldn’t buy a lift ticket in the line where you bought your ski school ticket. I have four sons, different in age, size and experience. I never got up skiing when I brought my family skiing in Vail on vacation before 11 in the morning. Nor was I in a pleasant mood at that moment.
“In Vail we’ve got three base opportunities. If you’re a beginner and want to take lessons you would assume that you would go to Vail Village. Guess what? We don’t provide beginners’ lessons at Vail Village. . . . ‘Mr. Gillett, you either go a mile this way or you go half a mile that way.’
“I say, ‘How the hell do I do that?’ It seems I take a bus. ‘And where do I catch the bus? Well, it’s a half mile from here. So I walk over with my beautiful children and put them in ski school and go into ski school myself. How many lines do you think I need to go through if I have myself, my wife and two children to get into ski school at Vail? Well, the answer is proprietary, but I can tell you it’s too damn many, and it’s something we’re working on.
“What else did we find at Vail? We found a company that had gone through a series of owners and an even greater number of area managers. The last two management teams had a predominant interest and background in real estate, so we found a company that was orienting itself much more to real estate development than mountain operations.
“We found a company that had over 100 profit centers. We were operating a hundred tiny businesses, and instead of operating the business as a whole, with everyone pushing in the same direction, we found a company where each one of these hundred profit center managers were running their own businesses — and not inclined to think in terms of the implications of that to the whole.
“We found a situation where there was limited concern for the guest. Our market research was very clear on that.
“We found a group of employees who were over-qualified. They were magnificent! With little leadership, and a much greater concern for their own quality of life than for an opportunity for a fun experience for the guest. I described what I found as a disease called Vale Valleyitis; in Washington it’s called Potomac Fever.
Cost of skiing
“Cost is an issue, and we’re working very closely with the housing and hospitality industries. You can now ski Vail five days, four nights in high season, including ski passes, including a 3-day’s lesson and breakfast each day for $225 — low season it’s under $200. So sleepy old Vail isn’t going to sleep any longer.
“One of the concerns I have is the perception that we need to change the cost of a lift ticket. [The lift ticket represents a small percentage of the weekly expenditure of a skiing family of four.] We went from $27 to $30. We met resistance. What do you think it costs to rent Vail Mountain for an hour? Below minimum wage. What does it cost to rent a tennis court in New York City? $35 to $45 an hour. What do you think they’ve invested in their tennis court? And what do you think we’ve invested in our mountain?
“We have not done a very good job of communicating to our guests about value — the quality that they are getting at a very, very low cost per hour.”
In the course of this riveting address on the ski industry, Gillett also gave notice to his Colorado competitors that he was prepared to play hardball if they persisted in playing pricing games at Vail’s expense.
“We’re not particularly interested in simply swapping skiers with other areas. But to the extent that other areas are going to use Vail and Beaver Creek as price umbrellas and slide in under us, I promise you we will be highly competitive . . . Now, either get your act together and come with us, and we’ll be a price leader, and we’ll have some fun and make some money, or you’re going to have us down your throats in terms of pricing, in terms of marketing, in terms of availability of tickets on the Front Range. That game is over!”
High-tech vs. High-touch
“What’s going on in America is a fascinating phenomenon. There’s no way to be all things to all people any more; each one of us must make a decision: high-tech or high-touch. [In supermarket terms] high-tech today is low service, large cubic volume, no one around to help, case lots of whatever you sell, coded bar checkout, no bagging. It means low prices. The ones that do it well are staggeringly successful.
“At the same time, equally successful [in the same market] are the high-touch supermarkets, with their delis, bakeries, 200-plus varieties of cheese, lots of people to help . . . It ain’t cheap, but they can be fabulously successful.
“The decision Vail had to make was whether to go high-tech or high-touch; you can’t afford to deliver mixed messages: we decided to go high-touch.
“[Today], there is a strong emphasis in both our areas on the guest experience. The research we’ve done is so staggering in terms of the guests’ positive attitude because we’re paying attention to them, finally.”
Kids are the future
“What else are we looking at? We’re working on beginners. What do you think our new relationship with Disney is all about? [Vail/B.C. have a licensing agreement with Disney for exclusive ski use of Sport Goofy. — Ed.] The real future of the ski industry is with the kids.
“Now tell me, do you think we’ll grow more with the Sport Goofy program, which will involve education and fun and entertainment and a direct involvement of Disney, or do you think we’d have been better off going with a hi-tech learning center for adults who are interested in racing?
“We believe that the greatest example of marketing in the United States is McDonald’s . . . The vast majority of their ads are aimed at the kids. And the kids are increasingly involved in the decisions as to where families take vacations. And we as an industry must do a better job of appealing to the kids.
“What’s the last time that your marketing departments or NSAA got together and said, ‘Hey, let’s create a cartoon series for Saturday morning television, that involves skiing!’
“When I bought the Harlem Globetrotters they made $80,000 the year I bought them, and they were basically out of business. We created a cartoon series. We got it on CBS. Within two years it was the Number One show in the history of television.
“We created it with social scientists from UCLA and Harvard. Each week we answered a series of significant issues with regard to values in families, with regard to safety, and stealing and lying and cheating. So there were significant social messages. And we were doing, we felt, some good.
“Within three years the Harlem Globetrotters went from $85,000 profit to over $10 million a year profit. And what we had done was we created demand among the kids of America.
“The bottom line of all this is that we have to continue to figure out better ways to attract and retain the youth of America.”
