Season Passes: The next frontiers, Mammoth’s cheap passes inspire local resort strategies
Part two of a three-part series.
With a smorgasbord of world-class slopes in their back yard, the Tahoe skier/snowboarder riding the lifts doesn’t need to venture outside the area too often.
A drive to Mt. Shasta, Mammoth Mountain or even the occasional trip to another state to carve turns is a vacation for those craving a change of scenery. Driving hours to a resort, finding a place to stay and discovering the local powder stash is typically a chain of tasks for unfamiliar visitors from the Bay Area or elsewhere. So why would a Tahoe skier buy a pass anywhere but here? Easy. The price.
Mammoth Mountain’s $375 early bird special was too tantalizing for some Tahoe skiers to turn down last summer.
Kina Nemeth, 26, and Amy Bell, 19, were just two of the 25,998 people who couldn’t resist the discounted unrestricted pass Mammoth offered last summer. Nemeth and Bell are employees of Headwall Cafe and Climbing at Squaw Valley USA, where they are already able to get a discounted concessionaire pass, albeit not as cheaply as the Mammoth pass.
Mammoth Mountain promoted the deal heavily in the Tahoe area with radio spots, direct mailers to post office box holders and numerous newspaper advertisements. The resort generated almost $10 million in revenue before a snowflake fell this winter. Nemeth found out about the deal through a friend. Bell saw it mentioned on a flier while at Mammoth. And both will buy the pass again.
“So will my friends and husband,” Nemeth said, adding that she was considering not working at Squaw Valley and just getting a pass to Mammoth for next year. “It’s dirt cheap, it’s not that far and I love Mammoth. It was just a great deal.”
Bell, who has lived in Tahoe for two years, but has been “commuting (to snowboard here) for four years,” makes the 2 1/2 to 3 1/2 hour drive every week. She used her pass last season four or five times, she said, and “was over halfway done paying it off before this season began. I paid it off the first week they were open.”
While these two are part of a Tahoe minority traveling elsewhere to ski or snowboard on a regular basis, Bell said that could change. “My friends all wish they’d got one and will get (one) if it’s offered again next season.”
The number of passes sold by the central Sierra resort is even more impressive considering Mammoth Lakes, where the resort is located, is at least a four-hour drive from its main source of clientele – Los Angeles and the rest of Southern California.
Will Mammoth do it again? “We’ll have a lot of angry people if we don’t,” said Karen McGillis, Mammoth Mountain communications coordinator.
Shawn Foster, a 21-year-old Mammoth Mountain passholder from Huntington Beach who also had a pass last season, said he’d buy it again. “It’s a lot more crowded, but it’s worth it.”
But Mammoth Mountain, which had 916,000 visits last season – more than any Tahoe ski area – isn’t the first resort to report success with a discounted season pass.
Price wars have marked the hyper-competitive Colorado Front Range ski resorts for the past three seasons and it doesn’t appear an armistice is likely in the near future.
With season pass sales exceeding 100,000 since the inception of the “Buddy Pass” and its likenesses, and no reported revenue casualties in spite of below average snowfall seasons, the discounted passes have worked for both snowsporters and ski areas, according to several Colorado resorts. This is a war with a short history, but a long past.
The path to war
One of the biggest concerns in the ski industry is skier visits, which have been relatively flat for more than 20 years. Since the National Ski Areas Association began tracking estimated visits in 1978-79, the number has hovered around 50 million, with a low of 39.7 million in 1980-81 and a high of 54.6 million in 1993-94.
Last season, national visits were estimated at 52.2 million, an increase of .2 percent from the previous season, according to RRC Associates, a Boulder, Colo., research firm. Ski areas have identified the need to not only go after new skiers, but to attract lapsed skiers. But the resorts battle against perception – skiing is an exclusive sport for the affluent. While the cost of skiing has gone up over the past 10 years, the rate is no faster and in some cases slower than the general U.S. inflation rate, according to the National Ski Areas Association.
“The relative affordability of skiing has remained relatively steady (and in some cases improved) over time as compared to other goods and services in the American economy and to other entertainment/recreation activities,” states the NSAA report.
While the National Ski Areas Association has attempted to show a lift ticket in comparison to other sporting activities (mostly spectator) costs about the same, skiing/snowboarding expenses add up to much more than just going to a ball game. Equipment, lodging, food, gas, lessons are just a few of the potential expenditures. And all of this, compounded by fierce competition, has led to war.
Up in arms
But who started this price war? While some people point to Mike Shirley, general manager of Bogus Basin in Idaho, most of the blame (or praise) goes to Colorado’s Winter Park.
On Labor Day 1998, the 2,886-acre Front Range resort introduced a “Friends and Family Pass.” Despite having its most skier visits to date the previous season (but dropping pass sales), the resort priced an unrestricted pass to both Winter Park and its neighbor Mary Jane at $199, down from $750. One of the requirements was four people had to buy the pass in order to get the discount. The resort sold 20,000 to 30,000, an exponential increase in the number sold.
“It piqued interest for people who didn’t ski. There was a recognition that we needed to jump start the sport. We had or tried other things like the high speed quad, shaped skis, amenities. But this was more in line with time and convenience. And it created a commitment,” said Joan Christiansen, Winter Park communications director.
What also worked for Winter Park was the timing.
“It was not a great (snow) year when this went into effect. Our ticket yield was down, but it was up in food and beverage and ski school, so we were able to capture revenue return,” Christiansen said.
The next day Copper Mountain Resort, another major Front Range resort, matched Winter Park’s deal. Vail Resorts considered this and a day later the resort giant offered its Buddy Pass for $199 for four people. Vail sold approximately 60,000 passes its first year, said Paul Witt, former Vail Resorts communications director.
The following year, individuals who had participated the year before could renew the Vail pass alone. Subsequently, the four people requirement has been dropped. Since last season, Vail Resorts has offered an unrestricted $259 pass to three mountains – Breckenridge (first in U.S. skier visits last year at 1.4 million) and Keystone, both owned by Vail and marketing partner Arapahoe Basin. In the fall of 2000, Vail Resorts augmented the Buddy Pass by unleashing the Colorado pass which added 10 days of skiing (with restrictions) at Vail and Beaver Creek, which the resort also owns, for $299. That price was in response to Copper Mountain and Winter Park joining forces to create the two-mountain, unrestricted Rocky Mountain Pass for $349.
But Bill Jensen, Vail Mountain’s Chief Operating Officer, doesn’t see these price decreases becoming a national trend.
“(The pricing) is market specific,” Jensen said, adding that a requisite for these low costs is the proximity of a large metropolitan area.
In order to sell passes this low, the resorts have to make up for cost in volume, which Front Range resorts have been able to do. While the Bay Area is one of the largest metropolitan areas in the country with roughly 7 million residents according to 1999 U.S. Census Bureau estimates, it still isn’t as close to Tahoe as Denver is to the front range resorts. In addition, Vail has other considerations when pricing its pass.
“We have two very different customers (the day user and the destination visitor). We have to be careful when we go about selling,” said Jensen, formerly of Booth Creek Inc. and Northstar-at-Tahoe.
Witt amplified this comment.
“There’s only so much we can control within the industry; what we can control is lift ticket prices. For Vail resorts, we are a very diversified company. We don’t have to rely too heavily on ticket sales,” he said.
Ticket revenues account for 48 percent of total revenues for Vail Resorts. Other revenue comes from hospitality, real estate, ski school, dining and lodging. Vail currently owns or manages 14 resort hotels.
However, Jensen admitted a considerable lowering of the season pass price is a risky proposition.
“Our first year we put our foot in the pool not knowing what was going to happen. It can threaten the livelihood of the resort and community,” he said. However, the current pass pricing has been “very successful” according to Jensen – at over 100,000 pass holders in three years. As far as Tahoe goes, the Vail executive said, “Time will tell in the customer mix. Tahoe resorts will still compete as day or weekend resort destinations.”
Christiansen echoed this sentiment.
“There’s such a captive audience in the Tahoe area,” she said. “There are more independent resorts in Tahoe. Each resort does what it needs to do to survive.” But in terms of pricing, Christiansen had other thoughts.
“The ski industry is shifting so much, which is good for consumers now, and resorts,” she said. “Nobody’s making money on mountains; they’re making money on real estate. The pendulum in pricing will swing back. But the No. 1 priority is growing the sport. And pricing is the next frontier.”
Next week: Part three, What Tahoe thinks about the price wars, here and there.
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