Tahoe’s hawks and doves: Resort giants gently ponder price wars
Part three of a three-part series.
It doesn’t make much sense that Ernie Riemer has a Kirkwood Mountain Resort season pass.
In the three years the 27-year-old has lived in San Francisco he has never owned a pass to any Tahoe-area resort. It’s at least a five-hour car ride to Kirkwood for Riemer, during which he drives by several top ski resorts. A senior manager of ad operations for Looksmart, an Internet search engine, he’d never even seen the resort before he bought the pass.
But Riemer couldn’t resist the $299.99 price. Offered by SnowBomb.com, a Web site that offers discounts to Tahoe resorts, Riemer purchased the pass before the site’s Dec. 31 deadline. The one stipulation was passes were sold in blocks of four. Although Riemer didn’t have three others to join him, SnowBomb.com partnered him with three others and the pass was his.
“I wouldn’t go to Kirkwood if it wasn’t for this pass,” Riemer said. “They got $300 out of me that they normally wouldn’t have gotten, but I’m going to break even.”
Riemer is exactly the kind of customer Tim Cohee, Kirkwood Mountain Resort’s president, hoped to attract with this deal and Kirkwood’s own $399 deal (without the foursome stipulation) it offered last summer.
“Our thought was if we can receive 10 days on the mountain in advance then that’s worthwhile,” Cohee said. “So we wanted to create a good value.”
That value aided in doubling total season pass sales and tripling the full season amount, thus breaking pass sales records, according to Nicole Belt, Kirkwood’s communications manager. Belt said Kirkwood focused on building customer loyalty, utilizing a lower pass price with the belief that passholders would bring other people.
“Anytime an area drops its prices, it sticks in people’s minds for years. I know of people in Tahoe that bought a Mammoth pass because it was a screaming deal. It was a win-win situation,” said Belt. Mammoth Mountain sold approximately 26,000 passes.
Although Kirkwood didn’t sell nearly as many passes as Mammoth, Jim McAlpine, president of SnowBomb.com, was nonetheless pleased with the results.
“We had an amazing response to Kirkwood and the ‘Four Pack’ deal,” McAlpine said, estimating the number of Kirkwood passes sold at over 10,000. “(The affordable passes) create loyalty and attract people coming from a lot of mountains which had huge price tags. Fifteen-hundred dollars for a season pass is outrageous.”
Hawking hawks and price war pacifists
Kirkwood isn’t the only Tahoe resort to report success with the discounted pass. Mt. Rose-Ski Tahoe also dropped its 2000-2001 season pass price when it sold a $199 Value Pass in the fall. According to Mike Pierce, Mt. Rose-Ski Tahoe’s marketing director, the resort had sales of more than 10,000 passes.
“We have a population base in our backyard of 350,000, but our pass sales were flat over the past four years, stagnant between 1,500 and 2,000 passes,” Pierce said. “The industry’s been flat for how many years now? We wanted to rejuvenate interest. We don’t want to devalue the product, but then again, where do you draw the line between being stagnant and increasing visits?”
Northstar-at-Tahoe, one of Tahoe’s larger resorts with more than 400,000 visits last year, also adopted this marketing brainchild when the North Shore resort, along with South Shore sister, Sierra-at-Tahoe, offered a $199 midweek pass last spring and summer.
Pass sales tripled at both resorts, reported Julie Maurer, vice president of marketing for Booth Creek, Inc., the two resorts’ parent company.
“When we first entered into this, it was a difficult decision,” Maurer said. “We looked into it further and thought it could be a really good thing for what we’re trying to accomplish. And it addressed issues we hear from our skiers.”
As it stands, Tahoe resorts are predominately day-use. Destination resorts historically priced season passes at a higher rate because they aren’t competing for day visitors and fewer pass sales are made up for with price. But with the blending of destination and day-use resorts, this is changing.
That’s not to say what works for out-of-the-way destination resorts like Kirkwood and Mammoth, which utilize more aggressive tactics to generate traffic, is appropriate for all ski areas.
“Each resort has to determine what is the best marketing strategy for them,” said Stacey Gardner, spokesperson for the National Ski Areas Association, a trade organization for ski area owners and operators. However, Gardner said “Feedback from the areas that have used preseason value prices has been overwhelmingly positive.”
A study in skier visits showed an increase of 1 million skiers at Colorado’s Front Range resorts since the introduction of the Buddy Pass and its contemporaries, according to findings by Leisure Trends Institute, a Boulder, Colo., research firm.
“We were seeing a decline in skier visits about five years ago,” said Joy Spring, co-director of Leisure Trends. Spring said skier interest was stimulated by discounted prices in spite of down years in terms of snow. Leisure Trends also reported a change in behavior among skiers – visitors were not just up for the day, but were also staying overnight more often.
With a lower pass price, Cohee said resorts maintain “an opportunity to lock in the customer who isn’t 100 percent committed. (The discount pass) enhances revenue … and it gets the skier on the hill.” He said the discount also insures the resort if it suffers a below-average snowfall year. But, Cohee said, “If you don’t jump volume and revenue, you’re in trouble.”
But one cry against lowering prices is that of crowded slopes, a valid point when considering that navigating Squaw Valley’s Mountain Run on a holiday weekend is as challenging as skiing KT-22’s Fingers. As a result, Squaw Valley representatives say they are reluctant to lower prices.
“Squaw has always said this is a top-rated product,” said Katja Dahl, public relations coordinator for Squaw Valley. “We think the pass is worth that. It may be more expensive than some of the other Tahoe resorts, but you’re getting what you pay for … It’s a privilege to ski here.”
With season pass sales up 33 percent the last three years including more than 5,000 sold last year, the resort doesn’t see a need to lower pass prices, according to Squaw Valley Ski Corp. President Nancy Wendt. And with customer loyalty already in place, Dahl added dropping the pass price was improvident.
“If you discount something, you give the impression it’s not worth as much as it was before,” Dahl said.
Moreover, Wendt said the skier experience is pivotal.
“We don’t stuff people onto the mountain,” said Wendt, who believes Squaw Valley, like other area resorts, already offers numerous discounts to local skiers like Excellence in Education discount tickets and Squaw’s night skiing pass.
Heavenly Ski Resort, though admittedly intrigued by Mt. Rose and Mammoth’s success, holds a similar opinion about pass pricing.
“Our passes are still a good value. You get what you pay for,” said Heavenly spokesperson Monica Bandows-Marini. Although season passes are marketed to locals, Bandows-Marini said, Heavenly is still wary of out-pricing the local community. But, in her mind, price wars aren’t likely.
“I think Tahoe’s a little different than other places with price wars,” she said. “We haven’t been put into a position where we need to drop our pants, so to speak.”
Because of these perceived risks, some Tahoe ski areas have moved in the opposite direction: added value passes.
More to a pass than a pass
Added value is one of the reasons why Sandy Henning, a hair stylist at Tahoe City’s The Balcony, purchased a pass for the first time in the nine years she’s lived in the area. Most of her friends had passes to Squaw Valley, and she liked Squaw’s amenities, such as the High Camp Bath and Spa, so Henning paid $1,400 for a pass she probably won’t ski off this year. But that doesn’t mean she doesn’t enjoy it.
“I would consider buying a pass again,” said Henning. “I like the idea of Squaw. My friends all ski there, and I like the apres-ski. Squaw is the place to be.”
Squaw Valley is one of numerous North American resorts moving in the added value direction. Whistler/Blackcomb, which sold for $1,519 Canadian, attaches myriad perks like discounted parking, lessons, equipment and meals to its season pass as does Park City, which ranged this year from $850 for the earliest birds and $1,580 for the last birds.
Alpine Meadows recently joined this field with its “Platinum Pass.” For $1,000 more than a normal pass, Platinum passholders can skip lift lines, park close to the lodge and take advantage of other benefits. Another interesting marketing move that Alpine made was partnering on a midweek pass with Sugar Bowl even though the North Shore resort already had a strong passholder base.
“Our intent was to add value to both what Alpine Meadows was offering and what Sugar Bowl always offered: excellent products that had been the locals’ favorite,” said Robert Olmer, director of sales at Alpine Meadows.
The $849 Choice Pass proved to be such a success that according to Bill Hudson, marketing manager for Sugar Bowl, the two resorts may consider moving to a full season Choice Pass. But neither resort wants to battle.
“We don’t want to turn into another Colorado for price wars,” said Rachel Woods, Alpine Meadows marketing coordinator.
Local business owners also thought the reduced pass price idea was interesting. Dave Wilderotter, who has owned Dave’s Ski Shop for 24 years, has seen a distinct change in the area’s industry, particularly skiing.
“Tahoe had always been an inexpensive place to come and vacation. All of a sudden now, we aren’t as inexpensive as we used to be,” said Wilderotter, who bought Northstar midweek passes as an employee incentive. While Wilderotter believes competition is good, he thinks resorts should focus more on a lake-wide level and strengthen the entire area.
“It’s so nice to have so many different options for day skiers. It’s kind of a shame for the passholder,” said Wilderotter.
Roger Kahn, the owner of Porter’s Ski and Sports and a 20-year veteran of the ski industry shares Wilderotter’s belief.
“The more people we can get on the mountain, the better we do,” Kahn said.
“I believe the magic number is about 10 days of lift tickets,” said Kahn. So, in his mind, $550 is right for a season pass. “I think it’s really expensive to ski. But I’m not a believer in how cheap can it go. There’s got to be a right number in there. I think if they sold 10,000, they’d sell fewer tickets, but then they could open fewer ticket portals and not spend as much on labor.”
Kahn doesn’t believe cheaper passes would overcrowd the slopes. He’d like to see more locals able to ski.
“That’s what upsets me – when there are local people who can’t afford to pay. We all have to shovel this snow and drive in it. The upside is when we can fly through the powder, be able to enjoy. Being able to ski does a lot to mitigate the impacts,” said Kahn. “But I don’t think it should be so cheap, because I think it’ll come back to bite the area. The ski area must be profitable.”
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