Vail Resorts CEO

TomWhiteTomWhite expert
in NELSAP Forum Posts: 581

How
a resort CEO transformed his business with one simple idea

Jeff Cox | @JeffCoxCNBCcom

11/16/17

 














































Vail Resorts CEO Robert Katz was looking for ways to energize a
boring business in the stale skiing industry when he had a simple idea: to
reinvent the season pass.

Some seven or eight years ago, Vail Resorts
slashed the price of its season pass from $1,500 to $600. Then Katz started
finding new ways to tailor the pass to customers' wants and needs, using the
information gleaned in the process to mine their profiles and deliver better
products.

The results have been stellar — a company considered a leading
innovator in the vacation and leisure industries and a stock that has
outperformed the market. Vail shares have risen more than 40 percent in 2017
and more than 300 percent over the past five years.

"Everyone thought we were nuts, (that) there was some
mistake," Katz said during a speech Friday at the Baron Investment
Conference in New York.

There was a catch with the new season pass offering: To get the
discount, skiers had to buy the pass before the season started.

Anyone who wanted to ski at any of Vail's 15 or so locations across
the world but did not get a pass would have to pay a day rate considerably
higher than a normal day lift pass.

"The company was shifting risk from us to our guests. The
amazing thing is it still exists," Katz said. "This has allowed us to
create one of the ultimate loyalty programs in travel — I actually think in all
consumer products."

Today the season pass program has soared, with 650,000 holders
across all 50 states and in a multitude of countries. Season pass revenue went
from essentially nothing to 43 percent of total revenue.

But it's about more than money: Vail has been able to optimize
the information it gets when people apply for the pass to offer more
appropriate programs for holders.

"Our ability to offer each person exactly the right product
at the right price with the right message, that's what's driven our
company," Katz said.

https://www.cnbc.com/2017/11/16/how-vail-resorts-ceo-robert-katz-transformed-his-business.html

Comments

  • obienickobienick expert
    Posts: 1,102
    It's the amusement park pricing strategy.  But amusement parks have a lot other lines of income besides entrance fees and are cheaper to operate.  It's worked for Vail for so long. Will it last?
  • 4aprice4aprice advanced
    Posts: 192
    I'm all for what Vail has done and I hope Aspen is taking notes.  I was clamoring for multi-mountain passes when they came out with the Epic products and hope they remain available.  I'm currently on Max (2nd year) but we are trying to plan an Aspen trip next year so I'm anxiously awaiting the new Aspen/KSL pass products this coming spring.  They weren't very forthcoming at the NJ ski show (probably cause they don't yet know) but I'm hoping they come up with something similar to Epic.  Currently we are here on the east coast where we weekend in New England (and day trip in the Pocono's and Catskills) and vacation in Colorado and Utah so we will be looking at what is best for that.  What will Max look like next year?, How about Freedom Pass?   March will be very interesting this year.  

    Alex

    Lake Hopatcong, NJ
  • rickbolgerrickbolger expert
    edited November 2017 Posts: 1,322
    I avoid their properties like the plague, so he still has some work to do

    "Our ability to offer each person exactly the right product
    at the right price with the right message, that's what's driven our
    company," Katz said.


  • joshua_segaljoshua_segal expert
    Posts: 2,140
    obienick said:

    It's the amusement park pricing strategy.  But amusement parks have a lot other lines of income besides entrance fees and are cheaper to operate.  It's worked for Vail for so long. Will it last?

    What worries me is that the "amusement park" pricing strategy will result in excessive lines of a bygone era.  As to other revenue streams, my understanding is that lift tickets are less than 50% of ski area income with food/bar, retail (+ shop for maintenance/tuning), school, day care making up most of the rest.
  • obienickobienick expert
    Posts: 1,102
    I don't have Cedar Fair's or Six Flag's SEC filings in front of me, but I'd bet they make a lot less than 50% on ticket sales.  Most parks charge $20-30 just to park (and not close to the entrance VIP parking that ski areas are getting in to). That's a massive revenue stream right there. And add on midway games which for a guest they might as well light their wallet on fire.  Winning odds are low to nearly imossible and the prizes are a pennies on a game cost.
  • 4aprice4aprice advanced
    edited November 2017 Posts: 192

    obienick said:

    It's the amusement park pricing strategy.  But amusement parks have a lot other lines of income besides entrance fees and are cheaper to operate.  It's worked for Vail for so long. Will it last?

    What worries me is that the "amusement park" pricing strategy will result in excessive lines of a bygone era.  As to other revenue streams, my understanding is that lift tickets are less than 50% of ski area income with food/bar, retail (+ shop for maintenance/tuning), school, day care making up most of the rest.




    4aprice said:

    Why? Where are you seeing this?  Your own Crotched is on a multi-mountain pass, has it changed and how?  To be fair I have heard that Breck has gotten somewhat crowed from time to time but they seem to be the exception not the rule. I will listen to reports out of Stowe this year with interest.  I mean if you have to ski the holidays you might see an issue or two but I don't think we will ever see the 45 min to 1 hour waits we used to see back in the 70's as the lifts are better and quite frankly I don't think there are that many of us anymore.

  • timberleaftimberleaf intermediate
    Posts: 41
    I'm a fan.  For the last 5 years or so, I spent about every 8th week working in Denver.  I would try to get in a ski day or weekend whenever possible.  At first I bounced around to a few different places off of I70 - locals telling me I HAVE to go here or there... but never Vail.  They spit the name out like it's a swear.  Finally, I'd had enough of crowds (Breck), conditions (Copper), and spartan facilities (Abasin) and eventually just started going to Vail every time.  I love the place.  Not the village, not the people, not the whole vibe - hate all of that.  What I love is the consistency and the focus on delivering great product.  The terrain is as challenging and fun as anywhere I've ever been.  The lift service is beyond anything I've ever seen.  The conditions are always near perfect with 24/7 grooming.  The only thing I've ever had to complain about there is the cost.  But I don't complain about it because I always feel like I got my money's worth.  Have never had a bad day there.  And there are still some decent spots to go for a beer that don't require you have a million dollar portfolio - BartnYeti's is a hidden gem in Lion's Head.  After spending half as much elsewhere only to feel like I wasted a day (and the effort to haul my gear across the country), I decided that the most expensive place to go was actually the best value.  With the cheap season pass, it became an absolute no brainer.  I will say that cheap lodging is getting harder and harder to find, though.  There used to be a Days Inn in Lion's Head that's converted to high end hotel now.  There's a comfort inn over at Beaver Creek that's reasonably priced - you may want to look elsewhere if you can't handle second hand pot smoke though.  And staying over there means $25 to park in the garage at Vail although I've seen lots of people parking along the highway in West Vail and taking the bus - may be an option for me next time.  But the garage is heated...mmmmm... I swear it's nicer than my house in there!
  • joshua_segaljoshua_segal expert
    Posts: 2,140
    To 4aprice:
    Your posting above got a little mixed up.  I edited it to make it more readable.  I apologize if I screwed it up in any way.

    You asked 
    <<
    Where are you seeing this (crowding)?
    >>

    The truth is that ski areas pretty much run at capacity on most weekends that have decent weather.  Getting more people to come to overcrowded facilities IMO, can't have a good long term outcome.  I waited for 1.75 hours to ride the MRG single in 1968.  I'd skin up before I'd do that today!  

    You said:
    <<
    Your own Crotched is on a multi-mountain pass, has it changed and how?
    >>
    Crotched is somewhat unique in that we are open 92 hours per week.  The net effect is our crowd is distributed: You can buy a 9AM to 5PM ticket, a 1PM to 5PM ticket, a 1PM to 9PM ticket;, night skiing ticket or midnight madness ticket.  Also, given the long open hours even our season pass holders don't all show up at 9AM.
    ---
    I know my friends who have season passes at Stowe are worried by the Epic Pass.  We'll know more by the end of this season.
  • 4aprice4aprice advanced
    Posts: 192

    To 4aprice:

    Your posting above got a little mixed up.  I edited it to make it more readable.  I apologize if I screwed it up in any way.

    You asked 
    <<
    Where are you seeing this (crowding)?
    >>

    The truth is that ski areas pretty much run at capacity on most weekends that have decent weather.  Getting more people to come to overcrowded facilities IMO, can't have a good long term outcome.  I waited for 1.75 hours to ride the MRG single in 1968.  I'd skin up before I'd do that today!  

    You said:
    <<
    Your own Crotched is on a multi-mountain pass, has it changed and how?
    >>
    Crotched is somewhat unique in that we are open 92 hours per week.  The net effect is our crowd is distributed: You can buy a 9AM to 5PM ticket, a 1PM to 5PM ticket, a 1PM to 9PM ticket;, night skiing ticket or midnight madness ticket.  Also, given the long open hours even our season pass holders don't all show up at 9AM.
    ---
    I know my friends who have season passes at Stowe are worried by the Epic Pass.  We'll know more by the end of this season.
    Joshua,

    Thanks for cleaning that up as I'm not sure what happened but anyway more of this interesting conversation.

    As for ski areas running at capacity on weekends, my experience is outside of the holidays (Christmas, MLK, and Presidents) is that crowd's are hard to judge.  In the decade we spent as a growing family at Camelback in Pa(a very busy resort) weekends during "high season" were a crap shoot, some days you thought would be bad weren't and others you would think wouldn't be so bad were busier.  The reason I put "high season"in quotes because at least at Camelback it was only between Christmas and Presidents Day, anything on the shoulders (including the wonderful month of March) were delightful.  

    You mention a 1:45 Mad River lift line.(for the single I presume)  I've waited in Lift lines on Madonna that snaked up the hill above the lodge, and 1 hr plus at the bottom of Campground at Snowmass where there was no other way out, so I'm know of what you speak,  but honestly I haven't seen anything close to that in years east or west.  I do admit that I have the luxury of avoiding any holiday period and do not travel during those periods. (why I still keep a CBK pass)

    The Stowe situation is going to be very interesting. Like I said I have heard of some crowds at Breckenridge but nothing at Keystone or A Bay.  Stowe is still quite a distance from NY and Boston (especially compared to Den-Breck) so I question whether it will be that bad, but worth keeping an eye on.  Certainly if one plans to go to any of the Vail resorts in Colorado/Utah  or Tahoe its worth the money right there.

    In our situation as it stands now (on the east coast) with grown children, I would not buy a pass product that did not include western options.  We certainly took advantage of Max last season taking 3 trips out west and numerous weekends up north and plan on doing much the same this year. There's even some pretty good western options on the Freedom Pass.  We do want to to get back to Aspen for a week so what ever product Aspen/KSL comes out with will be of great interest.  If that means more Stratton in my future that would not bother me one bit.  

    Alex

    Lake Hopatcong, NJ
  • joshua_segaljoshua_segal expert
    Posts: 2,140
    Good posting Alex.

    One thing people seem to forget about Stowe.  It and Jay Peak are major destinations for the Montreal crowd, certainly a major population center.
  • JimKJimK advanced
    edited November 2017 Posts: 261

    I'm a fan.  - Vail - With the cheap season pass, it became an absolute no brainer. - cheap lodging is getting harder and harder to find, - There's a comfort inn over at Beaver Creek that's reasonably priced - parking along the highway in West Vail and taking the bus 

    I've skied ten of the biggest/best Vail Resorts in North America over the last 3 or 4 years, some for as many as a dozen days each and spread across several months and seasons.  About to have a series of articles (with tons of photos) come out on Pugski.com about how to do them while keeping costs down.  Timberleaf is sharing some of the same tips in my articles.  I'll post a heads-up here when they are published.  As a mid-Atlantic skier they all send me to Nirvana.  They're so huge I find evading crowds and lines pretty simple, just go high, go to the fringes, go to the double black diamonds, and save beer money by bringing your own sandwich for lunch:-)

    Breck:
    image

    Vail
    image

    Park City
    image

    Kirkwood
    image

    Whistler
    image
  • JimKJimK advanced
    edited November 2017 Posts: 261
    JimK said:

    I'm a fan.  - Vail - With the cheap season pass, it became an absolute no brainer. - cheap lodging is getting harder and harder to find, - There's a comfort inn over at Beaver Creek that's reasonably priced - parking along the highway in West Vail and taking the bus 

    DUPE post

  • 4aprice4aprice advanced
    Posts: 192
    Always love your pics JimK.  You always manage to raise the stoke meter.

    Alex

    Lake Hopatcong, NJ
Sign In or Register to comment.