May 11th, 2011
Note: This is a continuation of yesterday's interview with Liftopia co-founder, Evan Reece.
SlopeFillers: Just to clarify, quickly explain what you mean by skiing as a commodity?
Evan: Ski resorts are really fortunate to be offering experiences that are and will always be unique. While there are many who sell lift tickets, and one can ski in thousands of places around the globe, no one ski resort is the same as another. Arapahoe Basin will always be different from Loveland, Vail will always be different from Aspen. This is different from the hotel industry, where a Sheraton can be built across the street from a Hilton and essentially offer same experience and value proposition. Resorts that understand that their core offering is different from anyone elses are the best at marketing a unique experience, and donít fall down the "I need to be everything to everyone" hole that ends up pricing and positioning resorts as commodities.
SlopeFillers: As you talk about these channels, the first things that come to mind for me are gas station 2-1s. I've used that type of discount frequently in Utah. Does this fall into the case of the gas station making money off of the resort? What are the implications and possible courses of action?
Evan: Exactly, I think that gas station deals are a very clear example of a product using a ticket deal to sell something else as opposed to the other way around. It is not that gas stations have some secret to marketing lift tickets that no one else has figured out, it is the fact that it is a 2 for 1 deal on way to the resorts where customers are headed anyways. Essentially, any store en route to a ski area would become a top seller with a 2 for 1, because it is an incredible and unfenced deal. Want to help a local tire store on your access road? Give them a 2 for 1 and in no time they'll be a top producer.
To go back to an earlier point, it is not that gas stations are "bad", it is that resorts should have an appropriate strategy in place to protect themselves. A 2 for 1 good just on Tuesdays with a limit of 20 per day? Perhaps that would be a good "as incremental as possible" strategy. The problem is that the gas station would not likely jump on that deal because it would not help them sell gas.
SlopeFillers: Going back to your thoughts on hitting the right price point. It's easy for marketers and tempting to consumers and promotional partners to take the classic "2-1" route. When analyzing their situations and partners, what factors should these resorts be taking into account as they identify a price point?
Evan: While there is truly no single correct answer to this question, the best way to approach any resort's distributions is to focus on the strategy and execution behind specific distribution options as opposed to the channels themselves. This can again be applied to any part of a resorts business... It is not IF you do Adwords, it is how well you execute. It is not IF you install a new lift, it is what terrain it serves and where its onload/offload locations are.
In general however, I believe that any discount initiative where the distributor's interests are not exactly in line with a resort's should be managed very carefully, especially if participation with said distributor has limited control over changing/removing/altering deals.
SlopeFillers: So, where are these trends taking the industry? How do you forsee these channels in 5 or 10 years time?
Evan: I have no doubt that the biggest change in ski product sales in the next 5 years will be a full transition to advance purchase alongside increases in window rates and overall yield. In order for ski resorts to insulate themselves from weather, snow conditions, sore legs, and hangovers, they must transition to booking customers into specific dates in advance, and they must get rid of "unfenced" discounts with redemption patters than mirror exactly on-mountain demand (aka, they are redeemed on peak days and ignored on rainy days).
If you look at Vail Resorts quarterly investor report from early April, the first bullet point under "Strategies for Growth in FY2012 and Beyond" is... wait for it... "Continue to Drive Advance Purchase". Vail is setting an example that advance purchase and variable pricing is top priority, while at the same time committing that their website is first and foremost an advance purchase tool. It is no longer theory that as resorts that get rid of unfenced discounts and focus on advance purchase they generate more revenue, it is fact. Resorts that execute well in this realm lock customers in to skiing in advance, capture a higher yield, and insulate themselves from "morning of" decisions that impact whether or not someone shows up on the hill on any given day. In addition, resorts are able to offer more types of products to more types of customers, encourage beginners to get started on the right foot, and free customers' hands from their wallets when they arrive (since they bought their tickets 2 weeks ago).