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My Take on the Simple, Clever Reasons Why Vail Sells Lift Tickets for $159

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Aside from posting M-T-W instead of M-W-F, I took a very different approach to my posts this week.

Little explanation, little intro, just a story about doughnuts, the same story retold about Vail, and the rest was up to your imagination. Part experiment, part hope that this would get us to think differently about these topics, I’m writing this final post beforehand with no idea if it will fail miserably or somehow work.

And while there’s much more meaning written into those stories than I’ll cover today, the focus of those posts was one, simple thing: $159 lift tickets.

Why?
That’s the natural question you see surface around this topic. Why would you charge such an “obscene amount” for lift tickets? Well, I think there are three reasons.

#1) People Pay It
This may sound obvious because, well, it is, but people actually buy these tickets. Lots of them. When you consider the $1000+/night lodging these skiers are staying in, that shouldn’t really surprise us. After all, if someone that makes $50,000/yr is willing to buy a ticket for $50, why wouldn’t someone who makes $500,000/yr be willing to spend $159?

#2) That’s What It’s Worth
What we often forget is that Vail is a company built, as my story suggested, in Luxuryville. Vail isn’t skiing, it’s luxury skiing. They are no more selling the same product as Cooper than Masa is selling the same product as McDonalds. In other words, $159 is likely what luxury skiing is worth.

#3) It Gets Headlines
When Masa raised their prices to $500/plate, diners across the globe didn’t cry out in pain like skiers do. Why? Because the restaurant industry has done a great job of segmenting products into fast food, casual/sit down/fine-dining. When something crazy happens in one group (like $500/plate meals), it doesn’t spill over to the others. But because there are no such fences in skiing, Vail raising prices to $159 somehow applies to an entire industry and it shows up all over the news.

#4) Lets Them Sell Other Products
But that plays right into the hands of Vail Resorts because it gives them a pulpit to send a much more inclusive message. For example:

If you’re Vail, the answer to the interviewer’s question is simple:

“We’ll raise it as high as it takes for news outlets like you to talk about it.”

See where this is going?

Good or Bad?
So is this good or bad? As in most cases, it’s both.

For Vail, it’s great. They raise window rates to $159. People pay it. Those who don’t pay it are guided toward equally valuable options to Vail. It increases the perceived value of passes and gets headlines which allows them to reach more people with a dual, inclusive message of “we sell luxury skiing” and “but we have options for everyone.”

For the ski industry, it’s not so great. Because they are getting all the headlines it skews reality, leading people to think that skiing is as expensive everywhere as it is at Vail. Maybe that’s why so many skiers complain, because they think it reflects the industry as a whole even though it doesn’t and a $40 day pass is available 15 minutes from Lionshead.

Even more, it makes it extra hard to compete because the Epic Pass is a luxury skiing product sold at middle-class skiing prices. Like paying $1 for a $10 doughnut, given the choice between middle class skiing and luxury skiing at the same price, it’s hard to blame skiers for their choice.

What’s Next
Maybe this is all a case for starting to call luxury skiing luxury skiing and community skiing community skiing.

That doesn’t solve the fact that Vail is selling a luxury product at middle class prices, but it might help at least keep the headlines about Vail’s next rate jump in the right context.

Or maybe a resort needs to one-up Vail and charge $500 at the window next year just to get the headlines and set the record straight. I dunno, but the $159+ window rate isn’t going anywhere.

And when you look at the benefits to resorts like Vail, why would it?

Published January 14th, 2015 by Gregg Blanchard.

  • http://www.gtgmobile.com/ Patrick Shaughnessy

    Excellent insight, thank you!

    • http://www.slopefillers.com/ Gregg Blanchard

      Thanks, Patrick!

  • http://vertimpulse.com Kevin Forrest

    Simple economics…if the market will support the price, they will continue to raise it until the market will no longer support it.

  • Kurt Gellert

    Excellent story, analogy, and analysis. A simple story showing the complexity of economics/pricing elasticity, consumer behavior, and market segmentation. Well done, Gregg!

  • Karen

    When I skied Vail, I saw tons of people with actual ski tickets–generally purchased full price at the resort for that day’s skiing. When I ski Breck, I see more people using the EpicDay pass to get some discount on their skiing. Most people I know that are very successful and have accumulated wealth have done it by making smart decisions and are not frivolous with their money. But I just don’t understand how someone would go to Vail and buy full tickets at full price when there are options for discounts. The internet makes this so easy.