Yesterday I told a story. No intro, no explanation, just a strange tale about doughnuts and coffee and Normals and rich people. If you haven’t read that story yet, do it now.
Now, let me retell the story with all the metaphorical pieces in their place. Tomorrow we’ll discuss why I took this random approach to such a big topic.
Once upon a time in the ski industry there were two groups.
The first, the middle-class group, had normal salaries, lived in normal homes, and stayed in normal hotels when they traveled.
The second, the luxury group, had massive salaries, lived in massive homes, and stayed in luxury hotels when they traveled.
One Luxury skier was named Joe.
Every winter when the snow was good, Joe would take a ski vacation.
One winter as Joe planned another such vacation, he spotted a resort in Colorado called Vail. This resort sold two things: skiing and lodging.
But is wasn’t just any skiing and it wasn’t just any lodging. The skiing was on thousands and thousands of acres, served by brand-new high speed lifts with luxury slopeside restaurants overlooking incredible scenic vistas. The lodging featured beautifully designed rooms, luxurious spas, amazing restaurants, ski-in/ski-out access and the best service money could buy.
Perhaps that’s why lift tickets were $159/day and lodging was $500/night.
Joe, intrigued by such a luxurious resort, bought two weeks of lift tickets and two weeks of lodging at Vail for his ski vacation. Sure enough, it was incredible. The best he’d ever experienced. He would surely be back.
Not surprisingly, he saw a story about Vail on a TV in the airport on his way home.
The next winter, Joe was saddened by a poor snow year across the rockies. There would be no skiing this year for Joe.
But as he looked at Vail’s webcams he saw something curious: middle-class people. Lots of them. And, even more curious, they were all skiing the same slopes he had.
“What are they doing at a luxury ski resort,” Joe wondered. “and how can they afford those lift tickets?”
The next winter the snow returned to Colorado and Joe took another ski vacation to Vail. After buying another lift ticket, he asked the girl behind the window about all the middle-class people he saw on the webcams.
“Ahh,” the girl smiled, “they weren’t buying lift tickets, they were using their season passes. Those cost the same as one at a single, regular-sized resort. That’s why we were open with such poor conditions, because people had already purchased their passes.”
“The price of a few lift tickets for a whole season?” Joe exclaimed. “That’s incredible.”
“Yep,” the girl replied, “the CNBC crew asked us who would buy a lift ticket for $159 and we told them that you didn’t have to pay $159 if you didn’t want to. If you bought next season’s pass today they’d get unlimited skiing for the cost of just a few tickets.”
“So, what if I buy next year’s season pass now?” Joe asked. “Would I get that deal too?
“You betcha,” the girl replied.
So Joe pulled out his credit card, paid for next season’s pass, and left.
The next winter high pressure had returned and snow was scarce. Seeing his season pass on the table, Joe packed his running shoes just in case, booked a week of lodging, and flew to Vail to use his pass.
“I have to ask you a question,” Joe said to the concierge when he arrived at the hotel. “Clearly I can afford to pay $159 a day for my lift tickets. Why be willing to sell a whole season to everyone, including me, for just $700?”
The concierge smiled and replied, “Because you buy $500/night lodging…and even though the snow sucks, here you are.”
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