Over the holidays I took my family skiing in Sun Valley, Idaho where I experienced the same feeling I get whenever I hop into a medallion taxi: this industry needs to innovate or die. I grew up skiing and always wanted to share my downhill passion with my kids. When I arrived in Sun Valley I realized nothing had change - and not in the good nostalgic way. Ski resorts have not innovated in the last 30 years and are falling out of touch with today’s consumer. We are living in a 140-character world. Ski resorts need to get relevant or die.
Where is the product innovation?
Ski resorts still rely on the same product they have for decades: the full-day all-mountain lift ticket. Ski resorts have rapidly increased prices in order to cover the costs of high speed quads, gondolas, and other infrastructure improvements. Over the past three years Sun Valley increased its lift ticket prices by more than 10% per year. That is more than 5x the rate of inflation. Other resorts have increased prices at similar rates. Here’s the problem: in a short-sighted attempt to recoup costs, ski resorts are ostracizing their core customer base and pricing the masses out of the market. I spent a single gondola ride thinking about a new marketing strategy for resorts like Sun Valley and here’s what I came up with:
Segment your customers:
Ski resorts should develop tailored offerings for three core customer segments:
i) Millenials - this segment represents the future of the sport. Ski resorts that want to be around in 20 years need to cater to millennial and hook them as lifelong customers. Millennials aren’t going to ski from 9am-4pm every day. They are multi-taskers who want action and variety - not fresh corduroy. They are also very price sensitive. $115 for a full-day lift ticket? Forget it.
ii) Young families – teaching their kids how to ski is one of the primary reasons parents take family ski vacations. Parents view it as an investment in a lifelong sport for their children. However, this investment needs to offer a reasonable value. Ski resorts need to make child care, ski school, and kids activities cheap, fun, and Facebook likable.
iii) Baby boomers – the boomers represent the golden age of skiing. They are the traditionalists who remember slow chairs and straight skies. They also tend to have more discretionary income. They no longer have the energy to ski all day long and would prefer to ski groomers for a couple hours and then retreat to a gorgeous lodge to drink chardonnay and talk with friends. Most resorts have catered to this audience so there isn’t a big need for new product offerings - just new pricing and packaging.
Create new product offerings:
Ski resorts should then develop products which cater to each of their customer segments.
i) Millenials – Devote a chair and section of the mountain to an X Games-style terrain park, slopestyle, and half pipe. The Greyhawk chair at Sun Valley would be perfect for this. I’d pump music through loud speakers on the hill and have a bar, stage, and viewing area at the bottom. People can sip microbrews and watch their buddies go big via real-time video feeds. I’d charge $40 for a park-only pass. Of course, there would also be live music, big air competitions, food and drink specials, t-shirts available for purchase which would probably bring the per day spend up to $60-70 per person.
Next, develop a multi-sport offering. Millennials like variety so ski resorts should create a single pass which gives customers all-day access to a suite of activities and gear including: skiing, snowboarding, terrain park, fat tire snow biking, and snowshoe trail running. Customers could do multiple activities in a day and end up at the base camp eating, drinking, listening to live music, and watching a nighttime competition.
ii) Young families – Sun Valley charges $300 for day care and $200/hour for private lessons. Crazy. They are profit maximizing on each transaction instead of optimizing for lifetime value. For small kids I’d offer a kids camp for a reasonable tuition and include a free adult lift ticket. I’d make it full-week pricing very attractive (e.g. the same price as 3 individual days). The resorts could offer enrichment add-ons including private lessons and an evening pajama party so parents can dine out.
I’d also incorporate wearables. Each family member should get a GPS-enabed bracelet which serves as an ID badge, GPS locator, lift pass, and payment system. Parents can add value to the bracelet and keep track of their kids’ spending and whereabouts. This would give older kids independence while keeping them safe and making it easy to meet up with parents for a few obligatory runs.
iii) Baby boomers – As I mentioned, ski resorts have already catered to baby boomers with high-speed lifts, grooming, and luxurious lodges. Boomers still go on ski vacations but tend to only ski for a few hours and don’t ski every day. Offer a “forever young” discount and include a free glass of wine for a day pass as well as per run pricing and this segment should be happy.
Build a pipeline:
Ski resorts need feeder programs which introduce people to the sport and their resorts. Baseball uses little league and farm leagues to develop players. Disney uses movies and books to captivate its audience and drive theme park visits. Destination ski resorts need local programs to drive pipeline for the resort. That could mean buying local mountains like Vail has done. Or simply offering compelling promotions through alliances with local mountains, airlines, and schools. Resorts need to create critical mass within specific geographies because people want to vacation at the same resort as their friends, neighbors, and classmates. If I were Sun Valley, I’d pick five cities to dominate: let’s say Seattle, San Francisco, Los Angeles, Minneapolis, and Chicago (I’m just making those up, the best way would be to look at its current customer geographic makeup). Then I’d structure programs to make it easy and cost effective for locals to visit the destination resort.
Offer flexible pricing:
Since we have already introduced wearable bracelets it would be easy to introduce per run pricing. Ski resorts should welcome skiers who may only ski a couple runs and call it a day. After all, they will likely indulge in other services (food, drinks, gear, rentals) and by definition won’t clog up the mountain. The skier can ski as many or as few runs as he or she wants and pays accordingly. The skier is never charged more than the cost of a full-day lift ticket. Resorts can use Uber-like surge pricing to avoid congestion at 9am on powder days. This will bring more skiers to the hill more often while not congesting the mountain.
Lastly, make seasons passes affordable. Sun Valley’s season pass is $2,299 which is equal to 20 days of peak season lift tickets. That means only locals would buy it. Instead, ski resorts should price season’s passes at just over a week of skiing. That creates an incentive to visit the mountain for two separate week vacations. Seasons passes are powerful because they provide upfront cash and give the resort predictability and financial liquidity.
Alright, that’s a quick summary of my gondola brainstorm on how ski resorts can get relevant and thrive. I didn’t have time to get into how to make the resort relevant in all four seasons (another key to survival - maybe that’s a future post). I want to make sure I can enjoy the sport with my kids the same way I enjoyed it with my parents. The only way that will happen is if ski resorts get aggressive and innovate.
Is anyone else thinking about this subject? What are your thoughts?
photo credit: angelocesare