Pass-price war creating PR problem for Skico
A public relations problem is already brewing for the Aspen Skiing Co. for next ski season.
The Skico – like every other Colorado resort – is going to have pay attention to round two of the Buddy Pass war or risk a black eye in the arena of public opinion.
The Buddy Pass war exploded last fall when Winter Park decided to sell passes for about $200 per person. Copper Mountain followed suit, as did the teamed resorts of Keystone, Breckenridge and Arapahoe Basin.
Winter Park sparked round two of the pass war last week, much to the chagrin of others in the industry. Prices have gone up, but so has the number of participating resorts.
Keystone, Breckenridge and Arapahoe Basin announced last week that they were back in the pass war. Loveland joined the competition for the first time this week and yesterday, Copper Mountain made its commitment.
Even with the increases, pass prices remain significantly below historic levels. All six of those resorts are vying for the lucrative Front Range market.
The Skico won’t dive into the thick of that competition, declared company President and CEO Pat O’Donnell, but he acknowledged the war could influence local pass pricing.
“That low a pass [price] has made it difficult for everybody in the ski industry, from a public relations standpoint,” said O’Donnell. “They’ve put the burden on everybody, and you don’t see anybody [outside of that area] jumping on it.” Evaluating pass prices When asked if the Front Range pass-price war could force the Skico to hold the line on its prices, if not drop them, O’Donnell replied that his staff is evaluating options for the 1999-2000 season “as we speak.”
He stressed, though, that prices won’t tumble to the rates charged by the resorts closer to Denver.
“Being a destination resort, we’re not caught up in Front Range price wars,” O’Donnell said. “Don’t hold your breath, because it’s just not going to happen.”
Only about 7 percent of the Skico’s lift-ticket sales come from Front Range residents. The resorts battling it out in the pass war depend more heavily on Front Range skiers.
On average, Colorado ski resorts rely on in-state residents for about one-third of their business. But that percentage is higher for some of the Front Range-oriented resorts.
O’Donnell said the resorts that drastically dropped their pass prices this season were counting on volume to make up the price deficit. Some resorts are well prepared to follow that strategy because they own a large share of lodging, retail and restaurants at their base areas.
Those resorts can capture other revenues from their customers, unlike the Skico. It relies almost solely on ticket and pass sales and ski-school lessons to pay for mountain improvements.
“We can’t take the financial hit and still put high-speed lifts at Highlands,” O’Donnell said, referring to the new Cloud Nine lift that’s going in this summer.
O’Donnell is unconvinced the gamble to make up in volume what was lost in ticket prices paid off for the Front Range resorts. Statewide skier visits were down 5.5 percent through February compared to the season before, according to Colorado Ski Country USA, the state trade association. Bad for the industry? O’Donnell also claimed that the pass-price war will ultimately harm the industry, even though it is good for consumers.
“It devalues the product in the eyes of the consumer, in my opinion,” O’Donnell said. “Second, it creates a perception that there is a large margin [of profit]. There isn’t.”
He hasn’t been the only one critical of the pass-price war. Colorado Ski Country’s director, John Frew, criticized the competition at the beginning of this season for turning skiing into a “commodity.”
“We spent 30 years trying to convince people they were already getting a good value. This throws that out the window,” Frew told The Aspen Times last November.
O’Donnell believes the participating resorts run a risk of alienating customers eventually. Pass prices cannot stay that low forever, and the resorts must figure out a way to raise prices without losing customers.
Indeed, prices have gone back up in the Front Range-oriented resorts. Winter Park’s Buddy Pass for next winter is $895 for four people, up from $795 this season.
Breckenridge and Keystone, both operated by Vail Resorts Inc., are charging $249 per person, up from the equivalent of $200 per person this season. The deal is available only to current Buddy Pass holders.
Vail Mountain and Beaver Creek aren’t participating in the competition.
Loveland is reportedly charging $250 for its entry into the competition while Arapahoe Basin will charge $199.
Copper Mountain announced it is charging $299 for a full-season pass and $199 for a Monday-through-Friday pass.
Unlike last year, the discounted passes at most of those resorts will only be available until May. Skico ponders options In contrast to $200 per person, the Skico charged $949 this season for a four-mountain, full-season pass for employees of businesses that belong to the Aspen and Snowmass Village resort associations.
A popular two-day-per-week pass was sold for $629.
Skico officials maintain that consumers get good value for the four-mountain passes and that their pass prices stack up well compared to other destination resorts – those that aren’t competing for residents of a nearby, metropolitan area like Denver.
Whatever the company does with pass prices for next season, O’Donnell said locals must realize that lift-ticket sales are already being used to “subsidize” season-pass prices.
The Skico received some criticism this season for its lift-ticket price, which was among the highest, if not the highest, at $63. If locals want passes kept in the range they are now, they shouldn’t object to the lift-ticket pricing, he said.
“You can’t have inexpensive pass prices and inexpensive tickets,” said O’Donnell. “It just doesn’t cut both ways.”
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