Looking at the 2011-2012 snow season thus far, it’s hard to imagine any snow-dependent destination turning a solid profit. How do you run a business based on something as unpredictable as the weather? This was the question posed to Rob Katz, CEO of the largest ski resort company in the United States, Vail Resorts, by Derek Thompson at The Atlantic. Katz told Thompson simply, “Make your business about much more than snowfall.” This year, Vail Mountain saw its snowfall decrease by 80%- the mountain’s driest season in 30 years- and yet visits were down a mere 15%. In order to understand this, one must take into account the fact that Vail’s ticket sales only account for 46% of its overall income. Another resort following Vail’s thriving business model is Whistler-Blackcomb; the two-mountain ski area offering more average snowfall, trails, lifts, and vertical drops on the continent. Similar to Katz’s strategy, Whistler-Blackcomb bases its profits off of the membership of its visitors, rather than the individual ski days. Both resorts sell season passes that allow for massive discounts for the rider- about 90% by season’s end- but allow for a higher earnings base surrounding lodging and dining at their resorts.
“Creating packages is fundamental to our business,” said Kevin Smith, executive vice president and CFO of Whistler/Blackcomb. “Especially if families pre-commit to a package that includes lift tickets, lodging, and ski school, we lock up that business before the snow falls.”
An additional key to Vail and Whistler’s success can be found in their extensive ownership of businesses from the base area on up. Snow schools, rentals, retailers, and restaurants; all fall under the resort’s umbrella. Also vital is the actual layout of the lifts and trails- visitors crave wide-open vistas, as well as varying levels of technicality in order to accommodate all types of riders. A well planned area will cater to families, first times, and thrill-seekers all the same.
“With the right design, skiers come down the mountain like water,” Katz said.
By employing their profitable business models, resorts like Vail and Whistler-Blackcomb are able to remain stable, even amidst the unreliable, erratic conditions that come with mountain weather.
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