In My View Cheaper is Better

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To the growing list of fin-de-millennium goods and services with prices headed downward¿such as D-RAM chips, jockey shorts and long-distance phone calls¿you can now add the ski-lift pass. A more unlikely candidate for deflation I can't imagine. For 65 years, since the invention of the rope-tow, skiers have endured an upward spiraling cost to use lifts and trails. How could such a reversal happen

Ask no more, for here ye shall learn. From the White Mountains to the Sierra, the cost of family skiing is dropping. More free and half-priced kids' tickets are available than at any time in the sport's history. Aspen is not increasing its adult pass for the first time since anyone in town can remember. Cheap, pay-in-advance season passes, as reported in last month's issue ("It's the Price, Stupid," Ski Life, October 1999), are furnishing unprecedented opportunities to save money. They've potentially cut the cost of a one-day lift ticket to $25 and less if you ski more than eight days a winter. Now Crazy Eddie pass prices are spreading nationwide. Why?

For the answer, you need to spin the clock back 15 years, to a time when area operators began to believe their success would rely on having grooming machines, computer-directed snow guns, high-speed detachable chairs and gondolas in order to create a quality of skiing you'd previously only dreamed of¿to say nothing of on-mountain Ritz Carlton log palaces to eat hamburgers in. As the resorts invested tens of millions of dollars in these high-cost enhancements, two things happened:

1) Resorts had to aggressively increase what they charged for a lift ticket to recover the cost of their investment. Over the past 20 years, the price of an adult weekend day pass has quadrupled, inflating 50 percent faster than the U.S. consumer price index. 2) 2) As many as 250 small and medium-sized ski areas went out of business, unable to pay for the costly trail grooming, total snowmaking coverage and high-speed, easy-to-board chairlifts, which we came to expect as part of the ski and snowboarding experience. The disappearance of these resorts stunted participation in the sport. (It also, incidentally, lessened grassroots development of young racers for our Olympic ski team.)

At first, these trends didn't appear to harm the surviving areas. They prospered, if for no other reason than the mathematical fact that less than 500 areas now sold the same number of passes as upwards of 700 areas did before. Nor did we consumers have much to complain about. Despite fewer venues for skiing, there was more lift capacity and skiable terrain than ever before.

So the resorts sat back and waited for an avalanche of skiers to flock to ticket windows. It never happened. The growth curve of skiing activity remained as flat as the top of a Montana butte. Indeed, if it weren't for the advent of snowboarding, skier visits would have fallen. One of the country's savviest ski area operators, George Gillett of Booth Creek Holdings, owner of 10 areas, recently admitted that, "Capital expenditures on terrain expansions, more high-speed lifts, grooming and snowmaking are not yielding much increase in skier visits."

Faced with a customer base exhibiting little or no growth, the industry began to grope for solutions in the past few years. It tried to mount a couple of multimillion dollar marketing campaigns to make skiing, like milk consumption, grow. They failed. Meanwhile, the individual resort owner was discovering the only way he could expand was to snatch market share away from someone else¿hoping eventually to host more skiers at lower prices, instead of fewer skiers at higher prices. Discounting spread like a rug sale at a North African souk.

Actually, with the profusion of lift-pass deals, it's difficult to know how much the big mountain companies have cut prices. Like the airlines, the resorts appear to be focusing more on yield: finding profitability in filling chairrlift seats and other resort facilities in off-peak periods, and in selling restaurant meals and ski gear. One thing is certain, though: Resorts are relying less on lift-ticket income. Last season alone, the big resorts invested a record half-billion dollars in improvements, but only 20 percent of it was for lifts. Almost half was for real estate development.

For the first time, the biggest areas grossed less than half their revenues from selling lift tickets, while their income per skier visit from food, gear rentals, lessons and other non-lift businesses soared by almost 25 percent. It may be more than a coincidence that on-mountain food and ski equipment are now more likely than the lift pass to be regarded as "too expensive," according to a survey of 275 skiers by Leisure Trends Group, a Boulder, Colo.-based company.

Flying was once regarded as an expensive way to travel, but over the years airlines promoted such a baffling array of discounted, half-price-and-less tickets that plane travel eventually came to look cheap. Airline-style ski marketing actually started several winters ago, with awards of free tickets in return for frequent skiing. Price options have widened, too. Fifteen years ago, the gap between the cheapest (Midwest) and costliest (Rockies) adult weekend lift ticket price was less than $5; today it's more than $16. It'll take more than a couple of winters of fly-the-skies price tiering, however, for skiers to regard the sport as reasonably priced. People are so spooked about the lift ticket as the central villain of high-cost skiing that they believe it accounts for 45 percent of a ski week's cost, when it's actually closer to 20 percent.

The Leisure Trends survey found that nine out of 10 skiers believe anything over $40 is too expensive to ride uphill and ski downhill for seven hours. For comparison's sake, you'll pay $40 for a stadium seat to watch three hours of NFL football. And a 4-1/2-hour round of golf at Hilton Head will cost you a hundred bucks, not including tips.

Prejudice about the cost of skiing is deep-rooted. Thirty years ago, in an article titled "The Vanishing $5 Lift Ticket," SKI's editors asked, "Will the $10 lift ticket kill skiing?" At the time, a lift ticket at Aspen cost $7. Many people¿especially young, less financially secure couples¿said they would ski less if the price went up. They didn't. Instead, they willingly abandoned rope-tows, paying more to ride on chairlifts. The more things change, the more they remain the same.

Still, history suggests that lower lift ticket prices may bring about a growth in skiing that resorts have been seeking for decades. In a 15-year period between 1978 and 1993, when the lift ticket price rose by 180 percent, skiing failed to grow at all. By contrast, in the years from 1951 to 1966, when the average cost of a weekend lift ticket rose by only 66 percent, the sport grew at the fastest rate in its history.

Sure, say today's ski area operators, but skiing grew fastest then because of the population bulge of young Baby Boomers entering the sport. True, but on the other hand, there are more 15 to 19-year-olds in the Nineties than there were in 1965. So maybe, just maybe, skiing grew faster four decades ago because the lift ticket price wasn't inflating like an Internet stock. History seems to be saying it is the price, stupid.