Vail: Epic Pass Sales and Strategy

[Tony Crocker]

finance company

That's Apollo Global Management, a private equity company whose first claim to fame was the takeover of Executive Life's junk bond portfolio out of its 1990 bankruptcy. George Gillett, the Vail owner 1985-1992, had overleveraged his media properties (mainly TV stations) and sold Vail to Apollo as part of bankruptcy restructuring. Katz was already working for Apollo in 1992 and was on the Vail Resorts board starting 1996 before becoming CEO when Vail went public in 2006.

Here are some details of Vail's history through 2016.

 

[MarzNC]

That's Apollo Global Management, a private equity company whose first claim to fame was the takeover of Executive Life's junk bond portfolio out of its 1990 bankruptcy. George Gillett, the Vail owner 1985-1992, had overleveraged his media properties (mainly TV stations) and sold Vail to Apollo as part of bankruptcy restructuring. Katz was already working for Apollo in 1992 and was on the Vail Resorts board starting 1996 before becoming CEO when Vail went public in 2006.

Here are some details of Vail's history through 2016.

According to the article, VR went public in 1997. That's when the name was changed from Vail Associates (VA) to Vail Resorts (VR). Adam Aaron was CEO then, and continued on until 2006. Aaron is now CEO of AMC Entertainment. He is not a skier. Had been leading a shoe company before being hired to lead VA/VR as I remember.

" . . .
In 1997, Vail Associates, renamed Vail Resorts, went public while simultaneously acquiring the nearby Breckenridge and Keystone ski areas via a merger with Ralston (yes, the cereal and pet food company). The conglomerate then began systematically acquiring lodging properties—including Vail’s first hotel, the Lodge at Vail—as well as retail outlets and restaurants in a series of moves that made local independent business owners decidedly nervous.
. . ."

I started learning about the history of VA/VR reading Chris Diamond's book Ski Inc. a while ago. It was too bad Diamond died before he could get a third book done about the post-pandemic era we are in with Epic, Ikon, Mountain Collective, and Indy passes all doing well. Plus Mountain Capital Partners upgrading Nordic Valley and Brian Head in Utah, as Park City continues to fight with the town over lift upgrades.

 

[Tony Crocker]

According to the article, VR went public in 1997.

Missed that.

Chris Diamond's book Ski Inc.

I read that too, overall very worthwhile but it missed a few relevant details/stories. There were some misstatements about when areas joined Mountain Collective. I think it discussed POWDR Corp's rocky beginnings at Killington but not that those issues were presaged during POWDR's earlier takeover at Mt. Bachelor. Comments were tangential, related to Vail's Australian acquisitions, but he said Perisher was highest and largest Southern Hemisphere ski area.

He said Vail paid $174 million AUD for Falls Creek/Hotham in 2019, shocking in comparison to the $38 million USD Mammoth paid for Big Bear just 5 years earlier. These areas are quite comparable in both size and skier visits.

 

[MarzNC]

He said Vail paid $174 million AUD for Falls Creek/Hotham in 2019, shocking in comparison to the $38 million USD Mammoth paid for Big Bear just 5 years earlier. These areas are quite comparable in both size and skier visits.

While they are comparable for resort size and skier visits, the regional setting is completely different between Southern California and Australia from a cultural and general population standpoint. Just as what happens for skiing in California for mountains of similar size is quite different between New England, the Midwest, or the Southeast.

It's taken VR a while to figure out how to best deal with Perisher. Been reading about it on the Aussie ski forum starting a few years before the acquisition. At least one exec who was put in charge of the Australian resorts never visited before the responsibility was moved to someone else.

 

[Tony Crocker]

completely different between Southern California and Australia from a cultural and general population standpoint

It's not clear to me how those differences would make the Australian areas more valuable. Yes they have more of a captive audience (many L.A. skiers disdain the local areas completely), but OTOH the population of SoCal is similar to the population of the entire country of Australia, thus leading to the similar number of skier visits.

I listened to the podcast this week. Stuart applauded the new half window price ski-with-a-friend program. Katz said that the multiarea season pass is a mature product now (with explicit endorsement by Alterra/Ikon) so the industry has to pay more attention to rest of the ski market. The option for the skiing friend to apply the ticket cost to a next year Epic Pass is a carrot to recruit more Epic pass buyers, and Katz intends to promote that feature.

Stuart wondered whether the Epic Pass was too cheap, contributing to overcrowding. Katz said that the complex pro-rata credits from the COVID shutdown in 2020 gave Vail a lot of data to determine what the correct pricing should be to maximize overall revenue. Katz pushed back on crowding in general, saying it was limited to a handful of peak days, and asked, "Who should we be excluding from the mountain?"

Stuart mildly questioned there being so few Epic partner resorts vs. Ikon. Katz did not answer that question directly but pointed out that the ski-with-a-friend program was only possible within the context of Vail owning nearly all the Epic Pass areas.

 

[Tony Crocker]

Fascinating how neither of them want to do anything about the killing-the-golden-goose problem.

Rob Katz seems to have some awareness of it based upon the recent interview with Stuart. The new half price ski with-a-friend program addresses one aspect, casual skiers who may have given up trips with more avid skiing friends due to the exorbitant window prices.

Alterra delegates these decisions to the individual resorts/partners. Some of them, both owned and partners, tweak their resort access via tiers:
1) Unlimited access on both Base and Full Ikon, though some places have holiday blackouts for the Base.
2) Unlimited access on Full but only 5 day with holiday blackouts for the Base.
3) 7 day access on Full and 5 day with holiday blackouts for the Base (most but not all partner areas).
Some areas also require reservations

The Base Plus has been abolished for 2025-26.

The tier 2 areas are Steamboat, A-Basin, Crystal and Schweitzer, all Alterra owned. A-Basin joined Ikon as tier 3 but is moving to tier 2 for 2025-26. Crystal was tier 1 after its Alterra purchase but had such severe parking overdemand during the pandemic that it moved to tier 3 for a year or two but has since settled on tier 2. When Alterra was first formed, Steamboat and Mammoth were going to be the tier 2 areas. But Mammoth had its own MVP pass since 2001 and full Ikon was a $200 price increase. After some pushback, Rusty Gregory knew his market and moved Mammoth to tier 1 with with base (including blackouts) being $100 less than the last MVP.

Deer Valley has always been tier 3 despite being owned by Alterra. Same for Aspen, where ownership/partnership with Alterra is somewhat murky.

 

[ChrisC]

I honestly think both Vail Resorts and Alterra should face a Justice Department suit for collusion and price fixing.

This $250-350/day b-llshit is only possible by both companies signaling to each other that they are going $300+ and they own the top 10 most popular resorts in North America.

They do not need to penalize skiers for not buying a season pass. I assume they have calculated/assumed that the casual skier will take one vacation per year (5 days of skiing), and you need to push them into an early pass product to get $ up front (summer), guarantee a vacation, and make sure break-even is 3 days vs. 5 days.

However, I think this destroys some of Vail's business case (more so than Alterra's). Why did Vail buy all those feeder resorts in the Midwest and, to a lesser extent, the Mid-Atlantic? I assumed it was to grow the sport and send them to destination resorts. However, the pricing is so aggressive and front-loaded that it seems egregious.

I would propose that Vail/Alterra still sell pass products during the season, with the astronomical day tickets as credits against them.

Anyways, this $300+ number is not real; it's just a sledgehammer yielded unfairly.

If Zermatt, Val d'Isere, Verbier, St Moritz can price at $50-100, so can Vail; but they are NOT publicly traded - but neither is Alterra - yet.

 

[Tony Crocker]

From Triple Play thread I wrote:

It is a valid point to see how low the breakeven days can get in this pricing era. I have tracked this for Mammoth since the MVP was inaugurated in 2000-01. Mammoth's breakeven days were consistently between 6 and 7 through 2013-14, drifted down to 4.7 by 2016-17. Ikon Base renewal vs. Mammoth window breakeven days started at 3.3 in 2018-19 and bottomed out at 2.8 in 2021-22 and were back to 3.4 in 2024-25 as the climb in window prices has finally slowed at Mammoth and maybe Alterra.

Stuart's e-mail today is the first salvo of a very deep dive into Vail's pricing. As of now there's not a link to a web version. Vail has announced 2025-26 window prices. The peak window price at Vail/Beaver Creek will be $356, applicable on 52 days: the usual holiday period but also a 10-day stretch in mid-February and nearly all of March. 21 other weekend days are $335 and 42 other midweek days are $307. Breakeven days vs. Epic Local (analogy to Base Ikon) is about 2.5 vs. Vail and barely over 3.0 vs. say, Breck or Heavenly.

Stuart noted that the annual increase in window prices accelerated during the Kirsten Lynch years. For 2025-26 that continues for most flagship areas, but Stowe and Keystone have no window price increase.

The new ski-with-friend-program prices are roughly equivalent to 2015-16 window prices.

I honestly think both Vail Resorts and Alterra should face a Justice Department suit for collusion and price fixing.

This $250-350/day b-llshit is only possible by both companies signaling to each other that they are going $300+ and they own the top 10 most popular resorts in North America.............Anyways, this $300+ number is not real; it's just a sledgehammer yielded unfairly.

NASJA had a Zoom in January 2024 about lift ticket prices, which I attended even though I was in France and it was 2AM. Stuart was the featured guest. His intro:

Even though they sell them, Vail does not want you to pay $299 for a lift ticket.. When a company finds itself in the position of actively steering customers away from its product, then it’s not a good product. And the big-mountain walk-up lift ticket is a profoundly broken product that needs to be reset or killed.

Stuart's Oct. 2021 column linked in that quote is well worth a read, along with some of the comments after it. In the Zoom call he said the window price model was unstable; that it would likely be eroded, especially midweek with Copper's $99 Thursdays being first evidence.

I assume they have calculated/assumed that the casual skier will take one vacation per year (5 days of skiing), and you need to push them into an early pass product to get $ up front (summer), guarantee a vacation, and make sure break-even is 3 days vs. 5 days.

The other motivation here is stabilization of revenue, minimizing sharp declines in bad snow years, particularly important for a publicly traded company like Vail. This is another stat I've tracked over time for Mammoth. Good year to bad year declines in skier visits:
1986 to 1987: -51% (no snowmaking then)
2006 to 2007: -31%
2011 to 2012: -28%

Kottke Rockies (Colorado is close to 2/3 of that):
1980 (113% of normal) to 1981 (64% of normal): -39% (very little snowmaking then)
2011 (132% of normal) to 2012 (75% of normal): -9%
I'm quite surprised by that -9%. Yes the Rockies are dominated by inflexible destination skiers, but was that not true in 1981? Vail's Colorado resorts were actually worse at -12.6% though they were also worse on snowfall than the Rockies overall. The Epic Pass already existed in 2012, though I think only for the 4 Colorado resorts plus maybe Heavenly.

 

[Tony Crocker]

Why did Vail buy all those feeder resorts in the Midwest and, to a lesser extent, the Mid-Atlantic? I assumed it was to grow the sport and send them to destination resorts.

It would seem to me that Vail should have a Triple Play type product strictly confined to some of these feeder regions. Like the ski-with-a-friend, they can do this because they own the areas. If Stuart's Rob Katz interview had happened after the Triple Play announcement, I suspect he would have asked that question.

 

[MarzNC]

The Epic Pass already existed in 2012, though I think only for the 4 Colorado resorts plus maybe Heavenly.

By 2012, VR had bought Heavenly and Northstar. In 2012 Kirkwood was added. More importantly, that's when the first "urban" ski resorts in the midwest were bought. Afton Alps tapped in into the Minn/St. Paul market while Mt. Brighton is close to Detroit. Wilmot was added in 2016, which is an hour from Chicago. All were independent family-owned hills. VR spent a fair amount of money on lift upgrades and renovating base buildings.

Why did Vail buy all those feeder resorts in the Midwest and, to a lesser extent, the Mid-Atlantic?

Mt. Brighton is literally a man-made bump (1100 to 1330 ft). The two (three?) hills were created by fill dug up when an interstate highway interchange was built nearby. I stopped by the base at the start of a Michigan ski safari a few years ago. Place was empty on a midweek morning. However, there were half a dozen park rates lapping the terrain park, which was served by a fast--very fast--rope tow. Also saw a parent with a little one and a senior. The pictures in the hallway outside the retail shop included not only a couple of the Epic Colorado and Tahoe resorts, there was also a picture of Perisher in Australia.

The situation changed drastically when VR bought out Peak Resorts. Peak started in the lower midwest with 100% snowmaking, then expanded to the northeast and PA. It seemed as of VR wanted Mt. Snow for the NYC/Boston market and ended up with all the little hills without much of a plan for how to deal with them. The people who have been skiing the PA resorts now on Epic for decades are finally seeing some noticeable improvements. The complaint level on DCSki has been high for the trio local to DC/NoVA and the trio local to Pittsburgh.

People who live in the midwest and mid-Atlantic don't have to buy Full Epic or Epic Local if their home mountain is owned by VR. There are much less expensive regional passes. Even a few 1-location passes for the smaller hills, including a senior discount. The Epic Day Pass is reasonable for someone skiing 7 or less days, even if only at small resorts. The price depends on which locations are included and whether or not holidays are included. The Epic Day Pass for 1-7 days started in 2018, after a season with just a 4-day and a 7-day option.