I asked a friend what I should ask Robert Katz, CEO of the now global $4 billion ski enterprise, Vail Resorts, if given the opportunity to interview him. His response was, “for free lift tickets”.
Even if Katz, once Wall Street investment mogul turned ski industry marketing guru, isn’t doling out lift tickets for free, he has made the sport accessible to more people, in more destinations, and for less money than ever before with the introduction of the Epic Pass to the ski industry.
While many have heard of the Epic Pass, a season pass that gives holders access to Vail Resorts’ 11 mountain resorts, as well as Arapahoe Basin in Colorado and five days at Verbier, Switzerland, few are privy to the genius behind its making.
“One of the challenges for the ski industry in the last decade was how to create more consistent skier visitation,” said Katz. “There was always fluctuation surrounding weather. We had to ask ourselves, how do we increase visitation from our guests?”
In a market whose success is measured in snowflakes, Katz has been involved with Vail Resorts since 1991 as a board director and became CEO in 2006. His first challenge was to come up with a way to drive ticket sales in a relatively volatile industry.
With a job that requires him to answer to the market, not the weather, Katz devised an unexpected plan to increase ticket sales; he lowered the price. Ten years ago a season lift ticket at Vail Mountain cost $1,800. Less people were skiing, operational costs kept climbing, and a successful year was dependent on snow.
“We reduced the season pass price to $579 in 2008,” said Katz. “There was a huge uproar in the industry. People thought that we had made a mistake and rushed to purchase ski passes thinking this incredible deal was going to go away.”
While the deal wasn’t going anywhere, the catch was that skiers had to purchase the pass before the season began. They would be locked in, regardless of weather, with the winner-take-all benefit of a drastically reduced season pass price and unlimited access to multiple resorts.
Overnight, Katz had introduced a game-changing initiative to the ski industry, carving out a unique way to drive ticket sales, while simultaneously creating more options and accessibility to skiers.
“We then held the lower price of that season pass to make sure it stayed affordable (7 years later, the Epic Pass cost $789 in fall 2015), but we’ve increased a single day [lift ticket]. If you want to show up on the middle of Christmas, you’re going to pay a higher price, but for everyone else— it’s very reasonable,” said Katz.
The Epic Pass has enabled skiers not to be priced out of the sport, resulting in a loyal following of the Vail Resorts brand, while also bringing opportunities for profit and growth.
“Skiing is a very social sport,” said Katz. “If one person in the group has a pass; it’s likely they will drag everyone else to the resort where they have a pass.”
In an industry where overall visit growth is only 1% per year, Vail Resorts has grown its sales of season passes 15% per year for the past seven years. And by introducing the Epic Pass to unique markets, Vail Resorts continues to increase its revenue.
In 2012, the company’s purchase of smaller, less expensive resorts just outside the city in Minnesota and Michigan was intended, in part, to target beginning skiers and a more diverse population that could in time, graduate to Vail Resorts’ premier resorts.
“Our branding around these small, urban resorts is that they are ‘where epic begins’. It’s where people start their ski experience. We felt if we could own smaller resorts, and improve them, all of a sudden we’ve created a season pass where people can ski locally, and eventually graduate to skiing out west.”
In 2014, Vail Resorts acquired Utah’s popular Park City Mountain Resort, which the company recently combined with Canyons Resort, creating the largest ski resort in the country.
“Park City and Canyons were right next to each other. The opportunity to combine them- it’s a once in a lifetime opportunity in the ski industry—it’s hard to create that kind of experience,” said Katz.
Vail Resorts hopes the new connection between Park City and Canyons, that now links over 7,300 acres of skiable terrain, will become a Mecca for “destination” skiers worldwide, and Vail Resorts isn’t stopping there.
The company’s most recent endeavor—the $134.8 million purchase of Perisher Ski Resort in Australia, at 3,076 skiable acres, the country’s largest—will allow Vail Resorts to become the only mountain resort company to operate ski resorts on two continents, creating a true year-round skiing opportunity for its Epic Pass holders.
“We are creating a more accessible opportunity for people,” said Katz. “It’s expanded the market of who can be an avid skier, instead of going up once or twice per year.”
Despite broadening skiing opportunities, Katz’s job doesn’t come without obstacles. “Ski resorts don’t change hands as easily as hotels or casinos, because of the passion previous owners have surrounding their resorts,” said Katz. “Not every decision is popular, but you keep trying to improve things, and ultimately, try to get it right.”
Katz has faced criticism ranging from acquisitions to decisions including moving Vail Resorts’ corporate headquarters from a mountain town in Avon, Colorado, to an office building off the I-25 corridor in Broomfield, Colorado.
“Any leadership position carries with it decisions you have to make that are difficult,” said Katz. “I think the ultimate goal is to keep your head in the right place, and trust that you have the right goals in mind.”
Today, the price of the Epic Pass has increased some from its original cost, but has maintained its integrity of allowing more people to hit the slopes, at a lesser price than ever before. Despite the global enterprise Vail Resorts has become, its present leader won’t soon forget his company’s native roots.
“I’d say Vail is our namesake resort,” said Katz. “Vail remains the top brand in skiing world-wide, known for providing this incredible ski experience and also the absolute best-in-class vacation experience. It has been able to deliver a luxury experience to visitors around the world, at a mass level. There’s truly no place like it.”