Annual Operating expenses mostly.
I am just curious if its feasible for resorts are able to lower the costs of lift tickets without going into the Red. Obviously lowered costs will bring in more people but does lowering the cost of tickets bring in more money? 10 people at $150 is $1500 and 100 people at $10 is $1500 but 50 people at $75 is $3750.
Hard to explain exactly where I'm going with this on a forum but hope you understand lol
Why would they lower tickets prices? Where is the proof that more people would buy tickets and offset the loss incurred by the price reduction? If you lower prices by 10% where is the "proof" that it will indeed result in a 15% increase in skiers?
I would think that if anyone has the information/data and knows the answer to this that it would be the operators themselves. They would be the most in tune with the price elasticity of their industry, their region, their unique offering (keep in mind that pricing will be based on different variables/drivers between a resort like Jack Frost and a resort such as Jackson Hole).
They look at all their revenue sources and carefully see where they have synergies or opportunities to raise (rarely lower) prices. Maybe they find that there is a high correlation between catering costs and conference/convention business, so they decide to lower food and beverage prices by 10% and increase private room rentals by 10% hoping to gain conference/convention business and come out making more money.
To try and answer your question, it seems getting people on the ski slopes is much more weather related than anything else. And local hills, which account for over 75% of the ~450 ski areas in the US are pretty cheap. Look at a place like Paoli Peaks - they have $36 lift tickets. Not sure how much lower than can go! Or look at a place like Attitash - you can buy a ticket at the window for around $60. Still pretty reasonable. Reminds me of movie theaters - the main driver to get people to come see movies is the quality of the movie slate. People will pay $7, $10, $12, $15 to see a good movie. Of course there is a breaking point - whatever that is.
Ski resorts have two "issues" though. One is that they have very high fixed costs. The second is that they have very high CAPEX (capital expenditures).
Lots or little snow, made by mother nature or made by man, as long as a resort is open most of their costs are fixed. Perhaps as high as 75%. They still need 80-90% of the staff even if it's a slow day. They still need to run the lifts even if 50% of the chairs are empty. They still need to turn on the lights in the locker room even if it only 1/3 occupied... Lots of snow means BOTH more skiers and less money spent on snow making with very little added costs. A perfect combination for a business model with high fixed costs since revenues increase with more skiers (across most/all revenue streams - tickets, food, lessons, retail, lodging, parking, rentals....) and expenses per skier decrease due to the lack of snow making (energy, staff, pushing around snow,...) and leverage that can be attained from the high degree of fixed costs. Of course no snow likely means no skiers, which usually means snow making and very little cost cutting, the last scenario ski resort operators want.
And if there is tons of snow people will pay just about anything. And if conditions are terrible, you might not be able to pay people to get out and ski. So pricing matters - always does - but perhaps not much in this case. Weather/conditions matters more.
As it relates to CAPEX - money used to acquire or upgrade things like property, buildings or equipment - there are very few years where a resort does not require some significant investment of one type or another. As an example, Vail Resorts spent $143 million in 2017 on its resorts - from $6 million on Epic Discovery to $65 million in basic maintenance.
Using Vail Resorts again, they made almost $2 billion in sales last year and ended with around $200 million in net income (profit). So that is a 10% margin. After all was said and done, they barely made $200 million after selling TWO BILLION worth of lessons, tickets, expensive clam chowder and the like.
I guess there could be more dynamic pricing but there is already a lot of pricing optionality. Be it early bird season passes or regular season passes or multi-day tickets or last minute at the window tickets, the industry is ahead of most others when it comes to pricing.
And ticket costs are just one variable of the overall cost of skiing. It seems the issue with skiing other than weather is overall cost, not just the cost of tickets. For many of us going skiing is a pretty expensive proposition, but not because of the price of ski tickets/season passes. Rather, because it usually involves lots of driving or flying, eating out, replacing expensive equipment and gear, having to stay at a hotel... In fact for many of us the price of the ticket is the least of our worries. For example, I can buy the Epic Pass for $859 and even if I ski 20 days the average ticket would be $40. But skiing 20 days would also likely mean that I would spend 18-20 days at a hotel and likely spend a couple hundred bucks on gas and a grand or two on airline tickets.
So while I would love for ticket prices to go down
I am not sure that it would be a good business move from the resort operators' perspective.
The other resorts also discount lift tickets if the skiing is limited.
