Vail Resorts is the king of the mountain. But recently, the ski company has been facing issues with overcrowding and labor disputes. WSJ travel reporter Allison Pohle on how Vail Resorts might be a victim of its own success. Further Reading: - Vail Resorts Has an Epic Problem - Vail Resorts Shareholder Calls for Overhaul, Ouster of Executives Including CEO Further Listening: - How Target Got Off Target - A Surprise Turkey and 200 Lemons: Everyday Stories From the Pandemic Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the main topic of this episode?
The other day, I caught up with my colleague, Allison Polly. Lately, she's been writing about the ski industry. Do you ski?
I do ski. Okay. I learned as an adult, though, so I did not grow up skiing.
Uh-huh. So you don't go out there and, like, shred the gnar?
I don't. I don't. I try to embody that, though. Like, I have an alter ego when I'm skiing called the Grade A Shredder. And that's me in that persona.
Wow. This is definitely going to make it into the podcast.
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Chapter 2: How did Vail Resorts become a ski industry giant?
She's finally getting her public recognition.
Grade A Shredder, or Allison as she's more commonly known, knows the biggest name in skiing is Vail Resorts. Vail started out as just one resort near its namesake in Colorado. But over the years, it's grown into a behemoth and now owns and operates 42 ski resorts around the world. And the company has completely revolutionized the business.
Vail markets itself as the experience of a lifetime, and it's a premium product. It is a luxury experience where they have created these little mountain villages that are emblematic of what you might see in Switzerland. The trails are immaculately groomed. You have high-speed chairlifts.
I mean, I feel like even just like in pop culture, almost just... The name Vale, like I'm going to Vale, is like, ooh, that's a really high-end, classy thing you're going to go do.
Exactly. It's fancy. It's desirable.
Vale has amassed a large customer base over the years. But as that customer base has grown, things have gotten a bit icy.
And as it turns out, Vail has pioneered a business model that is now really a victim of its own success.
Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. It's Wednesday, February 5th. Coming up on the show, the problems snowballing at Vail Resorts.
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Chapter 3: Why is the Epic Pass central to Vail's business strategy?
For decades, skiing in America was pretty straightforward. Ski slopes were largely independent operations. In the business model, it was pretty simple. You bought a day pass, and you went up and down the hill.
You would go up to the window at a ski resort, buy a lift ticket for the day. They would give you a tag. You would fasten it to the zipper of your jacket.
I remember kids in high school that skied. They'd wear their winter coats and have their ski pass on it growing up in Oregon at Mount Hood.
Yep, and they would have all those tags to show how many times they went. But it left the resorts themselves in a vulnerable position because how many tickets they were able to sell depended on how good the snow was and how good the season was. So if they had a great year, they were able to invest in the resort and make some upgrades.
If it was a bad snow year and they didn't sell a lot of tickets... That was tough, and that meant the next year was going to be difficult in terms of whatever snowmaking equipment or lift upgrades they were able to do.
For most independent ski resorts, which were privately held, this volatility was a headache. But for Vail, it was a big problem. Vale is the only ski resort company in the U.S. that's publicly traded on the stock market. It listed in 1997, meaning the company's sales have to be publicly disclosed each quarter to investors. And investors don't like volatility.
They just want to see growth all the time. So in 2008, Vale came up with a solution, the Epic Pass.
So what it did was take five Vail-owned resorts and a partnership with one other resort, put them all on one pass, and for the low price of $579, you could ski at any of these six resorts as much as you wanted for the entire season. Uh-huh. Whereas before, if you were buying a season pass, it was for one resort, and it was a lot more expensive.
It could cost over $1,000, even over $1,500 just for one resort. If you're somebody who's skiing 10, 15, 20 days a season, and your pass costs $1,000, $580 total, then your cost per time skiing is going down. So really, if you think about it, you know, you're getting a lot out of the value of the pass.
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Chapter 4: What challenges are arising from Vail's growth and success?
The main part of their strategy was buying up smaller ski resorts and putting them on the Epic Pass and raising the price of the Epic Pass a little bit along the way. So Vail was really acquiring resorts across the country.
Vail's entire business became about selling the Epic Pass. And at the same time, it dramatically raised the price of a single-day pass, which made the Epic Pass look like an even better deal in comparison.
So to just walk up to the window and go ski, it has become exorbitantly expensive, where today in this ski season, 2024, 2025, it will regularly cost over $300 on a holiday weekend at Park City, at Vail, at the most popular resorts, just for the day.
Just for a one-day pass.
For a one-day pass for one person. Yeah.
This is like got to be one of the most expensive hobbies that exists.
It is, and it's gotten more so over time.
And what did the introduction of the Epic Pass mean for Vale's business?
Wall Street loved this for Vail's business, and it was successful. It meant that tens of thousands of people are buying this epic pass before the season starts. So Vail is able to grow their revenue. They're able to have the money to buy more ski resorts, but also to improve the ones that they did buy. So a lot of these resorts were in rough shape before Vail came in.
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