Vail Resorts, Inc. is a publicly traded mountain resort company that owns eleven ski resorts, runs RockResorts hotels and condominiums, and also has a real estate segment. Four of Vail’s ski resorts, including Vail Mountain which is shown above (1), are among the top five most visited resorts in the United States. With the addition of Park City Mountain Resort, Vail will soon have the largest ski resort in the nation. (2,3)
Vail Resorts is focused on delivering exceptional experiences to their guests. (3) This philosophy drives the other aspects of the business model. The business model has different implications in the three different operating segments of Vail Resorts.
- For the mountain resorts segment, given the lack of new mountain resorts, Vail emphasizes maintaining the leadership position of existing resorts.
- In the lodging segment, Vail’s stated focus is to control the entire experience of visiting the mountain resorts by owning the beds at the base of the mountains.
- For the real estate segment, Vail emphasizes enhancing the resort bed base, amenities, and aesthetics.
Focusing on this expansion of the guest experience has allowed Vail Resorts to smooth their revenue flows so that lift tickets drive the base of the business, but additional profit comes from owning the entire mountain. Despite a low snowfall in 2012 (after a record 2011 snowfall), Vail did not have a decrease in annual revenue due to the success of their operating model. (5)
In order to own the entire mountain and control the guest experience, Vail Resorts has focused on several main areas.
1. Epic Pass
In order to lure customers into the Vail Resorts ecosystem, Vail offers Season passes which provide unlimited skiing at prices low enough to force competitors to create joint pass programs in order to compete. An estimated 300,000 variations of the Epic Pass are sold every year, bringing a range of customers to Vail properties. (6) Pass sales give a predictable revenue that allow Vail to smooth their financials.
Epic Pass Options (7)
2. Epic Mix
When customers arrive at Vail properties not only are they greeted by a cohesive resort, but they also are treated to a social media presence unlike at any other ski resort. Epic Mix allows any skier or snowboarder to tie their Radio Frequency Identification (RFID) enabled season or daily pass to an application which tracks vertical feet based on chair lift rides, provides a mountain guide, and also stores pictures taken by free photographers on mountain. The latest addition is an add on for crowd sourcing lift line wait times. This application and Vail’s focus on technology not only gives users a more cohesive experience, it also allows for network effects based on competition, photo sharing, and social media tie ins.
3. Mountain Specific Expansion Plans (9)
Vail Resorts’ five-year resort investments are now greater than $500 million. (10) These plans focus on the requirements for each individual resort properties. For example:
- Park City and Canyons expansion plans are focused on combining the properties into the largest ski resort in the United States
- Breckenridge expansion plans include adding summer and other year round facilities in order to increase utilization of existing infrastructure during historic down times due to its already high ski visits.
- Arapahoe Basin expansion plans revolve around adding and upgrading lifts, snow making, and other ski related projects in order to increase skier visits since it has lower visitation than other properties
This mountain-specific focus enables Vail to work towards a consistent experience for visitors regardless of location, and ensures mountains have enough infrastructure to draw in clientele.
4. Expansions Past Skiing
Vail has expanded their reach on multiple levels in order to increase their attractiveness to customers.
- Summer operations – Vail is spending $25 million each for Breckenridge, Vail, and Heavenly to add or improve summer activities in hopes of gaining $15 million EBITDA at each of those three resorts. (11)
- Hotels amenities – Vail strives to provide consistent levels of base area experiences, performing “catch-up” maintenance on new properties, and also earmarking funds for lodging improvements (2)
- Dining – Recent renovations have included upgrading restaurants since dining accounts for 9% of revenues (5)
- White Carpet Club – Vail’s new addition to Beaver Creek operations provides a private lounge, drinks, snacks, concierges, and valets for $150 a day at select resorts. Other mountains offer similarly priced add-on experiences to skiing. (12)
Vail Resorts focuses their investment and innovation on all aspects of the guest experience in order to increase the appeal of their properties. This focus not only results in an initial draw for customers, but also alternate sources of income to reduce Vail’s dependence on weather. Combined, these operating features, provide a strong basis on which Vail is able to execute its strategy of driving revenues through guest experiences.
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- “Our Strategies.” Vail Resorts Management Company. Web. 6 Dec. 2015. <http://www.vailresorts.com/Corp/info/strategies.aspx>.
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