MBAs outflank ex-ski bums as Colorado resorts push business
Mark Smith should seem out of place. Oh, he has skis leaning against his office wall, and he knows how to clamp them on. But he's not what you'd call really ``hot on the sticks.'' That seems odd, because Mr. Smith is vice-president for marketing of Vail Associates, keepers of one of the best ski mountains in the world, and the gondola that could pop him onto Vail Mountain is a few steps from his office.
Back in the 1960s and '70s, someone in Mr. Smith's position would have known lots about skiing and a few things about marketing. Now it's the other way around.
The same with his boss, Harry Frampton, president of Vail Associates. Before Vail, Mr. Frampton ran Hilton Head in South Carolina: not exactly a ski area but a very successful resort.
Skiing has become very serious, very expensive -- not just for skiers but for operators. Whereas most areas were started and run by skiers, ownership has shifted to large corporations willing to ante up the required millions.
Vail, started by an Army ski corps veteran, is now controlled by Goliad Oil. Copper Mountain, started by several individuals, is now owned by Apex Oil. Ralston Purina holds Keystone Arapahoe Basin, and Aspen belongs to 20th Century-Fox.
Although the 1984-85 season looks as if it will top the record season last year, Smith and his counterparts at other areas are not about to pack up their MBAs and hit the slopes. There is too much at stake.
Colorado ski areas, as well as those elsewhere, have launched a battle for market share, within both the ski and vacation industries.
The average skier is now a parent, not a free-spending college student, Smith explains. Marketing used to mean films and photos of skiers flying off a ledge or drifting through deep powder. The films now sport shots of happy kids bundled in parkas and their parents easily navigating an intermediate slope. What's more, although Colorado's skier visits (measured by lift ticket sales) topped the scale at 8.6 million last year, up from 8.2 million in 1982-83, national sales are stagnant, hovering stubbornly around 45 million skier visits for several years.
Aided by three seasons of accommodating weather and a central location, Colorado is the only region with an increasing market share, according to a spokeswoman for Colorado Ski Country, a local trade group. ``We are showing growth in skier numbers where the rest of the industry is not,'' says Smith.
So ski resorts here as well as on the East and West Coasts have pulled out the stops, aiming at every potential market segment that might plunk down $25 to slide down a mountain. Families who have skied top the list, but not far behind are families who have never skied, couples where only one spouse skis, women, children, seniors, aficionados, people who have skied just once, people who daydream about a Caribbean vacation, and anyone who is planning to ski at another resort.
Colorado resorts are discounting heavily during off-peak weeks, offering packages that ease the pain of a very expensive sport. Most areas have raised lift ticket prices substantially this year, but they discount them at the same time. Vail has set up marketing relationships with smaller areas in the East and West for people who learn to ski there but want to vacation in the big time.
The new marketing posture ranges from advertising to creating more intermediate slopes and doing major construction projects such as sports and shopping centers that cater to nonskiers. ``About 22 to 25 percent of the people who come here don't ski,'' one resort official says.
Keystone found that confirmed skiers shunned its slopes because they were too easy, geared largely to families and intermediate skiers. So the company built a brand new mountain of more advanced ski runs in one summer, half the usual time.
The bill came to $15 million, and it served notice about the stakes of the game. Similarly, Vail plans to spend $25 million over the next five years, adding new slopes and lifts and fine-tuning old ones.
Whether Colorado's ski resorts make money as swiftly as they spend it is another question. Only Vail, whose stock is traded over the counter, files reports on financial performance. Its net income was $3.6 million for the 1983-84 season. Vail and Aspen are considered the most successful ski areas in the country.
``Skiers are used to a high level of expensive services: snow grooming, snowmaking, and a lot of town services,'' comments an economist who has studied the industry closely.
He notes that although the business has grown, it has not grown as fast as expected in the 1970s, and the public has stubbornly resisted price increases on lift tickets.
In the early years, opening a ski area was like plugging in a money machine. The sport attracted an enthusiastic, affluent customer. Now the resorts have to spend more money to make less of it. ``That adds up to a pretty bleak economic picture for the ski business,'' this economist says. ``The ratio of profits to skier visits is not that good.''
The recession in real estate sales has cut deeply into many resorts' income. ``One way to look at skiing is as an amenity that sells real estate,'' the economist says. Most ski resort companies own large tracts of real estate developed as second-home condominiums. Although sales have picked up this season, they reached record lows over the last two years.