Q&A: Vail CEO on the future of skiing

Skiers enjoy the plentiful snow at the Northstar at Tahoe resort, which reported a 28-inch base after early December storms. It is one of the Vail resorts and offers discounts for buying lift tickets in advance.

Skiing is expensive, to be sure. A lift ticket to ski at Vail, or any other one of Vail Resorts’ other locations — including Kirkwood, Heavenly, and Northstar at Tahoe — can cost $200. But Rob Katz, the publicly traded Colorado company’s CEO, says you shouldn’t pay that much.

“Our goal is to say there’s no reason for anyone to pay that walk-up rate anymore. Just buy your skiing in advance,” Katz says.

Katz has been at the helm of Vail Resorts since 2006. Eleven years ago, he launched the Epic Pass, which would go on to transform the way we ski and the way ski resorts make money. Season passes are now the most affordable way to ski — especially if you buy one in the spring and you ski more than 10 days a year.

The multiresort Epic pass costs $939, while a pass for the three Tahoe resorts costs $589, with prices increasing in the fall and incentives like guest tickets encouraging early purchases. The result: With an early infusion of revenue from pass sales, ski resorts can operate a sustainable business with guaranteed customer loyalty.

Last year, Katz told investors that Vail sold about 925,000 Epic Passes for the 2018-19 season, up from 750,000 for the prior season. The next version of that pass is designed to cater not to hard-core skiers who shred 50 days a season, but to the skier who comes up once, maybe twice: Vail is selling day passes that can be used across its resorts for $106 —almost half the walk-up lift-ticket price.

The transition to selling passes hasn’t been completely smooth. The company’s stock chart looks a bit like one of the mountains its skiers fly down. Over the past five years, the shares have tripled — but that’s after a rough fall, when earnings announced in September and December knocked 30 percent off its value.

For Katz, the future of skiing is tapping into markets that have been overlooked. It’s making skiing more affordable and accessible. And it’s also going overseas, to places like China.

Katz, CEO of the largest corporation in skiing, spoke to The Chronicle about Vail’s new direction, how climate change and weather vulnerability weigh on the ski business, and what he thinks the future of skiing will be in the next decade.

Q: The Epic Pass is 11 years old. What was the thinking behind it when it first launched?

A: We felt like there was an opportunity to give people an amazingly good deal to purchase their skiing before the season started. And it was an opportunity to make skiing much more accessible and affordable for not only individual skiers, but families.

In return, obviously, we can provide more certainty and consistency to our company, but also to our employment, to our communities, and I think really try and move the ski industry away from this boom-bust cycle of weather and a little bit more toward long-term commitment.

Rob Katz has been the CEO of Vail Resorts since 2006.

Q: How has your approach to the Epic Pass evolved in the last decade?

A: Over the years, when we first introduced the Epic Pass, there was an initial rush to get it to folks who ski a lot of days during the year. Right away, there were folks who went in and thought of themselves as a true season-long skier. And then over the years, we slowly and methodically expanded that market to people who may not ski 40 days a year, but actually might ski 10, 9, 8, 7. I mean, literally, we continue to just bring down who we are targeting and continue to fine-tune the right messaging and approach, the right product features to bring people in.

Now, we’re saying: We’re going to let everybody out there pick and choose exactly how many days they want, as low as one day, as high as seven days. We’re also going to allow people to customize whether they want to ski on holidays or not.

The Epic Pass does an amazing job for those who are going to ski more than a few days a season. But what about the occasional skier? What about the person who is just starting out in the sport? I think this decision really speaks to truly everyone. Whether you ski one day, whether you ski all season, whether you ski on holidays or not, we now have a product that works for you.

Q: Why not just lower the price of lift tickets at the ski resort?

A: I think the challenge for the industry — which has been a challenge for decades, before we introduced the Epic Pass — if you’re going to give your cheapest price to somebody who is going to make a decision that day to walk up to the window and ski, then ... people will only buy their skiing on a great powder day.

But the problem is, to actually successfully run a ski resort over an entire season, you don’t just have expenses on powder days. You have expenses on every day of the season.

The other piece is, the weather is getting more variable and climate change is a huge component of some of the challenges that the industry is facing. There are two ways to address climate change. One is actually doing the right thing yourself and advocating for the right climate calls, which we do. But the second is, how do you orient your business for long-term stability, even in the face of increasing weather variability?

For us, that’s been getting people to commit to their skiing before the season, so the skier gets a great deal, and the resort gets a great deal. They’ve got a partnership.

In the absence of that, I think the ski industry would really struggle to survive.

Q: Last year, the Epic Pass saw more competition than it ever had before, with the emergence of the rival Ikon Pass. What impact did the Ikon have on Epic sales, particularly in Tahoe?

A: I think Ikon has a very good product. We really applaud them for what they’ve done. They’ve largely aligned with our approach. A lot more of the resorts over the years have realized that selling skiing in advance is important, that getting multiple resorts behind one pass is important, and I think that will be a benefit to the overall industry, and help the industry absolutely over the long haul to have another big company, instead of fighting this, really embracing it.

I think there is an opportunity to have two really good products in the market, plus all the other regional and smaller products, because there are so many great resorts.

Overall, our total revenue for season passes, we are up 13 percent. That’s pretty strong growth for us, even in the face of new competition for Ikon. Which I think aligns with what we felt — which was that, yeah, there’s opportunity for both companies to do well with that. And in Tahoe, it’s the same thing.

We still feel very much that our offering specifically in Tahoe, especially for Northern California — with Kirkwood, Northstar and Heavenly — is incredibly compelling. Adding Whistler to that, adding Park City and Colorado resorts. We still feel very good about our position, I think, within that.

Q: With the new Epic Day Pass, are you hoping to capture more of the San Francisco customer who comes up to ski once or twice a year?

A: There’s a huge percentage of the market that only skis a couple of days a year and don’t feel like they want to pay longer than that up front before the season begins. So we feel like this is something that will speak to that person who might be thinking and taking a couple of days.

That’s a big chunk of the market, and right now there’s not really a product that speaks to that person. Now, why isn’t that product out there? Because, obviously, we know that we’re going to be taking a big hit on our price. If someone buys this product versus going up to the window to buy a lift ticket, they’re going to get a great deal. We’re going to lose money on that one sale. But long-term, and over multiple years, that’s a trade that we think is right for our company and right for the industry.

Q: Winter weekends at ski towns like those in Tahoe bring a lot of challenges, like gridlock on the roads. What is Vail’s responsibility to mediate those effects of tourism in mountain communities?

A: I think we have to be leaders, along with the whole community — both the business community and the residential community. Local municipalities, to talk about what we need to invest in to make sure that the experience is a positive one. Because if the experience is not positive, then we will not in fact repeat behavior and we will not be delivering the amazing experience.

To me, we absolutely have to be at the table and be a real strong leader. In Tahoe, in particular, where you do have a bunch of different resorts — not just ours, all the resorts — you need to be part of that dialogue and discussion to help solve those things. And also, they’re complicated.

How do we collectively work together to make sure that we keep these communities and our resorts, certainly, thriving?

Q: Looking down the road at another decade, what do you think about the future of skiing?

A: We’ll continue to make this sport more accessible, but we also want to continue to get our clients to commit in advance. We’re going to keep the progress moving on this symbiotic relationship of consistency, for both the guests and the resort. I think this is critical, in particular, because I think weather variability is going up and becoming more challenging. There is an urgency around this.

We have to keep investing in the resorts themselves — upgrading restaurants, new restaurants, upgrading lifts, upgrading community infrastructure so we protect the experience and make sure that we don’t in any way harm it.

I think we need to diversify the sport. The challenge right now is that when you look across the sport, I think we’re doing quite well, but not necessarily in minority populations — both in terms of the people who work at the resort and in terms of our guest profile. And I think if this sport, 10 years from now, is going to be thriving, we need to have changed that paradigm by that point.

And then, for our company, I’d like to see us have a global footprint. It is a global industry. I think there are going to be some markets that are more mature, like the U.S., Canada and Europe. But then there are going to be markets like China, other parts of Southeast Asia, South America, that are going to be growing quite a bit, most likely over the next decade.

It’s being able to provide that same network experience. Someone in China can buy a pass and use it in China, potentially in Japan, Australia, Whistler, Tahoe. Those are the things we want to be in the forefront of.

Credit:

Julie Brown

Tahoe City writer. Email: travel@sfchronicle.com