Era of the Super Pass: Vail’s ‘transformative’ purchase of Park City issues a challenge for destination ski resorts like Steamboat

Tom Ross
With Vail Resorts' acquisition of Park City Mountain Resort, some would say the Epic Pass is a problem for true destination ski resorts like Steamboat Ski Area.
Tom Ross

By the numbers

▲ Total skier visits for the 2013-14 ski season reached 56.49 million.

▲ The total number of snow sports participants decreased across the board for Alpine skiing, snowboarding and cross country skiing from 2011-12 to 2012-13.

▲ All U.S. regions saw an increase in the number of skier visits from the 2011-12 to 2012-13 seasons.

▲ The 25-to-34 age demographic made up the largest percentage of participants in Alpine skiing, snowboarding and cross country skiing in 2012-13.

▲ Men outnumbered women by a 3:2 ratio in Alpine and cross country skiing in 2012-13. Among snowboarders, that ratio was 2:1.

Story update: Vail Resorts announced Dec. 8 that pending regulatory approvals it intends to spend $50 million on improvements at recently acquired Park City Mountain Resort in time for ski season 2015-16.

A standout among the other projects is construction of the eight-passenger Interconnect Gondola, which would connect PCMR with The Canyons, that Vail said would create the largest single ski area in the country at 7,300 acres of skiable terrain. The two resorts would be operated as one, with Canyons becoming The Canyons at Park City.

Other capital projects include upgrading two lifts at PCMR, including King Con from a four-person to a six-person detachable lift. The Motherlode chair would be upgraded from a triple to a four-person high-speed detachable quad.

Also new next year would be the 500-seat Snow Hut restaurant next to the Park City terminal of the Interconnect Gondola.

Further details may be found in a press release from Vail Resorts.

Even before powder hounds and shareholders were confronted with the news last month that leadership of Steamboat Ski and Resort Corp.’s parent company had been transferred from a longtime ski industry guy to an investment banker, the ski resort industry learned that Vail Resorts had succeeded in arranging the marriage of Park City, Utah, to The Canyons.

Competition among destination ski resorts in North America never may be the same, now that Vail Resorts CEO Rob Katz successfully has executed a plan to acquire Park City Mountain Resort. Katz has announced plans to build a new ski lift that would link that resort to The Canyons and fold that giant ski area into the Epic Pass that is transforming the industry.

“This is truly a transformative acquisition for Vail Resorts,” Katz was quoted as saying in a printed statement about his company’s fourth-quarter financial results released in September.

How Steamboat will fit into the “Era of the Super Pass” may be viewed as an open question with the abrupt news Nov. 21 that Intrawest CEO (and coincidentally former Vail president) Bill Jensen had stepped down for personal reasons. The news release announcing Jensen’s retirement also announced that he would be succeeded by a former Bear Stearns executive, Thomas Marano.

Whatever corporate path Marano is tasked with pursuing, it’s likely to involve a strategy that responds to the rising dominance of Vail’s unprecedented customer loyalty program.

In a prepared statement announcing his appointment, Marano said he sees opportunities to increase value for shareholders in the near and far term. He’ll have to do this while contending with Vail, which now owns or manages 22 resorts compared to Intrawest’s half-dozen.

Katz projected Park City Mountain Resort would add $35 million in earnings to his company’s balance sheet. He added that the 7,000 acres of skiable terrain of the combined Park City resort and Canyons would represent the single largest mountain resort in the U.S. But the greatest impact of adding Park City to the Vail Resorts portfolio may be that purchasers of its Epic Pass now have convenient airline access to the best resort village in Utah and a ton of terrain.

If you doubt that the expansion of Vail’s Epic Pass is a game-changer for the ski resort industry, consider what longtime industry executive Tim Cohee, director of the Ski Business and Resort Management program at Sierra Nevada College, has to say on the matter.

“As far as passes go, they are creating a product that no one can compete with,” Cohee said. “That pass is ridiculous. It’s insane. You have the best resorts in the best market in the United States and where it goes from here, nobody knows.”

As Ski Utah President Nathan Rafferty told the Salt Lake City Tribune in November, Vail Resorts has sold 400,000 Epic Passes worldwide.

A few days before his ski area opened for the 2014-15 season Nov. 26, Ski Corp. Senior Vice President of Sales and Marketing Rob Perlman said he wasn’t preoccupied with Vail’s Epic Pass.

By the numbers

▲ Total skier visits for the 2013-14 ski season reached 56.49 million.

▲ The total number of snow sports participants decreased across the board for Alpine skiing, snowboarding and cross country skiing from 2011-12 to 2012-13.

▲ All U.S. regions saw an increase in the number of skier visits from the 2011-12 to 2012-13 seasons.

▲ The 25-to-34 age demographic made up the largest percentage of participants in Alpine skiing, snowboarding and cross country skiing in 2012-13.

▲ Men outnumbered women by a 3:2 ratio in Alpine and cross country skiing in 2012-13. Among snowboarders, that ratio was 2:1.

“They are formidable competitors,” Perlman said. “But it’s less about worrying about our competitors and more about making sure we provide products and services that resonate with our guests.”

Steamboat, through its parent company Intrawest, has its own loyalty passes in place, including the Rocky Mountain Super Pass, which teams up with its sibling, Winter Park, as well as the unrelated resorts of Copper Mountain, Eldora and Crested Butte. Intrawest also has the new Passport program that offers discounted skiing across its diverse ski resorts.

Some would say the Epic Pass is an issue for true destination ski areas like Steamboat, Aspen and Telluride.

“It’s a huge problem for Steamboat,” Associate Professor of Ski and Snowboard Business at Colorado Mountain College’s Alpine Campus Mike Martin said. “If I’m a family of four living in Minnesota and I ski Afton (Alps, which Vail purchased in 2012), why would I not ski Vail (with my Epic Pass)?”

Martin said programs like Vail’s Epic Pass and the Rocky Mountain Super Pass are a means to claiming more market share absent true growth in the resort industry.

Growing market share isn’t easy in an industry that has endured essentially flat skier visits for decades.

The National Ski Areas Association reported that total skier visits for the 2013-14 ski season reached 56.49 million. It has been as low as 50.9 million in 2011-12 and as high as 60.5 million. But national skier visits reached 50 million way back in 1978-79 and, with a couple of exceptions, remained above that plateau throughout the 1980s and ’90s.

With resort real estate development still in recovery mode, programs like the Epic Pass and the Rocky Mountain Super Pass are an effort to make a positive impact on earnings reports and to please shareholders at publicly held ski companies, Martin said.

Steamboat’s live concert stage in Gondola Square has proven successful in building the loyalty of skiers and snowboarders who never would let a little snowstorm stop them from drinking a cold beer while they take in a show.Tom Ross

Targeting the 1 percent

Cohee said it’s plain to him that Katz and Vail Resorts have set out to capture the high-end luxury market.

“It’s clear Rob Katz and his gang have just really figured out there’s a very good market, with a lot of space at the top end. Strategically, they are clearly carving out the absolute top end of the business,” Cohee said. “There are 5 to 6 million (skier) visits in that top echelon of wealthy skiers.”

The Epic Pass is a customer loyalty program like none other, allowing skiers and snowboarders to gain access to 22 mountains with the purchase of a single $769 pass ($399 children ages 5 to 12). The question that resorts outside the Vail banner must confront is, “Once they sign up, will traveling skiers ever leave the fold?”

Cohee is in a position to know what he is talking about. He is a former executive at two major resorts in the Lake Tahoe region. He was a vice president at Heavenly Valley and president of Kirkwood. He said he has known recently resigned Intrawest CEO Jensen since the 1980s, knows Steamboat Chief Operating Officer and CEO Chris Diamond well and counts Les Otten, who formerly ran Steamboat as chief executive of American Skiing Co., as one of his closest friends.

Cohee sees a way for a relative handful of destination resorts outside the sphere of Vail to prosper in the era of the Epic Pass because of their singular identities.

“You better have a damn good ski area,” Cohee said. “If you’re not going to one of the Vail resorts, you’re going to Jackson (Wyoming), Steamboat, Aspen or Deer Valley because they’re cool and they have very good mountains. But even Deer Valley is Park City. The ace in the hole at Steamboat is that they have done an absolutely fabulous job of protecting that brand for decades. It’s a great mountain and a great town.”

In addition to its traditional season pass products, Steamboat and Intrawest have been pursuing two loyalty programs of their own. The Rocky Mountain Super Pass, at $569, provides adults unlimited skiing at Copper Mountain, Winter Park (managed by Intrawest) and Eldora, plus six days at Steamboat, three at Crested Butte and even five days at a resort in New Zealand.

Perlman said the Super Pass is a response to a perceived desire on the part of Colorado skiers to experience more variety than one resort can offer, and he acknowledged the other resorts have strengths that complement Steamboat — Copper has a bigger park, Mary Jane at Winter Park has more steep mogul runs and Crested Butte, with this year’s expansion into Teocalli Bowl, has significantly more extreme terrain.

“We’re geographically diverse within the state of Colorado,” Perlman said about the Super Pass.

Martin said a significant share, 20 to 30 percent, of his ski business students at Colorado Mountain College’s Alpine Campus in Steamboat purchase Epic Passes in order to gain access to the large parks at Breckenridge and Keystone.

“My students love Keystone and Breckenridge because they have amazing parks,” Martin said. “They start (the season) early and end late. They like that scene, that vibe. Every kid I know would be glad to ride Keystone tomorrow.”

Steamboat also offered the Passport this winter, allowing families, or even groups of people who are unrelated, to package their ski travel at a discounted rate.

The dream of 1 Utah

Not only does Vail Resorts dominate the Interstate 70 corridor in the central Colorado Rockies, but it has paired Heavenly Valley with Kirkwood to rule the Lake Tahoe region, as well.

Now, Martin said, with the acquisition of Park City Mountain Resort, Vail has a seat at the table should another transformative dream, One Utah, become reality.

One Utah, a plan that long has been in gestation, would create a network of ski lifts that would link Park City to the legendary steep powder chutes of Alta and Snowbird resorts in Little Cottonwood to approximate the European model of linked networks of ski stations in the Alps.

Martin said it’s clear that Vail did not want to be left out of One Utah if it becomes a reality and offers a skiing experience that could not be replicated anywhere else in the United States.

Cohee, who owns China Peak ski area near Lake Tahoe, said that as far as he’s concerned, Utah and the Tahoe resorts never will be able to match the ski resorts of Colorado with their 3,000 feet of vertical and never-ending broad intermediate runs. Utah may have dramatic terrain at Snowbird, but that isn’t necessarily what attracts affluent vacationers

“All of us have wondered for years why Utah doesn’t do more business,” Cohee said. “The terrain in Colorado is just spectacular. The fact of the matter is, Copper Mountain, Breckenridge, Vail, Beaver Creek, Steamboat and Winter Park are just better ski areas. They’re just better mountains. There’s nothing in Utah that can compete with one of those mountains.

“Snowbird is a great ski area. Alta is one of the best 2,000-vertical-foot mountains anywhere. Park City is OK. The Canyons is not OK. Deer Valley is good. But they are not Colorado,” Cohee explained. “Steamboat has 3,000 vertical feet of intermediate runs that are 200 feet wide with the best snow there is.”

Vacationing skiers and snowboarders around North America, and even the world, may be the ultimate deciders on who prevails in the era of the Super Pass.

To reach Tom Ross, call 970-871-4205, email or follow him on Twitter @ThomasSRoss1

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