Since I got married (in 1999), I have picked back up skiing, and in a big way. Just in the last few years, I’ve skiied Snowbird, Alta, Deer Valley, The Canyons, Copper Mountain, A-Basin, Breckenridge, Vail, Beaver Creek, Mt. Hood Meadows, Sugarloaf, Stowe, Killington, Jay Peak, Sunday River, Smugglers Notch, Cannon, Sugarbush, Okemo, and some other places that I’ve forgotten now. I’ve planned a big trip to Jackson Hole for January, primarily because the legendary tram is closing.
One thing I’ve noticed is the extraordinary variation in ticket pricing. Copper Mountain in CO, for example, routinely sells 4 day lift passes for as low as $69 or so, to locals, where they then spill out onto ebay. Copper also aggressively discounts its season pass, as do the American Ski Company resorts in the East (Killington, Sugarloaf, Sunday River, etc.). On the other hand, there are resorts that, so far as I can tell, NEVER discount, such as Jackson Hole. And while there is some discounting for the resorts in Utah, it is typically much more moderate than those in CO.
Of course, part of the explanation here is competition. The fiercest competition is for the local’s dollar, and where there are numerous resorts competing for that dollar, there will be extensive discounting. This explains why you see so many discount offers for CO resorts, but what can explain the lower intensity of discounting in UT, where they have more resorts per person than CO, and certainly a sufficient absolute number to encourage rather fierce competition? And is the overall cost of a ski trip to a destination resort like Jackson sufficient to make consumers COMPETELY cost-insensitive (as we must be to pay the full $70/day cost of a ticket).
Finally, are lift tickets Giffen goods? That is, are they a good whose consumption increases as price goes up? This is the case when people treat the price of a good as a proxy for its underlying value. For example, let us assume that there is imperfect information as to the quality of different ski resorts (or, at least, high search costs). If I’m planning a destination trip (which is highly likely to be a one-shot), I want to be pretty confident that I’ll really get blown away by the place I’m skiing. If I see that a bunch of discount tickets are available for Copper, but Vail is doing no discounting, I’ll have to ask myself–is Copper giving skiing away because their resort isn’t any good? (for the record, Copper rocks, although some of the discounting can create crowds at the bottom of the mountain). Or is it the case, as my (MBA-student) wife suggests, that some producers will simply refuse completely to discount, because any discounting sends a signal to the consumer that a price other than the list price is available, and thus they will hold out until a discount is found–or not consume at all.
We’ll post any interesting/useful insights into the economics of skiing here.