Why Are Ski Lift Tickets So Expensive?
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The cost of a ski lift ticket is routinely the most expensive item when booking a ski vacation. Why do they cost so much and what exactly do you get for your money?
Nowadays you can pay nearly $200 in the US and €65 in Europe per day. At first impression, these prices could appear a rip-off but dig a little deeper, and the true costs of running a ski resort paint a different picture. The spectre of climate change has really started to bite into winter sports margins. A combination of fewer skiing days, shorter seasons, lack of water, and higher electric costs have all connived to push costs up.
The Average Cost Of A Mid-priced Ski Vacation:
- $2,375 accommodation
- $1,200 ski lift ticket
- $625 lunch
- $600 ski rental
( Source: How much does it cost to ski? )
The overall cost to $4,800 plus airfare for 3 people or $1600 per person. This makes the ski lift ticket at least 25% of the overall vacation cost.
Per-day lift passes for the upcoming season are Breckenridge $149 and Vail $180. While in Europe Tignes is $62 per day and Val Thorens is $64.50.
Why Is The Ski Resort Business Model Different?
Ski resorts the world over have a difficult business model. Even in a good year revenue is only coming in during the run-up to the skiing season.
The resort will still have the same operating costs all year round regardless of the revenue from skiers. Overheads including insurance, banking, and the permanent staff, who maintain all the equipment and facilities associated with the resort. Marketing costs are also steady year-round, as one season finishes the run-up to the following one starts almost immediately.
How Do The Ski Resort Costs Break Down Into Sectors?
Large items in the resorts, such as all the ski lifts, cost upwards of $10,000,000 each. While the lifts may have a lifetime of 30+ years, installing 30 of them in a resort, at one go, is phenomenally expensive. The costs associated with running the lifts can be broken down as follows:
- 60% on staff costs
- 20% on maintenance costs
- 10% on electricity costs to operate it
- 10% on the insurance costs
Grooming the runs is also an expensive part of the mix. Often the snowcats (pisteing machines) are leased on long contracts because their capital cost is so high. $500,000 per machine is not unusual.
On Average, Over A Season The Costs For Grooming are:
- staff represent 31% of grooming costs,
- 29% on leasing
- 28% on fuel
- 10% on maintenance
- 2% on insurance.
Will We See More Snow Guns Because of Climate Change?
Each year artificial snow production becomes more and more important. The effects of climate change have repeatedly shortened ski seasons and lessened the depths of the runs.
Snow guns don’t just exist on their own. They need ancillary equipment including platforms and towers, water supply, and electricity. All in it is unlikely you would get any change from $50,000. Vail has just invested in 421 new guns, so the overall cost is vast.
The principal costs associated with snow production each season can be summarized by staff, the electricity use, which covers electricity for water pumping as well as for air compression, water, and maintenance. Insurance costs for snowmaking facilities are often built-in with the ski lift costs. It is clear with climate change constantly making its presence felt, the cost of artificial snow production is only going to rise.
Costs associated with ski resorts are sometimes hidden. Employees are a high cost as it takes many people to operate a large ski resort. Even offering low wages for employees at most ski resorts they are still a large proportion of their overall costs.
Employee housing is also problematic and expensive for large resorts to provide however, it is a necessity. It is not unusual for ski resorts to grow into prime real estate, making the possibility of affordable staff accommodation an impossibility.
Survival by Diversification
To still make a reasonable profit and keep ski lift ticket prices affordable ski resorts have had to diversify to generate new income streams. The once quiet times during summer are now just as busy as during winter with activities such as mountain biking, hiking, and paragliding.
The ski lift network can be used to transport summer visitors up the mountains, suddenly making mountain biking a much more attractive sport. With more visitors to the slopes, the cafes and restaurants on the runs can stay open all year round also, generating vital revenue.
What Other Activities Can Ski Resorts Turn To?
Some resorts, whether by geography or design, hold themed festivals and music events to attract crowds during summer to mountain ski towns. While European resorts are almost synonymous with hiking. This whole new lease of life during summer has led to the introduction of a whole range of outdoor activities including the likes of rope courses and zip lines; alpine slides, climbing walls, mazes, mini golf, grass skiing, bungee jumping, and mountain bike parks.
Overall, it is easy to see there are numerous factors that determine what a lift ticket will cost. Ski resorts are driven by minimizing the risk of their operations. Even with the growth of summer activities, they are heavily reliant on cold and snowy winters. In another diversification venture as they are now unable to accurately predict the next season, they have turned to change the marketing for ski lift tickets. By selling season tickets at a reasonable price the resorts can guarantee some of their revenue no matter how cold the ski season is. Guiding skiers towards a season ticket or multiday ticket walk-up lift ticket prices have risen to over $200 per day.