Ski & Resort CorporationPaths to Growth
Authored by: Neha Randhawa
1
Objectives For Today’s Meeting
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
• Level set understanding of competitive environment and situation at SSRC
• Determine core issue company is facing
• Review and evaluate recommendations
• Review implications and risks of recommended action plan
• Next steps in implementation plan
2
Executive Summary
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
• Ski destination resort industry increasingly competitive
• SSRC doing well, but losing share of Colorado skier market
• Customers spending fewer of their vacation days skiing on the mountain and repeat visit rate low
• SSRC needs to grow revenue by attracting new customers and retaining current customers
• Two-prong approach: Pricing actions and volume driving actions
• Will lead to higher revenue yield and increase # of skier days
• Add customer value and balance demand
• Implement pricing actions within 3 months, volume driving actions between 4-6 months, review program effectiveness in one year
3
Competition increasing and SSRC’s share of market declining
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
• SSRC had its best year ever (‘92/’93 season)
• Positioned as one of the premier North American ski resorts
• Direct competitors in Colorado area include Vail/Beaver Creek, Aspen/Snowmass, Crested Butte, Telluride, and Ski The Summit
• However, customers spending fewer of their vacation days skiing on the mountain• Customers looking for other wintertime activities (eg. Snowmobiling)
• SSRC’s share of Colorado skier market has steadily declined since 1990
• SSRC’s repeat visit rate was low, even compared to other resorts
4
Core Issue Facing SSRC
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
• How can SSRC continue to grow revenue in an increasingly competitive ski destination resort industry?
5
Grow Revenue
Attract new customers
Retain existing
customers
Recommendations – Two Prong Approach
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation 6
1. Pricing
Increase multi-day discount on lift ticket
(4 and more days only)
Seasonal variance lift ticket (peak vs. non-peak)
Repeat customer discount
2. Volume(# of skier days)
Expand SCRS reservation system
Implement commuter service from airport
Market to international skiers (destination)
Legend:
Attracting new customers
Retaining existing customers
Both sets of customers
Optimize Price for Higher Revenue Yield
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
• Current discount level not competitive, does not provide financial incentive to buy
• Provide better customer value and increase multi-day ticket sales
• Incremental revenue to offset margin lost on multi-day discount
7
Pricing
Increase multi-day discount on lift ticket
(4 and more days only)
Seasonal variance lift ticket (peak vs. non-peak)
Repeat customer discount
• Three season pricing: Peak @ $45 (Christmas, New Year’s, March Break), Regular @ $42, Value @ $37 (Nov 26 – Dec 11, April 5-close)
• Bring pricing more in line with direct competitors Vail/Beaver Creek & Aspen/Snowmass
• Balance demand; attract customers in slower periods and increase margins in peak periods
• Repeat visit rate low at 55%
• Incent customers to return by offering additional discount to drive sales and loyalty
• Incremental revenue from additional sales to offset margin lost on discount
Increase # of Skier Days to Lift Revenue
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation 8
Volume(# of skier days)
Expand SCRS reservation system
Implement commuter service from airport
Market to international skiers (destination)
• 20% of customers used SCRS to reserve in ‘91/’92, trend increasing
• 75% of these customers used toll-free #, with 60k calls receiving busy signal
• Expanding capacity will allow more reservations to be made, increasing sales
• 81% of business from customers in US, outside of Colorado
• Commuter service adds value and easy transport to mountain from Yampa or Steamboat Airport
• Differentiation can help add value in ticket prices compared to other resorts
• International skiers segment growing in US
• Willing to pay premium for premium destination resort
• Incremental revenue from sales to this segment offsets cost to market to this segment
Implications & Risks
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation
Implications
• Two-prong approach is balanced and conservative
• Will lead to higher revenue yield and increase # of skier days
• Deliver more value to multi-day skiers and repeat customers
• Maintain position of premier resort, in kind with Vail & Aspen
• Positive impact to local residents as business in area increases
9
Risks
• Little data on customer acquisition or retention costs – need to validate information
• Pricing actions’ impact TBD – could be viewed negatively by customers or not competitive given other resorts’ actions
• Unable to gain market share
• Uncertainty of how KIC (parent company) will respond to recommendations
Implementation Plan
ObjectivesExecutive Summary
Situation Analysis Core Issue RecommendationsImplications &
RisksImplementation 10
Research & AnalysisConduct analysis on pricing actions
and feasibility, effectiveness
Time Immediately
Implement Pricing ActionsDetermine pricing actions’ details and implement in fee structure
3 months
Expand SCRS reservation systemExpand reservation system toll-free # capacity to be able to take in new reservations
4 months
Implement Volume Driving ActionsIntroduce commuter program and market to international skier segment
6months
Post Implementation ReviewReview and analyse effectiveness of pricing and volume actions
1 year
How to improve profit?
Increase Revenue
Reduce Costs
Fixed Costs
Variable Costs
Volume
Revenue Capture
Increase # of skier
days
Improve Mix
Optimize Price
Create commuter
service from airport
Market to Internat’l
skiers (desination)
No Change
Increase multi-day discount
Seasonal variance
Teen Program
Repeat customer discount
Lift tickets
Accessory Shop
Ski school
Restaurant
Lodging
Other wintertime activities
On-Mountain
Dining
Summer activities
Current products
New products
Expand SCRS reservation
toll-free # to avoid busy
signal
Exhibit: Decision Tree