Seeing Red | The Independent Ski Resort Fighting Back Against Vail's Acquisition Business Model
Red's "Fight the Man" campaign has set them up in opposite to corporate giants
There is a snowy lodge in Paradise, and in that snowy lodge, there is a restaurant.
On the menu for that restaurant, there is a burger, and beneath that burger there is a postscript. A postscript so small that you can barely read it at all.
It says: “You have saved $23.30 by not eating at Vail" and it is followed by a smiley face.
Paradise is an area within Red Mountain Resort, the oldest ski resort in Western Canada. We’re not talking metaphorically here. The ski area is literally called Paradise.
To be specific, Paradise is on Granite Mountain, one of the four mountains which make up the enormous resort of Red, on the outskirts of Rossland and on British Columbia’s famous ‘Powder Highway’. But spend a few days enjoying the powder, tree lines and queue-free lift access in Red and you’d be forgiven for using the word to refer to the whole place.
Paradise Lodge is a perfect example of what makes Red tick. The walls are lined with portraits of local skiers and old members of the Ski Club, which for generations was responsible for the running of the resort. The people are friendly and interested in your day. The prices are reasonable. You can get a burger cooked to order on the grill outside for £10, and various specials of the day and other orders for even less.
That might seem like pretty standard pricing for a burger, but anyone who’s been served a £20 pizza in the French Alps will be salivating at the thought. Or, as the menu at Paradise Lodge kindly reminds you, anyone who’s found themselves dining off the slopes of Vail.
“I would describe Red as the most approachable, friendly ski community in North America," says Howard Katkov, CEO of Red Mountain Resort.
There are those in the ski industry who feel that the existence of independent resorts like Red might be threatened by Vail’s acquisition business model. Howard and Red have made headlines by establishing themselves as one of the loudest voices dismissing this claim.
Katkov first came to Red in 1995, bought a lodge, and then put together a group of investors to buy the hill in 2004 after he heard it was at risk of shutting down.
“The people are proud of their mountain and their community and they want to share it with visitors," he says.
“At Red the saying is ‘lots of friends on a powder day’, because you can show up at 10am and not queue, and you can still ski fresh lines five days after it snows at Red.
“You don’t have that angst where the powder is gone by 10am - and it is gone by 10 o’clock at Vail, at Whistler, at Park City."
Paradise Lodge only got flushing toilets in the past year. It recently underwent a full remodelling, and part of that included the replacement of the old, cold outhouse experience with some lush, flush toilets. The locals were particularly excited about this development.
Vail Resorts are famous for their deep pockets, and for the infrastructure - namely fast, often heated chairlifts - that they install after taking over a resort. It's unlikely they have ever had to concern themselves with the installation of flushing toilets.
Their acquisitions business model is heralded by many as the most forward-thinking in the industry. It could not be further from the independent model of Red Resort.
Vail now owns 15 resorts and controls upwards of 10 million skier visits a year. Their Epic Pass doesn’t just offer access to resorts they own, but to 64 resorts in eight countries, including 30 in Europe. Vail increase the price of day tickets when they buy a resort and put down the price of season passes to encourage people to buy a season pass even if they’re only going to be there for a week. And once you’ve got a season pass, the idea is that if you then take a road trip to ski or snowboard, you’ll travel somewhere already on the Epic Pass.
Sarah Morden, in charge of international communications at Vail, tells us the business strategy is driven by a “powerful network of iconic mountain resorts connected on one attractively priced season pass that pays for itself in just over four days of skiing."
"I’m good for the ski industry because I take a position that independence matters"
Morden describes the Epic Pass as “one of the best deals in all of travel". It’s certainly lucrative.
From January 31-March 4 2018 Vail Resorts reported a net income of $235.7 million, an increase of 58% on the $149.2 million they made in the same fiscal quarter in 2017.
These are numbers and buzzwords far from the anti-corporate, ski-bum mentality tied to snowsports. When was the last time you heard a park rat discussing his fiscal returns before dropping in?
Vail’s Epic Pass and their main rival, the Ikon Pass, run by Alterra Mountain Company, currently cover 50 ski resorts in North America, including some (most) of the continent’s best known resorts. One would imagine that is not great news for independent ski resorts outside of those passes. But that’s exactly what Red Mountain are - and happily so.
“You’ve got to put it into context," says Howard. “I think there are under 700 ski resorts in North America. Vail and Alterra own under 100 resorts. They control probably 25% of the skier visits, but I’m not worried about those guys and they’re not worried about me.
“I’m good for the ski industry because I take a position that independence matters, small private enterprise matters."
The anti-Vail argument from the après bars goes that your resort might be financially better if it joins the likes of the Epic Pass or Ikon Pass, but that - particularly if you are acquired, and particularly if you are acquired by Vail - your resort will lose its soul in the process.
When Vail acquires a mountain they enforce uniforms on the snow. Their mountain operations team wear black, ski safety wears yellow, grey for desk jockeys and so on. They manage all of their resorts not on site, but from their headquarters in central Denver.
"Vail’s Sarah Morden says 'we work hard to ensure the individual characteristics and brand personality of each of our resorts'"
Vail have a list of six company values, one of which is "have fun", and managers are given pins to award to employees who are seen to be having particularly notable fun. There's even said to be a fun award at the end of the year for the employee who promoted the most fun.
It’s not hard to see how their organised-fun philosophy clashes with traditional ski culture.
Vail Resorts’ Sarah Morden says “we work hard to ensure the individual characteristics and brand personality of each of our resorts. Vail is as different from Kirkwood as Whistler Blackcomb is as different from Park City."
But how different is that?
Howard Katkov of Red has been rather outspoken about the consolidation business model in the past. I ask him about his opinions on the potential effects on ski culture.
“Well I think it depends who is consolidating," he says. “Vail is now not just buying resorts but they’re also bringing in resorts under their Epic Pass. And that speaks to a certain consumer.
“For me, we’re independent, we have a unique community and a unique mountain and an incredible value proposition. I do what I think is right for my resort. I don’t react to, or follow, or consider what Vail or Alterra Mountain Company are doing."
It’s not hard to believe that last statement, given that Howard literally had to Google the Alterra Mountain Company to remember their name.
But how does an independent ski resort survive financially, and continue to update their infrastructure and ski experience outside of this lucrative bubble?
The transformation of Paradise Lodge at Red was possible thanks to an innovative business plan from Katkov.
While mega resorts like Vail were acquiring other mega resorts like Whistler Blackcomb (for $1.06 billion), Katkov decided to show that you could still disrupt the industry as an independent resort. He decided to crowdfund his own mountain.
Giving a nod to the merger-market with the campaign name “Fight the Man, Own the Mountain", Katkov’s campaign, which shut on 2 April 2018, channelled the spreading angst at the corporate growth in the ski industry and offered the first chance ever for punters to buy into the ownership of a for-profit ski resort through crowdfunding.
In the end Katkov and Red raised a total of $2,556,250 from 743 investors, "to let the world know that independence matters".
Howard says: “I had been following campaigns on platforms like Kickstarter and then I heard that it had been passed in Congress that companies were now allowed to raise equity with non accredited investors. So anybody.
“We have a marketing team of two other people so I went to them and said ‘let’s give it a shot’. It’s a very gratifying thing. I would say that what we did this year was the most impactful marketing campaign in the history of skiing. It’s blown up our brand awareness.
"I would say that what we did this year was the most impactful marketing campaign in the history of skiing"
“We’ve remodelled Paradise Lodge. We quadrupled the size of the High Performance Centre, doubled the size of the retail centre, and this summer we’re building six cabins and a clubhouse."
It’s an innovative marketing scheme but not one Katkov will repeat - and not one he feels he needs to in order to continue to attract new skiers and snowboarders to Red mountain.
“It was a once only," he says.
“You see, this consolidation [of other resorts by Vail and Alterra] also consolidates skier visits and makes those resorts more crowded.
“The price of these Epic Passes means that if you’re living in Whistler, you’re really forced to buy that, and therefore forced to use it. People end up skiing those places because of that pass. Those resorts then get more crowded. So that’s good for my resort.
“It’s big mountain skiing here without the crowds, at a great price, with great people. What could be better? There are two hour lift lines on powder days even at Revelstoke now."
He asks me: “What was the longest lift line you were in?"
I admit that it was at most a few of minutes, and Katkov nods and informs me of further plans to “create an access carrier" between two of the mountains that make up Red to progress the movement in resort even further.
But is it true about the crowds in the Vail empire? Does Vail really have a noticeable, ground-level impact either way on everyday living after it takes over the running of a resort?
We spoke to a small group of Whistler locals who did not wish to be named, but who lived in the resort before, during and after the Vail takeover.
“There’s a joke at Whistler that Vail’s aim was to buy the number one resort in North America but they’re doing a very good job of turning us into the number three resort in North America"
“The takeover isn’t ripping the soul out of the place, but it’s taking what drew me to Whistler away," said one skier.
The local describes Whistler as “the most complete mountain resort [they've ever] experienced" but is growing increasibly frustrated with Vail.
“One thing Vail did was strip away passes," they tell us. “The old management, who were based in town, saw value in giving passes to reps and athletes who’d market the resort. So you kept that core. People that keep the mountain busy in Spring once the good snow and the core of the community are gone.
“There used to be a Spirit Pass, where if you were working for a local business you’d get a discounted pass. But when you could get a cheaper Epic Pass and not work in town, the interest dropped, and that meant service levels dropped. They didn’t have enough lifties. The logistics didn’t work."
One snowboarder highlights the changes on the mountain, saying: “The healthy American culture is coming in. There’s now a sign at the base of Blackcomb gondola saying: ‘advanced terrain’.
“It’s little things like that. They groom more of the terrain than they ever used to in the bowls to connect more of the runs. It’s almost like sanitising it a little bit."
They admit the problems are not all down to Vail. “Whistler can be a strange place," one says, pointing to the seemingly ever-present housing crisis in the village that long predates Vail, and they admit that lift queues are always going to be big at a mega resort like Whistler.
“There are people who stand at Wizard Chair at 6.30am and that’ll never change."
Still, the feeling in town is clear: “There’s a joke at Whistler that Vail’s aim was to buy the number one resort in North America but they’re doing a very good job of turning us into the number three resort in North America."
The group point not only to the changes for locals, but highlight how in certain places hotel rates have been pushed up, something they speculate is down to the strong US dollar and the increased traffic brought to town by the Epic Pass.
Another regular brings up the issues with unionisation that ski instructors are currently facing, saying: “the staff are trying to unionise at the moment. Vail are trying to stop that."
“[Vail] increased the price that they’d sell private lessons for but the instructors still get paid the same.
“Whistler Blackcomb has a lot of unionisation problems this year and it’s all stemmed from the fact that the community feels like it has no say over what’s going on."
We ask Sarah, and she says: “we are committed to providing an environment where employees feel passionate, engaged and empowered. We strive to create a culture where people choose to work for us and we encourage open dialogue, through direct personal relationships.
“We respect the right of our employees to make their own informed choices on representation."
“If Vail have brought anything good to the resort, it’s the Epic Pass"
Still, they admit it’s not all bad at Whistler, and that it's certainly not all down to Vail.
“The mountain hasn’t changed really," admits one local. “And they’re putting new lifts in this year.
"It’s always been touristy. So if you bring in any big company like that, they’re going to attract more tourists and make it more expensive, but it’s always been the Disneyland of snowboarding".
The group admit that they will all get Epic Passes next season, and that now the Resorts of the Canadian Rockies (RCR) have been added to the pass, including Fernie, Kicking Horse and Kimberley, which are in the same part of the country as Red, they’ll use them too.
“If Vail have brought anything good to the resort, it's the Epic Pass," one says.
There’s an obvious argument that Red - which is an equilateral distance of 400 miles from the nearest cities of Calgary and Vancouver - could lose a lot of skier visits to the aforementioned CRC resorts courtesy of their addition to Epic Pass. Howard Katkov declines to comment on CRC joining the Epic Pass, but is comfortable not following suit.
“We’re not part of that," he says. “I’m not against ‘the man’, parsay, I’m just running my ski resort the way I think it needs to be run. Listening to our community and our consumer."
I ask Howard where he sees the ski industry in ten years time.
“There’s not going to be ski resorts that are starting anymore because it’s just too capital intensive," Howards says. “Vail’s currency is their stock. They’re going to continue to support their model of Epic Pass and acquisition. I don’t see them slowing down."
Sarah agrees: “We [Vail] see our place in helping support [the future of the ski industry] being through technology, sustainability, continually investing in the guest experience and finding ways to attract new skiers and snowboarders.
“One way in which we introduce potential guests to skiing and snowboarding is by developing the sport in urban areas like Chicago, Minneapolis and Detroit."
While Vail look to continue their expansion, Howard will continue to focus closer to home.
“I think right now we’re in the top five ski resorts in North America," he says. “If not number one. Pound for pound. Dollar for dollar. You can’t get a better experience.
“I can’t predict where we’ll be in the future in terms of my role but Red Mountain is not going away. It’s only going to get stronger and stronger as an epic skiing resort."
And it is an epic resort. The sheer size and variety of terrain Red offer cannot be understated. The powder lies for days - there’s actually still plenty of it left to ride when the resort shuts in April. There’s just not enough people there to make running the lifts worthwhile.
A snowcat runs right off the main piste, charging visitors just $10 for a one-run shuttle to guaranteed untracked snow. A $45 million four-star hotel and $4.5 million, 80-pillow hostel will open at Red next winter. The homey craft breweries and coffee shops in Rossland are built on local pride. And it might not be the busiest or best known resort in North America, but that keeps the lift queues short. Just how the locals like it.
For now, Red is a testament to the fact that you can run an epic ski resort without the Epic Pass. And as far as we can see, there’s been no signs of trouble in Paradise just yet.
Read the rest of the Mpora April Remote issue here.