Increasing Concentration
Authors: Travis Swiger (QAMO ’24) and Adam Looney
A wave of consolidation has reshaped the ski industry, transforming an industry previously characterized by independently owned resorts into an industry dominated by two main players – Vail Resorts (which sells the Epic Pass) and Alterra Mountain Company (which sells the Ikon Pass). In the United States, these two firms now own or are affiliated with more than 50 percent of total U.S. lift capacity. In most of the major skiing states, Vail Resorts and Alterra cover the vast majority of skiing or riding capacity, effectively creating a duopoly. In Utah, for example, 7 out of 15 resorts (including most of the largest resorts) are owned or affiliated with Vail or Alterra (Figure 1).
Figure 1. Mega Passes at Utah Ski Resorts
The economic concern with consolidation is that it reduces competition in the industry, eroding quality or raising prices, and allowing the duopolists to increase profits at the expense of consumers. So, are Alterra and Vail Resorts pocketing profits at the expense of consumers?
To address this question, we collected and analyzed data on U.S. ski resorts from internet sources and resort websites, including the number of lifts and the lift capacity measured as the number of skiers per hour. For each resort, we identified whether they were owned by Vail Resorts (and thus, on the Epic Pass) or whether they were owned by Alterra or affiliated with their pass, the Ikon Pass. In addition, we analyzed data on day passes and season pass prices for New England resorts (where historical data was readily available), to examine long-term trends in prices.
Our analysis suggests that while the ski industry is now highly concentrated, the expansion of mega passes has caused a large drop in season pass prices and a surge in riders who buy those passes. That suggests that most pass-purchasers—and even those who buy individual-resort passes—have benefitted from those lower prices. Day pass prices, in contrast, have surged, which has likely hurt occasional skiers, and deterred them from trying the sport. Our sense is that most of the vocal dissatisfaction with these passes stems not from how much Epic and Ikon charge, but from how many more people choose to buy them, which has led to longer lines, crowded slopes, and increased traffic. Those are serious problems, but they arise mostly because the industry has shifted to a model in which skiers and riders get unlimited mountain access for a fixed price.
How Concentrated is the Ski Industry?
Figure 2 shows the fraction of major ski states’ lift capacity that is affiliated with the Epic Pass, Ikon Pass, or independent (as of the 2023/2024 season). In most of the major ski states, Epic and Ikon cover the majority of lift capacity. In Colorado, 86 percent of capacity is Ikon/Epic. In California, 66 percent of lifts are Ikon/Epic. In Utah, 74 percent of lifts are Ikon/Epic, and in Vermont, 72 percent of lifts are Ikon/Epic. Nationally, 52 percent of lift capacity is associated with either Epic or Ikon.
Figure 2. Total Lift Capacity by Pass Affiliation and State, 2023
Note: Analysis of data obtained from ski resort websites and other internet sources. Results are similar when examining the number of resorts rather than lift capacity.
In most states, Epic and Ikon are effectively a duopoly, with little competition aside from small operators. Even when Epic and Ikon do not cover the majority of resorts (as in Utah, for example), their tendency to be available at larger resorts means that the majority of skiers are heading to resorts with the passes.
How Have Prices Changed? Evidence from New England
What are the implications of this consolidation? The key concerns of concentration are reductions in quality and consumer experience and increases in price. It is difficult to measure quality, but there is some data on historical prices for New England resorts from New England Ski History. In Figure 3, we show inflation-adjusted price indexes for season, Ikon, Epic, and day passes for New England resorts. The price index is constructed by weighting each resort’s price by its capacity, creating a measure of the average price of a ticket in New England.
Figure 3 shows that season pass prices (in dark red; left scale) have declined over time. There are two main reasons for the decline. First, as Epic and Ikon passes have tended to be cheaper than season pass prices, as more resorts have been acquired or joined these networks, the price has effectively dropped. For example, for the 2016/2017 ski season at Stowe, a season pass cost $2,313. The next year, after it was acquired by Vail, the price dropped to $899. (Plus, season pass holders could ski not just at Stowe but at any other Epic resort.)
In addition, even at non-Epic and Ikon resorts, season pass prices have increased by less than overall inflation; in inflation-adjusted terms their prices have declined, perhaps because of competition with these new low-priced offerings.
For day passes, however, the story is quite different. The average cost of a day pass (light green, right scale) has increased by 60 percent since the 1990s. Moreover, the increase in walkup ticket prices has accelerated over the last decade.
Note: Inflation-adjusted prices for season, Ikon, Epic, and day pass prices at New England ski resorts.
Resorts are clearly exercising their pricing power by charging higher prices for some tickets (i.e., walk-up day passes) and lower prices for others (i.e., season passes)—similar to how airlines charge different prices for flights booked far in advance or higher classes of service. Resorts charge a myriad of prices in a practice known as price discrimination. Higher prices are paid by customers who buy tickets late, purchase at the walk-up window, and who ski on holidays or during peak times. Lower prices are paid for advance purchases, off-peak days, and for limited access to fewer lifts.
Are Skiers and Boarders Better off?
Economically, industry consolidation and price changes create both winners and losers. Resort owners, Vail, and Alterra are clearly benefiting from the increases in ticket sales and ability to fine-turn the prices charged for season vs walk-up tickets. But does this necessarily imply that customers are worse off? Our sense is that most skiers have benefitted financially from the new regime, particularly those who ski or ride multiple days.
Relative to the 1990’s the price of season passes (including Ikon and Epic) are down, benefiting skiers who purchase these passes. Individuals who would have bought a season pass at Vail or Stowe are paying a lower price and now also get to ski at other resorts if they purchase an Epic or Ikon pass. Some skiers who never would have bought a pass now buy one at the lower price. Skiers with a mega pass benefit from the market changes that have allowed them to pay a fixed cost for a pass so that they may ski freely for the remainder of the season.
On net, the number of season passes sold are way up and pass prices are down. On that dimension, that suggests that most consumers are better off.
However, occasional or beginning skiers who face 60 percent higher prices than in the 1990’s for day passes are worse off. These skiers either pay more or decide that the high price is not worth it and choose not to ski altogether. In fact, the number of unique skiers has declined in recent years even as the number of total visits to ski resorts has increased (Jag, 2023). This trend reflects increasing concentration in the customer base. There are fewer skiers overall, but a subset of those skiers (season, Epic, and Icon pass holders) are putting in a lot more days on the slopes.
Beyond the price changes, there are aspects to the quality of the resort experience that are difficult to measure but have certainly changed over time. On the plus side, Alterra and Vail Resorts are investing huge amounts of capital in new lift capacity, snowmaking, and other resort infrastructure. On the other hand, there are anecdotes that the quality of service is declining, and the quirky, unique, individual characteristics and hospitality of individual resorts is being replaced by a homogenous corporate experience. It’s unclear how this nets out.
Perhaps the most vocal complaints about industry consolidation are not about reduced market competition, but instead are about overcrowding and congestion. Resorts are much more crowded than in the past. Road congestion is horrific on weekends and powder days, and demand for parking at many resorts far outstrips supply. On slopes, riders are faced with long lift lines, crowded runs, and snow conditions that deteriorate quickly during the day.
These are heavily complained about changes in the Ikon and Epic era. But the fundamental economic problem causing this congestion isn’t that duopolists are conspiring to keep prices too high, but that the new regime has made season pass prices so low. Many more people find these passes a good deal, and for these skiers and boarders, an additional day of skiing is free—that’s why it’s so crowded.
Solving this problem is more complicated and involves real tradeoffs, like charging more for parking, limiting traffic or imposing tolls on high-traffic days. One thing that would help—more terrain. There has been almost no growth in the number of resorts in the U.S. over the past 25 years, and relatively little expansion in terrain at existing resorts.