NEWS

Strategies for the new reality in mountain travel

Date: Jan. 11th, 2010
Contact: Ralf Garrison

Albert Einstein once claimed: “The definition of insanity is doing the same thing over and over and expecting different results.”

While Einstein wasn't famous for his economic predictions, his statement sets up a discussion about “New Realities” facing the destination mountain travel industry, as well as a supporting grid that could have come from a chalkboard session he was known for. Here's my thought process.

Until last year, the destination travel portion of the ski industry had been growing nicely. Spending rose as more people took destination vacations, leading to strong overall revenues and resulting trickle down to mountain town communities and their public sector representatives in the form of sales and lodging tax income. But in September of 2008, just about a year ago, the wheels fell off the economy, the rules changed, and inherent guest demand plummeted. Last year ended with occupancy down 15 percent and average daily rate down nine percent, based on metrics compiled by the Mountain Travel Research Program. According to Einstein, tourism-dependent businesses would be insane to think that they can continue the same behavior and expect a better result in this altered economy. We've entered a new reality that demands more.

A good starting point is the formulation of a compelling offer and its subsequent delivery to the target market, timed to generate a purchasing decision. To help visualize the dilemma faced by businesses and the opportunity afforded by customers is the target marketing matrix below.

More or Less: Fewer destination guests, less discretionary income and a thrifty ethic results in more competition, and a battle for share of a smaller market, where passive businesses (the “insane” ones) will most likely lose. Proactive strategies are called for, the first of which is a compelling offer to the target guest: more value or less price. Our Einstein-inspired graphic attempts to represent this along the left two squares. Some guests better respond to a value-add, the inclusion of a ski rental package, for instance, while for others it will take a slash in the price.

Sooner or Later: Some of the best guests at resorts got the worst deals last year. The converse is also true, and some last-minute bargain shoppers were rewarded with great deals. As resorts reacted to deteriorating market conditions at the prime of their booking seasons, guests learned bad habits, and hard-won brand loyalty gave way to recession-driven price loyalty. These habits may die hard and have established an awkward legacy that resorts are going to have to fight this season.

Resorts are varied in their strategies. Some are going out with their very best offer sooner, hoping to re-engage loyal destination guests, build a solid business base, and push back against bad habits learned last year. Others are pausing until later, waiting out shifting market conditions for a better understanding of consumer sentiment, saving available resources until the season unfolds. These resorts are prepared to react accordingly, but risking the perpetuation of bad habits in the process.

Neutral Zone: I've moderated the “insane” alternative of doing the same thing a bit to a softer “Neutral Zone” graphically representing the status quo, where this season's strategies remain substantially the same as in years previous, or perhaps no action is taken at all. Needless to say, neither Einstein nor I recommend the black hole of the Neutral Zone.

In this new reality, conventional wisdom is suspect by definition and additional indicators are mixed. Yet non-action is not an option, leading to a difficult dilemma of strategy. While every resort faces the same questions, and every guest the same opportunities, the related answers as to when and what to promote or purchase must be individually crafted based on your own circumstance. For the resorts, at least, the Einstein matrix may help frame the questions and while no one “right answer” exists, there is clearly a wrong one: doing nothing or nothing different and expecting the same behavior to produce a better result than last year.

Wonder if Einstein was a skier … probably not. 

is the founder and director of the Advisory Group, which provides marketing services to destination resorts around the country, owning and operating the Mountain Travel Research Program (MTRiP) and the Mountain Travel Symposium. You can contact Ralf at .