# Why Ski Resorts Can't Solve Their Crowd Problem Maxinomics · 2025-03-06 Phil Andrews argues Vail Resorts' Epic Pass has hit a growth ceiling: every extra skier worsens the experience, and resorts like Breckenridge can barely expand. Vail owns only the base areas and parking — the mountains belong to the U.S. government — so an approved 334-unit Breckenridge Grand Vacations project was cut to 190 condos and 36 hotel rooms after resident pushback, and Park City canceled two lift upgrades. About 20% of revenue rides on the two weeks around Christmas, so resorts lean on snowmaking at $1,000–$2,500 per acre. Vail's spread-out resorts hedge bad snow years, unlike American Ski Company, which collapsed after poor 1999–2001 seasons. After record 2022–23 revenue, Vail raised Epic Pass prices 8%, then sold 2% fewer passes for the first time — a negative network effect. ## Questions this episode answers ### Why hasn't a new ski resort been built in the U.S. in decades, and why did Vail start buying resorts instead? Phil Andrews explains there hasn't been a new U.S. ski resort built in 45 years because private land doesn't exist and building on public land requires heavy government permitting that won't happen. So in 1997 Vail began buying resorts like Park City, Breckenridge, Keystone, North Star, Heavenly and Whistler instead. [0:00](https://maxinomics.podhood.com/595dd543-f2f4-46fa-ae8e-dafb74879e22?t=0) ### What happened to the Breckenridge Grand Vacations hotel project that was approved in 2018? Phil Andrews says the 334-unit project was fully approved for two town-center parking lots, but residents turned against it as COVID-era crowds grew. The town council overturned the approval, and seven years later it went from 334 private homes and condos to 190, 229 hotel rooms to just 36, with workforce beds rising from zero to 48. [3:41](https://maxinomics.podhood.com/595dd543-f2f4-46fa-ae8e-dafb74879e22?t=221000) ### How much does it cost resorts to make fake snow? Phil Andrews reports that covering about one acre with one layer of snow costs between $1,000 and $2,500, before equipment: each small unit runs $5,000 to $6,000 and big snow guns run $35,000 to $50,000 a piece. Breckenridge has 600 acres of terrain prepared for snowmaking, making it an expensive defense against volatile weather. [5:32](https://maxinomics.podhood.com/595dd543-f2f4-46fa-ae8e-dafb74879e22?t=332000) ### Why is the Epic Pass business model different from software subscriptions like Microsoft Office? Phil Andrews contrasts the two: adding another Excel user costs nothing and there's no single road to watch Netflix, so those platforms benefit from more users. A mountain, though, exhibits a negative network effect — the more skiers, the worse the experience — while Vail must spend billions maintaining equipment, fending off weather and upgrading the experience. [9:04](https://maxinomics.podhood.com/595dd543-f2f4-46fa-ae8e-dafb74879e22?t=544000) ## Key moments - **[0:00] Buying spree** - [0:00] No new US ski resort has been built in 45 years, so Vail bought Park City, Breckenridge, Keystone and Whistler instead - **[0:45] Crowd problem** - **[1:37] Who owns what** - [1:41] On a prime day 30,000 skiers hit Breckenridge's three gondolas, and the Colorado Superchair's hour-long wait eats an 8-hour ski day - [2:13] Vail owns only the base area, parking lots and road at Breckenridge — the entire mountain belongs to the US government - **[2:37] Getting approvals** - **[3:31] Hotel fight** - [3:31] Breckenridge Grand Vacations was approved in 2018, then residents overturned it: 334 units cut to 190 and hotel rooms slashed to 36 - **[4:50] Weather bet** - [5:06] About 20% of a ski resort's revenue rides on the two weeks either side of Christmas — and enough natural snow to fill them - **[5:18] Snowmaking** - [5:48] Snowmaking one acre of terrain costs $1,000–$2,500 per layer, and Breckenridge prepares 600 acres for fake snow - **[6:30] Portfolio strategy** - [7:17] American Ski Company tried Vail's roll-up model in the 1990s, then bad snow years in 1999, 2000 and 2001 sank it with debt - **[7:19] Rollup risk** - [8:09] Vail just sold 2% fewer Epic Passes than last year — the first decline ever — after raising the price 8% - **[8:22] Peak Vail?** - **[9:19] Negative network effect** - [9:19] Ski resorts suffer a negative network effect: unlike Excel or Netflix, every new Epic Pass skier makes the product worse ## Speakers - **Phil Andrews** (host) ## Topics Industry Economics ## Mentioned American Ski Company (company), Breckenridge (company), Netflix (company), Park City (company), Vail (company), Epic Pass (product), Instagram (product), Microsoft Office (product) ## Transcript ### Buying spree **Phil Andrews** [0:00] There hasn't been a new ski resort built in the U.S. in 45 years, which is why in 1997 Vail started buying up as many ski resorts as they could: Park City, Breckenridge, Keystone, North Star, Heavenly, Whistler, the little hills in the East and Midwest, the most visited ski resorts in the entire U.S. And it's set to stay that way, because there's no more land to build on. Private land doesn't exist, and building on public land that requires a ton of government permitting is just not going to happen. 10 million more skiers visited U.S. ski resorts last year than in 2016. Vail's top properties being so desired to ski at are accommodating 2 million more skiers every year. That, the additional people, is actually a problem for the business of ski resorts. If you ski, you know the experience gets worse the more people that are doing it at the same time. ### Crowd problem **Phil Andrews** [0:45] You want a crowd at a sports game or a concert, but not at your ski hill. Those 2 million more skiers are having to spread out across the same amount of land, magnifying a series of bottlenecks that everybody that goes on a snow trip encounters: getting to and from the mountains, the lift lines, crowded slopes. Everybody can and wants to go at the exact same time: when it snows a lot, holidays, New Year's, Christmas, and other winter holidays when people can take off of work. On a prime day at the ski resorts, when people can and want to go—take Breckenridge, for example—30,000 people will show up at one of these three gondolas. Most of them at this gondola, the Colorado Superchair on Peak 8. It can carry 600 people up the mountain every 10 minutes. Fast, but during the morning rush, not fast enough. The wait time can easily be an hour long. There's just no other way to get up the mountain. And considering the ski day is kind of short, often less than 8 hours, that is significant. And this is just the first of two gondolas to get you all the way to the top. ### Who owns what **Phil Andrews** [1:37] So to grow, for this company to be able to continue to add subscribers to its annual subscription, the Epic Pass, could they double the speed of this thing if they wanted to? Let's back all the way out for just a second. This town, Breckenridge, was founded back in the 1800s as a mining town. The first ski run was cut in 1961. The resort stayed private for 35 years until Vail bought it in the '90s. But when we say Vail bought Breckenridge, what we actually mean is that of Breckenridge, all the charm and cobblestone streets, snow-covered roofs, that old town mining charm, all of this, what they actually bought was this: most of the village is owned by individuals, trusts, or businesses. The entire mountain is owned by the U.S. government. The only thing Vail owns outright are the base area, some of the parking lots, and the road. They have a few partnerships for overflow parking, then partnerships for a few lodges. Not to say these pieces aren't valuable. They are. They bought this place for about 300 million back in the '90s. It's worth at least a couple billion now. The road leading to the base area might even be the most valuable part, but every other parcel of land gets a say in what happens on every other parcel of land. So if we come back to, could they double the speed of this thing if they wanted to? They would have to design the whole thing, plan it out, and then submit a few hundred documents to the town council. ### Getting approvals **Phil Andrews** [2:45] The town council would then ask the rest of the town for their opinion. So the question would become, does the rest of the town want that gondola to be able to take double the number of people up the mountain? And the answer is increasingly no, because undoubtedly that would mean the resort wanted more people to come to it. And those people would need to park somewhere. They would need to sleep somewhere. They would need to be fed. As the initial expansion of Breckenridge ran through 2014, it overlapped with the launch of the first-ever successful subscription ski pass, the Epic Pass, which allowed people to ski or snowboard a bunch of different mountains by paying a fee before the ski season started. More and more people started to show up in these towns each winter. Locals in the towns quickly started to realize the actual impact and became less keen to quickly approve or approve at all any new projects or expansions from Vail or any other developers in the area. As just one example, first approved all the way back in 2018, Breckenridge Grand Vacations, a 334-unit hotel and condominium complex with retail areas, had been fully approved to be built on two critical parking lots in the town center. ### Hotel fight **Phil Andrews** [3:45] This is the north gondola parking lot they were going to pave over. It is in a prime locationright next to the Breck Connect gondola. Even on a Wednesday, it's full. But as the build date got closer and the overwhelming crowds from the COVID ski days rolled in, the residents turned against it. The town council listen, wrote the approval back under question, overturned it, and seven years after it had originally been approved, the project was moved off the two extremely well-located parking lots and went from having zero beds for the workforce to 48, 334 private home and condos to 190, 229 hotel rooms to just 36. Hotels are much more valuable for the resort, but they cause a lot more traffic because people come and go from them far more often. So all of this, in the addition of just 274 units, is going to take at least 10, 12, 13 years to go from idea to finished project because the neighborhood didn't like it. Park City is experiencing even more intense pushback directly on the mountain. Two lift upgrades canceled specifically because of traffic concerns. The town of Vail blocked the original Vail resort from building housing on land it felt it owned. In short, it's not impossible, but it is a huge pain to build anything in, on, or around these resorts. ### Weather bet **Phil Andrews** [4:50] So the idea that Epic Passes can just be sold to more and more people and more people visiting is good, highly suspect. And the thing about building and upgrades is that they're a bet, a bet on the weather, future snowfall, and that the future snowfall will fall in some fairly specific windows. Around 20% of a ski resort's revenue depends on the two weeks either side of Christmas. Enough snow and people show up. Not enough snow and people just don't come out. There's very little that's more depressing than trying to ski at one of these big mountains when there isn't real snow on the ground. So with fingers crossed, these mountains pray that the snow season, which might be four months long, begins to offer the wildly valuable, free, and volatile blessing of snow early. If it doesn't show up naturally, they'll have to buy it instead. ### Snowmaking **Phil Andrews** [5:32] Turning water pulled out of local rivers, streams, ponds, lakes, and the ground into fake snow. And nobody really wants the fake snow. This isn't why skiers come to the big destination resorts. It's just an expensive band-aid that either extends the season a little bit or keeps people just happy enough to not ruin their vacation. It's not an addition or a bonus. It's a prevention. To cover this section of the run, what's about one acre with one layer, just enough snow to ski on, depending on a few factors, would be between $1,000 and $2,500. And that is before the cost of the equipment. Each of those things cost $5,000 to $6,000, and the big snow guns will run $35,000 to $50,000 a piece. And here at Breckenridge, there are 600 acres of terrain prepared for snowmaking. The snowmaking situation is an obvious nod at the risk resorts face with the weather. There's no other way to look at it. If you have to invest this much money into a system that costs that much to run just to fend off the weather, it's not a great spot to be in. This is maybe the reason Vail's chosen business model is purchasing ski resorts in different areas around the U.S. and now around the world. A huge effort to take risk out of the business. The 18 resorts on the U.S. ### Portfolio strategy **Phil Andrews** [6:41] East Coast and Midwest are feeder resorts where kids learn and then, as they get older, come out to the West with friends and family. This is the purpose of owning those, particularly the small hills in places like Minnesota or the Poconos. Got to get them early. The major destination resorts are spread out in different snow regions: the Pacific Northwest, Colorado, Sierra Nevada, and more recently the Alps, Australia too. But these are more as feeder resorts to the big mountains in the U.S. and Europe rather than as a destination. The idea being that any one of these regions will see enough good snow in a year. The resorts in that region will do enough in profit to maintain the other resorts, and skiers will look at the snowfall at the resorts available to them on their pass to decide where to take a trip, which has worked to an extent. ### Rollup risk **Phil Andrews** [7:19] Vail has made money, and there have been no ski resort bankruptcies in decades. Quick side note on that: there being no new resort bankruptcies in decades, that is new. Snow is what keeps resort owners up at night. One or two bad years of snow and a resort could go under, or at the very least, not be able to maintain the grounds, upgrade equipment, or keep paying their staff. American Ski Company had tried to do what Vail has now done, but back in the '90s, roll up a bunch of resorts and put them on one pass. But they took on more debt than a few bad snow years could bear. Bad snow years in the Northeast in 1999 and 2001, where most of their resorts were complemented by bad snow in the West in 2000, and the whole thing completely and utterly fell apart. Following a banner year of snow for the entire U.S., 2022 to 2023, and the highest revenue Vail has ever earned, snow was just okay the following year, and Vail only came close to hitting the same revenue numbers. And they only did it by increasing the price of the Epic Pass by 8%. And then this is the first year where they've sold fewer Epic Passes than the previous year by 2%, which is not a huge number, but notable because it's the first time it's ever happened. ### Peak Vail? **Phil Andrews** [8:22] So was this the peak of Vail resorts' business prospects? When tons of people were working remotely post-COVID, snowfall was double what it usually was, and inflation hadn't started to wear down people's finances? Because it was also the point at which real anger started to form around the company. Yeah, I'm a little angry at Vail Mountain. **Phil Andrews** [8:39] People parking on the roads, Instagram accounts dedicated to hating the Epic Pass, blog posts, just anger from all the people who ski a lot. Making it seem fairly obvious that making this a giant, consistently growing business is probably impossible. Having steadily climbed in value as they added asset after asset, ski resorts to their balance sheet for all of the 2010s, the company was in the honeymoon period of acquiring resorts and celebrating the birth of a new business model for the ski industry, the Epic Pass. But since that point, what Vail has to overcome to continue to be a growth company, essentially a tech company with annual subscriptions, has become starkly obvious, and the market has noticed. The difference between adding a new subscriber to Microsoft Office and adding a new skier to the Epic Pass is huge. ### Negative network effect **Phil Andrews** [9:19] There are no costs to another person using Excel at the same time as you. There isn't just one road you have to drive down with one exit to watch a video on Netflix. On Instagram, the more the merrier. Really, it's better with more people. But on a mountain where everybody needs to get up and down it, this is what's called a negative network effect. The more the worse, the more the harder it becomes to grow. All while having to spend billions to maintain equipment, fend off the weather, and upgrade the experience so people don't go to other resorts. --- This library is powered by PodHood (https://podhood.com), the podcast website platform.