Comments on: Powdr seeks for Killington what Vail achieved this year http://blog.prestigekillington.com//powdr-seeks-for-killington-what-vail-achieved-this-year/48/ Killington Vermont real estate news Tue, 07 Oct 2008 04:22:50 +0000 http://wordpress.org/?v=2.6 By: Matt Hill http://blog.prestigekillington.com//powdr-seeks-for-killington-what-vail-achieved-this-year/48/#comment-4050 Matt Hill Wed, 20 Jun 2007 19:33:05 +0000 http://blog.prestigekillington.com/uncategorized/powdr-seeks-for-killington-what-vail-achieved-this-year/48/#comment-4050 It may sound like a strategy, but it's not a sound one. It's idiotic. Killington is not Vail. Vail is a brand that has been developed over decades as a luxury product. It has light, dry powder, immense bowls and the majesty of the Rockies. Along with Aspen, even non-skiers know Vail as a premier, luxury resort. People expect to pay a premium and they expect premium services to be in place when they visit. This was my experience when I visited Vail. It was expensive, but it was worth it. Killington cannot simply raise prices, invest a relative pittance of $3 million, call itself premium and expect to become Vail. Nyberg has said profitability will lead to future investment. Is he a real business person? You have to invest before you profit. You cannot declare (and price yourself as) a luxury resort without having the facilities IN EXISTENCE. And in reality, more than just having facilities, you have to build the brand before it's recognized as luxury. Imagine 2 limo services for weddings. One is called "A" - a vintage white Rolls Royce that has been impeccably maintained. They get celebrity weddings and cater to rich people, renting the car sparingly. The chaffeur is British, the champagne they serve to the couple is perfectly chilled, and everyone knows it. They charge twice as much as the competition. The second limo service B is a stretch Lincoln from the 90s that has 100,000 miles on the odometer. It looks fine, they wash it regularly, it doesn't break down (too often, (Canyon Quad!)) but it has a couple dents. They charge half the price and do four times as many weddings as the other company. This is fine. They serve different markets. B may even be more profitable than A, with lower costs and higher revenue. But what happens when B decides to install a DVD player (minor upgrade) and raise his price to 75% of A's? Of course customers will desert B for another lower cost competitor (Gore/Whiteface blackout pass: $475 vs. K-ton $599) And then B's owner says, "well, I will upgrade my service to justify the high price when this one starts being profitable!" Really? You think that will work? Matt It may sound like a strategy, but it’s not a sound one. It’s idiotic.

Killington is not Vail. Vail is a brand that has been developed over decades as a luxury product. It has light, dry powder, immense bowls and the majesty of the Rockies. Along with Aspen, even non-skiers know Vail as a premier, luxury resort. People expect to pay a premium and they expect premium services to be in place when they visit. This was my experience when I visited Vail. It was expensive, but it was worth it.

Killington cannot simply raise prices, invest a relative pittance of $3 million, call itself premium and expect to become Vail. Nyberg has said profitability will lead to future investment. Is he a real business person? You have to invest before you profit. You cannot declare (and price yourself as) a luxury resort without having the facilities IN EXISTENCE. And in reality, more than just having facilities, you have to build the brand before it’s recognized as luxury.

Imagine 2 limo services for weddings. One is called “A” - a vintage white Rolls Royce that has been impeccably maintained. They get celebrity weddings and cater to rich people, renting the car sparingly. The chaffeur is British, the champagne they serve to the couple is perfectly chilled, and everyone knows it. They charge twice as much as the competition.

The second limo service B is a stretch Lincoln from the 90s that has 100,000 miles on the odometer. It looks fine, they wash it regularly, it doesn’t break down (too often, (Canyon Quad!)) but it has a couple dents. They charge half the price and do four times as many weddings as the other company.

This is fine. They serve different markets. B may even be more profitable than A, with lower costs and higher revenue.

But what happens when B decides to install a DVD player (minor upgrade) and raise his price to 75% of A’s? Of course customers will desert B for another lower cost competitor (Gore/Whiteface blackout pass: $475 vs. K-ton $599)

And then B’s owner says, “well, I will upgrade my service to justify the high price when this one starts being profitable!” Really? You think that will work?

Matt

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