How Season Passes Change the Margin

This weekend’s Wall Street Journal told us all we might want to know about ski resorts’ season lift tickets.

It was also a lesson in marginal utility.

Season Passes

The idea was brilliant.

In 2008, Vail introduced its Epic Pass. Instead of paying for one destination, we could spend $579 and choose among six ski resorts. After that, as the company bought new properties, they multiplied the places a season pass could take you. In 2024, a $1000 season pass opened 42 of the properties Vail owns as well as a total of more than 80 through their partnerships around the world. By contrast a single lift ticket could cost $300.

This year, though, for the first time, Vail sold fewer Epic Passes than last year. Because of a 12-day ski patrol strike, most runs at Park City Utah closed. Creating long waits at Park City, the strike shifted where skiers visited. They’ve also had “operational challenges” at several sites and competitors with their own season passes. In addition, others chose the back country skiing that requires no lift passes. Still, the company sells a whopping 2.3 million passes.

Our Bottom Line: Marginal Utility

Defined as all that is extra, the margin is where most of our decisions occur. Also at the margin, utility–our satisfaction or pleasure–becomes relevant because utility can determine our incentives. Think of a chocolate chip cookie. At the margin we are always deciding how many to munch. The first and second cookies usually provide much more extra pleasure–more marginal utility–than the fifth cookie.

Before 2008, ski vacations were sort of like chocolate chip cookies. We could select one or two, but at some point, our extra pleasure subsides. However, when Vail offered the season pass, it moved the margin. With an Epic Pass, we also made a decision at the margin, but it lasted for 12 months. For many of us, the pass increased the marginal utility of each vacation. Because it provided access to ski areas around the world, we felt like we did not pay for each one. By contrast, until 2008, our marginal utility was based on an individual vacation decision.

And, remaining at the margin, we have to pay extra for parking, and rentals, and dining, and ski school:

Marginal analysis was one of Alfred Marshall’s (1842-1924) gifts to economics. He let us see that the utility of something extra is the key to understanding demand- and supply-side behavior…

…At ski resorts.

My sources and more: It is always nice when two articles converge. For today’s post it was the WSJ article, “Epic Problems At Vail” and also The Hustle’s newsletter from several months ago. (We should note that the first season pass came from Colorado’s Winter Park during the late 1990s.)