Over the course of the 2018-2019 season, you may have noticed us showcase a new metric in our reporting this year, RevPASS. It first appeared within our weekly Market Overview Report, and will be shown in our partner-specific End of Season Reports distributed to all of our resort partners at the close of the season. Evan will also be discussing this metric and overall industry performance in our Arrival Day Program at this year’s National Ski Area Association meeting in San Diego on April 29.
Before we get into the evolution of RevPASS and how it is used, let’s take a look at what metrics have been used historically to assess ski area performance. The ski industry has historically focused on two primary metrics to measure success of a resort over the course of the season: annual visitation and ticket yield. While these two metrics are certainly important, they do not allow for a granular understanding of performance, or comparisons between resorts of varying size or season length. Without relative metrics, it is impossible to assess a resort’s performance relative to its potential (as demonstrated by top performers).
Let’s take a look at what other industries use to measure relative performance. Both the hotel and air travel industries have developed relative metrics that help operators gauge the performance of their businesses as well as assess and tweak their pricing and distribution strategies.
- Hotel: Revenue Per Available Room (RevPAR) – Calculated by multiplying a hotel’s average daily room rate by its occupancy rate.
- Air Travel: Revenue Per Available Seat Mile (RASM) – Calculated by dividing operating income by available seat miles. Generally, the higher the RASM, the more profitable the airline.
Both of the metrics above offer a universal comparison for industries full of different players (disparate properties for hotel, and airline companies in air travel). How can we translate these metrics to the ski industry? The answer is with RevPASS: Revenue per Available Skier Seat.
RevPASS is a metric designed to compare ski areas using revenue relative to a common denominator (VTF/hr). It is calculated by dividing revenue by (VTF/hr*days in range) and can be used to compare relative success of a day, a week, a month, a year, a product type, etc. We think about RevPASS as a great normalizing metric for the industry. For example, if Resort A earns $1M in e-commerce revenue over a 120 day season, and Resort B earns $1M in e-commerce revenue over a 150 day season, who really had greater e-commerce success? Assuming they had the same VTF/h, Resort A is the winner. Given the large network of resorts on the Liftopia platform, we’re able to help our partners understand their performance in these metrics relative to others and comp set benchmarks.
Though of course ski resorts are different from hotels and airlines, use of relative metrics is key to understanding how effective a pricing strategy is against the industry and comp set. Unlike other metrics common in the ski industry, RevPASS gives more of an indication of true success over a given time period, which can have a real impact on the bottom line when used effectively.