Podcast #71: Vail Resorts Executive Chairperson of the Board Rob Katz

Who Rob Katz, Vail Resorts Executive Chairperson of the Board Recorded on January 24, 2022 Why I interviewed him As I wrote last month : Rob Katz changed skiing. Under his leadership, Vail demystified the season pass, transforming it from a rarified token for locals to an accessible and affordable product for casual skiers. An industry reliant for decades on bubble-prone real estate development had the grand realization that the skiing itself was its main product, and that the simple maneuver of bundling resorts onto a single pass, cutting prices, and moving the pass sales period to the offseason could stabilize a temperamental business reliant on weather. The Epic Pass spawned competitors. Vail’s consolidation of large resorts drove the consolidation of other large resorts. Today, 145 of the 462 active U.S. ski areas are on the Epic, Ikon, Indy, or Power passes. Just four companies own 67 of these mountains. Vail owns 33 (it will soon own 36 if regulators approve its sale of Seven Springs, Laurel, and Hidden Valley in Pennsylvania). Alterra – which did not exist in 2006 – owns 13. Powdr Corp owns 10, Boyne Resorts, nine; and Mountain Capital Partners, seven. But the combined might of three of those four conglomerates is on the Ikon Pass, matched against Vail and the Epic Pass. “Vail is the powerhouse of the industry,” said Alterra CEO Rusty Gregory in an interview with The Storm Skiing Journal. “There's no question about that. And Rob is the guy who led them to that success.” The ski industry today resembles the ski industry of 2006 as much as shopping or entertainment in 2021 resembles its ancestors from that time. But unlike big-box shopping, disrupted by upstart Amazon, or carefully programmed linear television, undone by Netflix, skiing was disrupted from within, by an established player with a visionary CEO. As Katz transitions to executive chairperson of the board and hands the keys to the CEO suite off to Vail veteran Kirsten Lynch, he has solidified his place as the most transformational figure in the history of lift-served skiing. “Rob changed a company, changed a business practice, added a product, he changed an entire business model, and an industry along with it,” said Shaun Kelly, managing director and senior research analyst at Bank of America who specializes in gaming, lodging, and leisure equity research. “I cover hotels, I cover casinos, and the businesses themselves are remarkably similar to what they were 10 or 15 years ago. You think about taking a stock from $30 to $300. In the stock market, you don't get multiples of your money unless you get both significant growth of your core business, but also a change in perception of how people value the cashflow or the business itself. And Vail got both.” No one has set the narrative around lift-served skiing over the past two decades more than Rob Katz, and hearing that story first-hand was an opportunity I was very happy to have. What we talked about Where Katz grew up skiing; crushing Hunter in jeans; how Katz began working with Vail in the early ‘90s and what the company looked like at the time; when Katz realized Vail could become Vail Resorts; the genesis of the Epic Pass; selling the idea of the Epic Pass both to the company’s board of directors and to the individual resorts themselves; how the world reacted to the Epic Pass’ launch; thoughts on the shift of the season pass from a rarified locals product to an everyman’s product; Vail’s move into California; how Kirkwood and Heavenly became part of the same portfolio and why that makes sense; why every Vail acquisition becomes unlimited on the Epic Pass; the story behind the Park City acquisition; why Vail needs Whistler and Whistler needs Vail; why and how Vail entered Australia; Vail’s Midwestern bumps and how they fed the empire; the importance of small ski areas; why Vail barnstormed the East; how the company will fix up its less-evolved resorts; is owning eight of the 22 public ski areas in Pennsylvania too much?; thoughts on $200-plus lift tickets; Vail’s Turn in Your Ticket program; what’s gone right for Vail in the 2021-22 ski season; the ongoing threat of Covid; how Vail will ensure that the meltdown at Stevens Pass does not repeat in future seasons; thoughts on Vail’s curtailed Midwestern operating hours this season; Vail’s crowd-management efforts; an update on Vail’s racial and gender-equity efforts; Jerry of the Day; and Vail’s enormous investments in employee housing and the challenges around that. Why I thought that now was a good time for this interview In November, Katz stepped into Vail’s executive chairperson of the board role, leaving the CEO seat he had occupied for 15 years. Raise your hand if, in January 2006, you thought we’d one day have a ski pass that bundled Vail, Park City, Heavenly, and Whistler with Mount Brighton, Michigan and Hunter Mountain. Vail’s rise to the top of skiing has been unpredictable, surprising, rapid, and amazing to witness. For frequent skiers, the sport has never been more affordable, their choices more varied. But the rise of Vail and the Epic Pass have not been seamless. Again, as I wrote last month: Stability, affordability, modernization: all of this benefitted skiers, especially frequent skiers. But Vail’s ascent to the top of the skiing food chain has catalyzed or coincided with profound changes to the lift-served skiing ecosystem and the mountain towns that surround them, especially in the West. Worker housing, long problematic, has reached crisis levels. Colorado’s Interstate 70, Utah’s Little Cottonwood Canyon (where Vail does not own a resort), and other mountain-transportation corridors have become synonymous with apocalyptic traffic. Resort consolidation has drawn charges of homogenization, mountain crowding, and day-ticket prices that make big-mountain skiing unaffordable for many Americans. This season, Vail has suffered from Covid-related staffing shortages and other issues that have prevented the company from fully opening Stevens Pass, Wildcat, and Attitash. Several of Vail’s smaller ski areas have slashed operating hours from previous seasons. Warm temperatures throughout much of the country through the first half of December didn’t help. This seemed like a good time to reflect on Katz’s legacy while sorting through the messy present and how Vail plans to move ahead. Questions I wish I’d asked There was just no way to cover everything. As Katz said before we started the interview, we could have spent an hour on any single question. I would have loved to have gotten more into Vail’s enormous investment in chairlifts, the impacts of the company’s vaccine mandate and the federal government’s worker-visa limits on staffing, mountain-town traffic, Katz’s enormous personal donations to charity, and the odd discrepancy between flat skier-visit numbers and what feels like ever-more crowded resorts. Next time. More Vail * Here’s a pretty good timeline of Vail Resorts’ acquisitions (does not include Seven Springs) * Previous Vail Resorts episodes of The Storm Skiing Podcast : East Region COO Tim Baker and Mount Snow GM Tracy Bartels * Thoughts on Vail’s enormous coming lift upgrades * A look at some of Vail’s struggles this season Get full access to The Storm Skiing Journal and Podcast at www.stormskiing.com/subscribe