Dynamic Pricing Benefits Attractions
Adopting dynamic pricing can boost revenues at outdoor seasonal attractions by setting flexible prices for admission based on current market demands. At the same time, offering guests different admission prices for certain days can earn their approval, especially if they can buy admission tickets for the days that they want in advance.
Meanwhile, selling season passes offers outdoor seasonal attractions a way to ensure revenue, even when bad weather is forecasted. Those attractions that price and promote season passes effectively can attract guests from competing venues, in addition to locking in sales to their regular customers.
These are some of the insights offered by a February 2020 study into Swiss ski resort pricing titled “Zusammenfassung der Studie über Preisentwicklung in Schweizer Skigebieten” (“Summary of the Study on Price Developments in Swiss Ski Resorts”). Published by the Lucerne University of Applied Sciences and Arts in association with Seilbahnen Schweiz (SBS), the national association of cable cars in Switzerland, the study’s findings are designed to provide Swiss skiing resort operators with better pricing options. However, lessons from the study can be useful to outdoor seasonal attractions that charge admission.
Dynamic Pricing Pleases Operators and Guests Alike
Dynamic pricing allows operators of outdoor seasonal attractions to charge varied rates for specific days or timeframes.
A benefit of dynamic pricing is that attractions can charge more for holidays, special events, or peak traffic days, when traditionally, more guests visit. A subtle advantage is that dynamic pricing precludes offering any kind of fixed price for guests to use as a comparative standard.
“In a dynamic pricing system, you can increase your prices more easily and especially in ways where the consumer doesn’t realize that prices are increasing because they have no fixed prices to compare them to. You have no such prospects with fixed prices,” says Professor Dr. Philipp Lütolf of the Institute for Financial Services at Lucerne School of Business. He served as one of the study’s authors, along with Professor Dr. Jürg Stettler and Professor Urs Wagenseil, both with Lucerne University’s Institute for Tourism Management.
At the same time, dynamic pricing allows value-minded guests to “get a bargain” while paying more, as opposed to clearly stated fixed prices that could steer them to lower-priced competitors. “For instance, say a guest sees that admission costs $90 on one day and $70 on another,” says Lütolf. “This gives them the opportunity to buy the $70 admission and feel that they have made a good deal for themselves.” For example, guests can easily see that a Saturday admission is more expensive than a Tuesday during the week.
The study drew other conclusions about the impact of dynamic pricing on Swiss skiing resort admission revenues. They include:
- Dynamic pricing led to a slightly smaller number of passes purchased based on a per skier/per day basis. However, thanks to the higher prices charged per admission using dynamic pricing, the actual revenue for the season increased by 1.5%.
- Resort guests are likely to buy multiday tickets under dynamic pricing models (as compared to fixed pricing) and do so earlier in the season (or prior to it).
- Dynamic pricing, with its differences in prices for specific dates/groups of dates, can persuade guests to book in advance to lock in admissions on those days.
- Dynamic pricing can help boost online ticket sales because guests can shop for bargains on the attraction’s website.
Season Passes Boost Visits
According to the Swiss skiing resort study, selling season passes boosts attendance at these resorts. During the 2019-2020 season, Swiss skiing resort season passholders used their passes 15 days per season on average. Swiss skiers without a season pass skied on average 4.5 days per season.
Based on this usage, a season passholder saves about 20% on admission on average compared to a guest buying a day pass. The resort that hosts them both pays the same amount to maintain the grounds, so season passes deliver lower net per-person admission revenues. However, the heavy attendance by season passholders opens up more opportunities for food service and retail sales.
One clear benefit of season pass sales is that this revenue comes in at the start of the season when cash flow is low. Another benefit is the “insurance” that season pass sales provide against bad weather. When the slopes are free from snow (and devoid of skiers), the money brought in by season pass sales can offset the loss of day pass sales.
Finally, season passes can be priced to lure guests away from competing facilities or give them the feeling of belonging, thus creating a sense of loyalty. This strategy can generate even more food and retail sales as passholders return time and time again, as well as offer opportunities for further upselling as a result.
Review the complete study in German here.