Blue Mountain Resorts Limited: The Night Skiing Decision
In mid-June 1979, Mr. Gordon Canning, president and chief executive officer of Blue Mountain Resorts, was facing a major decision. The officer has to determine whether or not facilities for night skiing in the upcoming season that it should be installed on the blue mountain slopes. And if he does so, then he has to specify the pricing strategy for tickets and passes. The decision had to be made by July 1st. Blue Mountain is located in the north of Toronto near Georgian Bay, is Ontario’s most prosperous Ski Resort. During the 1978-1979 seasons, Blue Mountain had 250 acres of Ski trails in service. There were 27 different trails serviced by eight chair-lifts and 10 other tows. Three quarters of the trails were covered with snow. Blue Mountain’s skier market is primarily from South and South-western Ontario, with a small proportion coming from U.S. Midwest. The largest group is the day skier who represents 38.4 % of skiers who visit Blue Mountain once or more during a year.
The Organization’s corporate strategy statement dictates that any proposed project must fit at least one of the following conditions before it can be undertaken: * A project which protects current earning power and minimizes any risks inherent to the business. * A project which helps to attain off-season use of facilities. * A project which expands primary earning power.
* A project which offers new opportunities in:
* Other ski areas
* Other recreational areas.
In addition, it was very important to the business to maintain a “comfortable capacity” at the ski resort. Opportunity:
In 1978, Gord Canning began to inquire into ways to increase utilization of the facilities in the off-hours of the winter skiing season. Blue Mountain felt a responsibility and a commitment to offering skiers the highest quality and best value for their money. Canning felt, therefore, that if Blue Mountain were to introduce night skiing, their facilities would have to be better than any of the competitors. By lighting entire slope, Blue Mountain could offer the longest run, the highest vertical and the best snow conditions for night skiing in Southern Ontario.
In addition, there would be operating costs involved in maintaining the facilities for the evening hours. The costs would involve payroll for cashiers and ski petrol, repair and maintenance costs for equipment and trail, printing cost for tickets and an additional cost for utilities. OVERALL EXPENSES REQUIERED FOR THE NIGHT SKIING OPPORTUNITY
Now here we will consider all about expenses which they have incurred if they plan to install a night skiing facilities. PARTICULARS| AMOUNT($)|
* INSTALLATION EXPENSES| 1,35,500|
* FIXED COST(SEASONAL ALLOCATION)| 20,000|
* VARIABLE COST * OPERATING COST (PER NIGHT) * PROMOTIONAL COST * INSURANCE COST(PER THOUSAND SKIERS)| 1000 5000 7.75|
From the exhibit we came to know the segment that most of the night skiers belong to age group of 18-24 which account for 54.2% of the total population of the night skiers. On the basis of marital status single males are the most which accounts for 80.5%. Reasons for night skiing are – * Social ability
* Craze for the sport
The customers who come to use the night skiing facilities are not price sensitive they mainly focused on the enjoyment part of the sport another reason for them to be not price sensitive is that there are no any other skiing facilities nearby. We can also see that the number of pass holders were around 60% and number of ticket holder were around 40%. Skiers were asked about the fairness of ticket price in a specific survey. Assuming skiers declared the maximum price they were...