Dynamic pricing of ski passes : How does crowdedness in slopes affect skiers’ willingness-to-pay and the optimal price of a ski pass

Abstract

This thesis use choice experiment to value consumers willingness to pay (WTP) for ski passes and contribution maximizing prices for ski resorts in the Inland region of Norway. Respondents consisting of total 346 where asked to choose between hypothetical scenarios with different attributes and prices. Logit and conditional logit models where used to estimate the utility customers receive in ski resorts under different scenarioes. The receieved utility measures include different weather scenarios, crowdedness in slopes, weekday and different alpine ski resort. Using conjoint analysis these attributes determinate consumers preferences when purchasing a ski pass. Based on the part-worth utilities derived from the conjoint analysis a market simulation was run to obtain market share for different level of crowdedness and the studied ski resorts. We came up with data points that where representing a demand function. We used the logistic function to interpolate the demand function, and we where using explicit the logistic function to estimate demand for an particular price level. Using Solver in MS Excel we came up with recommended contribution maximizing prices under different levels of crowdedness for the three studied ski resorts. Additionally, this thesis reveal characteristics that have significant effect on the willingness to pay for ski passes. We find that, at parity with price and customers preferences, the average consumer is willing to pay NOK 262 less when it very crowded slopes compared to not crowded slopes. Additionally we see that customers are willing to pay NOK 118 less when visiting Skeikampen ski resort compared to Hafjell ski resort , and NOK 155 less when visiting Sjusjøen ski resort compared to Hafjell ski resort. This thesis is a part of Innovative Pricing Approach in the Alpine Skiing industry (IPAASKI)1, a research project studying how to develop and implement innovative pricing schemes in the Alpine skiing industry.