How Austrian Ski Resorts Nail Decentralization
A deep dive into the old school ski resort model and why it's an apt analogy for web3
Today, in honor of the first day of the first month of winter, I want to talk about two subjects near and dear to me: skiing and web3. Or! More specifically, how the former is analogous to the latter. Bear with me…
For the sake of this post, when I talk about skiing, I’m talking about the resorts of the Austrian Alps. My father grew up in the Tirol, the Austrian state with the most skiing, and from 2018 through 2020 (while living in neighboring Switzerland) I explored much of the region’s resorts. Today, I’ll be focusing on the Arlberg. Comprised of five villages, spanning two states, webbed by 187 miles of in-bounds runs (the off-piste could well triple the terrain), and serviced by 89 lifts, the Arlberg is one of the world’s largest ski resorts.
It’s also, in comparison to its American counterparts, one of the world’s cheapest. All the aforementioned stats can be skied for a single-day lift ticket cost of 67 euros, or just under $70. Vail, Colorado, on the other hand, will charge $275 for single day tickets purchased day of during peak season this winter (yes, they are significantly cheaper if bought well in advance, but this eliminates the spontaneity of a powder day). Most big American ski resorts are no different. From Aspen to Park City, Steamboat to Jackson Hole, expect to fork over north of $200 at the ticket window.
Let’s dispose with the obvious first: Whether you prefer skiing in America or Europe is a matter of personal taste. On the whole, European resorts tend to be grander in scale, history, and charm, while their American peers (especially those out West) often boast better grooming, wider runs, and more reliable snowfall.
What isn’t up for debate is price. Austrian skiing (as well as European skiing in general) is far more affordable than American skiing. Why is that? Simple, because Austrian ski resorts are DECENTRALIZED.
In America, one company owns the resort. Sure, they might lease the land on which the actual trails are cut (typically from the National Forest Service), but everything else — from the lifts to the ski school to the rental shops to the cafeterias slinging severely overpriced fast food — falls under the single umbrella of the parent company. A monopoly, if you will. Or Disney World, minus the mouse but retaining the captive audience.
In recent years, the rising supermarket-ification of American skiing has only compounded these problems. Five companies own 71 of North America’s biggest ski resorts, with Vail laying claim to 31 of those. Season pass deals like Epic and Ikon are offered each winter and grant pass-holders access to all ski resorts within the company’s portfolio. This has only led to further problems, with a greater influx of skiers descending en masse to these resorts during holidays and often over-stressing the existing infrastructure. The lifts and staff simply cannot keep up with the demand. Rather than ski all day, many American skiers and snowboarders now find themselves stuck in comically gargantuan lift lines like the ones pictured below.
When considering all this, it could be argued that the greatest threat to American skiing isn’t climate change, but the one-two punch of stratospheric lift ticket prices and the corporations that keep jacking up said prices.
“It’s a theme park,” says Daniel Keiper-Knorr, a founding partner at VC firm Speedinvest. As a former ski instructor and a life-long fan of the Arlberg (his grandfather bought an apartment in Lech in the late 1960s), Daniel is mystified by the American model — at least from a consumer standpoint. “It’s perfectly organized skiing; for the supplier, not the guest.”
In Austria, Daniel tells me, things are done differently. This has a lot to do with how the sport arose in the Alps, where farming villages, not purpose-built resorts designed to sell vacation homes, are where skiing took hold.
“Ski resorts were not built by the drawing board here,” he says. “They grew organically.” He explains how these Alpine farming communities, many dating back to the 16th century, realized that skiing could add an extra revenue stream during the dead months of winter, and with the arrival of tourists — particularly Brits, who brought with them an aura of glamor — in the early 1920s, up went lifts, farm houses and post offices became hotels and restaurants, and shepherds and cheesemakers began teaching foreigners how to make parallel turns.
In terms of a decentralized model, it’s the ski lifts that prove most fascinating. In America, one company owns all the ski lifts at a resort. In Austria, there is no single owner, but rather hundreds, even — in the case of the interconnected Arlberg — thousands. This has to do with the fact that much of the land on which lifts are built and on which people ski down is farmland, which can be owned by multiple families.
Or, as Daniel puts it: “Typically the income of the lift is shared by the people who own the land over which it spans.”
In other words, a cluster of say 12 families might own five lifts on one side of the mountain, while another cluster owns lifts on the opposite side. Interestingly enough, not only does this lead to myriad owners (“all under one unified brand”), but it also creates healthy competition among lift operators that, in turn, ensures they are constantly upgrading their chairs and gondolas — good news for the consumer.
“If one starts to invest that triggers a chain reaction,” Daniel explains. “It forces the others to invest as well.”
For instance, last season in the Arlberg the old Madlochbahn double chair in Zürs (one of the resort’s five villages) was upgraded to a high-speed six-pack. This meant a far greater number of skiers and snowboarders would come down the Madloch run into the hamlet of Zug — too many people for the existing double chair at the bottom of the trail to handle. To avoid creating a bottleneck, the lift owners in Zug put in a state-of-the-art gondola linking guests up into Lech.
This same logic applies to the independently-owned restaurants and hotels in the resort. When I ask Daniel why they don’t all charge more for such excellent infrastructure, thus raising prices to the levels of American ski resorts, he laughs and says, “Because the next ski resort is just a valley away.”
Herein lies the rub: the small country of Austria has over 400 ski resorts, all of them locally owned; there is no one behemoth — a la Vail — that can gobble up the best mountains and charge exorbitant fees for access.
The other interesting facet in play are the ski schools. American resorts have one ski school per resort. There are no other options. Austrian resorts have many. For years in the Arlberg, each of the five villages had their own ski school. But today, following a lawsuit that hinged on the fact that these ski schools didn’t offer full-time employment benefits to their instructors, there are now many. Some might have 300 instructors, while another might have five. One outfit could specialize in beginners, the other off-piste guiding and heli-skiing. All this has resulted in affordable ski lessons for the consumer. For example, a full-day private lesson in Vail costs nearly $1,200, while a similar private lesson in Lech clocks in at $470.
“It’s basic economic theory,” Daniel says, referring to the 20 to 30 ski schools offering services across the Arlberg. “A monopoly can ask any price; the more fractionalized the market is, the more the true price emerges — what people are willing to pay equals the maximum the supplier can ask.”
In our opinion, The 100-year old Austrian ski model shows that decentralization works in business — and in web3! Whether we’re optimizing the existing Internet to become more user-centric, or rebuilding it anew, the principle remains: web3 start-ups are creating a world in which consumers benefit from fair prices, and independent operators/suppliers have the opportunity to build their own brands and connect with their growing community.
In terms of restaurants, the idea gets a bit trickier. Like web3, the restaurant business is also decentralized. This is a good thing for consumers, as a decentralized system promotes creativity and diversity. However, it plays out less well for restaurant owners and operators, which helps to explain why no one has any price leverage. Additionally, a key question for Blackbird is how do we — a web3 brand focused on connecting restaurants and diners closer than ever before — operate within this decentralized world of dining without homogenizing it, which is the last thing we want.
There is a solve for the issues and questions above, one in which both the restaurant and the diner benefit, and we’re busy finding the best solution. All of which sounds pretty wunderbar to us.
Blackbird Labs, Inc.
Thanks for reading! Blackbird will launch in select restaurants later this year. In the meantime, if you dug this, please give it a like! We’re also on Twitter and would love to hear from you there.
Well written and great analogous analysis!
Love this analogy and comparisons.
Having skiied on both sides of the Atlantic, I can attest to this, and do favor the European experiences. The food generally sucks in NA.
Decentralization and freedom of choice are the antidote to monopolies.
Another similar segment could be airports.