Free dining extended

[wbk]

Walt Disney World is finding out that cutting consumers off from discounts is difficult to do.

The resort announced Monday that it is extending a free-dining promotion through the end of 2010. The offer, which had previously been in place only for travel from mid-August until early October, will now cover vacations through Dec. 21.

Hotel packages must be booked by Aug. 14.


Source: Orlando Sentinel, July 7, 2010

[jlewisinsyr]

Disney made a big mistake expanding the Free Dining program years ago. Disney is going to have a real tough time breaking the discount pattern.

They really need to consider resetting their prices. In part of that, they could do a big marketing blitz spinning it to the customers point of view. Doubt that will happen though, Disney is stuck on the discount fix.

[Uncleromulus]

You are right--now they can NEVER go back to ordinary pricing (whatever that is).
And hordes of people jamming the restaurants all through 2010--how nice!!

[skiingfast]

Disney made a big mistake expanding the Free Dining program years ago. Disney is going to have a real tough time breaking the discount pattern.

They really need to consider resetting their prices. In part of that, they could do a big marketing blitz spinning it to the customers point of view. Doubt that will happen though, Disney is stuck on the discount fix.

Disney didn't make a mistake. By giving free dining they recieved far greater attendance.

[Uncleromulus]

But at much less profit per guest.
Now I think they are at the point where many folks on Free Dining would never eat at a WDW restaurant unless it was "free"--or as free as it can be considering the package.

[troynkasey]

It's the peaks and valleys of the "market". They will eventually eliminate or reduce further the discounts. That will restrict some people from going. But others who would go and stay deluxe with free dining, will now stay moderate with dining plan. Those saying moderate with free dining, will stay value with a dining plan. And some won't go. Or others will cut costs in other areas...no park hopper, no water parks, cut one day off their stay...etc.

There will be a dip in attendance, but there are still those folks who will go regardless. We're one of them. We go every summer when there isn't free dining. We took advantage of the 7 days for price of 4 a couple years ago and extended our stay while staying deluxe.

Once Disney gets rid of the discounts, they can still use them to supplement down times during the year or offer discounts or offer discounts to families who haven't visited in a number of years.

[skiingfast]

But at much less profit per guest.
Now I think they are at the point where many folks on Free Dining would never eat at a WDW restaurant unless it was "free"--or as free as it can be considering the package.

What you said is because of free dining they make less per guest, but if they didn't have free dining they would make nothing at all.

You just said it is better for Disney to have free dining than not.


Disney does not offer free dining because it hurts them. It bring in more guests which cover the fixed costs of thier business. It also brings in more return guests. Sure it gives up profit from what is could be but it also expands it what it would be.

[CR Resort Fan 4 Life]

Here is a link to the full article from the Orlando Sentinal.

http://thedailydisney.com/blog/2010/07/disney-extends-discounts-amid-signs-of-economic-weakness/

[skiingfast]

Once Disney gets rid of the discounts, they can still use them to supplement down times during the year or offer discounts or offer discounts to families who haven't visited in a number of years.

Quite right, this is why they offer free dining in the fall again a traditionally slow period.

We also don't know if they are offering as much of a discount as in the past. For all we know there are only 10 rooms per resort that the package will be available to or it is only available for a few resorts.

[Lewisc]

The rack rate of Disney hotels is very high, particularly when compared with other Orlando hotels.

I suspect "Free dining" produces more revenue then deep (40-50%) hotel discounts.

Free dining suggests at least some of the rumored cut backs in the dining plans for next year will be implemented.

[canopynut66]

Black out dates on the "new"extended dining. Black outs Oct 28 thru November 12 and are going November 1 thru November 11 2010. Anyone know what going on at WDW during that black out time period? reservations didn't. Does not help to have Visa rewards card or Passholder. Bummed us out:scared:

[jlewisinsyr]

Disney didn't make a mistake. By giving free dining they recieved far greater attendance.

Yes, on the short term, they did, and it probably was what kept them in the black. However, many companies have realized that discounting does more harm then good. It might keep you in the black during the discount period, but on the long term it results in less profits because it devalues your product.

[ConcKahuna]

Black out dates on the "new"extended dining. Black outs Oct 28 thru November 12 and are going November 1 thru November 11 2010. Anyone know what going on at WDW during that black out time period? reservations didn't. Does not help to have Visa rewards card or Passholder. Bummed us out:scared:

The final nights of MNSSHP.

[skiingfast]

Yes, on the short term, they did, and it probably was what kept them in the black. However, many companies have realized that discounting does more harm then good. It might keep you in the black during the discount period, but on the long term it results in less profits because it devalues your product.

Do you think you are able to figure this out but not someone in the marketing department of Disney? They didn't make a mistake.

Further, By bringing in more visitors they are likely to bring in more repeat visitors in the future.

Have you seen Coke and Pepsi discounted in the store, is it hurting them in the long run or are they still in business because of it?

[jlewisinsyr]

Do you think you are able to figure this out but not someone in the marketing department of Disney? They didn't make a mistake.

Further, By bringing in more visitors they are likely to bring in more repeat visitors in the future.

Have you seen Coke and Pepsi discounted in the store, is it hurting them in the long run or are they still in business because of it?

I am a Financial Analyst by trade, and even Disney has admitted that moving away from discounting is going to difficult because consumers have become accustomed to the discounting in place, devaluing their product.

Many retailers, especially as you move further away from necessities and to higher cost items try to avoid discounting because the ones that haven't have found themselves locked into a discounting pattern. The longer the discounting pattern lasts, the harder it becomes to remove yourself from it. That doesn't mean discounting shouldn't happen, but it should be deliberate and short in duration. Disney did what they felt they should and I will agree it was deliberate, but it has not been short in duration.

Let me use an example like A&F, it's a basic retailer, but it bucked the trend in discounting outside of deliberately discounting end of season clothes in which sales lasted in short duration. Consumers do not expect to find a "sale" at A&F very often (I shop there a quite a bit and I don't expect to walk in and see sales displayed in their windows, etc.). Now many economists were shocked that they didn't follow the likes of GAP at discounting at every corner and their sales reflected reduced traffic, but they also were able to keep their profit margins in check and as the economy pulls forward because the consumer expectation that there are very limited sales, they will be able to continue in a non-discounting fashion.

Now using your example, many consumers will jump back and forth between Pepsi and Coca Cola products based on the sale price (I don't drink soda, but I am aware of the market). The result of the price wars between the two companies has definately impacted their profit margins (something both companies admit to their investors), because consumers are price sensitive and both companies offer sales frequently often only buying when on sale. Sure both companies pull profits, but at what expense to their full profit potential without the heavy discounting.

It all comes down to basic economics and consumer behavior.

[tjkraz]

Black out dates on the "new"extended dining. Black outs Oct 28 thru November 12 and are going November 1 thru November 11 2010. Anyone know what going on at WDW during that black out time period? reservations didn't. Does not help to have Visa rewards card or Passholder. Bummed us out:scared:

The so-called "Jersey Week" is the first week of November. If it's like years past, Disney hotels are already booked to a high occupancy without any need for dining perks. Expect pretty large crowds for "off season" during that week.

[ProgressCity]

Do you think you are able to figure this out but not someone in the marketing department of Disney? They didn't make a mistake.

Wow. So now Disney employees are perfect? They never make mistakes? So taking down the Pleasure Island gates was a raging success? Oh, how about the new Pleasure Island, they're really packing in the bodies now are they?

Disney has made it's fair share of mistakes. The cast member name tag does not imbue the wearer with magical powers. They're people.

When something is available for 1/3 of the year, it is no longer a sale to stir up business. At this point people expect it and many people don't think the dining plan is worth it unless it's free. Why would they? If it's free 1/3 of the time it almost feels like a ripoff to have to pay for it if you happen to be traveling during the other 2/3 of the year.

Being in marketing myself, I have to agree with jlewisinsyr, Disney has devalued their product.

[bytheblood]

Disney made a big mistake expanding the Free Dining program years ago. Disney is going to have a real tough time breaking the discount pattern.

They really need to consider resetting their prices. In part of that, they could do a big marketing blitz spinning it to the customers point of view. Doubt that will happen though, Disney is stuck on the discount fix.


They need to just do it. They had no issues pulling VMK, ripping the tip and appetizer from the dining plan, etc...so this is just another business decision. Granted, the economy does play a role. I don't think room, discounts are so bad, just the free dining. If Disney would offer room discounts, they will make money in other areas because people have to eat and it is hard to go to Disney and not buy any souvenirs. (not all people, but most)

It is apparent that their focus is on time-share really. My biggest issue is with all of the hotel additions and no more places to play. Disney is working on another DVC resort and adding another value resort, yet we have the same 4 gates we have had for years before AKV, BLT, Pop Century and now the new additions were there. Adding princesses to Fantasyland does not quite assist in this area. :rolleyes1

[skiingfast]

Wow. So now Disney employees are perfect? They never make mistakes?



Great job taking my words out of context. I never said anything like this.

[tjkraz]

"Free dining" is apparently an offer which resonates with Disney guests. Disney keeps going back to that promo, so it's reasonable to assume that giving a family of 4 $100 per day worth of free food yields better results than simply discounting a room by $100 per night.

Certainly Disney execs are not flawless but they do have access to mountains of guest reservation statistics. It doesn't take a PhD to massage the data and identify the trends.

As for Disney overall philosophy of discounting, I agree that it isn't in their long-term best interest. And I think that's why we are seeing some reduction in the perks offered this fall (more blackout dates.)

When the economy went in the tank, Disney could have avoided discounts and hoped to achieve similar profitability by charging higher prices to fewer guests. In the short term, fewer guests would have certainly resulted in shorter park hours and a variety of other staffing cutbacks. Hard for any of us to really second-guess their decisions, though, since we don't have access to any historical data.

[pioneer89]

I theorize that the discounts have less to do with getting people to WDW as they do with getting people to commit 100% of their vacation to WDW.

I'm suggesting that the discounts are more designed to keep you away from Universal and Sea World, and less designed to get you to choose WDW in the first place.

If my theory is true, I think the desire of WDW execs to slow the discounting was just sunk by the popularity of WWoHP. WDW has lost it's monopoly on being the 'magical' destination. U-O has always had the reputation as the superior 'ride' destination, and WDW has been the superior 'theme' destination... not so clear cut any more.

Antecdotally, I'm even tossing about plans to skip a day at WDW (which I've already paid for) to try Universal for the first time. If we try Universal, we might like Universal, and our next vacation might be a split one.

[dbowles]

Has anyone come across this problem? We were told that the Wilderness Lodge was not offering free dining during our selected time because it is only offered at the Resorts that are in need of more reservations. :mad: Curious if anyone else has had that problem.

[nytimez]

Has anyone come across this problem? We were told that the Wilderness Lodge was not offering free dining during our selected time because it is only offered at the Resorts that are in need of more reservations. :mad: Curious if anyone else has had that problem.

No, but it makes sense. There are X number of rooms at each resort that are available for the promotion, which is used to drive up bookings at those resorts. When they reach a certain threshold, there's no free dining there -- because they want to drive up bookings at the remaining resorts.

[eliza61]

Disney didn't make a mistake. By giving free dining they recieved far greater attendance.

Don't mistake more people= more profit. Department stores made that mistaking and are suffering for it.

In order to get people to shop, department stores now must slash prices to the point where they are no longer profitable.

Airlines are also in this fix. customers are so used to getting rock bottom airline fares that the airlines now have to do ridiculous things (fees) to make a profit.

Now the problem Disney is facing is that they can't make a large profit on the restaurants. A lot of business have the greatest profit margin on "consumables". The extra stuff we purchase like t-shirts and food.
Even the dining plan has gone through a number of variations to try to max profits. remember when it started tips were included and people talked about getting the most expensive items on the menu. Now, tips no longer are on the menus and unless you go to a signature ress. high end items have been remove.

It will be interesting to see how htis progresses.

[tjkraz]

Don't mistake more people= more profit. Department stores made that mistaking and are suffering for it.

Not really a great analogy. The economics of a retail operation are much different than a vacation resort.

Most of Disney's revenue comes directly from the parks and in that case, more people absolutely does mean more profit. The parks are driven by fixed costs. Whether they have 25k people in the Magic Kingdom in a single day or 40k, the operating costs are about the same. Sure they may have to add an extra ride or food service worker here or there when crowds get big, but most daily costs exist regardless of crowd sizes.

With Disney charging $50-100 per person, per day for park admission, it's definitely in their best interest to get as many bodies through the gates as possible.

Hotel discounting is another matter and we all know Disney would like to start pulling away from those trends. Anecdotal evidence suggests that they have already done so. Even though "free dining" has returned, there are more blackout dates than the same period in 2009 and reports indicate that there are fewer rooms available with these promos (as in dbowles' post above.)

Disney will never get out of the discounting business altogether. Even before the recession hit, you could save 15% or so through AAA or 20-25% as a Passholder. Given the fact that we are still technically in a recession with near double-digit unemployment, any signs of improvement in a high-priced leisure industry are encouraging.

[professorkev]

Well I booked in April, got a Boardwalk Villa and dining (1 meal and 1 sit down and one quick) with a 8 day pass. it cost $4000 even. I asked triple AAA about the free meal and unfortunately its not offered with my discount. If I did the free meal and villa now it would be $4,350.00 So There is no real free meal because it's not valid on discounts! SUCKS!