Here's my 2 cents on the ever increasing Disney vacation and this board. It seems to me that everything today is pro business, pro money, and pro bottom line, it's the world we live in today. Consumers have stopped demanding more for their money and will fork over cash for just about anything. By doing so, we have allowed business to do less and charge more.
For some odd reason we are letting companies get away with taking more and giving us less, for some odd reason we think that's ok. And for some, if you question that, then all of a sudden you're "anti business" and on this board, almost "anti Disney". Why is not ok to question where our money is going?
That's a pretty broad characterization of millions of consumers, all with a much more intricate take on this (and other) businesses.
Personally, I tend to be a realist. I'm not defending Disney's actions, rather I understand the nature of their decisions and expect them to occur. Many moons ago I took just enough college business classes to understand that when times are tough, businesses discount and work hard to bring in customers. When times are good, prices go up and discounts evaporate.
The stock market is over 15,000. Last month's jobs report was better than anyone expected. Most people have stable employment and they are spending money.
An example, my wife and I went on our honeymoon to WDW in 2008, we looked at booking the same exact trip at the exact same time this year for our 5 year Anniversary. Keep in mind when this was priced out it was around the same time that Disney released it's annual report and noted that hotel room occupancy at his Orlando hotels were flat. From 2008-2012 when our economy went through a horrible recession, a WDW vacation increased in price a little more than 20%.
And I bet many other prices have gone up by similar rates. I still remember buying Christmas presents for thirty and forty cents on the dollar in 2008 because retailer were desperate to move inventory and meet their sales projections.
The recession began in December 2007. Throughout '08 the housing market was in a tailspin and the stock market crashed in the fall of that year.
Disney was desperate to get guests into its parks by that time. The 2008 prices you paid were heavily discounted. Now the discounts are much lower and prices have also increased.
You aren't comparing 2008 rack rates with 2013 rack rates...you're comparing '08 with heavy discounting vs. '13 with more moderate discounting.
We aren't going this year simply because of that, and this report of increased revenues does not include hotel occupancy rates. I'd like to know the percent increase of that, if its minimal or flat, then it tells me that Disney's cost is in fact keeping people away.
Hotel occupancy is around 80% and it has been relatively flat in recent years. However when you factor in the recent addition of 2000 rooms at Art of Animation, overall hotel guest numbers at WDW are up.
But the hotel occupancy is only a small piece of the pie. Tens-of-millions of park guests do not stay in Disney hotels. Those people are still paying for park tickets, food, souvenirs, etc. Park admission--which is always going up in price--is the big ticket.
I wonder how much Carsland and Disney's rolling back promotions is a part of the increase in revenues.
Point is, I do think Disney is missing out on more revenue because of their high prices.
Revenue but not necessarily
profit. Any reduction in price eats directly into the profits. Disney has to sell more units just to equal what they would have made with higher prices.
Pop Century has 2880 rooms with an average nightly rate of about $150. Let's be aggressive and assume that about 2/3 of that $150 is profit.
At 80% occupancy, Disney's profits could look something like this:
2880 rooms x 365 nights x .80 occupancy x $100 profit = $84 million profit per year
Now, let's assume the room rate is discounted by $50 and occupancy rises to 100%. Disney still has the same overhead expenses: front desk, housekeeping, theme park buses, utilities, maintenance, landscaping, property taxes, etc. The fee reduction comes right off of the profits.
2880 rooms x 365 nights x 1.00 occupancy x $50 profit = $52 million profit per year.
Even with more guests in the hotel, Disney made less money because the discounting directly impacts the amount they pocket from each transaction.
