Disney's $1 billion dollar bet on magical wristband - Wired

[lockedoutlogic]

Did you notice that LT was only spending part of his time at the Disney parks? It's not all going to Disney.

That aside, salaries have been stagnant for a long time now so this notion that people somehow have more disposable income doesn't add up. Prices have certainly gone up everywhere and yet supposedly there is a wage problem.

Because consumer debt is rampant...forming a bubble...that will burst and the bill will come due.

Disney has expertly positioned itself to have their parks essentially wiped out by it...as what's left of the "middle class" will be destroyed and that is the core Disney park clientele.

I hope it never gets here...but that is foolhardy...frankly.

 

[lockedoutlogic]

People have certain amount of money to spend. They've looked at Disney, and have found value even in the face of increasing prices. The rising food and ticket prices only serve to prove my point. People are willing to pay the burden despite the hikes because they find value in the product. More then ever before guests are willing to deploy funds on Disney vacations. Disney's profits have grown faster then consumer spending and economic growth. This points out that now guests are actually spending more then they did pre recession. People find value in Disney vacations.

They're buying their vacations on credit... Not saving in advance...

That's how the prices are "tolerated"...they're being spread out at 24.99% apr...

So there is your "value" in Disney.

Do you honestly believe these are all "financially sound, educated, rationale, savers" going on these trips?

I mean... Have you been to a walmart recently? Or a shopping mall?

Somehow Disney/travel has not been infested as all other sectors - notably real estate - has?

How quaint...

 

[clsteve]

I'm sympathetic to your volume argument. Very. As a fan of Apple, I'd seen the volume argument used against iPhone. Is it fair to compare an under $100 android phone to iPhone, which is more then 6 times as expensive? Nope. Those two products aren't in the same league. Now there was an angle I did agree with, comparing similarly priced and specced products to iPhone. Trying to argue there was no comparison between iPhone and and the latest Galaxy S phone was silly. Those two products are comparable because of price, specs, and target audience. They're both premium devices.

In the same way, Universal Studios Florida Park, and Magic Kingdom are similar. They're both in the same market. Both have similar pricing. They're both in the same business. They're one of the clearest cut comparisons of any product. Unless you're arguing that for some reason there's a major discernable difference between the two. I'd say the Resort linkup is the only advantage MK has. The flip side is MK is probably the reason the Resort hook up exists in the first place. Plus Universal is more accessible off the highway. Do explain why these two shouldn't be compared on volume?

Revenue Percentage growth is what you were talking about before me and Cormoran got off on profit. We can get back to that. I have issues using exclusively percentage revenue, because it fails to give proper perspective. For example, the Philippines has outgrown the United States on several occasions. Does that mean that any other country would trade for their growth over the US's? Nope.

The most comparable figures we have between the two companies comes from operating income before depreciation and amortization. (Universal doesn't make known it's full pre tax profit, and Disney doesn't make free cash flow available). Universal reported:

2014- $1,168,000,000
2013- $1,004,000,000
Growth= $164,000,000

Adding Disney's own numbers back into the mix brings it to:
2014- $4,135,000,000
2013- $3,590,000,000
Growth= $545,000,000

Universal Parks Revenue:
2014- $2,623,000,009
2013- $2,235,000,000
Growth= $388,000,000

Disney Parks and Resorts Revenue:
2014- $15,099,000,000
2013- $14,087,000,000
Growth= $1,012,000,000

DDL, I think you're saying that profit and volume skew the discussion, and I absolutely agree with you. But I kinda lost the rest of it somewhere around highway access and the Philippines.

But I agree. P&R for both companies are very similar, almost 2 peas in a pod - being the Theme Park business. But both with 2 different strategies.

Right now, number 2 Uni is seeing a larger return by investing in attractions. Disney, the number 1, has invested an impressive amount in guest management but is not yet seeing the returns for what they put into it. They very well may - and with much lower YTY expense.

But who knows..? Nobody. Since they're the first to try to manage human behavior to that extent.

The good news is: adding quality attractions still works in the Theme Park business.

It's good to know

 

[jade1]

Because consumer debt is rampant...forming a bubble...that will burst and the bill will come due.

Disney has expertly positioned itself to have their parks essentially wiped out by it...as what's left of the "middle class" will be destroyed and that is the core Disney park clientele.

I hope it never gets here...but that is foolhardy...frankly.

So they should target the lower class? You think it's busy now-just wait.

If what's left of the middle class is going to be wiped out soon as you claim-won't we have bigger issues than a theme park?

 

[wallrock]

I did notice he "chose" that yes, and FP+ will save him $20,000.

But what's your point-FP+ isn't causing stagnant salaries unless I missed something.

But "saving $20,000" with FP+ can be helpful for somebody with a stagnant salary.

This was the part, apparently you missed it as well:

"making the trips potentially more affordable for those that have smaller budgets." .

If you tell someone on a limited budget that they can save upwards of 20K by using FastPass+ they may decide to take a vacation elsewhere after they've emerged from their fainting spell.

According to Lake Travis that 'savings' is spread across multiple trips over multiple years. What about the folks that their trip is a once in a lifetime? Sorry, but the saving 20 grand isn't exactly a selling point.

And yes, jobs are (should be) a default. The problem today is that they are few and far between. I work in the tech sector and for every 20-something that shows up fresh out of college their are a hundred others from overseas that will take the job at half the rate, and they have experience. Now that will eventually change when the offshore salaries start to creep up to US levels (it's getting pretty close actually when you peel away the cultural membranes), but it won't change enough where people can consider the value of FastPass+. They'll be more concerned about funding the ticket just to get in the park.

 

[lockedoutlogic]

So they should target the lower class? You think it's busy now-just wait.

If what's left of the middle class is going to be wiped out soon as you claim-won't we have bigger issues than a theme park?

Indeed...that why I hope it never comes.

No...if i had I speculate on what Disney could do to protect the parks...it would not be to engage in a full throttle 11 year policy of end over end price hikes across the board and making the false assumption that the "middle class" demographic from the 80's and 90's simply make more now... And are in the "Lower upper class" now...and they can't gets them enough Disney!

That would be the wrong tact

 

[jade1]

If you tell someone on a limited budget that they can save upwards of 20K by using FastPass+ they may decide to take a vacation elsewhere after they've emerged from their fainting spell.

According to Lake Travis that 'savings' is spread across multiple trips over multiple years. What about the folks that their trip is a once in a lifetime? Sorry, but the saving 20 grand isn't exactly a selling point.

And yes, jobs are (should be) a default. The problem today is that they are few and far between. I work in the tech sector and for every 20-something that shows up fresh out of college their are a hundred others from overseas that will take the job at half the rate, and they have experience. Now that will eventually change when the offshore salaries start to creep up to US levels (it's getting pretty close actually when you peel away the cultural membranes), but it won't change enough where people can consider the value of FastPass+. They'll be more concerned about funding the ticket just to get in the park.

But again-why is there an assumption that only first time visitors (and ones with no jobs) want "characters and classic rides"? That ends it right there for me.

 

[jade1]

Indeed...that why I hope it never comes.

No...if i had I speculate on what Disney could do to protect the parks...it would not be to engage in a full throttle 11 year policy of end over end price hikes across the board and making the false assumption that the "middle class" demographic from the 80's and 90's simply make more now... And are in the "Lower upper class" now...and they can't gets them enough Disney!

That would be the wrong tact

Granted. Now what would you do do prepare for this sure thing dooms day.

 

[jade1]

Indeed...that why I hope it never comes.

No...if i had I speculate on what Disney could do to protect the parks...it would not be to engage in a full throttle 11 year policy of end over end price hikes across the board and making the false assumption that the "middle class" demographic from the 80's and 90's simply make more now... And are in the "Lower upper class" now...and they can't gets them enough Disney!

That would be the wrong tact

And why the 11 year window? The middle of that had the great recession-seems to have worked out.

 

[lockedoutlogic]

But again-why is there an assumption that only first time visitors (and ones with no jobs) want "characters and classic rides"? That ends it right there for me.

I don't think there is that assumption by anyone...

But diminishing return...and diminishing attention spans...means that the majority (assumption) of repeat offenders will tire on the same things - and that does affect their travel and spending habits.

I love the haunted mansion...but am I buying tshirts? Hell no.

And even my kids got over the stuff in the pirate dump shop after a year or two (the worlds first dump shop...I might add)...so even the "young at heart" theory doesn't hold.

 

[jade1]

If you tell someone on a limited budget that they can save upwards of 20K by using FastPass+ they may decide to take a vacation elsewhere after they've emerged from their fainting spell.

According to Lake Travis that 'savings' is spread across multiple trips over multiple years. What about the folks that their trip is a once in a lifetime? Sorry, but the saving 20 grand isn't exactly a selling point.

And yes, jobs are (should be) a default. The problem today is that they are few and far between. I work in the tech sector and for every 20-something that shows up fresh out of college their are a hundred others from overseas that will take the job at half the rate, and they have experience. Now that will eventually change when the offshore salaries start to creep up to US levels (it's getting pretty close actually when you peel away the cultural membranes), but it won't change enough where people can consider the value of FastPass+. They'll be more concerned about funding the ticket just to get in the park.

Take a crack at it as well-what would you do to entice the people with no job at all (or one at half the going rate) to come to WDW. Should be interesting. Pretty sure bringing back FP- won't do it.

 

[jade1]

I don't think there is that assumption by anyone...

But diminishing return...and diminishing attention spans...means that the majority (assumption) of repeat offenders will tire on the same things - and that does affect their travel and spending habits.

I love the haunted mansion...but am I buying tshirts? Hell no.

And even my kids got over the stuff in the pirate dump shop after a year or two (the worlds first dump shop...I might add)...so even the "young at heart" theory doesn't hold.

Still doesn't give someone a job.

 

[midaroco]

And why the 11 year window? The middle of that had the great recession-seems to have worked out.

Actually, Disney just began seeing attendance rates akin prior to the GR - the advent of free dining was to try and entice people into the parks during the GR, along with deep discounts on the rack rates.

 

[wallrock]

Take a crack at it as well-what would you do to entice the people with no job at all (or one at half the going rate) to come to WDW. Should be interesting. Pretty sure bringing back FP- won't do it.

Agreed, but probably not in the same manner that you are. I don't perceive the ancillary items like FastPass to be a stimulant to get folks into the parks. When those on a limited budget see the cost of transportation (assuming air transport), lodging, park admittance and consumables the only thing that will have them focus on FastPass is if Disney ever decides to charge for it. If not, they're not going to concern themselves with it.

What I would do would be more direct - trim the costs - but we both know that won't happen. I mentioned in another thread that when extensive construction is going on at, say, the Polynesian, why not drop the cost of a room? When they shut down half of the attractions at MGM, why not reduce the cost of admission? Feel free to bring it back up after you've replaced the removed attractions.

The bottom line is that Disney is, in my humble opinion, surviving off of return guests and the infusion of overseas visitors that are coming to experience a slice of Americana. WDW is mentioned in the same breath with New York City, Washington DC, The Grand Canyon, Las Vegas and other highlights of American culture. The 'benefits' of FastPass, the Magic Bands, Frozen or any other new item in the Disney stockpile isn't bringing folks over, the history of Disney is.

To get new folks into the parks it's going to take new things, reduced costs and people with the disposable income. Those less fortunate or of limited means aren't on Disney's radar.

 

[jade1]

Actually, Disney just began seeing attendance rates akin prior to the GR - the advent of free dining was to try and entice people into the parks during the GR, along with deep discounts on the rack rates.

Agreed-but they did get through it ok.

 

[jade1]

Those less fortunate or of limited means aren't on Disney's radar.

So the Middle Class then.

 

[jade1]

To get new folks into the parks it's going to take new things, reduced costs and people with the disposable income. .

But why would you reduce the costs when it's packed now.

Couldn't you do that when the doomsday hits?

 

[lockedoutlogic]

And why the 11 year window? The middle of that had the great recession-seems to have worked out.

Because they chose to use steep discounting and still raised "regular prices"...

They figured they screw em in 2013...

Err...I mean..."see guest satisfaction equalize on levels with a sustainable business trajectory"

 

[lockedoutlogic]

Granted. Now what would you do do prepare for this sure thing dooms day.

Duck and cover... Of course

 

[wallrock]

But again-why is there an assumption that only first time visitors (and ones with no jobs) want "characters and classic rides"? That ends it right there for me.

I don't recall making that assumption, but as I mentioned above I think it's the Disney legacy that brings in some folks, especially the new ones from overseas. For stateside first timers, and I mentioned this earlier as well, it could be the recent acquisitions that have peaked some people's interest. I know a few who could care less about movies like The Lion King, or any 'Disney' movie but are very interested in Star Wars, and as such are starting to eye Orlando around the time of Star Wars Weekends.