Disney reaching plateau in its hotels' occupancy

[crazy4wdw]

Disney reaching plateau in its hotels' occupancy
by Sandra Pedicini Orlando Sentinel

Te Walt Disney Co.'s hotel occupancy at its domestic resorts spiked in its first quarter — 89 percent compared with 81 percent the previous year.

It will probably be difficult to see it go much higher, Disney Chief Financial Officer Jay Rasulo said.

"I think hoteliers in general will tell you that to try to fill a hotel beyond 89 percent, 90 percent, 91 percent, is extremely difficult," Rasulo told analysts last week.

"To go beyond that, it takes too many match-ups of people who are staying three nights checking out replaced by five nights replaced in rapid succession, it becomes quite difficult. So … when you see occupancy in that kind of range, you are getting close to pretty much a full house and those were historically the numbers at which we started to think about expanded capacity."

Rasulo pointed out that there are many more hotels outside of Disney "and I am sure they are not experiencing rates of occupancy anything like that." The region's occupancy rate for the last quarter of 2014 was 72.2 percent, according to Visit Orlando.

Disney World has seen a drop in hotel rooms as it converted some into 360 suites at the Polynesian Village Resort.

Disney also has three hotels in Disneyland and about 361 hotel rooms at its Aulani resort in Hawaii.

MagicBands reach milestone in their usage, financial impact

Walt Disney World recently said it reached a milestone recently — distributing its 10 millionth MagicBand.

MagicBands are RFID-embedded wristbands that function as park tickets, hotel keys and FastPasses. They are part of Disney's MyMagic+ program, which also includes the ability to reserve rides up to two months in advance.

When discussing Disney earnings last week, Chief Executive Officer Bob Iger told analysts "we did see in the quarter a positive impact to the bottom line from MyMagic+, just the beginnings of it. We will continue to see more of that."

Also, Rasulo said, the increase in profit contribution from MyMagic+ will outweigh preopening spending on Shanghai Disneyland in fiscal 2015.

 

[DDLand]

Disney reaching plateau in its hotels' occupancy
by Sandra Pedicini Orlando Sentinel
It will probably be difficult to see it go much higher, Disney Chief Financial Officer Jay Rasulo said.

"I think hoteliers in general will tell you that to try to fill a hotel beyond 89 percent, 90 percent, 91 percent, is extremely difficult," Rasulo told analysts last week.

"To go beyond that, it takes too many match-ups of people who are staying three nights checking out replaced by five nights replaced in rapid succession, it becomes quite difficult. So … when you see occupancy in that kind of range, you are getting close to pretty much a full house and those were historically the numbers at which we started to think about expanded capacity."

MagicBands are RFID-embedded wristbands that function as park tickets, hotel keys and FastPasses. They are part of Disney's MyMagic+ program, which also includes the ability to reserve rides up to two months in advance.

When discussing Disney earnings last week, Chief Executive Officer Bob Iger told analysts "we did see in the quarter a positive impact to the bottom line from MyMagic+, just the beginnings of it. We will continue to see more of that."

Also, Rasulo said, the increase in profit contribution from MyMagic+ will outweigh preopening spending on Shanghai Disneyland in fiscal 2015.

Interesting...

Maybe our narrative here on Disboards is off. Art of Animation proves that they're willing to strategically add more hotel rooms in areas they see fit. Universal has been aggressively been adding hotel rooms, Disney could follow suit. This seems kind of like a hint of things to come. He wouldn't have added that part of about historically adding more hotel rooms if not. 2015 will be a year to watch. JHM got it right.

It also seems like My Magic is bigger then we thought.

Finally, why is Rasulo still speaking publicly? Is he staying on for the time being? I would have expected the resignation letter by now. Surprising.

 

[lockedoutlogic]

There's all sorts of inconsistency here.

First...there is zero way to directly coordinate bands with profits. Sure...I bet they have Increased revenues/profits with them...that was the point. But how can you effectively pin numbers to them? Obviously they're in a boom and prices are rising consistently.

That's classic Disney using ambiguity to push their own agenda. I would expect no less.

Second, not buying the "add rooms" drop either.

Taking rooms offline for rehab/DVC conversion is artificially boosting occupancy...as pointed out on other recent discussions.

"Adding" DVC also ensures near 100% occupancy. So they can retrofit and score.

I can see them maxing DVC conversions and then putting strain "downward" to create more demand and then add another "high priced value" like AoA. That place is fool's gold. A $350 junior suite with a nice pool...but holiday inn otherwise.

That's a win all around. And it creates more rack demand for aging properties...the all stars, port Orleans, and caribbeans of the world.


This much is clear...the deluxes are overpriced and can't reasonably sell at a higher price (unacceptable by mouse standards)...so they will all be receiving more retrofits/Addons/ or a combination of both to DVC...

If that's "adding"... Then I suppose jay is sorta correct.

He's also done within days...so he's probably just throwing out things for giggles behind the scenes.

 

[clsteve]

Interesting...

Maybe our narrative here on Disboards is off. Art of Animation proves that they're willing to strategically add more hotel rooms in areas they see fit. Universal has been aggressively been adding hotel rooms, Disney could follow suit. This seems kind of like a hint of things to come. He wouldn't have added that part of about historically adding more hotel rooms if not. 2015 will be a year to watch. JHM got it right.

It also seems like My Magic is bigger then we thought.

Finally, why is Rasulo still speaking publicly? Is he staying on for the time being? I would have expected the resignation letter by now. Surprising.

Don't forget that Uni's going down a much different path than TWDC. Big difference when you're partnering vs. carrying the load all by yourself. If they add more rooms - my money's on somebody else doing the adding (like that 5 star that just opened on property)...

And the MM+ quote is a classic and he's absolutely correct it had a positive impact to the bottom line. But maybe just a bit disingenuous. Perhaps all of the overruns and additional dev they shoved into all of the OpEx last FY is now finally over...???

 

[DDLand]

Don't forget that Uni's going down a much different path than TWDC. Big difference when you're partnering vs. carrying the load all by yourself. If they add more rooms - my money's on somebody else doing the adding (like that 5 star that just opened on property)...

And the MM+ quote is a classic and he's absolutely correct it had a positive impact to the bottom line. But maybe just a bit disingenuous. Perhaps all of the overruns and additional dev they shoved into all of the OpEx last FY is now finally over...???

I'm not sure, Disney can finance their own hotels if they want to. They make as much revenue in one quarter as Universal does all year. Especially with My Magic, why bring in competitors who will compete with their Disney monopoly? Four Seasons was brought in because they threw in the towel on trying to compete with that type of hotel. I think they could start thinking about expansion of hotels.

Seems like it, especially if it's supposed to offset Shanghai construction costs.

 

[DDLand]

There's all sorts of inconsistency here.

First...there is zero way to directly coordinate bands with profits. Sure...I bet they have Increased revenues/profits with them...that was the point. But how can you effectively pin numbers to them? Obviously they're in a boom and prices are rising consistently.

That's classic Disney using ambiguity to push their own agenda. I would expect no less.

Second, not buying the "add rooms" drop either.

Taking rooms offline for rehab/DVC conversion is artificially boosting occupancy...as pointed out on other recent discussions.

"Adding" DVC also ensures near 100% occupancy. So they can retrofit and score.

I can see them maxing DVC conversions and then putting strain "downward" to create more demand and then add another "high priced value" like AoA. That place is fool's gold. A $350 junior suite with a nice pool...but holiday inn otherwise.

That's a win all around. And it creates more rack demand for aging properties...the all stars, port Orleans, and caribbeans of the world.


This much is clear...the deluxes are overpriced and can't reasonably sell at a higher price (unacceptable by mouse standards)...so they will all be receiving more retrofits/Addons/ or a combination of both to DVC...

If that's "adding"... Then I suppose jay is sorta correct.

He's also done within days...so he's probably just throwing out things for giggles behind the scenes.

It is murky with the bands, but I trust they have internal indicators. Are they padded by people who want to make the situation better then it actually is? Perhaps. Though they are aggressively bringing MY Magic to TD and DLP so it seems like more could be going on there.

As for your comments about Art of Animation? Perfect. That's the type of market they can go after profitably, quickly, and with low risk. Plus, sense they're cheaper to put up then the beautiful pieces of art like the Lodges and Floridian they can easily bring in thousands of more keys using My Magic and DME. Stuck on property and using proprietary technology in an expensive hotels. Sounds like a win win.

He may be beating the drum on My Magic one last time. It was his baby apparently...

 

[lockedoutlogic]

I'm not sure, Disney can finance their own hotels if they want to. They make as much revenue in one quarter as Universal does all year. Especially with My Magic, why bring in competitors who will compete with their Disney monopoly? Four Seasons was brought in because they threw in the towel on trying to compete with that type of hotel. I think they could start thinking about expansion of hotels.

Seems like it, especially if it's supposed to offset Shanghai construction costs.

Disney has wanted to step back from hotel operations for a LONG time. Remember... They started that under somewhat duress and roy o always claimed "we're an entertainment company" when asked about such things...

Eisner liked it as a path to easy expansion... But grew tired of it and even dabbled early on... The result being the Art Deco monstrosities behind EPCOT.

Hotel operations are huge overhead. A necessary evil for Disney. They want the revenue derived from the rooms...but hate the cost of the staff and overhead. I'm sure they have and continue to continually look for a big fish to partner with.

But... They like it their way... Such as restricting hospitality services to their somewhat meager internal offerings. And they want all the pie and nobody will hire 30,000 people to just get the crust.

Universal has an innocence to this... They never had "all" the take that can be reaped... So they are content to partner and split the bank with lower overhead.

One thing is 100% certain - if wdw was built to today it would be outsourced in hotels...not a question.

And even their current activities lead to that sooner than later.

 

[DDLand]

Disney has wanted to step back from hotel operations for a LONG time. Remember... They started that under somewhat duress and roy o always claimed "we're an entertainment company" when asked about such things...

Eisner liked it as a path to easy expansion... But grew tired of it and even dabbled early on... The result being the Art Deco monstrosities behind EPCOT.

Hotel operations are huge overhead. A necessary evil for Disney. They want the revenue derived from the rooms...but hate the cost of the staff and overhead. I'm sure they have and continue to continually look for a big fish to partner with.

But... They like it their way... Such as restricting hospitality services to their somewhat meager internal offerings. And they want all the pie and nobody will hire 30,000 people to just get the crust.

Universal has an innocence to this... They never had "all" the take that can be reaped... So they are content to partner and split the bank with lower overhead.

One thing is 100% certain - if wdw was built to today it would be outsourced in hotels...not a question.

And even their current activities lead to that sooner than later.

Ah, see that's where I disagree with you. Disney at each of the resorts it's built has connected hotels to the properties. Now it's never been the same massive number as WDW and DLP. Examples such as Disneyland's prerecession hotel expansion plans and the addition of new rooms at HKD prove that they're still actively willing to explore that market and in some cases dominate in it. Would Walt Disney World have the same mix of hotels if it opened today? Nope. Would it have hotels that were Disney branded and leveraging My Magic and other hooks? I think so.

 

[lockedoutlogic]

Ah, see that's where I disagree with you. Disney at each of the resorts it's built has connected hotels to the properties. Now it's never been the same massive number as WDW and DLP. Examples such as Disneyland's prerecession hotel expansion plans and the addition of new rooms at HKD prove that they're still actively willing to explore that market and in some cases dominate in it. Would Walt Disney World have the same mix of hotels if it opened today? Nope. Would it have hotels that were Disney branded and leveraging My Magic and other hooks? I think so.

Well...it's just my uninformed opinion...

Ahhhh, see...or maybe it's not?

It's the way I said it is. They would sell it off in a second if it meant the loss of the employee commitments....don't doubt for a second.

All those examples you stated...up and through Hong Kong... Where the 1980's or earlier Disney model.

Build park + build hotels = full tables at chef mickeys and empty shelves in the giftshops.

The deal has never been there where they can control it to the 99% favorable level they require to outsource. But don't doubt the desire. If it were - seeya.

The only skin they really still have in the game - at least stateside...is the timeshare.

Do you think they'd have built 400 rack rooms on Oahu if they had it to do over again? Or if the Hawaiians hadnt insisted (more likely)?

Hell no...hotels are so "20th century"...

Don't believe me...look at almost every other hotel operator and how they've shifted from hotels to timeshares as their priority.

The bands are just a scheme and the hotels are just there...it's not some devious plan to "unleash" the hotels.

It's a devious plan to pack more crowds without further investment, sell more targeted crap, and raise the prices through the ying yang...carry on.

It took them ten years to finish the pop century development due to lukewarm demand...and they can't get people in many deluxe rooms anymore due to a price ceiling...so they're pulling them off the rack.

There just isn't that much money in hotels (insert shock here)...not for Disney the way they operate. Those rooms are catalysts for secondary profits of low overhead discretionary spending...
The rest is lean... Or if you won't believe that then you have to accept that the money is tied to other ancillary costs...
Where's the profit in a fleet of 1,000 "complimentary" diesel buses?
Something is always paying on the books...

Pay no attention to the man behind the curtain.

And also...Paris (well until now), Hong Kong, shanghai, Tokyo...
Hotels built on a "discount" plan. Can never underestimate that.

 

[DDLand]

Well...it's just my uninformed opinion...

Ahhhh, see...or maybe it's not?

It's the way I said it is. They would sell it off in a second if it meant the loss of the employee commitments....don't doubt for a second.

All those examples you stated...up and through Hong Kong... Where the 1980's or earlier Disney model.

Build park + build hotels = full tables at chef mickeys and empty shelves in the giftshops.

The deal has never been there where they can control it to the 99% favorable level they require to outsource. But don't doubt the desire. If it were - seeya.

The only skin they really still have in the game - at least stateside...is the timeshare.

Do you think they'd have built 400 rack rooms on Oahu if they had it to do over again? Or if the Hawaiians hadnt insisted (more likely)?

Hell no...hotels are so "20th century"...

Don't believe me...look at almost every other hotel operator and how they've shifted from hotels to timeshares as their priority.

The bands are just a scheme and the hotels are just there...it's not some devious plan to "unleash" the hotels.

It's a devious plan to pack more crowds without further investment, sell more targeted crap, and raise the prices through the ying yang...carry on.

It took them ten years to finish the pop century development due to lukewarm demand...and they can't get people in many deluxe rooms anymore due to a price ceiling...so they're pulling them off the rack.

There just isn't that much money in hotels (insert shock here)...not for Disney the way they operate. Those rooms are catalysts for secondary profits of low overhead discretionary spending...
The rest is lean... Or if you won't believe that then you have to accept that the money is tied to other ancillary costs...
Where's the profit in a fleet of 1,000 "complimentary" diesel buses?
Something is always paying on the books...

Pay no attention to the man behind the curtain.

And also...Paris (well until now), Hong Kong, shanghai, Tokyo...
Hotels built on a "discount" plan. Can never underestimate that.

Oh gosh no. You're one of the best posters on here. Don't mistake my difference of opinion as a diss or anything. You obviously have a lot of experience in the hospitality industry and have a strong passion for Disney.

Aulani was a Rasulo project. Interesting path they were going down. It almost feels like it was not supposed to be a standalone project. I think it was supposed to be part of a chain of Disney Resorts. Aulani looks weird next to Walt Disney World and Disneyland. Would a Disney Resorts brand look weird next to those two? No.

See the Disneyland and recent HKD expansions (albeit paid for by their partners) are examples of a post 80's view. What's interesting is these hotels are all what Walt Disney World would classify as deluxe. These smaller Resorts can't meddle with the large capacity lower margin per room Values. They'd sink the ship.

Walt Disney World has the space, the demand, and the footprint to support these value customers. These hotels don't have to make a ton of money. They're there to keep people on property, sell packages, and to as you like to point out sell merchandise.

The 200+ bus fleet is well worth the expenditures if no one considers leaving the property.

My Magic may be more devious then we give it credit for. Tickets, dining reservations, hotel keys, credit card hookup, photo pass, and fastpass are all there.

This is what most Disney Vacations look like. Get off the plane and walk past numerous Disney adds as you make your way to the Magical Express. Using your preshipped Magic Bands register and walk to your bus. Get to your hotel and then head off to the parks. Take the Disney Bus that will only take you to Disney properties. Then go on your preselected Fastpass rides. One of them features an in ride photo. You like what you see and scan the magic band. You check the time and remember you have reservations for dinner. Walk up and scan the Magic Band and everything is good to go. Ride back on the Disney Bus and repeat.

Perhaps midway through the trip you stop and wonder if you should go to Universal? Nah, you'd have to take a cab and buy separate tickets. Plus you can't preselect rides using the Magic Bands. Too much work.

You can literally fly from anywhere and never once leave a Disney curated or owned guest are.

If that's not devious, I'm not sure what is.

Isn't time share starting to fade out a little? I thought the big trend with companies like Marriott and Hilton was to divest land but continue hotel managment. Marriott even spun off its time share.

It's true that their partners are paying for part of it, but they're footing a significant portion.

 

[rteetz]

Aulani hasn't sold like they would've liked it too. They had more plans for other DVC resorts around the U.S. but they were killed off.

I will say that it is a theme that more people are taking that extra couple days and going to Uni. Uni also offers transportation from Disney to Uni if you are staying at one of their resorts.

Four seasons just opened a hotel on WDW property and it was named best in Orlando...

I see the need for new hotels I just don't think they will do it.

 

[DDLand]

Aulani hasn't sold like they would've liked it too. They had more plans for other DVC resorts around the U.S. but they were killed off.

I will say that it is a theme that more people are taking that extra couple days and going to Uni. Uni also offers transportation from Disney to Uni if you are staying at one of their resorts.

Four seasons just opened a hotel on WDW property and it was named best in Orlando...

I see the need for new hotels I just don't think they will do it.

I don't think I've ever seen that about Aulani. Journalists refer to it as a success. It's the number one family resort and it's undergone a series of infrastructure improvements and enhancements. There was National Harbor and a Ski Resort too I believe. I feel like that was a shift of priorities from new management more then a vindication of Aulani failing. Now is it a business they feel like they can make better returns on investment from then say Theme Parks? Probably not. There were the initial sales troubles.

I'm not sure. While it's become more popular here, the numbers don't really back that up. Increased attendance, hotel bookings, and higher guest spending would suggest Universal isn't effecting Disney. Many have pointed out that Orlando theme parks besides Universal and Disney are flat or declining attendance. Disney may have lost some growth, but there doesn't appear to be lost days either.

None are as painless and affordable as Disney Transport.

Yeah, Disney wanted a real 5 star resort on property. Plus, Disney owes the Saudi Prince for saving Euro Disney...

I think it's too compelling to ignore.

 

[rteetz]

I don't think I've ever seen that about Aulani. Journalists refer to it as a success. It's the number one family resort and it's undergone a series of infrastructure improvements and enhancements. There was National Harbor and a Ski Resort too I believe. I feel like that was a shift of priorities from new management more then a vindication of Aulani failing. Now is it a business they feel like they can make better returns on investment from then say Theme Parks? Probably not. There were the initial sales troubles.

I'm not sure. While it's become more popular here, the numbers don't really back that up. Increased attendance, hotel bookings, and higher guest spending would suggest Universal isn't effecting Disney. Many have pointed out that Orlando theme parks besides Universal and Disney are flat or declining attendance. Disney may have lost some growth, but there doesn't appear to be lost days either.

None are as painless and affordable as Disney Transport.

Yeah, Disney wanted a real 5 star resort on property. Plus, Disney owes the Saudi Prince for saving Euro Disney...

I think it's too compelling to ignore.

It may be a success as a hotel itself but not DVC selling wise. It is consistently winning awards and things but they still have plenty of DVC availability. There was a DC resort planned and one more I believe.

The Saudi prince saved DLP? I think disney saved it themselves since they put the money back into it. The prince only owns like 10%. DLP will be revitalized come 2017.

 

[clsteve]

I'm not sure, Disney can finance their own hotels if they want to. They make as much revenue in one quarter as Universal does all year. Especially with My Magic, why bring in competitors who will compete with their Disney monopoly? Four Seasons was brought in because they threw in the towel on trying to compete with that type of hotel. I think they could start thinking about expansion of hotels.

Seems like it, especially if it's supposed to offset Shanghai construction costs.

There's always revenue upside without considering risk and expense.

But, one uptick in occupancy after a long period of stagnation is not a trend. Especially when they've so much going on with refurbs and room conversions so it's impossible to tell if a few of those percentage point gains might be "organic"...

Besides, everything they've been doing recently has been focused on reducing or mitigating 2 numbers that people easily forget every time any level of WDW expansion comes up - hotels, 5th gate, etc.: 70,000+ employees, 1.1 billion in annual benefits costs (more than doubled in 8 years, against a 20% headcount increase same timeframe).

They're aggressively shedding headcount, or converting more to part time everywhere you look. Their major initiatives are also focused on this - NextGen, automated-room direct check-in, DVC conversion, etc. I just don't see them assuming more risk in that part of the business when they can just rake in no-risk leasing from partners.

DVC coversion vs. build and Disney Springs being a leased vs. owned footprint for stores and esp. 3rd party entertainment pretty much pinpoint their corporate direction in this....

 

[Reddog1134]

One thing is 100% certain - if wdw was built to today it would be outsourced in hotels...not a question.

That's amusing to think about when you consider the history of the Disneyland Hotel.

 

[lockedoutlogic]

It was the right play for them in the 1950s through about 1995...
But the worm has turned.

It's the problem with having a compound that required north of 50,000 employees

 

[gsimpson]

Interesting that Disney has been approached several times over the last 15 years to "spin off" their hotel operations to Wyndhamm and/or Marriott yet they have kept them, against the wishes of Wall Street who like to remind them they are an entertainment org and not a hotelier. They have repeatedly and steadfastly refused to go down that path, even when Starwood (who operate the poorly located Swan and Dolphin) wanted to be involved in more properties within WDW. Aluani has not been a good experience for their financials but a stand alone resort of that caliper is not the same as a property at WDW. DisneyQuest was pretty much an abject failure but they still have arcades on property. Their foray into designing and operating shopping malls outside their amusement parks was laughably bad yet they still are building Disney Springs. They seem to have executives who execute a plan at the parks that works and think they can simply copy that plan outside the parks, hasn't been a very successful pattern. They could easily off load a good deal of the risk of building new hotels by taking in partners but if you notice they aren't even doing that very much with movies anymore presumably because in addition to sharing the risk you also have to share the profits.

 

[Reddog1134]

Disney is taking in financial "partners" for new hotels. They are calling it DVC.

 

[lockedoutlogic]

Interesting that Disney has been approached several times over the last 15 years to "spin off" their hotel operations to Wyndhamm and/or Marriott yet they have kept them, against the wishes of Wall Street who like to remind them they are an entertainment org and not a hotelier. They have repeatedly and steadfastly refused to go down that path, even when Starwood (who operate the poorly located Swan and Dolphin) wanted to be involved in more properties within WDW. Aluani has not been a good experience for their financials but a stand alone resort of that caliper is not the same as a property at WDW. DisneyQuest was pretty much an abject failure but they still have arcades on property. Their foray into designing and operating shopping malls outside their amusement parks was laughably bad yet they still are building Disney Springs. They seem to have executives who execute a plan at the parks that works and think they can simply copy that plan outside the parks, hasn't been a very successful pattern. They could easily off load a good deal of the risk of building new hotels by taking in partners but if you notice they aren't even doing that very much with movies anymore presumably because in addition to sharing the risk you also have to share the profits.

No question they have listened...
But the problem with Disney...like most of their dealings...is they want complete control and 90% of the profits

And if you're jw Marriott...you laugh them out of the room

 

[DDLand]

There's always revenue upside without considering risk and expense.

But, one uptick in occupancy after a long period of stagnation is not a trend. Especially when they've so much going on with refurbs and room conversions so it's impossible to tell if a few of those percentage point gains might be "organic"...

Besides, everything they've been doing recently has been focused on reducing or mitigating 2 numbers that people easily forget every time any level of WDW expansion comes up - hotels, 5th gate, etc.: 70,000+ employees, 1.1 billion in annual benefits costs (more than doubled in 8 years, against a 20% headcount increase same timeframe).

They're aggressively shedding headcount, or converting more to part time everywhere you look. Their major initiatives are also focused on this - NextGen, automated-room direct check-in, DVC conversion, etc. I just don't see them assuming more risk in that part of the business when they can just rake in no-risk leasing from partners.

DVC coversion vs. build and Disney Springs being a leased vs. owned footprint for stores and esp. 3rd party entertainment pretty much pinpoint their corporate direction in this....

Large head counts aren't the problem. The problem presents itself when these employees are underutilized or they are not being efficiently put to work. The benefit increases are in the shadow of ticket price increases that more then make up for those types of expenditures. Does Disney like the trend? Probably not, but if these employees are driving gains in other areas it should be fine.

Really they have to evaluate this risk. Is putting more hotels on property operated by us a bigger risk then putting non Disney hotels that will not have My Magic, Magical Express, or Disney Transport?

The second one is a big risk that can't be ignored.