Are "After Hours" and "Early Morning Magic" Cutting Into Regular Hours?-Analytics (Long)

[serenitynow]

Well, traditionally to increase profits in a corporation one looks to cut costs and increase revenue. Offering more hours of operation, without collecting additional fees for those hours, is not likely to drive more money to the bottom line, especially once costs of labor are factored in. Once costs of operation are as lean as possible, it's time to find new streams of revenue.

Extra Magic Hours are still being offered but are more limited than have been offered in the past in an effort to control costs as no additional revenue is derived from EMH. EMH is good marketing for the company, but it comes with additional operational costs to the company. The surveys suggest that many guests actually avoid the park with the day's EMH due to the crowds. So EMH is a factor in some guests decision to stay onsite but not the only factor. Various promotional deals throughout the year also helps keep the on site resorts at healthy occupancy.

So, now how do we increase revenue? Collect more money from existing customers (raise prices) or develop a new customer base (invent a new widget or find a new market, Hello Shanghai).

Offering new paid experiences is one way of not only increasing revenue from existing customers, but also developing a new way to profit from offsite guests whose lodging dollars and some dining dollars are going elsewhere, outside the company. Actually getting your new rides and experiences operating should help increase revenue (more guests come spending more $$$).

If you can think of new ways for Disney to increase profits I'm sure they would love to hear about it. It has to be a combination of controlling costs while increasing revenue by collecting more money from ...ta da ... Their guests! You know times are tough when Disney isn't even printing its own money anymore!

 

[DisneyFive]

I've been out of the loop lately so I hadn't heard that park attendance is down. Thanks for the link!

Dan

 

[MickeyMinnieMom]

Very cool post, @JimmyV -- I'm a big data geek. Obviously correlation isn't causation, but the stats themselves are interesting to look at.

I wouldn't go crazy with conclusions (not that YOU have!), particularly as this is a snapshot at a pretty small period of time.

If one were to read DIS and estimate how many fewer hours were available to guests in 2016 vs. 2015, I suspect they'd guess it was WAY MORE than what these data show.

 

[MinnieSweetheart]

Well, traditionally to increase profits in a corporation one looks to cut costs and increase revenue. Offering more hours of operation, without collecting additional fees for those hours, is not likely to drive more money to the bottom line, especially once costs of labor are factored in. Once costs of operation are as lean as possible, it's time to find new streams of revenue.

Extra Magic Hours are still being offered but are more limited than have been offered in the past in an effort to control costs as no additional revenue is derived from EMH. EMH is good marketing for the company, but it comes with additional operational costs to the company. The surveys suggest that many guests actually avoid the park with the day's EMH due to the crowds. So EMH is a factor in some guests decision to stay onsite but not the only factor. Various promotional deals throughout the year also helps keep the on site resorts at healthy occupancy.

I take it you don't stay in the parks late very often?

There is PLENTY of revenue in the parks when they are opened late. Casey's has a line for at least 45 minutes AFTER park closing and the shops on main street stay busy for up to an hour and a half.

There are also plenty of ways you mentioned to increase revenue that don't require cutting costs. For one, simply raising prices without diminishing the experience!!

People are NOT just mad that hours are being cut over previous years, but that the tickets cost roughly 12% more. If I'm paying 12% more, I expect that to be enough increased revenue that you don't need to cut back on services that affect my overall experience.

 

[MinnieSweetheart]

Taking a look at June YOY:

June 1-30th 2015 - 469 Included hours + 12 EMH = 481
June 1-30th 2016 - 425 Included hours + 14 EMH = 439

That's gotta sting...

Keep in mind that June is still subject to change, but the hours were just updated today.... YOY its a loss of 42 hours. An entire work week.

Very cool post, @JimmyV -- I'm a big data geek. Obviously correlation isn't causation, but the stats themselves are interesting to look at.

I wouldn't go crazy with conclusions (not that YOU have!), particularly as this is a snapshot at a pretty small period of time.

If one were to read DIS and estimate how many fewer hours were available to guests in 2016 vs. 2015, I suspect they'd guess it was WAY MORE than what these data show.

Part of that is because of June, read the above quoted. It IS CURRENTLY WAY MORE than what the May data shows.

 

[MickeyMinnieMom]

I've been out of the loop lately so I hadn't heard that park attendance is down. Thanks for the link!

Dan

Down "slightly" in WDW... profit is up.

 

[MickeyMinnieMom]

Part of that is because of June, read the above quoted. It IS CURRENTLY WAY MORE than what the May data shows.

I saw that. I would suggest waiting until June has actually HAPPENED. They have been changing these things SO last minute recently. Another issue altogether.

 

[JimmyV]

I saw that. I would suggest waiting until June has actually HAPPENED. They have been changing these things SO last minute recently. Another issue altogether.

It was for that reason that I didn't reach into June. (But I'm glad someone did). I have a hard time believing that the posted hours are final. But they are shaving it pretty close if there are going to be changes. Can't wait until July 1 when we can put a bow on this. I did an analysis of EMHs for "Easter 2016 vs. Easter 2015" and people protested: "Wait until the end of April. Things will get better." They didn't. Last year there were "surprise" 7:00 openings all week around Easter. This year? Nada. That's why I mentioned in the OP that Easter vs. Easter was a bloodbath in terms of hours and I left them out of this analysis.

 

[nicko]

The reduction in water park hours is also worth mentioning. In previous years, both water parks were open every day in June and July from 9 AM to 8 PM. A couple of months ago, Disney did an across the board reduction to 10 AM to 7 PM. For us water park fans, that's a pretty big deal (especially since the water parks shut down pretty much daily in the summer from 2 - 4 PM because of thunderstorms).

 

[JimmyV]

The reduction in water park hours is also worth mentioning. In previous years, both water parks were open every day in June and July from 9 AM to 8 PM. A couple of months ago, Disney did an across the board reduction to 10 AM to 7 PM. For us water park fans, that's a pretty big deal (especially since the water parks shut down pretty much daily in the summer from 2 - 4 PM because of thunderstorms).

Thanks for adding in this data.

 

[serenitynow]

I guess I have spent too many hours in boring corporate meetings lately on ways to "drive revenue" that it is now spilling over into my posts. Yuck. Go to Disney, don't go to Disney, whatever. Live long and prosper

 

[WillAustin]

Down "slightly" in WDW... profit is up.

As a stockholder, AP holder, and long-time guest, I'm pretty sure I don't like "how" they got the profit up in the past quarter, especially if the attendance drop continues. Staffing cuts and price increases aren't a path to improved guest satisfaction.

 

[dlavender]

June is obviously subject to change. The data only reflects the updated extended hours that were released today. The comparison will have to be trued up July 1st.

Trying to increase revenue while decreasing costs is what companies do. I'm not sure many companies go into the day wishing for lower revenues and increased costs. These comments always remind me of business simulations that we ran in school. There was always someone who would look at projected margins and want to increase the prices while reducing the cost of goods. Margins would look fantastic on the forecasts. After participating in a simulated year, there were always a ton of unsold products in virtual warehouses causing fake financial stress. There is a fine line when looking to improve margins. Disney is attempting to find that line. I don't blame anyone, but as a consumer it's important to look at ROI. These reduced hours with increased prices can change that percentage for some, while not affecting others.

 

[JimmyV]

Trying to increase revenue while decreasing costs is what companies do. I'm not sure many companies go into the day wishing for lower revenues and increased costs.

Was there ever a time when the parks were considered loss leaders designed to get people to go to movies, buy VHS cassettes, spend money at Disney stores, etc? I could be wrong but it seems as if Disney is trying to squeeze more money out of the parks than before.

 

[dlavender]

Was there ever a time when the parks were considered loss leaders designed to get people to go to movies, buy VHS cassettes, spend money at Disney stores, etc? I could be wrong but it seems as if Disney is trying to squeeze more money out of the parks than before.

While the parks definitely give the company a halo effect, I couldn't believe that given the scope of WDW they ever envisioned losses. I think with the increased park costs (#thanksshanghai) coupled with decreased revenue from ESPN, there was pressure to make up those losses. I just hope they don't milk the golden goose too hard.

 

[Lucius Best]

If you can think of new ways for Disney to increase profits I'm sure they would love to hear about it. It has to be a combination of controlling costs while increasing revenue by collecting more money from ...ta da ... Their guests! You know times are tough when Disney isn't even printing its own money anymore!

I have lots of ideas: resort fees, parking fees at resorts, stop letting guests bring food/drink into the parks, more paid After Hours events and Early Morning Magic events at all four parks, let resort guests purchase additional FPs, sell a "FP+ hopper" where people can pay extra to reserve FPs at two parks, sell a premium "unlimited" daily Fastpass device like Universal or Six Flags, slash the maintenance and custodial budgets. Those are all great ideas for Disney to make more money without spending too much, and I'll even let Disney use these ideas for free.

But ultimately, I don't care a whit about Disney as a business or a company. I'm infinitely more concerned with Walt Disney World as a vacation destination for myself. I would be much more impressed if Disney's goal was not just to increase profits, but also to encourage me to maintain the revenue stream they get from my family going to WDW. Increasing prices, while cutting costs and park hours, with the big park additions still years away, doesn't make me excited. Looking at my personal vacation budget, it's looking like the WDW cost-cutting from my end will have to continue.

 

[JimmyV]

While the parks definitely give the company a halo effect, I couldn't believe that given the scope of WDW they ever envisioned losses. I think with the increased park costs (#thanksshanghai) coupled with decreased revenue from ESPN, there was pressure to make up those losses. I just hope they don't milk the golden goose too hard.

You're probably right, but "back in the day" when a piece of litter was snatched up before it hit the ground and it seemed as if every lamppost had been painted the day before and it cost a couple of bucks to get into the (one and only) park, it is hard to imagine that anyone was sweating bullets over profits derived from the park. When I think about the fact that attendance was half of what it is now, and customer service was double what it is now, I can't help but think that the profit-and-loss statements were very different.

 

[MickeyMinnieMom]

As a stockholder, AP holder, and long-time guest, I'm pretty sure I don't like "how" they got the profit up in the past quarter, especially if the attendance drop continues. Staffing cuts and price increases aren't a path to improved guest satisfaction.

As a stockholder, AP holder, and long time guest, I don't draw conclusions about any company (or anything) from such a short period of time when I believe the track record to be a solid one overall.

 

[NYDisGuy]

I just hope they are ready with capacity/hotels etc. for when Star Wars land or whatever comes out because it's going to flip everything on top of it's head. Reduced attendance will be a thing of the past. I think you're going to see things come out like crazy once the money starts rolling in from that investment. The innovation complacency and other cost down initiatives could be debated but the golden goose they will be milking will be Star Wars.

 

[WillAustin]

You can't buy an intangible asset (normally), especially goodwill. If the new lands/expansions don't hit, it will be a long rebuild.

I'll be very interested so see how they handle price increases as the new lands open.