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

[PrincessWithABlaster]

This really calls into question the whole notion that revenue increases as "person hours in the park" increases. We know that Disney is trying to increase Parks and Resorts revenue. That much is certain. Are the bean counters now telling us that Disney makes more money the less time people stay in the parks? Wouldn't this undermine the entire premise of MM+ and the reasoning behind the patent applications? Or is Disney finding out that it makes more money when it pushes people out of the parks and into other venues? Maybe that was the brilliance of MM+. Do a couple of rides, leave, and spend your money elsewhere. At some point, a group of people have had this discussion in a conference room in Burbank. I'd love to know what they concluded.

They increased prices on meals and tickets which compensated for the small decrease in attendance. The article said as much. But with those price increases their profits would have been higher if attendance had stayed the same or gone up. In these times of shareholder value, bigger profits are always better and desired. So I suspect this was bad news for Disney. They could have made so much more...

 

[nicko]

Not exactly. With the significantly increased hours at AK, it could very well offset the crowding and decreased hours at MK. A six hour increase there is HUGE. These stats don't take any of that into consideration. The attendance overall may very well be the same, but a significant chunk of that crowd may be at Animal Kingdom.

I don't think keeping AK open late will pull too many people away from MK this summer. Other then the quickly put together Jungle Book show, what is new at AK? There is usually a mass exodus around 3 or 4 PM from AK as people have done all the attractions. Sure some will stay once to see Jungle Book and the "all new" Safari at Night maybe one night, but that's about it.

Speaking of the Safari at Night, I remember the good old days when Disney would hype an actual new ride or attraction. Now the dearth of new things to do is so bad that they resort to "Safari at Night" which really means "Same Safari as During the day but with some lighting and fewer animals". Maybe next they will count Big Thunder Mountain as two attractions: "Big Thunder Mountain" and "Big Thunder Mountain at Night (but not too much at night because we are closing MK earlier now)".

 

[Mikie]

Hmmmm......I wonder. How long does it really take most people to make a souvenir purchase, buy a Mickey pretzel or balloon? Maybe I'm unique but it doesn't take me several hours. I can buy a couple of things in less than 30 minutes. If you can replace me every few hours in the parks with someone else who repeats the process, they may actually see more money with people spending less time in the parks.

Or maybe not, because if it did work that way and I were the head in charge, I'd INCREASE park hours and maximize that revenue effect! Or maybe they've determined thru their collection of data that spending reaches critical mass during a certain window of hours. Or maybe.........

Definitely, like you - I'd love to know.

I may be unique (but in this respect, I don't think so) but for my family, I don't think our spending is per person. It's more per person per hour. If we only spend a short time in the park, we may spend ZERO on souvenirs and meals, possibly having only a drink or snack. It's when we are there all day that we start meandering, get hungry for meals, shopping in one or more shops, getting a second or third beverage. . . With a limited amount of time, I'm going to do 100% rides, no discretionary spending. Unless I'm atypical, cranking through families more quickly would result in less supplemental revenue. If we were in the parks less, we'd likely be at our resort doing free activities (swimming, resort-specific activities). While we may eat there, at many resorts (all values and some moderates) that means only counter service, not pricier table service. And if we're not in the parks, we may even take a day or half day offsite, losing money for Disney. I really think they're pretty married to the "Disney bubble" effect, and I don't think pushing people out of the park helps keep people in the bubble.

 

[MinnieSweetheart]

Taking a revised look at June YOY:

June 1-30th 2012 - 426 Included hours + 35 EMH= 461 (Wow, EMH)
June 1-30th 2013 - 431 Included hours + 13 EMH = 444
June 1-30th 2014 - 461 Included hours + 11 EMH = 472
June 1-30th 2015 - 469 Included hours + 12 EMH = 481
June 1-30th 2016 - 425 Included hours + 14 EMH = 439

I don't have the data for monthly attendance numbers, and going by daily average x's 30 days won't be terribly accurate. However, knowing that attendance increased YOY (with possibly the exception of this June vs last June), it is kind of astonishing that June 2016 could potentially (bolded on purpose), have the least amount of operating hours in 5 years. If I get more time, I'll throw in more years.

This is exactly why I didn't agree with the poster who asserted "hours are just reverting to the mean" no crowds are up from 2013 and that is the most equivalent year in hours. If crowds are up, then they should be able to still bring in plenty of revenue hosting more hours.

 

[MinnieSweetheart]

I have listened to several podcasts (I know - one step up from what the bus driver told us last month!) say that attendance may be soft this summer due to the Brazilian economy downturn and the effect of families postponing their WDW vacations until the new lands open. Could this be the cause of the reduced hours? A simple balancing of supply & demand?

I think the irony is that a lot of their return customers would not be delaying trips to wait for new lands if prices hadn't gone up by so much this year. It's hard to justify taking a trip this year when just last year people priced their trips out at 12-18% cheaper on a recent thread. If I'm paying 15% more, I would like at least 11% (I'll account for inflation) more entertainment value.

As for the per person per hour thing, I know our family definitely spends more money the longer we stay. My husband is still bitter they took the cheese out at Casey's b/c he liked his "midnight snack" of corn dog nuggets dipped in cheese (mustard just isn't the same) I also know we are much more likely to buy bottled soda after around 9pm. I usually bring a bottle for each of us in the morning then we order a soft drink with lunch, but after walking around for a while, I'm just sick of water. On days we leave earlier, I don't need bottled sodas and my husband certainly doesn't need a "midnight snack."

 

[bbjunkie]

This is exactly why I didn't agree with the poster who asserted "hours are just reverting to the mean" no crowds are up from 2013 and that is the most equivalent year in hours. If crowds are up, then they should be able to still bring in plenty of revenue hosting more hours.

While that's true in black and white, I don't think all hours are created equal. I suspect that over time Disney has discovered a couple of really important things that drive the amount of EMH hours. 1). A relative few amount of guests will stay late. Even fewer staying "really late." (After 1:00 am). 2). The elimination of the 2:00 am and 3:00 am EMH came because not enough guests stayed in the park that late to warrant the operations cost, 3). Those that stay in the parks until 1:00 or 2:00 am don't spend as much money walking through shops on the way out as those leaving at 10:00 or 11:00, 4). There is not an overwhelming demand from guests to keep the parks open until 1:00, 2:00, or 3:00 am. My family is a late-nite-EMH family, and I can say from experience that much of the time after midnight, all rides are practically walk-on and the park feels significantly less crowded as blocks of 10 minutes go by. I can also say that as we walk out at 1:00 am or later, the amount of people in the shops seems significantly diminished. I can understand how it doesn't make fiscal sense for the parks to remain open. On a separate note, I think the annual stats sighted a few posts above are skewed a bit because of 9/11. WDW offered all kinds of incentives to get people to visit the parks amid fears and rising travel costs. By looking at these numbers, it looks they included adding all kinds of park hours.

 

[JimmyV]

1). A relative few amount of guests will stay late. Even fewer staying "really late." (After 1:00 am). 2). The elimination of the 2:00 am and 3:00 am EMH came because not enough guests stayed in the park that late to warrant the operations cost, 3). Those that stay in the parks until 1:00 or 2:00 am don't spend as much money walking through shops on the way out as those leaving at 10:00 or 11:00, 4). There is not an overwhelming demand from guests to keep the parks open until 1:00, 2:00, or 3:00 am.

OK. I'm not an economics major and I don't play one on TV. But if the above is true, (and I'm not saying it isn't), especially #4, why did Disney think it could sell this low demand commodity for $149 per person plus tax?

 

[JimmyV]

Disney probably figured that the night-owls who were used to an empty MK at 1am would be willing to pay for that experience after Disney took it away.

It's remarkable how ignorant executives at a Fortune 50 company can be. I have no problem with the idea of selling something instead of giving it away. But there is no way that the four points made by bbjunkie could lead any intelligent person to the conclusion that $149 plus tax was the right price point for this, especially when E-Ticket nights sold for $12.

 

[WillAustin]

But if the above is true, (and I'm not saying it isn't), especially #4, why did Disney think it could sell this low demand commodity for $149 per person plus tax?

I was going to post that, but you beat me to it.

 

[Lucius Best]

It's remarkable how ignorant executives at a Fortune 50 company can be. I have no problem with the idea of selling something instead of giving it away. But there is no way that the four points made by bbjunkie could lead any intelligent person to the conclusion that $149 plus tax was the right price point for this, especially when E-Ticket nights sold for $12.

I see it more as "arrogance" than "ignorance". Disney probably feels like they can raise prices to whatever they want, cut costs and hours, and guests will continue flocking to WDW.

I also view the $149 DAH events as an experiment, to see how many people would pay and/or how much people would be willing to pay. If they try it again they can always tweak the price, rides available, food and drink perks, and frequency.

 

[JimmyV]

I see it more as "arrogance" than "ignorance".

Equal parts both. Neither a good thing.

I also view the $149 DAH events as an experiment

When someone does something that misses the mark, it is retrospectively called "an experiment". Gotta love corporate semantics!

 

[bbjunkie]

OK. I'm not an economics major and I don't play one on TV. But if the above is true, (and I'm not saying it isn't), especially #4, why did Disney think it could sell this low demand commodity for $149 per person plus tax?

I suspect that they thought it didn't make sense to have x-amount of people in the park from 10:00pm-1:00am (or 11:00pm-2:00am) for FREE because they didn't make enough money. However, if they could charge $149 per person for the same amount of people, that would make it worth it because they were generating money. Also, if they sell those $149 tickets to people that would not normally been in the park anyway, then it would bring more people into the park starting at 4:00 to start spending money before the event begins. They had to launch to see if it would work as predicted. I think it was absolutely an experiment, and they launched in on their low-attendance evenings. Now they need to assess whether or not it worked the way they expected.

 

[Lucius Best]

Equal parts both. Neither a good thing.

Agree completely.

When someone does something that misses the mark, it is retrospectively called "an experiment". Gotta love corporate semantics!

I actually think that this was an experiment from the start, given the high price and small number of nights it was offered. If the customer was willing to pay $149, great, extend it throughout the entire summer. If the customer balked, they can drop it down to $89 and everyone thinks it's a bargain, especially after reading reviews of how empty the MK was on $149 nights where they had to give tickets away. But it's also definitely possible that Disney was completely clueless and thought that people would be willing to pay $149.

 

[JimmyV]

I actually think that this was an experiment from the start,

That is certainly possible. But given the way Disney surveys everything to death, (they send out more surveys than any company I know of), they could have "experimented" through a survey that asked if people would be interested in an After Hours event, and if so, what would they be willing to pay for it. With "1" being "Not At All Likely" and "10" being "Absolutely!", they could have tested people's price point from $49 through $199 to see where the revenue maximization would lie. And I can promise you that had they done that, the survey results would not have pointed them to $149. By doing it the way they did, (if, in fact, this was the experimental stage), they set themselves up for failure. First, if the event got bad press, it would kill any prospects for the future, as first impressions are hard to overcome in the business world; and second, because if they did decide to re-roll it out at a lower price point in the future, they would tick off the people who overpaid and that could create very negative customer reactions. I suppose to this second point, there weren't enough "over payors" to worry about. But hey!, they didn't ask me.

 

[TreyQ3]

OK. I'm not an economics major and I don't play one on TV. But if the above is true, (and I'm not saying it isn't), especially #4, why did Disney think it could sell this low demand commodity for $149 per person plus tax?

I'm guessing that they didn't know the right price since this was a new product. If I were them, I would calculate the variable costs (labor) and divide by the number of hard tickets available for this event. Add a little bit of profit and viola - that is the selling price. Yes, maybe someone should have looked and said there is no way people would pay this price and ditched the whole idea. But nothing ventured, nothing gained.

 

[dlavender]

With their newly mined data, they probably have a better idea of numbers in the park for certain hours. They looked at where they could cut, and what those customers looked like. I theorize that not many club level Grand Floridian vacationers were in the park from 12-2 AM. Probably more locals, and customers who are lower on the revenue per hour mark. They decided that they could cut those hours, lose those people in the parks, without causing any significant loss in revenue or image. They may or may not be right. I wish I had their data. I get asked for reports like these all of the time. (we don't have near the quality data that Disney has). If the aggregate revenue per hour equals or is less than the cost per hour, the decision is easy to make. The only thing to keep in mind is what I said earlier, customers look different in person than they do on a spreadsheet. There is no real metric you can use to forecast how many of these customers will not renew an AP because of these actions, or how many will delay a trip, etc. Of course they rely on surveys. And they phrase those to target their desired results. "Would you like the park to stay open later, or would you like to have bathrooms"..........

 

[carmelhp]

Happy to meet another satisfied Six Flags customer!

When we first started noticing the cost-cutting changes at Six Flags, we continued going, assuming/hoping that the mismanagement and understaffing were temporary, or an aberration. But after a while, we realized that the changes had become the new normal. So we gradually stopped going. Every year they email me about buying season passes, but I have no reason to think anything has changed. Even if they have improved the park-going experience 100%, at this point, the only thing that would get me back would be the addition of new/huge E-ticket ride(s).

This is the death spiral that Disney is risking. Popular attractions can become unpopular overnight is people think they're being hosed. And once those crowds leave, it's pretty hard to get them back.

 

[JimmyV]

I don't think Disney cares very much about the people who bought tickets full price and then found out that CMs and DVC and AP guests were getting in free or half price.

And this is part of the problem.

 

[MinnieSweetheart]

While that's true in black and white, I don't think all hours are created equal. I suspect that over time Disney has discovered a couple of really important things that drive the amount of EMH hours. 1). A relative few amount of guests will stay late. Even fewer staying "really late." (After 1:00 am). 2). The elimination of the 2:00 am and 3:00 am EMH came because not enough guests stayed in the park that late to warrant the operations cost, 3). Those that stay in the parks until 1:00 or 2:00 am don't spend as much money walking through shops on the way out as those leaving at 10:00 or 11:00, 4). There is not an overwhelming demand from guests to keep the parks open until 1:00, 2:00, or 3:00 am. My family is a late-nite-EMH family, and I can say from experience that much of the time after midnight, all rides are practically walk-on and the park feels significantly less crowded as blocks of 10 minutes go by. I can also say that as we walk out at 1:00 am or later, the amount of people in the shops seems significantly diminished. I can understand how it doesn't make fiscal sense for the parks to remain open. On a separate note, I think the annual stats sighted a few posts above are skewed a bit because of 9/11. WDW offered all kinds of incentives to get people to visit the parks amid fears and rising travel costs. By looking at these numbers, it looks they included adding all kinds of park hours.

But I was talking about a difference which is regular late night hours which has roughly 3 times the amount of potential attendance as EMH.... I get your point, but 10 is not at all late night closing.

 

[MinnieSweetheart]

Of course they rely on surveys. And they phrase those to target their desired results. "Would you like the park to stay open later, or would you like to have bathrooms"..........

Ugh so true! It kills me....