Attendance Down, Revenue Up

[minnie mum]

Lines I could possibly see, but how would crowds be affected by FP+ more than attendance? If there are a lot of people in MK, it seems like that would be directly correlated to attendance.

Nancy Grace made a few good points about crowds outside the lines, when there are precious few attractions to be had, like Epcot and DHS. Wandering around, looking for SOMETHING to do that doesn't involve standing in another long standby queue. Even in MK- you've got your 3 FPs booked, but what are you going to do in between each one? Again - out in the street wandering around, trying to find something with a short standby line..

And no, I've got nada to back this up. Just a gut feeling from my last couple of visits.

 

[Pemeberly]

Older travelers who do have the money to spend are looking for the high end experience.

I realize this is reaching REALLY far back in the thread, but I just had to comment: this is what happened to us this year. We were all set to take a WDW trip in September again and even reserved our dining. But, then we realized that between WDW prices increasing and the euro-USD exchange rate remaining favorable, it really doesn't cost THAT much more to go to Paris. So au revoir, WDW trip and bonjour, Paris.

 

[WillAustin]

Nancy Grace made a few good points about crowds outside the lines, when there are precious few attractions to be had, like Epcot and DHS. Wandering around, looking for SOMETHING to do that doesn't involve standing in another long standby queue. Even in MK- you've got your 3 FPs booked, but what are you going to do in between each one? Again - out in the street wandering around, trying to find something with a short standby line..

And no, I've got nada to back this up. Just a gut feeling from my last couple of visits.

Interesting thought. I have seen firsthand and read other's reports of the parks feeling more crowded in the recent past, even if there might be less people in the standby lines that are taking longer. The "in-between" rides we used to do now have longer lines.

 

[rteetz]

I'm curious if Disney is starting to bite off more than they can chew, in terms of construction and renovations.

I don't know about that. Disney is just at the point where they waited too long to do anything and now they have to do everything.

 

[rteetz]

I just am surprised to see people posting that Disney's goal was for attendance to fall. Stock prices fell today, so I'm not sure the market/investors see the success in this new strategy.

I think they believed that customers would be willing to pay the increased prices throughout the resort and that it would not reduce attendance. Now they are in a position to either admit they didn't have a good grasp on what their customers want/would be willing to pay or to try to silently change things to meet expectations.

No doubt. Disney doesn't want to see attendance decrease because that's even more revenue they could've had.

 

[Shanti]

It doesn't make a decrease in attendance a positive for the company, but it would be a factor in what people visiting in the near future should expect. Anyone who sees that attendance at WDW has gone down, and interprets that to mean that they will encounter lower crowds at the MK, could be unpleasantly surprised.

Agreed. After visiting HS last year, we have no desire to go back. And even though I like Animal Kingdom, I'm not interested in going until everything is up and running and all of the walls are down. I feel the same way about DL. I got reduced price DL hoppers via an auction last month (worth almost 3x what I paid), but won't use them until summer of '17, as I refuse to make trip out there while so much of the park is under refurbishment.

 

[bnhonest]

FWIW, when you have a product that has high demand, you increase your supply to satisfy demand. Otherwise, you risk turning away potential customers who want the product but can't have it and will settle for a substitute....

Say I have a hotel with 100 rooms. I know, and it's been proven, that I can fill every room charging $50 per night. But I also know that if I increase my rates per night to $100, that my room occupancy drops in half. Now I'm only filling 50 rooms. But if you factor in the cost of the cleaning staff and the use of amenities, I actually come out ahead with my hotel being half full.

Obviously that's just an analogy. But I think it works. If Disney can raise rates of hotels and park admission 20%, scare off 10% of the park visitors, and still turn a profit greater than full capacity and create positive experiences for their guest, I think that's what they'd try to do. It's all about finding that sweet spot.

 

[mshanson3121]

This is the 2nd bad earnings report in a row. What's worse is that they missed their pre-announced earnings expectations for the first time in over 5 years. You have to understand the gravity and the reality of this. Right now there are heads rolling at corporate headquarters. If you thought it was bad before, wait until you see them now. They will be slashing and cutting like rabid dogs.

Isnt that shooting themselves in the foot?

 

[lockedoutlogic]

Yes but Star Wars hasn't thankfully. Toy Story before cuts was looking to cost $500 million which was way too high. Those cuts brought it down a bit.

We've been over this many times...trust no budgets, no plans, no announcements, no rumors...

What can you trust?

The "downsizing" of a desperately needed refresh in a shell park already proved me correct...

You just can't trust THEM...period

 

[lockedoutlogic]

Isnt that shooting themselves in the foot?

To greedy stock watchers and an overbaked CEO in his 60's looking to pump air into his own parachute?

Nope.

It would only be bad for them if they cared what followed...but they don't.

 

[rteetz]

We've been over this many times...trust no budgets, no plans, no announcements, no rumors...

What can you trust?

The "downsizing" of a desperately needed refresh in a shell park already proved me correct...

You just can't trust THEM...period

I'll trust what I want and you can trust what you want.

 

[nicko]

Say I have a hotel with 100 rooms. I know, and it's been proven, that I can fill every room charging $50 per night. But I also know that if I increase my rates per night to $100, that my room occupancy drops in half. Now I'm only filling 50 rooms. But if you factor in the cost of the cleaning staff and the use of amenities, I actually come out ahead with my hotel being half full.

Obviously that's just an analogy. But I think it works. If Disney can raise rates of hotels and park admission 20%, scare off 10% of the park visitors, and still turn a profit greater than full capacity and create positive experiences for their guest, I think that's what they'd try to do. It's all about finding that sweet spot.

Perhaps. However I'm not sure that's a good long term strategy. Disney still needs to fill all those hotel rooms. With less park attendance, you also have less hotel occupancy. With all of the DVC rooms they have been adding, they need to continue to grow to fill them. With less attendance, you also have less food sales, less souvenirs etc.

That might be their goal, but I think they are finding out it comes with some downsides.

Furthermore, if you want to go more upscale with your clientele, you have to provide a better experience. Recent evidence has shown that the park experience for all has diminished, not improved. You can't simply raise your prices so high that only the 1 percenters can afford it and sit back and reap the profit from a smaller but higher end customer base.

For me personally, I would be willing to pay more if I actually got more. These days it's "pay more, get less".

 

[lockedoutlogic]

I just am surprised to see people posting that Disney's goal was for attendance to fall. Stock prices fell today, so I'm not sure the market/investors see the success in this new strategy.

I think they believed that customers would be willing to pay the increased prices throughout the resort and that it would not reduce attendance. Now they are in a position to either admit they didn't have a good grasp on what their customers want/would be willing to pay or to try to silently change things to meet expectations.

A working theory is that they want to streamline their clientele into only high bracket income to support more free spending with less overhead costs...

That is reasonable considering the types of moves they have made. The main benefit there is less employee requirements - which they hate - but higher purchases per capita.

They also then have a "better experience" with less demand for new things - which costs more - less crowds, more smiles.

The lazy way to good "guest service"

As opposed to pride and value.

 

[lockedoutlogic]

I'll trust what I want and you can trust what you want.

And that would be a tactical miscalculation on your part...

If you're doing it to pass the time...so be it. But I've seen this fish before...

 

[rteetz]

And that would be a tactical miscalculation on your part...

If you're doing it to pass the time...so be it. But I've seen this fish before...

I follow a lot of different sources from a lot of different places. I know which ones to trust more than others. Everything I've seen, read, heard, is nothing has been cut from Star Wars land while yes things have been cut from toy story land. Regarding the DHS project the only major change that many of the sources either got wrong or had right because things changed was where Star Wars land would be located. Everything else has been pretty spot on at this point.

 

[Enjoying Life]

Say I have a hotel with 100 rooms. I know, and it's been proven, that I can fill every room charging $50 per night. But I also know that if I increase my rates per night to $100, that my room occupancy drops in half. Now I'm only filling 50 rooms. But if you factor in the cost of the cleaning staff and the use of amenities, I actually come out ahead with my hotel being half full.

Obviously that's just an analogy. But I think it works. If Disney can raise rates of hotels and park admission 20%, scare off 10% of the park visitors, and still turn a profit greater than full capacity and create positive experiences for their guest, I think that's what they'd try to do. It's all about finding that sweet spot.

That is a completely flawed business model in every sense. If your target audience is the general public, you never want to alienate half of them. If you make toilet paper, you can't charge double and hope that half your customers will continue buying.

 

[MinnieSweetheart]

A working theory is that they want to streamline their clientele into only high bracket income to support more free spending with less overhead costs...

That is reasonable considering the types of moves they have made. The main benefit there is less employee requirements - which they hate - but higher purchases per capita.

They also then have a "better experience" with less demand for new things - which costs more - less crowds, more smiles.

The lazy way to good "guest service"

As opposed to pride and value.

From what I've seen, I don't think that's their end goal.

If they wanted only luxury guests at high prices, they could turn the whole parks into something similar to DAH and charge a few hundred dollars for a day that includes unlimited snacks, sodas, a meal at a sit down restaurant and low crowds. The high end market who can afford it would pay for it and the rest of us would be left out or spend considerably fewer days in the parks.

The fact of the matter is they are not posed to compete with luxury vacations. Someone mentioned upthread that they can't even provide a luxury experience for club level guests at a handful of deluxe resorts. And the reason the luxury is down at "deluxe" club levels - not enough staffing. Running a luxury resort takes MORE staff not LESS.

 

[ChipnDale79]

Say I have a hotel with 100 rooms. I know, and it's been proven, that I can fill every room charging $50 per night. But I also know that if I increase my rates per night to $100, that my room occupancy drops in half. Now I'm only filling 50 rooms. But if you factor in the cost of the cleaning staff and the use of amenities, I actually come out ahead with my hotel being half full.

Obviously that's just an analogy. But I think it works. If Disney can raise rates of hotels and park admission 20%, scare off 10% of the park visitors, and still turn a profit greater than full capacity and create positive experiences for their guest, I think that's what they'd try to do. It's all about finding that sweet spot.

Then why do they keep sending me pin codes practically begging me to go?

 

[TwoMisfits]

I follow a lot of different sources from a lot of different places. I know which ones to trust more than others. Everything I've seen, read, heard, is nothing has been cut from Star Wars land while yes things have been cut from toy story land. Regarding the DHS project the only major change that many of the sources either got wrong or had right because things changed was where Star Wars land would be located. Everything else has been pretty spot on at this point.

But isn't Toy Story land the one being built now and Star Wars land mostly waiting in the wings? We see cuts already on Toy Story land...we may just not see the coming cuts yet to Star Wars (since it's so early)...and after this earnings report and another likely bad one this summer (gonna call it now with all the delays still happening), and with the same management who's done it time and time again...I gotta go with LOL's cynicism being more likely at this point...

 

[lockedoutlogic]

From what I've seen, I don't think that's their end goal.

If they wanted only luxury guests at high prices, they could turn the whole parks into something similar to DAH and charge a few hundred dollars for a day that includes unlimited snacks, sodas, a meal at a sit down restaurant and low crowds. The high end market who can afford it would pay for it and the rest of us would be left out or spend considerably fewer days in the parks.

The fact of the matter is they are not posed to compete with luxury vacations. Someone mentioned upthread that they can't even provide a luxury experience for club level guests at a handful of deluxe resorts. And the reason the luxury is down at "deluxe" club levels - not enough staffing. Running a luxury resort takes MORE staff not LESS.

I agree they are NOT positioned for luxury...but that doesn't mean they don't think so.

Disney parks are based on a middle class model...
Two problems with that:
1. Not much of a middle class
2. Their purchasing power hasn't increased...which means they're priced out.

And they don't bother to try "luxury"...haven't for years. But they slap huge prices on their "services".

By the way...what's DAH?