Attendance Down, Revenue Up

[GillianP1301]

My 2 cents on this is...

Revenue is more than likely one of their key measures for success, that along with bottom line after all expenses, etc... are usually the 2 main ones. Attendance is secondary to this and almost irrelevant, other than it factors into what their expense line totals up to (i.e. the amount of staff needed to run the parks & resorts). For example, if attendance is down, then you arguably need less staff to operate. If they can achieve that, while increasing revenue (i.e. charging more for the same thing), then from strictly a business perspective they are doing extremely well. Their target market is not the budget traveller who is not at all interested in paying for premium events/attractions, their target market is going to be those who have more expendable income to lay out for the extras. Again this leads to increasing their revenue with flat or decreased operating costs.

 

[mshanson3121]

What I see now is what I have seen over the past 2-3 years. People who are habitual guests continue to be so, but find ways to spend less money (or the same amount as before, resulting in a "downgraded" experience), and come home longing for the "good old days". People who are first time guests come home and say "never again!", or, "it was OK, but I am in no rush to go back." Those are painful words to hear if you are a Disney exec. And it cannot be denied that pricing is a major factor. Those of us who used to pay $49 for a room at the Contemporary and have seen the price climb to $150, to $225, to $300, to $425, and upward to $650 have slowly adjusted to the increases and accepted them, (or not). But for a first time visitor paying $650? Their point of reference is that it is really, really, really hard to find a hotel that charges $650 per night anywhere in the country (not named New York City or San Francisco), and when you do pay $650 for a room while on vacation, you get a level of quality and service that blows the Grand Floridian or Poly out of the water. I think that current pricing might be accepted begrudgingly by repeat guests, but I don't see it being tolerated by first time guests. Yes, Value resorts are still a good value. But the gap in price between the Values and the rest of the resorts has gotten to the point where it is really hard to justify paying Disney's prices unless you have already been won over by the Mouse. I am not seeing "new growth" in the customer base the way I used to.

I definitely agree with the money aspect. It's why we stayed off-site. I'm sorry, I couldn't justify spending $150 (summer time, with discount) a night for their very cheapest hotel, which quite frankly, isn't even as nice as one of our local Comfort Inns, when I could get a beautiful, spacious 4 bedroom home, with a private 24' pool, for $100 a night. So not only did we save $50 a night on lodging, we saved $1000+ easily on food, because instead of paying $1500+for 3 meals and snacks a day OOP or buying the DDP, we spent $250 on groceries. And quite honestly, ate better/healthier than we would have, had we relied on DDP or restaurants. The "perk" of free parking and MBs didn't even come close to making up the cost difference. Nor, did we feel the "magic" of staying onsite was worth the massive savings. And, the more Disney increases prices on tickets, lodging, on food, etc.. and especially coupled with decline in service, the more people are going to either choose to go off-site where they can spend less, and have a better experience, or they're going to be forced to stay off site. Or, raise it high enough and people will just stop going altogether, because they'll realize that they can do other vacations (with better quality lodging/service) for less money (we can do a 1 week vacation at a 4* all inclusive resort, including flights, for almost half of what our Disney vacation will cost).

 

[mshanson3121]

I told my friend that as long as they keep selling multi day tickets and annual passes, the crowds will continue to be a problem. I really think that if EVERYONE had to buy a 1 day ticket, every time, that is the ONLY way you will see lower crowds.

I think tiering the multi-day passes will help some, because it'll be a fairly substantial price increase, that affects the majority of visitors. The tiering of single day tickets really didn't target the main crowd, so really has minimal impact on crowd control.

 

[lockedoutlogic]

This is the first bit of evidence that the theory of "it's great, people want more of it, they should charge what they want...wishes, magic, dreams, wonder!"

...is not in fact true.

They've had periods of growth and then slowing/flattening in the past in cycles...

However never independent of the overall economic climate...which is still in "spend" mode.

This is interesting and likely to get more interesting every 3 months.

 

[ElizabethB]

Revenue will follow attendance. As someone who regularly visited three times per year and held an annual pass, but has not found any reason to bother going to WDW in the last three years, I'm one of those loyal customers whose loyalty has been tried to the breaking point. No plans to visit this year either. WDW these days is incredibly high prices coupled with more and more disappointments regarding the actual guest experience. Attendance has caught up with this reality and revenue eventually will.

 

[DLgal]

Someone should tell the marketing department.

Seriously though, if you're talking about DLR, I can imagine that's another creature. I imagine they have been trying hard to reduce AP crowds. But I would also suspect that would be so that they could make room for selling more day passes.

Talking about all domestic parks.

 

[mom2rtk]

Agreed.

The thing I would like to know (but never will) is how any recent decrease in attendance breaks down by park. It is possible that the "modest" overall decrease results from lower attendance at some parks and less of a decrease (or even an increase) at MK.

I'd be shocked if that wasn't exactly what happened.

 

[Thiago Acquaviva]

I wonder if my country (Brazil) plays a part on this...

 

[summerw]

We were there 2 weeks after Easter, during what was supposed to be average crowds. If that's a decrease, I'll never go back (I realize that time period isn't first quarter). I definitely think there's some creative verbiage going on to try to hide construction costs and that HS is a 1/2 day park now for the next few years and that Epcot with Soarin' closed is not pulling as many.

 

[tlmadden73]

Crowds .. it will just continue to be insane at MK (and get worse as construction at DHS closes more things). It is just a waiting game until DHS is done and everyone will be wanting to spend multiple days at DHS AND potentially AK. The problem is once those parks are done, Epcot is going to be the "half day park" or the skippable park in a few years if they don't do something soon. Epcot being a ghost town won't help crowds.

 

[ChipnDale79]

Crowds .. it will just continue to be insane at MK (and get worse as construction at DHS closes more things). It is just a waiting game until DHS is done and everyone will be wanting to spend multiple days at DHS AND potentially AK. The problem is once those parks are done, Epcot is going to be the "half day park" or the skippable park in a few years if they don't do something soon. Epcot being a ghost town won't help crowds.

Epcot may not help crowds during the day in a few years, but it'll always pull people at night time. The restaurants in world showcase and the atmosphere will always pull the night time crowds.

Future World needs some serious help though.

 

[lugnut33]

Well maybe the expansion cuts will begin then. Will see.

I just think an entire "Revenue is down" overall would have been worse, but never know.

The Pixar area at DHS has already seen some major downgrades to its plans, especially in the Slinky Dog coaster.

 

[Minnesota!]

We live on the west coast. For nearly 10 years we had AP's and made at least 1 trip per month each were 2-3 days each. As recently as 5 years ago no black out AP's with park hopping were $250. I could buy them at Costco and get a $50 gift card making the AP only $200. I could afford to buy them for my family and make the trips. Today those same passes are $1050. Not possible to afford for entire family and have money left over for monthly trips. Haven't been back to DLR since then.

DAYUM!! That is insanity..

I totally agree. The pace of construction is glacial. I visited MK multiple times during the FantasyLand expansion construction and I saw very few workers. Building slowly saves construction costs of course.

Star Wars Land does not have to take 4 years. It's also frustrating that they sat on the Star Wars property for several years before announcing anything. How long has ROL taken? What about AvatarLand (not that I think anyone will make a special trip to see Pandora). Why is it taking so long to re-skin Maelstrom? Here is a better question: Why not leave Maelstrom as-is and instead add a new Frozen ride (which adds capacity to Epcot)?

I have been visiting WDW since the mid 80s. Back then, a major park was added pretty much every decade. Unfortunately that trend has come to an end. Instead 1.5 Billion was wasted on FP+ which adds zero capacity. It just redistributes the crowds. They could have built a 5th gate with that 1.5 billion. Be bold, like the old Disney company used to be and start expanding to grow revenue (and profit).

That was my thought from the start - leave Maelstrom, build the Frozen attraction on the land next to Norway. Two places for people to visit. I just don't understand the thought process of Disney...I really don't.

 

[lugnut33]

DAYUM!! That is insanity..



That was my thought from the start - leave Maelstrom, build the Frozen attraction on the land next to Norway. Two places for people to visit. I just don't understand the thought process of Disney...I really don't.

Here's the thing, building attractions does NOT increase revenue and they cost a lot of money. People on a ride are not spending money. If it was up to Disney execs right now they would be perfectly content to build themed malls with no rides at all.

 

[wisblue]

I'd be shocked if that wasn't exactly what happened.

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.

 

[mom2rtk]

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.

I agree with that. And that's what I told my friend planning a big trip for this fall even before the report came out yesterday.

 

[Nancyg56]

We were there 2 weeks after Easter, during what was supposed to be average crowds. If that's a decrease, I'll never go back (I realize that time period isn't first quarter). I definitely think there's some creative verbiage going on to try to hide construction costs and that HS is a 1/2 day park now for the next few years and that Epcot with Soarin' closed is not pulling as many.

I think that the lack of attractions open in Epcot, along with the attraction closures in DHS has certainly boosted attendance in the MK. I read so many people saying that they would not go to Epcot with Soarin closed. And that DHS is a 1/2 day park now, so the reduction does not surprise me.

I think that when there is less to do overall, the crowds feel more intense, and then when magnified by reduced capacity in many of the attractions that remain open, well.....you are crowded. I think that that long term, this is problematic for Disney because as people have already pointed out, the repeat guest is the least likely to leave feeling buyers remorse, and the repeat guest is not DIsney's target market. They seem to be marketing toward first time blow up the bank account guests, and those folks are the least likely to forgive a crowded park, wicked expensive food, and dining options that are not opened to them because they had no idea that needed to be locked and loaded 180 days out at 6 AM.

Never mnd the sticker shock for people who are just beginning to price out a trip....

 

[tlmadden73]

Epcot may not help crowds during the day in a few years, but it'll always pull people at night time. The restaurants in world showcase and the atmosphere will always pull the night time crowds.

Future World needs some serious help though.

IF people are getting park hoppers .. when I've had hoppers, yes .. that is what I used to do (as an adult). But now going with little kids .. I don't see doing that.

I think you are also underestimating what Disney Springs is going to do to the WDW nightlife. I know I (once I get back there now that is nearly done) (and probably MANY MANY others) would prefer to just hop over to Disney Springs (for free). Shopping AND way more dining options that are just as exotic (and probably cheaper for what you get) than World Showcase.
To me Disney Springs (now that is near completion) will kill the uniqueness and exotic nature that once was the World Showcase and make Epcot even more a ghost town.

Why pay for a cover charge (hopper pass) to go to a dated area with a lot of walking with only a handful of restaurants when you can go to Disney Springs and not only see the brand new area, but have more modern shopping options and exotic dishes? Italian? Japanese? They have those style of restaurants and more in Disney Springs from what I've seen .. plus a movie theatre .. and a bowling alley and a Cirque du Soleil show ....

 

[Minnesota!]

Here's the thing, building attractions does NOT increase revenue and they cost a lot of money. People on a ride are not spending money. If it was up to Disney execs right now they would be perfectly content to build themed malls with no rides at all.

Oh, I see that. It was more that they would have 2 places to disperse people vs. trying to cram the masses into one ride that, really, is just a rehash with Elsa vs Vikings... (or, at least that's how I imagine it!)

 

[Enjoying Life]

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.