Attendance Down, Revenue Up

[ChipnDale79]

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 ....

valid points, i completely forget about all they're doing with Disney Springs.

 

[Nancyg56]

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.

I also am afraid this may be the case. Unless someone decides to get creative and see what happens if they increase what peole get for their money.....wouldn't that be refreshing.....

 

[rteetz]

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

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.

 

[Enjoying Life]

I also am afraid this may be the case. Unless someone decides to get creative and see what happens if they increase what peole get for their money.....wouldn't that be refreshing.....

Don't hold your breath. Creative and refreshing are not words you hear in corporate board rooms. Unless the company makes breath mints.

 

[GillianP1301]

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.

Not necessarily. This is the classic supply/demand example. There is a finite number to attendance (the parks can physically only hold so many people), but not to revenue. Taking very simple numbers just for sake of discussion. If 100 people are willing to pay you $100 each and it requires $5000 in costs to support those 100 people OR if you can get 75 people for $200 each and it requires only $4000 to operate, option B is going to be what shareholders will favour. The trick is, that you have to look at the total revenue that person is bringing to you, so entrance ticket, resort room, souvenir purchases, meals, etc... Definitely a very fine balancing act.

If all they wanted to do was jam a park to say attendance was high, they could easily do that by either holding stead on their pricing or decrease their cost structure, it's pretty clear to me that is not their goal.

 

[GillianP1301]

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.

Where did you read earnings are down? I haven't searched out their financial report (something to save for my spare time lol). Just curious if you have a reference for the quarterly earnings report.

 

[Enjoying Life]

Where did you read earnings are down? I haven't searched out their financial report (something to save for my spare time lol). Just curious if you have a reference for the quarterly earnings report.

http://www.zacks.com/stock/news/216985/disney-dis-misses-earnings-1st-time-in-5-years-stock-falls-6

https://ditm-twdc-us.storage.googleapis.com/q2_fy16_earnings.pdf

 

[nilla]

1. Based on this, I'd say that Josh's assertion that the long lines and crowds are mor due to FP+ than increased attendance definitely has merit.

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.

 

[TLSnell1981]

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.

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.

I know some are super excited, but I have no interest in the new Star Wars or Avatar lands. Don't care for either movie.

 

[rteetz]

I know some are super excited, but I have no interest in the new Star Wars or Avatar lands. Don't care for either movie.

What about toy story? You also don't need to have interest in a movie to have interest in a theme park land. I have no interest in Harry Potter but I appreciate good themed lands or attractions when they happen.

 

[TLSnell1981]

I have 8 DGKs...we all love TS AND HP. For me,..just don't care for the theming with SW or Avatar.

 

[ellie05]

I don't think they intended to have lower attendance nor are they lying in the report to make it seem the parks are less crowded. There are a number of reasons why the parks might seem more crowded.

I think the plan of increasing prices and making profit of fewer people it is great for add on like the holiday parties. It is a win with the customers that will shell out the money because less crowds will provide a better expirience while Disney still making money. Since it is an add on they will still keep the day to day customers.
While I don't think they want to fill their park to capacity every day I think this shock them a little since they have raise prices and seen grown for I think now 5 years in a row until now. This is going to be interesting how they proceed from here. Disney has a lot of hotels rooms to fill and less attendance means less hotel rooms filled. I think what brought them here is a mixture of the world economy, the product they are putting out, better completion and price increases.

 

[dreiwhit]

In fact, the department my friend works in is VERY much interested in lowering crowds....and they have a LOT of influence to make other departments generate ideas to do so.

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.

IMHO, I think Disney World would be better served by adding multiples of the same rides (Dumbo), expanding the area in the existing parks and adding more rides (spreading out the crowds more) and by reallocating some rides to different parks. For example, move Carousel of Progress (my favorite, BTW) from MK to Epcot, Move Monster's Laugh Floor and Buzz Lightyear Space Ranger spin to DHS, etc, etc.

And maybe, instead of a Shanghai Disney, add another Disney World-type park to the central USA or to South America.

Of course, none of that will make the bean counters, Wall Street analysts who want short term stock gain and the recent college grads with MBAs happy....

 

[rteetz]

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.

IMHO, I think Disney World would be better served by adding multiples of the same rides (Dumbo), expanding the area in the existing parks and adding more rides (spreading out the crowds more) and by reallocating some rides to different parks. For example, move Carousel of Progress (my favorite, BTW) from MK to Epcot, Move Monster's Laugh Floor and Buzz Lightyear Space Ranger spin to DHS, etc, etc.

And maybe, instead of a Shanghai Disney, add another Disney World-type park to the central USA or to South America.

Of course, none of that will make the bean counters, Wall Street analysts who want short term stock gain and the recent college grads with MBAs happy....

With the economies of central or South America that won't happen.

Also they would rather just demolish attractions than move them. Moving space ranger spin to DHS doesn't make much sense when you have TSMM there already.

 

[Irish_Mike]

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

 

[Minniesgal]

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.

IMHO, I think Disney World would be better served by adding multiples of the same rides (Dumbo), expanding the area in the existing parks and adding more rides (spreading out the crowds more) and by reallocating some rides to different parks. For example, move Carousel of Progress (my favorite, BTW) from MK to Epcot, Move Monster's Laugh Floor and Buzz Lightyear Space Ranger spin to DHS, etc, etc.

And maybe, instead of a Shanghai Disney, add another Disney World-type park to the central USA or to South America.

Of course, none of that will make the bean counters, Wall Street analysts who want short term stock gain and the recent college grads with MBAs happy....

Or you raise prices and make it exclusive and limit the access but guarantee income from small volume high revenue sales. Like Chanel limit where they sell products sell at a high premium and every outlet I know sells out of everything frequently. There is more than one way to make the economic wheel turn.

Adding capacity is capital intensive in a period where they are not looking for high expediter as they are already committed to many projects. Increasing revenue from lower volume sales seems like a reasonable short term strategy. After all those who drop away will likely come back when the ongoing capacity upgrades come back.

 

[MickeyMinnieMom]

So is this thread going to be moved to the community board, too?

 

[MinnieSweetheart]

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.

 

[WillAustin]

So is this thread going to be moved to the community board, too?

I hope not.

 

[MickeyMinnieMom]

I hope not.

Agreed, but it would only be fair... http://www.disboards.com/threads/attendance-down-at-wdw.3509847/