Attendance Down, Revenue Up

[Enjoying Life]

As far as I know, Disney does not release attendance records. So how has this story derived such?

From the mouth of Bob Iger on Disney's earnings report: "Attendance at our domestic theme parks was relatively flat, as an increase at Disneyland Resort was offset by a modest decrease at Walt Disney World Resort."

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

 

[Mackenzie Click-Mickelson]

So I really don't know on this but what things do they define as "per-guest spending"?

 

[Shanti]

Bad lines are due to increased demand. To curb that prices are increased until profits and demand balance. Sure Disney can build more attractions to increase capacity (which they are doing) but no where near what demand requires.

Agreed. That was my point.

 

[mshanson3121]

NM

 

[TLSnell1981]

I think, attendance was this high because too many were already stuck...airfare, park tickets, etc.

 

[Mikie]

So their plan is working...

That's the question, though. . . (At least to me). The article states that they did not meet expectations, which are set by executives telling analysts what they're planning and analysts adding their own knowledge to it. If attendance dropped moderately and revenues went up, BUT not enough to meet expectations, resulting in a drop in stock price, perhaps this isn't the balance they are aiming for. So many factors involved, however, the cause of missed expectations could be something else entirely.

 

[mshanson3121]

Is the building of Avatar Land, Star Wars Land, Toy Story Land not investing in the parks? Over at Disneyland Resort they spent plenty building Cars land and revamping other areas of California Adventure. They're also building Star Wars Land at Disneyland as well. Quite a bit going on at the parks lately. That said, Disney is coming closer to pricing my family out. Can only go off season with large discounts.

It's WDW that is having more trouble than DL. And as it's been said on here many times before, this stuff is long overdue. Also, SWL and TSL are so far out from fruition. People care about the NOW. Not what's going to be there in 3-4 years.

 

[Huff]

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.

 

[Mikie]

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.

 

[Thumper1066]

My opinion, I think Disney is making excuses. They are in the business of telling stories. They are talking about smaller crowds to keep people from canceling their trips. We were expecting several new attractions/shows to be up and running after Memorial Day. Not happening. We still don't know about Star Wars light show/fireworks at DS at all in June. No FP for the new Frozen ride at Epcot. Half of DS is under destruction. ROL opening cancelled. Jungle Book show may be great, but when are they going to announce show times? Disney you are driving this uber planner crazy.

 

[Skywise]

On top of that, checkout this video from Shanghai Disney - Especially the Pirates of Caribbean ride at 27:00 or the water fountain ride at 39:00 or their version of Tomorrowland at 69:00!

(China's version of youtube)
http://v.youku.com/v_show/id_XMTU2NDM3MTA5Mg==.html

NONE of the plans of Star Wars land and Toy Story land look anything this ornate or detailed.
(I find the sheer amount of steps kinda interesting - Something that Disney is actively steering away from here in the states...)

 

[JimmyV]

Not that the last two consecutive quarters are the whole story, but exactly when is the $2 billion investment in MDE supposed to bear fruit? But for constant price hikes (which are completely untethered to MDE other than paying for it), earnings would be a horror show. Since the introduction of MDE, Disney has yet to announce positive earnings that were not largely (or exclusively) driven by price increases. No organic growth at all.

 

[cel_disney]

I think that there are several things in play here...the decisions that are being made to hold some attractions behind (Soarin) and others at WDW (FEA, ROL), and the Avatarland (will it ever arrive?) coupled with closures (DHS) definitely impact attendance...MANY people are still REALLY a last minute planners - we all know these people - they decide a month out if they are going. many of those people will see the new HP stuff and go there instead of Disney ... It's just got more buzz right now!!

But - I really do think that Disney will make it thru this...I expect that we will see more 'pay extra events' - they are really easy ways to make a couple million $$ without really increasing operating costs...

 

[MinnieSweetheart]

I mentioned on the party price hike thread, but I think it's relevant here. People may still make trips, but the quickest way to save money is to drop from a 7 day trip to a 5 or 6 day trip. That doesn't cause much loss in revenue in tickets and probably not much in souvenirs. Where that's going to impact revenues is restaurants and HOTELS. There are already a lot of deals for hotels in Disney this summer that are quite widely available and I'm not sure if they release average length of stay, but I would bet that it is going to drop substantially by at least .25 days but probably more like .5

People can only afford to stretch the budget so much before they are just going to have to limit what they do on vacation.

 

[nicko]

It's WDW that is having more trouble than DL. And as it's been said on here many times before, this stuff is long overdue. Also, SWL and TSL are so far out from fruition. People care about the NOW. Not what's going to be there in 3-4 years.

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).

 

[AliceIn]

The US dollar has been in a major decline since December.
http://www.barchart.com/charts/stocks/$DXY

But it was very high when people were making plans for this year. It appears to be coming back up also.

 

[Mac30188]

IMHO where Disney is jumping the shark are the service cuts. The expensive add ons. Smart. The tiered pricing. Smart. The increased prices. Smart. Cutting services. Fail.

Disney strength is their brand and ability to offer a once in a lifetime magical trip like no other. They have done for so long they now have generations willing to spend anything to bring that magic to their children. The running rides at partial capacity, cut backs in food quality and portion size, cutting Cast Members both in numbers and hours (which will lower quality), etc. destroys the fabric and legacy on which Disney is based. This erosion on the other side of the value equation completely undercuts the strategy of expensive add ons. Some one who spends several hundred dollars for unfettered access to 7DMT, is typically not going to accept waiting an hour for Dumbo because only one side is running and 20 minutes to wait in line to buy a Christmas ornaments. There are thousands of reasons people will want to come back regardless of cost. Disney now is giving people dissatisfiers they can use as justification not to return.

Honestly it almost feels like some desperate harvesting of revenue from the decades of magical memories people have in hopes of one last big fat paycheck and let the next generation of leadership deal with the problem of luring back the disenchanted "never again" crowd.

 

[MinnieSweetheart]

Honestly it almost feels like some desperate harvesting of revenue from the decades of magical memories people have in hopes of one last big fat paycheck and let the next generation of leadership deal with the problem of luring back the disenchanted "never again" crowd.

You know I've thought something a little less cynical, but along the same lines lately.

 

[Angel Ariel]

It'd be interesting to figure out if the attendance drop was in relation to the price increase - I think it's too early for the attendance to be that far down because the price increases just occurred really near the end of the quarter...

Wasn't the tiering tickets increase announced in February? With an October-Sept fiscal year, that would be closer to the beginning of the quarter than the end.

I know other increases were made towards the end of the quarter, but it's possible that the tiering announcement had an effect on Easter time...it was about a month before then.

 

[mom2rtk]

This is really interesting the only reason the didn't loose money is because of price increases, no wonder they desperately raised everything on a very short spam. I knew the international economy drop was going to affect them I think their nickel and dimming has also affected them.
Now they are saying they meant to do this, but by lower summer rates and a very long free dinning season says otherwise. I think that they are starting to see the decrease translate to the hotels occupancy. Comes fall universal is opening a new hotel and rides.

I don't think it was done on purpose.

But that's a double edged sword. Those price increases might have kept them profitable, but it apparently cost them enough that they missed predictions. I hope they are starting to see that there isn't an endless stream of people waiting to come through the gates and pay whatever it takes to have a Disney vacation.

However, Free Dining is going on for a shorter period than ever before. There were also lots of reports of lower-end room types being harder than ever to get for it, from the very first day it was available.

I have seen a number of reports the last couple weeks of rooms being added to the free dining inventory. Lots more available than when it was first rolled out.