Attendance Down, Revenue Up

[lockedoutlogic]

I won't fight too hard for TSMM. But where I was coming from is that it seems to be a pretty impressive bit of technology that impresses the pre-teen crowd even if adult engineers are unimpressed. The young demographic deserved something better than spinning elephants, dinosaurs and carpets.

Now I agree with you there...

But the fact that it has a 90+ minute wait and you have to book your reservation 4 weeks in advance makes it impractical for the younger set.

5 year olds don't understand money, logistics, or time...

They want to go on again and they can't.

 

[Mac30188]

I don't think Disney necessarily thinks about it as driving down the attendance to offer a better experience. I do believe it is about maximizing revenue and the ultimate goal of keeping the park attendance near full capacity without ever reaching full. They raise in prices to prevent the parks from hitting the point where they are turning away guests. No one wins when they are that crowded. The simple version of thinking is.. Rather than waiting for a sell out and wonder how many of the 5,000 guests you just sent away would have spent an extra $50 to be on the other side of the fence, use predictive models to capture that revenue BEFORE it walks away. IIRC, while attendance was very high last year, they had very few days of turning away guests. That tells me they were pretty darn good at the pricing game last year.

The lack of investment is just hurting them now but it is really a sin of the past. Based on the remarkable investment in new rides and shows in the next couple years, Disney can't be faulted for their current plans. They can be faulted for focusing previous budgets too much on technology(i.e. MB, FP+) and expecting that was going to make up for entertainment. Could that be driving down attendance? Maybe. I know I personally moved my vacation from April to November based on the significant difference in parks between these two times. I doubt I am the only one who decided postponing a trip a few months to get a few more options including; Soarin, FEA, ROL, Night Time AK, BTMRR (originally scheduled for earlier this year) etc. At the time I was deciding, the plan comparison of April versus November was 4 tier one attractions not available (Soarin, FEA, Sommerhaus, BTMRR), 1 undergoing a capacity expansion (TSMM), and an entirely new night time entertainment option including state of the art show. I already had my tickets, so there was no price difference to wait. It just was too much to ignore.

While Disney certainly is not a luxury destination for the top 1%, they certainly have pivoted their key demographic and focus towards the upper middle class from the middle class. The high cost additions and upcharges are just a perfect way to continue to develop new services for higher income points that don't price out their core demographic. It honestly is a very prudent and smart adjustment to keep them from turning into another Kodak if the middle class continues to erode. That combined with the use of DVC has given them some insurance in case of a negative economic event.

IMHO, it is still the cuts in service that is the fatal flaw in their plans. You can't get away with charging excessive prices and offering costly add-ons if you are going to get cheap on the little things that make Disney so special. It is like a great steak house that decides to only uses plastic forks and paper plates. Higher income patrons will complain about the plastic forks and paper plates, while lower income patrons will complain about the cost of the steak. Neither will want to return.

 

[lockedoutlogic]

I don't think Disney necessarily thinks about it as driving down the attendance to offer a better experience. I do believe it is about maximizing revenue and the ultimate goal of keeping the park attendance near full capacity without ever reaching full. They raise in prices to prevent the parks from hitting the point where they are turning away guests. No one wins when they are that crowded. The simple version of thinking is.. Rather than waiting for a sell out and wonder how many of the 5,000 guests you just sent away would have spent an extra $50 to be on the other side of the fence, use predictive models to capture that revenue BEFORE it walks away. IIRC, while attendance was very high last year, they had very few days of turning away guests. That tells me they were pretty darn good at the pricing game last year.

The lack of investment is just hurting them now but it is really a sin of the past. Based on the remarkable investment in new rides and shows in the next couple years, Disney can't be faulted for their current plans. They can be faulted for focusing previous budgets too much on technology(i.e. MB, FP+) and expecting that was going to make up for entertainment. Could that be driving down attendance? Maybe. I know I personally moved my vacation from April to November based on the significant difference in parks between these two times. I doubt I am the only one who decided postponing a trip a few months to get a few more options including; Soarin, FEA, ROL, Night Time AK, BTMRR (originally scheduled for earlier this year) etc. At the time I was deciding, the plan comparison of April versus November was 4 tier one attractions not available (Soarin, FEA, Sommerhaus, BTMRR), 1 undergoing a capacity expansion (TSMM), and an entirely new night time entertainment option including state of the art show. I already had my tickets, so there was no price difference to wait. It just was too much to ignore.

While Disney certainly is not a luxury destination for the top 1%, they certainly have pivoted their key demographic and focus towards the upper middle class from the middle class. The high cost additions and upcharges are just a perfect way to continue to develop new services for higher income points that don't price out their core demographic. It honestly is a very prudent and smart adjustment to keep them from turning into another Kodak if the middle class continues to erode. That combined with the use of DVC has given them some insurance in case of a negative economic event.

IMHO, it is still the cuts in service that is the fatal flaw in their plans. You can't get away with charging excessive prices and offering costly add-ons if you are going to get cheap on the little things that make Disney so special. It is like a great steak house that decides to only uses plastic forks and paper plates. Higher income patrons will complain about the plastic forks and paper plates, while lower income patrons will complain about the cost of the steak. Neither will want to return.

Excellent points...

I only dispute "sins of the past"
That is 100% the fault of the idiot in charge...doing next to nothing for 10 years.

You don't sit on a park...never...stagnation kills attractions like nothing else. Always been that way.

 

[MinnieSweetheart]

IMHO, it is still the cuts in service that is the fatal flaw in their plans. You can't get away with charging excessive prices and offering costly add-ons if you are going to get cheap on the little things that make Disney so special. It is like a great steak house that decides to only uses plastic forks and paper plates. Higher income patrons will complain about the plastic forks and paper plates, while lower income patrons will complain about the cost of the steak. Neither will want to return.

This is an excellent explanation!!

 

[Planogirl]

If Disney is so crowded that they are trying to keep crowds down why did I get my third pin code since December today? I've never had so many so quickly.

I agree with the comments that the constant cutting back is the biggest problem. It's hard to accept paying more when they seem so determined to cut wherever they can at the same time.

 

[mshanson3121]

Midway mania is very elaborate tank like contraptions in a very simplistic ride setup.

I like that they repurposed the space...but just like Dopey's dipper in MK...the line isn't reflective of the quality.

Everest had a chance - they failed.

And tower was the last great system designed for wdw...if we're honest.

How did they fail with Everest?

 

[nicko]

I don't think Disney necessarily thinks about it as driving down the attendance to offer a better experience. I do believe it is about maximizing revenue and the ultimate goal of keeping the park attendance near full capacity without ever reaching full. They raise in prices to prevent the parks from hitting the point where they are turning away guests. No one wins when they are that crowded. The simple version of thinking is.. Rather than waiting for a sell out and wonder how many of the 5,000 guests you just sent away would have spent an extra $50 to be on the other side of the fence, use predictive models to capture that revenue BEFORE it walks away. IIRC, while attendance was very high last year, they had very few days of turning away guests. That tells me they were pretty darn good at the pricing game last year.

The lack of investment is just hurting them now but it is really a sin of the past. Based on the remarkable investment in new rides and shows in the next couple years, Disney can't be faulted for their current plans. They can be faulted for focusing previous budgets too much on technology(i.e. MB, FP+) and expecting that was going to make up for entertainment. Could that be driving down attendance? Maybe. I know I personally moved my vacation from April to November based on the significant difference in parks between these two times. I doubt I am the only one who decided postponing a trip a few months to get a few more options including; Soarin, FEA, ROL, Night Time AK, BTMRR (originally scheduled for earlier this year) etc. At the time I was deciding, the plan comparison of April versus November was 4 tier one attractions not available (Soarin, FEA, Sommerhaus, BTMRR), 1 undergoing a capacity expansion (TSMM), and an entirely new night time entertainment option including state of the art show. I already had my tickets, so there was no price difference to wait. It just was too much to ignore.

While Disney certainly is not a luxury destination for the top 1%, they certainly have pivoted their key demographic and focus towards the upper middle class from the middle class. The high cost additions and upcharges are just a perfect way to continue to develop new services for higher income points that don't price out their core demographic. It honestly is a very prudent and smart adjustment to keep them from turning into another Kodak if the middle class continues to erode. That combined with the use of DVC has given them some insurance in case of a negative economic event.

IMHO, it is still the cuts in service that is the fatal flaw in their plans. You can't get away with charging excessive prices and offering costly add-ons if you are going to get cheap on the little things that make Disney so special. It is like a great steak house that decides to only uses plastic forks and paper plates. Higher income patrons will complain about the plastic forks and paper plates, while lower income patrons will complain about the cost of the steak. Neither will want to return.

I agree that Disney is only interested in an upscale customer. Unfortunately, other than raising prices, they haven't improved the experience. You can't just fence off an area, set up some tables with cupcakes and charge $50 to see the exact same fireworks they have been showing for years and wait for the "upscale customers" to flock in.

As for sins of the past, the current management team owns them. They have been around long enough that they were in charge when most of the decision to defer expansion occurred. In fact they continue to commit these same sins. They continue to:

• cut CM hours
• run rides at lower capacity
• run all construction projects on an extremely slow (cheap) pace
• trim theme park and water park hours (even during historically busy periods)

Frankly I'm not convinced the current management team actually believes they have made any mistakes in the past given what they are doing today.

 

[lockedoutlogic]

How did they fail with Everest?

They main show feature doesn't work and likely never will

 

[mshanson3121]

I agree that Disney is only interested in an upscale customer. Unfortunately, other than raising prices, they haven't improved the experience. You can't just fence off an area, set up some tables with cupcakes and charge $50 to see the exact same fireworks they have been showing for years and wait for the "upscale customers" to flock in.

As for sins of the past, the current management team owns them. They have been around long enough that they were in charge when most of the decision to defer expansion occurred. In fact they continue to commit these same sins. They continue to:

• cut CM hours
• run rides at lower capacity
• run all construction projects on an extremely slow (cheap) pace
• trim theme park and water park hours (even during historically busy periods)

Frankly I'm not convinced the current management team actually believes they have made any mistakes in the past given what they are doing today.

I've been curious about this. They run their construction projects slowly to save money. Wouldn't they come ahead financially if they got them built faster. I mean let's face it SWL and TSL are going to bring in more crowds. People are going to come in droves for SWL especially. Wouldn't that pay off in the end?

 

[ArwenMarie]

However, I do think they have already priced a lot of non-locals out of APs. If they really wanted to reduce crowds they would take away the AP discount for locals and make them spend $750pp.

Yeah, I can't jump on the "lowering crowds" bandwagon when they keep selling reduced-price Florida APs. As well as offering a monthly payment plan. Even if they just rid of the payment plan, they would see a reduction.

 

[lockedoutlogic]

I've been curious about this. They run their construction projects slowly to save money. Wouldn't they come ahead financially if they got them built faster. I mean let's face it SWL and TSL are going to bring in more crowds. People are going to come in droves for SWL especially. Wouldn't that pay off in the end?

Standard construction projects often have early completion/late delivery bonuses and penalties

Could they get these things done earlier? Absolutely - 100%

The schedules are an "operational" decision.

 

[nilla]

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.

Not sure how FP+ affects that. If there aren't as many attractions, that would be an issue without FP+ as well.

 

[Boski]

Standard construction projects often have early completion/late delivery bonuses and penalties

Could they get these things done earlier? Absolutely - 100%

The schedules are an "operational" decision.

While I don't disagree that operations does figure into the equation its not the only limiting factor. I'm willing to guess the #1 reason is cost.

 

[JimmyV]

I agree that Disney is only interested in an upscale customer. Unfortunately, other than raising prices, they haven't improved the experience. You can't just fence off an area, set up some tables with cupcakes and charge $50 to see the exact same fireworks they have been showing for years and wait for the "upscale customers" to flock in.

I'm not so sure. There are literally thousands of hotel rooms on site that sell for less for $95-$150 per night. And thousands more selling for $185-$225. Indeed, on any given day, there are more on site rooms selling for $225 or less than all other rooms combined. It is hard to make the case that the size and scope of Pop and All-Stars and AoA and Caribbean Beach and POR, (to say nothing of the campground), reveal a strategy of focusing exclusively on the upscale customer. And Disney knows that over 50% of its daily guests are staying off site for less than $150 per night. Disney could have built a Four Seasons style hotel and a Waldorf quality hotel. It chose not to, and instead sold (leased?) land to those companies so that they could build upscale hotels.

I think that the proliferation of fenced off area events is simply Disney's nod to the fact that WDW attracts visitors of every income and interest level, and that the upper end of the income strata was being underserved. I don't say the following to insult anyone, and it is not me projecting my views, but it is reality in the travel industry, and that is: Disney figured out that there is a healthy slice of the population who can afford to stay in Deluxe resorts and will accept nothing less. And many of these same people do not like the fact that once they cross through the turnstile, they "join the masses" and get no better or no different experience than any other person who drove in from their Day's Inn earlier that morning. They want an upgraded experience that includes add-ons and exclusive access. And other than a few tours, up until a couple of years ago, Disney offered very few such opportunities. It is simply capturing that underserved market. And there is also a slice of the population that wants an upgraded experience with add-ons and exclusive access and is willing to pay for it, even if that means that they have to stay in less expensive resorts, or even off site, in order to afford those experiences. There are people who do not want to be "one in 50,000" once they enter the park. They want their experience to be unique, more exclusive, and (in their minds), "better". Disney was leaving a lot of money on the table not sucking money out of these people's pockets. In 1990, anyone who wanted a "great" viewing spot for the parade camped out for two hours to get it. Now, you pay a fee to get it. None of this is suggestive of a business strategy that "is only interested in an upscale customer." Rather, it is suggestive of a business strategy where Disney realized that there are vacationers who value "buying their way out of the crowd" and that it was failing to separate those people from their money. Not at all unlike the American Express Platinum events or experiences. I will admit to spending quite a few shekels on some of those. But not nearly as much as Amex would like! So far I have resisted doing that at WDW because I find that the "pedestrian experiences" that I am getting are sufficient. But I can't say that this will always remain the same.

 

[Mikie]

I'm not so sure. There are literally thousands of hotel rooms on site that sell for less for $95-$150 per night. And thousands more selling for $185-$225. Indeed, on any given day, there are more on site rooms selling for $225 or less than all other rooms combined. It is hard to make the case that the size and scope of Pop and All-Stars and AoA and Caribbean Beach and POR, (to say nothing of the campground), reveal a strategy of focusing exclusively on the upscale customer. And Disney knows that over 50% of its daily guests are staying off site for less than $150 per night. Disney could have built a Four Seasons style hotel and a Waldorf quality hotel. It chose not to, and instead sold (leased?) land to those companies so that they could build upscale hotels.

I think that the proliferation of fenced off area events is simply Disney's nod to the fact that WDW attracts visitors of every income and interest level, and that the upper end of the income strata was being underserved. I don't say the following to insult anyone, and it is not me projecting my views, but it is reality in the travel industry, and that is: Disney figured out that there is a healthy slice of the population who can afford to stay in Deluxe resorts and will accept nothing less. And many of these same people do not like the fact that once they cross through the turnstile, they "join the masses" and get no better or no different experience than any other person who drove in from their Day's Inn earlier that morning. They want an upgraded experience that includes add-ons and exclusive access. And other than a few tours, up until a couple of years ago, Disney offered very few such opportunities. It is simply capturing that underserved market. And there is also a slice of the population that wants an upgraded experience with add-ons and exclusive access and is willing to pay for it, even if that means that they have to stay in less expensive resorts, or even off site, in order to afford those experiences. There are people who do not want to be "one in 50,000" once they enter the park. They want their experience to be unique, more exclusive, and (in their minds), "better". Disney was leaving a lot of money on the table not sucking money out of these people's pockets. In 1990, anyone who wanted a "great" viewing spot for the parade camped out for two hours to get it. Now, you pay a fee to get it. None of this is suggestive of a business strategy that "is only interested in an upscale customer." Rather, it is suggestive of a business strategy where Disney realized that there are vacationers who value "buying their way out of the crowd" and that it was failing to separate those people from their money. Not at all unlike the American Express Platinum events or experiences. I will admit to spending quite a few shekels on some of those. But not nearly as much as Amex would like! So far I have resisted doing that at WDW because I find that the "pedestrian experiences" that I am getting are sufficient. But I can't say that this will always remain the same.

Agreed, and figuring out how to capture an underserved market segment (especially a wealthy one) = wise move
The volume of value and moderate rooms vs deluxe means those travelers are WDW's "bread and butter". Alienating those people with markedly higher prices and no increased benefit = dangerous move
Offering exclusive experiences = good planning, especially when it has a very low cost to WDW (like dessert parties where your only added cost is cupcakes and a couple CMs and a rope)
Offering exclusive experiences that may take away from the bread and butter crowd while having higher costs (after hours event that has operating costs but precludes the park being open later for bread and butter guests) = risky move.
I think, along with Disney execs, we're all looking to see which way the teeter totter tips on these results.

 

[JimmyV]

Agreed, and figuring out how to capture an underserved market segment (especially a wealthy one) = wise move
The volume of value and moderate rooms vs deluxe means those travelers are WDW's "bread and butter". Alienating those people with markedly higher prices and no increased benefit = dangerous move
Offering exclusive experiences = good planning, especially when it has a very low cost to WDW (like dessert parties where your only added cost is cupcakes and a couple CMs and a rope)
Offering exclusive experiences that may take away from the bread and butter crowd while having higher costs (after hours event that has operating costs but precludes the park being open later for bread and butter guests) = risky move.
I think, along with Disney execs, we're all looking to see which way the teeter totter tips on these results.

Agree with all of this. And on the "risky" side, I think this is why the fireworks dessert party had always been tucked into the Tomorrowland Terrace. Little risk of ticking off the masses. But with new access at the hub, Disney is pushing the risk factor a bit higher.

 

[focusondisney]

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.

Probably. But someone needs to remind them that DisneyWorld is supposed to be a an AMUSEMENT park!! With rides & attractions!! Yep, people like all the hotels, shops & restaurants too. But without quality rides & attractions, people will eventually stop visiting.

 

[tlmadden73]

The food is DEFINITELY better in DisSpring vs. WS but, IMO, thats about it. I don't care to watch movies on my Disney vacation or bowl or see Cirq. There are more "exotic" shops but I've got better shops at home or online where I can search for deals and not pay a premium. WS is in a park, after you eat you can go do other stuff. I also don't think people are paying for a hopper pass just to go eat at Epcot at night.

Understood.

My main point is that in the 80s and even 90s, World Showcase was a fun place to have a bunch of exotic shopping and dining in one place. And this was in a time where locally you just didn't have the choices you do today. Between more local choices and more choices just down the road at Disney Springs, World Showcase (and even Epcot as a whole) just seem irrelevant. I wonder what attendance would be like there if it wasn't for the Food and Wine and Garden festivals.

 

[Irish_Mike]

Probably. But someone needs to remind them that DisneyWorld is supposed to be a an AMUSEMENT park!! With rides & attractions!! Yep, people like all the hotels, shops & restaurants too. But without quality rides & attractions, people will eventually stop visiting.

Theme park*

Other than that, I agree.

 

[MinnieSweetheart]

I've been curious about this. They run their construction projects slowly to save money. Wouldn't they come ahead financially if they got them built faster. I mean let's face it SWL and TSL are going to bring in more crowds. People are going to come in droves for SWL especially. Wouldn't that pay off in the end?

But the C-suite is only concerned about the price of stock today and in the near future whenever they plan to leave b/c it affects their personal holdings. It doesn't matter that it's probably more beneficial for the company, if you reinvest earnings....