Chesterfields fence and Disney

mustinjourney

DIS Veteran
Joined
May 8, 2016
I was reading a post about Chesterfields fence that I think is equally applicable to Disney lately.


The basic premise is that you shouldn’t come in and change a system unless you fully appreciate why the system was originally setup.

He gives an example of a new CFO coming into a startup and is looking to justify his salary by cutting costs. First to go is free soda and snacks. Long time employees feel slighted and jump ship since the original feel of the company is gone. End result: loss of human capital, know-how, and increased costs due to hiring new people and lost efficiencies.

Bringing this to Disney. Recent cost cutting measures such magical express and raising pricing of APs will likely have a similar effect. (Not to mention charging for things that used to be free—parking and fast passes)

Obviously, this is nothing ground breaking or new. But I thought it was a perfect example of the Chesterfield Fence.

Thoughts?
 

Brian Noble

Gratefully in Recovery
Joined
Mar 23, 2004
Maybe, but I am not sure the analogy carries.

Prices of APs going up---in some cases significantly---is nothing new. That's been happening since the dawn of (Disney) time. I'm also "old enough" (in Disney terms) to remember the inception of Magical Express. It was part of the triumvirate of changes (together with the MYW ticketing structure and dining plan) that were collectively designed to stem the bleeding of guests to Universal, Sea World, etc. It's not as though that's been here forever.
 
  • mustinjourney

    DIS Veteran
    Joined
    May 8, 2016
    Maybe, but I am not sure the analogy carries.

    Prices of APs going up---in some cases significantly---is nothing new. That's been happening since the dawn of (Disney) time. I'm also "old enough" (in Disney terms) to remember the inception of Magical Express. It was part of the triumvirate of changes (together with the MYW ticketing structure and dining plan) that were collectively designed to stem the bleeding of guests to Universal, Sea World, etc. It's not as though that's been here forever.
    allow me to pushback and elaborate.

    I would contend that the magical express was clearly instituted almost 20 years ago in an effort to (1) encourage higher attendance at onsite hotels and (2) make it harder for people staying on property that use the service to go to sea world and universal.

    in short, it was looked at like an investment that would increase the return Disney saw via longer stays (while also undercutting their competition). This is also why they went to ticket pricing in which days 5+ on a stay are drastically cheaper, which also encourages people to forego a diversion to universal or sea world.

    regarding APs, I was more thinking about removing things like photo pass as well as DVC discounts (no dvc discount on top pass right now). this is clearly a case of a money grab—which is analogous to the CFO pinching pennies by getting rid of a staff perk that didn’t really cost that much. Sure, you save money (get more money in Disney’s case) but you end up alienating a core group at what long term cost?

    Speaking anecdotally about myself, I used to talk very positively about Disney and encouraged people to go to Disney world. After all these changes, I no longer proselytize like I used to. I have no idea how much effect that has made on my contacts, but it’s not zero.

    I could be wrong, but I have a feeling Many of these cost savings measures were made bc executives told middle management they needed to cut costs due to covid. IMHO, these types of decisions fail to account for the reasons things like DME were instituted in the first place.
     

    Brian Noble

    Gratefully in Recovery
    Joined
    Mar 23, 2004
    I clearly (and already have) agree(d) with your assessment of why ME was called into existence---to create a captive audience. Where I disagree is why it might no longer exist. Namely: the audience is already "not captive."

    In 2005 (and for many years after that) getting a taxi was a high-friction experience. You had to call someone. They had to manually dispatch a car. The arrival time was uncertain, variable, and easily a half hour or more. Even scheduling in advance was unreliable. The cars weren't usually very nice. Payment was awkward, often required cash, and included the to-tip-or-not-to-tip dance. It wasn't expensive, but it wasn't cheap.

    Today? It's not quite frictionless, but it is very close. You pull your cell phone out, tap three times, and it will get you a car in 10-15 minutes, and tell you exactly when it will get there. Payment is transparent and automatic---and, until recently, the payment was cheap because the ride share companies' business model seemed to be "Light investor money on fire in the name of market share," ignoring the fact that at those rates they would never be profitable.

    In other words, not having a car is no longer much of a barrier to get off-property. Anecdotally, you can look around DISboards these past several years and see all the people who "just take an Uber" to add the Potterverse onto their Disney trip, etc. It is entirely possible that ME no longer generates the marginal revenue that justified its existence. After all, room rates weren't suddenly jacked up when ME was announced, and you can bet it wasn't created out of the goodness of TDO's hearts.

    As for APs: they have always been the shock absorber to attendance. But, even before the pandemic, attendance was high enough that company leadership openly talked about raising prices during peak times to reduce attendance and give those who remained a marginally better experience. I can't remember the first time I heard Iger talk about this in a quarterly earnings call, but it was probably around the time that single-day tickets went to a variable-pricing scheme. In the pandemic age, when the park capacity is even further restricted due first to public health interests, and then staffing difficulties, TDO is probably even less enthusiastic about having a bunch of people with effectively discounted admission clogging up the midways, and tying up the Park Passes for people paying full-freight.

    When the park capacity increases again and/or when demand suffers due to economic forces, etc. some form of discounted admission will be back for the DVC folks. And, realistically, it is discounted (when APs are being sold) to the vast majority of DVC members---namely, those who don't need to travel during the winter holidays or Thanksgiving.

    But, the main reason I disagree with your premise: TWDC doesn't have "new" leadership unfamiliar with the business. They've consistently been promoting from within both at the company overall and in the senior management ranks of WDW. Those folks all have the history of why these mechanisms were in place. Did COVID accelerate the changes? I'm sure it did---just like it is accelerating a lot of other things that were already in place or around the bend. Working from home is not exactly new; in my field, remote work has been common for a decade. Now the rest of the world has caught up.
     

    mustinjourney

    DIS Veteran
    Joined
    May 8, 2016
    I clearly (and already have) agree(d) with your assessment of why ME was called into existence---to create a captive audience. Where I disagree is why it might no longer exist. Namely: the audience is already "not captive."

    In 2005 (and for many years after that) getting a taxi was a high-friction experience. You had to call someone. They had to manually dispatch a car. The arrival time was uncertain, variable, and easily a half hour or more. Even scheduling in advance was unreliable. The cars weren't usually very nice. Payment was awkward, often required cash, and included the to-tip-or-not-to-tip dance. It wasn't expensive, but it wasn't cheap.

    Today? It's not quite frictionless, but it is very close. You pull your cell phone out, tap three times, and it will get you a car in 10-15 minutes, and tell you exactly when it will get there. Payment is transparent and automatic---and, until recently, the payment was cheap because the ride share companies' business model seemed to be "Light investor money on fire in the name of market share," ignoring the fact that at those rates they would never be profitable.

    In other words, not having a car is no longer much of a barrier to get off-property. Anecdotally, you can look around DISboards these past several years and see all the people who "just take an Uber" to add the Potterverse onto their Disney trip, etc. It is entirely possible that ME no longer generates the marginal revenue that justified its existence. After all, room rates weren't suddenly jacked up when ME was announced, and you can bet it wasn't created out of the goodness of TDO's hearts.

    As for APs: they have always been the shock absorber to attendance. But, even before the pandemic, attendance was high enough that company leadership openly talked about raising prices during peak times to reduce attendance and give those who remained a marginally better experience. I can't remember the first time I heard Iger talk about this in a quarterly earnings call, but it was probably around the time that single-day tickets went to a variable-pricing scheme. In the pandemic age, when the park capacity is even further restricted due first to public health interests, and then staffing difficulties, TDO is probably even less enthusiastic about having a bunch of people with effectively discounted admission clogging up the midways, and tying up the Park Passes for people paying full-freight.

    When the park capacity increases again and/or when demand suffers due to economic forces, etc. some form of discounted admission will be back for the DVC folks. And, realistically, it is discounted (when APs are being sold) to the vast majority of DVC members---namely, those who don't need to travel during the winter holidays or Thanksgiving.

    But, the main reason I disagree with your premise: TWDC doesn't have "new" leadership unfamiliar with the business. They've consistently been promoting from within both at the company overall and in the senior management ranks of WDW. Those folks all have the history of why these mechanisms were in place. Did COVID accelerate the changes? I'm sure it did---just like it is accelerating a lot of other things that were already in place or around the bend. Working from home is not exactly new; in my field, remote work has been common for a decade. Now the rest of the world has caught up.
    thank you for the detailed clarification. You’re right about hiring from within acting as a guard against what I’m suggesting—of course, that would also depend on which departments they spent their time in (and for how long and when) on their rise up to the top.

    we’ll never know for sure what all went on with the decisions to kill DME and remove AP perks. I guess I’m just more cynical given the totality of the circumstances.

    thanks for the discussion.
     

    The Jackal

    DIS Veteran
    Joined
    Oct 24, 2017
    Maybe, but I am not sure the analogy carries.

    Prices of APs going up---in some cases significantly---is nothing new. That's been happening since the dawn of (Disney) time. I'm also "old enough" (in Disney terms) to remember the inception of Magical Express. It was part of the triumvirate of changes (together with the MYW ticketing structure and dining plan) that were collectively designed to stem the bleeding of guests to Universal, Sea World, etc. It's not as though that's been here forever.
    How about this one and it has nothing to do with me, but I have heard someone talk about it. The AP discount for WDW AP holders who have continually held a AP active since the inception received a small discount. This has been removed by the current leader. I cannot imagine that this group is a large number. It is things like this that give the new leader his stigma of being CHEAPek and a penny pincher. If he cannot see it, he never will. I can buy an AP with 50% off food and free parking for an amusement park with a water park in it (nationally known) within 30 minutes of my house for a fraction (between 1/4 and 1/5th the price) of a Sorcerer’s pass. I can buy a pass for my whole family of 4 and it is cheaper than one WDW AP. You get preferred parking 2 ride line skips, 2 free digital ride photos. They have rides, characters, and holiday specials nights. Including the water park and children's rides there are 34 in this amusement park and 16 in the water park. There is a difference in feel between that national park and WDW. WDW rides are more themed, but does that justify the inflated price? Not including live performance shows, AK has 8 rides, HS 10 rides, Epcot 8 rides and MK 22 rides. Ever wonder why MK is visited by more people than the other parks. Just look at the number of rides it has. WDW for a lot of people are a trip of a lifetime, one and done due to cost. With steep price increases, they will price themselves out sooner than later. WDW is just lucky that resort is a worldwide attraction, while Disneyland is mostly a locals park.
     

    Matty B13

    DIS Veteran
    Joined
    Jun 13, 2016
    We started with our young family vacationing at WDW in 2015, when there was DME & luggage service, along with the Dining Plans and full featured AP's. My kids were very young at the time and just hoping on an airplane and showing up at your resort with your luggage already there, made WDW the easiest vacation we could have. We also brought my disabled father along and my mother, but over 70 years old, because we knew Disney would help us out......... This all lead to my family purchasing DVC.

    Now in 2022 there is no DME, no luggage service, AP's are very expensive, and there are no meal plans, which if I were not a DVC member, would just go some where else and spend half as much. Trying to manage luggage with small kids, especially at MCO is a pain in the butt. I'm not sure how many of the people who made these decisions actually have more than 1 kid, because as a family of 5, ease of vacationing is a huge deal to us.
     

    mustinjourney

    DIS Veteran
    Joined
    May 8, 2016
    We started with our young family vacationing at WDW in 2015, when there was DME & luggage service, along with the Dining Plans and full featured AP's. My kids were very young at the time and just hoping on an airplane and showing up at your resort with your luggage already there, made WDW the easiest vacation we could have. We also brought my disabled father along and my mother, but over 70 years old, because we knew Disney would help us out......... This all lead to my family purchasing DVC.

    Now in 2022 there is no DME, no luggage service, AP's are very expensive, and there are no meal plans, which if I were not a DVC member, would just go some where else and spend half as much. Trying to manage luggage with small kids, especially at MCO is a pain in the butt. I'm not sure how many of the people who made these decisions actually have more than 1 kid, because as a family of 5, ease of vacationing is a huge deal to us.
    agreed. The shuttle and baggage service to and from mco were some of my favorite perks when traveling with little ones. It made me really think of Disney as being a huge step above other companies and helped me to justify the insane Hotel prices they charged ($650+ per night at grand Floridian).

    not to nerd out, but I always thought of DME and bag service as catalysts towards getting people into WDW (lowered the activation energy needed to justify taking a Disney vacation).

    as an aside, had Disney offered a free shuttle from WDW to port Canaveral for Disney cruise, We would have definitely done a cruise by now. But I just couldn’t stomach the added expense of getting from Disney to the cruise (and back) on top of the premiums already being paid.
     

    RoseGold

    DIS Veteran
    Joined
    Jan 21, 2020
    made WDW the easiest vacation we could have. We also brought my disabled father along and my mother, but over 70 years old, because we knew Disney would help us out......... This all lead to my family purchasing DVC.
    The big one here is the disabled. I have a permanently disabled family member in a wheelchair. No MDE is a big change for us. I still haven't figured out how to handle transportation for our trip this summer. Disney was the one place where a wheelchair wasn't a giant amount of friction for everyone else's plans.

    If luggage was this big of a deal to people, I'm not sure how you made it on the plane.
     

    Matty B13

    DIS Veteran
    Joined
    Jun 13, 2016
    agreed. The shuttle and baggage service to and from mco were some of my favorite perks when traveling with little ones. It made me really think of Disney as being a huge step above other companies and helped me to justify the insane Hotel prices they charged ($650+ per night at grand Floridian).
    Yeah, that is what I always heard was the justification for the crazy high prices for the rooms, DME and luggage service was included in the price.
     

    tidefan

    DIS Veteran
    Joined
    Apr 1, 2007
    It's adjusted our plans, but I think the changes more affect the parks than the DVC resorts themselves. We've just adjusted how we use our points. We will be going to Aulani for the 3rd time in 4 years this year and have spent New Years at HHI and a long Summer break at Vero. We really enjoyed them, and now we go there more and get larger units. We may go to WDW every once in awhile now, but not like we did just a few years ago where we would buy an AP and go 3-4 times a year.
     

    Connect

    TODAY'S HEADLINES

    Top