Comcast and Disney - The Game is On (and that's good....)

[clsteve]

There have been several good discussions recently regarding Comcast’s aggressive expansion at UOR and how it will impact Disney/WDW. Especially now that Daigon Alley puts UOR firmly into multi-day Park status for many.
More than a few have dismissed it as an issue by stating how lopsided the attendance figures are. Often saying, “There’s no way Disney should be concerned, since they’re far and away the leader in attendance and will continue to be…” However, there is a vulnerability - an area of major concern. And Disney is very much aware of it: Length of Stay.

Length of Stay and the Vulnerabilities:

Disney have invested an incredible amount of resources and the related expense into the “Lock Guests In” Strategy. It’s been an amazingly successful Strategy over the years, to say the least. But, it’s also a significant resource and expense line hit, YTY. They've also continued to aggressively expand their on-site Resort/DVC footprint and ancillary entertainment options. These are not cheap to maintain and were built expecting a certain level of length-of-stay to maintain an expected revenue stream and profitability rate - much of which depends on the "Lock Guests In Strategy", as well as its infrastructure.

If Comcast, with the additions and improvements at UOR, decrease the Length-of-Stay percentages at WDW by increasing the percentage of guests now doing split or shorter stays – that’s a significant issue. Even if (and this is key) the Occupancy Rate stays the same or grows.

Why…?:

1. It increases the number of check-in/check-out days: these are the most resource intensive (and expensive) days for Disney (Mousekeeping; aiding guests with check-in/out, Park tickets, MB’s, maps, itineraries, ADR's; bell desk moving bags; MEARS; etc.). These are also the lowest spend days for guests since it’s a half day on-site, at most, for many guests, to no significant time on-site at all if you’re leaving at 8am or arriving at 11pm, as many do.

2. It increases the percentage of lost room-nights - and once a room night is gone, you can’t get it back. For example, Disney has a high percentage of week-long stays. You can see this in the Monday crowd size at MK caused by those Sunday-to-Sunday guests wanting to experience MK on their first day. Having a measureable percentage of guests now leave the Resort after 4 or 5 days on the Wednesday or Thursday increases the follow-on percentage chance for open rooms Wed-through-Sat by creating more one, two, or three night mid-week gaps between reservations that are harder to fill. The room grid for any Resort gets more difficult to fill the lower their average Length-of-Stay. It’s an Industry-wide dynamic and why all Resorts offer incentives for longer stays.

3. Longer stay guests are their most profitable guests. Consider that an average week might consist of 4 days in the Parks, then 2-3 days shopping at DTD, or dropping $250 at Splitsville, or golfing, or at the Spa, at TL or SAB, or just buying Mai-Tai's at the pool on their non-Park days. Any decrease in Length-of-Stay also decreases the number of days on-site guests utilize those highly profitable add-ons Disney have invested so much in. Bottom line: 4 day on-site guests tend to spend 4 days at the Parks. 5, 6, 7+ days on-site guests spend money on all those other wonderful and expensive Disney entertainment options.

4. It also increases the infrastructure hit in several ways- and here’s an interesting one to consider that shows some of the complexity of this issue: a higher percentage of split-stays can increase the percentage of guests with cars - whether theirs or rentals. Besides increasing a guest’s ability to leave WDW for meals or shopping (revenue), Locking Guests In by providing “free” transportation has also allowed WDW to minimize everything from traffic levels to parking facilities. More on-site guests with vehicles changes many dynamics.
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There are other issues, but it’s important to remember that everything is a percentages game for companies such as Disney and Comcast. With over 30,000 rooms and DVC's, WDW is as much a Resort Company as a Theme Park one. Even what would seem to be an insignificant 10-20% shift in Length-of-Stay can have a significant impact on the above, resulting in a direct impact to revenue and profitability splits.

But, this is not all doom and gloom… In fact, we could end up benefiting greatly from it. Disney have the ability to pull many levers to combat this. And we very much like many of those levers: Free Dining, discounts for length of stay, room discounts for AP holders, discounts on activities, or just an overall flattening of annual room rate increases, to name a few. And, they may well have to pull these levers. They've too much invested in the Lock Guests In Strategy. And, it isn't going anywhere because it can’t – from buses to Resorts. It’s a strategy supported by a huge infrastructure that needs to be fed to meet their targets. Disney is "Locked In", as well....

Anecdotally, many guests seem to be contemplating split stays for the first time very much because of UOR and DA. Don’t doubt for a second that Comcast understands very well what Disney have invested into locking their guests in. And don’t doubt for a second that Disney knows what they need to do to protect it.

These are some of the reasons why Comcast’s Roberts talks about increasing market share. Increased attendance is great. But UOR knows they’re not going to leap Disney in attendance and doesn't need to. However, they can win in other ways just by moving the market share needle. Disney's WDW infrastructure is huge, hungry, and is very much fed by Length-of-Stay.

High-level Executives are some of the most competitive creatures on the planet. They live to beat the competition, just as much as elite athletes. In business, beating the competition is much more complex than taking over the Number One spot. It’s often more focused on winning the measureables, the ones they themselves are measured by and compensated on - things like having better top-line revenue and profitability growth percentages YTY, expense line and liability optimization, stock price, etc. On a personal level (and yes, this is a huge driver – do not discount exec-level bragging rights. It’s real and it matters), much of the exec-level competition is also focused on impeding or causing pain where your competitor has vulnerabilities – forcing them to protect those vulnerabilities, slowing them down. And they all know each others’ vulnerabilities very, very well.

Some additional background: There’s an historical aspect to this that heightens this competition. Lockedoutlogic succinctly outlines Comcast CEO Tom Roberts’ personal investment in all of this in his post #628 at this link:

http://www.disboards.com/showthread.php?t=3300174&page=42

There’s always a game within the game. Sometimes it can even be personal. And many times, we consumers benefit very much….

 

[ThurlFan]

Thanks for the post and the link, clsteve. Great food for thought.

 

[Hoodie]

I think length of stay/onsite is where they'll see the impact too. The few times we did venture over to UOR we remained onsite at a Disney resort and took a cab over for the day. With the new "value" onsite that just opened at UOR and the early admission to DA and Hogsmeade that comes along with it, it makes much more sense to have a night or two at a Universal hotel now.

 

[patsal]

And big if, but if they are opening a time share resort at Universal I for one would consider there rather than the add-on that I am saving for at DVC. If the perks are right (fotl and early access). Consider it sold!

 

[jade1]

But, this is not all doom and gloom….

I would say it's 100% great.

Any improved competition is wonderful. Either enjoy both (because of the improvements) or get a better deal at WDW-as well as improved improvements to counter.

Unless it causes WDW to close it's doors-I see nothing but good.

 

[clsteve]

I think length of stay/onsite is where they'll see the impact too. The few times we did venture over to UOR we remained onsite at a Disney resort and took a cab over for the day. With the new "value" onsite that just opened at UOR and the early admission to DA and Hogsmeade that comes along with it, it makes much more sense to have a night or two at a Universal hotel now.

Yes. An on-site guest leaving Property for one or even two days for side trips wasn't as big an issue to WDW, as long as they were still staying all nights at the Resort. It is a very big concern if guests now start spending those Nights and Days at a Universal Resort, instead. As well as, start breaking away from being locked in with having their own transportation .....

 

[seascapemvy]

Length of stay is important but I think some people over state the number of week long stays. Yes there are lots of people who stay 7 or 8 nights. In fact I do it three times a year. But I also have spend lots of weekends too and I know of people who only go during the week. As for what Disney should do, I think it's easy. Build additions to AK, EPCOT and DHS. Then build a 5th gate just to the west of MK. The land is there and MK can't grow too much more. The theoretical capacity is about 100,000. They would mean if things were perfect they could have 36.5 million in attendance but we all know that's not possible so the realistic number is about 25 million or a little more. So more capacity is needed and a new park next to MK makes sense.

As for the rest of the property by expanding DHS and some additions to Epcot, Disney could increase capacity and attendance at the middle parks. Finally AK is the biggest park and has lots of room for expansion. Pandora goes a long way but there is all that land between Asia and Africa for expansion and AK is missing the Americas and Australia.

Disney should also not let Universal build all the new Hotels. Flamingo Crossing should be finished and that will add 5,000 more rooms. Disney also needs to build the new timeshare near River Country and the camp grounds and another one at Epcot outside future world and finally one more section at AK. They also need one more midrange hotel resort. The total number of hotel and timeshare rooms should be 40,000 by 2020 and 50,000 by 2030. This is easily accomplished and affordable.

Other steps Disney should take is to work with the surrounding off property resorts. Bennett Creek already uses Disney roads to get there. The Bennett Creek resots should be offered Disney transportation services at a reasonable cost. Orange Lake and others should also be offered the same deal once Flamingo Crossing is done. Disney Transportation should be looked at as a separate company that makes a profit. DVC resorts and hotels already pay into the transportation system and it should be profitable. Adding outside resorts would also increase park attendance. Further adding the neighboring resorts would bring the number of rooms with Disney transportation to over 60,000 and help fill the parks, not just 4 but 5 or 6, consistently.

Disney does not have to worry about Universal and shouldn't. Disney should worry about WDW. If they do there is no reason they can't have 50,000 plus rooms on property and combined attendance of over 100 million by 2030.

 

[Mad Hattered]

Excellent read, clsteve! What truly baffles me these days is just how much credit Universal is getting on these boards now. A few years ago that just didn't happen.

It's amazing just how many people are posting that they are doing split stays at Dis/Uni now. And as we are constantly reminded here, we are only a small portion of the annual visitors to Disney. Now extrapolate that number out to the general population that don't post on these boards and I think Disney needs to have some real concern about what is happening up the street.

 

[Planogirl]

It's funny but I was just having a discussion about this very topic with a family member. He argued that Disney was too big and too successful to be concerned with what Universal was doing. I told him that the changes might seem small but Disney would be concerned with any perceived losses since their motivation was to grow and to get "all" of the vacation dollars. Besides change happens and it's usually slow and gradual. History shows us that any giant can fall.

I see this as good for all too. Competition leads to innovation and hopefully that all too illusive good deal at WDW. It's easy for a corporation to become complacent and basically ask "where else would they go?" Where indeed.

I agree with the Mad Hat guy above me. I remember when just mentioning Universal led to ridiculous battles on these forums. There are still those holdouts that have extreme viewpoints but much of that fuss seems to have settled down.

 

[jon18uk]

Length of stay is important but I think some people over state the number of week long stays. Yes there are lots of people who stay 7 or 8 nights. In fact I do it three times a year. But I also have spend lots of weekends too and I know of people who only go during the week. As for what Disney should do, I think it's easy. Build additions to AK, EPCOT and DHS. Then build a 5th gate just to the west of MK. The land is there and MK can't grow too much more. The theoretical capacity is about 100,000. They would mean if things were perfect they could have 36.5 million in attendance but we all know that's not possible so the realistic number is about 25 million or a little more. So more capacity is needed and a new park next to MK makes sense.

As for the rest of the property by expanding DHS and some additions to Epcot, Disney could increase capacity and attendance at the middle parks. Finally AK is the biggest park and has lots of room for expansion. Pandora goes a long way but there is all that land between Asia and Africa for expansion and AK is missing the Americas and Australia.

Disney should also not let Universal build all the new Hotels. Flamingo Crossing should be finished and that will add 5,000 more rooms. Disney also needs to build the new timeshare near River Country and the camp grounds and another one at Epcot outside future world and finally one more section at AK. They also need one more midrange hotel resort. The total number of hotel and timeshare rooms should be 40,000 by 2020 and 50,000 by 2030. This is easily accomplished and affordable.

Other steps Disney should take is to work with the surrounding off property resorts. Bennett Creek already uses Disney roads to get there. The Bennett Creek resots should be offered Disney transportation services at a reasonable cost. Orange Lake and others should also be offered the same deal once Flamingo Crossing is done. Disney Transportation should be looked at as a separate company that makes a profit. DVC resorts and hotels already pay into the transportation system and it should be profitable. Adding outside resorts would also increase park attendance. Further adding the neighboring resorts would bring the number of rooms with Disney transportation to over 60,000 and help fill the parks, not just 4 but 5 or 6, consistently.

Disney does not have to worry about Universal and shouldn't. Disney should worry about WDW. If they do there is no reason they can't have 50,000 plus rooms on property and combined attendance of over 100 million by 2030.

Do Disney really need to build more rooms? I've got the feeling that some areas are difficult for them to fill at present anyway. and the point in the original post is that Universal are causing more split stays.

I would agree that they need to add to the "other three" parks as MK is a two-day park whereas DHS and AK are 1 day and Epcot is 1 plus the evening park. Encouraging waterpark visits and similar acitvities are other ways they can keep people on property for 6 days+ Also the upgrade into Disney Spring as a shopping destination may help if they can bring in external brands that encourage shopping there instead of going off to Florida Mall.

 

[Planogirl]

Do Disney really need to build more rooms? I've got the feeling that some areas are difficult for them to fill at present anyway. and the point in the original post is that Universal are causing more split stays.

I would agree that they need to add to the "other three" parks as MK is a two-day park whereas DHS and AK are 1 day and Epcot is 1 plus the evening park. Encouraging waterpark visits and similar acitvities are other ways they can keep people on property for 6 days+ Also the upgrade into Disney Spring as a shopping destination may help if they can bring in external brands that encourage shopping there instead of going off to Florida Mall.

I agree with everything you said except for bringing in external brands at Disney Springs. A limited amount of that doesn't bother me but I'd hate to see it just turn into another area mall even if a nice one.

 

[yitbos96bb]

Yes. An on-site guest leaving Property for one or even two days for side trips wasn't as big an issue to WDW, as long as they were still staying all nights at the Resort. It is a very big concern if guests now start spending those Nights and Days at a Universal Resort, instead. As well as, start breaking away from being locked in with having their own transportation .....

Interesting. The other possibility is that people are staying longer in Orlando instead. I'd like some real numbers on this.

 

[clsteve]

Excellent read, clsteve! What truly baffles me these days is just how much credit Universal is getting on these boards now. A few years ago that just didn't happen.

It's amazing just how many people are posting that they are doing split stays at Dis/Uni now. And as we are constantly reminded here, we are only a small portion of the annual visitors to Disney. Now extrapolate that number out to the general population that don't post on these boards and I think Disney needs to have some real concern about what is happening up the street.

It does seem like a trend, doesn't it? But, once you get past all the bluster and subjectivity, the vast majority of the folks on this board are pretty savy consumers. And savy consumers do their homework ....

 

[yitbos96bb]

Excellent read, clsteve! What truly baffles me these days is just how much credit Universal is getting on these boards now. A few years ago that just didn't happen.

It's amazing just how many people are posting that they are doing split stays at Dis/Uni now. And as we are constantly reminded here, we are only a small portion of the annual visitors to Disney. Now extrapolate that number out to the general population that don't post on these boards and I think Disney needs to have some real concern about what is happening up the street.

On the flip, neither universal park has passed Any WDW Park in attendance. There was a nice increase % wise. Fact is, Universal will never pass MK and Epcot in attendance (Capacity won't allow it) unless people stop going period but may pass DHS and DAK.". Will be curious to see what happens.

 

[clsteve]

Interesting. The other possibility is that people are staying longer in Orlando instead. I'd like some real numbers on this.

Real numbers would be great. There just haven't been any significant statistics pointing to vacation lengths increasing/recovering significantly after the '07 drop. Some international categories might have.....

 

[clsteve]

It's funny but I was just having a discussion about this very topic with a family member. He argued that Disney was too big and too successful to be concerned with what Universal was doing. I told him that the changes might seem small but Disney would be concerned with any perceived losses since their motivation was to grow and to get "all" of the vacation dollars. Besides change happens and it's usually slow and gradual. History shows us that any giant can fall.

I see this as good for all too. Competition leads to innovation and hopefully that all too illusive good deal at WDW. It's easy for a corporation to become complacent and basically ask "where else would they go?" Where indeed.

I agree with the Mad Hat guy above me. I remember when just mentioning Universal led to ridiculous battles on these forums. There are still those holdouts that have extreme viewpoints but much of that fuss seems to have settled down.

So many bring up that "WDW" is too big thing don't they ....?

And that's kind of the point I was trying to highlight in the thread. Universal understands that that very size and infrastructure is also a burden that can be exploited.

WDW, very much, doesn't want to be a Theme Park company again. They need to continue to be the all inclusive Resort Company. The business model and their recent capital investment shows this

 

[jon18uk]

Real numbers would be great. There just haven't been any significant statistics pointing to vacation lengths increasing/recovering significantly after the '07 drop. Some international categories might have.....

I think international guests have often stayed longer than Us guests, coming from UK we would stay 14 nights or more as the flight cost was high so adding an extra night accommodation doesn't seem as expensive. But we always stayed in a Disney resort, use Disney busses and then used smears to visit Universal.
I am thinking next trip we will stay at Universal for a few nights (to get Express pass and Early Entry). Obviously that is less revenue for Disney as previously
even if I was at Universal all day previously we would often eat at our hotel on return.
I also think that the advertising for Universal in the UK is improving and many more people will consider staying at a Universal and then driving (or using Mears) to Disney rather than the other way round now.

 

[beer dave]

I think international guests have often stayed longer than Us guests, coming from UK we would stay 14 nights or more as the flight cost was high so adding an extra night accommodation doesn't seem as expensive. But we always stayed in a Disney resort, use Disney busses and then used smears to visit Universal.
I am thinking next trip we will stay at Universal for a few nights (to get Express pass and Early Entry). Obviously that is less revenue for Disney as previously
even if I was at Universal all day previously we would often eat at our hotel on return.
I also think that the advertising for Universal in the UK is improving and many more people will consider staying at a Universal and then driving (or using Mears) to Disney rather than the other way round now.

I think if this really happens, the people will be quite disappointed in their choice. I certainly could see a couple days at Universal, but two weeks? If the new advertising leads people in the UK to believe that there is anything at universal to entertain them for 14 days (minus their brief trip to disney) then the people will surely feel mislead.

 

[clsteve]

[/B]


I think if this really happens, the people will be quite disappointed in their choice. I certainly could see a couple days at Universal, but two weeks? If the new advertising leads people in the UK to believe that there is anything at universal to entertain them for 14 days (minus their brief trip to disney) then the people will surely feel mislead.

It's a completely different dynamic. In Jan. we ran into several UK families staying a week to 10 days at the Hard Rock and Portofino Bay. They were using Uni as the hub for their Flex Tickets which gave them access to UOR, Seaworld, BG, altogether .
Jon18uk can chime in here, but the Flex ticket seemed very popular with the Euro visitors we ran into.

It's a strategy that seems to fit Uni very well - embracing the fact that guests want to do other things in Orlando. Disney can't.....

 

[jon18uk]

It's a completely different dynamic. In Jan. we ran into several UK families staying a week to 10 days at the Hard Rock and Portofino Bay. They were using Uni as the hub for their Flex Tickets which gave them access to UOR, Seaworld, BG, altogether .
Jon18uk can chime in here, but the Flex ticket seemed very popular with the Euro visitors we ran into.

It's a strategy that seems to fit Uni very well - embracing the fact that guests want to do other things in Orlando. Disney can't.....

Yep if booking through a third party package holiday (such as Virgin Holidays) they do push the flex ticket. Even booking direct with Universal they push towards a three park with WetnWild or the flex ticket.

I think you can easily fill a seven night trip with Universal, IoA, WetnWild, Florida Mall / Premium Outlets, SeaWorld. Add in Aquatica & Busch Gardens plus a second day at the Universal parks and you can fill a 10 night trip without even going to Disney.
There may also be people who stay at Universal Hotel and then drive to Disney for the day now. I used to do the opposite (stay Disney, drive to Universal) but Harry Potter has tempted me to stay Universal and spend less time at Disney.

One side note on the Flexticket, I found it cheaper on our last trip to buy a 2-park universal ticket and then a 2 park Busch/Seaworld ticket with Aquatica free. We weren't planning on doing wet'n'wild as already doing both Disney waterparks and Aquatica so this was a better deal. All the UK options still give 14 days admissions.