DCL/Disney Business model change setup for long term failure?

[cgolf]

This is something I have been thinking for awhile, but didn't quite know how to articulate it.

Originally it seemed like DCL/Disney was set at a price point that was just above average, but still attainable by the masses. Their marketing plan seemed to be bring in a family, hook the parents and kids on the product. Those parents will then become grandparents and bring the grandkids to the parks and ships. Those kids would become parents themselves and bring their kids to the parks and ships. This cycle has repeated itself for years. Essentially they had an incredible business blueprint for building a brand.

With the increase on the cruise prices and from what I hear the park prices (only been once, cruising is in our bones). I have seen family and people at work either decide to do other vacations or cut way back on their Disney related activities.

Is Disney setting themselves up to break this cycle by pricing some/many families out? Which may mean that in the future they could see declining attendance and brand awareness?

Also if they price into the luxury market they may have to up their game some to meet a different customer bases expectations. I have read some of the etiquette threads on CC, I would not do well in that atmosphere lol.

I get that Disney is trying to maximize profit, and as a company they can do whatever they want. Sometimes though maximizing short term profit sets you up for long term losses. Will be interesting to see which way Disney goes.

Just some random thoughts on an early Friday night

 

[dragynally]

This is something I have been thinking for awhile, but didn't quite know how to articulate it.

Originally it seemed like DCL/Disney was set at a price point that was just above average, but still attainable by the masses. Their marketing plan seemed to be bring in a family, hook the parents and kids on the product. Those parents will then become grandparents and bring the grandkids to the parks and ships. Those kids would become parents themselves and bring their kids to the parks and ships. This cycle has repeated itself for years. Essentially they had an incredible business blueprint for building a brand.

With the increase on the cruise prices and from what I hear the park prices (only been once, cruising is in our bones). I have seen family and people at work either decide to do other vacations or cut way back on their Disney related activities.

Is Disney setting themselves up to break this cycle by pricing some/many families out? Which may mean that in the future they could see declining attendance and brand awareness?

Also if they price into the luxury market they may have to up their game some to meet a different customer bases expectations. I have read some of the etiquette threads on CC, I would not do well in that atmosphere lol.

I get that Disney is trying to maximize profit, and as a company they can do whatever they want. Sometimes though maximizing short term profit sets you up for long term losses. Will be interesting to see which way Disney goes.

Just some random thoughts on an early Friday night

My DH and I have a crazy conspiracy theory about this. We actually think (for DCL) that they are pricing out large middle class families. We don't know why and that would be stupid of them. However it seems that's the group that is having the hardest time paying.

 

[cgolf]

My DH and I have a crazy conspiracy theory about this. We actually think (for DCL) that they are pricing out large middle class families. We don't know why and that would be stupid of them. However it seems that's the group that is having the hardest time paying.

I totally agree with this and yeh it makes no sense, because those are the families you want to hook long term I would think.

 

[dragynally]

I totally agree with this and yeh it makes no sense, because those are the families you want to hook long term I would think.

They may be targeting duel income no kids (still an odd choice). I've heard and can't confirm they track our spending. So if a bunch of people get inside staterooms and yet do to Remy and palo the prices of all staterooms go up. Something like that. Also if people aren't shopping a lot that gets tracked too.

 

[cgolf]

They may be targeting duel income no kids (still an odd choice). I've heard and can't confirm they track our spending. So if a bunch of people get inside staterooms and yet do to Remy and palo the prices of all staterooms go up. Something like that. Also if people aren't shopping a lot that gets tracked too.

I would guess most lines track spending. We spent our fare share early on for DCL gear and plush, but tailed off the more cruises we did. I think that most new cruisers on average will outspend gold and up cruisers. I am guessing the gold level discount is only there to try and get this group of cruisers to spend more in the shops.

 

[perditax]

My DH and I have a crazy conspiracy theory about this. We actually think (for DCL) that they are pricing out large middle class families. We don't know why and that would be stupid of them. However it seems that's the group that is having the hardest time paying.

Isn't it expensive to do anything with a "large middle class family"? I would imagine things get dicey once you choose to have more kids than you can reasonably fit in a single hotel room.

(Note: I'm not arguing that Disney isn't getting crazy expensive ... but it looks to me like it's supply and demand. The planet's population has also doubled in the time WDW has been open. They almost *have* to keep charging more just to keep the crowds under control.)

 

[dragynally]

Isn't it expensive to do anything with a "large middle class family"? I would imagine things get dicey once you choose to have more kids than you can reasonably fit in a single hotel room.

(Note: I'm not arguing that Disney isn't getting crazy expensive ... but it looks to me like it's supply and demand. The planet's population has also doubled in the time WDW has been open. They almost *have* to keep charging more just to keep the crowds under control.)

Totally. When I say "large" I should probably say average. 2 adults 3 kids feels large to me but totally correct me.

 

[perditax]

Totally. When I say "large" I should probably say average. 2 adults 3 kids feels large to me but totally correct me.

Ah, I was thinking more of the 4+ kids families, where they really have to get two rooms/staterooms or a $$$ suite. Not sure what the hospitality industry can do in that situation--they can't give away lodging and food for a family of six or seven at the same price as for a family of three or four. But this probably isn't the point anyone was making.

And in any case, even with a double income/no kids household, lately when I look up WDW prices at the level of accommodations that would make me happy, I just laugh when I see then. Clearly someone is willing to pay $600/night for AKL club level, but it's not me.

 

[dragynally]

Ah, I was thinking more of the 4+ kids families, where they really have to get two rooms/staterooms or a $$$ suite. Not sure what the hospitality industry can do in that situation--they can't give away lodging and food for a family of six or seven at the same price as for a family of three or four. But this probably isn't the point anyone was making.

And in any case, even with a double income/no kids household, lately when I look up WDW prices at the level of accommodations that would make me happy, I just laugh when I see then. Clearly someone is willing to pay $600/night for AKL club level, but it's not me.

I can't speak for the parks. I only went as much as I did because of friends with couches.

 

[NS8VN]

The Parks and Resort segment of Disney (which includes DCL) shows consistently growing revenue. The problem with DCL is that it is limited supply with large demand when priced only slightly higher than their competitors. They have zero financial incentive to keep their prices low if they can fill the ships. This might change when the new ships enter the line but if they plan to open up the Asian/South Pacific market then don't bet on it.

As for WDW, the quote I like best is that their concern now is creating the happiest time-share on Earth. That is how they are locking multiple generations in for decades to come.

 

[indyshea]

My husband and I both earn pretty nice salaries (both post-graduate degree level) and we have 1 child and DCL is becoming an 'only for special occasions' like every 10 years kind of price as far as I'm concerned.

 

[dragynally]

The problem with DCL is that it is limited supply with large demand when priced only slightly higher than their competitors.

Also true. It's amazing how quickly cruises sell out. And with only 4 ships it's not like there's a fleet to spread out the people.

 

[cruiser21]

When you look at the changes they did the Fantasy it was to improve the kids area. Their target is kids and families and always will be. There are a lot families in this country that have a lot of money. A Disney cruise is probably pocket change for them. Stock market is at record highs, economy is decent, people are positive about the future so they spend money. They next market crash or downturn will see lots of GT rates, kids sail free, etc. Of course there are middle class families like ours that have managed to cruise Disney, but I've never thought Disney was affordable for most middle class families. We were lucky to visit WDW and do a lot of DCL cruises before the prices got crazy.

 

[cruiser21]

I would guess most lines track spending. We spent our fare share early on for DCL gear and plush, but tailed off the more cruises we did. I think that most new cruisers on average will outspend gold and up cruisers. I am guessing the gold level discount is only there to try and get this group of cruisers to spend more in the shops.

We spend very little onboard. Now that we are seasoned travelers and have traveled all over the world I don't need Disney's help exploring ports. We don't buy pictures, I don't shop. We drink, but were not huge drinkers so I agree with this.

 

[cgolf]

When you look at the changes they did the Fantasy it was to improve the kids area. Their target is kids and families and always will be. There are a lot families in this country that have a lot of money. A Disney cruise is probably pocket change for them. Stock market is at record highs, economy is decent, people are positive about the future so they spend money. They next market crash or downturn will see lots of GT rates, kids sail free, etc. Of course there are middle class families like ours that have managed to cruise Disney, but I've never thought Disney was affordable for most middle class families. We were lucky to visit WDW and do a lot of DCL cruises before the prices got crazy.

We are a middle class one kid family trying to have said kid come out of college with zero debt. The way we do it is cruises are where we spend our disposable income and save in other areas of our life. This also means DCL is out for now. But when she id done with school we start to think seriously about retirement and the life we want at that point. Since we still want to cruise we will need to seriously start looking at how is the best way to set ourselves up for that, not sure where DCL will fit in then.

We really need to win one of those big powerball jackpots, would even be happy splitting one

 

[cruiser21]

We are a middle class one kid family trying to have said kid come out of college with zero debt. The way we do it is cruises are where we spend our disposable income and save in other areas of our life. This also means DCL is out for now. But when she id done with school we start to think seriously about retirement and the life we want at that point. Since we still want to cruise we will need to seriously start looking at how is the best way to set ourselves up for that, not sure where DCL will fit in then.

We really need to win one of those big powerball jackpots, would even be happy splitting one

We are going to WDW and sailing on the Dream next month. It's just me and my youngest son 12. It's kind of reward for going through some challenges over the last 6 months. In the future though our DCL cruise will be the specialty cruises like TA's, Panama, maybe a Sept Europe cruise. Something that I feel is a good value. I won't cruise DCL in the Caribbean. It's just not worth the money for ports I've been too. I will cruise other cruiselines in the Caribbean. I like Carnival and I like NCL for a Caribbean cruise I feel it's a really good value. I have one getting very close to college so I can appreciate needing to save for that.

 

[LAX]

I don't think Disney is necessarily targeting any group in particular (other than kids & family in general). I believe it's mostly supply vs. demand. If the ships fill to capacity at a certain price point one year, why not raise it the next year to see how it does? I am not arguing that's a good strategy long or short-term.

LAX

 

[rcchello]

At a $billion a new cruise ship, I don't think anyone is going to grow capacity that fast that the cost to the consumer will come down significantly. The only hope is that another Cruise line can convince those people they don't need the Disney experience.
I read about other Cruise lines and the only ones that look interesting cost more per night.

 

[jujubiee4]

I have always felt they wanted first timers as they spend more.

Traveling can be expensive period. We went on a combo 5 days NY/5days Disney World Dec around
Christmas. It was always on bucket list to see both places Christmas Time. I couldn't wait to leave
NY as it was crippling expensive. Even having been to both places before it was our first time DURING
CHRISTMAS HOLIDAYS so we went all out doing everything because i knew that wouldn't be happening
again. lol

Sometimes i think this is the person they want. The new cruiser/park goer because they have a tendency
to spend more.

Will be going on our Platinum cruise in June and I swear I don't like spending a dime more than cruise fare.
That is expensive enough.

 

[cyclenut]

We have priced this out a number of times and while Disney can be expensive, compared to other entertainment of the same caliber, it is priced pretty much where others are, but in terms of the ships and the parks. We are going to Disneyland next weekend (I'm a little sad because we used to live there and have annual passes so making a "trip" to Disneyland is new for us). We purchased three day park hopper tickets and the seemed outrageous. Then we looked at other entertainment. Concert tickets and theater tickets are expensive and it is for a couple of hours. Then there is rental car and parking. We are staying at a hotel that is walking distance to the park so we don't need to rent a car. It really adds up fast. Then when you consider the premium experience that Disney offers, it is priced pretty much where it should be.

That doesn't make me happy, but it is what we are seeing.

For a cruise, we are booked for two through Pamana. 14 days for $6700. That about $240 per night per person for a verandah room or $480 per day for two. Compare that to a land based vacation where Hotel will cost you $200 a night for a nice place in a major city, plus rental car, gas and then food for two and you get up there real fast. That is without paying extra to do anything.

Sure, you can put together a cheaper hotel and save money by walking, not eating out and doing things that are close to free, but that's called camping. (I love camping by the way). You can put together a cheaper cruise too. We price compared Dinsey Panama Canal to others and it was comparable.