Disney Profits and Prices

[eliza61]

Don't get me wrong, I absolutely love, love, love WDW and since I'm now a bonifide DVC member it's pretty certain that I will continue to visit the mouse for the foreseeable future. But.... I just finished an article saying Disney's profits were up 34% for the year attributed to increased park attendance, increased guest spending and higher DVC sales. Why then have they raised park prices at least 2x's last year and now are raising the prices on the Fantasmic dinner package?
Just made me feel a little sad, the same way I feel after hearing about oil companies raking in billions of dollars in profits while every one else is eating cheese sandwiches while struggling with astronomical fuel cost.

Ok my flame suit is on.

 

[pezpam]

No flames here, but it sounds like you already know the answer. The market will bear the higher costs and Disney is a for-profit enterprise with stockholders to boot. At the end of the day, more profit, whichever sector it comes from, makes the company folks and the stockholders happy. As long as you pay what they ask, you're signaling that it's worth it to you as a consumer. If and when they raised prices to a point where attendance dropped enough to affect profits negatively, you'd see prices go back down to what the market would bear. Until that happens, there is no non-charitable reason for Disney to stop raising prices and, sigh, they're not a charity no matter how much their product is packaged as happiness and light...... And as much as we think otherwise, a WDW trip is a strictly voluntary purchase. The cost of a week at WDW would pay for a lot of cheese sandwiches in my house.

 

[TheDisneyGirl02]

The way I look at it is that if they have to raise the prices, it means Disney won't go out of business. However, I do wish they would pay the Cast Members more. It's a crying shame that the CMs get paid so poorly when they are making that much of a profit. Oh well!

 

[Lynne M]

I think we all have a tendency to think of the Disney company as kindly old Uncle Walt, part of the family. There's an emotional tie to WDW and other Disney products for many of us, and so there's a little shock when Disney does something that isn't 'family-like'.....as in raising prices, or cutting services to save money.

The higher prices are just a reminder that Disney isn't a charity, or a public utility. They're a very large, very profitable corporation that just happens to be in the business of selling fun. Corporations exist to make money - as much as possible. They are answerable to their stockholders, and if they don't make every last cent of profit they can, the stockholders will see to it that the management is booted out and replaced. Prices are set as high as they can be without damaging the business - i.e., if it gets too expensive, people stop visiting WDW.

It's funny, people get annoyed when other companies raise their prices, but when Disney does it you can almost sense the hurt feelings.

 

[Got Quattro?]

You should read the book "DISNEY WAR". it give great incite into what make or breaks the companies bottom line.

The parks are one of the main proffit streams interms of NET Dollars taken in, which only equates to about 2% Net vs Gross.

The film business is where most of the money comes from, and good years like last year with 4 or 5 Huge Box office hits are what makes the company bottom line. Disney had 5 of the top 10 films for 2006 so far.

Another huge Profiit stream are DVD sales. Disney is constanly turning over and reseller that same products to consumers that had 95% of their production costs taken out 30, 40, 50 years ago. The Cinderella DVD is a great example. They had to spend a fractional amount of money to "restore" the film for DVD, then sold MILLIONS of them at $17.00 a piece. The probably had about $4.00 cost in each one.

My point is, it takes a lot of money to deliver a quality product like Disney World. So it costs much much more than say a six flags. A 2% proffit stream for the florida parks is a good happy medium between proffit taking and a direct loss like Euro Disney.

Read the book. It will open your eyes to a lot of things.

 

[disneygal33]

The way I look at it is that if they have to raise the prices, it means Disney won't go out of business. However, I do wish they would pay the Cast Members more. It's a crying shame that the CMs get paid so poorly when they are making that much of a profit. Oh well!

I totally agree. I was standing by the pool talking to one o0f the lifeguards in May and was shocked at how little Disney pays.
As far as why they raised their prices....because they can and people will pay.

 

[Fast Pass]

The way I look at it,rose color glasses and all, Disney gives a whole lot of money to charity that they say nothing about. If raising the ticket and other prices means they will continue to be generous to others- go for it!
The 2 -10% increase in this or that thing seems like alot but overall look at the complete 24 hr. entertainment value.
If Disney wasn't profitable believe me the parks would be gone in an instant.
O.K., now you guys can pick on me.

 

[Cass]

Disney is a business, not a charity - I don't worry about what they make, I just enjoy what I get out of the experience.

They are doing something right coz I keep going back

 

[Walter C]

I remember doing an annual report project on Disney for my accounting class.

Honestly, with the bad stuff that I hear about how Disney conducts business, I thought it would affect my enjoyment of the theme parks. It hasn't, and I hope to return someday.

 

[elwise1966]

Not to mention the fact that operating costs increase every year.
And the oil price skyrocketing filters down to almost all other industries which then have to raise prices to cover it, which then forces their customers (like Disney) to raise prices. It's a domino effect.

And I also think they should pay CM's better. If I didn't need the money, I'd work there for free just to get in.

 

[NewEnglandDisney]

I just can't complain about the prices at Disney. It's far cheaper than many vacation destinations, unless you are talking about camping in the woods.

If you buy a MYW ticket, you can get into Disney for as little as $30/day, which is less than even the dumpy local amusement parks in my area, let alone even a Six Flags or other tier park.

Prices at Disney value resorts, especially with the abundant discounts, are cheaper than most roadside motels these days (it's not uncommon to get one for $59-69/night). The Super8 up the road from my house has a base of 99/night, in an industrial park.

The food prices are comparable with much of the nation. Perhaps some people are used to cheap food, but where I live (the north east), my McDonalds charges the same prices as the supposedly overpriced one in DTD (in fact, our Big Mac costs a dime more). $7-8 for a burger and fries in a basket, $20-30 for a steak in a nice restaurant...same prices I'd pay at home. Now, I don't spend that much at home because I don't eat out often, and of course at Disney you are stuck eating out most of the time, but per meal their prices really aren't incredibly different. Character meals are pricey, but you are paying for the easy access to characters, not just the meal.

Disney picks you up from the airport now...for free. Transportation inside Disney...free. It's easy to see why people are spending more on souvineers and the like, because they are spending less elsewhere. It's now the exception and not the rule to rent a car, and a family of four is saving $120 just on Magical Express vs. old Mears transport.

I think you will find the price increases regarding restaurants because the demand is just too darn high. They can't have enough seats in most WDW eateries, and yes, they want you to buy the Dining Plan (I just hope that soon they start offering it independent of a package...i.e. allow you to have it with room only).

Prices have gone up everywhere. Disney is a publicly held company, it is not immune. It's in the business of selling a premium vacation experience, and in that category it's a downright value once you compare it to other vacation destinations.

NED