Do You think DISNEY has gone down hlll the last few years?

[KellyNY]

WE

Not everyone is paying 25-30% off. I'm sure they are tweaking this ratio as they track booking patterns. Just like they do on airlines....what's an airline seat worth? There is an average somewhere in the middle.


This is no "theory" or opinion, what's being explained here is simple economics. What theory do you think is being put forth? That businesses like Disney know exactly what the market will bear and price accordingly? That a room at a Disney Deluxe is actually worth more to some people than at the Waldrolf? And what is your theory that you are trying to say you aren't right or wrong about? They only thing being explained here is the basics of how a company prices it's products, not what Disney actually earned last quarter.

A customer "thinking they are getting a deal when they are actually not" is not an economic tool and thus not taught...you can't teach something you can't define. There is no way to define what that "deal" is, because everyone is different, and to some they might feel they are getting a "deal". Economics doesn't deal with "deals", they deal with supply and demand. That's what they have marketing departments for. Marketing departments come up with the tricks that you speak of, but they are driven by the hard numbers gained over there in the finance department.

What data do you want and why? Are you trying to establish some proof that Disney is run by idiots that don't know how to price their product according to market factors? I think I can take a wild leap and say that if the Deluxe has a certain price, Disney has some decent inside data that guides them to price in a certain way.

I think I gave a very real marketing principle and if you chose to ignore it is up to you. I also explained what numbers would proof me or you right or wrong so just read my post again before you ask what I just answered.
No, I do not think disney is ran by idiots but I also know that economics is more then just one class and saying that disney using one principle without giving a thought that there maybe more and it is complex enough is infact saying that they are idiots and imo it is a very ignorant thought.

 

[vacationclub]

WE

I think I gave a very real marketing principle and if you chose to ignore it is up to you.

I didn't ignore it, in fact I called it exactly what it is....a marketing principle (also know as a trick) and not an economics principle. How did I ignore it?

WE

I also explained what numbers would proof me or you right or wrong

prove you or me right or wrong about what? Do you want actual insider information here? Why is that needed just to prove what a product is worth (which we've already established is whatever someone will pay for it).

WE

No, I do not think disney is ran by idiots but I also know that economics is more then just one class and saying that disney using one principle without giving a thought that there maybe more and it is complex enough is infact saying that they are idiots and imo it is a very ignorant thought.

Who said any of that? I simply responded to some of your posts demanding numbers from a PP with the basic principal that drives all market decisions for companies not run by idiots. I didn't say there aren't other principals as well.

I'm still confused at what exactly your trying to prove, or say, or establish. I've read your posts back from a few pages (when they seemed to start) and can't figure out what you're trying to get it here. Is it that Disney doesn't know how to price it's product?

 

[notfrostyjosh]

This is worse than the fastpass thread.

 

[KellyNY]

I didn't ignore it, in fact I called it exactly what it is....a marketing principle (also know as a trick) and not an economics principle. How did I ignore it?

prove you or me right or wrong about what? Do you want actual insider information here? Why is that needed just to prove what a product is worth (which we've already established is whatever someone will pay for it).


Who said any of that? I simply responded to some of your posts demanding numbers from a PP with the basic principal that drives all market decisions for companies not run by idiots. I didn't say there aren't other principals as well.

I'm still confused at what exactly your trying to prove, or say, or establish. I've read your posts back from a few pages (when they seemed to start) and can't figure out what you're trying to get it here. Is it that Disney doesn't know how to price it's product?

My point is that rack price of hotels is overpriced on purpose by disney to create illusion of deal and while I am not arguing value of experience itself, I argue that true value, what people are willing to pay is not rack price but the price after discount.

 

[Planogirl]

One thing that no one seems to mention is that Disney might not want to in a sense dumb down their product. They wouldn't want to sell their rooms for less than other resorts because then their product might appear cheapened. I remember having this discussion years ago.

Also, rack rates at all resorts both onsite and offsite are pretty bizarre. Most hotels don't charge anywhere close to those rates.

None of this really means anything unless we know the occupancy rates of the Waldorf anyway. I can guarantee that there were plenty of rooms available at WDW the first week of August (a busy time) because I checked while we were there. There were also some discounts for those deluxe resorts and we could have stayed pretty much anywhere we wished. The discounts weren't deep enough to convince me though, again just my opinion.

 

[notfrostyjosh]

Disney owned resort rooms have an occupancy rate between 80 - 82% during any given quarter in recent memory. Disney also doesn't consider "Free Dining" a discount.

Mind blowing, right?

 

[Planogirl]

Disney owned resort rooms have an occupancy rate between 80 - 82% during any given quarter in recent memory. Disney also doesn't consider "Free Dining" a discount.

Mind blowing, right?

How do you get those figures? I'm always searching.

I guess that that would be an average of all resorts? We always find a few booked up but several with availability.

 

[notfrostyjosh]

http://corporate.disney.go.com/investors/archive.html

Specifically the August 9 and May 10 conference calls. There is another one coming up this week.

 

[KellyNY]

Disney owned resort rooms have an occupancy rate between 80 - 82% during any given quarter in recent memory. Disney also doesn't consider "Free Dining" a discount.

Mind blowing, right?

I'm not surprised, discount which for some weirdest reason is not considered discount is working.

 

[daisy1i]

its the economy, I don't think you can blame Disney!

 

[vacationclub]

One thing that no one seems to mention is that Disney might not want to in a sense dumb down their product. They wouldn't want to sell their rooms for less than other resorts because then their product might appear cheapened. I remember having this discussion years ago.

I was about to get to this, thank you for mentioning it. Of course Disney (or anyone else) isn't going to change their rates in times of economic recession, as they believe that condition is only temporary, so the solution is to offer temporary incentives, such as 3 for 5, free dining, etc.

My point is that rack price of hotels is overpriced on purpose by disney to create illusion of deal and while I am not arguing value of experience itself, I argue that true value, what people are willing to pay is not rack price but the price after discount.

But your theory is already blown by people in this thread saying they've paid rack rate. Not everyone is looking for a deal, some people do just pay the published rate if they don't need to or want to hunt for times and conditions that would offer an incentive. If rack rate was just an MSRP, or a number manufacturers come up with to create this "street price" allusion, you would have a point, but's it's not MSRP, it's a real cost that many do pay.

Disney and others have the same philosophy, which is that they aren't going to announce to the world that they've lowered their prices and thus lowered their overall perceived value, because no one will ever pay it again. They simply find marketing ploys (incentives, not discounts) to get people to fill the troughs on the graphs.

I'm not surprised, discount which for some weirdest reason is not considered discount is working.

I'm not surprised it's working either, it's a classic marketing ploy. It's not considered a discount because they aren't discounting anything. They are giving you something that you might not have purchased to begin with to increase the buyers sense that they are getting more for their money. They didn't discount the parks, or the concessions, or the rooms, or anything else. They just came up with a program to feed people as in incentive. For some, this may seem to be a discount if they would have purchased this same dining plan anyway, but not everyone would (if they own a calculator).

 

[KellyNY]

I was about to get to this, thank you for mentioning it. Of course Disney (or anyone else) isn't going to change their rates in times of economic recession, as they believe that condition is only temporary, so the solution is to offer temporary incentives, such as 3 for 5, free dining, etc.

But your theory is already blown by people in this thread saying they've paid rack rate. Not everyone is looking for a deal, some people do just pay the published rate if they don't need to or want to hunt for times and conditions that would offer an incentive. If rack rate was just an MSRP, or a number manufacturers come up with to create this "street price" allusion, you would have a point, but's it's not MSRP, it's a real cost that many do pay.

Disney and others have the same philosophy, which is that they aren't going to announce to the world that they've lowered their prices and thus lowered their overall perceived value, because no one will ever pay it again. They simply find marketing ploys (incentives, not discounts) to get people to fill the troughs on the graphs.

I'm not saying that nobody pays rack price, but few here who claim they did are currently dvc members and do not pay it now. I used to pay rack price a well when it made sense to me but now I believe price is blown and I do seek discounts. I also hang around resorts board and see people claim they stay at deluxe only with a good discount. I'm not saying everyone looking for discounts but today so many available that unless we know numbers it is difficult to argue what is actual number people are willing to spend and what would happen if there were no discounts at all.

 

[brunette8706]

Disney owned resort rooms have an occupancy rate between 80 - 82% during any given quarter in recent memory. Disney also doesn't consider "Free Dining" a discount.

Mind blowing, right?

*
LOL! I think you are on to something!!!!!!!!

 

[brunette8706]

i was about to get to this, thank you for mentioning it. Of course disney (or anyone else) isn't going to change their rates in times of economic recession, as they believe that condition is only temporary, so the solution is to offer temporary incentives, such as 3 for 5, free dining, etc.

But your theory is already blown by people in this thread saying they've paid rack rate. Not everyone is looking for a deal, some people do just pay the published rate if they don't need to or want to hunt for times and conditions that would offer an incentive. If rack rate was just an msrp, or a number manufacturers come up with to create this "street price" allusion, you would have a point, but's it's not msrp, it's a real cost that many do pay.

Disney and others have the same philosophy, which is that they aren't going to announce to the world that they've lowered their prices and thus lowered their overall perceived value, because no one will ever pay it again. They simply find marketing ploys (incentives, not discounts) to get people to fill the troughs on the graphs.


i'm not surprised it's working either, it's a classic marketing ploy. It's not considered a discount because they aren't discounting anything. They are giving you something that you might not have purchased to begin with to increase the buyers sense that they are getting more for their money. They didn't discount the parks, or the concessions, or the rooms, or anything else. They just came up with a program to feed people as in incentive. For some, this may seem to be a discount if they would have purchased this same dining plan anyway, but not everyone would (if they own a calculator).

*
bingo!

 

[LarryNabisco]

Free dining is awful. In a lot of ways it has ruined the quality of table dining.
I feel so bad for the poor servers who get stiffed on tips. I have talked to several and they absolutely hate the free dining promotion.

Watch the expresions of the servers when they find out its the dining plan during free periods, vs people who are paying for the meal. It's very obvious in most cases you see the servers expression perk up when a customer is not on the dining plan.

I had some friends inerested in free dining a few months back, and then when they crunched numbers they were surpised to find they were coming out ahead by not going with the free dining option.

I'd love to see Disney end this discount, but I suppose since there is a sucker born every minute, they will continue with it because it makes them $.

Just a shame others have to suffer because of it.

 

[MickeyMinnieMom]

She doesn't need to. The specific numbers are not required to make the point which is "a product is worth whatever someone will pay for it". Period. As long as Disney finds enough people to pay X amount for a product, regardless of what others may think of it's value, that's all they need to justify setting the price. I believe they teach this in the first 5 minutes of freshman economics 101.

This is no "theory" or opinion, what's being explained here is simple economics. What theory do you think is being put forth? That businesses like Disney know exactly what the market will bear and price accordingly? That a room at a Disney Deluxe is actually worth more to some people than at the Waldrolf? And what is your theory that you are trying to say you aren't right or wrong about? They only thing being explained here is the basics of how a company prices it's products, not what Disney actually earned last quarter.

Exactly - thank you!! You put this very succinctly -- exactly what I was getting at!

My point is that rack price of hotels is overpriced on purpose by disney to create illusion of deal and while I am not arguing value of experience itself, I argue that true value, what people are willing to pay is not rack price but the price after discount.

This is how the entire hospitality industry works. To varying degrees, it's how the entire economy works! At the end of the day, something is worth what someone is willing to pay for it -- i.e. a market clearing price. Right now that market clearing price is a more heavily "discounted" one (on average)... in a better economy, that average price (containing fewer discounted rates) will be higher. Economics 101 as vacationclub said. I get "promotion" emails from The Loews Regency and The London in Manhattan in slow seasons or bad economies -- it's standard practice -- not something nefarious that Disney is doing. And again... the very fact that these rates still surpass those of Waldorf, AND occupancy rates remain strong at Disney hotels (as others have cited in this thread) IS proof in-and-of-itself that the value is still there at those prices for enough Disney customers.

I was about to get to this, thank you for mentioning it. Of course Disney (or anyone else) isn't going to change their rates in times of economic recession, as they believe that condition is only temporary, so the solution is to offer temporary incentives, such as 3 for 5, free dining, etc. ...

I'm not surprised it's working either, it's a classic marketing ploy. It's not considered a discount because they aren't discounting anything. They are giving you something that you might not have purchased to begin with to increase the buyers sense that they are getting more for their money. They didn't discount the parks, or the concessions, or the rooms, or anything else. They just came up with a program to feed people as in incentive. For some, this may seem to be a discount if they would have purchased this same dining plan anyway, but not everyone would (if they own a calculator).

 

[KSDisneyDad]

http://corporate.disney.go.com/investors/archive.html

Specifically the August 9 and May 10 conference calls. There is another one coming up this week.

Interesting quote from the August 9th call:

As illustrated by our Q3 results, we remain willing to make a short-term trade-off between modestly lower occupancy and significantly higher room pricing, as we believe that a return to normalized pricing levels will drive greater long-term profitability.

Yes, the spending per night at the resorts is up dramatically in 2011. $246 per night in 2011 YTD vs $224 last yaer and $214 the year before that.

As an FYI, the numbers are also published in their 10-Q's and 10-K's.

When you look there, there are Numbers everywhere, but what do they really tell us?

Personally, I don't think one can look at their reported numbers (or any other company that projects attendance or other numbers) and make any general comments about Disney World going downhill, uphill, sideways or anything. The reason I say this is that the economy plays a big part of it.

My only point in this post is that any comments about Disney going downhill are simply opinions. There is no irrefutable evidence that it is going downhill. They have invested millions back into parks and resorts, but they have also made some cut-backs. They have remained profitable during the great recession, but they were affected like most companies who sell "luxury" items.

Occupancy is down considerably the last two years though. It's back down close to 2005 levels although the spending per night is up quite a bit since 2005 and up quite a bit in 2010 and 2011.

Overall, in 2009, you can see where the operating income for the Disney parks and resorts division took a big hit from the economy. 2010 was worse, but it looks like 2011 is going to be better for them (maybe because of the cruise line though).

The park and resorts operating income says that Disney is trying to do something to return to pre-great recession profitability levels. I think how they are getting there is what is making some upset. Even though Disney is spending a lot of money on new attractions, systems, resorts, refurbs, etc., they are also cutting back in other areas. Overall, costs have gone up since 2009 and 2011 may be the highest cost year yet.

If you look at the expense trendline, costs are up every year except 2009. If 2008 is taken out, it is a fairly linear increase in costs each year. I don't think 2008 was the "glory" year that so many seem to wish things were like again. I think most who talk about the way things used to be are referring to 10 years + ago.

It appears that for Disney's park and resort division, income is starting to increase again in 2011. Hopefully, in the long run that helps everyone. In 2011, domestic attendance is up (DLR and WDW combined). Domestic spending is way up. Spending per hotel night is up despite occupancy being flat. Overall, Disney guests are deciding that it's okay to depart with a little extra cash per day this year vs the last two years.

Here are some reported numbers. Note that in 2010, Disney stopped reporting WDW and DLR separately.

Disney Domestic Hotel Occupancy by Year:
2005: 83%
2006: 87% (86% for WDW)
2007: 89%
2008: 89% (90% for WDW)
2009: 87%
2010: 82% (no WDW breakout)
2011: 82%

Domestic Per Room Spending by Year:
2005: $206 ($199 for WDW)
2006: $218 ($211 for WDW)
2007: $225 ($217 for WDW)
2008: $233 ($223 for WDW)
2009: $214 ($205 for WDW)
2010: $224 (no breakout for WDW)
2011: $246 YTD

Domestic attendance Increase/(Decrease) Percentages:
2005: 5%
2006: 5%
2007: 3% (6% for WDW)
2008: 2%
2009: 2% (flat for WDW)
2010: (1%)
2011: 1% for first nine-months

Domestic Park Spending Increase/(Decrease) Percentages:
2005: 5% (2% for WDW)
2006: 3% (1% for WDW)
2007: 3%
2008: 3%
2009: (6%) (down 4% for WDW)
2010: 3%
2011: 7% for first nine-months

As so many people talk about cost cutting, here are costs per year for the parks and resorts division including their international parks (in millions)
2004: $6,673
2005: $7,845
2006: $8,389
2007: $8,916
2008: $9,607
2009: $9,249
2010: $9,443
2011: $7,536 (first nine months - should be higher than prior two years and maybe the highest ever)


Finally, Parks & Resorts Operating Income including international (in millions)
2004: $1,077
2005: $1,178
2006: $1,534
2007: $1,710
2008: $1,897
2009: $1,418
2010: $1,318
2011: $1,132 (first nine months - should be higher than prior two years)

 

[tonyRmoran]

Easy answer ... No, Disney has not gone downhill at all. One trip to Universal Studios or any Six Flags for that matter will clear up any confusion you may have about the quality of Disney fun you get for the money.

The world changes and so do they, but they'll always be on top, which indicates they are going uphill.

 

[MickeyMinnieMom]

Personally, I don't think one can look at their reported numbers (or any other company that projects attendance or other numbers) and make any general comments about Disney World going downhill, uphill, sideways or anything. The reason I say this is that the economy plays a big part of it.

My only point in this post is that any comments about Disney going downhill are simply opinions. There is no irrefutable evidence that it is going downhill. They have invested millions back into parks and resorts, but they have also made some cut-backs. They have remained profitable during the great recession, but they were affected like most companies who sell "luxury" items.

ITA And more for pulling in the data!! I haven't studied all of these numbers since 2009-2010, but the story is largely the same about Disney (as I was trying to sketch out in some of my other posts).

Taken all together, the stats and quotes you posted suggest to me that:
1) the economy is the major driving factor in prices & profits for Disney in the short term,
2) Disney HAS NOT cut spending dramatically and increased prices dramatically -- i.e. they haven't overall cheapened their offering and yet charged more for it
3) WHATEVER they are doing pricing-wise is based upon their interpretation of economic realities and adjusting their strategy in order to best navigate a difficult economic environment

All this is in line with Disney being a well-run company that continually tweaks pricing and other strategies to deal with ever-changing economic realties.

Interesting quote from the August 9th call:

As illustrated by our Q3 results, we remain willing to make a short-term trade-off between modestly lower occupancy and significantly higher room pricing, as we believe that a return to normalized pricing levels will drive greater long-term profitability.

Thanks for posting this!! I hadn't read this until now, but this is exactly the kind of thing I was saying in some other posts. They seek to maximize PRICE x VOLUME -- depending on the proportions, V can decrease when P increases and Disney is still in good shape! In the shorter term they determined that they needed to offer the deep discounts in order to maximize PxV. As they look toward the future and anticipate an economic environment that is either steady-state or (hopefully) on a longer term upswing, they switch strategies. All very logical -- all very consistent with Economics 101 (as vacationclub was saying!), and with solid corporate leadership. And they continue to invest in building their offerings.

NONE of the objective indicators about Disney suggest a company -- or a Parks SBU -- in decline. The rest is a matter of opinion.

 

[flicx]

Taken all together, the stats and quotes you posted suggest to me that:
1) the economy is the major driving factor in prices & profits for Disney in the short term,
2) Disney HAS NOT cut spending dramatically and increased prices dramatically -- i.e. they haven't overall cheapened their offering and yet charged more for it
3) WHATEVER they are doing pricing-wise is based upon their interpretation of economic realities and adjusting their strategy in order to best navigate a difficult economic environment

Sorry what you call conclusive results amounts to sheer opinion.Note the part where you say" it suggest to me that" that in itself says opinion!