Domestic park attendance down 4% in Q3

[Madonna3]

As for construction, the roads are necessary and that's just not Disney that has road construction. The parks construction is all happening at once because Disney waited too long to do anything.

I never said any of it was unnecessary, but it's created quite the mess.

 

[rteetz]

I never said any of it was unnecessary, but it's created quite the mess.

I agree but it always is worse before it gets better.

 

[jade1]

Hotel bookings were up 3% domestically.

I find it hard to believe Q3 would be this full, but awesome if so.

The drop in attendance was offset by guests spending more on tickets to visit the parks and vacations on Disney’s cruise lines, and higher occupancy at Disney hotels. Hotel occupancy was up 3 percent to 90 percent of capacity.

 

[Madonna3]

I agree but it always is worse before it gets better.

That's the truth. It's a nightmare there, imo. I was just there last week and the end towards Disney Springs is just all torn up. Trying to get out to 192 via Epcot is another disaster. My husband and I have started sneaking in the back way. It takes more time, but it doesn't jack up my suspension in the process.

 

[XXRAINMANX]

Honestly, this is how business goes. We all did those simple graph problems in school, sell 50 tickets at $30 and get X customers to buy, sell 100 tickets at $20 and get y customers to buy. Where do the 2 lines intersect and which has better revenue etc. That's all Disney did, they realized they were beginning to reach maximum crowd levels for its current park setup and knew expansion at Hollywood was going to decrease overall capacity. They increased costs to drive customer levels down while maintaining income. We can get upset about that decision all you want but it's basic supply and demand and Disney is a business and it was a sound business strategy.

The company realized it was going to continue to lose customer base with people continuing to cut the cord and instead of starting a new company from scratch they in a streaming service that they can utilize in the future to stream sports; and that investment was cheap for what they could get. Here's a breakdown for everyone. $1 billion investment on segment of the company that generates 40% of its total revenue (this quarter that's 40% of 14Billion so 5.6 Billion this last quarter). That's almost 6-1 return on investment for Disney if this streaming service works out, and it would stabilize 40% of the business. Disney's theme park division only generates around 30% of its revenue yet it's investing far more to maintain that income vs ESPN.

If Disney can maintain sales and decrease crowds at the same time that's good news for me. I get that it will potentially price out some of it's customers and that's an unfortunate side effect but we can't have it both ways, it can't be cheap and not crowded.

 

[nco91590]

"it can't be cheap and not crowded" - That just about sums it up for me.

 

[dreiwhit]

Now, Disney is not considered the value it once was and in a recovering economy, people are analyzing how they spend their dollars.

Also keep in mind that the economy hasn't recovered for some of us. For my family and me, after two pay cuts, i'm making what I did back in 2007. Of course, prices aren't the same as they were in 2007, so we have less money to spend on vacations and pretty much everything else than we did back then. I dare say that i'm not alone. Even though you get a lot for your money at WDW, its still very expensive and you have to have the money first to be able to spend it on a WDW vacation.

 

[Madonna3]

Also keep in mind that the economy hasn't recovered for some of us. For my family and me, after two pay cuts, i'm making what I did back in 2007. Of course, prices aren't the same as they were in 2007, so we have less money to spend on vacations and pretty much everything else than we did back then. I dare say that i'm not alone. Even though you get a lot for your money at WDW, its still very expensive and you have to have the money first to be able to spend it on a WDW vacation.

No. I don't think you're alone and that's why I chose the word "recovering" to describe the economy and that people are not wildly spending, but rather analyzing how they spend the dollars they do have. Disney is not the value it once was, imo and more places have become a better value giving far more competition to Disney than previously. I remember in 2007, I did Free Dining because it was absolutely a fantastic value. Now, I won't even touch the Dining plans.

 

[jade1]

Count me in a finally giving the finger to WDW this year, and I know many other loyal yearly guests who have decided to skip Disney as well. I'm fortunate enough in my career that money isn't an issue, and I've been visiting WDW at least once a year for the past 10 years.

But over the past few years experiencing Disney nickel and dime with 'additional/added' experiences and cutting back in parks and customer service ... basically paying more and getting much less year over year. Like many others I'm keeping an eye things and will probably head back when the park additions are complete, or for a quick food and wine trip. But for this year Royal Caribbean is getting my money as I chose to do a (non-Disney) cruise.

My guess is they (WDW) are counting on this from a lot of guests.

Loyal yearly guests have done it all over and over, and will indeed be back for the expansions.

Most will keep going IMO, just doing more as they come online.

Loosing 4% attendance for now, but making even more money while they expand? Can't beat that IMO.

 

[luisov]

I have a problem with that explanation. Yeah, it's simple supply and demand theory. They can reduce crowds while increasing their profits by raising the prices, and less crowds mean higher customer satisfaction. That's totally understandable. My issue with this is that WDW was neglected for almost a decade and the service quality decreased while prices kept increasing. We saw a very drastic price increase but got pretty much nothing in exchange.

It is an issue that they are currently trying to solve with Star Wars, Toy Story, Pandora and so on, but their reaction was too slow and now they have many other major issues to be concerned about, like ESPN. Disney rests on their laurels until they saw that someone else is becoming a serious threat to their market share.

 

[Brocktoon]

It is an issue that they are currently trying to solve with Star Wars, Toy Story, Pandora and so on, but their reaction was too slow and now they have many other major issues to be concerned about, like ESPN. Disney rests on their laurels until they saw that someone else is becoming a serious threat to their market share.

Just a another function of modern corporate politics, with managers kicking the problems down the road to let someone else deal with it. Pretty much in the corporate world you've got managers doing anything and everything to hit their metrics even if it's destroying the company as a whole, turning various functions against each other. The attitude is basically ... hey, I hit my numbers and I'll get promoted before the stuff hits the fan ... let the next guy deal with the fallout in a couple years.

In the big picture it was easy to see a lot of this coming with ESPN and the parks, but when everyone is too concerned with competing quarterly goals, no one may actually be steering the ship and seeing the big picture until it's too late. Then again ... that's what executive golden parachutes are for.

I have no solution to the problem but I see it and deal with it every day ... as I'm sure plenty of others do as well.

 

[lockedoutlogic]

I agree with this. ALthough its been asked on here for years by some- when it will fall.

The number one complaint has been capacity, crowds and long lines, heck even room capacity (cash and DVC) as well as dining.

Secondary would cost. Lower prices would make it even worse (busier).

FP+ has helped, but like DL it had to go up

But now that we see dollars and bookings indeed did increase-I believe the expansions will derail the dominos from falling if they don't scale back too much. Without them-I could have seen it happen. We will see.

I mostly agree...

I think that the majority of Disney business...the core repeat customers and you're average, domestic family that makes one or a few trips over time...is on a "pivot" right now in regards to pricing.

They are still consuming at a high rate - based on the slightly slowing attendance but higher revenues - but I think if they decide (internally...where they live in their own bubble) that the "market" is craving their product but will continue to do so at a higher rate...then they could see a significant dropoff if they overplay their strategy.

Just my gut on this.

The other thing is that I think they have positioned themselves horribly for a recession. Definitely in WDW...less so in Disneyland. When people start caring about what things cost again? They're Going to choke on the prices.

That's all on the Iger regime.

 

[lockedoutlogic]

Just a another function of modern corporate politics, with managers kicking the problems down the road to let someone else deal with it. Pretty much in the corporate world you've got managers doing anything and everything to hit their metrics even if it's destroying the company as a whole, turning various functions against each other. The attitude is basically ... hey, I hit my numbers and I'll get promoted before the stuff hits the fan ... let the next guy deal with the fallout in a couple years.

In the big picture it was easy to see a lot of this coming with ESPN and the parks, but when everyone is too concerned with competing quarterly goals, no one may actually be steering the ship and seeing the big picture until it's too late. Then again ... that's what executive golden parachutes are for.

I have no solution to the problem but I see it and deal with it every day ... as I'm sure plenty of others do as well.

You've nailed what I feel is the core problem with Iger.

He walks away and never looks back.

That was never the case in the family involved days...the name didn't allow it.

Even Michael Eisner...who like Jimmy Carter may look a lot better after time heals...didn't operate that way. The parks were a shrine to him...if nothing else. It's better than an accountant...even if it got loose or sloppy in the end.

 

[jade1]

The other thing is that I think they have positioned themselves horribly for a recession. Definitely in WDW...less so in Disneyland. When people start caring about what things cost again? They're Going to choke on the prices.

That's all on the Iger regime.

Do you blame the billions they are spending on expansion? As bad positioning for a recession?

Would cut that immediately if that was the concern no?

 

[jade1]

I have a problem with that explanation. Yeah, it's simple supply and demand theory. They can reduce crowds while increasing their profits by raising the prices, and less crowds mean higher customer satisfaction. That's totally understandable. My issue with this is that WDW was neglected for almost a decade and the service quality decreased while prices kept increasing. We saw a very drastic price increase but got pretty much nothing in exchange.

It is an issue that they are currently trying to solve with Star Wars, Toy Story, Pandora and so on, but their reaction was too slow and now they have many other major issues to be concerned about, like ESPN. Disney rests on their laurels until they saw that someone else is becoming a serious threat to their market share.

I agree with most of this if not all.

But what would you prefer they do at this point?

They may have taken their eye off of WDW, but a lot went on as well.

Why not pivot back and throw Star Wars, Avatar and TS at WDW? If its too late, why continue?

As Disney fans and vacationers we might night like all the ways they got here but 12 consecutive quarters of double digit earnings growth is pretty dang impressive

 

[Madonna3]

it can't be cheap and not crowded.

"it can't be cheap and not crowded" - That just about sums it up for me.

Agreed. But there always has to be balance. It has to be affordable with maintainable crowds. You don't want attractions running empty, but you also don't want 90+ minute lines. If you have lines that long, that means that's hundreds if not thousands of people queuing up instead of eating, drinking, buying.

 

[lockedoutlogic]

I have a problem with that explanation. Yeah, it's simple supply and demand theory. They can reduce crowds while increasing their profits by raising the prices, and less crowds mean higher customer satisfaction. That's totally understandable. My issue with this is that WDW was neglected for almost a decade and the service quality decreased while prices kept increasing. We saw a very drastic price increase but got pretty much nothing in exchange.

It is an issue that they are currently trying to solve with Star Wars, Toy Story, Pandora and so on, but their reaction was too slow and now they have many other major issues to be concerned about, like ESPN. Disney rests on their laurels until they saw that someone else is becoming a serious threat to their market share.

That's what Ima saying and have been for a long time.

It's one of Those cases where I hope I'm completely wrong...but the scoreboard isn't looking good...

 

[lockedoutlogic]

Do you blame the billions they are spending on expansion? As bad positioning for a recession?

Would cut that immediately if that was the concern no?

Do I blame them for 10 years of relative lack of effort/stagnation that forced them to dump billions haphazardly now that - if successful - only brings them back to current? No advancement then that could mean they stagnant immediately again once the dust settles?

Yes...in a word...that would be on them.

Tough being the mouse, isn't it?

 

[jade1]

Do I blame them for 10 years of relative lack of effort/stagnation that forced them to dump billions haphazardly now that - if successful - only brings them back to current? No advancement then that could mean they stagnant immediately again once the dust settles?

Yes...in a word...that would be on them.

Tough being the mouse, isn't it?

Side stepped it. Should they cut expansion now to position for a recession?

I agree with most of this if not all.

But what would you prefer they do at this point?

They may have taken their eye off of WDW, but a lot went on as well.

Why not pivot back and throw Star Wars, Avatar and TS at WDW? If its too late, why continue?

 

[Madonna3]

Side stepped it. Should they cut expansion now to position for a recession?

No, they should not cut expansion now, but they should use this time to prepare for the future and I think that's what they're doing. They're building new roads and infrastructure to support the demand they believe their expansions will bring. Hopefully, they do it right and appeal to the wandering fan base and pull from the gains that Universal will get.

I agree that it may be too little/too late. Once you get a taste for something else, you don't always return.

I'm not thrilled with the Disney Springs revamp. I hate it, actually. If I wanted to go to the Vera Bradley store I'd either go to Sarasota or take a plane ride to Indiana. There are very few "unique" shopping experiences and the ones that are leave you wanting.

For example, the new Uniglo or however it's spelled that is supposed to be "magic for everyone" doesn't go larger than size XL. My husband is 6'4" and 300lbs. He doesn't wear an "XL" so no magic for him.

Now, I am excited for the new DHS and AK expansions and I probably (can't say for sure) will visit them when they open. However, I am also going to visit Universal for the FIRST time while this is happening. Why? Because Disney created the opportunity for me to venture outside the bubble. The Fantasyland expansion was too lame to hold my interest, Epcot needs updating, DHS isn't worth visiting, and AK can't get it's act together. I am NOT renewing my pass next year and instead I am trading it for Universal pass. I've also rented out all of my DVC points for the next 2 years. Once I taste Universal, who knows, I may not be back.