Dose disney need to do free dining after posting higher numbers

[disney david]

Dose Disney really need to offer free dining longer then they already announced after saying numbers are up 3 percent from a year ago with spending up 4 percent should Disney hold off extending free dining. As iger also said they are planning on rolling out my magic plus early fiscal quarter of 2014 which begins in October so they going full steam ahead and my not need to offer discounts or not offer them for as long as they use to.


http://touch.orlandosentinel.com/#section/-1/article/p2p-76919432/

 

[OKW Lover]

Interesting question. Disney has said in the past that they wanted to do away with "sales" like FD. But even with the latest sales/spending figures, they still saw a need to offer FD to fill up their resorts.

 

[old lady]

Yes, because of their off -seasons.

 

[disney david]

Interesting question. Disney has said in the past that they wanted to do away with "sales" like FD. But even with the latest sales/spending figures, they still saw a need to offer FD to fill up their resorts.

Yes they also did it for a short time but their still rumor of them extending it. But I think after what their seeing with magic bands they my not need to offer it longer or at least not this time of the year. I like to see them do something else like just room discounts and more for ap.

 

[disney david]

Yes, because of their off -seasons.

But in feb they was more busy then they use to I think we seeing slow seasons not being as slow as they use to be.

 

[disneydad78]

I will cry the day Disney cut out "FREE Dining". For a family of 5 it helps us. Our boy,,,nah we ALL can eat!!!

 

[mommy2allgirls]

I think too many people would be upset if the free dining went away. It may not be necessary but I do think an uproar would happen if they didn't do it

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[disney david]

I understand people will be upset but I think it tome for Disney to may be slow take people off discounts. Because now you have people who won't book until Disney release free dining that a problem for Disney. Which Disney did create but doing the same discount around the same time of year. Their a time when Disney has to believe in it brand and know it strong enough to get people to come without offering free dining. Maybe instead a better room and package discount. Disney in the past proved it had a back bone and will do what Disney want to do even if people are upset and get in a uproar. Look at Starbucks in mk and them serving alcohol in mk people got up set they even signed petitions trying to stop it and guess what Disney still built the star bucks and they serve alcohol at bog. They will still offer free doing for may he I see one more year but less days and not extending it. Or change that offer to less resorts or something total different.

 

[FireDancer]

Disney offers free dinning as an incentive to spend money elsewhere, not for guests to save money. If I'm sitting in on the meetings about whether or not to offer free dinning the first thing I'm asking is whether or not people taking advantage of the offer are spending money elsewhere. If the family that would spend $500 on food gets free dinning and then spends that $500 anyway on some other item such as souvenirs it might make sense to offer it especially if the margins on that other thing is much higher than on food.

This is also why initiative that cost billions of dollars but allow guests to be more easily tracked and analyzed is more than worth the money. Since the cost side of the equation can be largely controlled that analysis becomes invaluable. Being able to track how specific classes of guests (for this discussion those who take advantage of free dining) spend money makes it much easier to determine if free dining works or just swells numbers without really making any money. Since we don't have access to that information is becomes very hard to determine if free dining works or not.

 

[disney david]

Disney offers free dinning as an incentive to spend money elsewhere, not for guests to save money. If I'm sitting in on the meetings about whether or not to offer free dinning the first thing I'm asking is whether or not people taking advantage of the offer are spending money elsewhere. If the family that would spend $500 on food gets free dinning and then spends that $500 anyway on some other item such as souvenirs it might make sense to offer it especially if the margins on that other thing is much higher than on food.

This is also why initiative that cost billions of dollars but allow guests to be more easily tracked and analyzed is more than worth the money. Since the cost side of the equation can be largely controlled that analysis becomes invaluable. Being able to track how specific classes of guests (for this discussion those who take advantage of free dining) spend money makes it much easier to determine if free dining works or just swells numbers without really making any money. Since we don't have access to that information is becomes very hard to determine if free dining works or not.

Your right Disney dose do it to get people to spend money else where but people see it as a coast saving promotion. And my be spend a little more but not what Disney want if you look after each quarter they offer it the profit numbers don't jump that much. If they offered a good room discount and maybe a shopping discount if to book a Disney resort then I think they get more that way. Because it get people spending even if it discounted they still make the money.

 

[jcb]

I've been meaning to drop by before now but I've been stuck in meetings the last couple of days.

Disney decides on discounts based upon their projections. They monitor bookings very closely. Shockingly, most people book a Disney vacation about 14 weeks out, Disney has said, so when Disney sees bookings lagging, they roll out a discount such as "free" dining (nothing is "free" of course).

I have to think that "free" dining costs Disney a lot less than room discounts. While Disney doesn't bump up the rack rate on room prices during free dining, at this point, they probably set the rack rate anticipating that free dining will be offered in the fall. Cutting 30% to 40% from a room rate must cut much further into profits than the cost of the food.

I'm not a big fan of "free" dining but that is a whole different story: http://www.disunplugged.com/2012/08/29/bungling-a-trip-to-walt-disney-world/

 

[wiigirl]

I think too many people would be upset if the free dining went away. It may not be necessary but I do think an uproar would happen if they didn't do it

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[LilyWDW]

I did notice that the free dining offer was a lot more restricted this year then the past. More resorts were excluded totally and the others seemed to have less rooms available. Many resorts sold out within hours. These restrictions could point to disney slowing down on the discounts.

 

[luvdisney87]

In our situation, a trip to Disney is a big thing and something we can only afford to do with a discount and every 3 years (I envy everyone who gets to go more often). We have taken advantage of the free dining the last two trips which has allowed us to spend more on souvenirs, go to MNSSHP and MVMCP, and do the waterparks, all of which we couldn't afford without the discounts/free dining. I also wonder if there isn't a "slow" season anymore because it seems that all the offers for this fall seem to be snatched up already!

 

[disney david]

I've been meaning to drop by before now but I've been stuck in meetings the last couple of days.

Disney decides on discounts based upon their projections. They monitor bookings very closely. Shockingly, most people book a Disney vacation about 14 weeks out, Disney has said, so when Disney sees bookings lagging, they roll out a discount such as "free" dining (nothing is "free" of course).

I have to think that "free" dining costs Disney a lot less than room discounts. While Disney doesn't bump up the rack rate on room prices during free dining, at this point, they probably set the rack rate anticipating that free dining will be offered in the fall. Cutting 30% to 40% from a room rate must cut much further into profits than the cost of the food.

I'm not a big fan of "free" dining but that is a whole different story: http://www.disunplugged.com/2012/08/29/bungling-a-trip-to-walt-disney-world/

What a honor to get the great mr burgin to stop by and give us one of his great blogs.

Mr burgin you now I have the up most respect for you and I be waiting to respond. So I do it right and don't upset you. Plus let's face it your a better writer and I could never go toe to toe with you without the help of the us Supreme Court that how great a lawyer you are.


I agree with everything you say but I think the doing coast more then room discount. From my experience in the hospitality field. Also when Disney dose the free dining they cut back and save money at restaurant so every one get cheaper food but still the same price to make up for he free guest. Where if you book a discounted room you get the same room as everyone else they don't take out let say the tv to save money. Food and labor coast Disney more then cleaning your room. But haven't has the chance to look at their books maybe you could get Disney to hand them over.


Again mr burgin thanks for posting and this is just my opinion keep up the great blogs and great work you so with the bears.

 

[jcb]

What a honor to get the great mr burgin to stop by and give us one of his great blogs.

Mr burgin you now I have the up most respect for you and I be waiting to respond. So I do it right and don't upset you. Plus let's face it your a better writer and I could never go toe to toe with you without the help of the us Supreme Court that how great a lawyer you are.


I agree with everything you say but I think the doing coast more then room discount. From my experience in the hospitality field. Also when Disney dose the free dining they cut back and save money at restaurant so every one get cheaper food but still the same price to make up for he free guest. Where if you book a discounted room you get the same room as everyone else they don't take out let say the tv to save money. Food and labor coast Disney more then cleaning your room. But haven't has the chance to look at their books maybe you could get Disney to hand them over.


Again mr burgin thanks for posting and this is just my opinion keep up the great blogs and great work you so with the bears.

Dave, aside from making be blush, you do make a very good point that Disney has to pay out of pocket for the cost of food (that it gives away for "free") but that if someone books a room at a discount, Disney doesn't really save on the room (and upkeep) costs.

My point was more about revenue and profit. Even with the cost of food (which Disney "gives" away with "free" dining), Disney likely generates more "revenue" by offering "free" dining than it does with room discounts. I wouldn't begin to know of course. Still, with deluxe room rates hovering around $400 a night, cutting the price of a room by 30 to 40 percent (per night) automatically decreases revenue for that room by $120 to $160 a night. I have to believe that Disney's bean counters have concluded that the cost of dining (even with having out of pocket expenses for food and labor) does not "cost" that much.

Not surprisingly, Disney offers the least amount of a discount it can. In the FY 2009 Conference Call, Iger explained:

The parks spent a fair amount of time watching the marketplace very carefully and waiting before they essentially implemented or extended a discount. And they also spent a fair amount of time figuring out exactly what the discount should be. And they ultimately concluded that the marketplace warranted maintaining the promotional offer because obviously the marketplace wasn't responding as much as it would have liked when we didn't have a discount in place. The point Tom [Staggs] made about bookings trends, booking trends have actually picked up significantly since we announced the discount. And they had been somewhat sluggish before we did. This has been the case in the past as well. We look at this very carefully. I would like to emphasize that in the past, when we've had discounts, we have not had a problem weaning consumers off the discount. As economic conditions improved in the past, we've managed to maintain volume while reducing or removing the discount.

I also want to point out that the discount that we have in the marketplace today is slightly less of a discount than the discount we had in the marketplace the last few quarters by a little bit; both on the room and ticket side, but also on the dining side, where it's been changed somewhat. By the way, the marketplace has reacted very well to it. There's also a strategic value to discounting and maintaining volume as we see it in that the park experience that we provide is unique and special guest experience and research we do suggests that people who come love it. That improves return visitation as well as extends word of mouth and that's a very valuable part of our marketing process. And so when the marketplace basically warrants discounting, we believe that it's a good thing for us to do, even though it results in slightly less revenue, maintaining volume is very important.

The discussion about park "maintaining volume" and "return visitation" is also tends supports the folks that have said that guests spend more in the parks when there is a discount such as "free" dining.

In one of the FY2011 calls, Iger made the point that even with the entrenched discounts (i.e., "free dining") Disney still looks very closely at future booking rates:

On the parks trend side, Ben, you know, we work really hard to wean the consumer of the discount. And it worked in the second quarter, where we had slightly improved, if you factor out Easter attendance and occupancy rates, and better pricing, which was really important.

The goal remains the same for the third quarter, where as Jay [Rasulo] mentioned we're running very slightly behind last year this time, bookings-wise, about 2.5%, but our pricing is up in the mid-single digits. And we feel that's basically in line with where we would like to be -- sorry, pricing is up in the double digits right now for the hotels that are reserved on the books.
And so with that in mind, we think that the consumer is willing to pay higher prices for good product, that's a good thing. They're still booking late, though. And I think that's interesting, because I think there's still an expectation in the marketplace that there's going to be some discounting. And that's probably why we're seeing the trends that we're seeing.

I also didn't mean to imply that discounting decisions are driven by any one factor. Nor is discounting an exact science. Jay Rasulo made this point in a May 2012 conference:

[Question: Okay. Let me ask you this on a subject that's near and dear to your heart, pricing strategies, the theme park. So how does pricing look versus where you guys started discounting a couple of years ago? And is that a way to -- I guess it would be -- to maximize returns? Talk about pricing.

Rasulo: It's a bit of -- I wish there was a simplistic answer to that question, but let me give you some perspective on it. Why it's not simplistic, particularly related to Walt Disney World, because when we started to promote into the downturn and thought that we would try to preserve volume by discounting and promoting around our product, we threw the kitchen sink into the potential outcome. There was the dining programs. There was discounts on rooms. There was differential discounts on different ticket types. It was a very rich possible outcome that we could offer to consumers.
So we wound up with the seven -- buy four days, stay for seven days. And that was, by the way, not that much of a ticket discount, to be frank because when you get past four days on the multiday ticket, there's very little incremental revenue, but it was a big hotel discount -- hotel rate discount of whatever, 27%, whatever it was. But then as we started to come out of it, we started throwing out ok, well, you get free dine. You won't get seven days for the price of four, but we'll give you free dine for a week's vacation. So there is a lot of ins and outs that are not that easy to sort through in terms of, well, where do you allocate the cost for that. Is that a food discount?
So I would -- so in answer to your question, we're certainly on the trajectory to get back to our let's say pre-downturn trajectory on pricing. I think as we open DCA in the next two weeks, we've announced our price increases there, you saw that on some ticket types, like annual passes, they were quite substantial, 30%, if you looked at the one-day it was less substantial but still pretty strong. I think you'll see a similar thing in Florida as we open the new product, and we'd like to price behind value enhancement. So I think we're well on our way to making our way back, and that's certainly our plan at this point.

 

[disney david]

Dave, aside from making be blush, you do make a very good point that Disney has to pay out of pocket for the cost of food (that it gives away for "free") but that if someone books a room at a discount, Disney doesn't really save on the room (and upkeep) costs.

My point was more about revenue and profit. Even with the cost of food (which Disney "gives" away with "free" dining), Disney likely generates more "revenue" by offering "free" dining than it does with room discounts. I wouldn't begin to know of course. Still, with deluxe room rates hovering around $400 a night, cutting the price of a room by 30 to 40 percent (per night) automatically decreases revenue for that room by $120 to $160 a night. I have to believe that Disney's bean counters have concluded that the cost of dining (even with having out of pocket expenses for food and labor) is does not "cost" that much.

Not surprisingly, Disney offers the least amount of a discount it can. In the FY 2009 Conference Call, Iger explained:

The discussion about park "maintaining volume" and "return visitation" is also tends supports the folks that have said that guests spend more in the parks when there is a discount such as "free" dining.

In one of the FY2011 calls, Iger made the point that even with the entrenched discounts (i.e., "free dining") Disney still looks very closely at future booking rates:

I also didn't mean to imply that discounting decisions are driven by any one factor. Nor is discounting an exact science. Jay Rasulo made this point in a May 2012 conference:

Yes I was counting food and labor into why i think dining coast more my hotel for the month of July spent over 46 thousand just on the food not sure yet how much revenue they made and I know Disney different they order in bulk and all the restaurants order from their main warehouses. Now we are a conference center and guest who just want to stay can get good deals like 99 a night now we don't really make that much money off the room but it better then having empty rooms. Plus Disney dose offer room discounts more if you look at ap discounts and every so often the offer room only discounts. So with food it can get very expensive even if you order in bulk like Disney dose my place use us foods which give them a discount based on how much they order and as long as they only have one drop off per week to save them the fuel and wear and tear on the trucks. So not sure if Disney has to or since their such a large company even with my hotel having a contract to have all the hotels use us food for most of the food ordering they still have to order once a week to keep their discount level and not have to spend more on the food.


I wonder which discount free dining or room discount get more people to spend more money because if Disney can get you to spend more on a room discount then it my be worth it more then free dining. But know with magic band s they could track that more they could see more info when it free dining or just room discounts and see which gets more of a spending increase.

With free dining I guess you have to really dine at expensive places and use it right to get the most out of it and the average guest might not do that so Disney my still make out after all where a room discount is the full discount and Disney won't make out on that. So I a torn on that part I still think dining coast more but if each guest is not using it to the fullest they should it could be less. But Disney has to clean the room no matter what so it be better to have guest in the room it save Disney money in the long run because empty rooms makes them no profits and when they need them they have to go in a clean it again before the guest get in the room. Well their supposed to not sure if they do.



I also know it hard to compare my hotel to any Disney resort because we are smaller and also a conference center so I just base it on what I know.

 

[Cherinva]

Without free dining, we wouldn't be able to go as often as we do (if you consider going every 2 years often...)

 

[Q-man]

I'm on record as it being mighty hard to put the magic smoke back in the bottle once you let it out in term of 'free dining' as well as maintaining Disney's main competition are beach all inclusive properties and cruises where the meals are included in the up front price.

As a former Hilton rooms and F&B guy. My actual hard cost on utilities, amenities, and refreshing the room was $25 a night in the late '90s. Margins on food are slim(captured markets- theme parks, sporting events, etc. is better) and alcohol sales is where the money is made. Alcohol isn't included in free dining. Selling out moderates at an approx $200 or more a night profit seems pretty good vs a 35% room discount minus hard cost. If moderate rack is $250 a nt and you discount it 35% that is $162.50 now subtract at least $25 a night hard cost and you're around $135 or less in profit.

Then the question is does a TS meal, a CS meal, and a snack for 3-4 people have a hard cost more than the $75 a day or more profit that a rack rate room produces over a discounted room. Plus a whole other slew of questions that go into that analysis- How much do the guests spend on that 3rd meal that isn't included and what are the profit margins? How much alcohol do people with 'free dining' purchase vs those without? Do room discount guests eat more CS reducing the profit margins and the opportunities to sell each adult 2-3 adult beverages that a TS meal allows? Do 'free dining' guests spend more shopping than the discount group? Then you get into the whole marketing power of the word 'free' vs discount when you've got ~22K on property rooms to fill. Unlike a physical good that lost night of occupancy can never be sold later it is gone for good.

I think disney david answered a lot of this in his post that Disney does increase profits when offering 'free dining'.

 

[disney david]

I'm on record as it being mighty hard to put the magic smoke back in the bottle once you let it out in term of 'free dining' as well as maintaining Disney's main completion are beach all inclusive properties and cruises where the meals are included in the up front price.

As a former Hilton rooms and F&B guy. My actual hard cost on utilities, amenities, and refreshing the room was $25 a night in the late '90s. Margins on food are slim(captured markets- theme parks, sporting events, etc. is better) and alcohol sales is where the money is made. Alcohol isn't included in free dining. Selling out moderates at an approx $200 or more a night profit seems pretty good vs a 35% room discount minus hard cost. If moderate rack is $250 a nt and you discount it 35% that is $162.50 now subtract at least $25 a night hard cost and you're around $135 or less in profit.

Then the question is does a TS meal, a CS meal, and a snack for 3-4 people have a hard cost more than the $75 a day or more profit that a rack rate room produces over a discounted room. Plus a whole other slew of questions that go into that analysis- How much do the guests spend on that 3rd meal that isn't included and what are the profit margins? How much alcohol do people with 'free dining' purchase vs those without? Do room discount guests eat more CS reducing the profit margins and the opportunities to sell each adult 2-3 adult beverages that a TS meal allows? Do 'free dining' guests spend more shopping than the discount group? Then you get into the whole marketing power of the word 'free' vs discount when you've got ~20K on property rooms to fill.

I think disney david answered a lot of this in his post that Disney does increase profits when offering 'free dining'.

Thanks for the better break down of it I know they extend it is year but will be interested if they do it next year if profit keeps growing and they see more people coming on slow periods. I also like to see wheatear people who use free dining spend more else where on property where Disney wants or do they take the savings and use it else where. I understand the benefit of free dining and happy it makes it possible for people to go but think soon Disney will have to end it if profits keeps going up and they don't see a need for it.

They offer ap discounts and room only discount through out the year so Disney see that a better option to use through out the year then doing more free dining periods. As I said room only discounts only really coast Disney when they do free dining they go in and change the menu to make it more coast effective so every guest who not on free dining has to deal with the coat Disney trying to save on.