Iger:Disney Will Dial Back Discounts

[Sammie]

Iger: Disney will Dial Back on Park Discounts in Latter Part of 2010

FEATURED, JASON GARCIA, NEWS — BY JASON GARCIA ON DECEMBER 9, 2009 AT 10:52 AM

The top executive at the Walt Disney Co. said this morning that he expects his company’s theme parks will scale back discounting during the second half of 2010, though he acknowledged that “we don’t know when we will essentially be able to turn it off.”

Disney Chief Executive Officer Bob Iger noted that the promotions Disney’s parks are currently offering – including another buy-four-get-seven hotel-night offer at Walt Disney World – are slightly smaller than deals they offered earlier this year, when the global recession was at its worst.

“We’ll be able to continue to dial that back over the latter part of 2010,” Iger told financial analysts at the UBC Media and Telecommunications Conference in New York.

Since the beginning of this year, Disney has been using a series of deep discounts at its theme-park resorts – on hotel rooms, food, tickets and more – to keep attendance afloat amid an overall slump in travel and tourism.

While the company has relied on promotions to prop up attendance during previous downturns, it has not before used them for such an extended period of time.

The strategy has kept Disney World and Disneyland in Anaheim, Calif., full, which Disney executives say helps ensure continued word-of-mouth marketing and leads to return trips. But it has eroded margins: Operating profit at Walt Disney Parks and Resorts sank 25 percent during the company’s 2009 fiscal year, which concluded Oct. 3.

Some analysts have expressed concern that the strategy may lead to a permanent expectation of discounts among Disney customers, which would make it difficult to return to full prices without harming attendance. Some also worry that the promotions have simply cannibalized future attendance by luring people who were planning to take trips later.

Iger, as he has before, dismissed both concerns. He said, for example, the promotions have attracted new customers who would not otherwise have visited a Disney park.

“We’re not concerned about weaning ourselves and the marketplace of the discounts,” Iger said.

Still, Iger declined to predict when Disney might be able to stop discounting entirely. Tourism-industry experts have been watching for indications that Disney is preparing to pull back its promotions as a likely sign of improvement in the broader travel market.

Iger said it is difficult to make long-term predictions right now because travelers are not planning trips far in advance. “Visibility well into the year is very limited,” he said.

“It’s just not a market that lends itself to long-term commitments or early buying,” Iger said.

Interesting comment about long term commitments, what is DVC if not a long term committment?

 

[eliza61]

I read this a few days ago Sammie and you're right the entire thing is interesting.

I've been a slightly vocal critic of Disney this year, not just DVC. There just have been to many, what I view as cut backs in quality and service.

It may not effect us dvc'ers as much as our discounts are far and few in between but I do wonder about the general public visitor. Disney thinks they are having a difficult time returning to full prices but I have more of a difficulty even imaging pay full prices for the lousy product.

Iger I guess may be looking at the new customer but I wonder about the return customers?

If I didn't have my dvc, would I return yearly paying full price for Disney as it stands today. No way Jose.

 

[littlestar]

“It’s just not a market that lends itself to long-term commitments or early buying,” Iger said.

Interesting comment about long term commitments, what is DVC if not a long term committment?

I think people are afraid to plan too far ahead because they're worried they won't have a job. Lots of people we talk to are worried about all this health care change stuff, too. They worry that their companies will let them go to save costs if the new healthcare plan is a job killer.

I'm with you, DVC is a long term commitment. It has to be harder now to convince the average working person to buy than what it was a few years ago because of the uncertain world we live in. If you're pretty well off financially, maybe not. But for your average family, I think every major purchase is probably reasoned out a little more thoroughly than it used to be.