January Occupancy WAAAY Down

[Mouseaholic!!!]

OK, we have made 9 day trips since the first week of January, and each and every trip was met with mobs in the parks, at the restaurants and at the resorts. Still waiting for things to "slow-down".

If we are lucky, they will NOT slow down!!! Disney needs all the people it can capture now.

If you look at the last quarter results....Disney is now earning only 53% of each $1.00 collected for the same quarter a year before. (because of all the discounts offered now).

We now need 189% of the traffic for Disney to earn the same $$$.

Crowds - WOO HOO ---- YEA! Crowds are a good thing!

 

[mitros]

If we are lucky, they will NOT slow down!!! Disney needs all the people it can capture now.

If you look at the last quarter results....Disney is now earning only 53% of each $1.00 collected for the same quarter a year before. (because of all the discounts offered now).

We now need 189% of the traffic for Disney to earn the same $$$.

Crowds - WOO HOO ---- YEA! Crowds are a good thing!

Your kidding me, right?

 

[Mouseaholic!!!]

Your kidding me, right?

Nope - that's the actual math.

In order for Disney to recoup their income for 2008 (an OK year...but not one of the best), they will have to entertain 189% of 2008's gate.

This is why Disney is looking at every division for layoffs. Payroll is an immediate reduction in their costs though brutal to the groups targeted.

The economy has not been kind to Disney but it will eventually turn around. Until then....they need more "heads in the beds" which is why they have offered so many BIG discounts. Each time they offer a 40% discount.....they have to increase the gate over the year before.....just to break even.

189% means there will not be a reduction in the quality of the experience because they will have the $$$ to continue!

Sadly, with the current conditions, the Disney "grownups" are doing their jobs....offering great discounts to bring us back....but also cutting everywhere possible......dumbing down the menus, laying off staff, extending maintenance periods (next time you are in the monorail riding over the MK parking lot.....look at the paint. I have a photo of my DH in a very goofy halloween costume kneeling near the "Doopy 106" row...seemed appropriate. Now when you look down, you can barely read the print the paint is so worn. Oh sure, it's just a parking lot...but where else are they cutting back on maintenance?).....ok, back on track.....cutting back on Fantasmic, shows, fireworks.

Maybe with all this work, later this year they will need only 150% gate. I guess the next quarter report will give us more insight.

 

[CanadianGuy]

Well to be blunt.. getting greater than 100% of last years gate attendance is very very very highly unlikely.. pretty much impossible in this economic climate.

And to stroll over to mitros's side of the fence for JUST a moment.. even if they DID get that kind of crowd - what would they do with them? Park attendance and crowd levels are limited by the number of open attractions and so forth.

So for example.. it's literally impossible (fire codes) for Disney to do 189% of last year's numbers for the two weeks around Easter, on July 4th, or December 25th to January 1st.. ... so that means on other days, they'd have to do greater than 200% to make up for it.

Well.. when you start looking at the calendar - there are a whole bunch of days where the parks could not accommodate 200% of last year's numbers.. so then you start looking at days where Disney needs to do 250~300% of last years same day numbers to keep up with this incredible number.

It simply won't happen... not in the current economic climate I'd bet the farm. Sorry.

I don't know where everyone else works - but my employer stopped replacing workers who quit last summer.. and we're all working WAY more to just keep the lights on with less revenue coming in the door.

My trip to Disney this year is off the table until at least January of 2010.. maybe later.

Knox

 

[Mouseaholic!!!]

Well to be blunt.. getting greater than 100% of last years gate attendance is very very very highly unlikely.. pretty much impossible in this economic climate.

And to stroll over to mitros's side of the fence for JUST a moment.. even if they DID get that kind of crowd - what would they do with them? Park attendance and crowd levels are limited by the number of open attractions and so forth.

So for example.. it's literally impossible (fire codes) for Disney to do 189% of last year's numbers for the two weeks around Easter, on July 4th, or December 25th to January 1st.. ... so that means on other days, they'd have to do greater than 200% to make up for it.

Well.. when you start looking at the calendar - there are a whole bunch of days where the parks could not accommodate 200% of last year's numbers.. so then you start looking at days where Disney needs to do 250~300% of last years same day numbers to keep up with this incredible number.

It simply won't happen... not in the current economic climate I'd bet the farm. Sorry.

I don't know where everyone else works - but my employer stopped replacing workers who quit last summer.. and we're all working WAY more to just keep the lights on with less revenue coming in the door.

My trip to Disney this year is off the table until at least January of 2010.. maybe later.

Knox

NOW you are finally seeing Disney's dilema! Because of all the discounts and the cost-savings each guest searches for now to afford one more trip to the magic place, Disney is not making the same amount of $$$ per guest as in the past.

It would be HORRIBLE to be in the park with a 189% gate!!!

But Disney MUST continue to make $$$$. They can cutback only so much before the experience by guests is compromised. The economy is putting Disney in a very difficult place.

My DH and I are actually one of the worst offenders. Our next Disney trip will be to our beloved DL.....with a gift of DVC points from a friend, we will stay at the Grand Cali, free castmember tickets, free Southwest Airlines flights with reward points, food delivery from Albertsons so our dining is only one meal out a day.... and a tighter spending budget when we ARE there....we are Disney's worst nightmare! .....but this is how we can afford to squeeze in a Disney holiday. I have already taken a 25% pay cut and our little company is facing a second shortly.


Bob Iger has already said the economy is forcing them to make very difficult decisions. It's impacting all of us in some way.....even if it's only going to Disney with all the cutbacks.

I will be the FIRST to celebrate when Disney begins to make their budget numbers again. That means eventually things will return to normal in our happy place.

 

[mitros]

Nope - that's the actual math.

In order for Disney to recoup their income for 2008 (an OK year...but not one of the best), they will have to entertain 189% of 2008's gate.

This is why Disney is looking at every division for layoffs. Payroll is an immediate reduction in their costs though brutal to the groups targeted.

The economy has not been kind to Disney but it will eventually turn around. Until then....they need more "heads in the beds" which is why they have offered so many BIG discounts. Each time they offer a 40% discount.....they have to increase the gate over the year before.....just to break even.

189% means there will not be a reduction in the quality of the experience because they will have the $$$ to continue!

Sadly, with the current conditions, the Disney "grownups" are doing their jobs....offering great discounts to bring us back....but also cutting everywhere possible......dumbing down the menus, laying off staff, extending maintenance periods (next time you are in the monorail riding over the MK parking lot.....look at the paint. I have a photo of my DH in a very goofy halloween costume kneeling near the "Doopy 106" row...seemed appropriate. Now when you look down, you can barely read the print the paint is so worn. Oh sure, it's just a parking lot...but where else are they cutting back on maintenance?).....ok, back on track.....cutting back on Fantasmic, shows, fireworks.

Maybe with all this work, later this year they will need only 150% gate. I guess the next quarter report will give us more insight.

No, I mean your kidding me saying that quote: "WOO HOO-----Yea! Crowds are a good thing". Huge crowds make it impossible to enjoy ones self.

 

[Backstage_Gal]

Sorry, I'm still saying you will see NO change in the crowds at Disney, other than up, either this year or next. We will see more and more people going. The DVC is selling SO many ownerships, that any former slow months are being filled up by new DVC members. {January, September and December} December has already proven that, and it looks like January will do the same. We plan on a few day trips, and I will assure you that we WILL see record crowds. I will post as we visit.

Yeah, that's why we are having layoffs, record crowds

 

[mitros]

Yeah, that's why we are having layoffs, record crowds

There are NO layoffs at the park/resort level at this time. Only management types.

 

[Backstage_Gal]

There are NO layoffs at the park/resort level at this time. Only management types.

Like exectutives? I beg to differ! Execs wre given a package option, for the thre rest of us, its straight layoffs.

Both DH and I are in middle management, and were flat out told there will be layoffs. We expect to hear by the end of the week. We both have worked there for over 30 years and might be out of work next week,

 

[LVSWL]

Like exectutives? I beg to differ! Execs wre given a package option, for the thre rest of us, its straight layoffs.

Both DH and I are in middle management, and were flat out told there will be layoffs. We expect to hear by the end of the week. We both have worked there for over 30 years and might be out of work next week,

BG- I hope that the news for you and your DH is good not bad. Thinking good thoughts for you.

 

[Mouseaholic!!!]

Like exectutives? I beg to differ! Execs wre given a package option, for the thre rest of us, its straight layoffs.

Both DH and I are in middle management, and were flat out told there will be layoffs. We expect to hear by the end of the week. We both have worked there for over 30 years and might be out of work next week,

Having gone through this when it was my DH's turn in New York....my sincere sympathy and best wishes for good news to both of you. DH was lucky - he got a buyout letter but was not chosen.

For those left behind, you will now discover how tough it is to maintain the quality of what was the norm last week.


Let's all remember to say THANK YOU to as many castmembers as we see. No one can promise they will be there the next time we visit....let's make them smile RIGHT NOW.

 

[Saxsoon]

The All Stars (where I work in Merchandise) are almost always at 95-100% capacity. There are many cheerleading competitions going on right now.

 

[mitros]

Like exectutives? I beg to differ! Execs wre given a package option, for the thre rest of us, its straight layoffs.

Both DH and I are in middle management, and were flat out told there will be layoffs. We expect to hear by the end of the week. We both have worked there for over 30 years and might be out of work next week,

Anything happen yet?

 

[tjkraz]

If you look at the last quarter results....Disney is now earning only 53% of each $1.00 collected for the same quarter a year before. (because of all the discounts offered now).

We now need 189% of the traffic for Disney to earn the same $$$.

Not sure where those numbers come from.

According to the data Disney released in February the Parks & Resorts division saw a 4% decline in revenue and a 24% decline in profit for the 1st quarter of FY 2009 (which ended in December.) That's compared to 1Q 2008.

The primary culprits are reduced guest spending and the discount travel packages Disney is offering.

When discussing profitability, you can't make simple calculations to guess at traffic increases necessary to match prior years. The amount of revenue which contributes to profit will certainly fluctuate at different guest levels. And, as stated here, Disney is also making adjustments to reduce overhead expenses.

There is definitely some belt-tightening happening but right now things are far from dire. Disney still earned nearly $400 million in PROFIT from its theme park operations in that quarter alone. We can certainly debate the appropriateness of some of the cost saving moves made in recent months, but it would be unfair to conclude that cuts and service reductions will be entirely driven by a desire to reach a certain profitability level no matter the cost.

 

[Peter Pirate 2]

We can certainly debate the appropriateness of some of the cost saving moves made in recent months, but it would be unfair to conclude that cuts and service reductions will be entirely driven by a desire to reach a certain profitability level no matter the cost.

Empirical evidence, much of what has been discussed here, based on what and how Disney has reacted to challenges lead me to strongly disagree with you on this matter.

Iger is purely a bottom line kind of slug. He. like Eisner before him, are more concerned with QUARTERLY numbers than anything else.

 

[redrosesix]

Got a call from my mortgage co the other day asking if I wanted to lock in at a lower rate (I had been doing 6 mo terms for the past 2 years, since those were the cheapest rates)

For the 1st time in a long time, the yield curve is no longer inverted -- longer term rates are again lower than short term rates. That's a good thing -- lenders don't like the inverted yield curve and loan less money under those circumstances.

I also watched an interview with a top Canadian market analyst on Tuesday, the day the Bank of Canada cut rates -- their spin on things? As soon as Canadian businesses can shake the dust out of the system, especially where our economy is tied to the US, we're set for a great rebound, likely a turn-around by the end of the year (although it's not time to jump back in the stock market yet)

Yes, we're in a recession now too, but hopefully the Canadians will be in a position to help out the US with our tourist dollars by 2010 -- keep the deals coming. Not sure about the cheerleaders and other teams, though -- 2009 still looks like a rough year for planning big trips. Our baton twirling team has to make a decision on Twirlmania (every Feb.) within the next month, and it's not looking good. Mothers will have to know they're going to have a paycheque to make the commitment.

 

[tjkraz]

Empirical evidence, much of what has been discussed here, based on what and how Disney has reacted to challenges lead me to strongly disagree with you on this matter.

Iger is purely a bottom line kind of slug. He. like Eisner before him, are more concerned with QUARTERLY numbers than anything else.

If that were true we would have seen much deeper cuts already. The $100 mill decline in profitability didn't catch anyone at Dis by surprise. They could have easily taken more drastic action to combat the loss...things like eliminating daily parades, eliminating nightly fireworks shows, reducing park hours further, canceling EMH, cutting staff across the board (housekeeping, ticket takers, front desk, bus drivers, attraction operators, maintenance, etc.), reducing meal portions, and so on.

Feel free to question decisions Dis management has made but (IMO) they simply had to find a way to adjust to a declining economy.

Management may be slaves to Wall Street but that's the sad reality of the system we live in. Investor expectations are much different today than they were 40+ years ago during Walt's lifetime. Our economy--and our 401Ks--aren't going to get any better until corporations start performing better.

 

[Peter Pirate 2]

If that were true we would have seen much deeper cuts already. The $100 mill decline in profitability didn't catch anyone at Dis by surprise. They could have easily taken more drastic action to combat the loss...things like eliminating daily parades, eliminating nightly fireworks shows, reducing park hours further, canceling EMH, cutting staff across the board (housekeeping, ticket takers, front desk, bus drivers, attraction operators, maintenance, etc.), reducing meal portions, and so on.

Feel free to question decisions Dis management has made but (IMO) they simply had to find a way to adjust to a declining economy.

Management may be slaves to Wall Street but that's the sad reality of the system we live in. Investor expectations are much different today than they were 40+ years ago during Walt's lifetime. Our economy--and our 401Ks--aren't going to get any better until corporations start performing better.

But Disney faces the double edged sword here. If they continue to behave like 'just another wall st. company' then they will forfit the goodwill, good name and reputation that their entire company was and still, to a large degree today, is built upon.

If Disney continues to follow the wall st. quarterlies and listens to the whims of wall st. for their strategic policy then in a very short time there will be nothing salvagable in the legacy that was once Disney ... meaning aside from the face of Mickey Mouse Disney will hold nothing more 'magical' in it's hallowed walls than the corporate walls at Universal/NBC, home depot or walmart.

Now it's true that fiduciary responsibility goes with running a public company but who was watching the store when wall st. suddenly decided that annual double digit growth was not only expected but could somehow go on for infinity.

A part of sound fiduciary responsibility is to ensure that the company is on solid ground going forward and only watching quarterly financials will not ensure that goal for a company like Disney which is based on something more than making money at its very core.

 

[tjkraz]

But Disney faces the double edged sword here. If they continue to behave like 'just another wall st. company' then they will forfit the goodwill, good name and reputation that their entire company was and still, to a large degree today, is built upon.

Thus the give-and-take I alluded to in my post.

If all Disney was worried about was profitability, they would have done all of the things I described. We would have even shorter park hours, fewer nighttime shows and parades, more attractions closed for questionable refurbishments, fewer staff throughout the parks, and so on.

Disney lost over $100k in profits in the first quarter compared to last year and we're nearly through the second quarter which probably isn't much better (if not worse.) Despite that the only job losses we've heard about are the 600 execs offered buyouts (only a portion of which are from Parks & Resorts) and some talk of future restructuring to streamline DL and WDW operations.

Every single day I wake up to find that there is no WalMart or Super Target going up on Buena Vista Drive is a reminder that Disney is still not "just another Wall Street company." If it were, the resorts and theme parks would have been sold off years ago...attractions would be Six Flags quality (see Universal Studios' ugly steel coasters.)

How would Walt have responded? Heck, I don't know. What I DO know is that 2009 is a lot different than the early-60s.

But knowing human nature, I have to say that continuing to pump dollars into the parks under the assumption that "if we build it, they will come" is not going to play out. As much as I'd like to see Fantasmic running 10 times per week instead of 3, I know that the extra revenue generated isn't going to cover the expenses for 7 additional shows.

Does that cost Disney some goodwill? Yeah, among some folks it will. But others are not so critical and still others realize that they, like so many other companies, are just trying to prosper in tough times. The challenge is finding the balance between lost goodwill and temporary service reductions.

Wall St. may be a joke but it's the only game in town. One of Disney's challenges is to restore investor confidence in the company and begin the recovery process.

 

[redrosesix]

Thus the give-and-take I alluded to in my post.

If all Disney was worried about was profitability, they would have done all of the things I described. We would have even shorter park hours, fewer nighttime shows and parades, more attractions closed for questionable refurbishments, fewer staff throughout the parks, and so on.

Disney lost over $100k in profits in the first quarter compared to last year and we're nearly through the second quarter which probably isn't much better (if not worse.) Despite that the only job losses we've heard about are the 600 execs offered buyouts (only a portion of which are from Parks & Resorts) and some talk of future restructuring to streamline DL and WDW operations.

Every single day I wake up to find that there is no WalMart or Super Target going up on Buena Vista Drive is a reminder that Disney is still not "just another Wall Street company." If it were, the resorts and theme parks would have been sold off years ago...attractions would be Six Flags quality (see Universal Studios' ugly steel coasters.)

How would Walt have responded? Heck, I don't know. What I DO know is that 2009 is a lot different than the early-60s.

But knowing human nature, I have to say that continuing to pump dollars into the parks under the assumption that "if we build it, they will come" is not going to play out. As much as I'd like to see Fantasmic running 10 times per week instead of 3, I know that the extra revenue generated isn't going to cover the expenses for 7 additional shows.

Does that cost Disney some goodwill? Yeah, among some folks it will. But others are not so critical and still others realize that they, like so many other companies, are just trying to prosper in tough times. The challenge is finding the balance between lost goodwill and temporary service reductions.

Wall St. may be a joke but it's the only game in town. One of Disney's challenges is to restore investor confidence in the company and begin the recovery process.

As a potential investor, I'm not seeing anything other than reactionary thinking at WDC -- as far as I'm concerned, they are providing opportunities for day trading, not a long term hold. They would really have to show that they will be more profitable long term -- I can't be concerned with how they increase quarterly profits if they're not reinvesting them properly. So goodwill, CapX, etc. are much more important to me than how they cut costs through cut-backs. A financially responsible co. should find cheaper ways to do the same or more, not just save money by doing less eg. cut production costs, reduce duplication of resources.

Not much confidence coming from this investor. I'll put my money elsewhere.