Park discounts to be reduced in 2010

[babbalooey]

Just read that Bob Iger expects that Disney park discounts will start to be reduced in the 2nd half of 2010, but doesn't know when they will be able to eliminate them altogether. He was speaking to financial analysts at the UBC Media and Telecommunications Conference in New York.

Maybe we'll all have some further justification for taking the DVC plunge (if we need the justification!)

 

[MinnieGirl33]

I really hope so.

When you think about it, if the bottom line profits are the same with & without the promos, why not create a more positive guest experience?

In theory, fewer guests should mean:

• better mousekeeping - not under such pressure to turn the rooms over
• better resort experience - ability to meet room requests more often
• better dining experiences - no need for tables crammed together, more ADR flexibility & dare I say, possible return of walk-up availability?
• better park experience - things like needing to be there for rope drop in order to avoid 120+min waits may only be seen over peak holiday times (granted, we haven't seen rope drop in about 10 years but it would be nice to walk the parks without feeling like a head of cattle in a herd once in a while)

Plus I think it would increase the perceived value of DVC... AND if you consider the recent article about the 7,200 villa expansion plans they would need to increase the perceived value.

JM2C

 

[purpliequeen]

I really hope so.

When you think about it, if the bottom line profits are the same with & without the promos, why not create a more positive guest experience?

In theory, fewer guests should mean:

• better mousekeeping - not under such pressure to turn the rooms over
• better resort experience - ability to meet room requests more often
• better dining experiences - no need for tables crammed together, more ADR flexibility & dare I say, possible return of walk-up availability?
• better park experience - things like needing to be there for rope drop in order to avoid 120+min waits may only be seen over peak holiday times (granted, we haven't seen rope drop in about 10 years but it would be nice to walk the parks without feeling like a head of cattle in a herd once in a while)

Plus I think it would increase the perceived value of DVC... AND if you consider the recent article about the 7,200 villa expansion plans they would need to increase the perceived value.

JM2C

Right on! Micro and macroeconomics freshman year. Glad I didn't sleep through everything...

 

[locodemickey]

Just read that Bob Iger expects that Disney park discounts will start to be reduced in the 2nd half of 2010, but doesn't know when they will be able to eliminate them altogether. He was speaking to financial analysts at the UBC Media and Telecommunications Conference in New York.

Maybe we'll all have some further justification for taking the DVC plunge (if we need the justification!)

I'm confused do you mean that they will be eliminating the $100 AP discount?

 

[Anal Annie]

I'm confused do you mean that they will be eliminating the $100 AP discount?

I think they're referring to some of these buy 4 get 7 deals and so much of the "free" dining discounts. I hope. Those incentives were designed to fill empty rooms & they put a drain on the restaurants & the ability to get ADR's and they cause excessive crowds at the parks.

 

[drusba]

Disney always has some kind of "discounts" whether it be AP, some of its packages, free park entry on birthday, others. Disney won't change that practice simply because it is just one of the tools it uses to successfully entice customers. Iger was obviously talking about the unusual discounts, including probably free dining, put into place as a result of the recession. In the meeting referred to he is not really talking about discounts but letting the analysts know that Disney believes things are going to pick up and start returning to normal during last half of next year and year after.

 

[Brian Noble]

In theory, fewer guests should mean:

There are some marginal costs, but theme parks (and to a slightly lesser extent, hotels) are dominated by fixed costs, not variable ones. The incremental cost of each new guest is relatively low.

The only way to really generate savings from reduced hotel stays is to close some properties---which they did after 9/11, closing parts of Port Orleans. Even then, debt service, exterior maintenance, etc. continues.

 

[BWV Dreamin]

Disney always has some kind of "discounts" whether it be AP, some of its packages, free park entry on birthday, others. Disney won't change that practice simply because it is just one of the tools it uses to successfully entice customers. Iger was obviously talking about the unusual discounts, including probably free dining, put into place as a result of the recession. In the meeting referred to he is not really talking about discounts but letting the analysts know that Disney believes things are going to pick up and start returning to normal during last half of next year and year after.

Exactly, his comment was targeted at potential stock holders.."Buy on the rumor..."

 

[gmboy95]

Disney needs to establish some real discounts for it DVC membership....beyond the $100 discount on annual passes!!!....They took away the valet parking, which was a great perk!!

I think there needs to be some serious discounts added for membership.

 

[MinnieGirl33]

There are some marginal costs, but theme parks (and to a slightly lesser extent, hotels) are dominated by fixed costs, not variable ones. The incremental cost of each new guest is relatively low.

The only way to really generate savings from reduced hotel stays is to close some properties---which they did after 9/11, closing parts of Port Orleans. Even then, debt service, exterior maintenance, etc. continues.

Given that the (many) costs are fixed, they can more acurately project where rack rate room occupancy percentages need to be in order to reach certain financial thresholds. Occupancy percentages will, in turn, dictate labor costs (which are the major variable, IMO).

I didn't take the quote as Iger implying they were looking to save money, I took it as a statement that the promos haven't impacted the bottom line, i.e. more guests have not resulted in more revenue, and that they may be looking to work smarter not harder.

Whatever the current mindset is, I think it will be interesting to see what, if any, changes actually come to pass. If they do in fact scale back on the general public offers I don't see how it could be bad for DVCers.

 

[dizfanz]

This is quite honestly one of the most intellectual threads I have read on these boards. I am not looking forward to it turning into the inevitable DDP bashing thread here soon. Or perhaps someone will state that Iger got his information from a bus driver.

 

[Brian Noble]

I took it as a statement that the promos haven't impacted the bottom line, i.e. more guests have not resulted in more revenue, and that they may be looking to work smarter not harder.

I wouldn't read too much into it. It was a presentation (indirectly) to institutional investors, so there's a certain amount of pandering to be expected. (Investors hate discounting, even if it is the smart thing to do financially.)

 

[Mickey'sApprentice]

The 4/3 deals irritated me as an AP holder. Disney waited until December to release AP rates for January. Although the 45% discount was fantastic, it was only on par with the discounts available to regular park guests.

As for the economics...building the resorts significantly added to Disney's fixed costs. The large amount of capital invested increased Disney's leverage. Increased leverage results in bigger "Swings" of revenue, i.e., either incredible profits or incredible losses.

Disney will offer discounts that will allow them to cover all variable costs. If they cannot cover variable costs...then they will shutdown. This is what happened with Port Orleans after 9/11. As great as the moderate resorts are, Disney makes more money on the value and deluxe resorts.

 

[dburg30]

Disney needs to establish some real discounts for it DVC membership....beyond the $100 discount on annual passes!!!....They took away the valet parking, which was a great perk!!

I think there needs to be some serious discounts added for membership.

Simply stated, why? Why would they discount a lot to you? I ask this on threads that AP holders and DVC members think they should have more discounts?

 

[drusba]

Simply stated, why? Why would they discount a lot to you? I ask this on threads that AP holders and DVC members think they should have more discounts?

Depending on what it is because it makes good sense from Disney's standpoint. Some argue they don't need to give discounts to DVC owners because they already have them captive. Too often large corporations think like that. Others would think: suppose I want to sell more of X product while guests are on site, then give DVC members a discount because they will likely spend more on X if I do so and I don't need to spend hardly anything on advertising costs to accomplish it -- just stick the information on the website (and in the Disney Files for which we pay the cost of preparing, printing and sending) and the discount more than pays for itself because of higher sales and savings in advertising costs.

 

[tjkraz]

Depending on what it is because it makes good sense from Disney's standpoint. Some argue they don't need to give discounts to DVC owners because they already have them captive. Too often large corporations think like that. Others would think: suppose I want to sell more of X product while guests are on site, then give DVC members a discount because they will likely spend more on X if I do so and I don't need to spend hardly anything on advertising costs to accomplish it -- just stick the information on the website (and in the Disney Files for which we pay the cost of preparing, printing and sending) and the discount pays for itself because of higher sales and savings in advertising costs.

As you say it depends what we're talking about, though. For instance, if DVC were to give members a 10% discount on purchases at Artist's Palette, revenues would have to increase in the neighborhood of 20-25% just to break even--more to see an increase in profit. The reason being that you're discounting the meals of every individual who had already planned to dine there. Plus you need to cover the added expense of salaries, utilities and raw materials necessary to service the additional customers--all at a lower profit level.

Now if Disney has a surplus of widgets they want to move out of the warehouse, DVC members are a good group to which they an market. Last week's sale event at World of Disney is a prime example.

But ongoing promotions involve accepting lower profitability on every sale with the assumption that the increase in sales will lead to a higher net. I doubt the math works in Disney's favor nearly as much as members would like to think.

 

[drusba]

Therein lies the problem, we are making assumptions when data is not available. We just don't know the total impact if discounts were provided even one such as your Artiste Point example. The problem is I don't think Disney really knows either because there is a mindset that discounts to DVC members are bad and should be offerred only when necessary.

We can only go by personal experience. I remember we used to have a 10% discount for anything at Disney Stores (other than on site) or the on-line store. All I can say is that we used to buy a lot more Disney merchandise on-line and at Disney Stores when we had that discount than we have since they ceased that discount, and I mean a lot more and that is just one family. If they had real restaurant discounts on site I would probably use them more. They allow AP holders to buy the Tables of Wonderland card that gives 20% discounts at almost all restaurants; they must be making a profit as a result; why not just offer the same ability to buy the card to DVC members? Who knows whether they have even thought about it or determined whether it would be good or bad for them. What the uppers demonstrate instead is narrow-think, when they do give discounts it too often for something most won't use and they don't seem to even consider ones most will use.

 

[Anal Annie]

Therein lies the problem, we are making assumptions when data is not available. We just don't know the total impact if discounts were provided even one such as your Artiste Point example. The problem is I don't think Disney really knows either because there is a mindset that discounts to DVC members are bad and should be offerred only when necessary.

We can only go by personal experience. I remember we used to have a 10% discount for anything at Disney Stores (other than on site) or the on-line store. All I can say is that we used to buy a lot more Disney merchandise on-line and at Disney Stores when we had that discount than we have since they ceased that discount, and I mean a lot more and that is just one family. If they had real restaurant discounts on site I would probably use them more. They allow AP holders to buy the Tables of Wonderland card that gives 20% discounts at almost all restaurants; they must be making a profit as a result; why not just offer the same ability to buy the card to DVC members? Who knows whether they have even thought about it or determined whether it would be good or bad for them. What the uppers demonstrate instead is narrow-think, when they do give discounts it too often for something most won't use and they don't seem to even consider ones most will use.

We are very discount driven.

We buy AP's because of the discount and therefore plan 2-3 trips per year with them. If the discount were to go away on the AP's I can tell you that we would not have the same incentive to go to FL THAT many times per year. I wish actually that they offered a pass to DVC owners (now that they have VGC) that would be good on both coasts.

When we're at WDW we always make a trip over to DTD to do our shopping so we can get that 10% off at the Marketplace.

Regarding the dining discounts...we had the TIW card a couple years ago when it was still the Disney Dining Experience card and was only $60 for AP holders. Once they raised the price it became not such a good deal for US as we found several restaurants we wanted to try that did NOT take the card (T-Rex & Rainforest Cafe, Wolfgang Puck etc.) Since it's a percentage discount, as a smaller family of only 3, it is harder for us to recover that investment cost - esp. once the price went up. It takes a lot of TS meals at PARTICIPATING restaurants. So instead, we try to plan for meals at places that offer the 10% DVC or AP discount - but that's only on the entrees. We would definitely plan for more TS meals if there were more discounts available.

Anyway, I happen to be in the camp of thinkers that Disney could (should) keep as many discounts available for DVC members as they can as we ARE repeat guests. But this thread is not about that...

 

[Pluto 2]

Disney needs to establish some real discounts for it DVC membership....beyond the $100 discount on annual passes!!!....They took away the valet parking, which was a great perk!!

I think there needs to be some serious discounts added for membership.

the valet parking wasnt free you paid for it in your dues.

 

[Chuck S]

the valet parking wasnt free you paid for it in your dues.

DVC has repeatedly stated that the perk was not paid for by dues, but by a 3rd party. But that if the perk continued, the cost would be shifted away from that 3rd party and into dues.

And please limit all valet discussion to the No more free valet thread.