Park discounts to be reduced in 2010

[tjkraz]

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.

For the most part I disagree. The list of restaurant and shopping discounts--while small--is not a static, unchanging list. Locations are rotated on and off of that list with regularity. Disney certainly does have the ability to track any upswings in foot traffic when a discount is introduced and they know how profitability is impacted by the lower margins on discounted purchases.

Tables in Wonderland used to be available only to FL residents. About 4 years ago they expanded it to Passholders. I agree that they COULD offer it to DVC members, but at the same time I suspect they view it as one of the incentives to get people to buy APs in the first place (AND make multiple trips in a year, AND add more DVC points, etc.)

As stated many people are motivated by discounts. But again offering a discount doesn't mean Disney stands to make any more money. Let's say a family has a dining budget of $500 per trip. If DVC members received a 15% discount at all (or most) restaurants, would that family be inclined to INCREASE their budget, or would they simply dine more luxuriously on the same $500? I suspect it's the latter more times than not, in which case Disney has to spend more on raw materials and labor just to earn the same $500.

I agree that Disney could get more experimental with discounts to gauge guest reactions--things like offering the TiW to DVC members or increasing the number of locations which offer dining or shopping discounts. But the main reason they will never do that is the backlash they will suffer in the event that such discounts are found to be unsuccessful. For instance, if DVC members were to gain access to buy the TiW and it was determined that AP sales suffered, that perk would be removed. Then Disney would face the loud chorus of "there's another DVC perk they took away from us!!!"

 

[emlutz23]

If this news does prove to be true, it just makes me happy that I've already pre-paid for my Disney lodging! I don't ever need to worry about whether or not Disney offers discounts next year or 40 + years from now!

 

[MinnieGirl33]

I don't think they are losing money by offering the general public mega discounts (free DDP, 4/3 deal,etc.) but I also don't think they are making more money by the increased traffic that is a result of those discounts. And isn't that, after all, the real goal of the promos?

I really think that was the point (or at least inference) made by Iger's statement.

I don't ever put much stock in statements that come out until they are actually carved in stone but it does give me some sense that what I've been saying for years isn't all that much off the mark.

I just really wish Disney (the company as a whole) would return to a "quality over qantity" mentality. THAT's what would increase the value of DVC (IMO).

 

[Chuck S]

I don't think they are losing money by offering the general public mega discounts (free DDP, 4/3 deal,etc.) but I also don't think they are making more money by the increased traffic that is a result of those discounts. And isn't that, after all, the real goal of the promos?

I agree, they likely weren't making a lot (if any) more money, but by filling the rooms, they probably were able to not lose as much money, because resorts have some fixed costs, whether they are occupied or not.

Hopefully, Iger's statement reflects that they will be able to discount less and still be able to fill the cash rooms.

But that certainly depends on the overall economy continiuing to improve, even if ever so slowly.

 

[tjkraz]

I don't think they are losing money by offering the general public mega discounts (free DDP, 4/3 deal,etc.) but I also don't think they are making more money by the increased traffic that is a result of those discounts. And isn't that, after all, the real goal of the promos?

In 2009 it wasn't so much about making more money as it was about maintaining as much as possible. The '09 fiscal year results were recently released and (if memory serves) resort spending went down only about 8%. Resort spending is a measure of the average dollars spent per guest, per day at one of the Disney resorts. It includes resort dining, souvenir purchases and room rates. Given the manner that Disney discounted over the last 12 months, a decline of only 8% is pretty respectable.

I just really wish Disney (the company as a whole) would return to a "quality over qantity" mentality. THAT's what would increase the value of DVC (IMO).

The problem is that Disney shareholders aren't going to accept a lower level of profitability from the Disney parks on the premise that the guest experience will be improved. Therefore, if you want to see 20% fewer guests in the parks, Disney would have to raise prices by close to 20%. I don't think many would be very accepting of that move.

 

[crisi]

The problem is that Disney shareholders aren't going to accept a lower level of profitability from the Disney parks on the premise that the guest experience will be improved. Therefore, if you want to see 20% fewer guests in the parks, Disney would have to raise prices by close to 20%. I don't think many would be very accepting of that move.

I'm a sentimental Disney shareholder, its in my portfolio for sentimental reasons. It hasn't been a great stock to own (though it was in the 80s when I bought it and got a ton of appreciation out of it) and I'd dump it if it weren't such a small portion of my portfolio and didn't have emotional meaning for me.

From a stockholder perspective, Disney needs to maximize growth and profit. Frankly, they've been doing a poor job of doing both for the past fifteen years. Discounts do not maximize profit, since they eat directly into margin.

 

[Chuck S]

The problem is that Disney shareholders aren't going to accept a lower level of profitability from the Disney parks on the premise that the guest experience will be improved. Therefore, if you want to see 20% fewer guests in the parks, Disney would have to raise prices by close to 20%. I don't think many would be very accepting of that move.

From a stockholder perspective, Disney needs to maximize growth and profit. Frankly, they've been doing a poor job of doing both for the past fifteen years. Discounts do not maximize profit, since they eat directly into margin.

Exactly, Eisner wasn't booted out because he "lost the magic" as some would have you believe. He was booted by the investment houses for not showing enough profit on the balance sheet. If profits had been great and consistent, he would probably still be with us.

 

[DVCPAT]

We are very discount driven.

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.

You can get the 10% discount anywhere on site. I always thought it was crazy to make customers travel to DD for the discount. I rarely purchase anything without some kind of price break.

 

[Chuck S]

You can get the 10% discount anywhere on site. I always thought it was crazy to make customers travel to DD for the discount. I rarely purchase anything without some kind of price break.

We've asked at other places for DVC discounts, and were told no, only at DtD (except for the few specifically listed stores, of course, like the bath shop at DtD.)

 

[DVCPAT]

We've asked at other places for DVC discounts, and were told no, only at DtD (except for the few specifically listed stores, of course, like the bath shop at DtD.)

How recently? We bought items at MK, Epcot and the Poly and recieved the discount over Thanksgiving. I found out about the new policy because I told my daughter to put an Imagineering book back, we’ll buy it at DD and get a discount. The CM overheard me and stated all Disney stores accept AP discounts. That little perk caused me to spend an extra $150.00 dollars.

 

[DVCGeek]

The CM overheard me and stated all Disney stores accept AP discounts.

But does that also go for DVC discounts? Not all DVC Members have APs, and I think that is what the PP was referring to...

 

[DVCPAT]

But does that also go for DVC discounts? Not all DVC Members have APs, and I think that is what the PP was referring to...

You’re right….Annie had the annual pass and Chuck responded to that post. Annual pass discounts were limited to DD. I’m not sure about DVC?

 

[Chuck S]

How recently? We bought items at MK, Epcot and the Poly and recieved the discount over Thanksgiving. I found out about the new policy because I told my daughter to put an Imagineering book back, we’ll buy it at DD and get a discount. The CM overheard me and stated all Disney stores accept AP discounts. That little perk caused me to spend an extra $150.00 dollars.

Our last trip was in June, so maybe it is a temporary holiday policy, or an early implementation of a new AP perk for 2010.

Anyway, great to know.

 

[Anal Annie]

A DVC discount ANYWHERE? Really? THAT would be nice. I HATE it when I find something I want in a MK store & can't find it at the MarketPlace. Then I gotta schlep myself back to MK to get it if it's something I really want. But I always look for it at DTD first so I can get the AP discount. That would save a lot of running around.

 

[nbodyhome]

The free dining promotion didn't have anything to do with the recession, it's been going on for 4 or 5 years now. The extension of it has to do with filling rooms during times that were busier previously, but the general "free dining" has been in place the last 4 or 5 Septembers. Discounting is not new, they also did the Fairytale Package after the decline of travel in 2001 (I think the package was introduced in 2003).

I am not sure that Disney could stop discounting now - a lot of people expect the discounts. I would have no problem if all aspects of the dining plan went away, though.

 

[tjkraz]

The free dining promotion didn't have anything to do with the recession, it's been going on for 4 or 5 years now. The extension of it has to do with filling rooms during times that were busier previously, but the general "free dining" has been in place the last 4 or 5 Septembers. Discounting is not new, they also did the Fairytale Package after the decline of travel in 2001 (I think the package was introduced in 2003).

I am not sure that Disney could stop discounting now - a lot of people expect the discounts. I would have no problem if all aspects of the dining plan went away, though.

Yes and no. Yes, they have been offering the free dining every fall for several years. But in the past it's largely been relegated to a 4-5 week period. This year it was available for several months.

The "7 for 4" packages were run for 2-3 summers earlier in this decade, but prior to 2009 they were not available for several years.

Neither promotion is new but the duration over which they were offered in 2009 was much, much longer than any time in 2006-2008. During more prosperous times room codes are typically available to AP holders and even the general public. But the discounts offered with those codes were not close to the value of these recent promotions.

 

[DVCPAT]

A DVC discount ANYWHERE? Really? THAT would be nice. I HATE it when I find something I want in a MK store & can't find it at the MarketPlace. Then I gotta schlep myself back to MK to get it if it's something I really want. But I always look for it at DTD first so I can get the AP discount. That would save a lot of running around.

It’s the annual pass 10% discount throughout WDW.

 

[TSMIII]

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.

Believe none of what you hear and only half of what you see!

If 2010 lags and Disney needs to put fannies in the hotels, you can bet the discounts will be back with a vengeance.