Possible Disney profit trend woes?

[eeyorepixie]

Possible Resort profit dip
http://www.orlandosentinel.com/the-...gical-express-traffic-20120723,0,257571.story

Fantasy not doing as well as the Dream

http://www.orlandosentinel.com/the-...-fantasy-performance-20120718,0,5525808.story

Found it interesting that combining the numbers makes it harder to get real data on how the resorts are doing. I know I am staying off site for the first time due to limited deals in my time frame and have spoke to others who are doing the same for the same reason.

 

[lockedoutlogic]

The combined numbers provide companies the ability to selectively filter what they want in order to justify - well...pretty much whatever they want.

Plausible deniablity when necessary, trumpet tooting at other times.


This trend will continue with Disney...as they concentrate in asia and put up smoke screens in the US as to not appear to be choosing a path of complacency...which is suspected but remains to be seen.


But the two articles are interesting...as the "6 billion" figure is going to be rammed down our (the consumers) throats for what i fear is years to come. The problem is that it is a number comprised of two resort areas that have - frankly - nothing to do with one another and cruise ships that have - frankly - nothing to do with WDW.

It's genius, really...and i think we're all being had.

But to comment specifically on the WDW numbers...that is alarming. Far so than the cruise ship details.

WDW is a profit machine that operates on sheer numbers...and if the numbers dip, the management gets extremely antsy and starts to consider how they can torch the village to dig up more bucks.

However, a decline in numbers can be a possible positive. Disney has apparently (from analysts, media, and their own statements) determined that the benefit of heavily discounted travelers is marginal - i.e. if they get everyone on discounts with free food - they aren't tracking much in the way of out of pocket spending once they're there.
And THAT is the point in the first place - not to get you to pay southwest for flight, the upfront dining plan costs (if not free) or even their inflated tickets...the point is to get mom, dad, and the kids to empty their piggybanks in the giftshops (which according to Mel Brooks is where the REAL MONEY IS MADE!).

So, the decline in numbers may not actually lead to much of a decline in profits or revenues...and if it means they can trim hours or staffing - might actually cause a bump. We'll see.

The other possibility is that repeat travelers who had been turned off a little bit by the firesale discounting period that WDW is attempting to come out of (i searched around my office for an example and found one...ironically...sitting in my chair) may be coming back and throwing more money into the pot The reality is that lesser crowds make a better experience for those who are going...always have, always will.
While our next trip may have shorter hours than what we would have had in the past, Who Cares? - I'd rather have the MK close at 9 instead of 11 and fight 25% less people on a given day.
I'd sign for that.

But disney's numbers on the decline at WDW is something to watch...as if that is combined with decreased revenues or profits, then they'll reverse the course yet again and try to bump it back up.

Gotta find the money for John Carter 2 somewhere.

The only other thought is that perhaps the decrease of discounts, combined with their rather exhorbinant price hikes this year in ticketing and food/ resort prices...may be settling in on people and driving people away. Which is something that they will try to nail down ASAP to see if damage control is needed.

In particular...the art of animation prices and "upper value" value plan with POP and AoA are particulary turnoffs....they seem to be tetering over the line there.

 

[mcd2745]

However, a decline in numbers can be a possible positive. Disney has apparently (from analysts, media, and their own statements) determined that the benefit of heavily discounted travelers is marginal - i.e. if they get everyone on discounts with free food - they aren't tracking much in the way of out of pocket spending once they're there.
And THAT is the point in the first place - not to get you to pay southwest for flight, the upfront dining plan costs (if not free) or even their inflated tickets...the point is to get mom, dad, and the kids to empty their piggybanks in the giftshops (which according to Mel Brooks is where the REAL MONEY IS MADE!).

"Spaceballs -the Flamethrower! The kids love this one"


I think it will be interesting to watch the current trends at WDW. While there are still some discounts and promotions (free dining, chief among them), the discounts clearly aren't what they were a couple of years ago. So, combined with all the economic isssues in Europe, which presumably will reduce the influx of all those European tourists of the last handful of years, I wouldn't be shocked to see some declines in attendance/occupancy. Then it will be even more interesting to see what's done in response.

 

[zulemara]

I discussed this on the podcast this week, I think we are finally seeing some effect of WWoHP on WDW. While many used to take magical express and stay on Disney property, they are now opting to rent a car. WWoHP has given people a reason to say "we're going to Orlando on vacation" not "we're going to Disneyworld on vacation."

Regarding the Fantasy, I'm not too concerned. It is more expensive than the Magic was when doing 7 nights and I think that plays into it. I think if Disney is really concerned about it, they will adjust prices accordingly to fill the cabins if that is their goal.

Also that article(or Disney) lied, they have been giving space available rates on the Dream to CMs since at least March. I'm sailing on one Aug 24th, 105 dollars/night

 

[ChipnDale79]

Is it just me or does anyone else believe that the cost of a Disney Vacation is starting to get out of hand? My wife and I just priced out a trip for ourselves and our 2 sons for a trip next year, both boys are under 3 so they are free, but for a week at POFQ with dining is just north of $3k.

Disney needs to be careful, with increase in prices and what Universal is doing, attendance may very well fall.

 

[zulemara]

Is it just me or does anyone else believe that the cost of a Disney Vacation is starting to get out of hand? My wife and I just priced out a trip for ourselves and our 2 sons for a trip next year, both boys are under 3 so they are free, but for a week at POFQ with dining is just north of $3k.

Disney needs to be careful, with increase in prices and what Universal is doing, attendance may very well fall.

yes, they are pricing themselves out of the domestic market in my opinion. I personally believe we will see the next evolution of this with the next gen initiative. I think they're going to create class warfare on property where you get more ride reservations and perks for being a GF guest over Pop Century. Just my opinion, but this is a trend that has been going on for a few years. In addition, it's not the domestic market keeping them afloat right now, it's the international market. Disney knows this, they know they have all kinds of untapped business in Asia, South America, and around the world. These people will come here with jacked up prices and cut benefits and still think they're getting a great deal. Again, just my opinion.

 

[hakepb]

Is it just me or does anyone else believe that the cost of a Disney Vacation is starting to get out of hand? My wife and I just priced out a trip for ourselves and our 2 sons for a trip next year, both boys are under 3 so they are free, but for a week at POFQ with dining is just north of $3k.

Disney needs to be careful, with increase in prices and what Universal is doing, attendance may very well fall.

It is certainly a very valid concern.

But it is not like Disney is operating in a vaccum, everything is more expensive than it used to be. A Big Mac meal used to be 2.99 now they are about 6.00. Candy bars used to be .50 in a vending machine. And comparing Multi day Disney tickets to other entertainment options is quite favorable. Our local county fair admission + a 4 hour unlimited ride armband is about $26/person/day and I spend less than that at Disney when I get 2 extended trips on an AP, and get 8+ hours of rides a day in a much nicer place.

 

[lockedoutlogic]

I discussed this on the podcast this week, I think we are finally seeing some effect of WWoHP on WDW. While many used to take magical express and stay on Disney property, they are now opting to rent a car. WWoHP has given people a reason to say "we're going to Orlando on vacation" not "we're going to Disneyworld on vacation."

This point is only valid if the attendance at IOA, UOR (and sea world perhaps too) experience steady climbs in attendance not only this year...but also consistently as long as this period of expansion for them continues.

You can't make the argument that universal and harry potter are cutting into disney if they actually don't cut into disney...and that can only be argued if they cut into the attendance lead that disney has always enjoyed and/or experience a more quantified increase in attendance when compared to disney's numbers. they got a bump form potter, no doubt...but it was after a prolonged downturn and still has yet to pose much of a threat to the mouse.

gate is the only number that doens't lie when making this argument. And universal is nowhere close to there yet.

IF...they get up to 10-12 million annual and MK is hanging around 17 as they stand now...then you have some documented fire behind the smoke.

Delcine in magical express is the first part of the argument....but only if those people then go to Hertz and punch a ticket at UOR

 

[lockedoutlogic]

Is it just me or does anyone else believe that the cost of a Disney Vacation is starting to get out of hand? My wife and I just priced out a trip for ourselves and our 2 sons for a trip next year, both boys are under 3 so they are free, but for a week at POFQ with dining is just north of $3k.

Disney needs to be careful, with increase in prices and what Universal is doing, attendance may very well fall.

acutally that doens't seem high...

$3K isn't that much in terms of travel costs today....and you figure a rack at a moderate is 150+ a night, your tickets are $1000.00 (yes...just the two adults), and dining just for the two of you would be 550 for quickserve and 800 for the standard dining plan....

so you're right there.

but you're right...its still thievery.

 

[zulemara]

This point is only valid if the attendance at IOA, UOR (and sea world perhaps too) experience steady climbs in attendance not only this year...but also consistently as long as this period of expansion for them continues.

You can't make the argument that universal and harry potter are cutting into disney if they actually don't cut into disney...and that can only be argued if they cut into the attendance lead that disney has always enjoyed and/or experience a more quantified increase in attendance when compared to disney's numbers. they got a bump form potter, no doubt...but it was after a prolonged downturn and still has yet to pose much of a threat to the mouse.

gate is the only number that doens't lie when making this argument. And universal is nowhere close to there yet.

IF...they get up to 10-12 million annual and MK is hanging around 17 as they stand now...then you have some documented fire behind the smoke.

Delcine in magical express is the first part of the argument....but only if those people then go to Hertz and punch a ticket at UOR

not saying I entirely disagree with you, but I don't think the constant attendance increases at IoA are just because of coming out of the downturn of the economy. WWoHP is drawing people and if the pace continues, IoA will pass 3/4 Disney parks in attendance very soon. To me that will be the telling statistic. IoA doesn't have to beat MK, it has to beat the other 3 Disney parks which it has significantly lagged behind since it was built. If IoA becomes the number 2 park visited in Orlando, that will be a HUGE slap to the mouse. Personally I hope they get there because Disney rests on their laurels way too much. Time for someone to truly challenge them. If Potter phase 2 opens in US, it could also give Disney's other parks a run for their money(literally!)

Just my opinion. I love watching the theme park wars play out

 

[eeyorepixie]

The combined numbers provide companies the ability to selectively filter what they want in order to justify - well...pretty much whatever they want.

Plausible deniablity when necessary, trumpet tooting at other times.


This trend will continue with Disney...as they concentrate in asia and put up smoke screens in the US as to not appear to be choosing a path of complacency...which is suspected but remains to be seen.


But the two articles are interesting...as the "6 billion" figure is going to be rammed down our (the consumers) throats for what i fear is years to come. The problem is that it is a number comprised of two resort areas that have - frankly - nothing to do with one another and cruise ships that have - frankly - nothing to do with WDW.

It's genius, really...and i think we're all being had.

But to comment specifically on the WDW numbers...that is alarming. Far so than the cruise ship details.

WDW is a profit machine that operates on sheer numbers...and if the numbers dip, the management gets extremely antsy and starts to consider how they can torch the village to dig up more bucks.

However, a decline in numbers can be a possible positive. Disney has apparently (from analysts, media, and their own statements) determined that the benefit of heavily discounted travelers is marginal - i.e. if they get everyone on discounts with free food - they aren't tracking much in the way of out of pocket spending once they're there.
And THAT is the point in the first place - not to get you to pay southwest for flight, the upfront dining plan costs (if not free) or even their inflated tickets...the point is to get mom, dad, and the kids to empty their piggybanks in the giftshops (which according to Mel Brooks is where the REAL MONEY IS MADE!).

So, the decline in numbers may not actually lead to much of a decline in profits or revenues...and if it means they can trim hours or staffing - might actually cause a bump. We'll see.

The other possibility is that repeat travelers who had been turned off a little bit by the firesale discounting period that WDW is attempting to come out of (i searched around my office for an example and found one...ironically...sitting in my chair) may be coming back and throwing more money into the pot The reality is that lesser crowds make a better experience for those who are going...always have, always will.
While our next trip may have shorter hours than what we would have had in the past, Who Cares? - I'd rather have the MK close at 9 instead of 11 and fight 25% less people on a given day.
I'd sign for that.

But disney's numbers on the decline at WDW is something to watch...as if that is combined with decreased revenues or profits, then they'll reverse the course yet again and try to bump it back up.

Gotta find the money for John Carter 2 somewhere.

The only other thought is that perhaps the decrease of discounts, combined with their rather exhorbinant price hikes this year in ticketing and food/ resort prices...may be settling in on people and driving people away. Which is something that they will try to nail down ASAP to see if damage control is needed.

In particular...the art of animation prices and "upper value" value plan with POP and AoA are particulary turnoffs....they seem to be tetering over the line there.

Here is the thing...I did buy the souvies first trip and guess what they were crap. My travel mugs were junk and broke within a week all 4 of them and at $20 a pop, why would I buy them again?

Then there is the ridiculouse pricing for my 10 year olds who are charged "adult" prices...
Then I got all excited about AOA resort until I saw the "value" prices...I will stick with POR and be crunched.

So all of the above has played a factor with me and how I choose to spend my money. There are just too many places I have yet to take my kids.

I am not going to buy low quality stuff, with obnoxious price tags. Why should I when I can get it on clearance at the Disney store. My BFF came back from Disney this week and she said "there is something so wrong with shopping in a world showcase shop and turn everything over and you see "thailand" on the bottom. She said I can buy that junk anywhere.

My friend also commented that this is her 32nd trip to Disney and she checked in to the Value resort and got the worst customer service she has ever received...all in all did this impact her whole trip...No...but she definately did not feel the magic she usually does and she said why spend 9,000. again anytime soon.

There is a shift...I never thought I would stay offsite, I adore on site, but I was just priced out with the cost of dining plan.

The economy is not back people at least not in my house, my paycheck has not grown but my gas bill, my electric bill, my car gas, and everything else has increased 10% and in some cases with food cost has increased 100% so something has to give...guess what? It is the discretionary money such as vacations...dining out this is the #1 place where I change how I spend my money.

I am staying at Bonnet Creek, 2 bath, 2 bedroom(nicer) renting a car (nicer)...eating off site(I think will be nicer and definately cheaper, buying souvies off site...and doing less days in the parks...and going to Universal why not? I have to spend the money one way or another why not do something new? Next trip it will be SeaWorld, Discovery Cove and maybe Buch Gardens.

P.S. already bought my return souvies for family and friends...did that this past February...including my yearly christmas ornament/mug...the only thing that I have not bought is a magnet for my work desk.

Now I read in this forum all the time but I do not pretend to be knowledgable about the ins and outs of Disney money...I am just an average Jo-line. KWIM? However, I really appreciate the knowledgable debates that go on here and I appreciate the thought out posts. Not saying mine is, mine is just an opinion and is my truth, not that my opinion counts for much but maybe...just maybe...the decrease in the Magical Express is because a bunch of average Joe's like me are feeling a bit put out with the cost of Disney.

 

[jade1]

not saying I entirely disagree with you, but I don't think the constant attendance increases at IoA are just because of coming out of the downturn of the economy. WWoHP is drawing people and if the pace continues, IoA will pass 3/4 Disney parks in attendance very soon. To me that will be the telling statistic. IoA doesn't have to beat MK, it has to beat the other 3 Disney parks which it has significantly lagged behind since it was built. If IoA becomes the number 2 park visited in Orlando, that will be a HUGE slap to the mouse. Personally I hope they get there because Disney rests on their laurels way too much. Time for someone to truly challenge them. If Potter phase 2 opens in US, it could also give Disney's other parks a run for their money(literally!)

Just my opinion. I love watching the theme park wars play out

Just curious, when the parks release attendance numbers-do hoppers count on the same day? Like going to IOA in the am, then US in the afternoon, then back to IOA for the eve. Or open MK-then hit DHS etc.

 

[zulemara]

Just curious, when the parks release attendance numbers-do hoppers count on the same day? Like going to IOA in the am, then US in the afternoon, then back to IOA for the eve. Or open MK-then hit DHS etc.

The numbers I refer to are unofficial from the report that comes out yearly, but it's equally unofficial so I view the comparison as valid.

 

[derekburgan]

I've really been enjoying the new rumor blogs and podcast shows. I think you have to have the Disney Blinders on pretty tight not to see some obvious red flags out there. Putting all the info together, I think Disney's biggest "problem" right now is it's corporate culture. It has too many cooks in the kitchen, so to speak. Too much of a top heavy management structure trying to justify its largesse. Whereas Universal is still relatively lean and mean, for Disney to do something it's like an iceberg having to change course. There's a good chance we're going to get the announcement soon that Transformers: The Ride will be open in Orlando by the end of next year whereas Disney Imagineers have to have meeting after meeting after meeting and get who knows how many people to sign off on a project, so nothing happens.

I agree, we may actually see some real change at Disney if Universal challenges Epcot. The very idea of this happening would seem unfathomable just a couple years ago.

 

[umichigan10]

I've really been enjoying the new rumor blogs and podcast shows. I think you have to have the Disney Blinders on pretty tight not to see some obvious red flags out there. Putting all the info together, I think Disney's biggest "problem" right now is it's corporate culture. It has too many cooks in the kitchen, so to speak. Too much of a top heavy management structure trying to justify its largesse. Whereas Universal is still relatively lean and mean, for Disney to do something it's like an iceberg having to change course. There's a good chance we're going to get the announcement soon that Transformers: The Ride will be open in Orlando by the end of next year whereas Disney Imagineers have to have meeting after meeting after meeting and get who knows how many people to sign off on a project, so nothing happens.

I agree, we may actually see some real change at Disney if Universal challenges Epcot. The very idea of this happening would seem unfathomable just a couple years ago.

If it does it deserves it. Its easily the 2 or 3 best theme park ive ever been to. (IoA that is)

 

[ChipnDale79]

acutally that doens't seem high...

$3K isn't that much in terms of travel costs today....and you figure a rack at a moderate is 150+ a night, your tickets are $1000.00 (yes...just the two adults), and dining just for the two of you would be 550 for quickserve and 800 for the standard dining plan....

so you're right there.

but you're right...its still thievery.

It's a 20% increase from when we went on our honeymoon in 2008, remember, we've been in a bad economy since 2008. So imagine how much it would have sky rocketed if the economy was good.

 

[ChipnDale79]

I've really been enjoying the new rumor blogs and podcast shows. I think you have to have the Disney Blinders on pretty tight not to see some obvious red flags out there. Putting all the info together, I think Disney's biggest "problem" right now is it's corporate culture. It has too many cooks in the kitchen, so to speak. Too much of a top heavy management structure trying to justify its largesse. Whereas Universal is still relatively lean and mean, for Disney to do something it's like an iceberg having to change course. There's a good chance we're going to get the announcement soon that Transformers: The Ride will be open in Orlando by the end of next year whereas Disney Imagineers have to have meeting after meeting after meeting and get who knows how many people to sign off on a project, so nothing happens.

I agree, we may actually see some real change at Disney if Universal challenges Epcot. The very idea of this happening would seem unfathomable just a couple years ago.

Where's the like button.....nailed it.

 

[pilferk]

Delcine in magical express is the first part of the argument....but only if those people then go to Hertz and punch a ticket at UOR

As a tangent:

We're actually using Mears from MCO to Hard Rock (day one) and then Hard Rock to AKV (day two). They're counting it as a "round trip"...and it's cheaper (there are 6 of us) than renting a vehicle large enough to transport us and our luggage. At least right now...we'll see what kind of rental deals pop up as we get closer to December.

ME for the return trip from AKV to MCO.

 

[pilferk]

My friend also commented that this is her 32nd trip to Disney and she checked in to the Value resort and got the worst customer service she has ever received...all in all did this impact her whole trip...No...but she definately did not feel the magic she usually does and she said why spend 9,000. again anytime soon.

Largely, I think that's because of where Disney has positioned itself in the labor market. While they may be the largest employer in Orlando (maybe in Florida?), their wage scale stinks. Even in the depressed economy....people aren't lining up to take those jobs. And those that are taking them...they're leaving relatively quickly for higher paying jobs. Low wages and high turnover don't, generally, lead to great customer service.

It generally leaves you with a) a lesser skilled labor pool and b) less motivated employees.

Disney's trying to keep labor costs down...and part of that is sacrificing some quality to cost.

That's not to say there aren't some GREAT CM's out there, who love their job. There are. And those that aren't so great generally weed themselves out, over time (either moving on or being moved on). But the guests still have to have face time with those "not so great" CM's until that weeding happens.

I'm not suggesting they should raise wages, or really trying to voice an opinion one way or the other. Just trying to explain one of the reasons why the CS of yesteryear has declined over time. It's not the only one (cultural/generational work ethic, courtesy, etc are all factors too..amoung others).

 

[pilferk]

Just curious, when the parks release attendance numbers-do hoppers count on the same day? Like going to IOA in the am, then US in the afternoon, then back to IOA for the eve. Or open MK-then hit DHS etc.

A) The parks generally don't release their numbers directly, park by park. That's intentional.

B) From what I've read, every unique "tick" through the turnstiles counts...the operative word being unique. If you leave and return to the same park, same day...it doesn't count. If you "hop", it counts once at each park you "hop" to.