Spending at Disney increasing

[Whatsthegoodword]

the story backs up what many have been saying in different threads.

Disneys price increases are impacting the bottom rungs of the middle class, making it more costly compared to incomes. thus some of those who were once in a life are now never and many others it is reduced number of trips , shortened trips and a much bigger bite out of disposal income.

Disney can and most likely will continue to push up prices, in all sorts of ways until they get real pushback in terms of reduced REVENUES. it is my view Disney sees there is better growth to be found by skewing the guest profile up the income ladder...

This is how business works. ALL companies do this: raise prices until it impacts the bottom line negatively. When they quit doing this, they'll run the risk of being weak - and become a subsidiary of another corporation. (Remember, that almost happened a few years ago...)

 

[oddman]

This is how business works. ALL companies do this: raise prices until it impacts the bottom line negatively. When they quit doing this, they'll run the risk of being weak - and become a subsidiary of another corporation. (Remember, that almost happened a few years ago...)

whoa there buddy.... That is NOT how "business works" . Pricing to what the market will bear is merely one method of pricing that exists, there are in fact many methods.
example, the top selling sriracha sauce is not priced to the market's ability to bear, instead the owner prices it low and focuses on volume. If he wished to raise per unit price he could, but instead he focuses on volume and having a product that is affordable for all....

it also makes the market less attractive for competitors.


Disney on the other hand is in fact raising its prices to deliberately change the profile of its average visitor. Dis runs close to full capacity as such they can improve profits easier simply by raising prices. The other way is to add more capacity and that costs far more monies, so instead they are pushing the boundaries of price and they have more room to go before they finish. So far they have doubled the real dollar price and the parks have stayed full, they will continue to do this until either the brand image is being hurt too much or the visitor numbers drop off enough to counter act the increased spend per visitor.

It is my view that Disney corp, know full well they are beginning to price out the lower levels of the US middle class, but they don't care because they continue to attract large numbers of global visitors who spend far more per visit those being pushed out.

 

[fairy oma]

I agree with you oddman. Of course Disney's bottom line looks great look at their price increases in the last 5 years with very little expansion of the parks and many closures with so far just empty promises of what's to come.

The Euro is tanking and despite the fact many of the resorts are sold out for certain periods of time many average visitors are coming close to talking with their wallets and walking away.

If our kids and their families were not looking forward to this trip I would rent a huge house on the beach in 2016 for 10 days and still not come out to what we are laying out for 6 days in WDW this time and I would still be able to pay for another vacation for all of us later in the summer.

OK...I am down from my soapbox...thank you letting me vent.

 

[rteetz]

Things look good for WDW! Guests like the better quality products and services (as cited in the article), and the Magicbands are doing what they are supposed to do. Looks like another good investment by the Mouse...

Well they were also supposed to help disperse crowds better which it's done to a point but more and more crowds just keep coming for it to be not even noticeable.

 

[peg110]

With charging on the magicband, people may not know how much they are spending. I know I kind of lose track on how much I am spending,,, to a point

Which is why I don't put a card on my Magic Band (or room key).

 

[mcjaco]

Considering how Disney keeps raising the prices on everything, its not surprising that people have to spend more while they're there.

I'd assume a great part of the spending is discretionary, not room and board.

 

[mvk]

despite the fact many of the resorts are sold out for certain periods of time many average visitors are coming close to talking with their wallets and walking away.

Is there anything at all to back this up? People keep stating this like its a fact, yet every quarter they are reporting record revenues due to higher attendance and higher per guest spending (according to the conference calls at the earnings release).

 

[OKW Lover]

Is there anything at all to back this up? People keep stating this like its a fact, yet every quarter they are reporting record revenues due to higher attendance and higher per guest spending (according to the conference calls at the earnings release).

Exactly. It seems like many of the posters here hare believing just the opposite. Not sure what they base that on. It kind of becomes a "nobody goes there anymore because its too crowded" discussion.

 

[Andrew015]

Is there anything at all to back this up? People keep stating this like its a fact, yet every quarter they are reporting record revenues due to higher attendance and higher per guest spending (according to the conference calls at the earnings release).

I don't think anyone here is suggesting that less people are visiting the parks overall as a result of higher prices. The argument that is being made (and IMHO, one that was pretty well articulated by oddman) is that less and less middle class folks can afford the prices being charged. Disney is thriving, however, as the more affluent demographics are lapping up what is currently being dished out (Poly bungalows, GF DVC, WL Cabins, $200 special ticketed events, etc.), thus filling the void with a clientele having significantly deeper pockets. Obviously, Disney's decision to raise prices and shift focus from the middle class to the upper-middle class and above is paying off, as attendance, profits, etc. have never been higher as you have pointed out. I don't believe that attendance and profits are up because more middleclass families with an average household income of $52K and ~$9K in credit card debt are visiting Lake Buena Vista.

Asking for "hard proof" of this is a bit of a stretch, as you know such information is not available. However, it's not rocket science. Rather, this is very basic microeconomics at play:

• Prices have been raised significantly over the past decade.
• Median household incomes have remained essentially flat over that same period of time.
• Conclusion: Many middleclass households that could once afford a Disney vacation in 2005 no longer can (or are spending less days, staying offsite, etc.), because they are making marginally more money today as compared to 10 years ago, yet the costs have in many instances doubled, resulting in a barrier to entry.

I'm not suggesting that Disney has totally abandoned the middle-class, as it still represents a significant piece of the puzzle. However, it's plain as day (to me at least) that a shift is in full effect. Look at "Free Dining" - a program definitely targeted to the average, middle-class family. In recent years, dates have become more and more limited, more restrictions have been put in place, etc. There is some speculation that "Free Dining" may go by the wayside completely in the next few years. If that happens, IMO, that's all the proof I need to show that the middleclass has officially been put on the back burner. Having said that, all that it will take to reverse the trend is another economic downturn, at which point, the average Joe will be welcomed back by Mr. Iger with open arms (provided that they're willing to pay rack-rate at Pop Century for their Free Dining).

 

[minnie mum]

I'd assume a great part of the spending is discretionary, not room and board.

I would argue that everything about a Disney vacation falls under the heading of discretionary spending. No one is required to go there. You aren't forced to stay at a Disney resort. You aren't forced to eat at their restaurants.

When was the last time you saw no increases on anything Disney from one year to the next? Even the "Free" Dining discount came with new strings this year- you were required to buy an upgraded tickets- a plain MYW ticket wasn't good enough. Tickets are up, resorts are up, food is up, and don't get me started on the cost of all the made in China merchandise.

With average incomes either flat or growing at a slow rate, I agree that Disney vacations are becoming more difficult for many, many families. It doesn't take a PhD in economics to figure that out.

 

[peg110]

Is there anything at all to back this up? People keep stating this like its a fact, yet every quarter they are reporting record revenues due to higher attendance and higher per guest spending (according to the conference calls at the earnings release).

Here is a Fact. We canceled our November 2015 Vacation to Disney (with Free Dining) because of.... Yup!.... Cost. Still going on a vacation, but to a different location. Not that we don't like Disney, because we do. It's just we have to be mindful and weigh out our options. Our alternate vacation will be significantly cheaper. Disney will still be on our agenda going forward but not as frequent.

I would be remiss if I didn't say another factor was the Crowd. Even at a low time, it's way too crowded.

 

[minnie-apple-mouse]

Here is a Fact. We canceled our November 2015 Vacation to Disney (with Free Dining) because of.... Yup!.... Cost. Still going on a vacation, but to a different location. Not that we don't like Disney, because we do. It's just we have to be mindful and weigh out our options. Our alternate vacation will be significantly cheaper. Disney will still be on our agenda going forward but not as frequent.

I would be remiss if I didn't say another factor was the Crowd. Even at a low time, it's way too crowded.

Sensational example of the "dilemma" facing WDW.

Too expensive, yet too busy.

 

[fairy oma]

Well they were also supposed to help disperse crowds better which it's done to a point but more and more crowds just keep coming for it to be not even noticeable.

This observation is based upon discussions among extended family and friends...young families we associate with all have stated that WDW is pricing themselves out of the market for them, their salaries are simply not keeping up with the costs of a 7 day vacation at WDW. FD and RO discounts this year have changed substantially from even 2 years ago and are/were of a very limited availability. If we know of 7-8 families who are discussing I think there must be other groups speaking about the issue.

Don't get me wrong...I love Disney and always have but as a boomer I was raised on Disney and therefore raised my kids the same way. Airfares are rising and let's face it the majority of working families cannot add an additional 3 -4 days to drive to WDW; this adds to the overall cost of the WDW vacation and although this is not Disney's problem it will directly effect the length of stays or even families choosing to take vacations elsewhere.

After all, wasn't Disney founded on the family dynamic and when you begin to lose those middle and lower class families it was founded upon won't Disney eventually find themselves without the substantial family fan base they have always profited from?

 

[Andrew015]

Sensational example of the "dilemma" facing WDW.

Too expensive, yet too busy.

You're mincing words. The argument isn't "Disney has become too expensive, so no one's going". Rather, the argument is Disney has become too expensive for certain demographics.

Separate discussion, but I'll argue that WDW is hardly "too crowded". Three of four parks are in dire need of attention, with the outlier being MK.

 

[Accident]

In my opinion, it's the magic bands. The data they have on how we act on the property, when we do or don't spend money and when the crowds are too much for us to go elsewhere and not spend money is key to getting everyone to spend more money. afternoon parades are suddenly at 3pm now? that doesn't suddenly happen.

 

[peg110]

Sensational example of the "dilemma" facing WDW.

Too expensive, yet too busy.

While it may seem ironic (and I totally agree), if ONE of those factors were gone, it could make a huge difference.

I don't want to pay a huge amount of money to wait and fight a crowd. If I am going to pay a huge amount of money, I don't want to wait. If I have to wait, I don't want to pay a huge amount of money. Of course it's all relative, to be sure.

I will also agree with Andrew015 that there could be some attention given to other parks to "Smooth" out the crowds a bit. For many only MK is an "All Day" park where AK, DHS and Epcot are half (or less) day parks. I personally can spend a full day at pretty much each park and be content. Again, part of this is a result of the crowds and lines. That being said, not sure what you mean by "Hardly too crowded". If I have to wait an hour to ride most rides, or I have to park myself on a curb 2 hours before a parade or fireworks show just to get an "OKAY" spot, then it's too crowded for my liking.

 

[Andrew015]

In my opinion, it's the magic bands. The data they have on how we act on the property, when we do or don't spend money and when the crowds are too much for us to go elsewhere and not spend money is key to getting everyone to spend more money. afternoon parades are suddenly at 3pm now? that doesn't suddenly happen.

I don't discount that there is a tremendous amount of knowledge gained from the bands. But I'm not convinced that spending is up solely because of them. We are only told that average spend per guest is up. Of course the executives point to the bands as the reason (after all, they're still in justification mode on their Billion $+ investment). How do we know that guest spend isn't up simply because costs are up? Certainly, TWDC isn't going to admit that in a quarterly report, as it essentially translates to "we're charging more because we can". Not exactly the message that the Disney P.R. Team wants to publicize...

 

[Andrew015]

That being said, not sure what you mean by "Hardly too crowded". If I have to wait an hour to ride most rides, or I have to park myself on a curb 2 hours before a parade or fireworks show just to get an "OKAY" spot, then it's too crowded for my liking.

The reason that you're waiting hours for more rides is because of FP+. It's purpose was to take crowds that were once very lumpy and "spread demand" from the more popular rides out to those attractions that were lesser utilized. It's been very effective in doing just that, but the end result is that guests are now waiting longer for rides that they could once walk on prior to FP+.

In the parks other than MK, attendance levels are only up 7% on average since 2008, or what equates to 1% growth per year. EPCOT is only up 4% during that period of time. It's not like people all of the sudden are coming out of the woodwork in Lake Buena Vista. In the business world, that's pretty much stagnant...

 

[peg110]

Whether it's FP+ or not, it's still more than what I prefer. I'd much rather wait in one line for 90 minutes and be able to walk on others in 10 then to have to wait in ALL lines for 45 minutes (or more)

I will add, however, that our experience was pretty much similar prior to FP+ as well. Very few rides/attractions were "Walk-on" type of rides.

 

[mcjaco]

Exactly. It seems like many of the posters here hare believing just the opposite. Not sure what they base that on. It kind of becomes a "nobody goes there anymore because its too crowded" discussion.

Or is it the every year guests that are complaining because now it's an every 18 months to every other year visit?

I would argue that everything about a Disney vacation falls under the heading of discretionary spending. No one is required to go there. You aren't forced to stay at a Disney resort. You aren't forced to eat at their restaurants.

When was the last time you saw no increases on anything Disney from one year to the next? Even the "Free" Dining discount came with new strings this year- you were required to buy an upgraded tickets- a plain MYW ticket wasn't good enough. Tickets are up, resorts are up, food is up, and don't get me started on the cost of all the made in China merchandise.

With average incomes either flat or growing at a slow rate, I agree that Disney vacations are becoming more difficult for many, many families. It doesn't take a PhD in economics to figure that out.

The article was more about spending within the parks, which is souvenirs, food, etc. That's what most people would call discretionary spending. But yes, for our side of it, the whole trip is really "discretionary."