Spending at WDW decreases 4% for 2009

[crazy4wdw]

From the Orlando Sentinel:

A closer look at how Walt Disney World fared in 2009
By Jason Garcia on December 3, 2009 at 11:40 am


Spending on tickets, food and merchandise at Walt Disney World fell in 2009, the first annual drop at the Orlando resort in nearly a decade and yet another example of how it has been squeezed by the global recession.

Guests at Disney World spent an average of 4 percent less in the resort’s theme parks during its 2009 fiscal year, according to a new regulatory filing from the Walt Disney Co. Park spending last dropped at Disney World in 2001, during the country’s last recession.

Disney’s year-end filing provides the most detailed glimpse of how the company’s biggest theme-park resort has fared through what Disney Co. Chief Executive Officer Bob Iger called probably “the weakest economy in our lifetime.”

In addition to the in-park drop, guest spending at Disney World’s hotels and time shares dropped 8 percent, from a per-room average of $223 to $205. That was the lowest level since 2005 and the first year-over-year decrease since 2003.

Both drops reflected Disney’s use of heavy discounts — including promotions featuring either seven hotel nights for the price of four or free dining — to keep travelers coming amid the brutal environment. Average ticket prices and average daily hotel-room rates both fell on the discounting.

Attendance for the year was essentially flat with 2008. Hotel occupancy slid 3 percentage points, to 87 percent.

Spending at Disneyland also dropped, with in-park spending fell 9 percent and hotel spending dropped 7 percent. But attendance at the Anaheim, Calif., resort, which draws far more local traffic than Disney World, jumped 7 percent.

Disney’s fiscal year ended Oct. 3. The company’s fiscal 2009 had an extra week in it because of a timing quirk; every six years or so, Disney has a 53-week fiscal year in order to keep the ending date of the year close to Sept. 30.

The shrinking guest spending was one of the primary factors that led overall revenue at Disney’s U.S. resorts to sink by $531 million. Disney’s domestic operations were also hurt by the inability of Disney Vacation Club to securitize time-share mortgages in a locked-up credit market.

Revenue at Disney’s international resorts dropped by $306 million for the year, primarily because of declines at Disneyland Paris, which suffered from both lower guest spending and strengthening of the U.S. dollar against the Euro.

Total revenues at Walt Disney Parks and Resorts fell $837 million for the year to $10.7 billion, a 7 percent drop. The division partially offset that by slashing expenses by $358 million, or 4 percent, to just under $9 billion. The cost-cutting included the elimination of 1,400 jobs in Florida.

Operating profit at Disney’s parks-and-resorts division sank $479 million for the year to $1.4 billion, down 25 percent.

 

[Maistre Gracey]

See... I knew they would miss my bar tab at the AC.

MG

 

[jlewisinsyr]

Although I think Disney will recover perfectly fine in the long run, they have done some long lasting damage to their pricing model with the discounting they did over the past year and half.

People are starting to fall into a lower cost structure for Disney and with the economy still pressured for years to come, it will be hard for them to increase their pricing without continuing to depress their sales.

 

[Scurvy]

See... I knew they would miss my bar tab at the AC.

MG

I know that Disney will blame this on the economy and on all the discounting they've done, but frankly I think the merchandise has something to do with it as well. There's so much less variety in the merchandise these days. I used to buy the things I thought I wanted as soon as I saw them, because I didn't want to have to make a special trip back to that store later in the trip. Now I wait till the end of the trip to buy most things because the same stuff is at every store. By the end of the trip I don't care as much about some of it as I initially did and so I don't end up buying it. In addition, there seems to have been a decline recently in the quality of the merchandise, and that plus the lack of unique items means that I buy less each time I go back.

And yes, for me at least the lack of the Adventurers Club means that I spend far less at WDW than I used to. I never had a huge bar tab there, but I did eat dinner and shop around DTD before almost every visit to the Club. Without the Club to go to, I haven't eaten or shopped at DTD at all. I've been spending my time - and money - elsewhere in Orlando instead.

 

[lugnut33]

Average ticket prices and average daily hotel-room rates both fell on the discounting

Imagine how much it would be falling if they weren't jacking the prices of everything in the parks?

 

[Uncleromulus]

Well--this isn't good news by any standard, but 4% is actually a bit lower than what I expected.
But they are doubtless looking at the overall picture, which I believe saw WDW COMPANY profits jump about 18% in that same period(?)

And jlewisinsyr makes a good point. Sooner or later Disney will probably have to ease up on all these discounts and then it will be interesting to see if guests are willing to pay "full price".

 

[anthony2k7]

Well--this isn't good news by any standard, but 4% is actually a bit lower than what I expected.
But they are doubtless looking at the overall picture, which I believe saw WDW COMPANY profits jump about 18% in that same period(?)

And jlewisinsyr makes a good point. Sooner or later Disney will probably have to ease up on all these discounts and then it will be interesting to see if guests are willing to pay "full price".

I'm not sure the discounts or deals will end any time soon. I think they are more likely to just raise the base rates higher

 

[fan of the TTA]

I'm not sure the discounts or deals will end any time soon. I think they are more likely to just raise the base rates higher

special offers have become a really big part of disney (in my opinion anyway).

i'd prefer if they raised rates to other things, than get rid of the offers.

 

[tjkraz]

Although I think Disney will recover perfectly fine in the long run, they have done some long lasting damage to their pricing model with the discounting they did over the past year and half.

The same thing happened after 9/11 (discounting) and eventually Disney was able to phase-out most of the discounts. Throughout 2002-2004 they ran the "7 for 4" offer and other similar promotions pretty much year-round. This situation isn't exactly unprecedented.

But there's certainly no guarantee of the same outcome this time. Disney has been raising prices faster than the rate of inflation for a while now so that may eventually catch up with them.

Eight years ago they marketed Disney Vacation Club points without any real incentives to purchase. You could get a small cost reduction for "selling back" the first year's points. Aside from that the published price was what folks had to pay. In more recent years they have embraced a model of raising the list price dramatically while offering discounts. This has a positive psychological advantage for buyers who think they are getting a deal as a result of the incentives. Disney could be headed down that road with the theme parks, too.

 

[disneyfan67]

I know that Disney will blame this on the economy and on all the discounting they've done, but frankly I think the merchandise has something to do with it as well. There's so much less variety in the merchandise these days. I used to buy the things I thought I wanted as soon as I saw them, because I didn't want to have to make a special trip back to that store later in the trip. Now I wait till the end of the trip to buy most things because the same stuff is at every store. By the end of the trip I don't care as much about some of it as I initially did and so I don't end up buying it. In addition, there seems to have been a decline recently in the quality of the merchandise, and that plus the lack of unique items means that I buy less each time I go back.

I think you hit right on the head here. I bolded the parts that express how I feel as well. There's only so much crap you can buy and afford when on a WDW vacation. My first family WDW vacation in 2002, I seemed to buy every trinket we saw and my credit card was exhausted by the end of the trip.

I noticed that on my last trip back in May 2009, I just wasn't interested in buying the souvenirs, especially the shirts. The stuff seems to be poor quality and nothing is unique. What I find at POTC is same stuff I see on Main street or in Tomorrowland. The t shirts which I used to love buying have really went downhill in quality as well. They don't hold up to the repeated washings and shrink really easy. I even returned the one I bought at Boutiki in the Polynesian halfway through my last vacation due to it comming apart. The clerk at the counter told me they're seeing more problems with quality of the shirts. That confirmed what I was thinking and there's times where some of the stuff Disney sells at their theme parks, looks like what you can get at Walmart. Disney management have cheapened the brand in some ways to go after the easy dollars. Look at all the Hannah Montana crap they have sold as example. It's everywhere and most of it's poor quality junk.

Lets face it, Americans are also drowning in CC debt and the "spend now, worry about later" attitude, has came home to roost. There's no easy refinancing the house to pay off debts or use your home's equity as a piggy bank anymore. People have no choice but to cut back and do more with less. It's what I did on my last vacation and by the looks of it, others did the same. It's going to be this way for quite awhile until the economy improves, jobs come back, and Americans lessen their debt load. That's my opinion on it.

 

[tjkraz]

Obviously the numbers confirm that people are spending less. Between job losses and many more being asked to take pay cuts, I'm sure that millions of Disney guests have less spending money in their wallets.

But I'm not convinced that the type of merchandise offered is to blame. Disney has been dumbing-down merchandise at the parks for at least a decade now. Still, guest spending continued to increase for many years in a row. It wasn't until the '08 to '09 comparison that the numbers took a dive.

I don't buy as much as I used to either, but that has more to do with reaching my own saturation point with Disney stuff than what is offered. There are still a number of locations which offer great, unique items at the parks--places like MouseGear at Epcot, many of the World Showcase pavilions and Keystone Clothiers at Hollywood Studios. Big locations like World of Disney and the shops that line Main Street at the MK are obviously designed to stock items with the greatest mass appeal. Those shops aren't even worth my time.

Quality of some items has suffered, too, and that's a shame. But again I'm not sure that it's to blame for a decline in sales.

 

[manning]

The way things are being engineered, and if successfully, in this country the good times by all will be hard to find again soon.

In the long run you will not be successful by discounting and cheapening product.

 

[manning]

When I go now I don't spend much. I concentrate on picture taking and because of the decline of quality and prices of food I now eat off site. The quality and prices are much better.

Hello Disney management...listening??