the why behind fastpass+

[sheetz]

I was under the impression that a 79% occupancy rate was pretty dang good in the hotel world...room for growth, yes, but not something I'd call a "struggle" either..

WDW used to average near 90% so that's a significant drop. And while that's still good enough to make a hefty profit it's not good enough for Wall Street.

 

[JimmyV]

Disney has said that MBs will be sold to offsite guests. What incentive do offsite guests have to buy MBs other than using with the FP+ system?

None. For an off site guest, a card works the same as a band. I can't imagine why I would want to wear a silly band if I were staying at the Waldorf or Dolphin. Especially if I had to pay extra for it. They will sell them to guests who have kids who want one and sell them the baling to adorn them. I'm a "no" on that.

 

[JimmyV]

WDW used to average near 90% so that's a significant drop. And while that's still good enough to make a hefty profit it's not good enough for Wall Street.

All depends on how you view the numbers. They built way more rooms, so the % went down. But it is hard to call that a drop. 80% is very good given the total number of rooms they have now.

 

[sheetz]

All depends on how you view the numbers. They built way more rooms, so the % went down. But it is hard to call that a drop. 80% is very good given the total number of rooms they have now.

80% sounds good but Disney is not going to wait until their occupancy drops below 70% before doing something about it. The drop in occupancy shows that there is a limit to their pricing power and that they now have to find new ways to entice guests to stay at their hotels if they want to continue showing revenue growth to Wall St..

 

[Arsenal1982]

80% sounds good but Disney is not going to wait until their occupancy drops below 70% before doing something about it. The drop in occupancy shows that there is a limit to their pricing power and that they now have to find new ways to entice guests to stay at their hotels if they want to continue showing revenue growth to Wall St..

Of course the rates are dropping. Who the hell can afford the deluxe resorts (GF, BC/YC/BW, Poly) in particular. The rack rate for those hotels is over 450 a night. Who the hell can afford that? The only reason I stay at those places is because I travel with 2/3 adults and we can split up the cost equally. But a working dad/mom who has to pay for a family of 4/5 and stays there. Hard to figure.

 

[Angel Ariel]

80% sounds good but Disney is not going to wait until their occupancy drops below 70% before doing something about it. The drop in occupancy shows that there is a limit to their pricing power and that they now have to find new ways to entice guests to stay at their hotels if they want to continue showing revenue growth to Wall St..

If they are struggling so much to fill rooms, why would they be building so many new hotels all the time?

Occupancy rates dropping because of.pricing and dropping because they keep adding more and more inventory are very different things.

 

[Nancyg56]

I agree with this. I can see them trying to monetize access to FP+, but not the FPs themselves.

I have always thought that FP+ was going to be utilized as a means to get folks to book resort stays. There has to be a benefit to staying onsite, and it has to be a benefit that is lost if your family stays at Motel 6. Before I was hooked on Disney, I did not get that stay onsite and live the DIsney magic mentality of the people who spent large sums of money in the WDW resorts. I figured we could book a nice place for less money, more room and save money. My DD had never really stopped visiting WDW, so she insisted on AKL and because I saw the feedback on the DDP ( the old one that included everything) I agreed. After that stay, we always stayed onsite because the DDP was an incentive that sealed the deal for us. Well, it is not any longer, and I suspect that Disney does not want to use free dining as the go to incentive any longer either, so what to do???

FP+ prebooking! Maybe deluxe resorts will be offered two or three additional tier one FP+ as a carrot, mods one or two and values an extra. These cost WDW nothing, not is discounts, not in package discounts, and not in food and dining, yet they have a value to guests who want to maximize their time and have no special reason to stay onsite otherwise.

It's funny how we, as consumers, determine value. My DH always asks me to keep our Disney vacation costs to a minimum. Okay. But he wants to stay onsite, likes three full meals, enjoys dinner shows, and has very distinct ideas about appropriate resort locations. This means his "cheap" WDW vacation budget differs from his cheap vacation budget anywhere else. For him, the monorail line is the only location he considers Disney, and Disney did a great job of marketing that to him, but what about other guests? How can Disney get them to look at WDW Resort as an all inclusive spot and make them pay for every portion of their all inclusive stay? Well, offer them something that they cannot get offsite, and that translates into a value when you consider "time is money". FP+!!!

I have no idea if this is a strategy that would work, but I know that some of the draws Disney offered in the past are not pulling my family in any longer, and while I would stay onsite, I am not inclined to spend the way I did in the past. They need to reach a new crop of guests, and perhaps this is one portion of that strategy.

 

[BuckeyeBama]

All depends on how you view the numbers. They built way more rooms, so the % went down. But it is hard to call that a drop. 80% is very good given the total number of rooms they have now.

But at what rate? Consider the promotions that Disney has to run year round to get that 79%. Here is a good article that hits on the basics of revenue management for hotel properties: link

An excerpt:

The mission should not simply be to get 100% occupancy; it should be to get occupancy as high as possible, with an average rate as high as possible. For a 100 room property, occupancy of 85% with an average rate of $140 is more profitable than 100% occupancy at $110. Although both scenarios produce roughly the same revenue, what does it cost you to clean 15 rooms?

Disney has stated that it wants to reduce its promo deals, and eliminate free dining. How is it going to fill those rooms during value season without free dining? We travel during value seasons and stay moderate or deluxe on most trips, and the resorts are empty even with free dining. The value resorts are packed, but how much money is Disney making on those guests with the free dining promo?

 

[JimmyV]

Disney has stated that it wants to reduce its promo deals, and eliminate free dining. How is it going to fill those rooms during value season without free dining? We travel during value seasons and stay moderate or deluxe on most trips, and the resorts are empty even with free dining. The value resorts are packed, but how much money is Disney making on those guests with the free dining promo?

I have a brother who is a regional revenue manager for a large hotel chain, and was the revenue manager for one of the "on property" non-Disney hotels. We talk about this all the time. Promotions are great. "Missions" are great. But there is only one thing that truly moves occupancy percentages and that is rates. 3 FP+ per day is not going to make someone with a $250 tolerance level bubble up to $500. Ever. As you have noted, during FD, the deluxes (and many moderates) are empty because FD comes with "rack rate" and unless you have a family of 5 or more, it is hard to make FD worth the full rack rate of the GF, Poly or Yacht. Hotels do all sorts of things to get people to come, but at the end of the day, they are still sloughing off unused inventory to Priceline, Hotels.com and Hotel Tonight. Despite all of the gimmicks that it might try, the most effective way for Disney to fill the more expensive hotels is the 30% discount. This is especially true now that the Swan and Dolphin have been joined by the Waldorf and Hilton (and soon Four Season) as cheaper alternatives to Deluxes at way, way lower rates. No matter how they tweak FP+, it will never be a perk that is going to make a Waldorf guest at $225 or a Dolphin guest at $180 move over to the GF at $700. At least, not with any regularity.

 

[mom2rtk]

I have a brother who is a regional revenue manager for a large hotel chain, and was the revenue manager for one of the "on property" non-Disney hotels. We talk about this all the time. Promotions are great. "Missions" are great. But there is only one thing that truly moves occupancy percentages and that is rates. 3 FP+ per day is not going to make someone with a $250 tolerance level bubble up to $500. Ever. As you have noted, during FD, the deluxes (and many moderates) are empty because FD comes with "rack rate" and unless you have a family of 5 or more, it is hard to make FD worth the full rack rate of the GF, Poly or Yacht. Hotels do all sorts of things to get people to come, but at the end of the day, they are still sloughing off unused inventory to Priceline, Hotels.com and Hotel Tonight. Despite all of the gimmicks that it might try, the most effective way for Disney to fill the more expensive hotels is the 30% discount. This is especially true now that the Swan and Dolphin have been joined by the Waldorf and Hilton (and soon Four Season) as cheaper alternatives to Deluxes at way, way lower rates. No matter how they tweak FP+, it will never be a perk that is going to make a Waldorf guest at $225 or a Dolphin guest at $180 move over to the GF at $700. At least, not with any regularity.

Agreed. I'm sure there are a few out there who ignore the math and would book the FP deal. But not enough to move the quantity of rooms we're talking about.

We already know the ceiling price of what extra FPs are worth..... no more than the average daily admission if one were to just purchase a second ticket.

 

[clsteve]

I have a brother who is a regional revenue manager for a large hotel chain, and was the revenue manager for one of the "on property" non-Disney hotels. We talk about this all the time. Promotions are great. "Missions" are great. But there is only one thing that truly moves occupancy percentages and that is rates. 3 FP+ per day is not going to make someone with a $250 tolerance level bubble up to $500. Ever. As you have noted, during FD, the deluxes (and many moderates) are empty because FD comes with "rack rate" and unless you have a family of 5 or more, it is hard to make FD worth the full rack rate of the GF, Poly or Yacht. Hotels do all sorts of things to get people to come, but at the end of the day, they are still sloughing off unused inventory to Priceline, Hotels.com and Hotel Tonight. Despite all of the gimmicks that it might try, the most effective way for Disney to fill the more expensive hotels is the 30% discount. This is especially true now that the Swan and Dolphin have been joined by the Waldorf and Hilton (and soon Four Season) as cheaper alternatives to Deluxes at way, way lower rates. No matter how they tweak FP+, it will never be a perk that is going to make a Waldorf guest at $225 or a Dolphin guest at $180 move over to the GF at $700. At least, not with any regularity.

Your brother is spot on. I think FP+ would be more geared to getting those guests to extend their stay- make a 4 day stay into 5 day stay, a 6 into a 7. I'm sure your brother would say that guest profitability is higher the longer the length of stay since the highest operational expenses are check in/check-out days (most resource intensive for the hotel). Getting an extra FP or 2 so you can get in Soarin' and TT with 2 days at EPCOT, get 7DMT in a couple of times over 2 days at MK (same with TSM), could entice a family already booked at a Deluxe to do one more day or so and increase the occ. rate and profitability.

 

[surferdave]

I think Disney will continue to do what's been very successful for them in eliminating their slow seasons: find new international markets and put on a promotional full court press in them. Figure out where in the world there's an upper class that is out of school during their slow times and has money (or credit) to burn. They've learned that when they give discounts to domestic customers in the off season they spend relatively frugally, but the international customers spend like drunken sailors when they come to the states (especially if their currency is currently strong against the dollar).

 

[clsteve]

I think Disney will continue to do what's been very successful for them in eliminating their slow seasons: find new international markets and put on a promotional full court press in them. Figure out where in the world there's an upper class that is out of school during their slow times and has money (or credit) to burn. They've learned that when they give discounts to domestic customers in the off season they spend relatively frugally, but the international customers spend like drunken sailors when they come to the states (especially if their currency is currently strong against the dollar).

Man, I sure miss those days when we were the ones doing that - when the dollar was high and other currencies were like Monopoly money......

 

[1234lucky]

I hear people talking about the kiosk lines. Can you not book your FP+ via a phone app once you are in the park?

 

[flicx]

Of course the rates are dropping. Who the hell can afford the deluxe resorts (GF, BC/YC/BW, Poly) in particular. The rack rate for those hotels is over 450 a night. Who the hell can afford that? The only reason I stay at those places is because I travel with 2/3 adults and we can split up the cost equally. But a working dad/mom who has to pay for a family of 4/5 and stays there. Hard to figure.

Yes, I really think Disney has hit the top for pricing at these resorts. Tickets are getting close too. It's gonna get interesting in a few years. A lot of people have already been priced out and a lot more soon will be. Top that off with expenditures on fast pass bust that could have been spent elsewhere, Disney may be painting themselves into a corner.

 

[JimmyV]

I hear people talking about the kiosk lines. Can you not book your FP+ via a phone app once you are in the park?

No. As of right now, off site guests can use the app to research wait times, book ADRs and most everything else. But the FP+ functionality is not activated. They have to use kiosks or CMs with i-Pads.

 

[mom2rtk]

I hear people talking about the kiosk lines. Can you not book your FP+ via a phone app once you are in the park?

So far offsite guests can only use the app to view FPs. Initial reservations and changes have to be done at the kiosks. I still think that will change though.

 

[ArwenMarie]

Agreed. I'm sure there are a few out there who ignore the math and would book the FP deal. But not enough to move the quantity of rooms we're talking about.

We already know the ceiling price of what extra FPs are worth..... no more than the average daily admission if one were to just purchase a second ticket.

So assuming a 7 night trip, about $175 a night for a family of four. Which would be enough to bump yourself up from a Value to some of the Deluxes. (And which would make a dent in moving from offsite to onsite.) Hmm...

 

[1234lucky]

I imagine they'll figure out the app for the FP+ too. If they are looking to improve lines for the masses, making them sit in line at a kiosk seems counter-intuitive.

 

[Angel Ariel]

For those continuing to talk about FP+ remaining an onsite only perk, it would seem that Disney's own marketing - the 2014 Vacation Planning DVD - would refute that.

In the DVD they talk about FP+, and they specifically define FP+ as the ability to prebook your favorite rides before your trip. They also specifically say that FP+ is included with theme park admission for all guests. There is no small print anywhere to say that this is an onsite only perk. Whereas when they describe EMH, there IS small print on the screen stating that it requires staying at a Disney resort.

Is it specifically spelled out saying "offsite guests will be able to prebook"? no, it isn't. But it is definitely worth noting that they do NOT indicate that FP+ requires an onsite stay, as they do for all of the other onsite perks they mention in the DVD.