Ticket Discount Predictions!!!

[PKS44]

vernon

your calculations are wrong. It is not "well in excess of $5000" for a family of four it is just under $4500 -$4479.42 to be precise at current AP prices for 3 years cost at this point for two adults and two kids... even the PAP is not "well in excess of $5000 it is under $6000 over 5 years I also do not know how many DVC currently have AP but I recall it being lower than the 30% figure you gave -actually about half that as I recall or lower....so the market and the risk is not what you are portraying...

As jarestel points out the risk is what it is...people will take or leave it...and this generates other streams of revenue, but even within the ticketing division itself your numbers are off because you fail to account for the difference in the cost of money....even if we believe your figures to get to the $30 million risked..it is wrong... it is not "lost" until the 4th year--also ...for two years they have an extra $30 million they would not otherwise have that is worth about $5 million at a low interest rate of return and the $25 million "lost is spread out over 5 years so a risk of about $5 million a year --not much for a company this size and only if it fails to attract a single new person and only attracts current AP holders....and attracts every single current AP holder ---both extremely unlikely....again it makes no difference what you or I think...but I remain unconvinced that such an offer would not do as jarestel suggests generate more spending overall by people trying to get "more out of the big investment they have made --just as we do with the DVC going for longer trips than we would without the committment...it is a committment that I think Disney would get for the risk and a committment that is worth going after...

 

[baileybrad]

I am hope that the discount is 20% for both types of APs. I will say it and get slammed .....5% would be slap in the face.

 

[vernon]

vernon your calculations are wrong. It is not "well in excess of $5000" for a family of four it is just under $4500 -$4479.42 to be precise at current AP prices for 3 years cost at this point for two adults and two kids... even the PAP is not "well in excess of $5000 it is under $6000 over 5 years I also do not know how many DVC currently have AP but I recall it being lower than the 30% figure you gave -actually about half that as I recall or lower....so the market and the risk is not what you are portraying

The PAP does indeed come in under $6k. It comes to $5951.36 . Averaging between the AP and PAP you get a cost of $5,215.39. I guess it depends on your definition of "well" but it's certainly in excess of $5,000 .

I used 30% as the figure for current DVC members having APs (or PAPs) as that was given on an earlier thread as being reported at the AGM. I wasn't there so I can't check but I'm happy to accept the poster as being genuine. It seemed to be in line with the polls carried out here in our random selection.

for two years they have an extra $30 million they would not otherwise have that is worth about $5 million at a low interest rate of return

1) You seem to be using a return of about 8.5% as your "low interest rate of return" . Please tell me where I can get a guaranteed rate of return of 8.5 %. Savings rates are about 2.5%
2) $10 mill of the $30 mill is money they would have received anyway in the first year ( on APs) and another 10 mill is money they would have received in the second. Therefore the company has only an extra 20 mill for one year and an extra 10 mill for the second (last year). At a realistic ( but generous) rate of interest (4%) that earns them less than $1,500,000.

Discounted park tickets will raise income overall without doubt, but you're asking ticketing to take too big a hit on their part of the deal for very little chance of making anything from it. Unless ticketing gets guaranteed subsidies from restaurants and shops ( which it isn't) there's no way the idea works for that department. IMHO 15-20% is a level at which it can be argued it's at worst a wash for ticketing, at best they make a small profit. with 40% at best it's a wash for that department and at worst they get hosed.

You have to understand how fractionised Disney and their divisions are, no division is going to take a hit to give another division a helping hand. Unless you can make a good argument for why it helps ticketing ( and at 40% one can't) it's never getting out the hanger, let alone off the ground.

 

[jarestel]

Originally posted by vernon
You have to understand how fractionised Disney and their divisions are, no division is going to take a hit to give another division a helping hand.

I believe you're referring to the Theme Parks division which encompasses all of the operations at the parks. If the Theme Parks are making money overall, that is the bottom line that counts. I'm sure if Ticketing ( one of the components of the Theme Parks division ) runs a promotion that increases the bottom line of the Theme Parks division, they will be hailed as heroes.

 

[vernon]

I'm sure if Ticketing ( one of the components of the Theme Parks division ) runs a promotion that increases the bottom line of the Theme Parks division, they will be hailed as heroes.

I don't match your confidence in the "fair play" with in the American corporate system. The areas making the money will claim the "hero" role for themselves IMHO. That's supposing the person representing the division to the board doesn't take the kudos himself.

Disney is such a huge company it's divisions within divisions. All those divisions are overseen by bean counters. When the promotion is up for grabs who gets it? The guy from ticketing whose division has a smaller % increase because he's taken a loss in order to boost the takings of the restaurant or retail divisions. My money goes on the person heading up the division with the biggest %age rise. It's all about the money. I'm not saying it's right, it's just the way it is.

 

[jarestel]

Vernon, you're entitled to your opinions about how the American corporate system works and to your opinions about how Disney works internally. Since these are opinions, we'll just agree to disagree on this one.

 

[PKS44]

vernon-you need to check you calculator--1 million in interest a year is 3.3% of 30 million not 8.5 % and it is % PER YEAR...--and that is every year...and the money coming in is in their hands for 2 years more than they would have had it...and your logic falls apart on the face of it because as was pointed out the logical extension of your argument is do not sell AP tickets at all because then you are losing out on the Park hoppers that would have been bought otherwise by those who are buying AP's...sorry but between the bad math and the poor logic--I too will just say we agree to disagree...and it still makes no difference whatsoever...what a deal like this should do is increase people making trips to WDW...I think it would...you think it is too risky...thanks.

 

[vernon]

Paul, Disney doesn't get the "extra" money for the whole 5 years (You're original post did correctly say for 2 years, but I think this is where you're getting a little confused). I believe you are falling into the trap of "double discounting" i.e. you're counting interest that Disney would earn no matter what program they put in place. LOGICALLY one can only count the ADDITIONAL interest it would earn if it enacted your idea, not money it would earn anyway from it's existing funding. Put simpley, in your plan Disney has 30 mill to invest for 5 years. In it's existing plan it would have 10 mill for the first year, 20 mill (plus interest) for the second, 30 mill (plus interest)for the 3rd, 40 mill (plus interest) for the 5th and 50 mill (plus interest for the 5th). The compounding of interest would mean your plan would earn slightly more interest than their existing one, but it's basically a wash.

Without offering a pass , in the manner you describe) Disney would already be taking $10 mill a year in sales anyway ( and earning interest on those takings). Therefore....

At the beginning of the program Disney takes $30 mill in ticket receipts instead of the usual $10. It therefore has an extra $20 mill, invested for a year at say 4% it netts an extra $800,000.

At the begining of year 2 Disney has $20,800,000. Deduct the $10 mill that would have arrived in it's usual ticket sales you have $10,800,000 invested at 4% Disney netts an extra $432,000.

At the begining of year 3 Disney has $11,232,000. Deduct the 10 mill that would have arrived in usual ticket sales they have $1,232,000. invest (4%) for the year that would compound up to $1.281,280 at the end of year 3 ,

compounds (4%) to $1,332,531 at the end of year 4.

At the end of the 5 year program the extra interest earned ( at 4%) is $1,385,832. To get to your figure $5 mill you need an interest rate of 10%+

I believe my logic, my maths and my calculator are working fine, but you're welcome to believe otherwise. It's an easy and understandable mistake that you made, but it's a mistake all the same.

 

[PKS44]

but you are assuming that everyone buys it the first year and no one new buys one the next year and the next....etc...

edit to add that even if it is 30 million and not 25 million it is spread out over 5 years so that is still just 6 million a year "risked" I would take the risk if I were running Disney...I would bet that it ends up generating more trips, more bookings, more eating, more more more...I stand by that prediction...

 

[RamVA]

OK, so to get this thread back on track......................

..........I have not visited this board in a very, very long time, so my question is......................
What Survery?

I have been a member since 1992, and I did not get a survery...................????????????????????????????

 

[CarolMN]

Originally posted by RamVA
OK, so to get this thread back on track......................

..........I have not visited this board in a very, very long time, so my question is......................
What Survery?

I have been a member since 1992, and I did not get a survery...................????????????????????????????

I didn't get one either - not eveyone did. Apparently, it was sent only to selected members (maybe a random sample??) and there were different versions of it as well.

Here is a link to the thread if you are interested in reading about the survey postcards:

http://www.disboards.com/showthread.php?s=&threadid=595497&highlight=+ticket++survey

Best wishes -

 

[RamVA]

Thanks, Carol!
I'll go check it out.

 

[vernon]

but you are assuming that everyone buys it the first year and no one new buys one the next year and the next....etc...

It's a five year pass, if all the existing AP holders buy one of your passes they won't need to buy one next year, or the year after etc.

As previously posted, that's the worst scenario . All those currently buying annual passes take up the 5 year offer ( with a 40% discount) and no one else does. That's why it has such a large potential downside. That assumption was already plainly stated and explained.

 

[Jimmac]

I am hoping for the 25% discount on APs but doubt that Disney would be THAT NICE to DVC members.

 

[PKS44]

6 million a year is not a large potential downside especially given the incredibly low likelihood that it could ever reach that worst case scenario....