The Disney Company is hurting from the economy. The company reported that their earnings were down 32% in their first fiscal quarter.
It seems like they are reorganizing the cruise line's management, and a discount which is really a time-limited price cut in some cruises?
It doesn't surprise me that
DCL would be forced to compete based on price.
In hard economic times, the argument of price premium for "pixie dust" becomes less compelling, especially when competitors with comparable product offerings cost so much less.
It also doesn't surprise me that the cruise line would be forced into competitive pricing, because, I would imagine (not know much about the cruise business) that their fixed costs are less variable. I suppose their variables might be to some extent quantities of food, and perhaps some staffing levels, but I would also imagine that there might be contractual obligations, which means they can't react as quickly to ship load levels.
A good cruise for them is probably one with a lot of load, which probably equates to a higher per cabin yield. Again, I don't know much about the business.
The parks on the other hand, can be more flexible. They can lay-off staff and reduce staffing levels. They can limit park hours.
I would imagine that true park numbers are down, but through manipulation of hours and staffing, one's experience in the parks might be that the park crowd levels remain the same.
I also understand that DVC sales are being hurt by the economy. Oddly, I've also heard that the new offering, Bay Lake Towers has not been hit that bad. I've been working on the new points for the new offerings, and points for 2010 and looking at Bay Lake Towers, it takes A LOT of points to stay there. Which means, one has to purchase more points or bigger contracts if one wants to have, let's say a weeks' stay there.
I have heard that the people who are buying points at Bay Lake Towers, are those not necessarily impacted by the economy.
You can read my further wonderings in my upcoming article in the
Wall Street Journal, entitled,
What Price Pixie Dust? Fantasy Pays the Price Amongst Hard Economic Reality
.