I for one don't consider Universal and Sea World regional parks.
True, they attract more out-of-towners than Six Flags, but they rely on a higher percentage of locals than Disney. Not a knock, just a fact.
Universal in particular is trying to change that, and they may succeed, but that doesn't change how it stands now.
I just don't see the harm in getting more people in the parks if it takes a discount.
There is potential harm because you lower your margins, and those same people will expect similar discounts when times are better. You will then have a difficult time raising prices to levels that you could have had you not discounted.
Sure, there's a line somewhere in there, and that's why Disney does discount more now than they did a few years ago. But they still want to be able to charge what guests are willing to pay when times are good. Its a strategy that has worked for years. Consistent value. The problem with this value equation isn't on the cost side, its on the benefit side.
I wouldn't of bought my Universal pass with free parking had it not been only $99 a year. Universal got $400 out of my family because of this discount. That is $400 Disney won't see and the money we spend inside Universal.
Ok, lets just say that Disney charges $200 per person for the same product, factoring in Disney's greater number of attractions, etc.
Now, lets look at two families. One (yours) pays $400 to Universal. Another pays $800 to Disney. Now, lets assume Disney had lowered their price to $400, and lets say that was low enough to get you to purchase Disney instead of Universal.
You're right, Disney now has your $400, and that's $400 they would not have had. But what about the other family? They only had to pay $400, when they were willing to pay $800. So now, Disney is right back where they started, bringing in $800, only now, they are incurring costs on 8 people instead of 4. This reduces their profit, even though more people are in the park.
Yes, they will make some of it up in merchandise/food sales. But will it be enough to cover the $400 they gave away? Remember, they will have to make up $400 in PROFIT to cover the $400 they've lost. That means if you spend $400, they are still in the hole, because the profit on that $400 might only be $200.
Now, don't get hung up on the specific numbers, because they aren't accurate, or even important to the discussion. I'm just showing how its not as simple as saying lower your prices to get more people in. Yes, there is a point where you could be charging too much, but there is also a point where you are charging too little.
Its not that Disney thinks they are too good to charge less, its that people still place higher value on Disney than Universal. That's why Universal cannot get away with charging what Disney does. That's also why they want to become what Disney is, a true resort destination for families. Then they can (and will) charge what Disney does.
You're right in that if Disney continues to reduce the value of its product by cutting and not developing, they will be forced to lower prices. But again, the problem is the benefit side, not the price.
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