Wouldn't Disney Make More Money!

[JimC]

I believe they would make more money with a better pass discount program, particularly on the APs. This is not based on any research, just my own reaction and observations of random comments here.

We probably go more often and longer with DVC and APs because the expensive part of a WDW holiday is covered. We even have extended and added trips on cash, using AP discounts, because of the passes. For others it might encourage more time on property rather than exploring non-Disney attractions. Where they make out is increased spending on shopping, dining and recreation. I believe that would more than offset the decrease in ticket sales.

 

[crisi]

But vernon, the point is that we don't. We do these things on Disney property. I despise Central Florida off Disney property -- though eventually the kids will be of the age to really enjoy IOA, and we will do that (I'll just have my husband drive and close my eyes so I don't need to look at Central Florida). So Disney giving us additional discounts is a money losing proposition. For everyone who would spend more time/money at Disney there is someone who would spend the same amount of time/money at Disney and make the additional discounts a losing proposition.

People say "we just buy a seven day hopper and maybe spend four days in the parks, then we spend time by the pool or going to other Orlando attractions, so Disney would make money on us by giving better/bigger discounts." But there are a ton of us who buy UPHs with our 10% discount, play a round of golf, never cook in our room and never leave Disney property. Any additional discount (and the 10% discount on UPHs) is money out of Disney's pockets with my family. And a ton of DVCers already buy an annual pass every year. Give those people a discount and its lost cash to Disney. (The Florida residents would be a wash, its unlikely that we'd get discounts better than theirs are, and I'd guess that Florida DVCers are already using their Florida discounts. Same with military discounts or any other special discounts).

The question then becomes, do the statistics support additional discounts? - i.e. will the net gain of DVCers spending more time in the parks compensate for the discounts taken by people whose spending patterns would remain stable? My guess is that the answer is no. But, given the data warehousing I KNOW Disney does, its a pretty easy question to answer - and despite the fragmentation of the business, I can't believe they haven't run the numbers. (BTW, I do this sort of statistical analysis for a living nowadays - Six Sigma Black Belt with an IT background).

Don't get me wrong, I'd LOVE additional discounts (yum, Florida resident discounts, Disney Dining Experience). I just remain unconvinced its a clear cut good business decision.

 

[CaptainMidnight]

Originally posted by JimC
I believe they would make more money with a better pass discount program, particularly on the APs. This is not based on any research, just my own reaction and observations of random comments here.

I agree, despite Crisi's assertions. We often get park hopper passes and then avoid the parks for full days at a time. If we had APs due to a reduced price or Florida resident discount and the breakeven point were different, we'd be spending more time and money in the parks and at park restaraunts, lounges, even for deserts and after dinner drinks and a couple of attractions. We would spend more than we would save with the discount. It appears from other posts, we're not alone.

 

[childsplay]

It has been my experience that in situations like these (should Disney offer larger discounts) people's myopic perspective tends to become their reality......in other words... "Disney would/wouldn't make more money from me therefore it is a good/bad idea."

To that end I can only share our experiences, when OKW had free passes for the length of stay I can unequivocally state that we spend more money on our vacations at Disney (as a whole) as compared to our trips since the expiration of that promotion.

 

[Patpat15]

We spend half of our time "off site" spending alot of money. If Disney gave us the discount I really truly believe they would make much more money than the amount lost on the discounted annual pass. That is why I started this thread.

The following is just my opinion, and I do think the company sometimes just does not use common sense. Inter department squabbles, whatever.

And it just takes a little bit of common sense to realize that the communication between Disney departments is lame. From the miscommunication between the valet and the front desk, to the (yes, I will say it) the demise of the go network, and other "great ideas" which have affected this Disney stock (prior to 9/11 it was tumbling). I really believe that, although we love disney, you just never saw things like the bottlenecks at Animal Kingdom, in the old Disney, the Disney who built the underground city under the Magic Kingdom. And although we still love, Disney, go two to three times a year, If you look at Main Street USA you can nowdays find lightbulbs out, and not just one or two, the surest sign that they have, corporately, spread themselves too thin, from the cruise lines, to the team ownership, etc. You have to spend money to make money, and spending the money on giving your base- the DVC members, the best salespeople they could ever find, by giving us all discounts on spending more time in their parks, seems very prosperous to me.

Just my opinion.

 

[vernon]

Crisi said

and despite the fragmentation of the business, I can't believe they haven't run the numbers

They run the numbers, but only on a departmental level, i.e. what's in it for me. It's arguable as to whether park ticketting would increase revenue, therefore it hasn't been done. I think you underestimate the rivalry that exists between departments. If you, as head of ticketting, take on a program that has a negligable impact on your profitability, but it increases profit of the dining or sales departments and their is a promotion up for grabs the way the company works it will be them getting the promotion, not you. IMHO that's one of the big problems in much of American business. People are judged on their P+L not on their contribution to the company.

But vernon, the point is that we don't

You personally may not, but do you not concede that the evidence, even here on this topic, shows that many people do. As Childsplay says people tend to become myopic and view it only as what they personally do. From talking to and reading people's posts it is pretty obvious to me that many people do indeed spend a fair amount of time off site, this is particularly the case in many of those longer standing members that have been visiting over many years. With another 40 odd years to go until the end of the program I believe that trend is more likely to increse than to decrease. Much has been made of Disney's ability to track my "spending", but considering I rarely charge to my room they would find that difficult and even then, how do they know what I spend at Universal, SW or any of the off site restaurants I use. Crisi, you really are missing out on some wonderful opportunities by refusing to sample other things in central Florida, it's your vacation so I won't try to corrupt you, but there are things to cater to every taste.

 

[crisi]

I conceded the evidence that many people POSTING HERE do. But that is a self selected sample. Quite a different thing than a random sample. Ancedote is not the singular of data. None of us have anything but our own experiences and the ancedotes of others.

And I think you overestimate the fragmentation of business. Doing this sort of data analysis and having consulted prior to my current gig for years, if Disney is as fragmented as you think, they are far behind the Fortune 500 I've worked with.

 

[spiceycat]

I don't even know if WDW offered me a discount (even to make it a florida resident pass) that I would buy it.

I had an annual pass last year - we went 7 times - too many really....

I have an annual pass for both SW and US/IOA - that I intend to kept - they are reasonable and if you go more than twice - a very good buy. I also looked at that 5 days pass that US/IOA has for my guests.

 

[Johnnie Fedora]

The main problem here is that WDW doesn't offer any ticket media that fit the DVCers vacation style. We currently do the three trip on an AP then skip a year or more of parks, then do an AP again. We almost never/want to spend an entire day at the parks. I cant stand the idea of wasting a hopper for three to four hours of park time.

Personally, I'd like to see a pay by the hour park admission for DVCers. You clock in and clock out. If you forget to clock out you pay for the rest of the day. With the ever increasing numbers of DVCers, this wouldn't be a difficult concept for Disney to develop. Dvcers would have their own checkout turnstyle for leaving the park. Disney could just direct bill your credit card or room account the going rate for your hourly use of the parks. This would give DVCers a special perk, without calling it a discount. It would also allow DVCers to jump in and out of a park for dinner or shopping etc.

Johnnie

 

[Jimbo]

The main problem here is that WDW doesn't offer any ticket media that fit the DVCers vacation style. We currently do the three trip on an AP then skip a year or more of parks, then do an AP again.

That's exactly what we do. So isn't it fair to say that Disney <u><i>does</i></u> offer a pass that fits our vacation style? It would be even better if they gave us a discount on it, but it certainly fits as is.

 

[vernon]

Crisi I think this forum is probably the biggest single meeting place of DVC members, by the fact we tend to be people who have a regular (daily) interest in Disney, not just our vacations I would suggest the if anything the members that frequent these boards are more likely to be the type that would buy AP's not less.

As far as the fragmentation of business, Disney is by it's nature a much more diverse and fragmented business than many of the others in the Dow Jones Industrial average. Most of the other companies in the indexes tend to have a much more limited product/client base. IMHO it has been a corporate choice to make Disney divisions "fight" against each other. I don't think they would consider their business "model" as being "far behind" more that their business culture is one of competition and survival of the fittest. The company reflect Mike Eisner's ideas of what makes a good business, while it may be true that his ideas have been successful in some areas, I would contest the notion that they have been successful in all areas.

 

[sgtdisney]

I can't speak for anyone except me, but I can assure you if we had some incentive to be in the parks more, we would be there. As it is now, we tend to visit one park per year for only one day. Then we take our vacation dollar off property and come back to our 'home' to rest and relax.

When we had the free passes we were in a Disney park every single day of our vacation. Even if it was just to go into Epcot Center (as it was called then) for dinner everynight. We stayed on property and in the parks spending money along the way. Now, since the passes are gone, that has all stopped for us. We go off property more. Universal (and SeaWorld) as of late are offering great pass discounts to everyone, not just the elusive Fla resident, but for everyone. Apparently Disney does not have to do this. If they don't have to, fine. I am a stockholder as well and if they are able to maximize profits by charging everyone full price so be it. However on the flipside, I am perfectly content to take my vacation dollar and spend it somewhere else for now. Would I rather be in the parks, probably. But, not at the prices Disney wants for the privledge..

As the average 'age' of the DVC member (in terms of how long a person has been a member) increases, I think Disney will see a drop off of DVC member attendance at the parks. There aren't nearly as many 10 year+ members are there are 4 years or less. When these people tire of spending the money on admission, maybe, then we will see a discount. Until then, I am happy to give my money to other places and restaurants in and around Orlando and enjoy my 'home.' If Disney isn't missing my money, no loss to either of us...

 

[crisi]

I've consulted at 3M - you don't find many more companies more fragemented. And this was prior to the Imation spin off. Sandpaper, cleaning chemicals, scotch tape, medical supplies, computer hardware, etc. All in seperate divisions. A corporate structure developed to make the divisions compete against each other. And Grand Met PLC, who owned Pillsbury, Burger King, Alpo Petfoods, liquor companies and brands, Liggett, Intercontinental Hotels, Horse Tracks, Pearle Vision Centers, Restuarants, and a retirement home (all while I worked for them, although not all at the same time). That was a nightmare! I'm intimately familar with the fragmentation of large diverse companies. Moreover, I was at a conference with Disney employees who were doing such data mining to make decisions two years ago - so I'm pretty sure Disney does do similar work.

And us owning more APs is exactly the point. We ALREADY own APs, giving us a discount on APs is taking money off the top from the people already holding APs in exchange for the assumption we those who don't own them spend more money in the parks if they did own them. We need to spend enough in Mickey Bars and meals to make up for the discount (don't forget, you only get to count the margin on the Mickey Bar, not the complete cost). Its possible the math works out on this. Its possible it doesn't. We don't have the data to support either conclusion.

 

[DebbieB]

Originally posted by Jimbo
That's exactly what we do. So isn't it fair to say that Disney <u><i>does</i></u> offer a pass that fits our vacation style? It would be even better if they gave us a discount on it, but it certainly fits as is.

I attended the DVC annual meeting in December 2000 and this came up. So they took the opportunity to announce a DVC only pass called "Magical Years" I believe. Only problem was that it was a total joke! Pay $700+ upfront and get a 5 day park hopper plus for 4 of the next 5 years. All 5 days must be used within the year, no carryovers. I wonder how many members bought it?

 

[sgtdisney]

Originally posted by DebbieB
I wonder how many members bought it?

So MANY people bought it that it was cancelled very quietly, fairly soon after it was introduced.

 

[Duckielucky]

Last year we went to Disney World three times so we bought year passes for the whole family. It was great. We stayed at the Boardwalk and could run over to the World Showcase to eat whenever we felt like it. We were there a total of 22 days. I believe that 10 days is the break even point. Anything over 10 days and it is cheaper to get a year pass.

I would love to be able to get a 5 or 10 year pass. A lifetime pass would be even better.

 

[Jimbo]

DebbieB - My point was that the annual pass fits our vacationing style. We go a couple times in a year. By timing the trips we can use our APs many times. We're probably pretty typical, I think. So it's not a situarion where the right kind of pass doesn't exist, they're just expensive.

I agree that the "Magical Years" pass didn't make a lot of sense for anyone.

 

[vernon]

I did receive a request to complete a survey that was being done by Disney last weekend. There really wasn't anything interesting in it ( certainly nothing to do with DVC) , the main interest seemed to be how much time one spent off site and how much money was spent on the most recent trip. Looking through my CC receipts I came up with my spending coming in at about $5,000 of which less than $1,000 had been spent at WDW ( the majority of that was $400 at Hoi Palloi in DTD and $300 on restaurants at the non Disney hotels at DTD). I'm certain that if Disney compare my spending for the trip to the spending on my room charge ( which we are all sure they can track easily) it would make for quite disturbing data for them.

It did make me wonder if Disney is becoming concerned about how much money is leaking away from WDW as guests try out other attractions in the area. I'd be interested to know if many other recent guests received the request to fill out the on-line survey.

 

[crisi]

vernon,

If I were doing the analysis for Disney, I'd pull the data every year or eighteen months and re-run it. Things change - people's spending patterns, the availablity of decent Orlando area attractions, the economy, the margins Disney works with. Its possible that what makes sense this year won't make sense next year.

But I'd also keep in mind how unhappy DVC members get when Disney takes away perks. If they give us a discount on annual passes because it makes sense, and five years from now the statistics show the discounts being a money losing proposition, they are in a bad spot. They either keep losing money or create bad will amoung DVC members by pulling the discount.

So it isn't a decision I'd make lightly - even if it made financial sense. I suspect that I would be more likely to give DVC members some sort of one time coupon as a "thank you" (and maybe give out the coupon every year or every couple of years or whenever it made sense) good for an additional 10% off the admission media of their choice.

(Now as a DVC member, I'd like the discounts. But I trying to think from the other side).

 

[vernon]

IMHO the demographics for this would be the same as for Florida residents, you'd simply move it in line with whatever Disney thinks viable for the Florida residents. IMHO the same arguments/rationale can be made for both groups. If it's worth giving Florida residents a break on park passes because Disney feels they spend more time and money that way, the same argument can be made for DVC members, JMHO.

P.S. Disney could quite easily put out a notice with the offer along the lines of " In an attempt to give our members perks that they have indicated a desire for we are running the following promotion to gauge the viability of making it more permanant, obviously if the take up of the perk is at a low level we would be forced to reconsider it's value to the members and it's economic viability to the company" "