Spirited Spring Break News, Observations & Thoughts ...

[71jason]

I give you that.

I also think marketing departments ruin movies. They give too much away in trailers, promo materials, etc.

Amazing Spider-Man 2 as good an argument as any for that. Although even the first one, someone cobbled together a 30 minute movie from all the pre-release material that hit all the movie's beats.

 

[truecoat]

I give you that.

I also think marketing departments ruin movies. They give too much away in trailers, promo materials, etc.

It's good that Abrams comes from the Spielberg school of trailer making. Less is more.

 

[fosse76]

Amazing Spider-Man 2 as good an argument as any for that. Although even the first one, someone cobbled together a 30 minute movie from all the pre-release material that hit all the movie's beats.

I remeber feeling that way for the second Harry Potter film. The trio appeared on practically every talk show, and they showed different scenes from the film on each one. When I saw the movie in theaters, I had felt like I had already seen it before.

 

[flynnibus]

And it's earnings time... Disney BLOWS out the quarterly number and estimates

http://www.orlandosentinel.com/business/os-disney-second-quarter-earnings-20140505,0,7516117.story

The Walt Disney Co. said Tuesday that it set yet another quarterly earnings record, reporting gains across all of its vast entertainment holdings, including theme parks.

The theme-park growth was powered by increased visitor spending at Walt Disney World, higher attendance at Disneyland in Anaheim, Calif., and more hotel bookings on both coasts.

Burbank, Calif.-based Disney said it turned a $1.9 billion profit for the three-month period that ended March 29, the second quarter of the company's fiscal year. That was up 27 percent from a $1.5 quarterly billion profit a year ago.

Company-wide sales rose 10 percent to $11.6 billion.
[...]
Disney's parks-and-resorts segment posted an operating profit of $457 million, up 19 percent from $383 million a year ago. Sales were up 8 percent to $3.6 billion.

Disney said that the combination of higher ticket prices and increased food and beverage sales at Disney World was one of the biggest drivers of the park division's profit growth. But the company also acknowledged that spending on Disney World's billion-dollar "MyMagic+" project, which only recently rolled out to all resort guests, continued to suppress profit margins.

 

[jlsHouston]

And it's earnings time... Disney BLOWS out the quarterly number and estimates

http://www.orlandosentinel.com/business/os-disney-second-quarter-earnings-20140505,0,7516117.story

Heck I guess it doesn't matter if MM+ suppresses profits because they can just raise ticket and food prices and make record profits.

 

[flynnibus]

The segment with the largest boost in revenue was Disney’s studio entertainment business, which reaped $1.8 billion during the quarter — a whopping 35% increase — as mega-hit Frozen continued to rake in the dough. The Idina Menzel/Kristen Bell-helmed film boosted Disney’s at-home entertainment sales (that is, DVD sales) as well as theatrical revenue abroad. Though Disney did not discloses the at-home or abroad sales as a result of Frozen, the company said that the results compare favorably to the at-home sales for Wreck-It-Ralphand international theatrical sales for Wreck-It-Ralph and Oz The Great And Powerful during the same time last year

http://www.forbes.com/sites/maggiem...th-q2-earnings-on-continued-success-of-frozen

The company said it posted adjusted earnings of $1.11 a share, beating the 96 cent average forecast of analysts surveyed by Thomson Reuters I/B/E/S. A year ago, Disney reported adjusted earnings of 79 cents a share.

http://finance.yahoo.com/news/disney-shares-jump-frozen-fuels-204433504.html

 

[flynnibus]

JR "we can continue to price behind these investments and still feel very comforatble with our volume"

Interpretation - we know we can keep raising prices and people keep paying them!

 

[jlsHouston]

JR "we can continue to price behind these investments and still feel very comforatble with our volume"

Interpretation - we know we can keep raising prices and people keep paying them!

Yep..

 

[truecoat]

JR "we can continue to price behind these investments and still feel very comforatble with our volume"

Interpretation - we know we can keep raising prices and people keep paying them!

Yep, I can't wait until they hit the wall because they are going about 60 mph right now.

 

[flynnibus]

And more FP+ for character M&G's...

Kenny the Pirate is reporting that Pooh at EPCOT will be a Tier one FP+! along with other changes...
http://kennythepirate.com/2014/05/0...get-fastpass-star-wars-weekends-shows-get-fp/

 

[Lee]

I missed something - is it well known that George was tight with Al and fed him info?

Rumored.
At one time, GK wanted to "neutralize" Lutz. (No, not a euphemism for kill)
That may well have changed.

 

[Kman101]

I was reading old Al archives and they were clearly aware of him and monitored everything and didn't seem pleased they were constantly called out. But at that time, DL deserved to be called out. Gee that first part sounds awfully familiar.

 

[NearTheEars]

I give you that.

I also think marketing departments ruin movies. They give too much away in trailers, promo materials, etc.

Now, I agree with you 100% on that Dave!

 

[flynnibus]

More reading from the OS on the earnings call...

http://www.orlandosentinel.com/business/os-disney-second-quarter-earnings-20140505,0,7516117.story

Disney said it turned a $1.9 billion profit for the period, which ended March 29, up 27 percent from a year ago, when it earned $1.5 billion.

Total sales rose 10 percent to $11.6 billion.

At Disney's parks-and-resorts division, operating profit rose 19 percent to $457 million on sales that climbed 8 percent to $3.6 billion. And Disney said the profit growth would have been even higher — approximately 31 percent — if not for the later arrival this year of the busy Easterholiday.

Disney credited the theme-park growth primarily to higher ticket prices and greater food and merchandise sales at Disney World, higher attendance at Disneyland in Anaheim, Calif., and more hotel bookings on both coasts.

Combined attendance at Disney World and Disneyland ticked up 3 percent, while per-visitor spending in the theme parks grew 4 percent. Occupancy in the company's domestic hotels — which are largely concentrated at Disney World — jumped six percentage points to 86 percent, while per-room was up 3 percent.

Disney acknowledged that its theme-park profitability continued to be weighed down by spending on MyMagic+, which fell behind schedule last year and only rolled out to all Disney World visitors a month ago. And costs are likely to continue weighing down earnings in the near future, as Rasulo said, "We're still very much in the process of communicating its benefit" to customers.

But Disney, which has faced growing pressure from analysts and investors to demonstrates results from MyMagic+, said the expensive project was beginning to work on several levels. Another central element of the project are "MagicBands," rubber bracelets embedded with microchips that function as all-in-one park tickets, hotel room keys, credit cards and FastPasses.

One of the biggest benefits so far, the company said, was the rising number of visitors planning details of their trips in advance. Disney says its research shows that travelers who do more pre-planning ultimately spend more time on its property — rather than visiting competing parks, shops and restaurants — "so we like these trends," Rasulo said.

In addition, Disney said it is more effectively spreading crowds inside its parks, allowing it to squeeze in "thousands" of additional visitors during peak periods such as Christmas and Easter.

"Because Fastpass+, the ability to basically plan your day as it relates to top attractions in the park in advance, has had huge pickup by our guests, it allows a better distribution of guests around the park," Rasulo said. "And quite often the amount of capacity we can let into the park is highly driven by pinch points and particular areas of the park that we don't want to get too overcrowded. So when guests are better distributed around the park, we can let more in."

 

[zweltar]

I give you that.

I also think marketing departments ruin movies. They give too much away in trailers, promo materials, etc.

THIS! I feel like trailers are giving away every exciting or funny moment that a movie offers. So much so that I have often felt disappointed when I see the film because I knew all the cool things that would happen - there were little to no surprises.

 

[danv3]

JR "we can continue to price behind these investments and still feel very comfortable with our volume"

Interpretation - we know we can keep raising prices and people keep paying them!

Yeah, I would anticipate another increase this summer. The February one was basically a bonus increase.

 

[ParentsOf4]

Disney has made a horrible mistake with MyMagic+.

Now that I have your attention …

No, I’m not bashing MyMagic+. Quite the opposite. The just-released Q2 company financial results suggest that MyMagic+ could have been a key driver to financial success, if leveraged properly. However, it looks like Disney leadership is letting a tremendous opportunity slip away.

Let’s focus on a single passage from the company’s press release for this quarter and consider what Disney’s 10Q filing tells us about it:

"Higher operating income was due to growth at our domestic parks and resorts driven by increased guest spending at Walt Disney World Resort, higher attendance at Disneyland Resort and increased occupied room nights at both resorts. Higher guest spending was due to higher average ticket prices and food, beverage and merchandise spending. These increases were partially offset by higher costs which were driven by spending on MyMagic+ and labor and other cost inflation, partially offset by lower pension and postretirement medical costs."

As disclosed in the 10Q, domestic theme park attendance is up 3% but that number is artificially low as a result of Easter shifting to Q3 this year. As indicated in the press release, it appears most, perhaps even all, of the quarter’s gain is driven by DLR. WDW attendance essentially is flat.

Flat attendance at any Orlando theme park is pretty good performance right now, especially with the loss of Easter week.

Historically, theme park attendance tends to decline before the unveiling of a major addition. Park goers tend to defer their visits, waiting for the big opening.

Although it’s debatable whether Seven Dwarfs Mine Train (SDMT) qualifies as a truly major addition, it is WDW’s best addition since Expedition Everest in 2006. That’s 8 years; practically a lifetime between rides when it comes to amusement parks. For Disneyphiles, SDMT represents the best thing in years.

There should be no debate that Diagon Alley is a huge addition in Orlando.

With Diagon Alley and SDMT rolling out this summer, it’s likely that large numbers delayed their Orlando vacations this year. Even with the addition of Diagon Alley, Universal remains a 2 or 3 day vacation for most, giving WDW the opportunity to draw these guests into their resort for 3 or 4 days. This summer, Diagon Alley will increase attendance at both Uni and WDW.

All things considered, flat attendance at WDW right before the opening of Diagon Alley and SDMT is pretty good performance. WDW remains as popular as ever.

Another number from the 10Q to consider is Per Capita Guest Spending (PCGS). This represents the amount spent per person at the theme parks. This is up only 4% 2Q2013 vs 2Q2014.

For corporate Disney, this is bad, really bad. In recent quarters, 8% has been the norm. WDW has raised ticket prices an average of 12% over the last 12 months. Food, beverage, and merchandise prices are up considerably too.

A 4% PCGS increase along with much higher prices suggest WDW theme park prices are reaching a breaking point. Rather than simply pay Disney’s higher prices, guests are reducing spending. That means fewer meals; fewer drinks; fewer t-shirts. All these are high margin items. This adversely impacts profitability. Disney simply cannot keep charging more for the same old same old. Their paying customers are starting to revolt.

Taken together, the attendance and PCGS numbers suggest that guests still love WDW but just can’t stomach the prices anymore.

Disney needs to slow down theme park price increases and look for revenue elsewhere.

Guess what? They have it at the hotels if they are not afraid to use it.

What do I mean?

Unlike the theme park numbers, which are roughly split 2-to-1 between WDW vs. DLR, the 10Q hotel numbers are nearly 90% of what’s happening at WDW. Overwhelmingly, these numbers represent what’s happening in Orlando.

And this quarter’s hotel numbers are good.

Really good.

Both for Disney and for consumers.

MyMagic+ was rolled out to onsite guests in October and was announced before then, just in time to influence guest hotel choices for the just-reported quarter.

Guests responded tremendously. Whether frightened at the prospect of being treated like second-class citizens and being forced to stand in those sometimes ungodly FastPass+ kiosk lines or simply being attracted by the idea of preselecting 3 attractions before arriving, guests decided to stay onsite.

Occupancy skyrocketed from 80% to 86% year-over-year, one of the largest jumps in the history of WDW. Available Room Nights remained flat, suggesting this surge in occupancy was real.

This is not some correction easily attributable to external factors such as the economy or cheap travel. The improved occupancy represents a significant rethinking by WDW guests on the way they selected their hotels.

Remember, pre-selection of FastPass+ wasn’t made available to offsite guests until April, after the end of the quarter. Throughout the entire second quarter, onsite guests had a distinct advantage over offsite guests. The second quarter results show a customer base ready to respond to this advantage by purchasing more high-margin hotel stays.

Also helping this surge were flat hotel rates.

Per Room Guest Spending (PRGS) represents the amount spent per occupied room night at the hotels, including “guest spending on food, beverage and merchandise at the hotels”. PRGS was up only 2.6%. Think about that for a moment. Taking into account food, beverage and merchandise price increases at the hotels and actual room rates were flat.

Taken together, MyMagic+ along with flat hotel rates helped fuel a surge in onsite hotel stays.

Did I mention that WDW’s hotels are obscenely profitable?

Once a hotel reaches a certain occupancy rate, the incremental cost of filling extra rooms is minimal. At Disney’s occupancy rates, the incremental cost of filling extra rooms is perhaps $20 or $30/night. Yet PRGS was $275/night. That’s a lot of profit.

WDW has nearly 24,000 hotel rooms. Until the most recent quarter, over 5,000 of these were going empty most nights. $275 X 5,000 X 365 nights per year equals, well, it equals a lot of money every year.

Whether you like it or not, MyMagic+ could work as a tool to increase the number of onsite hotel stays. MyMagic+ could be used to fill those empty rooms, even justify the construction of additional rooms.

With Disney’s incredible margins, increased hotel stays are WDW’s next chance to cash in big.

Yet WDW management is letting this opportunity slip away.

Offsite guests now are able to make their FastPass+ selections 30 days in advance, considerably reducing the appeal of onsite stays. Piling on top of that, MagicBands now are for sale for a measly $12.95. Rather than representing a badge of distinction for onsite guests, MagicBands can be purchased for about the same price as those cheap metal pins Disney sells by the tens-of-millions.

Offsite and local guests won’t like the suggestion but, if kept as an exclusive onsite perk, MyMagic+ was a potential gold mine or, in the spirit of SDMT, a potential diamond mine.

Fortunately for offsite and local guests, Disney management was afraid to leverage MyMagic+ to its full potential.

It just goes to show that WDW continues to be mismanaged, both creatively and financially.

WDW desperately needs strong leadership with vision.

 

[the.dreamfinder]

Rumored.
At one time, GK wanted to "neutralize" Lutz. (No, not a euphemism for kill)
That may well have changed.

Seems like with Dusty and co., they certainly have accomplished that mission. The site is generally more positive on Disney, look at how they fawned over Mary Niven.

 

[PhotoDave219]

Okay.... Wdw raised prices 12% and we've seen 12.8% profit?

That cannot be good

 

[Lee]

Seems like with Dusty and co., they certainly have accomplished that mission. The site is generally more positive on Disney, look at how they fawned over Mary Niven.

Yeah, that was weird. Seems like they are trying to praise their way into something.
They need a new Al. Quick.

Okay.... Wdw raised prices 12% and we've seen 12.8% profit?

That cannot be good

What a coincidence....