The Spirited 8th Wonder (WDW's Future & You!)

[devoy1701]

Now that we've seen the new area open...I'm not sure that TWDC is wrong to play it soft. Hogsmeade is incredible. The only domestic land I would compare to it is Radiator Springs in DCA, which is also stunning. And, while I have not seen it yet, it looks like Diagon is even better. But....Diagon does not yet seem to be pulling in the people in huge numbers in the way that Hogsmeade did. Yes, EFG has an insane line, but some of that seems to be due to poor operations/uptime, and the rest of the land is not over-run. Granted, some of that is due to more foresight in planning for guest flow, etc., but Diagon does not seem to be the complete game-changer that Hogsmeade was.

Some people already covered this. But I'll also answer from another perspective. Even if Diagon Alley wasn't a "huge hit" or as "big of a success" as Hogsmeade was, that really doesn't matter. The point isn't to hit Homeruns every time you add something to the parks. You have to be able to supplement and support those homeruns with singles and doubles to build out the entire experience. That's the formula that we keep asking for at WDW...Build an e-ticket every 3-5 years, but supplement that with Bs, Cs, and Ds, opening every 1-3 years. Universal has the advantage of having their two parks right next to each other which allows them to split the offerings between the two parks as you can easily visit both in one day (even before the Hogwarts Express). At WDW, this formula really needs to be applied at a per park level, which is where TDO has failed miserably. Aside from the fact that they have waiting until absolutely necessary to add attractions, they do so one park at a time, allowing places like DHS, and Epcot to remain incredibly stale. By the time Avatarland opens at AK, it will have been about 13 years since anything of substance was added to that park....that's too long considering it was missing a land at opening due to budget constraints.

 

[ParentsOf4]

In 2006 Disney was at 86% capacity. That is the highest they have had this century. They were 79% in 2013 and will be over 80% this year. I think the number will be the 82% or just a fraction higher. In hotel terms that is amazing. The problem here is people talk about empty rooms on a given night without understanding the industry. If a company is averaging over 85% is does not have enough rooms or is charging too little. In fact the highest hotel occupancy was in a given year this century was about 63% nation wide in 2006. However as pointed out earlier Orlando is not anywhere and so occupancy should be higher but over 80% even in Orlando is excellent especially since as everyone else has pointed out Disney is more expensive than neighboring hotels. I bet Universal would love to have Disney's hotel occupancy rate. I just called and they have rooms at each of their hotels this weekend. There is nothing bring with that and it should be expected but it just shows rooms are always available except for 1 or 2 nights a year. That is the hotel business.

Also just for the record if you check my prior posts you will always see when I used rooms for comparison I always used 80% occupancy rates for my numbers and 2 per room. I knew that was low because at Disney and Universal they should average more than 2 people per room but in most years both Disney and Universal should average 80% occupancy. Our. The other hand DVC occupancy average 95%. Therefore provides more attendance for the parks.

Not exactly right.

WDW's occupancy was 90% as recently as 2008. WDW's lowest occupancy ever was 75% in 2002. In 2013, occupancy was 79%, but that number was inflated by DVC, which has added 1950 rooms since 2002. Take away DVC and WDW's hotel occupancy was around 76%. WDW also has about 4% of its rooms out-of-service. Take that into consideration and about 72% of WDW's hotel rooms were occupied in FY2013. (Note Disney's fiscal year runs October to September.)

Excluding WDW, the Metro Orlando area occupancy was 71% (pulled down by the North Orlando area), with the nearby Lake Buena Vista hotels running at 78% in 2013. WDW's hotel occupancy rate currently is running below local hotels.

There's one reason and one reason only that WDW's occupancy rate is lower than Lake Buena Vista's: price.

Disney's plan to convert WDW hotel rooms to DVC is not indicative of a healthy hotel business model.

 

[Nemo14]

Not exactly right.

WDW's occupancy was 90% as recently as 2008. WDW's lowest occupancy ever was 75% in 2002. In 2013, occupancy was 79%, but that number was inflated by DVC, which has added 1950 rooms since 2002. Take away DVC and WDW's hotel occupancy was around 76%. WDW also has about 4% of its rooms out-of-service. Taking that into consideration and about 72% of WDW's hotel rooms were occupied in FY2013. (Note Disney's fiscal year runs September to September.)

Excluding WDW, the Metro Orlando area occupancy was 71%, with the nearby Lake Buena Vista hotels running at 78% in 2013. WDW's hotel occupancy rate currently is running below local hotels.

There's one reason and one reason only that WDW's occupancy rate is lower than Lake Buena Vista's: price.

Disney's plan to convert WDW hotel rooms to DVC is not indicative of a healthy hotel business model.

Wait, so Seascape's "statistics" were wrong?

 

[ParentsOf4]

Margins used to be even higher in the old days though, right @ParentsOf4 ?

In the 1970s until 9/11, margins used to run about 2-to-7% higher than they did in 2013.

What's particularly interesting is that if you look at the entire Parks & Resorts (P&R) segment, 7 of Disney's worst 10 years for P&R margins have been under Iger, and Iger has been CEO for only 8.

Sometimes, cutting corners, raising prices, and deferring investments is not the best way to improve margins.

Returning to the point of this thread, converting empty hotel rooms to DVC units should improve margins.

Unlike The Spirit, I've not heard anything about converting WL hotel rooms to DVC. However, going under the assumption that corporate Disney is not going to invest billions to 'fix' WDW, converting empty hotel rooms to DVC is the right move to make.

 

[EpcoTim]

Wait, so Seascape's "statistics" were wrong?

Or "made up" or "grossly false" or "bathed frequently" or "not remotely correct"

Sorry, got lost in all those quotes and forgot who I was for a minute there.

 

[SandraAnn]

Back to the idea that the behavior of DVC clientele dumbs down the resorts...I am going to disagree with that a bit. I think the blame lies solely on Disney's shoulders.

When DVC comes to a resort, housekeeping and short-term maintenance (touching up walls, fixing broken furniture, etc) slides downhill because of the structure of DVC budgets. I think this idea of reduced housekeeping and maintenance bleeds into the operation of the deluxe resort. If DVC is paying for their own minimal housekeeping and repairs, then maybe the budget for the deluxe resort starts to look bloated. So they start reducing that as well.

One thing I always wonder...they sell people on DVC with the idea that you can stay "deluxe" for a reduced rate...yet, once you get in to your DVC, you don't even get daily housekeeping, something that they even give at the values. Call it what it is (a timeshare), but calling it a "deluxe" is just a falsehood.

I guess it's a chicken-and-the-egg argument, but I really think that the slide starts with Disney letting stuff go, not a decline in the behavior of the clientele. I don't know, maybe there is some psychological thing that happens in people's brains when they see scuffs on walls and dirty carpets...the broken window theory if you will.

There's also another point to this that I think signals to people that these aren't fancy hotels, so do as you please, and that's the quality of the food. I can't count the number of times that I have chucked a sandwich or left a dinner because of the poor quality of the main ingredients (mainly the meat). My husband and I have a joke..."That was Disney good" if the food was edible. I think that sends a message to you, real fast, that you are not in a fancy hotel. So hey, more power to people if they want to walk around in crummy clothes and let it all hang out. Honestly. Why not.

I also think that our culture in general has become messier, less formal, over the past couple of decades. So it's not unreasonable to think that can be seen at WDW either.

 

[merry68]

In the 1970s until 9/11, margins used to run about 2-to-7% higher than they did in 2013.

What's particularly interesting is that if you look at the entire Parks & Resorts (P&R) segment, 7 of Disney's worst 10 years for P&R margins have been under Iger, and Iger has been CEO for only 8.

Sometimes, cutting corners, raising prices, and deferring investments is not the best way to improve margins.

Returning to the point of this thread, converting empty hotel rooms to DVC units should improve margins.

Unlike The Spirit, I've not heard anything about converting WL hotel rooms to DVC. However, going under the assumption that corporate Disney is not going to invest billions to 'fix' WDW, converting empty hotel rooms to DVC is the right move to make.

That Iger stat regarding margins is just sickening. What a quick cheap way to prop that stat up for the great CEO, room to DVC conversion. Has to be... Wait for it... Revolutionary CEO forward thinking.

 

[Bocabear]

A few pages back we went through a whole "what is the topic" thing... Disney resorts & DVC. Then it turned into a talk about the type of guest that stay at Deluxe hotels... with got deleted because it was deemed off topic.

Got it!
I definitely think the "looking for a bargain stay for my vacation in a couple months" is not on topic.. as pertains to the future of the resort as it pertains to us on a grander scale...
though actually the type of people that say in the different levels of resorts does inform one's decision on where to stay...and what we feel the future of that location is...

 

[ParentsOf4]

That Iger stat regarding margins is just sickening. What a quick cheap way to prop that stat up for the great CEO, room to DVC conversion. Has to be... Wait for it... Revolutionary CEO forward thinking.

P&R margins bottomed out at 12% in 2010. They’ve been climbing about 1% per year since then.

What we’ve seen in recent years at WDW is a ‘small ball’ strategy to improve margins: raise prices, squeeze quality, defer theme park investments. (This versus the ‘swing for the fences’ strategy adopted by Universal in recent years.)

The reported conversion of WL hotel rooms to DVC is consistent with Disney’s strategy in recent years.

 

[seascape]

Wait, so Seascape's "statistics" were wrong?

I get all my information from relaible sources. http://www.forbes.com/sites/greatsp...-resorts-provide-stable-cash-flows-to-disney/ . You may not like the numbers but they are real numbers backed by a reliable news organization and not just made up by someone here. I have also in the past quoted hotel capasity from the county tax records. Those total numbers do include the Disney numbers since the Disney hotels pay taxes.

 

[PhotoDave219]

Anyways, after a week of travel, I can no longer justify the inflated prices at WDW. For anything. Water, food, park admission. And hotels. You do not get your money's worth anymore.

As with this DVC conversion, has anyone examined this as an excuse not to upgrade guest rooms? Since it's timeshare, don't the owners have to pay for upgrades or something like that? Just another way for TWDC to pass the buck on to the guest....

 

[PhotoDave219]

That Iger stat regarding margins is just sickening. What a quick cheap way to prop that stat up for the great CEO, room to DVC conversion. Has to be... Wait for it... Revolutionary CEO forward thinking.

Yes, it's quite revolting.

More reasons for CEO compensation to not involve stock options.

 

[alphac2005]

My guess is that a lot of Universal's current clientele were formerly WDW's. I know that I have jumped ship to Universal and I am a 50 year old who likes plush resorts, fine dining, great themeing, and most importantly when talking about a theme park resort vacation, state of the art compelling attractions. I have been going to WDW since '71 and to look at the place as it is today is saddening and for the extent of the upcoming additions, I see a lot more DVC and Shopping and not a lot of attractions. Therefore I have a one day trip to DAK penciled in sometime in 2017.

I think that's an excellent guess. It's as if the properties have flipped. When Cerebus, which is another *ahem* wonderful private equity firm, owned Universal and upkeep was awful and the whole atmosphere between that upkeep and the guests were akin to Six Flags. To be more specific, ever been to Six Flags in Atlanta? It's basically a dumping ground for kids and teens. Parents buy APs and let those kids have free reign all day at Six Flags. There is no other way to put it other than trashy. Universal used to be like that. It's totally changed and I think what you're saying could be really right on.

BTW-Seeing prior posts about Dave and '74s comments about guests, it's not a class issue, it's a decorum issue. For many decades, people would visit places with dignity and respect regardless of socioeconomic class. That's what is is missing. Nothing beats the guy coming up to the front desk at the Grand Floridian in his beat up sandals, all too tight shirt, and complaining very loudly about something OR the guy coming up to the counter with his pressed button down shirt, tie, then pulling out his cellphone and giving them the "Don't you know who I am?" treatment. Both lack decorum. That's what it's about. There are plenty of people that I've seen at Disney Resorts that supposedly look the proper part, but lack any manners. It's the idea that since they've spent so much money, then they are owed something. All part of the vicious cycle that they've created with their absurdly priced hotel rooms.

 

[devoy1701]

Like most hotels these are the starting rates and only a few rooms at these prices. Once the set number of rooms are sold at these low prices you pay a higher rate.

Yes, those rates are the Florida resident and passholder rates. Regular rates are almost double.

Definitely missing the point. Besides the fact that nobody should ever pay rack rate for a room at a hotel, To bring this slightly back on-topic, The fact that you can get deluxe accommodations at Universal for the same price that Disney is charging for Moderate and some value resorts is laughable. It really doesn't matter if the rates are AAA, FL Resident, AP, or whatever. Disney needs to (but won't) needs to do a price correction for their resorts. Even with my passholder discount, the best rate I could get at the Wilderness Lodge (the cheapest of the Deluxe resorts) was $256 for August. CBR wanted $154 per night. My passholder rate used to get me a king room at CBR for $99, or a standard room at the All-Stars for $49. I used to be able to book a room for $225 at WL during the Holiday Season...I wonder what that price looks like now. Disney has priced their own rooms out of the market, which may very well have been their plan along. There are people who will pay whatever rate to stay on property, and they'll keep coming, the rooms that are being converted are the ones that used to be filled by those who knew the true value of the dollar they were spending and aren't willing to make that leap anymore. I'll stay at Royal Pacific for $154 over CBR for the same price any day. It has a true classy island feel and excellent Loews Service.

 

[zweltar]

It's the idea that since they've spent so much money, then they are owed something. All part of the vicious cycle that they've created with their absurdly priced hotel rooms.

I see this, too, and it could be readily remedied by Disney giving the "guests" (walking wallets in Disney's eyes) an experience that they feel is worth the high prices paid. However, when you pay the prices for a MK view at CR and the shower head is covered in calcium and lime buildup and the vents are covered in a very thick coating of dust (not that that could possibly happen to someone), the guests can become disenchanted and begin to rationalize unacceptably poor behavior.
Sadly, Disney's recent moves, including this DVC expansion, seem to be avoiding this issue.

 

[PrincessNelly_NJ]

Definitely missing the point. Besides the fact that nobody should ever pay rack rate for a room at a hotel, To bring this slightly back on-topic, The fact that you can get deluxe accommodations at Universal for the same price that Disney is charging for Moderate and some value resorts is laughable. It really doesn't matter if the rates are AAA, FL Resident, AP, or whatever. Disney needs to (but won't) needs to do a price correction for their resorts. Even with my passholder discount, the best rate I could get at the Wilderness Lodge (the cheapest of the Deluxe resorts) was $256 for August. CBR wanted $154 per night. My passholder rate used to get me a king room at CBR for $99, or a standard room at the All-Stars for $49. I used to be able to book a room for $225 at WL during the Holiday Season...I wonder what that price looks like now. Disney has priced their own rooms out of the market, which may very well have been their plan along. There are people who will pay whatever rate to stay on property, and they'll keep coming, the rooms that are being converted are the ones that used to be filled by those who knew the true value of the dollar they were spending and aren't willing to make that leap anymore. I'll stay at Royal Pacific for $154 over CBR for the same price any day. It has a true classy island feel and excellent Loews Service.

I wasn't aware you were aiming for an actual "point."

You said that you could "booked RP for $150 a night and less, which is close to the majority of Disney hotel prices."
For you as a resident, yes, but the average guest traveling to Orlando from out of Florida can't book it for that cheap. Therefore, yes, many are priced out of Universal.

I've seen people say it countless times, "Is it worth it to go to Uni? It's gonna cost me $XXX for one or two days and etc."

Even me, years ago, I would book a room at CSR for $140 dollars and pay $80 to get to Universal for the day vs paying $230+ at Uni hotels plus a taxi to and from the airport or elsewhere. Not to mention the cost of tickets, just because it was cheaper. I would never pay rack rate unless I found it really necessary, which has never been the case at Disney for me.

You are right, Disney hotels are vastly overpriced and Uni hotels give you much more for your money.
It is sad when a Deluxe resort at Uni is the same price as a Disney moderate (one of which is often ranked as the worst moderate.)

I noticed Disney is beginning to update prices for 2015. One the Pop Century page, it says the average rate is $140.... $140 for a value resort.

I just can't get over that!

 

[flynnibus]

The fact that you can get deluxe accommodations at Universal for the same price that Disney is charging for Moderate and some value resorts is laughable.

For the same reasons we debunk Disney's 'deluxe' resorts as high-end, the same applies to UNI. I've never considered their three hotels as deluxes.. but rather a moderate++.

 

[PrincessNelly_NJ]

For the same reasons we debunk Disney's 'deluxe' resorts as high-end, the same applies to UNI. I've never considered their three hotels as deluxes.. but rather a moderate++.

If you think Uni deluxes at moderate++ then what do you think of Disney deluxes? Value++ hotels?

 

[devoy1701]

For the same reasons we debunk Disney's 'deluxe' resorts as high-end, the same applies to UNI. I've never considered their three hotels as deluxes.. but rather a moderate++.

I find the Loews resorts at Uni to be on par with a Hyatt or Sheraton. So i guess I agree with you. They aren't Waldorf class of hotels, but they are superior to many of Disney's Deluxe hotels.

 

[Cesar R M]

It's all about margins. They could fill every room if they wanted, and make money. This is about making ENOUGH money to satisfy their profit per square foot metrics. ENOUGH money to hide the overhead at all the support offices(yes, talking about the PR dept), ENOUGH money to lift their margins so they don't look like chumps next to the television segment.

Margins used to be even higher in the old days though, right @ParentsOf4 ?

doesnt that mean that the management as just transformed into a bloated mess that leeches and sucks all the money?
Because.. reading the forums, people already confirmed that Disney gives poor salaries, awful maintenance, lots of cost cutting..etc..
So.. WHERE DOES THE MONEY GO? all to wall street?