WSJ: Even Disney Is Worried About The High Cost Of A Disney Vacation (gift link)

[Laketravis]

It's not the same discussion. The other one was comparing Universal and Disney in terms of attractions. This discussion is on the financial impact Epic is possibly having

I (incorrectly?) took it as a blanket exemption.

 

[HauntedPirate]

“Even Disney is concerned with the high price of Disney vacations”

2 weeks later:

“Disney raises theme park ticket prices”

I expect they’ll keep 2-3 dates available at the current bottom-end price so they can claim to be “holding the line on ticket prices”. But expect a majority of dates to have price increases.

I wonder if they’ll tick up Park Hopper prices another $10-20. AP’s… gotta jack those up another $100, right?

 

[Stripes]

Some intelligent thoughts here from the former President of Disneyland Resort.

 

[Jrb1979]

Some intelligent thoughts here from the former President of Disneyland Resort.

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I don't disagree with what he said. IMO those of us who are saying the parks have problems, you and others automatically assume we mean the parks are going to close or go out of business.

His quote of pressure and expectations of growth is the issue they face now due to pricing. Look at this summer. I don't care that it's the new down season. Orlando has a brand new theme park opening and availability and rates are the lowest in years. IMO that says pricing is a big problem and I fully believe Orlando is tapped out. With prices as they are and as he said growth isn't likely to happen.

 

[monothingie]

It means that they’ve built an attendance decline due to Epic into their financial projections which is the model they’re using when providing investor guidance, but Hugh is personally optimistic that the actual results will outperform the projection.

There’s absolutely nothing “both-sides” about his statement.

And then 3 weeks later Disney launched the "limited time" trial balloon for free dining, which failed to move the needle. So then after that was the "Up to 35% off" general discount for late spring and summer.
So then after that was the "Up to 40% off" AP discounts.

If Hugh G. Johnson is so optimistic, why are they throwing so much excrement at the wall and seeing what sticks?

Or, is this more of the typical Disney saving face routine that everyone sees through? (Except for the cupcake brigade of course.)

 

[monothingie]

Some intelligent thoughts here from the former President of Disneyland Resort.

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Hardly intelligent, his statement is like hearing from the fox who raided the henhouse on how he's not to blame for the slaughter.

Let's start with some of my core beliefs:
Disney parks have become unaffordable to a larger group of people

• The business model has evolved to rely upon less people spending

Yes, it is an unsustainable path you geniuses set down on, that we're now seeing the end result of thanks to dolts in suits like you.

There is an economic addiction to premium products

If only Disney provided a "Premium Product" compared to other leisure options on a per dollar basis.

• The scale and age of the business model is maturing

Yes, focusing all efforts on extracting maximum spending per guest is apparently the only way generate revenue.

• The elevated price point expands the competitive set

Based on the behavior of guests, Disney is loosing to the competition. (Not just theme parks)

• These are unlikely to change

I don't believe these forecast a negative future, but it does put pressure on any expectations of growth

I absolutely agree with him that it won't change. He's even stumbled on something (Probably by accident) that there is an intense amount of pressure on growth. It's why we're here in the first place, because of the need to on a quarterly basis throw your previously very successful method of operation away to appease the institutional investors.

Disney vacations are fun, but they are also stressful. My simple model is:
Price times Crowds Equal Stress.

Solution: Buy LL to solve the problems that we created to make you want to buy LL.

 

[Sir_Cliff]

I absolutely agree with him that it won't change. He's even stumbled on something (Probably by accident) that there is an intense amount of pressure on growth. It's why we're here in the first place, because of the need to on a quarterly basis throw your previously very successful method of operation away to appease the institutional investors.

I do very much agree with this, and it's part of why it frustrates me to see fans essentially gloating when there is a flat/negative quarter or the share price goes down. Institutional investors are not demanding less profit now in the service of a more sustainable business in 5-10 years time.

If Disney could hold the line that the nature of the business is such that there will be some quarters where revenue is flat or even a little below the prior year but it will continue to grow over the medium to long term, that would promote far healthier business strategies. That's part of the reason I didn't have any particular objection to the comments about Epic's opening. I don't know how viable that is in the current environment for a publicly traded company, however.

With more price rises apparently incoming, I am curious how worried Disney really is about the cost of a WDW vacation, at least in the short term. They still seem to be in the mode of tweaking prices here and there for different aspects of the experience rather than anything that suggests they're in crisis mode. I could see a longer term vision where increased capacity coming online in a few years time could be accompanied by an easing off on prices, but then I'm not sure even all the previously announced additions are adding that much new capacity to the parks.

 

[John park hopper]

So where is the 60 billion coming from for park investment ?

 

[monothingie]

I do very much agree with this, and it's part of why it frustrates me to see fans essentially gloating when there is a flat/negative quarter or the share price goes down. Institutional investors are not demanding less profit now in the service of a more sustainable business in 5-10 years time.

If Disney could hold the line that the nature of the business is such that there will be some quarters where revenue is flat or even a little below the prior year but it will continue to grow over the medium to long term, that would promote far healthier business strategies. That's part of the reason I didn't have any particular objection to the comments about Epic's opening. I don't know how viable that is in the current environment for a publicly traded company, however.

With more price rises apparently incoming, I am curious how worried Disney really is about the cost of a WDW vacation, at least in the short term. They still seem to be in the mode of tweaking prices here and there for different aspects of the experience rather than anything that suggests they're in crisis mode. I could see a longer term vision where increased capacity coming online in a few years time could be accompanied by an easing off on prices, but then I'm not sure even all the previously announced additions are adding that much new capacity to the parks.

Price increases and relying on schemes to extract additional revenue from guests are the only option they have.

Remember the revenue from LL is almost all OI at this point to the tune of hundreds of millions of dollars domestically. That's a pretty handsome reward for doing almost nothing.

 

[HauntedPirate]

Hardly intelligent, his statement is like hearing from the fox who raided the henhouse on how he's not to blame for the slaughter.

Yes, it is an unsustainable path you geniuses set down on, that we're now seeing the end result of thanks to dolts in suits like you.

If only Disney provided a "Premium Product" compared to other leisure options on a per dollar basis.

Yes, focusing all efforts on extracting maximum spending per guest is apparently the only way generate revenue.

Based on the behavior of guests, Disney is loosing to the competition. (Not just theme parks)

I absolutely agree with him that it won't change. He's even stumbled on something (Probably by accident) that there is an intense amount of pressure on growth. It's why we're here in the first place, because of the need to on a quarterly basis throw your previously very successful method of operation away to appease the institutional investors.

Solution: Buy LL to solve the problems that we created to make you want to buy LL.

Matt is one who gets it. I regularly read his musings and it’s rather apparent why he left - his ideas and style didn’t fit with the sea change under way after Iger fooled Roy (among other reasons).

 

[monothingie]

Matt is one who gets it. I regularly read his musings and it’s rather apparent why he left - his ideas and style didn’t fit with the sea change under way after Iger fooled Roy (among other reasons).

That may be so, but what he's saying doesn't mesh with the point of the WSJ piece. It appeared to me that he was toeing the line.

 

[HauntedPirate]

That may be so, but what he's saying doesn't mesh with the point of the WSJ piece. It appeared to me that he was toeing the line.

His frustrations with the current parks model are out there. He understands it but is not a fan.

 

[lazyboy97o]

Matt is one who gets it. I regularly read his musings and it’s rather apparent why he left - his ideas and style didn’t fit with the sea change under way after Iger fooled Roy (among other reasons).

My understanding is that his leaving was not entirely of his own volition. He openly wanted the top parks job but Iger chose to keep Rasulo around.

 

[Tha Realest]

Compounding all this isn’t just the increasing prices of everything- it’s that the baseline price of admission has gotten excessively more expensive, and the non-LL or non-premium experience (or baseline experience) has gotten demonstrably worse and much more unpleasant.

 

[Laketravis]

Price increases and relying on schemes to extract additional revenue from guests are the only option they have.

Remember the revenue from LL is almost all OI at this point to the tune of hundreds of millions of dollars domestically. That's a pretty handsome reward for doing almost nothing.

Yet it's a product who's demand is based on a required level of FOMO.

Interesting dilemma. Either (A) Protect that lucrative profit stream by continuing to staff/operate/price the parks in such a manner as to cause the consumer to believe they need to spend hundreds or thousands more to avoid missing out, the long term impacts of which are almost entirely negative, or (B) Sacrifice a large portion / even all of that profit by creating conditions that grow attendance and correct a reputation of being too expensive, growing revenue organically long term.

 

[Touchdown]

You can only increase per caps and suffer decreased attendance for so long. It is not sustainable and if not corrected will result in a disastrous situation when suddenly the per capita spending will drop (along with attendance) when people stop feeling value in the purchasing. It’s happened time and time again in the regional theme park market, and will happen to Disney at some point, likely soon, given how hard the company is pushing back on this report.

 

[MickeyLuv'r]

Nothing is stopping them except price. Nobody is paying $450 10 times to visit Epic Universe for 10 consecutive days.

The backlash that Disney and other parks got for reservations isn't worth it.

Aren't AP holders allowed to buy single day tickets? As far as I understand, there is a transaction limit of 6 tickets per order, but passholders can place multiple orders if they want to visit multiple days and the dates are available. I think the price for AP holders runs about $140-170ish per day, for any 2025 date past June 7.

 

[Stripes]

Price increases and relying on schemes to extract additional revenue from guests are the only option they have.

Quick reminder that there are 8 new attractions coming to WDW that are about to start construction. The new attractions are very likely to increase attendance.

If Epic fails to deliver an attendance boost for Universal that would be concerning. I think Epic will boost attendance though.

Remember the revenue from LL is almost all OI at this point to the tune of hundreds of millions of dollars domestically. That's a pretty handsome reward for doing almost nothing.

Lightning Lane has increased the return on investment for new attractions. So when you say “doing nothing” you’re ignoring that in order to keep the Lightning lane model afloat they have to invest billions in new attractions.

 

[Laketravis]

Aren't AP holders allowed to buy single day tickets? As far as I understand, there is a transaction limit of 6 tickets per order, but passholders can place multiple orders if they want to visit multiple days and the dates are available. I think the price for AP holders runs about $140-170ish per day, for any 2025 date past June 7.

Correct.

 

[monothingie]

Quick reminder that there are 8 new attractions coming to WDW that are about to start construction. The new attractions are very likely to increase attendance.

In 4-5 years...maybe.

Lightning Lane has increased the return on investment for new attractions. So when you say “doing nothing” you’re ignoring that in order to keep the Lightning lane model afloat they have to invest billions in new attractions.

You're right. LL is being used to justify attractions that will be optimized to maximize LL revenue. It also will encourage them to minimize actual capacity expansion to feed additional demand into the LL system.

LL is a growing factor for pushing guests away from Disney. Disney doubling down on it is only good in the short term.