Less discounts at Disney

[lt94]

Seems like Disney wants to give us less in the form of discounts and back to full pricing I wonder the timeline

"Occupancy in the company's U.S. hotels was flat for the quarter, but per-room spending rose 6 percent on higher rates and fewer discounted room nights. Disney Co. Chief Financial Officer Jay Rasulo called the results "further evidence" that the company's efforts to wean travelers off of promotions "continues to pay off."

 

[Master Yoda]

It has been happening for the last couple of years. While there always seems to be a promotion running, the discounts have been lower, availability less and the offers are riddled with blackout dates.

 

[Brian Noble]

Yep, no surprise. The quarterly reports/investor relations documents have been saying that this is the plan for some time now.

 

[DeanFinder2.0]

While on this topic, do you think we'll see any free dining or such this year? I know there save up to 30% on select hotels is up, but I'm thinking of a trip in the Christmas season. :shrug:

 

[Polydweller]

At some point a company has to wean customers off of discounts. As can be seen on all the Disney boards a large proportion of people just keep looking for the next discount. People increasingly try to not pay non-discounted prices. That just isn't sustainable for a company. They have to have people buy at regular price and only use discounts to increase sales in low season. After all, it's a business not a charity.

 

[fosse76]

At some point a company has to wean customers off of discounts. As can be seen on all the Disney boards a large proportion of people just keep looking for the next discount. People increasingly try to not pay non-discounted prices. That just isn't sustainable for a company. They have to have people buy at regular price and only use discounts to increase sales in low season. After all, it's a business not a charity.

The problem is Disney overcharges to begin with. If occupance is flat, that means it isn't working. It just means the people who continue to go can afford to go without discounts...or they may be staying off site. They should be aiming to increase occupancy...and if they stopped raising rates then perhaps they wouldn't have to have strated discounting in the first place.

 

[Polydweller]

The problem is Disney overcharges to begin with. If occupance is flat, that means it isn't working. It just means the people who continue to go can afford to go without discounts...or they may be staying off site. They should be aiming to increase occupancy...and if they stopped raising rates then perhaps they wouldn't have to have strated discounting in the first place.

Pretty hard to increase already fairly strong occupancy, at least by most in the industry. I'm a hotelier and would love their occupancy rates. But you can increase revenue per room night by not giving discounts.

 

[Brian Noble]

Exactly. Occupancy in the 80s is very very good. Average in Orlando, excluding Disney, is in the high 60s. And, this

If occupance is flat, that means it isn't working.

is just wrong. Occupancy is holding steady in the face of increasing effective room rates. That means it very much *is* working.

 

[ToTBellHop]

Exactly. Occupancy in the 80s is very very good. Average in Orlando, excluding Disney, is in the high 60s. And, this

is just wrong. Occupancy is holding steady in the face of increasing effective room rates. That means it very much *is* working.

This has been Disney's key to success, actually. They have increased rates and ticket prices every year while maintaining some deals, so they can have an ad that says "save 30%" but you are in fact paying more than you were for that room 5 years ago.

Or, take the example of sky-rocketing dining prices. When you see those prices going up, the next time they offer free dining, you are more likely to take it and book a vacation you otherwise might have skipped (and you'll pay full price for your room and tickets).

 

[JillC LI]

While on this topic, do you think we'll see any free dining or such this year? I know there save up to 30% on select hotels is up, but I'm thinking of a trip in the Christmas season. :shrug:

Me too so I sure hope so!

 

[Bolna]

Seems like Disney wants to give us less in the form of discounts and back to full pricing I wonder the timeline

Well not right now as just today I got a pin code for free dining for dates until June...

 

[fosse76]

People keep citing this 80% occupancy level. I'd like to see proof of this.*
*EDIT - Nevermind, I found it...but that includes the Disneyland Resort as well

And my point was, essentially, Disney is cheating. Raising prices to increase profit when demand is flat means that you have a) either staurated the market and there is no more demand or b) are not offering enough incentive for more people to come. If they slightly lowered prices, it is possible occupance would increase as well as profits.

 

[MichWolv]

People keep citing this 80% occupancy level. I'd like to see proof of this.*
*EDIT - Nevermind, I found it...but that includes the Disneyland Resort as well

And my point was, essentially, Disney is cheating. Raising prices to increase profit when demand is flat means that you have a) either staurated the market and there is no more demand or b) are not offering enough incentive for more people to come. If they slightly lowered prices, it is possible occupance would increase as well as profits.

And if they raised prices, it is possible that occupancy would fall by only a little, and profits would rise.

But I'm guessing that Disney understands the basics of pricing and profit maximation as well as you and I, and that they've got a better feel for the right combinations of rack rates and discounts in their business than you and I do.

Not for nothing, there is economic theory with studies to back it up that suggests strongly that, in a business with limited volume (due to limited inventory or capacity), you maximize revenue and profits by having a high list price with frequent large sales, rather than a lower list price and less frequent/less significant sales.

 

[ToTBellHop]

And if they raised prices, it is possible that occupancy would fall by only a little, and profits would rise.

But I'm guessing that Disney understands the basics of pricing and profit maximation as well as you and I, and that they've got a better feel for the right combinations of rack rates and discounts in their business than you and I do.

Not for nothing, there is economic theory with studies to back it up that suggests strongly that, in a business with limited volume (due to limited inventory or capacity), you maximize revenue and profits by having a high list price with frequent large sales, rather than a lower list price and less frequent/less significant sales.

Exactly--people buy when they get the impression that they are getting a deal (whether or not they really are).

 

[Brian Noble]

Nevermind, I found it...but that includes the Disneyland Resort as well

True. IIRC, though, DLR's occupancy rate is historically lower than WDW's. Could be wrong about that, but I don't think I am.

Raising prices to increase profit when demand is flat means that you have a) either staurated the market and there is no more demand or b) are not offering enough incentive for more people to come.

No, you are absolutely wrong here. Supply and demand dictate that, all other things being equal, an increase in prices is met by a *decrease* in widgets sold (or room-nights occupied). If you can increase prices, but still sell the same number of widgets (or the same number of room-nights) it tells you that demand is increasing.

It *could* also tell you that you are at an inelastic point on the demand curve, but that also means you have woefully under-priced your rooms; doubtful here.

 

[gallerie]

People keep citing this 80% occupancy level. I'd like to see proof of this.*
*EDIT - Nevermind, I found it...but that includes the Disneyland Resort as well

And my point was, essentially, Disney is cheating. Raising prices to increase profit when demand is flat means that you have a) either staurated the market and there is no more demand or b) are not offering enough incentive for more people to come. If they slightly lowered prices, it is possible occupance would increase as well as profits.

It isnt just Disney. A famous Department Store marks it's merchandise up 60-70% so it can put it on sale at 40% off and everyone thinks they are getting a deal. Just the way our "Sale" minded population thinks.

 

[Rowdy]

It's funny, if Disney lowered ticket prices by $10, they'd make way over that by how much more people they'd bring. Especially with their competition down the road being "the most expensive".

 

[ToTBellHop]

It's funny, if Disney lowered ticket prices by $10, they'd make way over that by how much more people they'd bring. Especially with their competition down the road being "the most expensive".

I highly doubt that. I don't think the average person knows how much Disney charges per day in the parks (nor would they care--they care what their total package costs), so they would never notice the $10 decrease and they certainly wouldn't book a trip based upon it. However, when they see a commercial advertising 30% discounts at the All-Stars, many people will pick up the phone to get a quote.

We can criticize Disney for many things, but let's stop pretending any of us know more about pricing and advertising than Disney does. Lightbulbs may be burned out on Main Street, but Disney still knows how to market and sell its parks to the average Joe or Jane Schmoe.

 

[BigThunderMatt]

Lightbulbs may be burned out on Main Street, but Disney still knows how to market and sell its parks to the average Joe or Jane Schmoe.

They don't even really have to market. Disney is easily riding on brand recognition alone with the amount of first time visitors they're getting lately. More than half of the people that come as first timers have no clue what the place actually is other than it is Disney World. Many I've spoken to spend more than half their week-long trip at Magic Kingdom because they think it's the only park or that the others aren't worth visiting. Some don't even realize what's IN Magic Kingdom. I have been asked many many times "What is there to do here?"

If Disney can bring in 1,000+ village idiots on a daily basis that come based on the fact that Disney World merely exists and they know OF it, it's no wonder they haven't had to come up with a really memorable ad campaign in some time.

 

[Rowdy]

I highly doubt that.

I'm speaking for us locals, and personal experiences who say "it's that much now, I'm not paying that". There would be a lot more pull. I've heard countless times from people around here/family members "I'd go if it were the same price as 5 years ago when we went".