FY2012 TWDC financial results

GoofGoof

Premium Member
The big question is, at what point does that become counter productive? Eventually the extra amount you are going to be earning from the increased prices will be offset by the number of people who decide they can't afford to go to Disney or at least can't afford to go as long.

You hit the nail on the head. I fear it may take that kind of attendance drop to get them to green light a DCA style makeover. It is short sighted thinking, but Iger is on his way out and everyone around him is probably more worried about keeping their jobs under a new regime to suggest taking a chance.
 

Atomicmickey

Well-Known Member
The big question is, at what point does that become counter productive? Eventually the extra amount you are going to be earning from the increased prices will be offset by the number of people who decide they can't afford to go to Disney or at least can't afford to go as long.

Add to this what we might term "stratification of experience".

WDW has always had an egalitarian feel. You pay to get in, but once you're there, essentially
you have the same experience. No more. This hunt for new revenue streams--and I believe that
NextGen is in large measure just that--means that 'the more you pay, the better your day'. I mean,
sure, you choose between value and deluxe resorts, quick service and sit down dining, that sort of thing.
This business of reserved areas for fireworks viewing, other premium upcharges like Wild Africa Trek,
etc. mean that they are going to be nickel and diming us all to death, soon, I feel.

One of the things about FLE, for me, is that its most spectacular enhancement is essentially a new
revenue generator, the BOG restaurant. Come on in and spend more money. (Not that a dining option
like that wasn't needed, I just wish it was part of a more attraction-heavy expansion)
 

GoofGoof

Premium Member
Add to this what we might term "stratification of experience".

WDW has always had an egalitarian feel. You pay to get in, but once you're there, essentially
you have the same experience. No more. This hunt for new revenue streams--and I believe that
NextGen is in large measure just that--means that 'the more you pay, the better your day'. I mean,
sure, you choose between value and deluxe resorts, quick service and sit down dining, that sort of thing.
This business of reserved areas for fireworks viewing, other premium upcharges like Wild Africa Trek,
etc. mean that they are going to be nickel and diming us all to death, soon, I feel.

One of the things about FLE, for me, is that its most spectacular enhancement is essentially a new
revenue generator, the BOG restaurant. Come on in and spend more money. (Not that a dining option
like that wasn't needed, I just wish it was part of a more attraction-heavy expansion)

I fear they will be borrowing the Universal model of charging for express pass. I am actually surprised it didn't happen already. It's not like TDO to leave money on the table like that.
 

menamechris

Well-Known Member
The big question is, at what point does that become counter productive? Eventually the extra amount you are going to be earning from the increased prices will be offset by the number of people who decide they can't afford to go to Disney or at least can't afford to go as long.

I agree - but the way things are going - Disney seems to be taking the approach that attendance drops are alright, as long as the overall domestic numbers look acceptable. What does this mean for Orlando? I think that people will begin splitting thir vacations between Disney and Universal. I think it will become the norm for tourists to spend 4 days at Disney, and then move over to Universal and spend three days there. Universal is working very hard to incorporate a very "family-friendly" image - and it is working. But that will mean the era of Disney holding tourists captive on property for the length of their vacation will soon be coming to an end. And with no greenlit plans to fight the expansion and innovation down the road, we may be talking about a matter of months once Universal's value resort is complete.

I do honestly fear for the future of the WDW resort. There are many who think Disney will be fine no matter what, and weather whatever storm, but I think the kind of leadership and decisions that are being made are not with the resort's long-term goals and profits in mind, just the quarterly report. Once people are lured away, and begin vacationing differently, they will never go back. They will realize there is a whole Orlando outside the gates of WDW. This will most definetly affect the bottom line and attendance (and we can see that it already "modestly" has). And what may be extraordinary today, will be ordinary tomorrow.
 

WDW1974

Well-Known Member
@asianway @WDW1974

Does anyone know how they got 78%, did they take the percentage of land plus world or number rooms overall. How has the DL hotels been doing near capacity?

I'll return to this thread when I have more time ... not spending my beautiful Saturday sitting here.
But if that 78% is both (and I haven't looked to see IF that is the case but it sounds right), then WDW had issues again becuase DL's resorts have been running well over 90% and at prices much closer to rack rate versus the discounting that is rampant STILL 'Bob we're cutting down our discounting 2009 Iger'
 

asianway

Well-Known Member
Original Poster
I'll return to this thread when I have more time ... not spending my beautiful Saturday sitting here.
But if that 78% is both (and I haven't looked to see IF that is the case but it sounds right), then WDW had issues again becuase DL's resorts have been running well over 90% and at prices much closer to rack rate versus the discounting that is rampant STILL 'Bob we're cutting down our discounting 2009 Iger'
DL has a much smaller "box" to fill and can pretty much play with rate to achieve 90's on a daily basis. WDW is the lions share of those rooms, so the Occ % is going to live or die by their results.
 

StageFrenzy

Well-Known Member
DL has a much smaller "box" to fill and can pretty much play with rate to achieve 90's on a daily basis. WDW is the lions share of those rooms, so the Occ % is going to live or die by their results.

Definitely aware of that, I was wondering where/how they were flubbing the numbers to make it look better. Combining what spirit said earlier this year about occ rates in WDW and DL's smaller number of rooms along with carsland they have to be sitting pretty.

psstt... If you build it and it is a hotel they might not come.
 

TP2000

Well-Known Member
This came to me sitting in traffic yesterday;

With these Iger/Rasulo comments they are clearly expecting FLE to pay off big with attendance and spending in 2013. But what is officially open in 2013 for FLE is the Mermaid clone from DCA, some gift shops and meet n' greets and a nice new restaurant. Mermaid is the only actual "NEW RIDE!" that opens with FLE, and this is what Mermaid did for DCA attendance when it opened in May, 2011:

2010 Attendance @ DCA - 6.28 Million
2011 Attendance @ DCA - 6.30 Million

Barely budged up in attendance after Mermaid opened (with adjacent new restaurants and pretty park upgrades around it). Mermaid is a cute, fun ride of the type DCA lacked originally, with a short 5 minute wait on busy afternoons, but it's nothing to pin an entire new "Come to Florida!" marketing campaign on. It's not even much to encourage customers to spend an extra day on Disney property for, instead of escaping for a day or two to go see Harry Potter up the freeway.

I also wonder how Mermaid will be received in Magic Kingdom, sitting next door to Small World as one of the great family fun rides of all time, and nearby Peter Pan and Pooh as other solid dark ride offerings. At DCA, Mermaid filled an empty void in the middle of the park where no family demographic dark ride existed before or is nearby. At Magic Kingdom, it sits in the midst of already great family demographic dark rides to immediately compare and contrast against. It should be interesting to see how Mermaid is received by families in that very different Magic Kingdom Park environment.
 

TP2000

Well-Known Member
Maybe...there is enough demand for that many rooms, they have simply priced themselves out of the market by providing at best, Fairfield Inn service at Ritz prices.

Thank you for that perfect analogy! I have often marveled at the lack of polish and profesionalism at WDW Moderate and Deluxe hotels. They get away with front-line service staff like you'd find in a basic Fairfield Inn, or at best a decent Sheraton. But they charge prices like you'd find at a Ritz, or even a Mandarin Oriental if you are there at the wrong time of year. Amazing!

And this is something I've noticed at the West Coast Disney hotels too; most notably the Grand Californian where the only people to greet me with a smile and hello were the Spanish-speaking housekeeping staff I passed in the corridors. The English speaking desk clerks, bellmen and front of house staff pretend to not work in the service industry most of the time; they are too cool to provide gracious service, and Disney has not trained them well on how to even begin to do that if they have the inclination. Pay the same amount per night at the nearby Laguna Ritz Carlton, Montage, or Newport Islands hotel, and you are treated like royalty by perfectly turned out and polished staff, so it can be done in SoCal just as it can in any other big city at that price point. But not on Disney property, apparently.

Ending a mandatory transaction with a cheesy smile and "Have a Magical Day!" does not excuse all your other service deficiences and your lack of overall profesionalism. :rolleyes:
 

asianway

Well-Known Member
Original Poster
Thank you for that perfect analogy! I have often marveled at the lack of polish and profesionalism at WDW Moderate and Deluxe hotels. They get away with front-line service staff like you'd find in a basic Fairfield Inn, or at best a decent Sheraton. But they charge prices like you'd find at a Ritz, or even a Mandarin Oriental if you are there at the wrong time of year. Amazing!

And this is something I've noticed at the West Coast Disney hotels too; most notably the Grand Californian where the only people to greet me with a smile and hello were the Spanish-speaking housekeeping staff I passed in the corridors. The English speaking desk clerks, bellmen and front of house staff pretend to not work in the service industry most of the time; they are too cool to provide gracious service, and Disney has not trained them well on how to even begin to do that if they have the inclination. Pay the same amount per night at the nearby Laguna Ritz Carlton, Montage, or Newport Islands hotel, and you are treated like royalty by perfectly turned out and polished staff, so it can be done in SoCal just as it can in any other big city at that price point. But not on Disney property, apparently.

Ending a mandatory transaction with a cheesy smile and "Have a Magical Day!" does not excuse all your other service deficiences and your lack of overall profesionalism. :rolleyes:
As far as the Disneyland Hotel goes, I think they come close to the prices. They don't have the captive audience WDW has with the Hilton, Marriott, and Sheraton across the street.

DLH has characters in the lobby at check in times, a great group of CMs over at Trader Sams, and every time I've eaten at Steakhouse 55 a manager visited my table-a rarity at a WDW restaurant. The new rooms look great.
 

GoofGoof

Premium Member
@asianway @WDW1974

Does anyone know how they got 78%, did they take the percentage of land plus world or number rooms overall. How has the DL hotels been doing near capacity?
I don't think DL hotel rooms can move the number very much. Less than 10% of the inventory. One big factor is what they use for the denominator. If they take rooms out of service than you reduce the number available and increase the percentage. They just quote a percentage with very little additional data.
 

MichWolv

Born Modest. Wore Off.
Premium Member
P&R is a huge driver of capital spending so they have large non-cash accounting expense in the form of depreciation that lowers net income, but has no impact on free cash flow. The parks are a steady source of reliable cash flow which helps to stabilize the film studio and TV results which fluctuate depending on successful TV shows and movies.

Actually, free cash flow is typically (and definitely in Disney's case, per the release) calculated as operating cash flow less capital expenditures. So depreciation (and other things) are added back to net income to get operating cash flow, and then cap ex is deducted to get free cash flow.

That P&R is a huge driver of cap ex is, of course, true.
 

MichWolv

Born Modest. Wore Off.
Premium Member
Given today's treatment of Disney stock by Wall Street, I strongly suspect Iger is shying away from committing further capital investments beyond those already announced in 2013. The stock hasn't seen this steep of a decline in over a year. Carsland might be a "go" but it could be years before you and I are on a Carsland attraction at DHS.;)

True on the steepest decline in a year, but the stock hit an all-time high in October, and even with an 11.5% drop since then, closed Friday at a higher price than anytime in the Company's history prior to June of this year, so I don't think Iger is reconsidering his strategy yet.
 

MichWolv

Born Modest. Wore Off.
Premium Member
Yes, with $927M in depreciation in 2012, WDW and DLR provide a great deal of free cash flow. Unfortunately for the fans of the theme parks, TWDC continues to invest this money in TV and film, Iger's pets.

Actually, the depreciation expense of $927 is dwarfed by the cap ex of $2,242M in the domestic parks. As depreciation is, essentially, a spreading of previous cap ex over the useful lives of those capital expenditures, the fact that cap ex in the current year is so much greater suggests that, dollar for dollar, disney is replacing capital assets at a greater rate than the previously constructed assets are being used up. Of course, that doesn't take into account inflation, so the analogy isn't perfect. I don't think the report has segment operating cash flow or free cash flow, so we can't really tell how much cash flow P&R are generating compared to others, but the comparison of depreciation expense for the segment to cap ex for the segment does not, in and of itself, suggest underinvestment.
 

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