Len Testa - “Disney positions itself as the all-American vacation. The irony is that most Americans can’t afford it.”

[monothingie]

Disney obviously has to continue to offer a product that is appealing to those with the money to enjoy it and can certainly screw that up. Maybe they already are. However, I don't see how you can make a clear case that Disney needs to continue focusing on a consumer group that is declining both in terms of relative size and income versus another that is only likely to continue becoming more lucrative.

Thinking back to the article that sparked this thread, you can clearly see that Disney still provides avenues for those in the middle income bracket to experience WDW. Presumably, with greater capacity they can also provide more avenues to appeal to this audience. If you were running the company, though, would you really look at the numbers and say "we need to focus on this demographic that is declining in almost every respect"?

Because the majority of guests are not the ones staying at the Deluxes or DVC and buying LL or VIP Tours. Do you think it is fully sustainable to depend on the expectation that fewer guests will spend more to cover the loss in number of average guests?

I think what you're getting wrapped up in the income brackets. Disney isn't pursuing the Upper Income Bracket, they're pursuing the 1 and 2%. A family of 4 with a household income of $180K does not have the same disposable income as a family of 4 with a household income of $500K. Disney wants them more than anything, and they don't exist en masse.

 

[Sirwalterraleigh]

There was data released yesterday that the US economy is being floated by only the top 20% of earners…responsible for 51% of ALL spending this year…and even their leverage is way the hell up.

That’s a disaster inbound

What could go wrong? It’s not like the guilded age lead directly to the biggest economic collapse in history sandwiched by the two most catastrophic global wars ever…

 

[Sirwalterraleigh]

I think people want all of this to be true, but I don't know that it is. For example, there is nothing that suggests the trend toward greater concentration of wealth in the upper income bracket relative to the middle income bracket is going to change anytime soon. So, if anything, the economic incentives to pitch their product to this group may increase along with their relative share of the national income.

It is also less clear to me that we're seeing low attendance right now. My impression is more that it is stagnant for Disney and Universal with perhaps a slight decline, but not that it is low. Compared to any year in the 1990s, for example, it would probably be considered a record-breaking year for WDW. So, is that really not viable if those who are attending are paying increasing amounts and their ability to do so will also likely continue to increase?

None of this comes from a place of being happy about what is happening, but rather trying to be open eyed about it and understanding why it is happening.

It’s 100% true

The parks were built to operate on a specific model.
It was volume. Not quite Walmart…but in the neighborhood. The operation has to have high volume to churn the cash registers (that’s what they used to use instead of Apple Pay for the kids out there)…

It’s not “optional”…moving away from it just causes cracks in the damn…and every move they make is to plug one as another opens up.

The dumbest things maybe in their history is the 10 year “…it’s luxury now…”nonsense…only equaled by fandom
In echo chambers such as this believing it and giving it air.

It’s stupid…you can’t have all “high margin” customers. Put a 10000 in a park a day that make a million and they’ll shutter the parks in a shockingly short amount of time.

Because the product they sell doesn’t have the value to make up for the losses in body count and volume.

It’s easier to have a tiger grow SPOTS.

So how did this happen?

BAD MANAGEMENT.

I may have mentioned that once or twice before…

 

[Miss Bella]

I did the River Cruise out of Budapest down through Slovakia, Austria and into Germany for the Christmas Markets, absolutely incredible trip, you will love it!! Marie

I want to do the Danube river cruise. Not sure about December though. How cold was it?

 

[lentesta]

For what it's worth, this new 40% off deal for APs seems better than average:

You can see the sailings by clicking "See offers" on the righthand side of the DCL site.

 

[Miss Bella]

There was data released yesterday that the US economy is being floated by only the top 20% of earners…responsible for 51% of ALL spending this year…and even their leverage is way the hell up.

That’s a disaster inbound

What could go wrong? It’s not like the guilded age lead directly to the biggest economic collapse in history sandwiched by the two most catastrophic global wars ever…

I've been saying for more than a decade that the debt bubble is going to pop. Yet we seem to keep kicking the can down the road and holding the economy together with duct tape. I don't think this is sustainable and unfortunately I think it will eventually catch up with us.
All this talk of going to Europe, but their economy is in dire straights. I expect to see them default again. The Euro was never a good idea to begin with.

 

[Sirwalterraleigh]

For what it's worth, this new 40% off deal for APs seems better than average:

View attachment 883818

You can see the sailings by clicking "See offers" on the righthand side of the DCL site.

Not exactly a sign of “strong demand”

…I’m sure it’s Chapek’s fault

 

[Miss Bella]

For what it's worth, this new 40% off deal for APs seems better than average:

View attachment 883818

You can see the sailings by clicking "See offers" on the righthand side of the DCL site.

WDW is also offering some good deals to Floridians. I think that means sales are weak.

 

[Miss Bella]

Not exactly a sign of “strong demand”

…I’m sure it’s Chapek’s fault

In January the shareholders across all forums will tell you the ships sailed full and the parks were packed with no mention of how they got that way.

 

[Sirwalterraleigh]

In January the shareholders across all forums will tell you the ships sailed full and the parks were packed with no mention of how they got that way.

That and it’s not true

Because that’s not financial data

They can say whatever they want

 

[Sir_Cliff]

Because the majority of guests are not the ones staying at the Deluxes or DVC and buying LL or VIP Tours. Do you think it is fully sustainable to depend on the expectation that fewer guests will spend more to cover the loss in number of average guests?

I think what you're getting wrapped up in the income brackets. Disney isn't pursuing the Upper Income Bracket, they're pursuing the 1 and 2%. A family of 4 with a household income of $180K does not have the same disposable income as a family of 4 with a household income of $500K. Disney wants them more than anything, and they don't exist en masse.

But Disney is not closing everything below a Deluxe or DVC: the moderates and value resorts are open and doing fine. They are also very expensive, and probably priced more for that top 19% than the middle 51%. When they need to appeal to that middle 51% to fill them, they then offer various discounts.

I think talking about those income brackets is more realistic than talking about the top 1 or 2% in terms of Disney's business strategy. They are certainly providing more offerings for those at the very top end, but there are still tens to hundreds of thousands of guests moving through the resort every single day. So, either WDW is capturing a lot of that narrower market or it isn't quite as unaffordable as is being implied.

There was data released yesterday that the US economy is being floated by only the top 20% of earners…responsible for 51% of ALL spending this year…and even their leverage is way the hell up.

That’s a disaster inbound

What could go wrong? It’s not like the guilded age lead directly to the biggest economic collapse in history sandwiched by the two most catastrophic global wars ever…

This is kind of what I am saying. Disney can certainly be criticised for various decisions they are making, some of which are likely bad ones. There is no mystery why the resort (and other businesses) are becoming less accessible to the middle classes, though, when you look at the numbers and consider how anyone in business would respond to what they show. If you want to address that, it's not going to be by lowering the cost of a WDW vacation.

 

[lentesta]

Not exactly a sign of “strong demand”

…I’m sure it’s Chapek’s fault

My sis called today to cancel and rebook her upcoming cruise. It saved her $1,500 after losing the $800 deposit. Same itinerary and stateroom.

 

[networkpro]

I want to do the Danube river cruise. Not sure about December though. How cold was it?

Its not optimal weather. ~2 hours of sunlight a day (heavy cloud cover), daytime highs in the upper 30's. lows in the upper 20's. BUT You really need to visit Christkindl markets along the Danube at least once in your life, they are wonderful. Passau is a good one, but not as good as Striezelmarkt in Dresden.

 

[Sirwalterraleigh]

This is kind of what I am saying. Disney can certainly be criticised for various decisions they are making, some of which are likely bad ones. There is no mystery why the resort (and other businesses) are becoming less accessible to the middle classes, though, when you look at the numbers and consider how anyone in business would respond to what they show. If you want to address that, it's not going to be by lowering the cost of a WDW vacation.

No no no

If you see a storm on the horizon…you hedge/contingency to address it

You don’t lean into it.

Is this the Nickelodeon School of Economics?

Whales cannot keep the Parks growing…you totally missed it

 

[Andrew C]

My sis called today to cancel and rebook her upcoming cruise. It saved her $1,500 after losing the $800 deposit. Same itinerary and stateroom.

That is amazing...lol.

 

[Vegas Disney Fan]

Disney isn't pursuing the Upper Income Bracket, they're pursuing the 1 and 2%. A family of 4 with a household income of $180K does not have the same disposable income as a family of 4 with a household income of $500K. Disney wants them more than anything, and they don't exist en masse.

And the ones that do exist have unlimited vacation options due to their disposable income.

I think that’s what Disney is overlooking, they may convince the high earners to come for 1 week every couple years, between their other vacations, but that’s not enough to replace the loyal fans they’re losing who used to go several times every year.

It’s amazing they learned absolutely nothing from the Starcruiser fiasco.

 

[Splash4eva]

It’s 100% true

The parks were built to operate on a specific model.
It was volume. Not quite Walmart…but in the neighborhood. The operation has to have high volume to churn the cash registers (that’s what they used to use instead of Apple Pay for the kids out there)…

It’s not “optional”…moving away from it just causes cracks in the damn…and every move they make is to plug one as another opens up.

The dumbest things maybe in their history is the 10 year “…it’s luxury now…”nonsense…only equaled by fandom
In echo chambers such as this believing it and giving it air.

It’s stupid…you can’t have all “high margin” customers. Put a 10000 in a park a day that make a million and they’ll shutter the parks in a shockingly short amount of time.

Because the product they sell doesn’t have the value to make up for the losses in body count and volume.

It’s easier to have a tiger grow SPOTS.

So how did this happen?

BAD MANAGEMENT.

I may have mentioned that once or twice before…

Altho i agree with everything you have said and agree Iger gets passes all the time… something also needs to be said about being able to extract so much more money from these guests and also myself included have said this is a model that seems unattainable yet here we are and its still standing… lets face it also they really havent wowed us with much that they are able to hang onto & with these upcoming expansions pure curiosity will bring people back who may have strayed. Its such an interesting dynamic.

 

[Sirwalterraleigh]

Altho i agree with everything you have said and agree Iger gets passes all the time… something also needs to be said about being able to extract so much more money from these guests and also myself included have said this is a model that seems unattainable yet here we are and its still standing… lets face it also they really havent wowed us with much that they are able to hang onto & with these upcoming expansions pure curiosity will bring people back who may have strayed. Its such an interesting dynamic.

There hasn’t been a recession in 15 years

That is the reason. It’s nothing napoleon did. He actually has made them far more vulnerable.

 

[Sirwalterraleigh]

And the ones that do exist have unlimited vacation options due to their disposable income.

I think that’s what Disney is overlooking, they may convince the high earners to come for 1 week every couple years, between their other vacations, but that’s not enough to replace the loyal fans they’re losing who used to go several times every year.

It’s amazing they learned absolutely nothing from the Starcruiser fiasco.

Post of the day

 

[Splash4eva]

There hasn’t been a recession in 15 years

That is the reason. It’s nothing napoleon did. He actually has made them far more vulnerable.

Hence the criticism regarding stock price as we have discussed but if a recession comes tough to single out any company really if business slows down. Personally the DCL from things ive seen and read discounts etc may be a bigger issue for him