News Disney CFO Hugh Johnston Says Dynamic Pricing Is Coming to the Parks

[KDM31091]

Speaking of ridiculous prices, for $99 at universal studios you get a holiday VIP tour with skip the line access, a meal, cookie decorating etc. and a super highly themed gift shop (not a glorified Target). $99. That’s it. All the holiday offerings are included every day for everyone it seems. Just watched a video about it and was impressed for $99.

$200 at Disney for the privilege of attending the party (because most of the Christmas things are behind said paywall) and nothing extra is included except some cookies and hot chocolate.

It feels like Disney really is losing the plot. Why are they ripping out theming and destroying their product while wanting to keep milking guests dry? It’s going to backfire at some point. They’re milking guests dry and then wondering why people spending in other areas. All of a sudden charging for LLs means fewer people in coral reef for example so it’s closed for lunch soon. People have a finite budget. You can only squeeze so much.

 

[flynnibus]

If anyone is shocked that C-Suite is mentioning yield... your pearl clutching is probably a few decades late.

A decade or so they were also in a phase of squeezing the stone vs investing. In recent years, they pivoted and said the ROI is huge for investment and unleashed a huge amount of capital.

Now we're back to boasting about how squeezing blood from the stone is where they are really good at...

"yield" is not new, but stressing your growth is coming from your ability to milk people without growing capacity is a note worthy message.

 

[flynnibus]

Speaking of ridiculous prices, for $99 at universal studios you get a holiday VIP tour with skip the line access, a meal, cookie decorating etc. and a super highly themed gift shop (not a glorified Target). $99. That’s it. All the holiday offerings are included every day for everyone it seems. Just watched a video about it and was impressed for $99.

Hrmm.. I was just at Epic on Thursday. $159 gate charge, VIP offer? $515 on top of that.

The Holiday Tour is not skip the line access for the park like the normal VIP tour. It's basically a paid Grinch M&G show experience.

 

[flynnibus]

If Disney prices me out I’ll go somewhere else and they’ll have to try to get me back or replace me with a new customer.

This is the thing... Disney's model is so predicated on the repeat customer. Their brand loyalty and return rate is the envy of the world. These kinds of behaviors work to kill the golden goose.

I don't think the Disney we know can survive without the 'lifer' repeats. When Disney breaks the cycle on a customer or family.. that isn't one lost visit.. that is multiple future ones.

It takes a while to break that - but Disney seems to be trying their hardest to do it.

 

[Figments Friend]

It would be nice to have some dynamics at the Parks.

Just not the pricing.

-

 

[Chi84]

This is the thing... Disney's model is so predicated on the repeat customer. Their brand loyalty and return rate is the envy of the world. These kinds of behaviors work to kill the golden goose.

I don't think the Disney we know can survive without the 'lifer' repeats. When Disney breaks the cycle on a customer or family.. that isn't one lost visit.. that is multiple future ones.

It takes a while to break that - but Disney seems to be trying their hardest to do it.

I think the WDW we know was headed in that direction in any event.

Clearly it’s just an opinion but there are only a few generations that grew up “together with” Disney as it first started and initially expanded. Boomers and Gen X started with Disney and took their millennial children. Disney was on television, which was limited and in most cases had no competition.

Young people now have so much competing for their attention that I doubt they would feel the same connection with WDW as we did when we saw it grow from one park and a few monorail resorts into what it is today.

Of course Disney isn’t helping things by making indefensible business decisions and putting their parks out of reach for most people. But my feeling is that most things have a lifetime and the Disney “we know” is aging.

 

[DisneyHead123]

I think the WDW we know was headed in that direction in any event.

Clearly it’s just an opinion but there are only a few generations that grew up “together with” Disney as it first started and initially expanded. Boomers and Gen X started with Disney and took their millennial children. Disney was on television, which was limited and in most cases had no competition.

Young people now have so much competing for their attention that I doubt they would feel the same connection with WDW as we did when we saw it grow from one park and a few monorail resorts into what it is today.

Of course Disney isn’t helping things by making indefensible business decisions and putting their parks out of reach for most people. But my feeling is that most things have a lifetime and the Disney “we know” is aging.

My personal take is that the “Disney has to build nostalgia with every new generation” is overblown. I mean yes, it’s true for any brand that if they can hook people young it will be good for sales. That’s why tobacco and vape companies have gotten into trouble for targeting kids. But it’s also true for almost every brand that they have to sell themselves to each new generation of adults (and, alternately, that many things we have childhood nostalgia for do not become purchasing mainstays of adult life, no matter how much we loved them as kids.) I feel like there’s an assumption that many adults won’t go to Disney unless they have fond childhood memories, and I don’t think that’s a fair standard. I think Disney does well with Millennials largely because they really pushed Millennial-centric marketing and ideas in the parks.

 

[HauntedPirate]

Wasn’t it said that dynamic pricing in Paris was limited to tickets and possibly hotels? IF true, then I’m not sure why some are taking that to include things it didn’t include.

 

[MisterPenguin]

Wasn’t it said that dynamic pricing in Paris was limited to tickets and possibly hotels? IF true, then I’m not sure why some are taking that to include things it didn’t include.

Hugh talked about dynamic pricing for the parks. And he talked about yield for other things including food.

The lack of specificity has led to conflation.

 

[Sirwalterraleigh]

Wasn’t it said that dynamic pricing in Paris was limited to tickets and possibly hotels? IF true, then I’m not sure why some are taking that to include things it didn’t include.

Because that’s what the idiot said?

 

[flynnibus]

I think the WDW we know was headed in that direction in any event.

Clearly it’s just an opinion but there are only a few generations that grew up “together with” Disney as it first started and initially expanded.

WDW simply isn't old enough to support a lot more than 2-3 generations of families going... so being limited to a few is kinda by definition You really only have the boomers, their kids, and their grandkids. But especially through the 90s, that kind of generational entrenchment by middle class america is what built DVC.. contributed to DCL being such a success.. and lead to kids who went so much in the 90s that their childhood carried Disney through the next 30 years.

To your point though, will the kids who went 5-8 times as millennials onward become Disney lifers and repeat the same kind of visitation patterns with their kids? Disney was still converting people en mass through the 200x era and through the early 201x years. DVC was still being sold like crazy. So Gen X were still buying the repeat story. Will their kids? This is what Disney is toying with...

Boomers and Gen X started with Disney and took their millennial children. Disney was on television, which was limited and in most cases had no competition.

Young people now have so much competing for their attention that I doubt they would feel the same connection with WDW as we did when we saw it grow from one park and a few monorail resorts into what it is today.

Obviously tastes and options evolve.. but that's also why Disney is a brand conglomerate now. Disney isn't just Donald Duck, but Iron Man, Star Wars, etc. They are covering the spread.. and trying to find those new experiences people still want.

I've been saying it for 20years tho, that the competition caught on and undermined Disney's lead. So to your point, I don't think a gen Z kid is as impressed by WDW as a Gen X kid was. They can see a Rainforest Cafe at their local mall...

 

[Chi84]

WDW simply isn't old enough to support a lot more than 2-3 generations of families going... so being limited to a few is kinda by definition You really only have the boomers, their kids, and their grandkids. But especially through the 90s, that kind of generational entrenchment by middle class america is what built DVC.. contributed to DCL being such a success.. and lead to kids who went so much in the 90s that their childhood carried Disney through the next 30 years.

To your point though, will the kids who went 5-8 times as millennials onward become Disney lifers and repeat the same kind of visitation patterns with their kids? Disney was still converting people en mass through the 200x era and through the early 201x years. DVC was still being sold like crazy. So Gen X were still buying the repeat story. Will their kids? This is what Disney is toying with...


Obviously tastes and options evolve.. but that's also why Disney is a brand conglomerate now. Disney isn't just Donald Duck, but Iron Man, Star Wars, etc. They are covering the spread.. and trying to find those new experiences people still want.

I've been saying it for 20years tho, that the competition caught on and undermined Disney's lead. So to your point, I don't think a gen Z kid is as impressed by WDW as a Gen X kid was. They can see a Rainforest Cafe at their local mall...

I think Disney can find those new experiences but there are going to be hits and misses along the way.

This won’t matter if they continue to price their product out of the reach of younger families.

 

[CoastalElite64]

I'm telling you, I'm more fascinated that he said it, than what was said.

Like, is this ... a strategy? Just acknowledging it's an expensive good and no longer middle-class affordable? Or was it a gaffe like saying guests can afford to skip a churro or two?

This is what I was saying in threads the last few months. WDW is priced as a premium/luxury for most Americans, especially in this economic climate. This confirms it.

 

[BrianLo]

I think the WDW we know was headed in that direction in any event.

Clearly it’s just an opinion but there are only a few generations that grew up “together with” Disney as it first started and initially expanded. Boomers and Gen X started with Disney and took their millennial children. Disney was on television, which was limited and in most cases had no competition.

Young people now have so much competing for their attention that I doubt they would feel the same connection with WDW as we did when we saw it grow from one park and a few monorail resorts into what it is today.

Of course Disney isn’t helping things by making indefensible business decisions and putting their parks out of reach for most people. But my feeling is that most things have a lifetime and the Disney “we know” is aging.

To your point though, will the kids who went 5-8 times as millennials onward become Disney lifers and repeat the same kind of visitation patterns with their kids? Disney was still converting people en mass through the 200x era and through the early 201x years. DVC was still being sold like crazy. So Gen X were still buying the repeat story. Will their kids? This is what Disney is toying with...

I like to push back in this very commonly repeated anecdote and Flynnibus is right that DVC is an excellent surrogate of loyalty.

What data supports that Millennials are a weak Disney generation? I think there is either conflation or confusion about what defines the generational limits.

The primary spend demo are now millennials. Attendance is significantly higher than it was in the 80/90’s when Baby Boomers were taking their millennial kids. DVC continues to sling a similar volumes of new contracts in spite of far worse pricing and internal competition from their own resale product. Disney offers far more product (on both coasts). Where do we think Disney adults are coming from?

This five alarm that the baby boomers are the last Disney generation seems mostly personal anecdotes. They are the last “Walt” generation, certainly. But the early Eisner/VHS Gen also have strong affinity for the product. They are what is currently supporting the product base.

WDW continues to swim with kids; we have a very long way to go for me to be convinced the core demographic has in any way changed and an even further way to drop that attendance mix to compensate for how many more kids by volume are in the parks than In the 80/90’s.

 

[Jrb1979]

This is what I was saying in threads the last few months. WDW is priced as a premium/luxury for most Americans, especially in this economic climate. This confirms it.

WDW was never built as a premium/luxury product. While it always has been pricey, it was still affordable for most Americans.

In theory, it makes sense to go after those who have the most disposable income. The problem is many of those who do have that money aren't likely to be repeat visitors to WDW.

 

[Chi84]

I like to push back in this very commonly repeated anecdote and Flynnibus is right that DVC is an excellent surrogate of loyalty.

What data supports that Millennials are a weak Disney generation? I think there is either conflation or confusion about what defines the generational limits.

The primary spend demo are now millennials. Attendance is significantly higher than it was in the 80/90’s when Baby Boomers were taking their millennial kids. DVC continues to sling a similar volumes of new contracts in spite of far worse pricing and internal competition from their own resale product. Disney offers far more product (on both coasts). Where do we think Disney adults are coming from?

This five alarm that the baby boomers are the last Disney generation seems mostly personal anecdotes. They are the last “Walt” generation, certainly. But the early Eisner/VHS Gen also have strong affinity for the product. They are what is currently supporting the product base.

WDW continues to swim with kids; we have a very long way to go for me to be convinced the core demographic has in any way changed and an even further way to drop that attendance mix to compensate for how many more kids by volume are in the parks than In the 80/90’s.

I think millennials are among the generations I mentioned as growing up alongside Disney. I would never say boomers were the last.

My kids are millennials and love Disney. They go as many times as my husband and I can afford to take them and our grandkids.

If they had to pay for it themselves they would choose another vacation venue. Not because they couldn’t afford it but they would prefer to spend their money elsewhere.

 

[flynnibus]

My personal take is that the “Disney has to build nostalgia with every new generation” is overblown. I mean yes, it’s true for any brand that if they can hook people young it will be good for sales. That’s why tobacco and vape companies have gotten into trouble for targeting kids. But it’s also true for almost every brand that they have to sell themselves to each new generation of adults (and, alternately, that many things we have childhood nostalgia for do not become purchasing mainstays of adult life, no matter how much we loved them as kids.)

The issue for Disney is this isn't just normal churn. Without the repeat customers Disney's EXISTING demand line would collapse. Disney today has an insanely high percentage of their annual demand from customers who are loyal repeaters. Disney doesn't just have to advertise to the new age group to stay afloat, they have to gain many times over the number of customers they lost.. because the loyal repeater who maybe came 4-5 times every two years is gonna take 4-5 NEW customers to replace them. So it's not just 'lose one, win one, repeat annually'..

 

[Sirwalterraleigh]

This is what I was saying in threads the last few months. WDW is priced as a premium/luxury for most Americans, especially in this economic climate. This confirms it.

That’s not the product

You can “say it” until you’re blue in the face…that juice doesn’t match the squeeze.

It’s why the attendance is shrinking with no economics driving it and the margins are getting tighter.

 

[MrPromey]

The poor cast members who'll have to keep changing all those signs in the confectionery over and over...back and forth

I'm sure if they go this route, they'll replace with little e-ink sings. From the added profits they'd more than be able to afford it if Kohl's operating as a secret discount chain can.

 

[Sirwalterraleigh]

I like to push back in this very commonly repeated anecdote and Flynnibus is right that DVC is an excellent surrogate of loyalty.

What data supports that Millennials are a weak Disney generation? I think there is either conflation or confusion about what defines the generational limits.

The primary spend demo are now millennials. Attendance is significantly higher than it was in the 80/90’s when Baby Boomers were taking their millennial kids. DVC continues to sling a similar volumes of new contracts in spite of far worse pricing and internal competition from their own resale product. Disney offers far more product (on both coasts). Where do we think Disney adults are coming from?

This five alarm that the baby boomers are the last Disney generation seems mostly personal anecdotes. They are the last “Walt” generation, certainly. But the early Eisner/VHS Gen also have strong affinity for the product. They are what is currently supporting the product base.

WDW continues to swim with kids; we have a very long way to go for me to be convinced the core demographic has in any way changed and an even further way to drop that attendance mix to compensate for how many more kids by volume are in the parks than In the 80/90’s.

Travel statistics have risen considerably on a predictable trajectory for 75 years…even as the overall wealth numbers have declined for half of that.

It’s not that less people got to go…it’s that they have less wealth than the two generations prior.

So that looks roughly like an “X” on the Econ flow chart and the lines continue to diverge. That isn’t a great spot to be in when you’re 100% a non essential product.