A Spirited Perfect Ten

[ford91exploder]

Thankfully the demand for Disney Springs restaurants hasn't hit that hard yet.

 

[Nubs70]

ParentsOf4, I have a random question that I've been going over. Say MK has an exact attendance every Thursday of 100,000 people present-day. If WDW doubled the price of Thursday admission to the Magic Kingdom (say from $100 exactly to get in on Thursday to $200 exactly) and left everything else static across the week with regard to price/hours/etc., would attendance be more or less than 50,000 on Thursday (for simplicity lets assume only single-day tickets can be purchased for attendance)?

I wonder what price point would see 100,000 daily guests to MK become 10,000 daily guests if price was the only variable different in the current attendance equation.

Depends on the price elasticity of the MK experience. Based on park performance post 9/11 and 08 recession, the MK experience is price elastic.

It appears that those in power believe that the brand is highly inelastic and customers will pay anything. WDW are potraying surge pricing as a means to thin the herd. WDW really wants the same attendance levels at higher prices.

 

[ford91exploder]

Depends on the price elasticity of the MK experience. Based on park performance post 9/11 and 08 recession, the MK experience is price elastic.

It appears that those in power believe that the brand is highly inelastic and customers will pay anything. WDW are potraying surge pricing as a means to thin the herd. WDW really wants the same attendance levels at higher prices.

I think Burbank thinks that WDW pricing is infinitely elastic and the 'One and Done' crowd will pay anything to visit WDW. They are wrong of course because strategies like this usually backfire at the worst possible moment for the company. Sadly it will be fun to watch the flameout of the TWDC. As I've said the various business units will continue but under new ownership.

Just watch the trainwreck over at ESPN, I'm NOT a fan of ESPN and I know lots watch it to see their college teams, But TWDC is making the assumption that people watch ESPN because it's ESPN not because of the CONTENT and PERSONALIITIES who are on ESPN. But TWDC is firing all their well known on-air talent and replacing with what reruns of old games. The same cost cutting mentality which took root in Orlando post 9/11 is metastasizing across all of TWDC. Yes it gives good results in the 1< year timeframes but it leads to the 'why am i paying so much for so little' damaging the business long term.

 

[JediMasterMatt]

According to Disney's own 10K filings, domestic theme park attendance is up 30% since 2005. At WDW, that's more than an entire theme park's worth of attendance packed into the same 4 theme parks!.

I'm just thankful that WDW has improved in every aspect by at least 31% since 2005 to offset the increase in attendance. We are living in golden (parachute) times ladies and gents.

*I'm inside a steel framed building... no need to worry about getting struck by lighting at the moment.

 

[HauntedMansionFLA]

I'm just thankful that WDW has improved in every aspect by at least 31% since 2005 to offset the increase in attendance. We are living in golden (parachute) times ladies and gents.

*I'm inside a steel framed building... no need to worry about getting struck by lighting at the moment.

I'm just waiting for another recession or stock market meltdown to hit sometime soon. It happens every seven to eight years. Yes, golden times but nothing last forever.

 

[Cesar R M]

but here is a great example of how the current disney model of planning and upsells makes vacationing harder...

I'm going for 2.5 days in Dec... I want to see all three nights of entertainment (osbourne, illuminations, MK). Yet, MK is closing early due to parties for both nights I'm there.. and wanting to secure a spot against potential mobs... I'm looking at booking the desert function for osbourne. But months ahead, with no input from actual crowds, or weather.. I have to pick and lockdown which night I'm at each park due to the 100% necessity for ADRs and fear of crowds/limited availability.

I can't get dinner at DHS or EPCOT without securing a ADR... and doing so basically eliminates seeing MK's fireworks that night. Still torn... but I think seeing illuminations may be worth the tradeoff.

you cant just get a dinning reservation at California grill?

 

[COProgressFan]

Disney springs seems to be adding mostly those higher end places. I just don't see them all being successful long term.

Do we know what's left, restaurant wise, to open? There is STK which is a high end steak house. Edison or whatever, which also seems like it will be up there in price. I feel like this is a gamble for these restauranta to open there.

I completely agree with this. I think there is going to be a limit to how much people are willing to pay for dining at Springs. The new additions sound great. But I'm not sure the clientele can support all these high end places. I suspect a mix of a few more moderately priced sit-down locations would suit them better. Time will tell, of course, but I think they're missing the mark.

 

[Cesar R M]

He's wrong. Plain and simple, He's wrong.

Yes, Epcot has shows the least amount of growth percentage wise in the past 5 years. Yes, Epcot has shown 4.2% growth vs 6.3% for DHS and 8.5% for DAK since 2009.

Yes, Epcot relatively even with 1992 attendance levels.

Yes, Epcot is in dire need of some serious love and capital investments - no more makeovers or "plussing" as the fanbois call it. ("Plussing" is like getting a piercing. You're just changing what was already there and the novelty will wear off quick - as Prince Albert.)

However its going to be at least 5-10 years before either DHS or DAK are even with them attendance-wise, IMO. And even then, I cant see both DAK and DHS overtaking Epcot.

even if DAK and DHS explode thanks to Star Wars and Avatar/ROL ?

 

[doctornick]

even if DAK and DHS explode thanks to Star Wars and Avatar/ROL ?

DAK is not going to "explode" due to Pandora/ROL. Sure, some people might go there who otherwise wouldn't, but the largest effect will be people spending longer in DAK when they go there as opposed to more days. Instead of going in the AM and leaving mid day -- there was always that rush out at the end of the parade when they had it -- people will spend a full day there. Which is still great, as it relieve some of the pressure at night on Epcot and especially MK. But I don't see DAK surpassing Epcot any time soon, especially with Epcot getting a new Soarin' and Frozen and who knows what else with the reported $350M going there.

DHS going past Epcot? I'd guess that is possible once SW is done on top of TSL. However, there will be some element of "rising tide raises all ships" going on -- a few people might cut off a half day (dinner) at Epcot or a second Epcot day in favor of more time at DHS, but more people will go to WDW in general which will add folks to Epcot.

 

[ford91exploder]

I'm just waiting for another recession or stock market meltdown to hit sometime soon. It happens every seven to eight years. Yes, golden times but nothing last forever.

THAT is when TWDC gets washed down the drain because they have done nothing to improve top line revenues, Since so much of the asset value of the TWDC is in treasury stock a decline in their stock price drives down the financial value of the company, They don't even have a quarters's worth of cash on hand unlike most of their comparables. Most of their theme park assets are fully depreciated and are not being replaced at a rate commensurate with the current depreciation.

Their 'golden age' of stock price is based entirely on financial engineering and those companies ALWAYS FAIL HARD. The parks and media properties will continue under new ownership which hopefully is someone like OLC and not a Bain Capital or KKR.

 

[ford91exploder]

I completely agree with this. I think there is going to be a limit to how much people are willing to pay for dining at Springs. The new additions sound great. But I'm not sure the clientele can support all these high end places. I suspect a mix of a few more moderately priced sit-down locations would suit them better. Time will tell, of course, but I think they're missing the mark.

Agree - Midmarket would have been a better choice but once again Disney is counting on wealthy 'One and Done' clientele.

 

[ford91exploder]

Depends on the price elasticity of the MK experience. Based on park performance post 9/11 and 08 recession, the MK experience is price elastic.

It appears that those in power believe that the brand is highly inelastic and customers will pay anything. WDW are potraying surge pricing as a means to thin the herd. WDW really wants the same attendance levels at higher prices.

Actually post 9/11 and 08 it was the locals and AP's which carried the place back in the post 08 time disney extended your AP 3 months if you renewed. A far cry from how AP's are treated today.

 

[twebber55]

DAK is not going to "explode" due to Pandora/ROL. Sure, some people might go there who otherwise wouldn't, but the largest effect will be people spending longer in DAK when they go there as opposed to more days. Instead of going in the AM and leaving mid day -- there was always that rush out at the end of the parade when they had it -- people will spend a full day there. Which is still great, as it relieve some of the pressure at night on Epcot and especially MK. But I don't see DAK surpassing Epcot any time soon, especially with Epcot getting a new Soarin' and Frozen and who knows what else with the reported $350M going there.

DHS going past Epcot? I'd guess that is possible once SW is done on top of TSL. However, there will be some element of "rising tide raises all ships" going on -- a few people might cut off a half day (dinner) at Epcot or a second Epcot day in favor of more time at DHS, but more people will go to WDW in general which will add folks to Epcot.

i disagree
i think you see a cars land type bump for DAK in 2017
and we ll see a IOA type bump for DHS

 

[flyerjab]

DAK is not going to "explode" due to Pandora/ROL. Sure, some people might go there who otherwise wouldn't, but the largest effect will be people spending longer in DAK when they go there as opposed to more days. Instead of going in the AM and leaving mid day -- there was always that rush out at the end of the parade when they had it -- people will spend a full day there. Which is still great, as it relieve some of the pressure at night on Epcot and especially MK. But I don't see DAK surpassing Epcot any time soon, especially with Epcot getting a new Soarin' and Frozen and who knows what else with the reported $350M going there.

DHS going past Epcot? I'd guess that is possible once SW is done on top of TSL. However, there will be some element of "rising tide raises all ships" going on -- a few people might cut off a half day (dinner) at Epcot or a second Epcot day in favor of more time at DHS, but more people will go to WDW in general which will add folks to Epcot.

i disagree
i think you see a cars land type bump for DAK in 2017
and we ll see a IOA type bump for DHS

My initial reply is if nothing was being done at EPCOT beyond the Frozen addition and Soarin' expansion/refurb. I believe that DAK will see a significant attendance bump after Pandora, night safaris, Rivers of Light show, as well as additional dining, shopping and entertainment, all debut over the next 1-2 years. Do I think that DAK will catch up and surpass a stagnant EPCOT? I definitely think it will as everything currently stands. To me, extended hours with new options will allow more people to venture out to this park at night. I know that there are people now that avoid this park in the summer because it is simply the hottest of the 4 orlando parks. With expanded evening and night hours, I think that what they are adding will be enough of a draw to really boost the annual attendance numbers.

As far as DHS goes, the latest TEA numbers had this park slightly behind DAK, with that being 1+ million behind EPCOT. After DHS is overhauled, everything is telling me that this park could become the 2nd highest visited WDW park. I think that Star Wars as an intellectual property is huge, and I don't think that Disney is fooling around with this one. 14 acres, with the potential for 2, signature E-Ticket attractions (coupled with Star Tours), and interactivity and complete immersion throughout? This will rival the debut of the WWoHP IMO in terms of sheer numbers. And it will have staying power to boot. Something else that I expect will happen with this park will be new entertainment. I expect that with a rumored Fantasmic overhaul, there will be a new night time show at this park with fireworks that may rival what is offered at the MK. If they go through with all 4 phases, and the refurbs highlighted on that wonderful overhead map that was highlighted by @marni1971, I expect this park to really act as somewhat of a relief valve after everything is completed.

Back to what I originally posted, though, and that my comments above are predicated on the fact that nothing beyond the 2016 enhancements is happening at EPCOT. I do not believe that to be the case. I think that EPCOT is the last of the 4 parks that will receive love. We already know that there is an Illuminations upgrade rumored to be happening. Also, an additional 350 million budgeted for this park that hasn't been publicly earmarked as of yet. That could do wonders with the right amount of imagination and energy (see what I did there?). I still think that this park will be much improved come 2021, and if the money is well-spent, then I don't know. EPCOT could still be the 2nd most popular of the WDW parks. I still think that DHS will give it a true run for the money.

 

[gonzoWDW]

Everyone has brought up an interesting point about the high end clientele that Disney Springs seems to be targeting with its new restaurants. The set up of Disney Springs is, essentially, a shopping mall, and the stores in a typical shopping mall make money by moving volume. If Disney Springs doesn't have enough incentive to bring in the "mid level" customer, those stores won't move as much volume as they could, eating into their potential profit.

"High level", price inelastic clientele that go to these restaurants are definitely going to the parks, and likely buying merch there. Disney Springs should be targeted at the locals and tourists in the area (maybe for Uni) who don't want to, or can't, pay theme park pricing, but still want to buy merch.

 

[culturenthrills]

Everyone has brought up an interesting point about the high end clientele that Disney Springs seems to be targeting with its new restaurants. The set up of Disney Springs is, essentially, a shopping mall, and the stores in a typical shopping mall make money by moving volume. If Disney Springs doesn't have enough incentive to bring in the "mid level" customer, those stores won't move as much volume as they could, eating into their potential profit.

"High level", price inelastic clientele that go to these restaurants are definitely going to the parks, and likely buying merch there. Disney Springs should be targeted at the locals and tourists in the area (maybe for Uni) who don't want to, or can't, pay theme park pricing, but still want to buy merch.

It seems like these restaurants are targeted at convention people but it seems like since the demise of PI Disney has lost a lot of the convention business to I-Drive and Citywalk. So it will be interesting to see how well these restaurants do because I don't see people spending that kind of money.

 

[Frankie The Beer]

Quick prediction for Disney's earnings call on Thursday.

Disney will once again prove profitable but the stock will slip, not as much as last call because I think Disney will have started to stop the bleeding surrounding ESPN. The fate of ESPN effects several high profile stocks, Comcast included, and I think in general Iger's long term plan for it is actually pretty sound if you take the time to really look at it. Disney is killing at the theme parks, they have had an amazing year in film with their biggest bullet in their holster yet to be shot. With all the Star Wars hoopla, I can't see the products line not at near or record numbers, and its only going to get bigger. Good times to be a DIS stock holder.

 

[Bairstow]

Everyone has brought up an interesting point about the high end clientele that Disney Springs seems to be targeting with its new restaurants. The set up of Disney Springs is, essentially, a shopping mall, and the stores in a typical shopping mall make money by moving volume. If Disney Springs doesn't have enough incentive to bring in the "mid level" customer, those stores won't move as much volume as they could, eating into their potential profit.

"High level", price inelastic clientele that go to these restaurants are definitely going to the parks, and likely buying merch there. Disney Springs should be targeted at the locals and tourists in the area (maybe for Uni) who don't want to, or can't, pay theme park pricing, but still want to buy merch.

While Disney Springs, or rather, Downtown Disney, was indeed once aimed at attracting locals, I think the current strategy is more focused on high-end foreign tourists and their spending money, as with a lot of the high-end "outlet" malls in the Orlando area.

 

[rael ramone]

While Disney Springs, or rather, Downtown Disney, was indeed once aimed at attracting locals, I think the current strategy is more focused on high-end foreign tourists and their spending money, as with a lot of the high-end "outlet" malls in the Orlando area.

Seeing that WDW is by far the largest employer in the area, and doesn't pay squat - and 'Disney pay' has trickled down to lots of other businesses in the area, I don't think attracting the median level Orlando local is going to help these businesses pay the sky high lease payments the Mouse wants.

 

[PhotoDave219]

Quick prediction for Disney's earnings call on Thursday.

Disney will once again prove profitable but the stock will slip, not as much as last call because I think Disney will have started to stop the bleeding surrounding ESPN. The fate of ESPN effects several high profile stocks, Comcast included, and I think in general Iger's long term plan for it is actually pretty sound if you take the time to really look at it. Disney is killing at the theme parks, they have had an amazing year in film with their biggest bullet in their holster yet to be shot. With all the Star Wars hoopla, I can't see the products line not at near or record numbers, and its only going to get bigger. Good times to be a DIS stock holder.

What, no thread for the call?

Attendance is up 15% in the quarter and up 7% overall for all Domestic Parks. Per Cap Spending up 1%. Per room up 7%. Occupancy up 1% to 84%.