A Spirited Perfect Ten

[JediMasterMatt]

This really comes down to management philosophy. Is it smart business to take your most successful product line for granted?

They have all sorts of empirical data to backup their behavior in Orlando. Look at all the gate receipts, guest surveys about how successful MM+ is, and 3rd party media feedback like the Fast Company article on the great job they are doing.

Who cares if it actually makes sense? Especially over the long haul. When you are dealing with fiscal quarters and answering to the Street and not your guests, it's easy to do something different in 3 months.

BTW - it's easy to paint MM+ in a good light. Just ask questions like they do on the surveys. "Would your visit have been as enjoyable without MM+?" Of course the answer is no based on the way you ask the question. Add FP+ onto every attraction, make sure every dinner reservation is booked in advance, and then ask the question.

It's kinda like intentionally taking a guest on a cruise and then tossing someone over the railing and then give them a life preserver and ask "What would your cruise have been like without the life preserver?" Ask a guest that question that went on a cruise that didn't involve going overboard and you will get a different answer to that question.

 

[CaptainAmerica]

It's kinda like intentionally taking a guest on a cruise and then tossing someone over the railing and then give them a life preserver and ask "What would your cruise have been like without the life preserver?" Ask a guest that question that went on a cruise that didn't involve going overboard and you will get a different answer to that question.

At least you're not exaggerating.

 

[CaptainAmerica]

Disney is blowing smoke here. DVC sales are up. However, the "old" Villas at the Grand Floridian (VGF) actually outsold the Polynesian Villas & Bungalows (PVB) by a wide margin. (Sorry, I don't have the numbers in front of me.)

How are you suggesting they're getting away with that. You can't use Poly sales as a driver over zero baseline. It's sales as a driver over prior year.

Also you can't just compare VGF with PVB because VGF is still being sold. So you're comparing FY14 VGF to FY15 VGF + PVB.

 

[GoofGoof]

This really comes down to management philosophy. Is it smart business to take your most successful product line for granted?

Sure. Apple spends all its money investing in developing laptops now since iPhones sell so well, right?

I couldn't agree more that they should be investing heavily in a market that is showing tremendous growth. It makes no business sense to ignore Orlando.

 

[CaptainAmerica]

I couldn't agree more that they should be investing heavily in a market that is showing tremendous growth. It makes no business sense to ignore Orlando.

Giant red flag with that line of thinking would be the tourism market pre-9/11 or the real estate market pre-2008. If you're a home builder in 2007, you're building and building. "Investing heavily in a market that is showing tremendous growth." Two years later, you have a portfolio of half-completed homes leveraged at two times their completed value. The bank calls your notes and you're no longer in business.

 

[JediMasterMatt]

At least you're not exaggerating.

Shh... I was trying to give Staggs ideas about MM+ reservations for life preservers on Disney Cruise Lines.

 

[realdizfan]

First time posters are "naive" and aren't credentialed until they amass enough posts I guess. I've been part of a few communities around the Disney Parks sphere since the 90's and grew bored with it all. It got harder to deal with once industry experience showed how woefully uninformed people are about how the parks are run and how they make decisions, and how those people deify people like Al Lutz for taking endless fortune-teller style shots in a general direction and then brag about how right they've been.

But I digress, probably too arrogant and quite naive of me to assume that actual credentials don't fly on internet forums. It's fine though, lively discussion never hurt anyone and as stated- it's the internet. Feel free to ignore my reasoning or statements as I am free to do to yours.

 

[realdizfan]

Giant red flag with that line of thinking would be the tourism market pre-9/11 or the real estate market pre-2008. If you're a home builder in 2007, you're building and building. "Investing heavily in a market that is showing tremendous growth." Two years later, you have a portfolio of half-completed homes leveraged at two times their completed value. The bank calls your notes and you're no longer in business.

An additional red flag is dumping un-necessary capital into competing with the egos and free flow of cash over at Universal Creative instead of investing in the true driver and supporter of growth- infrastructure. But of course they're doing both and spending billions at WDW yet it's not enough to satisfy the 1% of Disney's market share that thinks WDW is terrible yet continues to visit annually or more.

 

[GoofGoof]

How are you suggesting they're getting away with that. You can't use Poly sales as a driver over zero baseline. It's sales as a driver over prior year.

Also you can't just compare VGF with PVB because VGF is still being sold. So you're comparing FY14 VGF to FY15 VGF + PVB.

This is what he's talking about. In Q2 2014 they sold 324K points at VGF. In Q2 2015 they sold 366K points at VGF plus 137K points at Poly for a total of 503K points. That's a 55% increase in points sold but is driven by both an increase in VGF sales YOY plus the fact that no Poly points sold in 2014.

 

[CaptainAmerica]

This is what he's talking about. In Q2 2014 they sold 324K points at VGF. In Q2 2015 they sold 366K points at VGF plus 137K points at Poly for a total of 503K points. That's a 55% increase in points sold but is driven by both an increase in VGF sales YOY plus the fact that no Poly points sold in 2014.

I get that. I'm not sure how that's "blowing smoke." That's exactly what they said.

 

[twebber55]

An additional red flag is dumping un-necessary capital into competing with the egos and free flow of cash over at Universal Creative instead of investing in the true driver and supporter of growth- infrastructure. But of course they're doing both and spending billions at WDW yet it's not enough to satisfy the 1% of Disney's market share that thinks WDW is terrible yet continues to visit annually or more.

I agree with a lot of what you are saying my question to you is what are your thoughts on mm+ as an investment?

 

[GoofGoof]

I get that. I'm not sure how that's "blowing smoke." That's exactly what they said.

Sales at Poly alone this year were less than sales at VGF were last year. In other words it's not just Poly sales driving increased sales.

 

[GoofGoof]

Giant red flag with that line of thinking would be the tourism market pre-9/11 or the real estate market pre-2008. If you're a home builder in 2007, you're building and building. "Investing heavily in a market that is showing tremendous growth." Two years later, you have a portfolio of half-completed homes leveraged at two times their completed value. The bank calls your notes and you're no longer in business.

That's true of any park though. 9/11 hurt DLR too. I fail to see how the threat of terrorism or a recession would be a good excuse not invest in WDW.

 

[ford91exploder]

This really comes down to management philosophy. Is it smart business to take your most successful product line for granted?

No but in todays quarter to quarter mentality who cares as long as the bonuses keep coming.

 

[wdisney9000]

An additional red flag is dumping un-necessary capital into competing with the egos and free flow of cash over at Universal Creative instead of investing in the true driver and supporter of growth- infrastructure.

While infrastructure is crucial, at what point does having attraction capacity match attendance increase become an issue? People dont return for infrastructure, nor can they ride it. Ive yet to see any evidence that shows WDW's infrastructure would have crumbled without NGE.

How much more should they invest in infrastructure? How much more data do they need to crunch before you think its acceptable that they get back to building actual high quality attractions and experiences? You know, the kind that made it the most visited place on Earth even without the aid of wireless technology or the ability to know who is eating what food and when.

 

[realdizfan]

Is MM+ worth the hassle and investment? Sure it is.

Over the long term, MM+ will be a boon to the parks. Of course there are kinds to iron out, but it's a massive project that's clearly a first in the industry. Nobody else is even close to the tech Disney is using/planning to implement in the future. I recently had some colleagues in town from a major European/Disney style operation and they were floored by the tech (not so much the visible stuff, but the logistics stuff and the future enhancements). In it's current state, MM+ is just a heavy investment in infrastructure that will massively cut labor and increase guest satisfaction (which it's already beginning to achieve). Once fully fleshed out (especially at Shanghai), it'll be a full blown step beyond anyone else in the industry (well, honestly it already is- since they can't just "sell" a cut in line pass like Universal or give unlimited fastpass to hotel 20,000 guests a day like Universal.

Has anyone realize how much of a test bed MM+ has been for newer versions that will be in Paris and more importantly, Shanghai? When Disney has to manage 20 million brand new visitors per year at SDL, they'll certainly be glad that WDW worked out the kinks in the system while still making the place more enjoyable (in my opinion) than the previous system.

I'm at a loss for words as to how people are going to react when the new World of Color is showing one or two shows a night and requiring people to show up at 8AM at DCA and wait 30-45 minutes for a "fastpass" in order to see that evenings showing. It blows my mind that people wouldn't prefer to book that same fastpass ahead of time and avoid all of that garbage that DLR now deals with regarding their night shows.

 

[ford91exploder]

It looks like the ghola of Mr Thick is back among us spreading Celebration Place approved BRAVO-SIERRA...

 

[CaptainAmerica]

That's true of any park though. 9/11 hurt DLR too. I fail to see how the threat of terrorism or a recession would be a good excuse not invest in WDW.

I'm not saying "don't invest." I'm saying "don't get carried away with investment based on a current boom."

 

[GoofGoof]

An additional red flag is dumping un-necessary capital into competing with the egos and free flow of cash over at Universal Creative instead of investing in the true driver and supporter of growth- infrastructure. But of course they're doing both and spending billions at WDW yet it's not enough to satisfy the 1% of Disney's market share that thinks WDW is terrible yet continues to visit annually or more.

Why would anyone who is a fan of WDW be against the company spending money on the park? The hotels have been at near 90% occupancy for several quarters now. Maybe it's time to think about building more rooms, expanding. Attendance is up despite healthy increases in prices. Why not reinvest some of the gains you are making to build towards future cash flows? Infrastructure needs improvement. I agree with that. It's not sexy or headline grabbing but it's necessary in a resort approaching 50 years old. They should also be looking to expand as well. Avatar and the plans for AK look promising but there are other needs too. DHS, and EPCOT in that order.

I can't understand the mentality that they should just ignore investment since it's doing well financially. If Eisner followed that approach we would still have 2 gates and a handful of hotels. WDW is ripe for a new period of growth.

 

[realdizfan]

^ You're operating under the impression that WDW is being "ignored", which is a laughable falsehood. They've outspent Universal Orlando for the past several years on projects that will do far more for the resorts health long term than any new rides. And they're spending tons on new rides/shows/parades too.

While infrastructure is crucial, at what point does having attraction capacity match attendance increase become an issue? People dont return for infrastructure, nor can they ride it. Ive yet to see any evidence that shows WDW's infrastructure would have crumbled without NGE.

How much more should they invest in infrastructure? How much more data do they need to crunch before you think its acceptable that they get back to building actual high quality attractions and experiences? You know, the kind that made it the most visited place on Earth even without the aid of wireless technology or the ability to know who is eating what food and when.

Probably some time after Avatar, Star Wars, Frozen and New Fantasyland have slammed the parks full for the next decade. They should probably just prepare for the huge gains in per-caps and attendance that will come from the billion+ plus that they're spending there already. Has anyone else dealt with full parking lots at the parks lately? It's happening everywhere except EPCOT. Dead give away that attendance isn't suffering. Honestly, we're debating why Disney isn't spending more on new rides when the parks (especially MK) are steadily increasing in attendance without much new "impressive" investment in new attractions. The better play is to be ready for when the impressive stuff in the pipeline that will clobber Universal; and they seriously need the infrastructure to deal with the onslaught of attendance that is going to be happening. They really don't need more of a reason to draw guests when hotel occupancy is at an all time high and attendance is steadily increasing. It's much smarter to ensure that the current visitors are satisfied enough to spend more money there than to go after more people that will just add to their infrastructure problems.