Al Lutz: "Management must stop bending over to pick up pennies as dollars fly over their heads"

[WDW1974]

I am constantly baffled about how little business acumen they have ... let's say they accept the "rubes will come no matter what philosophy" ... OK ... so you have the rubes no matter what, why not go after EVERYONE? I hate to make it so simplistic but the discerning guests, the informed shoppers, the avid fans, the AP holders (they will lose eventually), the DVC owners (who may start looking for a way out) ... these are the people they should be not just attentive of but flat out catering too, especially if the average American rube is coming no matter what, why not shoot for 85-90% of the population instead of being satisfied with 60%?

I dunno. I know they don't want discerning guests. Guests who care about quality and fresh product. They want simple guests who will love Splash Mountain with half the effects not working and the logs smelling like body odor.
At the same time, UNI and SW are raising the quality on everything and even siphoning away DVCers who may be staying at a WDW resort, but aren't visiting the four Disney parks.

 

[tomman710]

I dunno. I know they don't want discerning guests. Guests who care about quality and fresh product. They want simple guests who will love Splash Mountain with half the effects not working and the logs smelling like body odor.
At the same time, UNI and SW are raising the quality on everything and even siphoning away DVCers who may be staying at a WDW resort, but aren't visiting the four Disney parks.

That's what should be infuriating to shareholders. Yes, the discerning guests might be the minority but TDO is still ignoring a sizable target market, essentially settling with say 50-60% of their targets, which I think has to hurt the bottom line, if not now then eventually.

I think it's simple math, (obviously I am simplifying the numbers for the sake of argument) we spend $.50 we get $2.00 from the rubes, but if we spend $1.25 to appeal to everyone then we could make $3.00 ... yes it's just .25 extra profit but more profit is more profit.

 

[djlaosc]

WDW has been counting on a lot of income from defense contractors on the US side and the lower/working class of the UK and most of those folks I'd put squarely in the Walmart clientele. But there's no saying how long those groups will have the money to come considering the economies and policies in those nations.

I don't think that they should be counting on the UK over the next year or so - lots of flights for next year have been cancelled/combined, one operator seems to be pulling out of Florida completely, and some economy flights are coming in at over £1000 ($1570). I know that "2 weeks at the start of August next year at Port Orleans with WDW tickets and flights" currently costs more than the "3 weeks at Caribbean Beach with WDW tickets, 2-week Universal tickets, Discovery Cove non-Swim/SeaWorld/Aquatica/Busch Gardens tickets, car hire, Kennedy Space Center with transportation that we did last year end August/beginning-mid September"

 

[ParentsOf4]

Sadly, I do think this is true to a point, although I wonder how long this will last. WDW has been counting on a lot of income from defense contractors on the US side and the lower/working class of the UK and most of those folks I'd put squarely in the Walmart clientele. But there's no saying how long those groups will have the money to come considering the economies and policies in those nations.

Based on the most recent earnings conference call, WDW is relying on a growing contingent from South America. When asked about the domestic/international park splits, CFO Jay Rasulo answered:

Yes, I'll tell you that I've talked for a long time about that range being, like, 18% to 22%, 23%. And in this quarter, at World, they were up at the high end of that range. They had a very strong fourth quarter relative to international attendance. Fundamentally driven by Brazil and Argentina, but even the UK, which is, of course, one of our other big markets, was up for the fourth quarter.

Does anyone know if Disney has been advertising in those countries?

 

[djlaosc]

Does anyone know if Disney has been advertising in those countries?

The UK get those adverts of the little kids being told they are going to Florida while they show clips of Disneyland all the time (and they always mention the free dining plan as well)

Wouldn't necessarily say that I've seen any adverts recently though, but of course, 4th quarter bookings for this year would have been made 2nd quarter last year (we can book packages 18 months out)

 

[dreamscometrue]

I tend to agree.

Paul Pressler ran Disneyland into the ground between 1994 and 1996 when the park was 39-41 years old, and the Internet community (yes, the Internet did exist then) went crazy about it. WDW is 41 years old. I somehow doubt that Disney has it laid out that they're going to strip mine the parks for dollars at a specific age, but there's certainly a precedent. It just took Paul Pressler leaving, and I don't doubt that TDO is due for some rotation/exit.

It's a long-run game. People seem to forget that Universal was tanking much worse between 2005 and 2008 than Disney is now and hasn't been remotely close to hitting its max single-park attendance figure for a year set in 1998. Sooner rather than later out of Disney would be nice though.

^^This!

Wow Dude/Dudette, that is a great little post! I know you're new around here, at least in terms of posting, but I look forward to reading more of yours.

 

[RSoxNo1]

I think you may well be on to something here. Disney has NOTHING else that is imminently on the horizon. IF the Studios makeover is approved or IF Pandora happens (my money again is that this thing ain't gonna happen) you're talking no construction fences likely before 2014 (maybe later). Disney needs to show 'we're building HUGE MAGICal new attractions' and (we won't discuss the laughability of that statement) and what better place than smack dab in the center of the MK. ... I get why it's taking them years to build a kiddie coaster.

Right I mean, look how long it's taking Universal to built Transformers right in the middle of their park. It's not just Disney that's taking 4 years to build a roller coaster... Oh wait... Universal will have conceived of, and built 3 versions of the same attraction in less time and a fraction of the cost? I don't buy it.

 

[The Empress Lilly]

After visiting all the WDW parks, both Universal parks, and SW on successive days, I'm more convinced than ever that the 7DMT's slow construction schedule is artificially induced. SW has the huge Antarctica construction site in the middle of the park, and USF has the Transformers site in the middle of the park, plus the HP additions at the periphery.

It's abundantly clear to anyone visiting those parks that lots of work is being done on big, new, exciting projects. I'm sure Disney wanted to have its own ongoing construction going on over the same time period, just so it can demonstrate to uninformed guests that "Hey, we're building new stuff over here too!"

Awesome explanation. It hadn't occured to me yet.

I figured the slow construction had something to do with spreading out costs over several fiscal years, and / or with the PR possibility to open a grand attraction right in the middle of WDW's most iconic land several years in a row.

Perhaps having a very visible construction site is a goal in itself too. To create a buzz, a vibe of progress, change, dynamism, something new. Gah!


I shall use it as further evidence for one of my main running themes: With TDO, never ascribe to incompetence what can be ascribed to cunning behaviour and shrewd business acumen.

 

[The Empress Lilly]

The point I focus on is Disney's belief there is a never-ending supply of rubes who will gladly replace us and accept today's product as WDW quality. I don't believe it. There are millions and millions of and millions of people who have no desire to ever set foot in a Disney theme park.

Time will tell! Is WDW's model sustainable or not? Me, I'm not as pessimistic, (is that optimistic?), as you are. I don't even know what is optimistic and what is pessimistic here - that these infinite hordes of rubes exist or not.


On a related - optimistic - note. If WDW implements more stratified pricing instruments, those with deep wallets will increase in percent of spending at the World. In a single price model, each ten percent of guests is responsible for ten percent of revenue. In a stratified model, there will be a tier of ten percent that will be responsible for, say, thirty or forty percent of total WDW revenue. Assuming that the top tiers have slightly more discerning taste than the average rube, WDW will have a clear incentive to become less dumb, with better maintenance, more upscale.
An unforeseen, quite possibly promising effect of NextGen.

 

[WDW1974]

Right I mean, look how long it's taking Universal to built Transformers right in the middle of their park. It's not just Disney that's taking 4 years to build a roller coaster... Oh wait... Universal will have conceived of, and built 3 versions of the same attraction in less time and a fraction of the cost? I don't buy it.

I don't buy much of what TDO is selling these days ... I REALLY want to get back to TDR in 2013!

 

[WDW1974]

Time will tell! Is WDW's model sustainable or not? Me, I'm not as pessimistic, (is that optimistic?), as you are. I don't even know what is optimistic and what is pessimistic here - that these infinite hordes of rubes exist or not.


On a related - optimistic - note. If WDW implements more stratified pricing instruments, those with deep wallets will increase in percent of spending at the World. In a single price model, each ten percent of guests is responsible for ten percent of revenue. In a stratified model, there will be a tier of ten percent that will be responsible for, say, thirty or forty percent of total WDW revenue. Assuming that the top tiers have slightly more discerning taste than the average rube, WDW will have a clear incentive to become less dumb, with better maintenance, more upscale.
An unforeseen, quite possibly promising effect of NextGen.

It sorta makes sense, which means I've clearly spent too much time on MAGIC tonight!

 

[The Empress Lilly]

It sorta makes sense, which means I've clearly spent too much time on MAGIC tonight!

Face it - in spite of all basic instincts and little voices in the back of your head, you simply can't help to like me!

I love you too! (And no, despite persistent rumours to the contrary: I don't Imagineer-love guys. And Foxx is a girl)


~ Disneyland has a Starbucks and is therefore inferior ~

 

[culturenthrills]

The only ones who want to say people are tired of Potter are the ones with egg on their face right now since they were screaming from the mountain tops that Potter would fail and WDW wouldn't be hurt by it, when we know the opposite is true... So, they need a new spin to WDW remaining stagnant and Universal growing by leaps and bounds...

I was at IOA yesterday and even on a slow day HP land is still busy. Shops were still packed with plenty of people buying stuff. I love how these fanboi's esp the ones who become new members to spout WDW pixie dust-ganda always bring up attendance. It isn't all about attendance. Hotel occupancy is down at wdw and the only reason guest spending hasn't cratered is cause they keep jacking prices.

Comcast wouldn't be spending the money they are if guest spending wasn't thru the roof. They are stealing one or two days from many wdw guests vacations now. Wait until Potter 2.0 hits.

 

[Calvin Coolidge]

I was at IOA yesterday and even on a slow day HP land is still busy. Shops were still packed with plenty of people buying stuff. I love how these fanboi's esp the ones who become new members to spout WDW pixie dust-ganda always bring up attendance. It isn't all about attendance. Hotel occupancy is down at wdw and the only reason guest spending hasn't cratered is cause they keep jacking prices.

Comcast wouldn't be spending the money they are if guest spending wasn't thru the roof. They are stealing one or two days from many wdw guests vacations now. Wait until Potter 2.0 hits.

Anecdotal evidence in support of this:

The past three times my parents went to Orlando, they have stayed at a Universal Hotel, for the convenience and the built-in "express" pass that lets you basically never wait in line for more than twenty minutes. The first two times they switched to a WDW hotel to get EMH on the days they'd be at the Disney parks. This August they didn't even bother. Stayed in the Royal Pacific, walked to IOA in the morning and got to the park at like 7:30 to go straight to Harry Potter.

And the only merchandise items purchased all trip were from HP.

 

[Skibum1970]

Shootings have been happening for 100's of years you just realized this?

In addition, this is neither the forum nor time for this type of discussion.

 

[ULPO46]

Shootings have been happening for 100's of years you just realized this?

I understand that but two shootings happened at a universal studios Florida parking lot two years ago. What is it going to take for Disney and other parks to seriously consider the threat of protecting the parks. 9/11 was a taste of it. On average there are over 40,000+ people in the magic kingdom alone each day of the year. I know they have happened for years but never before in so many public places in such a short period of time. I am not saying this for fun I am saying this to think a minute the what if's. Tell me that you have never thought it out of what chaos would form. They really need extra security.

 

[celluloid]

There is only so much you can do. Unfortunately we live in a world where if someone wants to do harm badly enough, they will find a way to do it. We need to focus less on security and more on how we treat fellow man.

per square foot and how many people enter, exit and are inside at any given time, theme parks are the safest place on the planet.

 

[TP2000]

A great Avatar test was done back on Halloween - you can find Cars, Star Wars, Pirates, Avengers, Potter, costumes but none for Avatar. The same test can now be done at Christmas as well - going to the toy stores - no Avatar action figures, no Avatar Lego sets, no Avatar anything I can find at all. My family with my oldest being 10 - I just can't let my kids watch Avatar with all the swearing, smoking, and alien sex.

That was my Halloween test!

I've done it for two years in a row now, after Avatarland was announced in September, 2011. In my rather affluent neighborhood where all the kids have everything they could ever want, and where a bunch of other kids come to on Halloween because they assume we give out better candy (and at least I do), not a single Avatar anything has shown up at my door for two years in a row. A ton of Star Wars characters are there each year, with some of their parents not even being old enough to have seen the original Star Wars in a movie theater in '77. And Cars costumes are in great abundance with the 3 to 9 year old boys. And enough sparkly Disney Princesses to make you think the gender-neutral toy industry is doomed forever.

But not a single Avatar anything. Ever. Because the kids don't care about it, and the parents have already forgotten it. And something the general public doesn't care about is not a good foundation to build a 500+ Million dollar theme park expansion on.

 

[celluloid]

Same thing can be done by going to Toys R Us.com and looking at the seach options. Search any property and you will see how popular they are. Avatar has some party plate sets and some halloween make up ear kits. That is it. Search anything else and you will have pages upon pages of merch.

Same thing goes for the place I currently work for. We deal with kids birthday cake designs. Not once have I actually seen an Avatar birthday cake. Not a single dang time. Every other pop culture property I have seen done.

TDO is in a world of fail.

 

[twebber55]

Same thing can be done by going to Toys R Us.com and looking at the seach options. Search any property and you will see how popular they are. Avatar has some party plate sets and some halloween make up ear kits. That is it. Search anything else and you will have pages upon pages of merch.

Same thing goes for the place I currently work for. We deal with kids birthday cake designs. Not once have I actually seen an Avatar birthday cake. Not a single dang time. Every other pop culture property I have seen done.

TDO is in a world of fail.

maybe its because its not a real kid movie
once again because you dont lie doesnt mean it wouldnt translate into a great theme park experience