Analyst: Bookings soft at Disney World's moderate and deluxe resorts

[fillerup]

From Jason Garcia in Saturday's O'Sentinel, first two paragraphs:

Analyst: Bookings soft at Disney World's moderate and deluxe resorts

"Citing concerns about weakness at Walt Disney World's mid- and high-priced hotels, a Wall Street analyst on Friday lowered his earnings projections for the Walt Disney Co.'s theme-park division.

"Based on our tracking of hotel occupancy at Walt Disney World, we believe the value resorts are seeing slightly better trends than moderate/deluxe resorts" for the fall and early winter, UBS Investment Research analyst John Janedis wrote in a note to investors."

Full article:

Soft Bookings

 

[Disney05]

We've always stayed at a deluxe or mod. Have tried talking my wife into trying a value but will never happen. I do rent points from a DVC member occasionally too. Always at least half of what Disney would charge.

 

[bugsbunny]

I've been starting on these forums for years that the rack rates are way over priced. I've had 25+ trips and have stayed at FtW right up to WL for 10 days. Its not that I don't have the money, its that I don't see the valueof WDW hotels. The ”values” are anything but that. A motel room for $129/night? It's ok for two people, but it gets cramped for only 3 people. But dont worry, the Animation Suites will be open at $300/night! What a bargain.

I was able to rent a 6 bedroom 3500 sq ft house for 9 days for $3000. It's closer to AK than most of the actual WDW hotels. I have three in my family and my brother has 5. He would have needed 2 rooms or a suite. This house will be cheaper and nicer than any suite I could have rented through WDW

Disney needs to wake up with its pricing. They have almost ticket prices in the last 10 years and raised hotel prices way beyond comparable accomidations. I cant see ever staying on property again unless there it's some amazing deal. But even the free dining is offset by the higher rack rates, so you really need to compare the math to see if you are getting your money's worth.

 

[DisneyRunner]

I have FD bounceback for ASMu booked for next August. This really doesn't work with my DD's high school athletic schedule. The time frame that is ideal, June, July, the first few days in August. With this news, perhaps some good room only discounts would be available next summer. My family would really likke to stay at PO. It's our favorite!

 

[Cosmic Commando]

Does anyone know how an analyst like this would even get info on future bookings? Since they're outside the company, I would assume they'd have about the same level of access as an average shareholder... close to zero. This is for future bookings, so it's not even like they could go to the lobby and count the number of people checking in like people who estimate theme park crowds. Not that I think they make stuff up; I'm just curious where they get their info from when Disney plays this kind of thing so close to the vest.

 

[DisneyJoe]

Does anyone know how an analyst like this would even get info on future bookings? Since they're outside the company, I would assume they'd have about the same level of access as an average shareholder... close to zero. This is for future bookings, so it's not even like they could go to the lobby and count the number of people checking in like people who estimate theme park crowds. Not that I think they make stuff up; I'm just curious where they get their info from when Disney plays this kind of thing so close to the vest.

If you read the article, he's speculating just like all of us are.

"However, we think occupancy levels are flat to down [year over year], particularly at the deluxe resorts and only slightly better at the value/All-Star resorts," Janedis wrote."

 

[boufa]

I have always found it amazing that some people will get park hoppers (the biggest waste of money more often than not) and stay deluxe, then have the nerve to complain that the dining plan is not a good deal.

Everyone's situation is different. But first don't slam the values, then say clearly that your situation is not value appropriate. Yes, large groups don't belong in value.

In my case, off season, free dining, free parking, an offsite hotel would actually have to pay ME $26 per night to stay there and break even. But this is not always the case, we rented a house/condo and loved it completely.

I also happen to think that most (some) days inn's are exactly what I look for when traveling to other places, so the comparison is fine with me. We are paying more for a sleep inn on the trip down and back than we are paying for POP next week.

 

[fillerup]

This idea isn't original to me, but I wonder how many people have drastically changed their spending habits either permanently or for a long time to come because of the "Great Recession".

I couldn't help noticing the many posts on this thread and others of people saying "We can afford it, but.......". We're in the same boat - I spend a lot more time considering cost to value in my discretionary spending.

One example - when our APs expire next year, one of us will revert back to Fl seasonal to save a few dollars. The only reason we didn't do that this year is that we saved substantial money by applying our birthday gift cards to the passes.

I think Disney may be trying to defy gravity in raising prices in every possible area with no increase in value received, and in some cases less value. I believe they're relying on the captive loyal audience theory and that may not work as well as it has in the past.

 

[captainkidd]

This idea isn't original to me, but I wonder how many people have drastically changed their spending habits either permanently or for a long time to come because of the "Great Recession".

That's part of it, but certainly not all of it. I think the simple fact is, Disney has priced themselves out of the middle-class market.

 

[pixargal]

Our family has definitely changed our traveling plans because of the increase in resort rates and ticket prices. We usually travel from Charlotte to Florida a couple of times a year to visit family. We like to stay a few days at Disney on our way down. However, this December we will be stopping over at either, St. Augustine or Kennedy Space Center. If we can get a good deal at the Universal resorts then we may stay there and check out Harry Potter also. We love Disney, especially at Christmastime, but it's getting hard to justify the cost of getting our dose of the Magic.

 

[Scuttle]

YES! OK WDW - bring on the AP discounts . Soft can be GOOD - we're certainly not going to see deals if the Deluxes are packed.

I know, that's what I'm saying! Maybe we will finally get a AP 45% discount off the deluxes this winter.

 

[captainkidd]

A few months back I started a thread entitled something along the lines of Is Disney out-pricing you? A lot of people jumped on my case saying how it was nonsense. I'm just saying, this trend is going to continue. When the cost of anything excessively outpaces the median income, demand goes down. It can be travel, the cost of homes, the cost of cars, whatever. Disney feels as though they are impervious to simple economics. They aren't.

 

[COProgressFan]

A few months back I started a thread entitled something along the lines of Is Disney out-pricing you? A lot of people jumped on my case saying how it was nonsense. I'm just saying, this trend is going to continue. When the cost of anything excessively outpaces the median income, demand goes down. It can be travel, the cost of homes, the cost of cars, whatever. Disney feels as though they are impervious to simple economics. They aren't.

They also seem to think they are impervious to the people simply trying to get what they pay for. While I would suggest that WDW resorts are generally run quite well, the value for what you get is not what it once was. When the rack rate for rooms at deluxes has in some instances gone up 20% over a couple years, people start questioning whether its worth it. And in addition to it being more expensive, I would also argue that the service standards at the deluxes is not quite what it was even 5 or 6 years ago.

Bottom line is this has nothing to do with pricing out the middle classes, etc., it has to do with what you get for your money. For many folks, myself included, the value just isn't there anymore.

 

[COProgressFan]

YES YES YES.... Absolutely. Everyone else should avoid the Deluxe Hotels . Clearly a bad deal . I applaud everyone else getting a FAR better deal .

I see what you're saying in principle (by not going, there will be discounts) but the reality is massive discounting wouldn't be necessary if the rack rates weren't ridiculously high in the first place. And Things like 40% off the GF or Boardwalk are great, but not quite as great as they were even a few years ago since rack rates have gone up so much on even basic rooms.

Hotel rooms are priced based on supply/demand and I completely get that, but the practice of raising rack rates to ridiculous price points, then offering massive discounts for much of the year so guests think they are getting a deal is a business practice which is not only unclear/unfair to guests, but diminishes your brand as well when guests have now been trained to never pay full price.

 

[boufa]

Remember that a 20% increase with a 19% drop in attendance is a 1% win for Disney. Having said that, I am over simplifying, but if it is on property vs off property, then they still get your food money, and your admissions.

The current pricing structure does not make it cheaper to go to other places, in fact it makes it more expensive.

To go to Disney for 7 days is $284 per adult (lets say 2 adults and 2 kids in the family) ... $1096 total.

Now lets say you do 5 days at Disney and 2 days at universal... $523.96 for the universal tickets, and the disney tickets only drop to $1028.80. So to save money and spend some time at universal actually costs $1552! Assuming that the hotel costs and food are comparable. It is unlikely that they are over $400 cheaper.

Break down #2... Disney for 3 days, Kennedy Space Center for 1 day and universal for 3 days. $1681!!!!!!!

So it is clearly cheaper to go to the parks everyday, rather than spending time at the other attractions in the area. Disney clearly knew what it was doing when it structured the tickets. We are going to the parks everyday during our stay for this very reason. The only real money saver is running out to a coast and spending the day at the beach. However, gas, tolls, paying for our own food for those meals (we have free dining) once again makes it cheaper to visit the parks.

 

[boufa]

I see what you're saying in principle (by not going, there will be discounts) but the reality is massive discounting wouldn't be necessary if the rack rates weren't ridiculously high in the first place. And Things like 40% off the GF or Boardwalk are great, but not quite as great as they were even a few years ago since rack rates have gone up so much on even basic rooms.

Hotel rooms are priced based on supply/demand and I completely get that, but the practice of raising rack rates to ridiculous price points, then offering massive discounts for much of the year so guests think they are getting a deal is a business practice which is not only unclear/unfair to guests, but diminishes your brand as well when guests have now been trained to never pay full price.

I have worked at a department store... 2 details, 1 never buy in Monday or Tuesday because that it the highest priced days of the week. Things tend to go on sale Wed thru Sunday, but it varies every week, depending on that weeks "sale" aka discount offer. Also there is somewhere in nearly every major department store a disclaimer that says "Regular prices are offering prices only and may or may not have resulted in sales" In English, when it says 50% of regular price, that "regular" price may actually be artificial and may not have ever been offered to customers. Very similar to the Disney discounts.

 

[BigTxEars]

My money is on Disney knowing more about running their resorts and parks than Wall Street. We just left POR this morning and I can tell you that is was very busy last night with new arrivals

I would also say that roughly 20%-25% of the people at the resort, parks and restaurants this past week were either Europeans, Japanese or from South America. Disney seems to be doing well drawing in foreign tourist.

I am a stay on site person, the "magic" of doing so is worth it to me. I can see why some would feel different but for us it just feels right. :sohappy:

 

[menamechris]

Does anyone know how an analyst like this would even get info on future bookings? Since they're outside the company, I would assume they'd have about the same level of access as an average shareholder... close to zero. This is for future bookings, so it's not even like they could go to the lobby and count the number of people checking in like people who estimate theme park crowds. Not that I think they make stuff up; I'm just curious where they get their info from when Disney plays this kind of thing so close to the vest.

It is speculation, but remember, Orlando is a tourist city. There are others ways these analysts can survey people through other bookings, etc. Disney is just one piece of the pie - and they are not completely necessary to find out information about people who will be traveling here.

 

[KingdomofDreams]

We love Disney and prefer a Disney vacation over anything or anywhere else, but even we have our limits. We're planning a DL/DCA/USH trip for next summer and I planned to stay at the DL Hotel for 5 nights, but unless there is a decrease in rates or a significant discount offered, we'll stay offsite. Currently, the rate offered for a standard room at the DL hotel next summer is $400 per night! $400! That is beyond ridiculous and I refuse to pay it. I'm sorry, no standard hotel room is worth $400 a night. No doubt there are people out there who will be willing to pay it, but I'm not one of them.

And to the poster above who did the breakdown of how Disney works the numbers to keep people on site, you are absolutely correct! Disney is a business and a very savvy business. We refuse to play their game though. We know where we want to go and what we want to do and what our budget is. Rather than give up one of our other desired destinations - Universal, etc. - we just look at where we need to cut our expenses to make that happen. That results in less money spent at Disney. No souvenirs, no character meals or special (read expensive) experiences, and if necessary stay offsite. Why downgrade the quality of our accommodations just to stay onsite? There are many beautiful deluxe level hotels practically right next door with a rate that corresponds to Disney's mods, or in some cases, value!

 

[Lucky]

people that compare Disney Value Resorts to Days Inn have either never stayed at a Value Resort or never stayed at a Days Inn. It's such a ridiculous analogy.

I've stayed at both, and I agree. A lot of Days Inns are total dumps.

 

[PolynesianPrincess]

Normally we don't even stay on property as we have a timeshare just outside the gates. However, we are staying at the WL on our next trip. The only reason we could afford it is because we all had a little extra money this year and we got a discount with the AP rate and even then it was still pricey. This is out first time staying anywhere other than a Value. I'm definitely going to compare the two afterwards to see if it was worth it. Within the next few years, those deluxes will be out of our price range. Probably the moderates as well. All 3 of us (myself, my mother and my sister) make very good money but we don't want to have to save up for a year to be able to afford accomidations when we can go elsewhere for less. Without the timeshare we probably would only get to Disney once a year or so. We love Disney but the prices they charge do not equal what you receive, IMO.