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

 

[KCheatle]

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 TOTALLY AGREE!!! It sounds terrible, but with soft bookings comes marketing ploys to get people in there! I am waiting very patiently for a 40% discount again for May, 2012 and I'm hopeful that this will push that discount coming out sooner rather than later :slurp:

 

[KingdomofDreams]

WL is a great resort. The lobby is impressive, the grounds and pool area are beautiful, and the location is super. The rooms are ok. We were a little underwhelmed with it on that front, but certainly they're not bad. A lot of people love the WL, but we're more fond of AKL. I guess in most instances it's just a matter of personal appeal. Whether you'll decide it's worth the extra $$ or not will most likely come down to your own individual priorities and preferences.

** Oh and in my post above about the $400/night price tag on the DL Hotel, from everything I've seen, that doesn't even include parking! Add on an additional $15 per day for self-parking, $17 per day for valet. sheesh...

 

[COProgressFan]

We love Disney but the prices they charge do not equal what you receive, IMO.

This the crux of the issue for most people. Are you getting your money's worth? Does the cleanliness, maintenance, service correspond with the price?

10 years ago I would give a resounding yes, but now I don't believe the premium price gives you a premium product (without a massive discount which brings prices closer to reality).

 

[jim1051]

I truly hope there are thousands who feel this way so the line for toy story mania will be less than an hou next trip

 

[DisneyJoe]

I truly hope there are thousands who feel this way so the line for toy story mania will be less than an hou next trip

Disney resort guests only make up a fraction of the overall park guest attendance - so if prices drive people offsite, the lines at the attractions will still be just as long.

 

[Eldon_Brasche]

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.

Not to sound cheeky, Just to clarify on your analogy:
Say you have a product that sells for $100 and you always sell it to 100 people. ($100 X 100 = $10,000)
If you increase your price by 20% it goes from $100 to $120.
If your customer base decreases by 19% it goes from 100 to 81 customers.
The new total is $9,720 ($120 x 81)
The difference between the $10,000 and $9720 represents a loss of 2.8%.

 

[Slowjack]

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.

Not really. This down+up percentage thing trips up a lot of people. Suppose the original guest count is 100 (just to make the math easy). If attendance was down 19%, that would make the new number 81. If each of those people spend 20% more than the first group, 81 + (81 * 0.20) = 97.2, so Disney had lost almost 3% in revenue. In fact it would take a per-person spending increase of nearly 25% to make the new arrangement more profitable than the old!

Besides the math, though, lower occupancy hurts the hotel operator in a non-linear way. Because you have to run A/C and clean the common areas, staff the front desk even when no guests are there, etc., there's a large fixed cost to keeping the doors open regardless of the number of guests. Same deal with the parks, and putting these together is why Disney had been so aggressively micro-managing price levels on hotels on different days, ideally getting the guest counts even throughout the year.

Bottom line, once the capacity is built, it's best for Disney to maximize its use.

 

[Slowjack]

Not to sound cheeky, Just to clarify on your analogy:
Say you have a product that sells for $100 and you always sell it to 100 people. ($100 X 100 = $10,000)
If you increase your price by 20% it goes from $100 to $120.
If your customer base decreases by 19% it goes from 100 to 81 customers.
The new total is $9,720 ($120 x 81)
The difference between the $10,000 and $9720 represents a loss of 2.8%.

Wow, we were both making the same point at the same time. Eerie!

 

[Flip83]

I've stayed at just about every resort. And Yes, Deluxe are much nicer...clearly. But I look at the amenities and the worth of the price. Polynesian is a beautiful resort with a monorail. But the pool is nice, nothing too special, and the rooms are VERY outdated. SO much of that cost for staying at Polynesian is completely not worth it. But I look at the Beach/Yacht Club and I look at Amenities. The Pool is the best on property, close walk or boat ride to Epcot, Boat to HS, rooms are beautiful and spacious. Beach club rather then Polynesian saves you SO much money, its unreal! Polynesian was almost 2 thousand more I think? Are you kidding me? I've always wanted to stay at Polynesian one more time in my life when we have kids, and unless they update the rooms, I'm not wasting that extra money. Between my fiance and I, we do well and can afford a nice disney vacation, but as of late, we typically choose to stay at a Pop Century or something because we can stay more days because of the price of it, and we barely spend time at resort anyway. We use it to shower and sleep. If we decide to stay at Beach Club like we are in October, we will spend more time at pool then usual because it's a beautiful pool. Otherwise, we will do a Value resort a lot and just have a ton of fun at all of the parks.

I can see why people stay at Value or even Moderate more. It really does make the most sense. It's nice to treat yourself to a beautiful Deluxe resort sometimes, but if you are just wanting to go with the family and have a great time and save a few bucks... of course people will just do value. Many families don't spend a lot of time at resort so most people arent going to spend the extra 2-3 thousand+ dollars for a Disney Vacation. They will stay at Value, save... get the Dining Plan and have just as nice of a vacation as the same family who is staying at Polynesian.

 

[boufa]

Not really. This down+up percentage thing trips up a lot of people. Suppose the original guest count is 100 (just to make the math easy). If attendance was down 19%, that would make the new number 81. If each of those people spend 20% more than the first group, 81 + (81 * 0.20) = 97.2, so Disney had lost almost 3% in revenue. In fact it would take a per-person spending increase of nearly 25% to make the new arrangement more profitable than the old!

Besides the math, though, lower occupancy hurts the hotel operator in a non-linear way. Because you have to run A/C and clean the common areas, staff the front desk even when no guests are there, etc., there's a large fixed cost to keeping the doors open regardless of the number of guests. Same deal with the parks, and putting these together is why Disney had been so aggressively micro-managing price levels on hotels on different days, ideally getting the guest counts even throughout the year.

Bottom line, once the capacity is built, it's best for Disney to maximize its use.

Not to sound cheeky, Just to clarify on your analogy:
Say you have a product that sells for $100 and you always sell it to 100 people. ($100 X 100 = $10,000)
If you increase your price by 20% it goes from $100 to $120.
If your customer base decreases by 19% it goes from 100 to 81 customers.
The new total is $9,720 ($120 x 81)
The difference between the $10,000 and $9720 represents a loss of 2.8%.

WOW! Double whammy on the math... thanks. My point (besides the flawed example) is that a certain amount of loss is built into and expected on every increase. The exact number may be 20 % increase in prices and a 10% decrease in attendance. however there is a point where a greater cost out weighs the loss of business.

Is this good business, kinda, not really. Like you point out there are a lot of fixed expenses that are more efficiently spread over a 100% full facility vs a 80% full facility.

You talk about how things at Disney have changed over the years, and the big business mentality. It comes straight from the stock market. The stock market want, needs to see monthly and quarterly numbers. The system is not really accepting of short term losses to drive long term gains. This has made very many businesses quite short sighted. Disney being one of the most obvious examples. Why do you think that they bumped ticket prices early this year. It will artificially pad their numbers for an extra few weeks.

 

[chwilson88]

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

Haha, well played Trotsky. I'm with you.

 

[COProgressFan]

You talk about how things at Disney have changed over the years, and the big business mentality. It comes straight from the stock market. The stock market want, needs to see monthly and quarterly numbers. The system is not really accepting of short term losses to drive long term gains. This has made very many businesses quite short sighted. Disney being one of the most obvious examples. Why do you think that they bumped ticket prices early this year. It will artificially pad their numbers for an extra few weeks.

You're right, this is a problem not just for Disney, but lots of other corporations as well. A good leader/CEO would be able to recognize the needs of the company long term, so that it is not just profitable today, but in 25 years as well. But there is enormous pressure from Wall Street to have big gains every quarter. How realistic is that, to expect double digit profit increases every quarter, year in and year out? It's just not possible. I know Wall St. will never accept that, but the Disney CEO and board could (to some degree).

I'm not saying it's easy, but the short-sighted moves don't really help anyone in the long run.

 

[SleepingMonk]

The simple fact of the matter is that Disney "deluxe" hotels are far from deluxe.

And when you can stay at a Peabody, Loews, Kessler, etc...for half the price Disney charges it makes it all the more ridiculous.

 

[paul436]

If I could afford deluxe, I would stay at a deluxe. But when I have to make choices based on economics, the easiest choice for me is to stay at a value resort instead. I've always had a great time staying at value resorts and felt like I right in the middle of the magic.

 

[AgentP65]

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.

It seems that Disney's marketing strategy with their resorts is directly analogous to that of their dining plan: increasingly high resort room rack rates are just like the inflated pricing of the menu items (particularly entrees). The exorbitant pricing makes guests feel like they're getting a great deal when they purchase the DP or get a 30% (or more) discount on a resort room. This is especially true with TS and signature dining. And then when they offer free dining, people start chomping at the bit to take advantage of this offer!

BUT...since you have to do an MYW package (and pay the FULL rack rate) in
order to get the DP....it's clear Disney knows what it's doing!!!

 

[AgentP65]

I've stayed at just about every resort. And Yes, Deluxe are much nicer...clearly. But I look at the amenities and the worth of the price. Polynesian is a beautiful resort with a monorail. But the pool is nice, nothing too special, and the rooms are VERY outdated. SO much of that cost for staying at Polynesian is completely not worth it. But I look at the Beach/Yacht Club and I look at Amenities. The Pool is the best on property, close walk or boat ride to Epcot, Boat to HS, rooms are beautiful and spacious. Beach club rather then Polynesian saves you SO much money, its unreal! Polynesian was almost 2 thousand more I think?

We're staying at Poly in October and when I priced other deluxes, Poly was only $600 more for a 7-night stay. The rack rates for all the deluxes are ridiculous, though. I could stay at a Ritz-Carlton in a major city for less! However, with a PIN discount the deluxe room cost becomes slightly more bearable. Poly is $445 rack for garden view and we are paying $267. Still exorbitant for the level of service and amenities, I know. Last year splurged and did MK view at GF. Will not do that again. Just not worth the cost.


I agree that Beach & Yacht are fabulous resorts. It's awesome to be able to walk to EP and enter via IG. But we spend at least 2 full days at both MK and EP (as well as 1 day at AK & HS). Getting to MK from Beach/Yacht is a bit of a hassle. We feel Poly has the best transportation options. Super close to MK and quick monorail ride to EP from
TTC. We also love that we can hop over to GF and CR for signature dining. And while we do use our resort pool, it's not a deciding factor in terms of where we stay. Also, I believe Poly rooms are larger than those at BC/YC.

 

[AgentP65]

Oops...quote in above post didn't load correctly.

To clarify, Poly was $609 more for 7 nights than Beach Club. Garden view for both.

 

[harryk]

Depends which one you stay at. The Wilderness Lodge Villas are very nice. But I agree - I'm not a fan of the other DVC rooms. The Boardwalk Villa rooms are downright ugly.

Have ownership at Villas at Wilderness Lodge, but whenever possible stay at Boardwalk Villas - just like the old Atlantic City Boardwalk decor.

 

[SleepingMonk]

Just a quick example from Expedia...

Room rates for this weekend, sorted by star rating and price.

(5 star) Waldorf Astoria, deluxe king = $197 per night
(4.5 star) Peabody Orlando, deluxe king = $256 per night
(5 star) Ritz Carlton, deluxe king = $259 per night
(4.5 star) Portofino Bay, garden king = $274 per night


(4 star) Disney Grand Floridian, lagoon view queen = $500 per night


I understand the location bonus for the Grand Floridian, and that discounts might be available, but to even make that rate public on travel sites like Expedia, Travelocity, etc...is a total joke.

 

[harryk]

I have to admit I never seen WLV so I can't judge. I did stay at a 2 bedroom AKL Kidani and wasn't impressed.

Villas at Wilderness Lodge are very nice. Have that 'Lodge' feeling which I saw when I visited many of the National Parks this year. Decor is not what I always look at - but they are clean, have great atmosphere, and exceed expectations. Have always enjoyed my stay at those villas.