Bob Iger: "We Don't Believe We Have A Pricing Issue At Our Domestic Parks"

[FettFan]

I'm going to come down on Iger's side on this issue, simply because the parks are crazy crowded as is. When I was there last month (July 10-16), the parks were inundated with what can only be described as a sea of humanity.

As I mentioned on a Facebook "Disney is a Money Grubbing Rah Rah Rah" hate fest (fueled in part by Abigail Disney's "Bob Iger Is Evil Because He Has A Lot Of Money" hate fest)..... if the prices were lower, more people would be showing up more often, and there would be more capacity closures.

Disney is in a damned-if-you-do/damned-if-you-don't position and price increases are the safer option.
Think about it this way.... let's say, theoretically, that Disney keeps the admission low, enticing a family on a budget to make the trip to Florida. They're on such a budget that they opt to stay offsite at less-expensive lodging (Motel 6, Quality Inn, etc.). They're doing pretty good....until they get to the Magic Kingdom Parking Lot and are being turned away because within two hours of opening, the park is already nearing capacity and is only open for Disney Resort guests and AP holders.

Look, I know it's a massive financial burden for a WDW trip.

BUT....I'd rather that people who pay that burden actually get to experience the parks to the fullest instead of being turned away for preferential VIP's.


THAT BEING SAID..... I fully expect that should attendance lag, that the prices will also drop to entice more people.
The good news is that we've already been seeing this in the form of the tiered pricing schedule that WDW rolled out last year.

 

[drizgirl]

So says the man who doesn't even have to pay to go to a Disney park and makes hundreds of millions a year.
Iger will say anything to justify the price increases and blame lower attendance on ANYTHING else.
He can blame it on people waiting for SWGE if he wants to but I am more inclined the think they have finally reached the tipping point where more and more people just don't think it is worth it any more. The statement "The pricing is based on the "value of the franchises"" is just double speak for "we will squeeeze them for every pe

So says the man who doesn't have to pay, makes hundreds of millions a year, and never has to wait in line.

 

[Gelatoni]

I think we will look back at iger one day as one of the worst things that ever happened to Disney time will tell but he banks way too much on the make money today, screw how it effects us tomorrow attitude imo.

 

[John park hopper]

I think we will look back at iger one day as one of the worst things that ever happened to Disney time will tell but he banks way too much on the make money today, screw how it effects us tomorrow attitude imo.

Iger knows he is not at Disney for the long haul. Why would he care what kind of shape Disney is in after he leaves as long as he gets his stock options and golden parachute.

 

[Indy_UK]

I don't want to be that person but I'm yet again coming down on Igers side here.

By purchasing Lucasfilm, Marvel, Pixar and now Fox he has set up the company for many many years. People won't agree but from a business perspective, he's been the best person for Disney.

However... he's not a theme park guy and he admits that.

All the consolidations and cut backs they make at the TV/ movie studios especially with the Fox purchase makes total sense for the company and doesn't affect guests. He does the same at the parks and it very quickly shows.

Bob will be gone in a couple of years and I'm hoping that by then, Hulu, ESPN+, star India and Disney+ will be raking in the money along with maybe 10 cinema release a year on its own and then yeah, a bit more care will be shown towards the parks.

I still feel the issue with the parks is more Chapek than Iger

 

[Hank Hill]

Why are they worried about attendance anyway? If each guest spends more per visit, but there are less guests, that is a win for Disney the theoretically the guests, depending on how low they staff the parks. Unless too many rooms are empty it shouldn't be an issue. I believe that has been the strategy for a while now. Adding costs that used to be free, and perks for pay means people spend more than previously. But people keep coming. It also hurts brand image if the parks are too crowded and people come away not happy after a trip.

Lowering attendance should not be seen as bad all the time. I do not believe a 5th gate is in the plans for at least a decade and the parks feel overcrowded as is. Lowering attendance is good thing. Unfortunately, these types of reports and calls are to appeal to the lowest common denominator and they have to be careful what they say. While some information can be gleaned, it all can't be taken at face value or too much read into statements.

 

[erasure fan1]

Lowering attendance should not be seen as bad all the time. I do not believe a 5th gate is in the plans for at least a decade and the parks feel overcrowded as is. Lowering attendance is good thing.

I've read a lot of if they lower prices, attendance will get worse. And I agree. But, the issue is they don't have enough capacity at 3 of the 4 parks. Instead of trying to lower attendance, they should be focusing on adding to the parks and running what they have at full capacity. In my opinion, the lowering attendance approach is being done because, it's simply the cheaper option. It's not about guest satisfaction, it's about the short term gains.

 

[OneofThree]

Lower attendance is useless if you short staff and keep the lines long or longer than they used to be.

Well, not exactly useless. It would be nice to be able to walk through the parks as opposed to having to wade in a sea of humanity.

 

[RobWDW1971]

Why are they worried about attendance anyway? If each guest spends more per visit, but there are less guests, that is a win for Disney the theoretically the guests, depending on how low they staff the parks. Unless too many rooms are empty it shouldn't be an issue.

Unfortunately, it is still about the clicks - increased guest spending is great, but it doesn't offset loss in attendance. Using ballpark numbers, in just a theme park, an "average" guest is probably worth ~$150 ($100 attendance average after discounts, $30 food, $20 merch, etc.). If you went crazy and said guests will spend 20% more while in the park (which would be enormous on a per cap basis) that is just another $10 ($50 X 20%). When you throw in what they spend if they are at a WDW hotel or at a Disney owned Disney Springs location, then it is exponential obviously. The park's business model is based today like it always has been, every room filled, every park to capacity. And since WDW doesn't have DL's AP dynamic, hordes of reduced admission clicks aren't the issue.

 

[flynnibus]

Why are they worried about attendance anyway?

For the same reason marketers count 'impressions'. Attendance is basically the fuel for the engine... The more people there, the more chance for spending. It's also a very rough indicator of trend of popularity. But attendance is tricky because it's very seasonal.. which is why one has to be careful when judging changes in isolation.

It's also something that can be used to judge activity levels vs peers. For instance.. if Disney counts attendance down, yet everyone else in Orlando counts attendance up... that gives insight into trends happening at Disney.

It's just one important metric that works in hand with other things - it's not 'the' metric that matters. But with all things - you must be careful when looking at stats in isolation.

 

[It Is What It Is]

ESPN is a prime example of what the soulless Iger can do in terms of long term damage.

He took a top brand and severely damaged it by cutting staffing costs, killing personalities (which is what made ESPN), overpaying for product (SEC, ACC, NBA, NFL TV contracts) and charging high fees.

As a result of the high fees more and more people are cord cutting or avoiding the ESPN/ABC/Disney packages.
His NBA product is alot worse than when the NBA was on NBC and is inferior to the TNT/TBS NBA product.
He's chased away top Sportscenter talent and there's been a failure to develop and bring up new talent. When the Beeker like Scott Van Pelt is the headliner you have a huge problem.

They have massive problems because they overpaid for all those TV contracts, trying to corner and monopolize the market and content (analogous to the acquisition of the Fox movies) and the customers have revolted and brand loyalty to ESPN is dead.

I think when people look back they will see him as a grand failure to a much larger degree than with the regard with which he is looked at right now. Now some may separate that out by saying that it's Iger later years that was the problem just like people are separating Eisner/Wells from Eisner/Ovitz.

Pooh, you have some points of consideration in your thread. I don't agree with a lot of it but it was interesting to read. You mention in your footnote that Disney has a department that reads our posts.

If I was one of those readers I would have discounted the post after the word 'soulless'. I totally get the dislike for his business practices but to use the word soulless would infer you have personal knowledge of the man. Have you spent a lot of time with him? If so, do tell, I have lots of questions!

It is my hunch that whoever replaces Iger in a couple years will be all about appeasing the board of directors. And we all know what the board wants: money and stock growth.

 

[It Is What It Is]

Well it worked because you felt compelled to respond.

Yes, Iger is no Soul Man. You dig?

Pooh, good luck to you

 

[Astro_Digital]

Watched a YouTube video and they said just to get in you would pay for a family of four $800.... for only one day.
No food, light sabers etc....
For a middle class family this is too much money.

 

[ddbowdoin]

This is brought up frequently, but I think your view on this is going to depend on the region you live in and what activities you compare it to.

I recently stayed for one night at a Holiday Inn in North Adams, MA. It's the Berkshires, but its really nothing special - its just a bland tiny city with some nice state parks near by. It was just okay even by Holiday Inn Standards. After taxes and fees, it was just over $300 for the single night.

The average price per night at Animal Kingdom Lodge is $415/night during my stay. Those two properties are night and day different. It makes AKL look like a HUGE bargain. Hotels are just expensive these days.

We can play the same game with the park tickets. Yes, It's well over $100 a day at the MK for a single day ticket, but a 3 hour off-broadway show in your home city also runs over $100 a ticket. Entertainment is just expensive these days.

Damn, dropped that much to stay in the Berkshires? Must have been driven up by either Tanglewood events or move in weekend at Smith College.

 

[eliza61nyc]

Watched a YouTube video and they said just to get in you would pay for a family of four $800.... for only one day.
No food, light sabers etc....
For a middle class family this is too much money.

I guess I disagree sort of. not the cost part but for middle class family. I ask this question and have yet to really get an answer. If the product is too expensive for so called middle class families, exactly who is taking up that space now?? are you meaning that all those people are rich?

I think those videos and articles are intentionally deceptive.
how many middle class families would go for only 1 day? (not talking about locals with AP's)?
Also it seems to make the assumption that a trip to disney is a spur of the moment thing. I think (and I admit my sampling pool is small) most middle class families do what they have been doing for decades. they plan and save for it. most folks I know book some times a year in advance and then save.
so you are right, most families don't wake up and spend 800 bucks on a day at the parks but they will set a budget say of 3K for a family of 4 and save for it.

lastly the whole concept of "middle class" is a bit ambiguous. the Pew foundation give it as an income range of about 40K to 122K. Ok but 55K a year which is supposedly middle class is one thing in lower cost Alabama but darn near poverty in New Jersey.

Every time Disney has a price increase there are a multitudes of articles and threads about how Disney is out pricing the middle class and or average family. so who the heck is in the parks? I went in April and while I didn't ask strangers what their income was I suspect they would consider themselves middle class.

 

[Goofyernmost]

Why are they worried about attendance anyway? If each guest spends more per visit, but there are less guests, that is a win for Disney the theoretically the guests, depending on how low they staff the parks. Unless too many rooms are empty it shouldn't be an issue. I believe that has been the strategy for a while now. Adding costs that used to be free, and perks for pay means people spend more than previously. But people keep coming. It also hurts brand image if the parks are too crowded and people come away not happy after a trip.

Lowering attendance should not be seen as bad all the time. I do not believe a 5th gate is in the plans for at least a decade and the parks feel overcrowded as is. Lowering attendance is good thing. Unfortunately, these types of reports and calls are to appeal to the lowest common denominator and they have to be careful what they say. While some information can be gleaned, it all can't be taken at face value or too much read into statements.

Because you are leaving out the main thing that prevents it from being good and that is the old saying, that I think I just made up... "Greed is a cruel mistress". They can't help themselves, the more they get the more they want. All the upper people know that their time with the company/parks is limited and anything they do that is bad in the long run, will probably not be a problem until after they are all retired and living on their private island in the Caribbean counting huge piles of money. If it all fails eventually they will sit back, light up cigars with Hundred Dollar bills and say that when they were running the place it was extremely profitable. What happens to Disney down the road is of no concern of theirs.

 

[Kingoglow]

Watched a YouTube video and they said just to get in you would pay for a family of four $800.... for only one day.
No food, light sabers etc....
For a middle class family this is too much money.

Haven't seen the video or quite understand how they arrived at $800 for four people to get into the park but obviously, that is a fine price for middle class families. It is probably too much for the lower class families though. /shrug

 

[Goofyernmost]

Damn, dropped that much to stay in the Berkshires? Must have been driven up by either Tanglewood events or move in weekend at Smith College.

When my daughter went to Smith, the hotels were reasonable, but, that was the mid 1990's so perhaps greed has expanded over the years. Of course the other thing was we lived in Vermont so I think there was only one time in that year she attended that we stayed in town.

 

[ddbowdoin]

When my daughter went to Smith, the hotels were reasonable, but, that was the mid 1990's so perhaps greed has expanded over the years. Of course the other thing was we lived in Vermont so I think there was only one time in that year she attended that we stayed in town.

We got caught in that weekend craze when a good friend got married at the Eric Carle Museum during the Smith / Umass graduation. Yikes, 350 for a standard chain hotel. Nope, slept in my van.

 

[John park hopper]

Greed is everywhere you see this all the time-- companies are started by generation 1 and generation 2 works to keep the company going generation 3 just waits for generation 2 to die off and they sell the business for short term gain --bundle of money. I'm seeing this in my hometown--Seafood business (fishermen rely on) generation 2 is in poor health and generation 3 is just waiting to sell it off for the cash