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

[Goofyernmost]

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.

I think I can understand why it would be expensive because of the following short story. I was sitting in a rocker on the porch of my daughters dorm at Smith speaking with another parent. He was a reporter for ESPN and arrived in a huge new Mercedes. I had an 5 year old Dodge Caravan. What I did have was a nursing home business with property that consisted of one large house and one small house, plus our family home plus my wife was attending U-Mass, Boston with an apartment overlooking the bay and next door to the Kennedy Library. So I played that up. At the time with two daughters, the oldest attending Colorado College in Colorado Springs and a wife in college, it was difficult to find two nickels to rub together, but, I played up the impressive and didn't mention the negative. He didn't know that so I felt that I was able to fit right in, but, didn't spend to much time looking for hotels in the area. I consider myself to be a survivor. Man, I'm breaking out in a sweat just thinking about those years.

 

[Stripes]

3% tho, that is a tiny blip. Hard to explain with any certainty in many situations. Definitely not enough for a regular person to enjoy. Enjoy as in, a signal for those that have been avoiding the crowds to return.

Lol, I need to see a nice 20% dip for me to return.

Disney parks are a lot like traffic jams. When you're in a traffic jam on the freeway, each additional car that merges onto the road makes the problem substantially worse. Hence why there are often meters to slow the number of merging cars. When a park is packed, each additional guest has a larger impact on wait times. A 3% dip in attendance might not sound like much, but it has a bigger impact on wait times than you might think.

 

[eliza61nyc]

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

the word "greed" is right up there with "racism" in over use. Exactly what happen with my family's restaurant and one of the problems is usually the following generations don't care about it as much as the ones that started it. My grandfather and great uncle built a successful business so much so they sent their kids to college, when they got old and in poor health no one wanted a restaurant. it's hard as hell work. my uncles gave it a try but by the time my generation got old enough, we sold that sucka quick fast and in a hurry.

Next many times the things generation one did are just not financially feasible in gen 3,4 and beyond. which is why the never ending comparison to what Walt did is pretty useless.
Now I'm not sure if I agree with the "greedy walt disney world" description that is so readily tossed around. Disney is a for profit business Iger's job is to make as much money for his clients as humanly possible. That's his job, now of course how he does it is the question.

 

[John park hopper]

the word "greed" is right up there with "racism" in over use. Exactly what happen with my family's restaurant and one of the problems is usually the following generations don't care about it as much as the ones that started it. My grandfather and great uncle built a successful business so much so they sent their kids to college, when they got old and in poor health no one wanted a restaurant. it's hard as hell work. my uncles gave it a try but by the time my generation got old enough, we sold that sucka quick fast and in a hurry.

Next many times the things generation one did are just not financially feasible in gen 3,4 and beyond. which is why the never ending comparison to what Walt did is pretty useless.
Now I'm not sure if I agree with the "greedy walt disney world" description that is so readily tossed around. Disney is a for profit business Iger's job is to make as much money for his clients as humanly possible. That's his job, now of course how he does it is the question.

May be a better word rather than greed --- short term gain

 

[networkpro]

the word "greed" is right up there with "racism" in over use.

I would hazard that there's a section of the public that lacks the ability to verbalize their opinion beyond "I dont like it" and grasp at whichever emotionally loaded buzzwords are in use in attempts to add emphasis in this generations' equivalent of "yo mamma"

In simple terms, Disney owns "stuff" and charges people to use its "stuff". It decides how much to charge and you can either pay and play or not and dont play.

Its not a democracy, or socialism... its capitalism. There is no "All affected Principle" clause to economic decisions by the owner of the "stuff". You don't automatically get a say on any decision by the owner of the "stuff" because it impacts you in some manner. You can buy into the ownership of the "stuff" {stock in a public company, contractual agreements such as annual passes or timeshares (DVC) } for example which grants you some say but its still private property. It still remains their "stuff" at the end of the day no matter what plans you or any other organization may have plans for it.

Companies don't have to be altruistic in all facets of their operations, but Disney does contribute with cash and in-kind dontations amounting to hundreds of millions of dollars every year.

 

[disneyflush]

As far as the park's Disney said they were going to price people out. 3% drop in attendances means nothing if revenue and profits go up more than 3%. Only problem is the stock trading crowd will look at the attendance numbers and wonder what is going wrong. The traders won't like that, they want both ends. Increased attendance and increased profits. Iger should have informed them what the new business model is.

Theoretically, lets say it drops 3% next quarter and revenue and profits keep going up. Everyone is happy right? Lets do that for next 3 quarters so make it a fiscal year (not the official one but 4 fiscal quarters). Now our attendance is down 12% year-over-year and we are going to need to bump up prices 12% to reach break even on revenue before the annual price hikes of, lets say, 5% across the board that we need to reach our fiscal goals. Add the % attendance drop to the % number Disney raises prices annually to determine the magic number each year that prices are going to go up. 17% in 1 fiscal year using dummy numbers. How long before this becomes an actual issue for the company? Does making attendance go down via 'pricing people out' make long term/short term sense given their pricing/sales model?

 

[Animaniac93-98]

Haven't seen the video or quite understand how they arrived at $800 for four people to get into the park

Peak season 1 day ticket (as in today or summer) to Disneyland: $149/adult, $141/child + $50 for park hopper upgrade

4 1-day hoppers would be about $800. That's before parking, food etc.

 

[John park hopper]

Peak season 1 day ticket (as in today or summer) to Disneyland: $149/adult, $141/child + $50 for park hopper upgrade

4 1-day hoppers would be about $800. That's before parking, food etc.

you don't have to eat there but parking if you drive is a fixed cost

 

[Animaniac93-98]

you don't have to eat there but parking if you drive is a fixed cost

Doesn't matter where you eat or park, it's extra $ you spend on top of admission.

It's all part of the cost of visiting Disneyland for a day, and part of the decision to go or not.

 

[jloucks]

Doesn't matter where you eat or park, it's extra $ you spend on top of admission.

It's all part of the cost of visiting Disneyland for a day, and part of the decision to go or not.

I think base price and fixed cost might be close to the same thing in this scenario.

 

[Animaniac93-98]

I think base price and fixed cost might be close to the same thing in this scenario.

For parking, yes. Unless your hotel is close enough that you don't need to pay to use the Disney lot.

 

[flynnibus]

As far as the park's Disney said they were going to price people out. 3% drop in attendances means nothing if revenue and profits go up more than 3%.

Sure it means something when the way you are offsetting the drops is with unsustainable double digit price increases.

The net number isn’t the interesting one people... it’s what composes that number and how they got there where the analysis is.

 

[DrummerAlly]

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.

Well, if you’re going to the Berkshires, you’ve got to stop at Tanglewood, right? Seriously though - worst bang for your buck ever at that Holiday Inn.

 

[xdan0920]

Hey everyone, just a quick little anecdotal story regarding Disney and pricing.

Yesterday I played as a guest in a $2000 a group golf outing at a pretty prestigious club. (Humblebrag? Regular brag?) My playing partner had just taken his family to Sesame Place and we were chatting about it. Of course the conversation drifted to Disney.

The table we were at had a handful of guys who, in no way, shape or form would be considered middle class. The overriding opinion of Disney world?

“Fun but insultingly expensive”

Now, these aren’t guys being priced out. These are guys who just find the Disney pricing to be, as my buddy @George is known to say, absurdist.

Affordability isn’t the issue IMO. Being made to feel like a moron every time you get rung up is an issue though.

 

[Goofyernmost]

Hey everyone, just a quick little anecdotal story regarding Disney and pricing.

Yesterday I played as a guest in a $2000 a group golf outing at a pretty prestigious club. (Humblebrag? Regular brag?) My playing partner had just taken his family to Sesame Place and we were chatting about it. Of course the conversation drifted to Disney.

The table we were at had a handful of guys who, in no way, shape or form would be considered middle class. The overriding opinion of Disney world?

“Fun but insultingly expensive”

Now, these aren’t guys being priced out. These are guys who just find the Disney pricing to be, as my buddy @George is known to say, absurdist.

Affordability isn’t the issue IMO. Being made to feel like a moron every time you get rung up is an issue though.

That would be when you have the money to go anywhere in the world. You can afford it, but you feel like you are being racked over the coals when you have to pay those absurdist prices.

For those whose affordability doesn't even get them into the front gate, overpaying for everything isn't even in the vernacular. It's the same difference between a 1st world problem and a 3rd world problem.

 

[eliza61nyc]

I've been saying that for a while. Doesn't mean you can't afford it, you just don't think it's worth the money.

Two completely different things.

I'm a guy who would spend money and cars, trucks, motorcycles that I like but they could be expensive or not. I do not base my decision on the most cost effective. As far as cars, a cheap Toyoda will be your most cost effective and will last trouble free for years. I wouldn't drive one of those. I see why people do but...just no for me. Best bang for your buck. I bought a 1999 motorcycle because I liked the looks of it and it did what I was looking for. I don't like the new black out look of bikes or all the electronics. I don't need or want ABS, traction control etc. I like old school. I also know how to work on the older bikes because I like to, not that I have too. Same with old cars, it's a hobby. Doesn't mean I won't go buy some exotic car brand new that catches my eye, I won't be working on that my self.

It's like pretty much everything in life. There is the best bang for your buck. Next level up is nicer but costs more. Next up is name brands etc. that you pay more for nothing other than the name. Then the just stupid expensive for something for no real reason.

And it doesn't make one stupid if they chose one level over another. "the old guy" as I affectionately called my late husband was a amateur cyclist. did a lot of charity long distance bike rides. when he told me he was going to drop 1700 bucks on a Bicycle, I thought I could use it as evidence in his sanity hearing. lol but the bills were paid, the kids had tuition, so it was all good.

People value things differently.

 

[xdan0920]

Does Disney have a price issue?

“Bikes cost $1700”

Ok....

 

[BeentoallDParks]

i dont complain about the parking fees for example, as if i go to downtown nashville, i pay more for a few hours than i would for an entire day of parking my car at POP. Its a luxury to have your car at this point, were only 11 hours away, and prefer to drive, we get there quicker sadly,. can bring anything we want with us, and bring back anything. Ill gladly pay a few bucks, the same way i would if i was going to a concert downtown, or a preds game. Big cities do the same.

This is how customer standards decline. We used to get something nice, and when it’s taken away, we make excuses for the company. Disney owns every square inch of its resort and its park profit is in the billions. Unlike in big cities, there is no landlord to pay, which is why big cities have steep parking fees and WDW really doesn’t need them.

 

[KBLovedDisney]

I just heard that they raised their Press Penny machine prices by 50 cents. So, it is now a $1 plus a penny...for a pressed penny outcome.

 

[Mr. Moderate]

I spend time just lurking and reading and don't comment much. I enjoy reading the threads and this one hits home for me personally. I'm a longtime fan of the parks, but my family has moved on due to pricing and the feeling that it's just not for us anymore, or at least not for us in terms of money. I was a longtime DVC member, until recently where I sold both by contracts, and don't miss the fees, etc. I personally feel that Disney has reached the tipping point with the price gouging and the days of me going yearly, are done. I sometimes get the strong feeling that Disney doesn't want repeat customers and seems to be aiming at first time visitors and getting all the revenue they can from them. It seems like a short sighted business strategy in grabbing with both hands and trying to squeeze every dime you can out of the guests. Both my wife and me thought on our last trip, that it felt like we both had enough and that finally the negatives outweighed the things we loved about going to the parks and staying at the resorts.

I may want to go in 3 to 4 years, but even then, I have my doubts if I'll be able to swing the costs, and if I can, will I want too? I can only imagine the costs by then. Kind of bummed just thinking about it.