Changes for Galaxy's Edge Temporarily On Hold

CastAStone

5th gate? Just build a new resort Bob.
I'm no business man but this seems entirely counter-intuitive to me.

If some parks are closed, wouldn't you want to announce some discounts and encourage more attendance at your parks?

Why would you raise prices, lower staff, decrease guest satisfaction and de-incentivize attendance?
Any intelligent P&L owner would be forced to respond is with cuts where they could, but not with price increases, at least not above and beyond what they were going to do anyway.

Disney is undoubtedly doing research on pricing and setting them at the levels that maximize profits. Those equations don't change because a park in another country closes. Raising prices above those researched optimal price points will decrease attendance or stay-nights or consumption of corndogs or whatever, and you will make less money, not more.

My worry is that "cuts where they could" was already done quite a bit in the last 6 months...
 

EricsBiscuit

Well-Known Member
Per a reliable source, I'm informed that an upcoming meeting in two weeks to determine potential changes / expansions for Galaxy's Edge has been put on hold with a tentative meeting in April that exists more as a placeholder than anything. This meeting was to be attended physically or via teleconference by Bob Chapek, Megan Crumpacker, Vanessa Morrison, Kris Theiler, Josh D'Amaro, Phil Holmes, and Kareem Daniel (among others). The cancellation of this meeting is directly due to the closure of parks in Asia, which is placing a hold on all potential future expansion expenditures for domestic parks until a more firm outlook in that region can be determined. Furthermore, I was told that a contingency plan is in place should Asian parks remain closed for significant durations that would see one of the water parks at WDW closed for the spring, as well as all mini-golf venues, and reduced hours at the parks (think opening times of 10 am for non-MK parks). All of these changes are ONLY on the table if Asian parks stay closed for months. The belief is that WDW can absorb cuts much better than DLR, which is already being run on lower staffing due to the summer "Close the Gap" initiative. Regardless though, any changes for Galaxy's Edge at either US park is now on hold.
Let’s use common sense for a moment. How would closing money making operations like the Water parks and mini golf make any sense? Sounds like bs
 

bpiper

Well-Known Member
Let’s use common sense for a moment. How would closing money making operations like the Water parks and mini golf make any sense? Sounds like bs
Easy, its a case of utilization. Close a mini golf or water park running at 50% of capacity and move the guests to the other one making it run at 100% capacity.
Still make the same money, but save in all the labor and utility expenses. Those water park pumps eat a lot electricity.

Disney knows exactly how much utilization these venues are running at all times.
 

CastAStone

5th gate? Just build a new resort Bob.
Let’s use common sense for a moment. How would closing money making operations like the Water parks and mini golf make any sense? Sounds like bs
I’m going to assume that the water park utilization is low in April, and Disney is betting that with 1 instead of two they will make more money, not less. That’s (part of) why they close them 1 at a time for the winter.

That would not be true on the summer days where they close the water parks due to capacity. So there's No way that stretches to far into May and beyond.
 

LSLS

Well-Known Member
This... does not make any sense at all. The Asia parks are undoubtedly covered by business interruption insurance. They're not losing huge sums of money with those parks being closed.

So I'm far from any sort of expert, but is a flu outbreak considered a disaster that would even be covered under this? And even if so, and even if they make that money up in a year, we all know Disney does not look at anything beyond a fiscal year (heck, maybe not even a quarter).
 

Hawkeye_2018

Well-Known Member
I suspect that attendance trends are going to be troubling.

Disneyland is seeing the same reported Surge at opening, with soft crowds the rest of the day pattern, as HS. Until they solve the Boarding Groups strategy and get day visitors to purchase tickets and stay all day, attendance is a concern. At DL, which relies on locals more than WDW, this is very troubling. It will be interesting to hear the analysis when we get the next quarterly results call. I don't KNOW that this is the case, but multiple sites and business sources are reporting those observations.

They do count the "first gate click" in their daily attendance so maybe the gate numbers will be OK, but internally I bet that Disney is very concerned, and this is an unintended consequence of the Boarding Groups strategy. At WDW people can use park hoppers, but at DL they are potentially discouraging day visitors who spend more.

Combine this with the current closures in Asia, and Parks & Resorts is going to potentially show some pretty awful results. Fortunately, if Asia recovers and they figure out how to leverage GE for all day attendance, this will be a short term dip. Hopefully.

I admit that this is all speculation. My opinion only.

I REALLY believe that Disney will hold any GE expansions and defer uncommitted Capital investments until they figure all this out. They can finesse financial investments to be spread across additional quarters. It's gonna be all hands on deck. Reduce expenditures without, theoretically, impacting the Guest experience. That means anything and everything is on the table. Disney reports company revenues and income, and one division compensating for another is not exactly a new idea.
I hadn't heard this before. So folks are coming to DHS for RotR only and leaving afterwords?
 

choco choco

Well-Known Member
Final exam question -

You run a massively successful theme park complex. Due to outside forces impacting revenue, your parent organization demands an increased contribution effective immediately. To achieve their financial mandate you should:

A) Raise prices.
B) Cut operating hours and staffing.
C) Shelve indefinitely all new attractions not already under construction, 'slow roll' projects already in the pipeline.
D) Innovate. Rush new entertainment and devise temporary offerings to increase attendance and guest spending.
E) A, B & C. Definitely NOT 'D'.

How about (F) Do the logical: Tell you shareholders that you had a lesser than expected quarter/year because two parks were closed for an extended period but it is indicative of nothing at the company because it is a freak world event and we'll just move on to next year.

See, Disney, one sentence. It wasn't that hard.
 

CaptainAmerica

Premium Member
So I'm far from any sort of expert, but is a flu outbreak considered a disaster that would even be covered under this?
Yes.

And even if so, and even if they make that money up in a year, we all know Disney does not look at anything beyond a fiscal year (heck, maybe not even a quarter).
Do you understand how executive compensation is structured? Stock options and that sort of compensation come with a mixture of short-and-long-term vesting periods. There are significant incentives in place for them to maximize value in the long term.
 

LSLS

Well-Known Member
Do you understand how executive compensation is structured? Stock options and that sort of compensation come with a mixture of short-and-long-term vesting periods. There are significant incentives in place for them to maximize value in the long term.

Think we are getting off topic a bit on my tongue in cheek comment. Even if they do consider the long-term implications of getting that money back here, it doesn't negate them looking short term to offset any potential hits right now. We know they are making cuts and putting future expansion on hold due to this, so they are obviously not thinking about the money coming in a year or more from insurance will make this up, they are thinking they have to do everything they can to offset for right now.
 

WDW Pro

Well-Known Member
Original Poster
Easy, its a case of utilization. Close a mini golf or water park running at 50% of capacity and move the guests to the other one making it run at 100% capacity.
Still make the same money, but save in all the labor and utility expenses. Those water park pumps eat a lot electricity.

Disney knows exactly how much utilization these venues are running at all times.

Exactly. And because Typhoon Lagoon is under refurbishment, you simply extend the refurbishment without any real negative media.
 

TP2000

Well-Known Member
And that earnings report is next Tuesday about 4pm. Will be interesting.

That earnings report is for Fiscal Quarter 1 that ended December 31st, 2019. It won't be able to reflect anything from the Coronavirus or park closures that took place in late January, 2020.

But what next week's earnings report will be able to reflect is the near collapse in attendance at Hong Kong Disneyland that had already taken place in October/November/December of 2019 due to the pro-democracy protests in Hong Kong. Hong Kong Disneyland was already in meltdown mode last fall, long before the first sneeze from the Coronavirus.

The Coronavirus closures of the parks, and subsequent collapse in earnings in China, will not be reflected until Quarter 2 results are reported this May.
 

TrainsOfDisney

Well-Known Member
This is one of the funniest things I’ve ever seen-

keeps their salaried management ranks bloated and fat and fed empty carbs in endless cubicle farms from Lake Buena Vista to Celebration.


How about (F) Do the logical: Tell you shareholders that you had a lesser than expected quarter/year because two parks were closed for an extended period but it is indicative of nothing at the company because it is a freak world event and we'll just move on to next year.

See, Disney, one sentence. It wasn't that hard.
It’s not hard but then Chapek doesn’t get his bonus $$$
 

Lilofan

Well-Known Member
It's the tagline given to this phenomenon that has been mentioned on Disneyland fan blogs for at least a decade. The term "Close The Gap" is what TDA execs call tightening their belts, and they do it every few years for various reasons. It involves cutting labor costs, going really lean on salaried management, and removing any costly perks or expenses that aren't at the core business of running Disneyland.

They did it most recently in the summer of 2019 when they opened Star Wars Land and no one showed up. Disneyland had one of its slowest summers in decades, which was the complete opposite of what they thought would happen when Star Wars Land opened. So they slashed and burned the budgets and never added anything back this fall and winter when modest crowds returned for Halloween and Christmas.

WDW runs very differently than Disneyland, and often uses huge amounts of hourly employee labor and overtime and keeps their salaried management ranks bloated and fat and fed empty carbs in endless cubicle farms from Lake Buena Vista to Celebration.

God help the economy of Central Florida if the closures of Shanghai and Hong Kong drag on past 30 days and genuine panic sets in with the Burbank set, as the WDW execs have so much fat hanging around their necks that Mr. Chapek would probably die of excitement if he realized how much waste there is to cut out there.
Hopefully it won't come to this but I recall in news reports in the early 2000s, that it was extreme belt tightening such as part time teams not being scheduled to work, Disney University shut down, no raises given to salaried teams, dining areas and entertainment shows at the parks not operating everyday as cost cutters under Eisner.
 

TrainsOfDisney

Well-Known Member
Hopefully it won't come to this but I recall in news reports in the early 2000s, that it was extreme belt tightening such as part time teams not being scheduled to work, Disney University shut down, no raises given to salaried teams, dining areas and entertainment shows at the parks not operating everyday as cost cutters under Eisner.

You mean like previously daily entertainment like jammitors and Main Street Philharmonic being cut to 5 days a week? And other daily entertainment like muppets, banjo brothers, pirates show, royal majesty makers, world showcase players, etc. being cut entirely over the years?

As I said, I was just starting to get hopeful seeing the crowds visiting dhs for Rise and Epcot for the arts festival.
 

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