Crowds are down? Curious about the claims . . .

[ToTBellHop]

All of those announced projects are funded with capital dollars that are already allocated and approved and are typically unaffected by stuff like the lower attendance numbers we've seen recently. Lowered attendance has the potential to result in shortened operating hours and other similar operating impacts to adjust operating expenses to the reduced revenues of lower guest counts.

Indeed. It could possibly lead to hesitation toward committing to further projects and impatience over cost overruns. We will still get the four rides announced for DHS.

 

[gmajew]

Ok let's think about this for a moment and think about how big a 30 percent drop is. Even with the TEA numbers being estimates they are all we have to go on. This kind of drop is roughly 6m people. I am sorry but that is not happening.

Everyone needs to be real and there is no way that number is even close. If it was we would have no black out dates we would have 1/2 price offers fling around we would see a major drop in price for food etc as the company would be shocked to its cores.

This kind of drop would be sending stock plummeting. Even the rumors if true would be ugly.

 

[SorcererMC]

that doesn't mean that they don't want their business full of customers who can afford their services. At the current price structure that Disney has installed do you not think they want the place packed?

I'll take that as a real question and not rhetorical. No, I don't think they want 'the place' packed - it diminishes the guest experience and increases operating expenses. I think that MK is packed, while the other parks don't even come close to that attendance level. They are not going to increase capacity at MK (they just added NFL). If they want to keep increasing revenue, they need to shift those crowds to the other parks, and I think that is why they have the tiered pricing strategy, and their current investments planned (that we know of).
It's fine if you don't agree of course, thanks for clarifying your earlier post.

Edit - actually I think we're kind of on the same page here, eg they aren't drawing more customers that can afford to spend more, they are driving them away due to the price for the product offered

 

[Nubs70]

Ok let's think about this for a moment and think about how big a 30 percent drop is. Even with the TEA numbers being estimates they are all we have to go on. This kind of drop is roughly 6m people. I am sorry but that is not happening.

Everyone needs to be real and there is no way that number is even close. If it was we would have no black out dates we would have 1/2 price offers fling around we would see a major drop in price for food etc as the company would be shocked to its cores.

This kind of drop would be sending stock plummeting. Even the rumors if true would be ugly.

We could all run out and buy short positions.

 

[Disneyhead'71]

Also, I am sure there are a lot of people postponing trips until some of the current projects come online. Particularly given the current state of DHS.

Universal had this problem when they announced the first Potter. Attendance dropped seriously between the announcement and when Potter opened.

 

[Mr Bill]

We could all run out and buy short positions.

I did something similar with options the day before the May earnings announcement. Sold a credit put spread for $42 that would expire worthless if DIS stock stayed below $107 through that Friday. Made another $51 with a similar trade shortly after. Small money when it comes to trading, but considering my max potential loss on the $42 winner was $58, a 72% return on a five day trade isn't bad!

 

[ford91exploder]

There is zero chance of any of that happening.

I hope and pray you are correct in your assesment, I've been a student of US corporate behavior for a LONG time and moves like these are part of the playbook.

 

[ford91exploder]

Thank you for articulating this in a realistic way....I would take SWL over what they are planning w/ GotG at Epcot anyday. My .02.

I think there is potential for rebound the holiday season as well....the next 3-4 mo. though is a different story. I don't want them to 'throw the baby out with the bathwater' in the meantime.

WDW management has done it twice before, During the cost overruns at DLP (it's why tomorrowland looks half finished because it IS), 2008 was supposed to have major upgrades for WDW canned because of financial crisis (while UNI greenlighted WWoHP), If the 30% is real well we'll see it happen again...

 

[ford91exploder]

They'd be stupid to cut from Star Wars Land, it's what they need to boost attendance. I can see them scaling back some scenery or interactive elements around the land, but those rides are conceivably the most important thing Disney has under construction right now... or almost under construction. Maybe sorta almost under construction? They're under construction at Land I think.

I would imagine there'll be a bounce back later on in the year assuming nothing else goes wrong, or at least a bounce back to levels that aren't alarming. Hopefully they don't overreact and start cutting even more.

The fact that an action would be stupid in the long term is lost because US corporate management is focused at best on the NEXT quarter, To hell with 5 years down the road.

 

[wogwog]

A friend tells me the WDW Cast Maingate September calendar for family and friends for MK was recently released and has no block out dates. 2015 had ten days blocked out for September. This would support the idea that Disney expects lower attendance for the next three months to continue. @PhotoDave219 and others here follow that sort of thing and may have already posted.

 

[PhotoDave219]

A friend tells me the WDW Cast Maingate September calendar for family and friends for MK was recently released and has no block out dates. 2015 had ten days blocked out for September. This would support the idea that Disney expects lower attendance for the next three months to continue. @PhotoDave219 and others here follow that sort of thing and may have already posted.

Uh no, i just heard about this today..... The blackouts are few and far between.

 

[SorcererMC]

WDW management has done it twice before, During the cost overruns at DLP (it's why tomorrowland looks half finished because it IS), 2008 was supposed to have major upgrades for WDW canned because of financial crisis (while UNI greenlighted WWoHP), If the 30% is real well we'll see it happen again...

Yes, I know the threat of drastic cuts is real (and why panic is short-sighted)....Disneyhead'71 said that they are looking at Jan '17 as the next real challenge (b/c they must have some estimates on the holiday attendance already). IMO, Disney would be wise to try to increase the spending of the domestic and in-state visitors while cutting opex, eg if locals know that crowds are down they may flock to the parks instead of avoiding it, I don't know if there are sufficient numbers for that though (who wants to go in the middle of July when it's hot and miserable and you can go any other time?). I'd like to think it would rebound in the holiday season, but it could also snowball.

I'm waiting, or wanting more information/ evidence about which consumer segments are down the most, for Disney and Orlando in general.

 

[gmajew]

I hope and pray you are correct in your assesment, I've been a student of US corporate behavior for a LONG time and moves like these are part of the playbook.

I hope your wrong because the ones that last don't think like this. During the last couple of recession and down turns they may have cut park spending but the company did not stop spending. They bought marvel in 2009.

 

[Nubs70]

I hope your wrong because the ones that last don't think like this. During the last couple of recession and down turns they may have cut park spending but the company did not stop spending. They bought marvel in 2009.

I do forget what % prices have risen and if a 30% attendance drop is true. For argument sake, prices rose 6% and attendance drops 30%, WDW is in a world of crap. Cuts will come and specials will fly. Hopefully, they are satisfied with covering fixed cost and not maintaining stock price.

$DIS needs to let the stock price fall then buy back stock near the bottom when things improve.

Oh that's right, $DIS bought stock at the top in effort to make it go higher yet. Finance must have had their spreadsheet upside down that day.

 

[Tay]

After the price hikes, portion cuts, cutting staff hours, lack of cleanliness , and no worthwhile attractions in years they deserve a 30% decline in attendance. They don't have anything worthwhile until Star Wars Land opens. NFL was so underwhelming. No ones coming to AK for Pandora other than Disney theme park fans who were going to come anyway. Two high capacity rides will defintely help the park though.

Even though it's rumored that Fast and the Furious ride will be a 4D ride which has me sick, Universal has still made the most of what they have. They'll have spent half of what Disney has spent on MM+ (Rumored to be 3 billion)on rides/attraction from Hogwarts-Fast and the Furious and has opened up a new ride almost every year since then. I'm positive they could fit Nintendo Land, new Marvel and Suess ride, Secrets Life of Pets, and Toon Lagoon redo into the other half Disney spent on MM+ alone. The same MM+ they don't plan on developing further.

During the recession they should have done some much needed major refurbs on all the rides that really really need them now and prepare land for expansion.
TSL should be almost done now. Has it even broken ground yet? Frozen should be in Fantasy Land or DHS with an entire Arendelle mini land instead of a makeover of a low capacity ride that's probably going to cost so much to keep fixing because it keeps breaking down.

I really hope this is a wake up call to Disney. No theme park will ever touch MK in attendance but the other 3 Wdw parks are fair game for Universal.

 

[Brad Bishop]

They'd be stupid to cut from Star Wars Land, it's what they need to boost attendance. I can see them scaling back some scenery or interactive elements around the land, but those rides are conceivably the most important thing Disney has under construction right now... or almost under construction. Maybe sorta almost under construction? They're under construction at Land I think.

I agree with you but it wouldn't surprise me. It's how we got a gimped 7DMT - they decided to save money in the short term and have people leave the ride with, "that was it?," from now until the ride is pulled rather than to just go with a longer track and more complete ride. That was stupid.

Tomorrowland being 1/2 done and never completed. That was stupid.

I think there's also this naïve idea of what "fully funded" means. I get it. In it's most simplistic form you think, "Star Wars land is going to cost $200M (just picking a number out of the sky here). The suits have signed off. It's fully funded and will be built as planned."

This doesn't take into account the BS nature of getting projects approved: You shorten timelines and claim the lowest cost possible to get it done. You're basically saying, "If nothing every goes wrong ever and no person on the project or at any of the vendors ever get sick and everything bolts together perfectly and everything works on the first try..." (though you don't actually say it - you just quote the figure). Sometimes you may actually add extras to it so that when management tells you, "That's too much!," you can then go back and take out the "extras" so that you can get what you actually wanted.

The other side of it, outside of the BS negotiations, are the actual, unplanned things that come to light that hold things up and increases costs.

Forgetting all of that, though, there's the very real notion that something is "fully funded... until it's not." Tomorrowland revamp in the early 90s was fully funded... until it wasn't. Finishing the rest of Pop Century was fully funded.. until it wasn't. Some of these things make sense and some don't.

It'd be like if you and your spouse decided to add a section onto your house and after much thought and planning decided, "Yep! Let's do it!" It's now "fully funded" as you both see the task ahead of you and have agreed to finish it. Then the economy bottoms out and you lose your job and you decide, "OK. We're going to stop at the walls and roof being done so that the rain doesn't come in." Now it's not fully funded.

What amazes me is that they have a park, DHS, which has had a problem since day one which was that it was built fast and cheap to get it out the door before Universal. Then it was allowed to languish for 25 years. Now they're doing upgrades and rather than saying, "Let's do it right this time," they're already starting to pull back, from what I've seen, with TSL. There's no thought as to, "...wait a sec... This is how we got into this mess!," or, "We did this with 7DMT.. Let's just do it right.."

I really think it's all based in taking the spreadsheet to their boss and showing them what they saved. There's no thought for longevity and guest experience, just, "Look at this! I saved $250K! Where's my bonus?"

 

[SorcererMC]

The wheeling and dealing then you have to make reservations and FP's months in advanced etc. etc

I'm wondering if this (along with the price hikes and bad press) is what has killed the 'getaway weekend' - what Disney claimed would increase convenience has become too much of a hassle for just a few days...so that people are saying 'eh, we already saw NFL last year (or the year before), it's not worth it'. Also w/ MM+, Disney should have their finger on the pulse of consumers, but apparently they don't. They implemented the tiered pricing after consumer sentiment peaked in Dec-Jan, for example.

 

[ford91exploder]

I hope your wrong because the ones that last don't think like this. During the last couple of recession and down turns they may have cut park spending but the company did not stop spending. They bought marvel in 2009.

Disney as currently operated is a company based on short term financial engineering and Iger is positioning it as a 'Growth Stock' pre-Iger it was run as a 'Value' company focused on long term plays. Being in Silicon Valley 'Growth' companies either become 'Value' companies or implode.
Iger's ENTIRE career has been about financial engineering but you can trace that back to his undergrad work in meteorology which is an extremely math oriented field, So it's not surprising that his management style would be to manage 'The Numbers' rather than 'The Business'.

When Disney bought Marvel at the time NO ONE wanted the company, In 2009 you could have bought Marvel for a used Pinto and a $500 gas card which was just about the deal Disney did for Marvel.

 

[gmajew]

Disney as currently operated is a company based on short term financial engineering and Iger is positioning it as a 'Growth Stock' pre-Iger it was run as a 'Value' company focused on long term plays. Being in Silicon Valley 'Growth' companies either become 'Value' companies or implode.
Iger's ENTIRE career has been about financial engineering but you can trace that back to his undergrad work in meteorology which is an extremely math oriented field, So it's not surprising that his management style would be to manage 'The Numbers' rather than 'The Business'.

When Disney bought Marvel at the time NO ONE wanted the company, In 2009 you could have bought Marvel for a used Pinto and a $500 gas card which was just about the deal Disney did for Marvel.

$4B is far from chump change....

 

[ford91exploder]

I do forget what % prices have risen and if a 30% attendance drop is true. For argument sake, prices rose 6% and attendance drops 30%, WDW is in a world of crap. Cuts will come and specials will fly. Hopefully, they are satisfied with covering fixed cost and not maintaining stock price.

$DIS needs to let the stock price fall then buy back stock near the bottom when things improve.

Oh that's right, $DIS bought stock at the top in effort to make it go higher yet. Finance must have had their spreadsheet upside down that day.

Disney may have finally hit that inflection point I've been talking about for the past couple of years and it's all downhill for the company from here on out barring major changes at the top.