Disney Management LIES?! How Management cheated to kill an Epcot Attraction!

[wdwdave09]

WoL pavillion

Thanks for a very interesting thread.

I was at WoL in October 2003 and it was pretty empty. My kids enjoyed all the props, however, and seemed to enjoy The Making of Me as well. But the pavillion did feel outdated. I think a pavillion about Life should be a part of Epcot and as stated earlier, there has been so much life science advancements that you could really make a meaningful and inspiring pavillion out of WoL. But that will cost $ and I have no idea how Disney execs make their spending decisions. I say spruce it up or gut it and start from scratch - just don't let it sit unused/empty for years.

Also, this thread very much reminds me of a book I read a month or so ago called Down and Out in the Magic Kingdom by Cory Doctorow. Its about many things but the central theme is what the Magic Kingdom looks like in the future, specifically Liberty Square. The MK has been taken over by CMs and groups (or ad hocs) of CMs are responsible for upkeep of the attractions. Some want to keep things as they always were and others want to "update" by bringing in new technology.... Sound familiar here?
Anyway, might be worth a read.

Thanks for the post Grizz, it got me to thinking about the initial purpose of Epcot (exploring different aspects of our world) vs. building an amusement park like Universal Studios or Busch Gardens where the focus is on thrill rides. Don't get me wrong, I LOVE thrill rides. As I mature, however, I better understand the beauty of what Disney created and why people love the place. Many companies can build an amusement park. But only one built a truly magical place that immerses you in a theme.

Dave

 

[HennieBogan1966]

No, you're missing my point

First of all, just because you advertise anything, whether it be a sale or regular priced items, does not, in itself, increase or decrease how many people will see/call about the pricing. What I am saying is that price is more of factor in itself, as to where/why we (the public) make a majority of our purchases. Some people buy designer clothes because they believe there is more "quality" in those than in others. Truth is, that isn't always the case.


SuperTarget is still open due to one word: Capitalism. Because of the freedoms of this country, businesses are free to compete for their customers.
Some will shop Target, some Wal Mart. Which one gets more traffic? Which one shows more $$$ on their books at the end of the year? Wanna bet that will be Wal Mart? And why do you think that will be? Atmosphere? Location?
Parking Lots? I doubt it. I'm gonna go with PRICE!!!

Same thing with the Theme Park Business. If a family of four has to choose between a week at Disney, which will probably run in the neighborhood of 4 or 5 thousand, or a week at Six Flags for half the price? Mind you, I'm talking your average family of four, and not a family who's median income is over 100k a year.


Again, your choice is to shop where you do for personal reasons and not necessarily based on price. I'm here to tell you that is not the norm for the majority of Americans. And to believe your logic, for you personally, you would pay a higher price for product, even if you were offered a cheaper price for it. (I harken back to your comments on roads/schools for that train of thought). In other words, you believe that some taxation is good in order to pay for road/school improvement. Again, not disagreeing with you on that
but just saying that for my side of it, if we reformed alot of the funding programs that we currently have, that there would be a windfall of funds to further improve roads/schools, etc., across this nation.


Some will be Cadillacs, instead of Geos. I get that. That's the beauty of freedom of choice. But, the majority of Americans can better AFFORD the Geo price, and if they were offered the Caddy for the price of the Geo, wanna bet they'd accept?

I would.

 

[HennieBogan1966]

Oh, and one last thing

One thing that companies do is to build margin into their products for purposes of markdowns. This occurs very frequently in the retail industry across a broad spectrum of product lines/services.

Now in reviewing things such as hotel bookings, it's very difficult to measure their value against perishable goods/services. They are huge profit makers because all your doing is reusing the same good/service over and over. Yes, there's overhead, but the rooms don't have to be "rebuilt" each week. Therefore, a lot of margin is made in those bookings, even though they may be sold at a reduced rack rate. If I book you at a rate of 55 a night, versus 75 a night, I'm still making money. There's no investment in the room itself, other than the items in the room. My overhead for payroll will stay roughly the same, as most companies in this country seek to control, if not suppress payroll hours as much as possible on a week to week basis.

When it comes to discussing perishable commodities, from food/beverage to apparel, toys, etc., there is margin built in. And in most cases, when the product first arrives at its POS, that margin is at its max. So, if there is a markdown, I'm still going to make money on it. And I'm already planning for the margin, as well as the margin I'm making when you pay retail. I know this due to the industry that I currently work in. And these are 3 month cycles. We have some product that when it arrives, is already at markdown, due to "special buys" we arrange with our vendors. Of course, when the new "seasons" start, we receive the new product, which comes in at full retail. Now, I'm SURE that Disney has very similar arrangements with vendors in order to maximize their profits. So, even though you may see their offers of discounts as tanking the profits, I say those plans are well accounted for long before the "discounts" ever hit any ads or print media. So, I assure you, there's no money being "lost" due to discounts. And if I can increase the volume of guests at my Theme Park by offering discounts, I can again assure you that there will be high margin products that I will offer and sell to my guests while they are visiting.

 

[Pixie Duster]

Yay for intelligent arguments!

I just want to add one mroe thing regarding the price factor.

It costs $60 to go to a live concert. That concert will last about 2.5 maybe 3 hours if you are lucky. It cost $55 for an all day admission to an Orlando theme park. That one day ticket allows you all day access to every single ride and all the shows / entertainment in that park. Then you have the park hopper tickets which I believe have a lower per day rate since they are purchased like a packaged deal. So then you now can go to any park all day and hop around as much as you like.
$55 looks big, but it is within a reasonable bracket.
If Disney were to lower the price, let's just get theoritical here and got more people in the day it would not be good. They've now made less money per head, and yes there may be more heads in the park, but from a guest standpoint (which then leads to a business standpoint), that is not a good thing. The more crowded a park is the longer the wait times, the less area there is to move and the most frustrated EVERYONE (cast and guest) becomes.

Plus during Non-Peak times we will barely be making a dime and our budget will be even lower. And who knows maybe more of the less attended attractions would become dark.

 

[HennieBogan1966]

I Agree, But

One thing you have to keep in mind is that all business is cyclicle (spelled right?). Anyway, businesses prepare for these things by slowing down their purchasing dept., lowering payroll budgets, etc. So, it's not as though they don't know these times are coming. And while crowded parks make for longer wait times, believe me when I tell ya, the execs. love seeing longer wait times. That increases their opportunities in other areas, as I mentioned earlier, which are higher margin areas of the company. The longer you wait, the more thirsty you get. How much profit do think they are making on that soda? Or bottled water? Multiply that by the turnstile number twice over. (2 drinks per day in a park is probably a low estimate on my part.) Not to mention the profit on a burger or hot dog. Now, how about that plush doll your child wants. As a cm for TDStore, I CAN tell you that's our biggest margin product. Disney has less money invested in that hardline item than in any other, per item. Now, multiply that by 25% of the turnstile number, which again, I believe, is low. But you get the idea. Anyone who says that lowering ticket prices at these theme parks, for the sake of this singular debate, is bad for the bottom line, is simply wrong. Ticket prices are very adjustable, as there is no REAL investment in those tickets. Yes, there is a cost to produce them, but there is no REAL VALUE to them, except their face value they are sold at. When we sell one at the store, it's pure profit for the company. How's that for margin?

The arguement that, again, in this singular case, that the overall bottom line is lowered by offering discounted packages, doesn't hold water. Give me more butts in the seats, at a lower entrance fee, and I'm gonna beat ya more times than not, when we total up sales for each day.

You can't look at this situation in a vacuum. You have to examine the Big Picture when totalling up the opportunities that we get at the parks once you're inside the gates.

 

[speck76]

First of all, just because you advertise anything, whether it be a sale or regular priced items, does not, in itself, increase or decrease how many people will see/call about the pricing.

So what you are saying is that all commercial advertisement is for nothing. From the ads we see on TV, to those that come in the Sunday paper, these serve no purpose at all. :lookaroun

Same thing with the Theme Park Business. If a family of four has to choose between a week at Disney, which will probably run in the neighborhood of 4 or 5 thousand, or a week at Six Flags for half the price? Mind you, I'm talking your average family of four, and not a family who's median income is over 100k a year.

Here is the thing that I have found...the vast majority of people do not choose between taking a $4-5K vacation and a $1K vacation. If they are planning on taking a major vacation (cruise, WDW trip, whatever) they will do so. I have never personally said (before I lived in Orlando) "Well, I have enough money saved up for a great trip to DisneyWorld, but, I am just going to take a trip to Cedar Point instead.

Also, look at the demographics of those who travel to Orlando....they are not your defined "average family of four".

 

[speck76]

Now in reviewing things such as hotel bookings, it's very difficult to measure their value against perishable goods/services. They are huge profit makers because all your doing is reusing the same good/service over and over. Yes, there's overhead, but the rooms don't have to be "rebuilt" each week. Therefore, a lot of margin is made in those bookings, even though they may be sold at a reduced rack rate. If I book you at a rate of 55 a night, versus 75 a night, I'm still making money. There's no investment in the room itself, other than the items in the room. My overhead for payroll will stay roughly the same, as most companies in this country seek to control, if not suppress payroll hours as much as possible on a week to week basis.

In hotel school, they teach that the hotel room is perishable, and that if it is not sold each night, the hotel can never sell "that room-night" again. While, there is some truth to that, it is pretty much a bunch of crap.

If I have a 1000 room hotel, is it better that I sell 500 rooms at $200, or 1000 rooms at $100....I am still going to make the same amount of gross revenue. The problem is that if I am selling the 1000 rooms, I need to staff to check-in and check-out 1000 families, I have to staff to clean 1000 rooms, I have to pay for heat/light/power on 1000 rooms, I have wear on 1000 rooms, and if I offer the complementary continental breakfast that many hotels do, I have to feed 1000 families....my profit margin has gone to hell, which is going to upset Wall Street.

 

[ClemsonTigger]

Following on your scenario Speck, HenniBogan is still in line. The actual playout, like with the airlines is

You sell/book your 500 rooms at $200 and you sell some/many additional rooms at various discounts or promotions at $149.95, $105.00, $90 whatever and you are ahead.

With your proposal, you have no opportunity to gain that additional push. As far as overhead, yes unoccupied rooms have less daily cost, but not much. They still have to be cleaned, heated/AC, as well as sitting there as a depreciating commodity, which is the bulk of the cost. Skipping 30 min of maid service or restocking of toiletries is a minor cost overall.

I do agree with you that I believe Disney would benefit from making specials less frequent which would discourage the planning that many of us take here around "annual discount specials", or make the packages smaller and more competitive...then again that leads to unhappy people that feel they "deserve" an advertized discount, but come in after they are all used up.

If this were an easy equation, I don't think we would have 5-6 major airlines in or poised for bancrupcy. (and before you go into the Southwest model, don't forget the level of service that must be compromised. Discount vs. premium services follow different formulae.

 

[TURKEY]

With your proposal, you have no opportunity to gain that additional push. As far as overhead, yes unoccupied rooms have less daily cost, but not much. They still have to be cleaned, heated/AC, as well as sitting there as a depreciating commodity, which is the bulk of the cost. Skipping 30 min of maid service or restocking of toiletries is a minor cost overall.

QUOTE]

I highly doubt there are any hotels/motels/resorts that go into each and every room daily if no one was occuping the room the night before. If a room isn't occupied for 2 weeks, they won't get cleaned until someone is due to stay in that room in the next few days.

Most chain motels I've ever stayed at, have 2 or 3 housekeepers per floor. If occupancy gets down so low, you fill entire floors before you start on the next. Most chains (at least around Orlando) can predict what their occupancy levels are going to be at a given time and can manage labor hours accordingly.

 

[Computer Magic]

These last few posts is one of the deepest, intelligent, and positive dialogue (with no name calling) I’ve seen on this forum. :sohappy:

If Disney were to lower the price, let's just get theoritical here and got more people in the day it would not be good. They've now made less money per head, and yes there may be more heads in the park, but from a guest standpoint (which then leads to a business standpoint), that is not a good thing. The more crowded a park is the longer the wait times, the less area there is to move and the most frustrated EVERYONE (cast and guest) becomes.

Pixie Duster, How dare you apply Walt’s philosophy into this conversation http://www.smileycentral.com/?partner=ZSzeb001 which goes against current Disney business ethics (btw: your view is a good thing). Putting the cast and guest first is the right thing to do. As I stated before, I consider this is a fair profit. Earning a profit but not trying to squeeze every dime out of the guest at their guest expense (as well as management squezzing the life out of the Cast). By not trying to pack everyone together like a sardine is a good thing.

Unfortunately, what HennieBogan1966 stated is current management’s philosophy.

The park hopper and fast pass is current Disney exec dream. Yea, they will sell it as a perk to guest (which is also true). But believe me they are getting something (profit).

They are betting, if a more popular park is too crowded, you will go to a less popular park. Hey lets spread the guest out and if guests stay in the crowded park even better. They will become frustrated with the long lines and do something else. They may have a cold drink, ice cream, eat or shop.

Continue the conversation about ticket price. They could sell the ticket at cost or a small lost and still makes money. The same holds true for the resort. The majority of the people will spend money once inside the park. That is where they make their money. The same way a grocery store works. Grocery stores will advertise certain items and take a lost on those items. Knowing, the majority of the people will spend money on other items once inside the store.

ClemsonTigger I also agree with that statement. Knowing Disney is going to offer discounts, I will wait and plan my trip after the discount is announced. This BIG issue for Disney is how can they stop without aggravating the guest, they have come to expect discounts.

It all boils down to how management wants to conduct business (business ethics). The current trend is to squeeze every dollar out of the consumer. The majority of business world has lost sight of fair profit. Which is where this topic stated for me.

Wow, this all steamed rolled after I innocently brought Economics into the conversation and has turned into a full blown MBA topic based on Disney...I love it!

Great conversation HennieBogan1966, Spect76, Pixie Duster and ClemsonTigger. I look forward to more dialogue like this. I like the fact we kept the conversation professional.

 

[Pixie Duster]

The worst things about an unoccupied room is not the costs that are still there like utilities and labor it's that you can never get that room back.

Example: If you have 200 rooms that can be sold, as in that is the amount of rooms built into your hotel. You sell 190 rooms on 9/16/04. There is no way to ever get those 10 rooms recovered. Yes you could sell 200 rooms on 9/17/04, but you are still down 10 rooms from the previous night. The only way to recover those rooms would be to sell 10 extra rooms (210), which is impossible. Hotel rooms are not products you can just sell more of the next day. There is a set amount of rooms available a night, once the night has passed you can never recover any unoccupied rooms. You can do better the next night but it will never replace the lost revenue for the previous day.

Now let's get back to Wonders of Life. There is a minimum amount of CMs required to work at WoL in order for it to run. If that pavilion is not getting a reasonable market share of the park's attendance it is not only wasting labor at WoL it is taking traffic from other areas in the park at putting it in WoL. Yes that traffic is a small percentage, but when you think, "ok I can close this area, move that labor to a more productive area and the guest can spend more time and money in a different area..." Makes sense.

If CoP closed I would be very hurt because it was Walt's favorite, but if I am one of only a few people that still actually goes to the attraction I would understand why it would need to be changed.

 

[HennieBogan1966]

Again Speck, you're operating in a vacuum

When you speak of "A" hotel, you are operating in a vacuum. What I mean is that you speak of a scenario in which your only ability to make profit is to sell a hotel room to a guest. What I am saying is that Disney does not have that worry. As long as they have guests in the rooms, they ARE GOING TO MAKE PROFIT. The rooms have to be staffed, the cafeteria, pool area, etc., etc. But what we're talking about are guests which are going to patronize "4" theme parks during the course of the day. Not to mention hundreds of restaurants, gift shops, etc. etc. That's where the profit is.

If you are "A" hotel owner, then yes, your scenario does change your ability to utilize marketing tools, such as discounted rooms. I won't argue that point. But we're talking about a business which has many avenues in which to make profits (margins). That fact alone allows Disney to offer these discounted packages, while still making huge profits on a daily basis in the parks.

 

[HennieBogan1966]

Now on to Computer Magic

I disagree when you say that Disney is unfair or unethical in its business practices, due to packing people into the parks to maximize profits. There isn't a company in the world that doesn't utilize the add-on or upsell business model.

What's funny is how you stated you wait for the disounts to be announced before you make your plans. So, while you say it's unethical for them to pack em and rack em, you're participating in the very thing you are against.

There's nothing wrong with what they offer. Thank God they do. A lot of us out here couldn't afford to go if they didn't. Fair profit is whatever I can make for a product I sell, based on what the consumer is willing to pay. If the market dictates that a gallon of milk sells for $3 then that's what I'll sell it for. Does that make me money hungry? Don't think so. Just following market trends. Capitalism!!!! If you don't want to pay $3 for a gallon of milk, then you'll buy it elsewhere. It's up to me to find the balance. Disney merely follows those same kinds of trends. You can't sell tickets for $25, candy for 50 cents, and sodas for 75 cents anymore. You think minimum wage is low now? Try those numbers and see how much you get paid per hour. It's a business. And unfortunately, things cost more money to make, buy, produce, etc. etc.

Just a fact of life.

 

[Computer Magic]

The worst things about an unoccupied room is not the costs that are still there like utilities and labor it's that you can never get that room back.

Example: If you have 200 rooms that can be sold, as in that is the amount of rooms built into your hotel. You sell 190 rooms on 9/16/04. There is no way to ever get those 10 rooms recovered. Yes you could sell 200 rooms on 9/17/04, but you are still down 10 rooms from the previous night. The only way to recover those rooms would be to sell 10 extra rooms (210), which is impossible. Hotel rooms are not products you can just sell more of the next day. There is a set amount of rooms available a night, once the night has passed you can never recover any unoccupied rooms. You can do better the next night but it will never replace the lost revenue for the previous day.

Now let's get back to Wonders of Life. There is a minimum amount of CMs required to work at WoL in order for it to run. If that pavilion is not getting a reasonable market share of the park's attendance it is not only wasting labor at WoL it is taking traffic from other areas in the park at putting it in WoL. Yes that traffic is a small percentage, but when you think, "ok I can close this area, move that labor to a more productive area and the guest can spend more time and money in a different area..." Makes sense.

If CoP closed I would be very hurt because it was Walt's favorite, but if I am one of only a few people that still actually goes to the attraction I would understand why it would need to be changed.

I guess I have a few questions or observations regarding the resort occupancy . Does the hotel really expect to have full capacity all the time? That seems very optimistic. I would think they have a break even point calculated on how many rooms needs to be occupied per day to cover cost. Then all rooms occupied above that are profit. (of course minus the variable cost incurred for each additional room).

Let's say they need to have a 65% occupancy rate to break even, but for a week they were only at a 55% occupancy rate. Wouldn’t they make up the difference by getting an occupancy rate of 85% rate the following It seems they are setting themselves up for a lost by expecting all rooms to be occupied all the time. Or this that the plan, a tax write-off?

The goal would be to sell as many rooms above the break even point (possibly at a discount, small profit is better then the room sitting idle).

Your statement still holds true as their potential profit isn’t as high as it could be. So then if they aren’t at full capacity, is this considered a lost? I know if they don’t make the break even point that would be a lost.

 

[pjammer]

SuperTarget is still open due to one word: Capitalism. Because of the freedoms of this country, businesses are free to compete for their customers.
Some will shop Target, some Wal Mart. Which one gets more traffic? Which one shows more $$$ on their books at the end of the year? Wanna bet that will be Wal Mart? And why do you think that will be? Atmosphere? Location?
Parking Lots? I doubt it. I'm gonna go with PRICE!!!

Same thing with the Theme Park Business. If a family of four has to choose between a week at Disney, which will probably run in the neighborhood of 4 or 5 thousand, or a week at Six Flags for half the price? Mind you, I'm talking your average family of four, and not a family who's median income is over 100k a year.

I agree and disagree. Wal-Mart has better sales because of prices. Thats why more people shop at Wal-Mart than anywhere else....LOW PRICES. But it is not only the low prices, its the quality product at a low price. Why go to Super Target and pay say $1.75 for a bag of Doritos when I can go to Wal-Mart and buy the same bag for $1.50. However I can buy the "Best Value" brand and get it for $1.00 but I want the quality of the Doritos brand but at a lower cost than I can find anywhere else. Is not the just the low prices...but the quality name brand products at low prices. Thats why you see the name brand items selling out more at Wal-Mart than the "Best Value".

Same would apply to the Theme Park industry. However Disney is the name brand. You see plenty average americans at the parks, dishing out the dough, even though they should be buying a bar of soap or fixing the Trans Am in their front yard. They could go vacation at Universal or Sea World or Busch Gardens, but why do that when you can go to the "name brand" theme park for the same price, or a little bit more.

If Disney lowered there price it wouldn't affect their business. When you have established yourself as the best people will pay the money...espicially when your competition is the same price. Universal would be the company that could gain by lowering cost. Because they offer almost...almost the same quality. It's like choosing between Dr. Pepper and Mr. Pibb. The same product for the same price. If one was lower though, it would change the desicion making process of the average consumer who thinks both taste the same. With Dr. Thunder "or Six Flags" being in a far third.

 

[Computer Magic]

To HennieBogan1966

What I’m saying is their "Discount" price should be regular price which would give them a fair profit. Disney prices are too high. Park attendance was down and Disney needed a way to bring the people back to the park. Disney offered "Discounts" and people started showing up. Guess what, they are still making a fair profit.

This tells me their prices were too high. Even with discounts, the park is not at full capacity every day. So they are tying to bring people back to the parks.

I would not go to Disney at peak time; I just don’t like large crowds. Being packed like a sardine is not my ideal of a good time. Just because I utilize the discounts doesn’t make me hypocritical with my beliefs. So I stand by my statements.

 

[Pixie Duster]

To HennieBogan1966


I would not go to Disney at peak time; I just don’t like large crowds. Being packed like a sardine is not my ideal of a good time. Just because I utilize the discounts doesn’t make me hypocritical with my beliefs. So I stand by my statements.

We've had the Play 4 Days FL resident ticket BEFORE we had the huge drop off. We've always had a few types of discounts they just change depending on which market we are going for. Attendance did not come back only because of the discounts, the discounts only apply to certain people at a certain time. There were many more pyschological reasons guests came back in large numbers starting this past holiday season.
Let's just say Disney lower their prices. By the logic used in your previous post people will begin coming to the parks more. Which then would mean it would be more crowded, and a lot busier during non-peak times. Do you want to deal with that?

Back to the hotel.... break even is acceptable only during non-peak times, during peak times it'd better be at capacity.

 

[TURKEY]

I don't think WDW has ever done a GA resident deal like they have been doing for FL residents.

 

[HennieBogan1966]

I'm Back

Sounds like PJammer is agreeing with me. Now, on to some of your comments. Whether or not you choose to attend based on "crowds" doesn't necessarily reflect the fact that you choose to use the discounts, which usually occur during the holiday seasons, which are usually fairly busy. Now, you may choose to attend the week before Thanksgiving, or a week or two before Christmas, but you are still utilizing the disounted packages. Disney could make those prices their regular prices, but what you'd see is a decline in quality of service, and therefore a decline in the quality of your vacation. Like it or not, the first thing companies cut when they need to "save" or "make" the numbers balance, is payroll. We can debate all day whether that's right or wrong, but that's the reality. The other thing is that while Disney tends to be a leader in most cases, they are also going to follow market trends and pricing, just like everyone else. As the market goes, so goes the pricing. And sure, during peak seasons, you want the rooms full, which is why you see the pricing you do. It's called SUPPLY and DEMAND.

Do you think that if suddenly everyone started buying Cadillacs that the price would come down on them? I think not. So why should Disney lower their price at that point? Another point to look at is that during peak seasons, they are looking to maximize profits in advance of slower periods, which they KNOW they will go thru in other parts of the year. Again, you can't view these things in a vacuum. Business is a living, breathing thing that changes on a day to day basis.

 

[TURKEY]

There are plenty of discounts year round, not just during the busy seasons.