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Disney Pricing Strategy
- Thread starter WisDisneyFan
- Start date
Tom P.
Premium Member
It does not take a long article to explain Disney's pricing strategy.
A vacation at Walt Disney World is a luxury item. People are willing to pay luxury item prices for it. Despite all the increases, people keep coming in record numbers. Disney wants to make as much profit as possible. Therefore, they will continue raising prices until they reach a point at which people stop coming.
There. One paragraph.
A vacation at Walt Disney World is a luxury item. People are willing to pay luxury item prices for it. Despite all the increases, people keep coming in record numbers. Disney wants to make as much profit as possible. Therefore, they will continue raising prices until they reach a point at which people stop coming.
There. One paragraph.
CaptainAmerica
Well-Known Member
They actually want [some] people to stop coming [at certain times of the year]. Bob Iger addressed this in the latest earnings call with analysts (emphasis mine):
Steve, on the first part, we've been witnessing, over the last few years, a substantial increase in the popularity of our parks. A lot of that has to do with how well they've managed and the kind of investments that we've made not just operationally but in expansion and the use of IP that's extremely popular.
In doing so, what we're also trying to do is to use that popularity to manage guest experience a little bit better in the sense that - and we know that crowding can be an issue, and that when our parks are the most crowded, the guest experience is not what we would like it to be.
And so we're leveraging the popularity to obviously increase pricing and to spread demand, to get much more strategic about how we're pricing. So the parks are still accessible, but in the highest peak periods, we're trying basically to manage the attendance so that the guest experience isn't diminished by the popularity.
And I think, because of the nature of the investments we're making, we've been fairly vocal and transparent about those investments, the two big Star Wars, Toy Story Land that just opened up in Florida, the work that's going on in Hong Kong and in Paris and Shanghai and in Tokyo and all the great expansion and IP that we're putting in. That popularity is going to continue, and with that's going to come the, I guess, enviable task of balancing that popularity with guest experience and price elasticity.
Translation: The parks are too crowded and they're going to keep increasing prices because overly crowded parks ruin the guest experience.
Disstevefan1
Well-Known Member
Exactly, "they will continue raising prices until they reach a point at which people stop coming."
Look at what has happened to marithon weekend at WDW, the prices kept creeping up till it hit a breaking point. Allegedly, in 2018 there were 20 thousand partisapants to 12 thousand in 2019. Break point hit!
I gotta think there will be changes made to marithon weekend at WDW
Depends on how much the average maithon weekender spends. If they don't spend as much as other guests then they will probably not care, raise the rates even higher or cancel it completely.... it also depends on whether they are seeing an increase in other types of visitors.
CaptainAmerica
Well-Known Member
See the Iger quote above. They're going to raise prices past the point when people stop coming. Crowds are so bad it's affecting the guest experience, so they actually want to reduce attendance at peak times. As long as the percent increase in price is greater than or equal to the percent decrease in attendance, they're happy.
If he's telling investors that there is customer dissatisfaction with overcrowded days, then it's pretty clear Bob cares and it's on his radar. He had to approve the recent switch to on-demand pricing, and it seems very likely that poll results from guests were the issue. In the past year I've gotten two surveys asking if the park was too crowded.
The reason people are willing to pay a premium for a Disney park experience is because of the quality of experience. Our insiders have told us that Disney is sensitive to overall customer dissatisfaction. Customer satisfaction is what Disney trades in, though one may not think so from a forum that can be very... picky... at times.
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Tom P.
Premium Member
I understand what you're saying, and unlike some people, I do actually think Iger cares about the guest experience. But I also think that their desire to reduce crowding, or at least to spread it around more, is somewhat belied by the fact that they have been quite obviously panicking at lower bookings this year. The earliness of the free dining promotion, the fact that it's available basically for all of July through September, how much more availability there is in years past, how early the Halloween party tickets went on sale, other discounts that are out there, and so on all suggest to me that when bookings do start to decrease, they're not at all happy about that.
That's mainly due to guests waiting for Star wars opening
Tom P.
Premium Member
I agree that's the reason, but it doesn't change the point. If Disney really was wanting to see lower crowd to improve the guest experience, they wouldn't be panicking and offering all sorts of incentives to get people to book this year.
CaptainAmerica
Well-Known Member
I think the key difference is resort reservations versus theme park attendance. The two are related, but barely. They want every bed filled at all times, so I think we'll continue to see admission prices increase much more rapidly than resort room prices.
Resort occupancy has minimal impact on crowds. I have no idea if these numbers are accurate, but a quick google tells me there are 30,000 total hotel rooms on property. 90% occupancy is very good and 75% occupancy is very bad, so we're talking about a swing of maybe 5,000 rooms per night that determines success or failure from an occupancy perspective. The parks get over 150,000 guests per day, meaning those marginal rooms aren't going to move the needle much in terms of total crowding.
With resort occupancy fairly steady year-round, it's offsite guests (including locals) that drive the seasonal fluctuations in park crowds.
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Bingo! It's the same reason why you don't see as many phase closings anymore, or the increased number of available tickets for parties, etc. Cram them in there until it becomes a safety hazard.
CaptainAmerica
Well-Known Member
Wrong.
This:
Even if you accept fully that Bob is the most cynical corporate executive of all time and doesn't care about guest experience for the guests' sake, of course he cares about guest experience from a profitability standpoint. People won't come back if their time in the parks was crap because they had to wait 30 minutes for the PeopleMover. I'm not suggesting Bob cares about the guest experience just because he's a super kewl guy, he cares about the guest experience because happy guests are repeat guest, happy guests identify with the brand, happy guests buy lollipops and puzzles and t-shirts and antenna toppers, and happy guests tell their friends how awesome their family vacation was.If he's telling investors that there is customer dissatisfaction with overcrowded days, then it's pretty clear Bob cares and it's on his radar. He had to approve the recent switch to on-demand pricing, and it seems very likely that poll results from guests were the issue. In the past year I've gotten two surveys asking if the park was too crowded.
The reason people are willing to pay a premium for a Disney park experience is because of the quality of experience. Our insiders have told us that Disney is sensitive to overall customer dissatisfaction. Customer satisfaction is what Disney trades in, though one may not think so from a forum that can be very... picky... at times.
Disney.Mike
Well-Known Member
Double the cost... Please God double the cost
I wonder what would happen if they raised daily ticket prices to $200 and Platinum plus to $1500 with a 20% discount for Florida and DVC members? I hate the crowds. I would love to see attendance go down 10% and if paying more for it would be worth it to me. The problem is that rather than increasing prices to what is actually needed Disney is increasing prices just enough to still attract more people and then add more VIP tours.
eliza61nyc
Well-Known Member
That's what I think, especially guest who are one and done.
eliza61nyc
Well-Known Member
I think it's two different matrices Tom. As @CaptainAmerica mentioned there are only so many rooms and compared to the number of daily visitors, it's not that large of a percentage. Now I do think they care about filling those rooms because onsite visitors give you a greater chance of keeping them in the Disney bubble, that has a trickle down effect. On site will eat onsite, buy souvenirs onsite, etc etc.
John park hopper
Well-Known Member
If Disney was really serious about reducing crowds --reduce the park capacity from its current level and when it reaches that point shut the gates.
CaptainAmerica
Well-Known Member
The reason they care about crowds is because it creates a negative experience for guests. Shutting the gates and locking guests out of the parks when they've already paid to bring their families on vacation is a much worse experience than being inside a crowded park. Your suggestion actually makes the guest experience worse, not better.
Raising prices prevents people from coming in the first place.