News Expect closure of Hong Kong Disneyland and Shanghai Disneyland to impact Walt Disney World

[havoc315]

For Disney, guest retention programs have become a major focus. Many travel professionals will tell you that Disney is working overtime to get guests to come back. These aren't ordinary guests who may go once every 4-6 years, these are repeat Disney guests who travel once or more per year who have turned their back at Disney. These guests are discovering that for the price of a week long Disney trip they can go to Europe or Asia or on a cruise for the about the same price if not less.

Luckily for Disney (for now) there is a sucker born ever minute who will pay for the non-discounted rack rate with dining plan.

Remember, guest retention is a trailing indicator. Strong return visits in 2020 means people had good experiences BEFORE 2020. If people are having bad experiences in 2020, you'll see guest retention slide in 2021.. etc.
And major damage to reputation can be impossible to repair. It took Coca Cola years to get back to where they were before New Coke.

Disney *might* be fooling themselves, looking at the full parks, and see it as evidence that all is healthy. The reduced hours are working, the parks are still full! See, cutting parades was no problem, the parks are still full!
I have to think, in the long term, there won't be sustainable demand for $600 hotel rooms paired with $20 hotdogs paired with a 3-hour line for every ride.
But who knows, Disney does market to a worldwide audience, they are trading on decades of a magical reputation. Maybe there are enough customers who are willing to suffer through massive crowds.

But to paraphrase Yogi Berra.. we may get to the point where, "nobody goes there anymore, it's too crowded"

 

[monothingie]

Remember, guest retention is a trailing indicator. Strong return visits in 2020 means people had good experiences BEFORE 2020. If people are having bad experiences in 2020, you'll see guest retention slide in 2021.. etc.
And major damage to reputation can be impossible to repair. It took Coca Cola years to get back to where they were before New Coke.

Disney *might* be fooling themselves, looking at the full parks, and see it as evidence that all is healthy. The reduced hours are working, the parks are still full! See, cutting parades was no problem, the parks are still full!
I have to think, in the long term, there won't be sustainable demand for $600 hotel rooms paired with $20 hotdogs paired with a 3-hour line for every ride.
But who knows, Disney does market to a worldwide audience, they are trading on decades of a magical reputation. Maybe there are enough customers who are willing to suffer through massive crowds.

But to paraphrase Yogi Berra.. we may get to the point where, "nobody goes there anymore, it's too crowded"

Based on the information I've been told and what travel professionals with opinions have said, the guest retention initiative has been going on for a couple of years. Most of it has been in response the the heavy handed nickel and dime upcharges which really swung into high gear around 5 years ago. (Remember the cabanas in tomorrow land? Interpark backstage shuttle service? etc...)

With regards to your other point, and not trying to involve politics into the discussion, the economy has been very good, especially in the past 3 years which saw some of the largest price increases. The additional disposable income, coupled with record levels of credit card debt allow people to absorb the pricing craziness and in turn allows Disney to justify their increases.

Is it sustainable? Not at all. The corona virus (bringing it back on topic) shows how fragile the whole house of cards they've built is. What is happening on the other side of the world is having AN impact here. An inevitable economic change will have an impact here as well. I remember the bad times and the fire sales in the 00's. It was a very dark time for WDW, and it looks like current management is just blowing that bubble bigger and bigger every month.

 

[DDLand]

Some oversimplify the role of parks and resorts in the company with, “but they have money! Wah!” Sure. They do. And then you follow with, “they only care about this quarter! Wah!” Not really. But they are a company. $300 million isn’t an issue. But if they report Q2 results and there is a 10% drop in profits, investors will flee and they will lose many hundreds of millions. The calculus is complicated here, but they can analyze trends company wide and make small modifications in the short-term—increase prices on some items a bit, cut hours a bit, push off construction of a super hero E-ticket by a few months, and in doing so, control their numbers to avoid frightening Wall Street. Publicly-traded companies need to keep investors. And investors are extremely testy in 2020. Just watch the stock markets. The smallest thing, like 1 person arriving in the US with Coronavirus or a tweet from someone in power can send stocks spiraling. So, yes, they must be in damage-control mode to weather this storm. Hopefully, the virus dies down quickly. Otherwise, I’d expect cuts to become more dramatic.

Disneyland is still making use of assets more than 60 years old. Walt Disney World is fast approaching 50. These businesses have generated 100s of Billions in Revenue over their lifetimes. They have proven to be one of the best bets in business. While other consumer products and services have come and gone, Walt Disney World and Disneyland have been there printing cash. If Iger were being a half decent steward of the company’s assets, he would take the long view.

Last year (to return to Amazon) Jeff Bezos announced a significant profit miss at Amazon. This was primarily due to increased spending related to building out infrastructure. The goal is to get same-day delivery to more people than ever. Initially, investors were unenthused, but Bezos told the story. He explained that they were building what the customers wanted. Some unloaded shares, but most trusted one of the most successful CEO’s judgement. Today, Amazon is up nicely year to date and even more since the disappointing earnings report.

Apple announced a drop off due to the Coronavirus. Today the shares are trading around where they were before. As @lazyboy97o pointed out, Tesla is building for tomorrow. If investors are too daft to see that a shutdown may impact revenue, that’s astonishing. Most institutional investors will stick with Disney no matter what. This has much less to do with strategy, and much more to do with a complete misunderstanding of theme parks. They honestly believe that they’re providing a good experience, so they see some fat to cut. Nothing is essential to the parks. Anything is fair game for Chapek to cut.

Walt Disney World should have sizable year over year growth. Iger needs to explain the situation, and then move on.

Based on the information I've been told and what travel professionals with opinions have said, the guest retention initiative has been going on for a couple of years. Most of it has been in response the the heavy handed nickel and dime upcharges which really swung into high gear around 5 years ago. (Remember the cabanas in tomorrow land? Interpark backstage shuttle service? etc...)

With regards to your other point, and not trying to involve politics into the discussion, the economy has been very good, especially in the past 3 years which saw some of the largest price increases. The additional disposable income, coupled with record levels of credit card debt allow people to absorb the pricing craziness and in turn allows Disney to justify their increases.

Is it sustainable? Not at all. The corona virus (bringing it back on topic) shows how fragile the whole house of cards they've built is. What is happening on the other side of the world is having AN impact here. An inevitable economic change will have an impact here as well. I remember the bad times and the fire sales in the 00's. It was a very dark time for WDW, and it looks like current management is just blowing that bubble bigger and bigger every month.

Let’s chew on this hypothetical. What will Disney do when people stop coming? We all know that they will cut operating hours and maintenance. But the reason people aren’t coming is exactly because they’re getting a bad value. So the cycle will repeat. The current management is ill equipped to respond to any problem.

 

[monothingie]

Let’s chew on this hypothetical. What will Disney do when people stop coming? We all know that they will cut operating hours and maintenance. But the reason people aren’t coming is exactly because they’re getting a bad value. So the cycle will repeat. The current management is ill equipped to respond to any problem.

Probably a repeat of what they did in the 00's. As you said they will cut everything from hours to staff to maintenance to capex. Further you'll see incentives and offers like buy 4 get 3 free, free dining, 13 for 12 AP's. All of which in reality cost them very little. But it won't be enough, because the prices are/were still many times over what could be considered reasonable.

Here's also something to consider, and exodus from DVC or a wave of foreclosures if it gets bad. DVC is a cash cow. Even with all the resale restrictions and nonsense they've introduced in the past couple of years, points are insanely over valued. What do you think will happen when all those people decide to sell or can't afford to make loan payments.

 

[Horizons '83]

Can't believe how many former or current CEO's/CFO's and SVP's we have on these boards

 

[ToTBellHop]

Can't believe how many former or current CEO's/CFO's and SVP's we have on these boards

What else do we have to do while “spending time with family”?

 

[Patcheslee]

Can they just say "you work and get paid an hour less per day from now on" in the US? I know in my country a company can't do that..

I'll just say I work at a union company, and cut hours are first voluntary with no pay, or if they have to force ppl to take a day off a week we get 4 hours of that day paid. It's been going on for the past month now, so it all depends on the contracts unions negotiate. Non-union jobs I've seen hours cut with no notice at all.

 

[monothingie]

Can't believe how many former or current CEO's/CFO's and SVP's we have on these boards

What else do we have to do while “spending time with family”?

Clap with me.

I said Clap

 

[marni1971]

A timely reminder these attraction hours can fluctuate as deemed necessary.

 

[prberk]

Based on the information I've been told and what travel professionals with opinions have said, the guest retention initiative has been going on for a couple of years. Most of it has been in response the the heavy handed nickel and dime upcharges which really swung into high gear around 5 years ago. (Remember the cabanas in tomorrow land? Interpark backstage shuttle service? etc...)

With regards to your other point, and not trying to involve politics into the discussion, the economy has been very good, especially in the past 3 years which saw some of the largest price increases. The additional disposable income, coupled with record levels of credit card debt allow people to absorb the pricing craziness and in turn allows Disney to justify their increases.

Is it sustainable? Not at all. The corona virus (bringing it back on topic) shows how fragile the whole house of cards they've built is. What is happening on the other side of the world is having AN impact here. An inevitable economic change will have an impact here as well. I remember the bad times and the fire sales in the 00's. It was a very dark time for WDW, and it looks like current management is just blowing that bubble bigger and bigger every month.

I agree with all of this.

I also agree with others here that WDW and DL are benefiting from decades of good will and great experiences. But the sticker shock is starting to be experienced among friends I know with families. Some have thought about WDW vacations and just decided to go the beach instead, because it was half or less of the price. And the longer that families skip WDW, the less they seem to care. It is losing some of its "awe" among some of the kids who have never or rarely been there.

I can't help but think that some of that also is the way it is nearly absent for the last decade on television, especially The Disney Channel, at least in the uplifting way that it used to be showcased. Lately, when it is on television, it is not showing the "wonders" like it used to. What I mean is that shows like "WDW Inside/Out" and "Imagineer This" on The Disney Channel, as well as Travel Channel and History Channel specials, for many years constantly showcased the innovation and wonder of WDW out there as something to be seen. It created demand that was deeper than the latest celebration or attraction. It bred a sense that WDW (as well as DL) was a special place, with cool innovations to seek out and experience. And that programming was really, of course, an extension of what Walt himself had done over the years as host of his program. I really don't see that type of programming out there these days, the lack of which over time will also help erode the reputation of good will that the resorts have that has helped them to weather the storms and price increases.

And on a more serious note, if the corona virus starts to show up even more here (and maybe currently in Japan), I can see tourism to the parks being affected more directly. For real reasons beyond Disney, let's pray that this virus is fully contained soon. But if it is not, and it starts to spread more soon, I think the effect on the domestic parks (and Japanese) can be more direct, and start to become more like the time immediately following September 11, 2001, when parts of WDW were shuttered.

 

[larryz]

Can't believe how many former or current CEO's/CFO's and SVP's we have on these boards

 

[ToTBellHop]

Clap with me.

I said Clap

Frat-boy-Bob’s promiscuity knows no bounds. “You get the clap! You get the clap! Everybody gets the clap!”

 

[Rhinocerous]

Frat-boy-Bob’s promiscuity knows no bounds. “You get the clap! You get the clap! Everybody gets the clap!”

It's his unbridled charisma. Man and woman alike cannot resist it.

 

[the.dreamfinder]

For the curious, it appears the SHDL Zootopia mini land didn’t get much farther than earth moving based on these recent flyover pics.
Zootopia will be built northeast of SDMT.

 

[WDWTank]

I don’t know I’m still not sold Disney is going to make these drastic cuts already. This is a very different situation than 9/11. I was working for Disney during that time period. The parks were a ghost town for years out of pure fear of flying. This is a very different situation today outside of Asia. And yes it sounds like an incredible amount of money they are losing right now but the Walt Disney company has lost just as much money on movie bombs in the past. One example alone was John Carter which had a 200 million dollar write off. And this back In 2012 when the company was significantly smaller than it is today. Disney can manage this lose for now much better than in the past. It has grown tremendously since 9/11 which was a much much worse situation. The company today is 12.5 times larger than in 2001. Will there be cuts? Absolutely small cuts like entertainment and watching hours. Stoping the Avengers E Ticket? I’m not convinced yet. But we shall see.

Disney didn’t need to buy 100% of 20th Century Fox. Maybe they could've saved money by buying only a portion.

 

[WDWTank]

Clap with me.

I said Clap

OMG he looks like Thanos

 

[Lirael]

OMG he looks like Thanos

 

[Rteetz]

Walt Disney World Reverses Decision to Reduce Operating Hours of Select Epcot Attractions

 

[mightynine]

Walt Disney World Reverses Decision to Reduce Operating Hours of Select Epcot Attractions

I guess they hit their cupcake party budget line in the spreadsheet after all!

 

[larryz]

And the big stone holder left? That's for Universal.