But... They could be completely FINE with FP upcharges driving away numbers to the point of offsetting direct gains. Lower crowd numbers mean less staffing, less park hours, less fireworks/night shows, less gas, less maintenance on rides, less monrail and bus wear and tear (not to mention less busses even required!!), more people in Disney Springs after park close, etc...
The staffing cuts and crowd manipulation alone would easily mean tens of millions of dollars a year. Easy.
I'm quite sure they'd be happy with having half as many people in the parks that were paying twice as much. Especially if that half as many people were high income/high spend (because they were the ones that could still afford the experience).
But... They could be completely FINE with FP upcharges driving away numbers to the point of offsetting direct gains. Lower crowd numbers mean less staffing, less park hours, less fireworks/night shows, less gas, less maintenance on rides, less monrail and bus wear and tear (not to mention less busses even required!!), more people in Disney Springs after park close, etc...
The staffing cuts and crowd manipulation alone would easily mean tens of millions of dollars a year. Easy.
I'm quite sure they'd be happy with having half as many people in the parks that were paying twice as much. Especially if that half as many people were high income/high spend (because they were the ones that could still afford the experience).
Not really. Skimming off the half of the people who spend less on food and merchandise is not going to make the remaining half spend twice as much. The remaining half are not going to buy double the food and double the merchandise.
WDW's entire infrastructure is designed to handle tens-of-thousands per day. It's better to have 10,000 more than 10,000 less.
Higher attendance (at the highest possible price) is preferable. Higher attendance results in better operational efficiency and better margins.
More people packed into the parks means higher sales
and higher margins. When is WDW more profitable, Christmas Week or the fourth week of January?
If the goal is to drive away customers in order to improve Per Capita Guest Spending (PCGA), why upcharge for FP+? Why not simply charge $200/day for a ticket?
WDW is entertainment for the masses. In mass entertainment, there's always a sweet spot, a middle ground between balancing price per unit and number of units sold.
You can conduct surveys and analyze data to the umpteenth degree but, ultimately, you never know where it is until you try it.
In recent years, Disney has employed a strategy called "price leveraging". It means raising prices on what you already have, perhaps repackaging it a bit to hide the increase. In more common parlance, it's sometimes expressed as "whatever the market will bear". Essentially, it means raise prices until sales start to be adversely impacted.
This strategy depends on trying something and gauging the market's reaction to it. It's a feedback loop, often trial-and-error. It also sometimes means trial balloons. Try something and then say, "Oops, that's not what we meant" when it fails.
From 2010-2013, Disney implemented
aggressive price increases at its theme parks. As a result, PCGS rose 25% in 3 years. That means you and I spent 25% more in 2013 than we did in 2010 for essentially the exact same theme park experience.
Ouch!
Disney's aggressive increases have had consequences. Normally after a recession, domestic Disney theme park attendance bounces back 5-to-10% per year. Instead, domestic attendance gains have averaged closer to 3%. For the first 9 months of this year, it's only up 2%. Disney's higher prices are hindering growth.
Equally disturbing is what has happened to the mix of sales at the theme parks.
In recent decades, Disney collected about 4% more on food, beverage, and merchandise than on ticket sales. In other words, for every $1 in ticket sales, they sold $1.04 elsewhere at the parks.
Disney's aggressive price increases have unbalanced this ratio. In 2013, food, beverage, and merchandise sales was only 89% of admission. Disney is selling only 89 cents in food & merchandise for every dollar sold in tickets.
That's an all-time historic low for Disney.
Last year, domestic attendance was up 4% while prices were up more than that. Yet Disney managed only 6% growth in merchandise, food, and beverage revenue. People are adjusting to the higher prices by simply buying less.
These are indications that Disney's prices are reaching a tipping point.
It appears Disney has recognized the trend and has reacted to it. Tickets are up 4% in 2014. To offset the lost revenue of a larger increase, they simply hiked ticket prices earlier in 2014 than they did in 2013.
Within any business, there are those who think "higher prices" is the cure to all corporate woes.
However, there are signs that Disney has recognized that its strategy of "higher prices only" has run its course and now it's time to concentrate on other growth initiatives.
At WDW, it's time to start building at the theme parks. That's where growth lies.