How is WDW Doing Economically?

[Pumbas Nakasak]

Only Miley Cyrus and Jonus Bros ones by descerning music lovers

 

[JWH]

Disney will be fine. We spent 8 days in early/mid-June, and the place was packed. On our flight down, the family next to us was going to Universal because they couldn't get a room at Disney. Parks were packed every day.

It was our third trip in 10 years (we hadn't been in 6 years) and I was very pleased with the condition of the parks.

 

[fosse76]

By the way, Disney as a company will be fine. A little recession thins the competition, focuses employee efforts, and provides the necessity to make smart decisions. Yes, a minor reduction in profits, but nothing serious for a company with so much in cash flow and assets.

They had a 46% drop in profits...not exactly a minor reduction considering how much it takes for them to profit...and that's the Company as a whole...not sure how much profit the parks/resorts are making...but I'm sure it's not much. With all the people staying on property using discounts, Disney is probably breaking even. Is it going to survive? Of course, but it isn't exactly swimming in profits.

 

[Ralphlaw]

They had a 46% drop in profits...not exactly a minor reduction considering how much it takes for them to profit...and that's the Company as a whole...not sure how much profit the parks/resorts are making...but I'm sure it's not much. With all the people staying on property using discounts, Disney is probably breaking even. Is it going to survive? Of course, but it isn't exactly swimming in profits.

Good point, but the company, as you say. will be fine. Everyone who runs a business knows that every day, month, or even year, will not necessarily be profitable. A 46% reduction in profits, of course, means that they are still making 54% of the profits (which is money above costs) that they used to have during the very good times. This is exceptionally good compared to most other entertainment companies.

I assume Disney is paying its employees, paying the utilities, paying the taxes and debt payments, and planning for even more expansion in the future. In fact, downturns are exactly when it is often profitable to expand. After all, prices of contractors, acquisitions, and some commodities often go down during such times. I bet there is still healthy profit, just substantially less than there used to be. Which makes you wonder what kind of tremendous profits come in when things are booming.

 

[pax_65]

From a marketing perspective, Disney seems to have multiple objectives that they approach somewhat independently of each other.

Objective #1 is to get people on property. Through advertising and unprecedented discounts, they have succeeded in this objective - they've had good crowds this year especially considering the state of the economy. But because people are staying at such reduced rates, income is way down.

Objective #2 is to get people to stay on property and spend money there. Here they've had mixed success. The meal plans still seem to be successful, which helps keep people on property (although this has been discounted at times also). Disney's Magical Express helps too - people without rental cars are much more likely to just stay on property. I haven't seen figures on this but my sense is that their merchandising is in a bit of trouble - probably in part because there is little that feels "exclusive" to the parks anymore - so much of the stuff for sale can be purchased anywhere - in the parks, at the Marketplace, or in your hometown Disney Store (or Target for that matter!)

I would guess that income from merchandise sales is down too compared to past years... but in any event, it's definitely not high enough to compensate for the hotel discounts.

Objective #3 is selling DVC. This has been enormously successful for Disney but I've heard they are struggling a bit now. DVC requires a big outlay of $$$ which fewer people are willing to part with in this economy. It's also bad timing as Disney has a lot of inventory now - Saratoga Springs, Animal Kingdom Lodge and Bay Lake Tower.

All in all, I'd say Disney is doing as well as could be expected. Even with the loss of income, it's better to have a crowded resort than an empty one. The crowds bring in income through food, park passes and merchandise sales (even if it's not enough to turn a profit) and probably has allowed some cast members to keep their jobs (i.e. no need for a full housekeeping staff if a hotel is 75% empty). Also, it positions Disney well for the recovery - bringing people to the parks is hopefully creating new Disney fans who will return (and pay a higher price) when the economy recovers.

 

[tirian]

In the past few months, I've seen tons of Disney commercials marketing all types of huge sales. 3 days free? Free meal plan? I was wondering if these deals helped Disney at all. And I would like to know how WDW is doing overall economically. It's sad to see such an amazing place have so little crowds.

Swells and ebbs are part of any economy, unless it's Communist or Socialist, in which it generally only ebbs.

So little crowds? This last year was the most crowded I've ever seen since my first trip in 1990.

They're doing fine. They're just not selling as much BS merchandise. You don't see every kid walking around in a big goofy hat or as many people with the swirly glowing things, or the spray bottles with electric fans, etc. People are only buying what they really need. Park tickets, food, and that's about it.

You're partly right. Admission barely covers the park's operating expenses; it does not count as profits. Disney relies on overpriced food and merch for profits—and those are down in a HUGE way. Disney had so much overstock last winter that most merchandise was 50% off throughout Christmas. Although the parks are crowded, heavy discounts and military offers are creating those crowds, and in Disney's eyes, the bottom line is not "doing fine." (And yes, I'm in a position to know this for a fact.)

Not true.

Profits are down. Big from what I've been told.

Correct: crowds are normal, but profits are down.

WDW has made it through the 70s, late 80s, and 9-11. They're going to come out of this just fine. Economic tides are part of the real world.

 

[SirGoofy]

Correct: crowds are normal, but profits are down.

WDW has made it through the 70s, late 80s, and 9-11. They're going to come out of this just fine. Economic tides are part of the real world.

Yup. Profits are down, but there's nothing to worry about. I think people just need to breathe and relax. WDW isn't going anywhere.

 

[tirian]

From a marketing perspective, Disney seems to have multiple objectives that they approach somewhat independently of each other.

Objective #1 is to get people on property. Through advertising and unprecedented discounts, they have succeeded in this objective - they've had good crowds this year especially considering the state of the economy. But because people are staying at such reduced rates, income is way down.

Objective #2 is to get people to stay on property and spend money there. Here they've had mixed success. The meal plans still seem to be successful, which helps keep people on property (although this has been discounted at times also). Disney's Magical Express helps too - people without rental cars are much more likely to just stay on property. I haven't seen figures on this but my sense is that their merchandising is in a bit of trouble - probably in part because there is little that feels "exclusive" to the parks anymore - so much of the stuff for sale can be purchased anywhere - in the parks, at the Marketplace, or in your hometown Disney Store (or Target for that matter!)

I would guess that income from merchandise sales is down too compared to past years... but in any event, it's definitely not high enough to compensate for the hotel discounts.

Objective #3 is selling DVC. This has been enormously successful for Disney but I've heard they are struggling a bit now. DVC requires a big outlay of $$$ which fewer people are willing to part with in this economy. It's also bad timing as Disney has a lot of inventory now - Saratoga Springs, Animal Kingdom Lodge and Bay Lake Tower.

All in all, I'd say Disney is doing as well as could be expected. Even with the loss of income, it's better to have a crowded resort than an empty one. The crowds bring in income through food, park passes and merchandise sales (even if it's not enough to turn a profit) and probably has allowed some cast members to keep their jobs (i.e. no need for a full housekeeping staff if a hotel is 75% empty). Also, it positions Disney well for the recovery - bringing people to the parks is hopefully creating new Disney fans who will return (and pay a higher price) when the economy recovers.

^^^ Right. DVC is a big thorn in their side right now, too, as most of the AKL/BLT folks switched from other properties.

My only concern (and Wall Street's, too) is that Disney isn't investing in the parks right now to offer new attractions at the end of the recession.

Ironically, Disney is trying to hold onto its purse strings to make Wall Street happy, and analysts have downgraded Disney for not spending money and not planning ahead for the post-recession period!

 

[tirian]

Disney will be fine. We spent 8 days in early/mid-June, and the place was packed. On our flight down, the family next to us was going to Universal because they couldn't get a room at Disney. Parks were packed every day.

Umm, hotel rooms have been available every day all summer. Maybe they couldn't get a Value resort; they also probably didn't consider staying off-property; they also probably didn't really know anything for a fact, because Universal has been busy, too.

It was our third trip in 10 years (we hadn't been in 6 years) and I was very pleased with the condition of the parks.

I'm glad you noticed that. Maintenance has been at an old-school high lately, and the parks have been getting a lot of TLC. It's the main reason I haven't joined the Doom-and-Gloom crowd.

 

[SirGoofy]

I'm glad you noticed that. Maintenance has been at an old-school high lately, and the parks have been getting a lot of TLC. It's the main reason I haven't joined the Doom-and-Gloom crowd.

Maintenance is awesome. Seriously. They've really kicked it into high gear, and I couldn't be happier.

It was my one huge pet peeve while I was there, and they've really turned it around the past few months.

 

[jt04]

Umm, hotel rooms have been available every day all summer. Maybe they couldn't get a Value resort; they also probably didn't consider staying off-property; they also probably didn't really know anything for a fact, because Universal has been busy, too.



I'm glad you noticed that. Maintenance has been at an old-school high lately, and the parks have been getting a lot of TLC. It's the main reason I haven't joined the Doom-and-Gloom crowd.

I said this before but I think it needs repeating. Maintenance and refurbs normally would not take much input from WDI. My theory is that is because WDI's resources are being largely directed towards projects away from WDW. The company is investing heavily in new attractions at other resorts while substantial investment is targeting WDW's infrastructure and refurbs, for now. Eventually, I believe, WDW will be getting the investment in attractions we all want to see.

 

[hokielutz]

I said this before but I think it needs repeating. Maintenance and refurbs normally would not take much input from WDI. My theory is that is because WDI's resources are being largely directed towards projects away from WDW. The company is investing heavily in new attractions at other resorts while substantial investment is targeting WDW's infrastructure and refurbs, for now. Eventually, I believe, WDW will be getting the investment in attractions we all want to see.

Unfortunately, many folks don't hold faith in the above word, and only see doom and gloom when other parks build new attractions, and WDW is only fixing or maintaining their current set. I understand the want that exists to expand, but have some faith that it will come. Just not as soon as we want it.

 

[pax_65]

Kind of a thread drift, but... is it two different departments who handle cleaning the park versus cleaning an attraction?

The reason I ask is that in May we noticed the parks overall to be in tremendous shape - clean, fresh paint, etc. but we noticed a number of attractions to be dirty (Splash Mountain - trash in the queue line, chewing gun along the sides of the ride, Norway - dust on flags in queue line, etc. - just to name two).

 

[tirian]

Kind of a thread drift, but... is it two different departments who handle cleaning the park versus cleaning an attraction?

The reason I ask is that in May we noticed the parks overall to be in tremendous shape - clean, fresh paint, etc. but we noticed a number of attractions to be dirty (Splash Mountain - trash in the queue line, chewing gun along the sides of the ride, Norway - dust on flags in queue line, etc. - just to name two).

To some degree, the attractions people are supposed to take care of their own cleaning, but maintenance, engineering, and custodial CMs do have overlapping duties. The rumor mill says Splash Mt's problem is that the attractions managers won't allow Staffing to schedule the CMs in early enough to clean the gum off their attraction every day.

 

[tirian]

I said this before but I think it needs repeating. Maintenance and refurbs normally would not take much input from WDI. My theory is that is because WDI's resources are being largely directed towards projects away from WDW. The company is investing heavily in new attractions at other resorts while substantial investment is targeting WDW's infrastructure and refurbs, for now.

Ummm... it's partly true. Much of WDW's recent issues DO come from poor management. Most of the new upgrades, including the coming attractions, come from Lassetter and Co. overriding the lackluster WDP&R and forcing good things through the pipeline.

WDI is focusing on DCA, not DL, right now, but that's not an excuse for 17 years without one new E-ticket at the MK, or for temporary structures remaining in place at two theme parks, or for Epcot's maintenance to be ignored for nearly 10 years, or for the Studios to be virtually ignored for several years, or—well, the list goes on and on. Plus, DCA's funding *shouldn't be* connected to WDW's; the resorts don't share financing.

Don't forget that DL was literally falling apart before its 50th anniversary, and it's not getting anything particularly new in the forseeable future, either. (Revamped fireworks and Fantasmic aren't long-term investments.) DCA's fix is a necessity to get crowds out of DL. All of those issues were due to bad management, and not because WDI's attentions were focused elsewhere. Well, in a way they kind of were; the Imagineers were trying not to get laid off from ridiculous internal politics and ego problems.

Eventually, I believe, WDW will be getting the investment in attractions we all want to see.

Yep, but new WDP&R management would make things a lot easier, especially if the new folks adhered to Walt's vision for his parks instead of just seeing dollar signs floating around the status quo.