Josh D'Amaro comments on rising prices and "additional" or removed services: "An inevitable result of progress"

[Smiley/OCD]

By “discount“ maybe he means charging something reasonable as opposed to what they think they can get away with.

Yes, hockey pucks, I mean fine quality hamburgers were $12.00 now a feel good price of $9.99…

 

[Javier Antonio Nisa Avila]

I love your posts…because of your native perspective…

And this one is at the top. “Progress” is not the word to use and those trying to distract/divert from that are just throwing up distractions that change nothing.

Bravo.

It’s not an economics problem with this…it’s horrible judgement, semantics and fundamental misuse of ingles.

Thank you so much. I agree with you. They are using different keywords in order to get their aims. However, many people are believing these far-fetched ideas.

To my mind, Wald would never have accepted this. Moreover, if they want to get more money, why not doing other things? There are many ways to improve the benefits in parks without increasing prices. My wife, who is an expert un linguistics and communication, did a project of communication about how to improve benefits and the key point was communication and merchandise. For instance, Europeans no longer buy merchandise on the American website. As a matter of fact, the Spanish website is oriented to children. Really?

Anyway, they have used language to generate a misunderstood and people believe that is all right. There are many things that have been lost after COVID. For instance, what about Fantasmic?

Well, I think we will change our destination next time. We have never visited Universal because we loved Disney. However, I think it is crazy to pay this huge amount of money for something that it is the same. If not, we will visit other parks around the world. Finally, I think they will lose

 

[CaptainAmerica]

Disney consolidates both Shanghai and Hong Kong, despite owning a minority of the stock in each, because, despite the minority ownership, it has power over the day-to-day operations of each through contractual agreements. There are several structures in which this could happen. In the case of Shanghai and Hong Kong, the structure is one where, while Disney owns a minority of the operating entity, the operating entity has contracted management to a company that Disney owns a majority of. Thus, Disney controls the entity that makes management decisions about the operation of the resort. This is described in the footnotes to the financial statements as follows:

The consolidated financial statements of the Company include the accounts of The Walt Disney Company and its majority-owned or controlled subsidiaries.
*****
The Company enters into relationships with or makes investments in other entities that may be variable interest entities (VIE). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant (as defined by ASC 810-10-25-38) to the VIE. Hong Kong Disneyland Resort and Shanghai Disney Resort (together the Asia Theme Parks) are VIEs in which the Company has less than 50% equity ownership. Company subsidiaries (the Management Companies) have management agreements with the Asia Theme Parks, which provide the Management Companies, subject to certain protective rights of joint venture partners, with the ability to direct the day-to-day operating activities and the development of business strategies that we believe most significantly impact the economic performance of the Asia Theme Parks. In addition, the Management Companies receive management fees under these arrangements that we believe could be significant to the Asia Theme Parks. Therefore, the Company has consolidated the Asia Theme Parks in its financial statements.

The management companies are mentioned elsewhere in Disney's 10-K filing as follows:

Shanghai Disney Resort
Shanghai Shendi (Group) Co., Ltd (Shendi) and the Company have 57% and 43% equity interests in Shanghai Disney Resort, respectively. A management company, in which the Company has a 70% interest and Shendi a 30% interest, operates Shanghai Disney Resort.

Hong Kong Disneyland Resort
The Company owns a 48% interest in Hong Kong Disneyland Resort and the Government of the Hong Kong Special Administrative Region (HKSAR) owns a 52% interest. The resort is located on 310 acres on Lantau Island and is in close proximity to the Hong Kong International Airport and the Hong Kong-Zhuhai-Macau Bridge. Hong Kong Disneyland Resort includes one theme park and three themed resort hotels. A separate Hong Kong subsidiary of the Company is responsible for managing Hong Kong Disneyland Resort. The Company is entitled to receive royalties and management fees based on the operating performance of Hong Kong Disneyland Resort.

Not that it matters, but these types of structures are common for businesses in China, as the Chinese government generally disallows outside ownership of significant real estate in China. So companies structure their operations in China so that they have less than majority ownership of the real estate, but still make the decisions about running the business through contractual relationships. For accounting purposes, the decision on whether the operations are included in the financial statements is determined by "control", not ownership. Usually, control rests with the majority owner, but not always.

Interesting. Another fun example is the Golden Oak Non-Residential Association, which is like the HOA of Golden Oak that isn't actually an HOA. Disney has 0% equity interest but they control the majority (possibly the entirety?) of the board seats.

 

[Smiley/OCD]

All this time B.C and Josh or B.I. are referenced yet no identity is given to the members of "The Board". Who are the shadowy nameless members of "The Board"? Maybe they should be brought out into the light for all to see and know since B.C. and Josh etc. answer to "The Board". How about a look behind the curtain? Decision making may be different, no?

That’s public knowledge, any business or google search can get you that info…

 

[TheMaxRebo]

I belong to a group of people that are into drinking at Disney.. We just joined on the advice of a bartender and it has well over 40,000 members at this point. We joined because we really enjoy a GOOD cocktail.. Not a simple rum and coke or a screwdriver but I digress. I feel like that site represents the problem.. Not the excessive drinking on Disney property but it seems like every other day some will ask for the best drinks on property and a huge swath of people suggest La Cava De Tequila. The bar that serves margaritas out of a jug...

Maybe that makes sense to some people here, maybe some of those people are here but if your idea of a great drink comes out of a plastic jug from walmart, you're overpaying for garbage and you enjoy the bottom of the barrel service and quality.

Didn't the drinks at La Cava used to be hand made? Maybe people are still remembering that

Which connects to the larger issue/topic - people planning their trip around what used to be there/how it used to work vs what is actually there now (which in same cases is worse, in others is just different)

 

[bhg469]

Didn't the drinks at La Cava used to be hand made? Maybe people are still remembering that

Which connects to the larger issue/topic - people planning their trip around what used to be there/how it used to work vs what is actually there now (which in same cases is worse, in others is just different)

Most of the members post pics from inside the bar.. The group is less than a year old and I don't think any of them are aware that Cava one made the drinks.

You're probably right about your assumption. There is a lot of nostalgia at play here but I just cannot see that lasting forever.

 

[MichWolv]

All this time B.C and Josh or B.I. are referenced yet no identity is given to the members of "The Board". Who are the shadowy nameless members of "The Board"? Maybe they should be brought out into the light for all to see and know since B.C. and Josh etc. answer to "The Board". How about a look behind the curtain? Decision making may be different, no?

I assume this is sarcastic, but in case it isn't -- Board members of pubic companies are named in every annual report. They are elected by shareholders at periodic intervals. There is no shadowy namelessness here. But to make it even easier than looking in the annual report, you could just go to the corporate Disney web page, and click to "Leadership" -- https://thewaltdisneycompany.com/about/#leadership. Board members all identified on the page.

 

[Tha Realest]

We’ll be there very soon - a trip planned in 2019. I’ve already dropped two days off what was originally planned to go elsewhere.

After that I don’t know when we will go back to a WDW park. We’re certainly not planning on it.

This is like Ken Burns saying he's tired of baseball, the Civil War, and jazz music.

 

[MichWolv]

Interesting. Another fun example is the Golden Oak Non-Residential Association, which is like the HOA of Golden Oak that isn't actually an HOA. Disney has 0% equity interest but they control the majority (possibly the entirety?) of the board seats.

Possibly. I don't know if Disney actually consolidates the Golden Oak association. Looking in the 10-K won't tell us, because it is likely that it is immaterial, so wouldn't be mentioned either way. Usually, HOA's and similar entities are operated by a company affiliated with the developer (at the start), but are operated, contractually, on a break-even basis, so that the economics of the entity all flows to the property owners, even if the operator makes the decisions. In those situations, the operator generally does not consolidate because they have no economic interest in the entity apart from the fees they earn for operating the association. As long as those fees are "normal" for the activities being performed, the operator wouldn't consolidate, unless it also happens to own a majority of the properties at the time.

 

[el_super]

That doesn't change the statement that attendance is not increasing, so it is very possible a lot of people are stopping going (or at least going less).

In the short term they get more money. But what of the long term?

I think it's pretty obvious that the decisions being made now are part of their long term plans. It's important to remember that these people working on these strategies, spend 40+ hours a week learning and understanding how the parks operate, with data we don't have access to, and on a level that none of us here can probably even comprehend.

Josh can talk all he wants about progress and guest experience, but I see a lot more stress in faces of pictures I see nowadays, and that could have long term impacts. And FYI, I don't see it in other parks we visit.

Yes, going to a Disney park can be a terribly stressful experience today, and yes it can impact the desire of people to return. Disney knows this and has stated as such.

But the only real way to correct for this, is to start bringing attendance down. You have 20 million people going to a park (and with a business model) that was designed in the 1970s to accommodate half as many people. Raising prices might seem like a detriment today, but if it reduces the crowds and reduces the stress of a visit, it will be worth it in the long term.

 

[trainplane3]

An old work colleague of mine visited a few months ago.

You couldn’t find someone more covered in pixie dust. His parents brought him up on a diet of DVC and DCL. His second homes were Hilton Head and WDW. He made me look like a casual guest.

He messaged me whilst there with a simple message. “The magic is gone“.

I don't blame them. The parks still feel lacking and massively overwhelmingly stressful with planning.
We did a July trip only because we "had" to use DVC points. Would've been fine without it. Only trip we actually planned for is the 40th which we all know how that'll end (spoiler, it won't even start). Our next trip is for late 2023 and that's hopefully it. Going from 3 trips a year down to a single one is a big step back for us.

I'm not even looking forward to that single one next year.

And on the topic of trying to pull big spenders into the parks...it's hard to even spend money when most of the merch is crap now. Save for some of the unique Epcot and MK throwback anniversary stuff, it's all so generic and boring. Even the freaking pins are starting to get boring. A friend came down for their first time in July and didn't want to buy anything even though they came with an extra suitcase and the mentality of burning money down there.

 

[CaptainAmerica]

And on the topic of trying to pull big spenders into the parks...it's hard to even spend money when most of the merch is crap now. Save for some of the unique Epcot and MK throwback anniversary stuff, it's all so generic and boring.

I hate the EARidescent line, but the Vault Collection was engineered in a laboratory for the sole purpose of separating me from my money.

Also:

Look how ugly it is! I love it so much.

 

[the_rich]

Oh I strongly disagree with this. I hate the EARidescent line, but the Vault Collection was engineered in a laboratory for the sole purpose of separating me from my money.

I had to pull my sister away from the vault collection section.

 

[Kirby86]

So the fee they charged me to park overnight at their hotel after I already am paying for a room to stay there and park tickets is a progress fee? Gotcha glad it's not them trying to just nickel and dime me.

 

[Vegas Disney Fan]

In the short term they get more money. But what of the long term? A lot of people who have gone for years are saying they don't want to go back. How many of those people are a go to person for questions from friends looking to plan trips? How many of those will say it's not worth it, do something else (and friends will listen to the advice)? How many kids are not falling in love with the parks like their parents did, meaning they don't have that connection when they grow up? Josh can talk all he wants about progress and guest experience, but I see a lot more stress in faces of pictures I see nowadays, and that could have long term impacts. And FYI, I don't see it in other parks we visit.

Business studies have shown for years that it’s 5-6 times more expensive to attract a new customer than it is to retain an existing customer. It also shows that existing customers are much more likely to continue to return than the new customer you manage to attract once.

If Disneys attendance plan is based on a belief “there’s 10 new customers waiting to take the spot of every loyal customer we lose” they are destined to fail in the long run.

 

[CaptainAmerica]

If Disneys attendance plan is based on a belief “there’s 10 new customers waiting to take the spot of every loyal customer we lose” they are destined to fail in the long run.

Your implication here is that they're bleeding loyal customers. They're not.

They're not replacing loyal customers and replacing them with new ones, they're retaining loyal customers and adding new ones. And then a tiny minority of folks are Very Mad Online.

 

[Sirwalterraleigh]

These are audited financial statements.

So that’s pretty “simplified” accounting then, huh?

 

[Sirwalterraleigh]

Your implication here is that they're bleeding loyal customers. They're not.

They're not replacing loyal customers and replacing them with new ones, they're retaining loyal customers and adding new ones. And then a tiny minority of folks are Very Mad Online.

Did you “audit” that?…because I don’t recall anyway to make such a definitive assessment of millions of paying customers…
That’s what they may put in speeches…but it’s not disclosed nor would it ever be. Internal data would be the only way to “know”

 

[Sirwalterraleigh]

It may seem unlikely, since Disney is such a staple of Americana, but similar events have happened in the past. Overnight Disney can become unfashionable, passe, uncool, ridiculous, superficial, vulgar, and somewhere no one with any sense or style goes to anymore. It can reach that tipping point when enough people hate the management, can't afford the parks, feel abused, feel insulted, and treated like walking ATM machines. EVERYONE in upper Disney management seems to be going out of their way to make this happen. They no longer even pretend to serve the core values that built the company. I hope it happens.

American giants have fallen before. I always point to the ridiculous decline of Kodak…but there are others.

One that is legendary is in downward collapse now that I can think of…

It’s not “impossible” as many fans dismiss without considering…

 

[MissingDisney]

So the fee they charged me to park overnight at their hotel after I already am paying for a room to stay there and park tickets is a progress fee? Gotcha glad it's not them trying to just nickel and dime me.

My thoughts exactly. They made progress by now stranding me at the airport so I have to pay to get on property if I fly in, but they also zing me with parking fees if I have my own transportation to the resort. They really thought of everything to make my stay more positive in view of progress.