I think a lot of that has to do with the sliding scale of the admission price. The Magic Your Way tickets kind of ruins the per day pricing profits while simultaneously keeping inpark spending afloat. MYW went into effect in 2005. (Edited 2005)
An item such as electricity typically is recorded as an operating expense (opex). Disney does report opex but since the current discussion seems to center around theme park investing activities, I think what you're more interested in is capital expenditures (capex).
An item such as electricity typically is recorded as an operating expense (opex). Disney does report opex but since the current discussion seems to center around theme park investing activities, I think what you're more interested in is capital expenditures (capex).
When Disney adds an attraction (e.g. SDMT), builds a garage (i.e. what's happening at DTD), or buys a vehicle, most of the associated cost is recorded as capex.
Opex is not considered an investment while capex generally is.
However, not all capex provides an actual theme park improvement. In fact, Disney reported that their baseline capex without special projects was over $1 billion annually in 2005. Think of this as replacing something that is old. For example, Disney purchasing a new bus to replace an old bus that has reached the end of its usefulness.
Disney generally refers to this type of capex as "maintenance capital". It is recorded as capex but does not represent a true investment. What's the alternative, spend over $200/night at a Moderate Resort hotel just ride a bus that's 20 years old, with worn out seats, and belching out fumes?
Really, it's not surprising that Disney spends so much. Whether it's theme parks, hotels, or cruise ships, Disney's Parks & Resort (P&R) segment is a capital intensive business. In 2013, P&R realized over $14 billion in revenue. Spending over a billion annually just to keep that enormous infrastructure in place is to be expected.
Expenses generally are managed as percentages of revenue. Two companies might spend identical dollar amounts on capex in a given year but if one company has significantly less revenue, then its investment strategy is considered more aggressive.
From this perspective, Disney's highest investment level occurred in 1982, the year Disney finished EPCOT. That fiscal year, Disney's P&R capex ran a whopping 89% of revenue!!!
The other extreme was in 2008 under Disney's current CEO Bob Iger, when P&R capex was a miserly 8.1%.
For his 21 years as CEO, Michael Eisner averaged 22.2%.
So far, Iger has averaged 14.1%.
With three-quarters of the fiscal year complete, Iger's domestic capex (i.e. WDW & DLR) for 2014 stands at 7.3%, the second lowest in the history of the company, beaten only by Iger's 6.9% domestic capex in 2008.
Most of what Iger is spending today is overseas.
Below is P&R revenue and capex levels under Iger, who became CEO at the beginning of FY2006.
View attachment 66239
Quoting from Disney's 2013 10K description of Parks & Resorts:
Historically, Disney collected roughly 1-to-5% more on food, beverage, and merchandise than on ticket sales. There are outlier years here and there but, generally, that trend holds true all the way back to the days of the original Magic Kingdom.
). To me, it seems Disney has recognized the trend and that after 3 straight years of aggressive price increases, realized it just might be time to slow down a bit.
You're "facts" are not welcome here, we much prefer pixie dust!An item such as electricity typically is recorded as an operating expense (opex). Disney does report opex but since the current discussion seems to center around theme park investing activities, I think what you're more interested in is capital expenditures (capex).
When Disney adds an attraction (e.g. SDMT), builds a garage (i.e. what's happening at DTD), or buys a vehicle, most of the associated cost is recorded as capex.
Opex is not considered an investment while capex generally is.
However, not all capex provides an actual theme park improvement. In fact, Disney reported that their baseline capex without special projects was over $1 billion annually in 2005. Think of this as replacing something that is old. For example, Disney purchasing a new bus to replace an old bus that has reached the end of its usefulness.
Disney generally refers to this type of capex as "maintenance capital". It is recorded as capex but does not represent a true investment. What's the alternative, spend over $200/night at a Moderate Resort hotel just ride a bus that's 20 years old, with worn out seats, and belching out fumes?
Really, it's not surprising that Disney spends so much. Whether it's theme parks, hotels, or cruise ships, Disney's Parks & Resort (P&R) segment is a capital intensive business. In 2013, P&R realized over $14 billion in revenue. Spending over a billion annually just to keep that enormous infrastructure in place is to be expected.
Expenses generally are managed as percentages of revenue. Two companies might spend identical dollar amounts on capex in a given year but if one company has significantly less revenue, then its investment strategy is considered more aggressive.
From this perspective, Disney's highest investment level occurred in 1982, the year Disney finished EPCOT. That fiscal year, Disney's P&R capex ran a whopping 89% of revenue!!!
The other extreme was in 2008 under Disney's current CEO Bob Iger, when P&R capex was a miserly 8.1%.
For his 21 years as CEO, Michael Eisner averaged 22.2%.
So far, Iger has averaged 14.1%.
With three-quarters of the fiscal year complete, Iger's domestic capex (i.e. WDW & DLR) for 2014 stands at 7.3%, the second lowest in the history of the company, beaten only by Iger's 6.9% domestic capex in 2008.
Most of what Iger is spending today is overseas.
Below is P&R revenue and capex levels under Iger, who became CEO at the beginning of FY2006.
View attachment 66239
You're "facts" are not welcome here, we much prefer pixie dust!
Domestic capex as a percentage of revenue (a traditional way of viewing expenses) is at its third lowest level since WDW opened in 1971. (I don't have data from earlier years.)
Yeah, but speaking for myself as a WDW fan, I am looking at it completely opposite, capex is half what it was just two years back, and even at that, I don't know how much is being spent on the east coast vs west. I don't give a crap what's being spent in Asia. Maybe some day I'll get there, but not soon enough, I guess.
I don't gather you actually read ParentsOf4's posts. A major point is that domestic spending, as a percentage of revenue, is down. One would hope absolute spending would be up now compared to 2004. I also pay more for a carton of ice cream now than I did in 2004. Interestingly, if I continue that analogy, it is even more illustrative. I pay more for a carton of ice cream now compared to 2004 but they've reduced the size of the carton by 25%. Disney invests more money in its parks in 2014 but is actually building less because cost of building has risen.
It really isn't worth arguing w/ someone who is hell-bent on concluding that Disney is doing "enough." Suffice it to say, only a small amount of that 50% rise in coke prices is due to corporate greed. Shipping costs are higher for every processed component of your coke. Just like it costs more to ship milk now. I know cow wages haven't risen.
