Nothing Goofy about Disney park moves

[BigTxEars]

I know a few things about Star Wars land and another expansion at DHS that haven't become public knowledge yet that I'm quite excited for. Just because I'm not singing Disney's praises now doesn't mean there aren't things that I'm excited for.
As for working at Disney, take a gander at http://forums.wdwmagic.com/threads/workers-want-pay-boost.880782/. I'm sure there's plenty of info there, but I'm not doing your research for you..

Still looking for the slave like treatment of CMs you posted about.....you linked is a thread on here, and one I already have seen, nothing new there to read at all....certainly not to support a view that WDW has issue filling staffing needs because of the way they treat people.

It is great to see you post something postive about WDW.

 

[ParentsOf4]

If your are going to compare ROI from over a decade ago then all of those factors come into play. But if the cries from some on here are to be heard then turns at the gate are up, prices are up and investment back into the parks is down, if that was the case it seems ROI would be way up. So where is the disconnect to the math?

For historical perspective, P&R gross margins were in the high teens (18%-20%) while EPCOT was built, low twenties (22%-24%) while Disney-MGM & DAK were built.

Under Bob Iger (who became CEO in 2005), they reached an all-time low of 12%-13% from 2009-2011.

They now are starting to climb back up, at around 16%, not because of any major investment at WDW but because theme park ticket and food prices were up over 8% domestically, up over 20% since 2011. WDW just rushed another 4% ticket price increase last month.

Meanwhile, domestic P&R capital investments (i.e. money spent at WDW & DLR) were slashed by over $1 billion in 2013.

Corporate Disney is raising prices and slashing FF&E budgets in order to prop up profits. Again, compare that to the 1980s and 1990s when Disney built entire theme parks, water parks, hotels, shopping districts, and more yet still maintained P&R gross margins near or above 20%.

Operational costs this year for MyMagic+ were projected by Disney to be around $300M in FY2014. Rather than bringing in revenue, so far MyMagic+ is costing WDW a lot of money even though it's been rolled out to all hotel guests since October. Rumors are that MyMagic+ is more than 100% over budget, although Iger has refused to comment on MyMagic+'s budget. Right now, MyMagic+ is shaping up to be a bad financial decision.

MK attendance is strong. However, DAK and DAK have guest retention problems. Many show up in the morning but leave by mid-afternoon, making those 2 theme parks less profitable to operate after a certain hour. In 2017, DAK will be unveiling a new nighttime show in an attempt to keep guests at DAK at night.

What's particularly weak are hotel occupancies at the Deluxe and Moderate Resorts. (With the exception of AOA's Family Suites, the Value Resorts are performing well.) The hotels are highly profitable. They have much better returns than the theme parks so when their occupancies are down, it hurts the bottom line. Corporate Disney would rather have fewer theme park patrons and more Deluxe and Moderate Resort patrons.

Finally, VGF sales have been inconsistent. This needs to get sold out quickly in order to make room for DVC sales at the Poly.

There is a lot of uneven financial performance at WDW right now, which is acting as an anchor on the overall gross margin.

MK is a money-making machine. The rest of WDW is not performing nearly as well.

 

[ford91exploder]

For historical perspective, P&R gross margins were in the high teens (18%-20%) while EPCOT was built, low twenties (22%-24%) while Disney-MGM & DAK were built.

Under Bob Iger (who became CEO in 2005), they reached an all-time low of 12%-13% from 2009-2011.

They now are starting to climb back up, at around 17%, not because of any major investment at WDW but because domestic P&R capital investments (i.e. money spent at WDW & DLR) were slashed by over $1 billion in 2013. Meanwhile, theme park ticket and food prices were up over 8% domestically. WDW just rushed another 4% ticket price increase last month.

Corporate Disney is raising prices and slashing FF&E budgets in order to prop up gross margins. Without that FF&E cut, gross margins might very well be under 10%. Again, compare that to the 1980s and 1990s when Disney built entire theme parks, water parks, hotels, shopping districts, and more yet still maintained gross margins near or above 20%.

Operational costs this year for MyMagic+ were projected by Disney to be around $300M in FY2014. Rather than bringing in revenue, so far MyMagic+ is costing WDW a lot of money even though it's been rolled out to all hotel guests since October. Rumors are that MyMagic+ is more than 100% over budget, although Iger has refused to comment on MyMagic+'s budget. Right now, MyMagic+ is shaping up to be a bad financial decision.

MK attendance is strong. However, DAK and DAK have guest retention problems. Many show up in the morning but leave by mid-afternoon, making those 2 theme parks less profitable to operate after a certain hour. In 2017, DAK will be unveiling a new nighttime show in an attempt to keep guests at DAK at night.

What's particularly weak are hotel occupancies at the Deluxe and Moderate Resorts. (With the exception of AOA's Family Suites, the Value Resorts are performing well.) The hotels are highly profitable. They have much better returns than the theme parks so when their occupancies are down, it hurts the bottom line. Corporate Disney would rather have fewer theme park patrons and more Deluxe and Moderate Resort patrons.

Finally, VGF sales have been inconsistent. This needs to get sold out quickly in order to make room for DVC sales at the Poly.

There is a lot of uneven financial performance at WDW right now, which is acting as an anchor on the overall gross margin.

MK is a money-making machine. The rest of WDW is not performing nearly as well.

I had no idea that P&R performance minus the FF&E cuts was so poor and historically poor as well, What would you anticipate the results to look like if UNI with HP 2.0 manages to take another day away from the average Orlando vacation?

 

[TubaGeek]

Still looking for the slave like treatment of CMs you posted about.....you linked is a thread on here, and one I already have seen, nothing new there to read at all....certainly not to support a view that WDW has issue filling staffing needs because of the way they treat people.

It is great to see you post something postive about WDW.

Lucky for you, I just happened to write a post of that nature on another thread:
http://forums.wdwmagic.com/threads/has-anyone-ever-worked-at-wdw.881816/page-2#post-6003249

Now, to appease you, I will say a nice thing about Disney.
There is no company whose legacy I admire and love more than Disney, including the parks and resorts.

 

[ParentsOf4]

I had no idea that P&R performance minus the FF&E cuts was so poor and historically poor as well, What would you anticipate the results to look like if UNI with HP 2.0 manages to take another day away from the average Orlando vacation?

My opinion is that Diagon Alley should help WDW's theme parks by drawing more vacationers into Orlando. No matter what people think of Diagon Alley, Universal is no more than a 2 or (maybe) 3-day vacation for most.

I'm less sure about what will happen at the hotels. That's where the greatest profits are and the biggest unknown is. Will people use WDW as a base of operations for their Uni visits, or will they stay in the Universal area and visit WDW? I really don't have a clue. We should start to see a pattern develop once an opening date for Diagon Alley is announced.

WDW's problem is that their high resort prices drive vacationers offsite and unless they see a real onsite benefit with MyMagic+, it's difficult for me to imagine how Diagon Alley helps improve WDW's hotel occupancy rate.

I wish I understood the tourist's mind better but I really don't know what they are going to do this summer when it comes time to select a hotel.

 

[ford91exploder]

My opinion is that Diagon Alley should help WDW's theme parks by drawing more vacationers into Orlando. No matter what people think of Diagon Alley, Universal is no more than a 2 or (maybe) 3-day vacation for most.

I'm less sure about what will happen at the hotels. That's where the greatest profits are and the biggest unknown is. Will people use WDW as a base of operations for their Uni visits, or will they stay in the Universal area and visit WDW? I really don't have a clue. We should start to see a pattern develop once an opening date for Diagon Alley is announced.

WDW's problem is that their high resort prices drive vacationers offsite and unless they see a real onsite benefit with MyMagic+, it's difficult for me to imagine how Diagon Alley helps improve WDW's hotel occupancy rate.

I wish I understood the tourist's mind better but I really don't know what they are going to do this summer when it comes time to select a hotel.

I have not been to UNI since a 2003 corporate event so I can't say much about the park, If I'm in the area I will probably see what they have done with HP - Enjoyed the books and movies so I'd like to see what's been done there.

I prefer to hang out at KSC these days lots to do and see that will not be available once Falcon Heavy and SLS come online in 2017 or so.

It will be very interesting to observe the dynamic in O-town this summer.

 

[BigTxEars]

For historical perspective, P&R gross margins were in the high teens (18%-20%) while EPCOT was built, low twenties (22%-24%) while Disney-MGM & DAK were built.

Under Bob Iger (who became CEO in 2005), they reached an all-time low of 12%-13% from 2009-2011.

They now are starting to climb back up, at around 16%, not because of any major investment at WDW but because theme park ticket and food prices were up over 8% domestically, up over 20% since 2011. WDW just rushed another 4% ticket price increase last month.

Meanwhile, domestic P&R capital investments (i.e. money spent at WDW & DLR) were slashed by over $1 billion in 2013.

Corporate Disney is raising prices and slashing FF&E budgets in order to prop up profits. Again, compare that to the 1980s and 1990s when Disney built entire theme parks, water parks, hotels, shopping districts, and more yet still maintained P&R gross margins near or above 20%.

Operational costs this year for MyMagic+ were projected by Disney to be around $300M in FY2014. Rather than bringing in revenue, so far MyMagic+ is costing WDW a lot of money even though it's been rolled out to all hotel guests since October. Rumors are that MyMagic+ is more than 100% over budget, although Iger has refused to comment on MyMagic+'s budget. Right now, MyMagic+ is shaping up to be a bad financial decision.

MK attendance is strong. However, DAK and DAK have guest retention problems. Many show up in the morning but leave by mid-afternoon, making those 2 theme parks less profitable to operate after a certain hour. In 2017, DAK will be unveiling a new nighttime show in an attempt to keep guests at DAK at night.

What's particularly weak are hotel occupancies at the Deluxe and Moderate Resorts. (With the exception of AOA's Family Suites, the Value Resorts are performing well.) The hotels are highly profitable. They have much better returns than the theme parks so when their occupancies are down, it hurts the bottom line. Corporate Disney would rather have fewer theme park patrons and more Deluxe and Moderate Resort patrons.

Finally, VGF sales have been inconsistent. This needs to get sold out quickly in order to make room for DVC sales at the Poly.

There is a lot of uneven financial performance at WDW right now, which is acting as an anchor on the overall gross margin.

MK is a money-making machine. The rest of WDW is not performing nearly as well.

Seems the shareholders are fairly happy with the direction the parks/ company are headed:

http://www.thestreet.com/story/1253...t-the-walt-disney-company-annual-meeting.html

Since these shareholders have a major investment in Disney I would think they would not tread lightly if they felt the parks were underperforming do you? If the parks are slipping under the waves as implied by some where are the heads on a platter at?

The links I provided earlier showed record attendance at WDW last Q, resort room usage up and both of these with higher prices to boot. Both of these leading to record revenue overall for the parks.

No doubt the number you provided are accurate but what occurred at WDW 10-20 years ago is of little matter when looking at their numbers today. How many different factors have changed none of us will ever know, from interest rates, tax rates, wage cost, advertising cost, technology cost, fuel & energy cost etc it's simply not apple to apple comparison. Gross margin is a funky beast, I have to deal with it daily as it drive the baseline of my business. It can help you or kill you and sometimes you can't do anything but go along for the ride.

I like the future of MM+, I think with the ever increasing crowds at WDW it's needed. Being as based as it is in cell phone tech it just makes sense in today's world. I will not take my cell phone into the park, or even on vacation at all but I am in the minority there. As the wrinkles are ironed out it will make the crowds as WDW much more organized and thus the park much more efficient at moving them.

 

[ParentsOf4]

Seems the shareholders are fairly happy with the direction the parks/ company are headed:

http://www.thestreet.com/story/1253...t-the-walt-disney-company-annual-meeting.html

Since these shareholders have a major investment in Disney I would think they would not tread lightly if they felt the parks were underperforming do you? If the parks are slipping under the waves as implied by some where are the heads on a platter at.

Actually, there was some backroom maneuvering prior to this year's shareholder meeting. A large block is none-too-happy that Iger is both CEO and COB and some deals were struck to avoid an embarrassing vote.

As a whole, The Walt Disney Company is performing well. Stock price is a function of the entire company. In the most recent quarter (i.e. the quarter sited in the Orlando Sentinel and Theme Park Insider articles you quoted earlier) all other Disney segments outperformed Parks & Resorts. P&R was the weakest performer.

As I’ve previously noted (and as documented by Disney’s 10Q, 10K, press releases, and earnings calls), P&R margins are up due to “higher ticket prices and food and beverage spending”. Disney is not claiming anything else for improved financial results.

WDW theme park tickets are up more than 30% since 2010. DDP prices were increased 20% in 2013.

Does anyone seriously think WDW is 30% better than it was 4 years ago?

Domestic P&R (i.e. WDW & DLR) gross margin was at an all-time company low in 2010. When you're at the bottom, it doesn't take much to go up. In WDW's case, it simply takes higher ticket and food prices.

Meanwhile, Wall Street repeatedly has asked Iger about MyMagic+. They cannot figure it out and still can't after 5 straight quarters of responses from Iger. The earnings calls transcripts make for a fascinating read.

Iger's background is in TV. He understands film and TV well. He has absolutely no experience in theme parks, and it's showing. Unlike you and I, Iger genuinely does not like theme parks.

This is not a criticism of WDW. This is a criticism of P&R leadership which is being reflected in WDW’s financial performance, and what we see happening at the Orlando theme parks over the last 10 years.

Nearly everyone on this site is pro WDW.

It's just that some of us are not pro corporate Disney.

Current company leadership has no passion for WDW and is hell-bent on squeezing every last cent out of their "guests".

Our frustrations are not with WDW itself or the front line CMs who try their best under increasingly difficult circumstances. It's with a bunch of extremely well-compensated senior executives in California who think that it's OK to dupe consumers and cash in on a facility that took decades to establish. A bunch who seem intent to turn WDW into a bastion of mediocrity.

 

[Andrew C]

Actually, there was some backroom maneuvering prior to this year's shareholder meeting. A large block is none-too-happy that Iger is both CEO and COB and some deals were struck to avoid an embarrassing vote.

As a whole, The Walt Disney Company is performing well. Stock price is a function of the entire company. In the most recent quarter (i.e. the quarter sited in the Orlando Sentinel and Theme Park Insider articles you quoted earlier) all other Disney segments outperformed Parks & Resorts. P&R was the weakest performer.

As I’ve previously noted (and as documented by Disney’s 10Q, 10K, and earnings calls), P&R margins are up due to “higher ticket prices and food and beverage spending”. Disney is not claiming anything else for improved financial results.

WDW theme park tickets are up more than 30% since 2010. DDP prices were increased 20% in 2013.

Does anyone seriously think WDW is 30% better than it was 4 years ago?

Domestic P&R (i.e. WDW & DLR) gross margin was at an all-time company low in 2010. When your at the bottom, it doesn't take much to go up. In WDW's case, it simply takes higher ticket and food prices.

Meanwhile, Wall Street repeatedly has asked Iger about MyMagic+. They cannot figure it out and still can't after 5 straight quarters of responses from Iger. The earnings calls transcripts make for a fascinating read.

Iger's background is in TV. He understands film and TV well. He has absolutely no experience in theme parks, and it's showing. Unlike you and I, Iger genuinely does not like theme parks.

This is not a criticism of WDW. This is a criticism of P&R leadership which is being reflected in WDW’s financial performance, and what we see happening at the Orlando theme parks over the last 10 years.

Nearly everyone on this site is pro WDW.

It's just that some of us are not pro corporate Disney.

Current company leadership has no passion for WDW and is hell-bent on squeezing every last cent out of their "guests".

Our frustrations are not with WDW itself or the front lines CMs who try their best under increasingly difficult circumstances. It's with a bunch of extremely well-compensated senior executives in California who think that it's OK to dupe consumers and cash in on a facility that took decades to establish. A bunch who seem intent to turn WDW into a bastion of mediocrity.

How do you think Eisner was different? He also came in with no park experience. Did he just have a passion for it that Iger does not?

 

[NoChesterHester]

How do you think Eisner was different? He also came in with no park experience. Did he just have a passion for it that Iger does not?

I think the words "passion" and "competitive" are synonymous with Michael Eisner. Sometimes to his benefit. Sometimes to his detriment.

His successor is a far different leader.

 

[ParentsOf4]

How do you think Eisner was different? He also came in with no park experience. Did he just have a passion for it that Iger does not?

Eisner envisioned himself as the second coming of Walt Disney. After some initial apprehension, he really developed a taste for the theme parks and working with WDI.

If you have a chance, read Disney War. It gives some insight into this.

Eddie Sotto, a former VP at WDI, used to post here regularly. This is an interesting story from Eddie that gives you some idea of exactly how much Eisner got involved in the theme parks:

Back in the Mike Ovitz years, Coke was a sponsor, and since CAA, Mike's Hollywood Agency repped them (remember the polar bears?), they wanted a better value for their participation and he decided to help them activate their brand in the parks. Coke did not like to be tied to nostalgia like Coke Corner and want to look younger, so they tolerate those locations because they sell a lot. To them, those Tiffany Lamps make them look out of touch and old fashioned. I know.

Among adding the "Cool Spots" to sell more Cola, roaming salespeople pre parades, and additional signage, the cup became a big deal (as I believe they pay for a part of them). My department was tapped by Ovitz to design mockups of the cups that showed the Coke imagery at various sizes in relation to Disneys. Mike kept wanting Coke imagery to be bigger. It felt like he was working for them! Coke's perspective was to sell more product everywhere and they even got mad when we made the Toontoon "talking" drinking fountains (as it made drinking water fun!) We ended up doing many versions and getting frustrated, but Ovitz was the new President and he was asking me to personally handle it, so what do you do? We kept making some alternates that tastefully blended the Coke logos into the parks. He had me driving them to his home on the weekends!

Finally, Michael Eisner realized what was going on with the cups, stepped into the room, and looked at all the versions, was frustrated that it had gone that far, and overruled Ovitz by choosing one that had Coke imagery but still left Disney predominant. That was gonna be the end of it. To be fair, back in Walt's day there were Coke cups that had no park ID and were the diamond pattern variety, so it's been all over the place. I tried to find an image of the Ovitz cup mentioned, but came up empty. If they keep the red ones, I guess the glass is half full! End of cup story.​

 

[jlsHouston]

Disney Wars is a great read on the Eisner years. I found myself alternately despising him and admiring him. Glad when he got the no confidence vote and sorry he had to get a taste of his own medicine about how he treated people.
The man was a total paranoid, and he got the theme park vision because he did see himself as truly Walt's successor.
He was from entertainment like Iger but he put the Goofy outfit on and he picked trash up off the sidewalk of MK to prove he got the theme parks and he loved architecture and he was largely responsible for why so many of the resorts on property are unique in design.
I don't know Iger does the deals and he has the network background which makes a lot of money for TWDC and that is reflected on the balance sheet. But I think I agree that Iger unlike Eisner, just hasn't been able to step into the shoes left by Walt & Roy Disney.
@Andrew C get Disney Wars and read it. I brought it with me at Thanksgiving and read it on property. Excellent read on Eisner and the inner workings of TWDC during the 90's.

 

[bhg469]

You DO know what a fluffer is

I do and I think its completely accurate!

 

[Andrew C]

Disney Wars is a great read on the Eisner years. I found myself alternately despising him and admiring him. Glad when he got the no confidence vote and sorry he had to get a taste of his own medicine about how he treated people.
The man was a total paranoid, and he got the theme park vision because he did see himself as truly Walt's successor.
He was from entertainment like Iger but he put the Goofy outfit on and he picked trash up off the sidewalk of MK to prove he got the theme parks and he loved architecture and he was largely responsible for why so many of the resorts on property are unique in design.
I don't know Iger does the deals and he has the network background which makes a lot of money for TWDC and that is reflected on the balance sheet. But I think I agree that Iger unlike Eisner, just hasn't been able to step into the shoes left by Walt & Roy Disney.
@Andrew C get Disney Wars and read it. I brought it with me at Thanksgiving and read it on property. Excellent read on Eisner and the inner workings of TWDC during the 90's.

I actually read it a few years back. Probably worth a re-read though to look at it from a different perspective as I have read much more about Disney history since then. I was despising him during most of it. Haha.

 

[devoy1701]

No ones denying it.

Fortunes have been spent in DL, HKDL and DLP.

Though any article that quotes that no one else was brave enough to spend in 2008-9 needs to be taken lightly.

I thought the same thing. We've seen significant investments from Universal and Sea World Theme Parks in the same time frame.

 

[JoeT63]

Ok...

My last family trip to the World was 14 years ago, so I'm terribly excited about our upcoming trip. Going with DW and our baby...DD who is now 20. So it'll be a different, adult, trip but all three of us are giddy about the prospects.

I was able to go last October while in town on business, and I took the opportunity to go solo to Epcot one evening. I was close to a railing during Illuminations when a little girl, maybe 3 years old, squeezed in next to me for a better view. Her parents were apologetic but I sure didn't mind and gave her all the room she wanted. When she absent-mindedly reached up for my hand during the fireworks my heart melted. I turned to look at Mom & Dad and they were beaming.

I understand this thread. I go to Disney World to escape capex and, at my level, P&L's and weekly sales reports. Frankly, how Disney chooses to invest/spend (or however it's defined on quarterly con-calls) is up to them. I only assume they know what they're doing. I'm there to enjoy myself and my family.

As for the arms race with Uni and the fear that "we" are losing? I've had fun at Uni too, but I never cried when a little girl I didn't know took my hand.

 

[ford91exploder]

I do and I think its completely accurate!

Just checking yes inappropriate and perfectly descriptive...

 

[jlsHouston]

I actually read it a few years back. Probably worth a re-read though to look at it from a different perspective as I have read much more about Disney history since then. I was despising him during most of it. Haha.

How funny, me too, it wasn't until Gold and Roy Jr went after him that I actually developed empathy for him as a person. He was so full of himself and so inconsiderate of others. But he had vision and he cared about the parks and resorts not just the studios

 

[jlsHouston]

Ok...

My last family trip to the World was 14 years ago, so I'm terribly excited about our upcoming trip. Going with DW and our baby...DD who is now 20. So it'll be a different, adult, trip but all three of us are giddy about the prospects.

I was able to go last October while in town on business, and I took the opportunity to go solo to Epcot one evening. I was close to a railing during Illuminations when a little girl, maybe 3 years old, squeezed in next to me for a better view. Her parents were apologetic but I sure didn't mind and gave her all the room she wanted. When she absent-mindedly reached up for my hand during the fireworks my heart melted. I turned to look at Mom & Dad and they were beaming.

I understand this thread. I go to Disney World to escape capex and, at my level, P&L's and weekly sales reports. Frankly, how Disney chooses to invest/spend (or however it's defined on quarterly con-calls) is up to them. I only assume they know what they're doing. I'm there to enjoy myself and my family.

As for the arms race with Uni and the fear that "we" are losing? I've had fun at Uni too, but I never cried when a little girl I didn't know took my hand.

Exactly, it's those poignant moments you feel honored to witness or be a part of and it is the reason why none of us want them lost because of lack of vision and shareholder greed.

 

[JoeT63]

Exactly, it's those poignant moments you feel honored to witness or be a part of and it is the reason why none of us want them lost because of lack of vision and shareholder greed.

Yep, I absolutely get it. I think my point is that as hard as they seem to try...I don't think they can screw it up completely. And those who are repeat visitors who yearn for the good-ole days need only slow down and watch the kids' faces. (To me the problem with FastPasses isn't that you can now only get 3, it's that you can get ANY. Walt's vision wasn't to encourage commando-themeparking, imo. But I digress...)

Make every trip a new one, not a comparison with the past. I'm sure the magic still happens.