Spirited News & Observations II -- NGE/Baxter

[twebber55]

Whether or not Avatar is greenlit and what pieces are greenlit is not really the point -- the point is when will we see it? Based on FLE construction, I'd be shocked if we see this before 2018. In any event, all four parks need to be major draws to keep people inside the wall.

With regard to WDW's profit, I dunno. These numbers are not publicly reported and I don't mean to suggest WDW is not profitable -- indeed, that is is the problem -- it is profitable no matter how much TDO spits on their property it keeps turning a profit so its hard to blame them from a financial perspective. But, I do believe it is underperforming -- certainly relative to DLR. More importantly, my point is that if WDW's business strategy breaks down and people start to look off property, it could be like a boulder that starts slow and then is very difficult to stop because of all the other revenue that leaves with that marginal park day or two or three.

All we can go by is what George K recently said... 2017...my optimistic side tells me Avatar 2017 and DHS expansion whatever that is 2018

 

[Lord_Vader]

Her point is that they spend money on the franchises but have done minimal to utilize those franchises, other than updating a ride and having more mickey/star wars crossover merch.


Exactly. They have all of this fantastic IP but are either unable to do anything with it at WDW (Marvel) or just...don't (Star Wars). They're not doing much to improve the parks, and what they have done lately is mostly catered to the under 12 female demographic, like @luv said. I'm hoping this changes, but time will tell.

Seems to me Disney closed on Lucasfilm late last year, not even six months ago, IMO it is very unreasonable to expect anything be done with Star Wars that was not already in the pipeline for at least another six months. I am an avid SW fan, love the IJ movies and expect to see something very big at WDW in the future but would absolutely HATE it if Disney were to rush to build something simply to one-up USF/IoA.

 

[openendedsky]

Seems to me Disney closed on Lucasfilm late last year, not even six months ago, IMO it is very unreasonable to expect anything be done with Star Wars that was not already in the pipeline for at least another six months. I am an avid SW fan, love the IJ movies and expect to see something very big at WDW in the future but would absolutely HATE it if Disney were to rush to build something simply to one-up USF/IoA.

Fair point and I didn't consider that in my original post.

 

[Tim_4]

any ball park figures on the price tag for avatar..im assuming NFL was about 400 million

Somewhere between NFL and DCA.

 

[orky8]

I have said WDW will be getting investment and even wdw74 agrees with me now. Disney knows what the competition is doing now so that makes it easier to respond strategically. Which they have always done, continue to do and will do in the future.

My concern for Disney is not whether they will make the investment, but whether it will be too late. Carsland and Avland are, at best four years away. Disney has spent the last twenty years training (mindwashing - including myself) that staying on property is the be-all and end-all of magic. I believe that is one of those things, kinda like a reputation or trust, that take a long time to develop and only an instant to destroy. Disney needs people to stay on property, buy food on property, and buy merchandise on property. Their business strategy has been to capture the entire vacation spend. What happens if that strategy starts to break down? Don't get me wrong, WDW is not going anywhere, and as was the case at DLR, hopefully only good things will come of this. It's just said that for 20 years, TDO's has been milking the margins and paying big bonuses all while kicking the can down the road and someone is going to have to clean up this mess eventually and have the hutzpah to invest heavily again if Disney ever hopes to revive their walled-garden strategy. Otherwise, they may need to simply fight for every park day (which would probably be a good thing from our perspective).

 

[jt04]

My concern for Disney is not whether they will make the investment, but whether it will be too late. Carsland and Avland are, at best four years away. Disney has spent the last twenty years training (mindwashing - including myself) that staying on property is the be-all and end-all of magic. I believe that is one of those things, kinda like a reputation or trust, that take a long time to develop and only an instant to destroy. Disney needs people to stay on property, buy food on property, and buy merchandise on property. Their business strategy has been to capture the entire vacation spend. What happens if that strategy starts to break down? Don't get me wrong, WDW is not going anywhere, and as was the case at DLR, hopefully only good things will come of this. It's just said that for 20 years, TDO's has been milking the margins and paying big bonuses all while kicking the can down the road and someone is going to have to clean up this mess eventually and have the hutzpah to invest heavily again if Disney ever hopes to revive their walled-garden strategy. Otherwise, they may need to simply fight for every park day (which would probably be a good thing from our perspective).

I still think they have decided (or were 'convinced') that a healthy central Florida tourist industry "outside the berm" was in the mouse's best interest. That would explain most everything.

Try addressing this issue rather than editing it out. That is where the explanation is. IMO.

Compare the Microsoft/Apple story.

 

[orky8]

I still think they have decided (or were 'convinced') that a healthy central Florida tourist industry "outside the berm" was in the mouse's best interest. That would explain most everything.

No, this is what they said publicly, but prepared internally with "potter swatters" at ALL FOUR parks. But while Potter drew a crowd, it did not draw people off property as it was just a 1 day thing at most. So Disney put its potter-swatter plans back in the desk drawer and figured Uni would take a breather. But Uni did not take a breather. In fact, while I'm sure Disney anticipated an HP2, they did not anticipate the incredible amount of investment they are seeing -- Transformers in less than a year, Simpsons, HP2, and JP and more it seems in the pipeline and beyond blue sky.

Disney's strategy is NOT a rising tide floats all boat strategy -- it is a capture all vacation spend strategy. Uni's strategy with Potter 1 was to create its own draw. Uni's strategy now is to breach Disney's wall by creating its own multi-day draw. Uni knows there are tons of tourists nearby with fat wallets and its goal is punch a hole in Disney's wall and let those tourists come spend a few dollars on their property.

 

[flynnibus]

It's the same 'we don't need to worry about those customers... we have millions of others..' type of thinking that sank detroit when toyota and honda ramped up in the domestic market. The proverbial canary in the coal mine. Disney is counting on the inertia of their past instead of paying attention to what's happening outside their bubble.

Disney is trying to make the moat bigger... to hold onto people even stronger... rather than simply building a product so good that no one would want to leave.

If the kingdom is too big to afford to modernize and keep fresh... bite the bullet and trim the dead limbs.

 

[jt04]

No, this is what they said publicly, but prepared internally with "potter swatters" at ALL FOUR parks. But while Potter drew a crowd, it did not draw people off property as it was just a 1 day thing at most. So Disney put its potter-swatter plans back in the desk drawer and figured Uni would take a breather. But Uni did not take a breather. In fact, while I'm sure Disney anticipated an HP2, they did not anticipate the incredible amount of investment they are seeing -- Transformers in less than a year, Simpsons, HP2, and JP and more it seems in the pipeline and beyond blue sky.

Disney's strategy is NOT a rising tide floats all boat strategy -- it is a capture all vacation spend strategy. Uni's strategy with Potter 1 was to create its own draw. Uni's strategy now is to breach Disney's wall by creating its own multi-day draw. Uni knows there are tons of tourists nearby with fat wallets and its goal is punch a hole in Disney's wall and let those tourists come spend a few dollars on their property.

I know this is the carefully crafted storyline that has been established here. And I hope it is true. The possibility Disney was caught flat-footed does not worry me though. The fact that Transformers went in so speedily makes me think you are right. But at the same time, central Florida being perceived as a tourist mecca is in WDW's interest.

My gut tells me that if Disney wanted to bury its Orlando competition it would have. But if you are right, I think Uni may have awakened a sleeping mouse who will to whatever it takes to answer the challenge.

In either case, we win!

 

[Lord_Vader]

I'm really not trying to be snarky here, but can someone please explain the business model where it's okay to keep building hotels and DVCs so that your occupancy rate (which used to be in the high nineties) has dropped into the seventies, but you keep restaurants shuttered or reduce staffing so your dining "occupancy" is essentially 100%, since a walk up isn't even a possibility?

Occupancy rates in the 90's implies there is not enough capacity during peak times, 80"s which is where they are now implies they have enough openings to accomodate most reservations even during peak times. They increase rates during non-peak times with discounts and don't offer as many to constantly keep them in the 80's.

Restaurants run at 100% of capcity are very profitable, much more so than a restaurant run at 80% capacity therefore they close down locations to keep the ones open at high utilization rates to maximize their profit.

 

[Lord_Vader]

If you weren't a regular, DHS is a full day and the other parks take longer as well. Being a regular, you have your favorites and know what to skip. However, if you were last there five or ten years ago, like the average guest, you'd go see every show and ride every ride. We all evaluate full day versus half day through our own personal lenses but many of us skip Beauty and the Beast or Idol or Indy or LMA or all of the above. There's a full day of stuff to do at DHS, just not a full day of stuff you FEEL like doing.

We travel to the world each year, do nearly everything and have yet to 100% of every attraction/show at EPCOT, DHS, or AK in a single day even when we planned our days out fairly well. I agree with you, most guests move around the park and try to do as much as possible but doing so at a park like DHS results in taking a day to a day and a half to catch all the shows and attractions and that is leaving out AIE.

 

[luv]

All Orlando parks require a day or more to see and do everything. As time went on, I considered DHS a half-day park at best and frequently skipped it to make room for other things. But I'd never tell a newbie that they could see or do everything in any park in half a day...except maybe Gatorland ("Orlando's best half-day park!"), though you can easily spend a full day there, if you wanted to do that.

 

[Lee]

Yeah, because if you've been to the parks much in the last 5-10 years... they are largely the same and you can skip large portions of it because you are either a) bored of it or b) smart enough to know to not waste your time on it.
The margin milking is playing out in the market place.. people are cutting back and opening their eyes to other alternatives. The faucet doesn't turn off overnight... but the damage has been done.

Well said.

The "tug of war" is going to be fascinating to watch.
Disney is spending a billion plus on a virtual ball and chain, while Uni (the Resort, not the architectural firm...) spends nearly as much building impressive new attractions.

Potter 2.0 will solidify Uni as a two-day destination. That is two days out if a typical 6-7 day stay that Disney definitely doesn't want to lose. Add Sea World and Busch...
Vacations won't be getting longer, days spent at Disney will get shorter.

Interesting times...

 

[xdan0920]

Quoted for absolute truth. It's all wannabe gangsters and... what's a polite way to say "skanky teenagers"?

If I ever get sad that Pleasure Island closed, all I need to do is spend five seconds at CityWalk and I'm cured.

Sweet generalization. Totally vibes with your earlier complaints about "Disney Haters" not complaining about a single bad experience, but rather, lumping them all together.

Also, I'm only on page 316 here, so bear with me...

I don't see how people complaining about MILF not fitting in TomorrowLand is the same as you saying WWoHP doesn't fit in Islands of Adventure. It's a completely different thing. If SpiderMan was in the middle of WWoHP, that would be the same thing. What you are saying is that two themed lands can't border each other. Which is in fact, impossible to avoid.

I realize you feel the need to defend TWD corp from all the perceived haters, but some of what you are saying is downright silly. Try and remember, 99% of us love WDW. We just want the best for it.

 

[Tim_4]

Sweet generalization. Totally vibes with your earlier complaints about "Disney Haters" not complaining about a single bad experience, but rather, lumping them all together.

Also, I'm only on page 316 here, so bear with me...

I don't see how people complaining about MILF not fitting in TomorrowLand is the same as you saying WWoHP doesn't fit in Islands of Adventure. It's a completely different thing. If SpiderMan was in the middle of WWoHP, that would be the same thing. What you are saying is that two themed lands can't border each other. Which is in fact, impossible to avoid.

I realize you feel the need to defend TWD corp from all the perceived haters, but some of what you are saying is downright silly. Try and remember, 99% of us love WDW. We just want the best for it.

With that logic, literally ANYTHING can go in Islands of adventure as long as it's an island. Isn't that what people don't like about DHS's so-called identity crisis.

 

[flynnibus]

No you're not crazy. People just don't get how theme parks operate beyond attractions. Harry Potter was actually hot back in 2011. Harry Potter is Internet hot now. Today, mid-afternoon, Forbidden Journey had a shorter wait than Hulk, Spiderman, Doom, Dudley Do Right, and Non-Dueling Dragons, and Poseidon (according to the board, I thought it was a timed show thing)

I guess that POTC was a dud too. considering it's wait time. If you want to attack something.. at least try with something you KNOW isn't BS. Forbidden Journey is a capacity juggernaut.. posted times isn't as meaningful as rider counts and you know it.

Merch sales have fallen off much faster than projected. You know you've got problems when your gold standard is actually just a polished bronze standard and you're blowing your money on more of the same.

Is that what the bosses think of The Little Mermaid?

When there's a bus that goes straight from MCO to MK and your vacation starts 20 minutes after you get off a plane... and there's a 30 minute wait for tickets at IoA at 1pm on a Sunday because there are only four windows open, after you waited for your luggage and rental car and hotel room.... those wristbands are going to make much, much more sense to people.

Who buys their tickets halfway through the operating day?

 

[luv]

CityWalk is not filled with thugs, lol. It is a vibrant, hopping, energetic kind of place late at night. It's a little more vibrant and energetic than I like on a regular basis...but I'm getting old, lol.

On area occasions, I'll stop to eat after the parks close and walk through CityWalk on my way out, which would be around ten-thirty. I enjoy the hip thing they have going on while I walk through...reminds me of my younger days. But I'm always glad to get in the car and go, too.

I never feel like I'm surrounded by thugs, lol. I would not visit a place like that.

 

[MichWolv]

Paging @MichWolv...

Late to this party, but let's see if I can figure out what people are poring over and figure out if I have anything to add.

 

[Tim_4]

Uni raised ticket prices this weekend.

Insert righteous indignation here.

 

[flynnibus]

1) The increase in operating costs outpaced revenue growth. That is never good.

Except you overlook the obvious that the boost in costs is due to short term capex investment. So they boost investment $150+mil or so.. yet in that same period they got a $50 mil boost in revenue. Only 3 years to get your ROI on investments scheduled to work for 20+ years? Anyone would jump on that.

They are investing because they are bullish that the revenue boosts are not short term, while their boost in capex is. They are investing on both costs.. heavily. They've already set the expectation with the market that capex for NBCU will be up well into 2015.

2) Operating cash flow is not the bottom line. Since you have the numbers at your disposal, tell us what net income minus capital expenditures is. Is that number positive or negative? The net income number is in the double digits, yeah?

Quarterly revenue vs long term capex isn't a concern of anyone because they know the capex is dollars intended to work for the coming DECADES. They have the money to do it, they have a product people believe in, so they can take the short term balance sheet hit in a single BU because it does not pose a significant risk.

Contrast that with Disney, who without the bullish outlook, has to manage the capex expense to NOT cause fear that the bottom line is sliding. The difference is all about outlook... UNIs is all up.. Disney's is all FLAT.