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Spirited News, Observations & Thoughts IV
- Thread starter WDW1974
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crispy
Well-Known Member
It's interesting because I took my daughter to a birthday party this weekend, and the subject of WDW vacations came up. One of the moms mentioned that they had planned to go in October, but even with the room discounts available during that week, it was way too expensive for them. They booked a week at the beach instead. They visited WDW two years ago and want to take their daughter back since she enjoyed it so much. This is a two-income, middle class family that feels priced out of WDW right now.
GoofGoof
Premium Member
Yep. It will kill the view there, but they are keeping the luau. Personally, I'd rather leave the point untouched and scrap the luau area like the old rumors.
ParentsOf4
Well-Known Member
But is WDW attendance really up?
I think Rasulo and Iger have been playing fast-and-loose with the term "attendance record". Since it's not a financial metric, there's nothing illegal with that. It's the CEO's job to puff up the company as much as possible, as long as no laws are broken.
Some time ago, I posted my analysis of WDW's Q3 "attendance record" here. In a nutshell, CFO Jay Rasulo reported the following in the prepared statement, where wording could be chosen carefully:
“During the quarter, attendance at our domestic parks was up 3%, with Walt Disney World and the Disneyland Resort each setting new Q3 attendance records”
Later, during the more casual Q&A, CEO Bob Iger let the truth out:
“Magic Kingdom in Florida had record numbers, as Jay mentioned, in the third quarter.”
That's not what Rasulo said. He clearly was talking about WDW as a whole. However, The Magic Kingdom setting an attendance record (which it did) is an attendance record of sorts for WDW, so Rasulo's statement that "Walt Disney World and the Disneyland Resort each setting new Q3 attendance records" is truthful when looked at from a certain angle.
Let's remember that total domestic theme park attendance was up only 3% for the quarter. That includes the "Carsland bump" at DCA, which has seen significant double-digit growth, along with the "New Fantasyland bump" at MK. Taken as a whole, it's likely that all of the 3% growth occurred at DCA and MK only. In fact, together those two parks should have produced significantly more than 3% growth if attendance elsewhere was flat. That means attendance at Disney's other 4 domestic parks is down and, in some cases such as DHS, down dramatically.
Now, let's go back and revisit what was said about attendance in Q2. Quoting Iger's prepared statement:
"In Q2, Walt Disney World and the Disneyland Resort both set new attendance records for the quarter."
Wow, that sounds a lot like what Rasulo said in Q3. Again, we have to question exactly what is meant by "attendance records" in the prepared statement vs. what Iger said in the Q&A:
"Well, as you may or may not know, the Magic Kingdom park in Orlando is the number one park down there. It's actually the number one park in the world. And we hadn't really done much to Fantasyland in the many, many years since we opened.
"So this was significant both from our perspective, but also from a guest perspective. The only thing I can tell you that may give you some sense is that the Magic Kingdom broke an all-time single-day record for attendance during the Easter holiday, and we believe that was a direct result of the investment that we made in Fantasyland."
Note that Iger focused on the Magic Kingdom once again, ignoring the other 3 parks. He didn't even say the Magic Kingdom set a quarterly attendance record, only "an all-time single-day record for attendance".
Take what's said publically about attendance with a grain of salt. As a whole, WDW very much has an attendance problem.
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Such a shame. It really hurts to see them raising prices so high that families cant afford to go or have to save for years just to be able to afford it. Its so far from some of the principles that Walt himself had as far as it being a place for families to enjoy time together. Yes, they have a premium product which deserves a higher price but it truly has gotten insane over the last decade. We are seriously considering getting Uni season passes next year and just taking a year off from Disney. Not because we think Uni is better than Disney, just because we can save a little dough and absence makes the heart grow fonder.
GoofGoof
Premium Member
Agreed that corporate spin is always going to paint the most pretty picture. Its possible WDW in total was down with MK up a lot more than the other parks. However, it's been my experience that the prepared remarks are a lot more carefully worded than answers to a direct question which are more off the cuff. It would be more likely that Iger's comments to the question were inaccurate than Jay's prepared comments. I guess its also possible that they worded things that way to cover themselves legally while painting a more rose colored picture. IMHO Iger is going out of his way to highlight MK attendance to talk up the success of FLE. Analysts want to know that large capital projects are showing a return. He may also potentially be looking for another big chunk of change for DHS and he wants analysts and more importantly board members to know FLE is adding real gains. Highlighting a 1 day record in MK attendance is intended to show that the goal of the project was fulfilled. Increased capacity at MK allowed for more people in the park and FLE is driving ticket sales.
The point is we are stil not seeing the drop that some people seem to think is happening. Even if they were playing with the words a little I really doubt the numbers were way down but they decided to just say record attendance. If the numbers were bad they would just say nothing or talk about domestic parks in total. They went out of their way to highlight WDW attendance. This has not always been the case in the past. Maybe the foreign tourist thing is masking a decline in domestic guests.
I don't doubt that there are families who have been priced out or people who just don't want to go back, but there still seems to be an endless supply of new guests to take their spot. I know of a few people who have "thrown in the towel" on visiting WDW, but I'm visiting in November with a family that has never been before.
ParentsOf4
Well-Known Member
But Iger and Rasulo are dodging attendance discussions as much as possible. Consider what was said by Rasulo in the Q1 prepared statement:
"The increase in operating income at our domestic operations was driven by higher guest spending at Walt Disney World and the Disneyland Resort and attendance growth at the Disneyland Resort. For the quarter, attendance at our domestic parks was up 4% and per capita spending was up 6% on higher ticket prices, food and beverage, and merchandise spending."
Domestic attendance up 4% in Q1. Wow, that's more than the "attendance at our domestic parks was up 3%, with Walt Disney World and the Disneyland Resort each setting new Q3 attendance records" But when asked a direct question about WDW Q1 attendance:
"And how was attendance at Disney World in the quarter?"
Rasulo had to come clean:
"Attendance at Disney World was down at hair, I would say, and that -- oh, I'm sorry -- it was up a hair, but it wasn't the driver for the quarter. As Bob just said, everything that's going on at the Disneyland Resort is really what's driving the attendance trends for domestic parks."
So, domestic attendance was up 4% but essentially all of it was at DLR. By comparison, Q3 domestic attendance was up 3% yet we are lead to believe both DLR and WDW had "attendance records". It doesn't add up.
The simple truth is that Wall Street obsesses over theme park attendance, which is why Eisner stopped reporting attendance way back in 1985. It wasn't telling the spin story Eisner wanted to tell.
Wall Street knows there's only so much blood you can squeeze from a rock. Prices cannot keep going up at double or triple the rate of inflation; it's unsustainable. WDW guest incomes are not keeping pace. But that's exactly what has been happening for the last 5 years or so under Iger.
Wall Street knows what's happening at Universal; $265M invested in one land at Uni and suddenly Uni is a completely different theme park. Wall Street expects corporate Disney leadership to produce those kinds of results. They want to see sustainable growth at WDW.
Q1: Per capita spending up 6% on higher prices. Parks & Resorts revenue was up 7%.
Q2: Per capita spending up 10% on higher prices. Parks & Resorts revenue was up 14% "due to a shift in the timing of the New Year's and Easter holidays relative to our fiscal periods."
Q3: Per capita spending up 7% on higher prices. Parks & Resorts revenue was up 7%.
So, it's basically higher prices that are driving growth, nothing else.
How many guests' incomes are keeping pace with those increases? Wall Street knows this is an unsustainable business model.
That's why Iger and Rasulo have started to spin attendance. They need to say something to justify the money being spent in Orlando. If WDW isn't experiencing "record attendance", then what's the $450M spent on New Fantasyland doing? What's the billions being spent on NextGen going to do? It calls into question corporate Disney's leadership. It calls into question Iger's and Rasulo's judgment. Let the attendance spin begin.
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Nubs70
Well-Known Member
Before prices are lowered, the engineers will devise algorithms based on behavioral analytics than will entice you to spend more money.
TinkerBelle8878
Well-Known Member
On the same note, when they track us to all the stores (with the same merchandise grossly overpriced) , see we're in there all of 5 or 10 minutes and walk out without buying a thing. Or when people are so priced out of food that's subpar that they are now bringing their own in and aren't buying CS/Sit Down or DDP.
I doubt it would happen. Unless the whole economy collapses, Disney won't be overpriced. If anything, I fear that they will continue to jack the pricing up.
They are making very little money on the Theme Parks right now. And that is somewhat evidenced by the past several pages of discussion regarding DVC, thus supporting a great idea of @ParentsOf4 posted awhile back on how Disney is now running hotels and DVC and not really running a Theme Park per se (and Parents writes much more eloquently than I do!!)
I just don't think the thought that Disney could price itself out of the market crosses the Suits minds. It is all about meeting goals and making that Bonus check at the end of the quarter for them. They have been so far removed from the Theme Park Guest demographic for so many years they just don't care.
And I wouldn't put it past the big mouthpieces of Rasulo and Iger to blame NGE- gee, the computer gave us the wrong info!! Spin, spin spin, blame, pass the blame, and then repeat spin.
Welcome to Corporate America. The only thing I see of Walt is One Man's Dream in DHS, and that is sad.
ParentsOf4
Well-Known Member
Just to be clear, the theme parks are highly profitable. The issue is not profitability, its growth. In the world of megacorporations, lack of significant revenue and profit growth equates to failure.
It was former CEO Mike Eisner who decades ago called the Walt and Roy Disney loyalists who ran the theme parks "monkeys" because Eisner thought that running the theme parks was so easy that even monkeys could do it. The current parks are making loads of cash not because of what Iger and his minions are doing but despite what Iger and his minions are doing. Iger & co. have proven Eisner right; running WDW is so easy that even today's corporate Disney monkeys can do it.
Any management bozo can produce short-term growth by raising prices and cutting quality (sorry, "Value Engineering" the product). That's exactly what corporate Disney has been doing at WDW for the last few years. Consider the price of a 7-day MYW base ticket under the Iger regime:
2005: $199
2006: $210 (5.5%)
2007: $219 (4.1%)
2008: $228 (4.1%)
2009: $234 (2.6%)
2010: $247 (5.6%)
2011: $267 (8.1%)
2012: $288 (7.9%)
2013: $309 (7.3%)
That's a 55.3% increase at a time when median U.S, household income is up only about 12%. What exactly has been added to WDW in recent years to justify these price increases?
WDW has been saved by an unusually strong economy in Brazil and Argentina. If not for a fortuitous situation beyond their control, WDW would be in financial decline.
What corporate leadership has done recently is not a sustainable business for long-term growth. At some point, they have to revitalize the product. Otherwise, WDW will slowly sink into mediocrity. Right now, WDW is living off its reputation from prior decades. Once the consumer wakes up to that fact, WDW could be in for a world of financial hurt.
The business decisions being made by today's corporate Disney leadership don't bode well for WDW's future. Another few years of that same leadership and shareholders will begin to wish WDW was run by a bunch of monkeys.
GymLeaderPhil
Well-Known Member
They love to slap him all over construction wall signs and reactive press releases too to justify stupid decisions. Sad that he's become a corporate martyr.
flynnibus
Premium Member
Wasn't it the 'magic kingdom' that was quoted as having record attandance and not WDW? It can add up if DLR is up, MK is up, but the other three WDW parks having less growth or even negative.. could get you to those same statements and everything being legit.
Putting your best foot forward isn't the same as dodging the topic. One has to be careful how far they extrapolate their conclusions from the actual facts on hand.
unkadug
Follower of "Saget"The Cult
rest on one's laurels
Fig. to stop trying because one is satisfied with one's past achievements.
ex. Despite our success, this is no time to rest on our laurels. We rested on our laurels too long. Our competitors took away a lot of our business.
ParentsOf4
Well-Known Member
Please refer to my earlier posts on Q3 attendance here and here.
I think Iger and Rasulo have been making the kinds of statements a CEO and CFO should. However, some seem to think "all is well" at WDW because "attendance at our domestic parks was up 3%, with Walt Disney World and the Disneyland Resort each setting new Q3 attendance records." My point is such statements require critical analysis; WDW is facing significant attendance challenges.
orky8
Well-Known Member
I think what is equally important is WDW's business model is collapsing or at least in serious jeopardy. The strategy for WDW has always been to capture 100% of guest spend for a week. Starting with ME at the airport all vacation spend was to be at WDW. This requires guests to attend all four parks, among other things. If attendance is up at MK but falling at the other parks, then we know guests are starting to spend their time (and more importantly their money) elsewhere. And once people start spending a day or more off property Disney loses big on the margins. The value of staying on property begins to fall too. Disney has been able to mask the collapse of its business strategy with higher prices (on both tickets and hotels) but this strategy could backfire as they push more and more people off property creating a domino-like collapse of the business strategy. MM+ is their last attempt to keep people in their walled garden. But I think it is way too little way too late and the next five years are going to very interesting as Disney figures out the hole it's dug itself into.
EPCOTCenterLover
Well-Known Member
I'm not all that interested in returning to WDW for awhile. My last visit in 2009 was enough- and Star Wars and Avatar Land are not enough to draw me back soon. TWO Sci-Fi IPs? How about something else.
flynnibus
Premium Member
You still take too much liberty in your conclusions and overlook other possible combinations that could still be real without making their statements false.
Case in point, your conclusion they used a MK record to stretch it to mean a 'wdw record'. It's possible to have a MK record, and have WDW as a whole have a record, while WDW as a whole wasn't up significantly... and still be able to make the statements and be true. Record attendance could be by as little as 1 additional guest
Your conclusions extrapolate too much from the limited statements available. They assume one possible outcome.. which isn't necessarily the case.And what do you base the last claim on? What facts published by the company? Or do you blend insider tips here interchangably with statements made by the officers of the company? Often your analysis makes these hops and skips from published facts to your conclusions from them and treat those conclusions as if they were published fact as well.
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