The “wealthy” is not going to work

[Sirwalterraleigh]

Supply and demand. Real business 101 stuff.

Parks have unprecedented demand and a lack of supply? Raise the costs.

Well the last recession - which I admit Iger handled brilliantly/outsmarted his customers - saw them actually push prices up across the board (for after…and it works brilliantly) - and spin packages and temporary Discounts In the 30-40% range to bridge the slowdown.

So what happens the next time? What may work?

And to be clear to the stock wonks and those who aren’t old enough to have yoda wisdom on this: there will be a next time. This isn’t a”post recession world”. Hell…recessions are good for politics. Which the street knows and why they maybe on “high alert” now.

 

[ppete1975]

To keep it simple: the cyclic nature of boom and bust from 1955-2010ish provide “price resets” that allowed Disney parks to maintain relative value as compared to discretionary spending habits.

Prices never went “down”…and it was never “cheap”…

But they Maintained more value/affordability. I could pour into numbers of the reign of King Ogre…but it’s just an opinion. Someone will “counter” with a graph that shows ticket prices are “on par” with inflation. But it’s not a “one factor” argument. It’s a collection of things relative to travel and the overall economic climate.

Here’s my take: if you asked people if they are getting good value today - what percentage would say “yes”?
10, 20 years ago?

What are the percentages in comparison? Longterm effects

I remember us going as a family in the mid 80s, and my parents really having to save for the trip. I agree with you.. its never been cheap. But new EPCOT and a much less busy magic kingdom sure made the ROI feel better.

 

[Sirwalterraleigh]

People are no longer afraid of debt. They arent afraid to whip out a credit card for spontaneous wants and desires.... let alone a little billy and little princess sally first second third fourth trip to disney. As mickey says... nothings going to stop us now.

Mentality wise…yes

If capital were to slowdown/dry up? Different story

 

[Sirwalterraleigh]

Supply and demand. Real business 101 stuff.

Parks have unprecedented demand and a lack of supply? Raise the costs.

The Walt Disney Company sells “non-tangible” product more than any other company you can find. Certainly none that large…

I’ll kindly ask we recognize this isn’t Econ 001 or Econ 004. We need at least a 300 level class and a couple in market research.

 

[GimpYancIent]

The Walt Disney Company sells “non-tangible” product more than any other company you can find. Certainly none that large…

I’ll kindly ask we recognize this isn’t Econ 001 or Econ 004. We need at least a 300 level class and a couple in market research.

Difficult if not impossible to quantify and price the value of a "non-tangible" that is totally dependent on each consumers individual perspective. Excellent point.

 

[erstwo]

The Walt Disney Company sells “non-tangible” product more than any other company you can find. Certainly none that large…

I’ll kindly ask we recognize this isn’t Econ 001 or Econ 004. We need at least a 300 level class and a couple in market research.

Difficult if not impossible to quantify and price the value of a "non-tangible" that is totally dependent on each consumers individual perspective. Excellent point.

Agree so much. I am no marketer, but those marketing teams know what they are doing! I once had a friend in marketing describe their product's 'target'. Now, this product is enjoyed by many - wide age range, economic range, ethnicity range, etc. But the entire marketing campaign was aimed at one woman: a 28 year old, married, mom of 2, who drove a minivan, and then the list got even more specific from there. This "mom" had a name, her kids had names, they "knew" what neighborhood she lived in, her income, brand of minivan, where she shopped, what she purchased, her religion....the list went on and it was (to me) just honestly weird how oddly specific everything was.

But they target this one fictional woman with their product and they get a huge range of customers - older, younger, richer, poorer. I feel almost certain the same thing goes for Disney. They have a target, but I might not be their target (as a matter of fact, I'm certain I'm not the target any longer since my kids are so much older now.) So maybe it feels like Disney is targeting someone above or below your salary range, but they probably know what they are doing.

FWIW - I know plenty of high net worth and high income folks - some who don't even like Disney - who take multiple Disney vacations, pay for the private tours and drop a lot of money. And on the other hand, I have family members who have very low net worth and low income who wouldn't go to Disney with me even if I paid for all of it. They just don't like it (what's wrong with them??)

 

[Lilofan]

Disney is catering to the wealthy.

They don’t want the middle class.

They can upcharge all they want the wealthy will pay for it!

These are things I see here daily to explain away the fiscal policy of the mousetrap.

Now let’s use a liberal definition of the word “wealthy” as a household making 200k a year or more.

That puts us somewhere around 26 million households in the states. I’m aware that the Mouse gets overseas visitors, but they seriously expect 30% of the households to not only visit but repeat visit on a yearly basis?

Let’s not forgot the more $$$ people make the more they expect. When your used to the Four Seasons the Contemporary is going to seem lacking.

It’s often discussed here that Disney can’t fail. It’s impossible.

However the idea that the “wealthy” are going to carry this company is ridiculous.

It has to be the middle class.

What’s the long term game plan?

What happens if the recession does come?

I would be interested to hear everyone’s thoughts.

Disney is catering to a select wealth of people. The stealth wealth ( ie the neighbor next door net worth 7 or more figures on paper living below their means , flaunting their riches is a foreign word etc ) would probably not fall in this target segment.

 

[el_super]

The Walt Disney Company sells “non-tangible” product more than any other company you can find. Certainly none that large…

Yeah.... sort of. There are still physical limits to how many people they can cram into the parks and what the higher crowds due to the overall experience.

It's not necessarily as scientific though as you make it out to be. Disney knows that more people in the park means a reduced quality of experience for everyone, and lower intent to return. Raising prices though, which would control the crowding, is also seen as a negative.

So it's simply a matter of balancing price versus crowding. The park can be free, and everyone in it would be miserable. Or the park could be incredibly expensive and the people who want to go but can't afford it would be miserable.

What we see in the parks now, is a situation where finding compromise, usually leads to both sides being slightly unhappy, but it's still better overall. Access can still be had for relatively cheap, but the quality of experience requires more spending.

 

[Sirwalterraleigh]

Agree so much. I am no marketer, but those marketing teams know what they are doing! I once had a friend in marketing describe their product's 'target'. Now, this product is enjoyed by many - wide age range, economic range, ethnicity range, etc. But the entire marketing campaign was aimed at one woman: a 28 year old, married, mom of 2, who drove a minivan, and then the list got even more specific from there. This "mom" had a name, her kids had names, they "knew" what neighborhood she lived in, her income, brand of minivan, where she shopped, what she purchased, her religion....the list went on and it was (to me) just honestly weird how oddly specific everything was.

But they target this one fictional woman with their product and they get a huge range of customers - older, younger, richer, poorer. I feel almost certain the same thing goes for Disney. They have a target, but I might not be their target (as a matter of fact, I'm certain I'm not the target any longer since my kids are so much older now.) So maybe it feels like Disney is targeting someone above or below your salary range, but they probably know what they are doing.

FWIW - I know plenty of high net worth and high income folks - some who don't even like Disney - who take multiple Disney vacations, pay for the private tours and drop a lot of money. And on the other hand, I have family members who have very low net worth and low income who wouldn't go to Disney with me even if I paid for all of it. They just don't like it (what's wrong with them??)

I’m not debating the marketing people…except that the dweebs they have now are obviously less skilled Than the ones I worked with…

I’m saying there’s a way bigger risk of “pushing it” when you sell emotion.

Remember the “cult of iPhone/iPad”?

Well that was silly emotional buying to a degree…but you still had a computer in your hands.

What are Peter Pan, tea cups and mine train?
Not much.

The danger isn’t that they can’t market it…the danger is that you get labeled a “ripoff”. And they are getting far too close to that.

 

[Sirwalterraleigh]

Disney is catering to the wealthy.

They don’t want the middle class.

They can upcharge all they want the wealthy will pay for it!

These are things I see here daily to explain away the fiscal policy of the mousetrap.

Now let’s use a liberal definition of the word “wealthy” as a household making 200k a year or more.

That puts us somewhere around 26 million households in the states. I’m aware that the Mouse gets overseas visitors, but they seriously expect 30% of the households to not only visit but repeat visit on a yearly basis?

Let’s not forgot the more $$$ people make the more they expect. When your used to the Four Seasons the Contemporary is going to seem lacking.

It’s often discussed here that Disney can’t fail. It’s impossible.

However the idea that the “wealthy” are going to carry this company is ridiculous.

It has to be the middle class.

What’s the long term game plan?

What happens if the recession does come?

I would be interested to hear everyone’s thoughts.

Disney May think they’re catering to the wealthy…but what they offer isn’t equipped to service the wealthy.

So many here say they “know that”…but they cuddle up at night with their DVC contract and complimentary tote bag (do they still do that?) and will NEVER believe it.

They sing Barry manilow in their head over and over.

 

[Sirwalterraleigh]

Yeah.... sort of. There are still physical limits to how many people they can cram into the parks and what the higher crowds due to the overall experience.

It's not necessarily as scientific though as you make it out to be. Disney knows that more people in the park means a reduced quality of experience for everyone, and lower intent to return. Raising prices though, which would control the crowding, is also seen as a negative.

So it's simply a matter of balancing price versus crowding. The park can be free, and everyone in it would be miserable. Or the park could be incredibly expensive and the people who want to go but can't afford it would be miserable.

What we see in the parks now, is a situation where finding compromise, usually leads to both sides being slightly unhappy, but it's still better overall. Access can still be had for relatively cheap, but the quality of experience requires more spending.

The nostalgia/brand recognition is their prime “asset”

Don’t futz with it to the degree the Bobs have.

Other than that…I agree with you.

 

[Sirwalterraleigh]

Disney is catering to a select wealth of people. The stealth wealth ( ie the neighbor next door net worth 7 or more figures on paper living below their means , flaunting their riches is a foreign word etc ) would probably not fall in this target segment.

They’re specifically counting on the very slim slice between the top of the middle class and the basement of the upper classes.

Who are the most overextended and the most vulnerable to economic and travel boom/bust

 

[el_super]

The nostalgia/brand recognition is their prime “asset”

Don’t futz with it to the degree the Bobs have.

The brand... as a whole ...has probably never been stronger. That's what is fueling the unprecedented demand and keeping the parks packed with people. The parks are still packed with people, despite all the harping here over reservations, prices increases and reduced service.

If anything, the lesson here might be that the efforts to curb demand haven't been strong enough, and more is needed to be done to keep the crowds under control.

 

[Sirwalterraleigh]

The brand... as a whole ...has probably never been stronger. That's what is fueling the unprecedented demand and keeping the parks packed with people. The parks are still packed with people, despite all the harping here over reservations, prices increases and reduced service.

If anything, the lesson here might be that the efforts to curb demand haven't been strong enough, and more is needed to be done to keep the crowds under control.

You’re buying the stuff those dips say on stock calls

Let’s let it play.

Other than marvel…the argument can be made that all of bob’s buys are underperforming

 

[Sirwalterraleigh]

Yeah.... sort of. There are still physical limits to how many people they can cram into the parks and what the higher crowds due to the overall experience.

It's not necessarily as scientific though as you make it out to be. Disney knows that more people in the park means a reduced quality of experience for everyone, and lower intent to return. Raising prices though, which would control the crowding, is also seen as a negative.

So it's simply a matter of balancing price versus crowding. The park can be free, and everyone in it would be miserable. Or the park could be incredibly expensive and the people who want to go but can't afford it would be miserable.

What we see in the parks now, is a situation where finding compromise, usually leads to both sides being slightly unhappy, but it's still better overall. Access can still be had for relatively cheap, but the quality of experience requires more spending.

I gotta wonder where this comes from?? It’s contrary to everything we’ve seen for 15 years. Like diametrically the opposite

 

[el_super]

I gotta wonder where this comes from?? It’s contrary to everything we’ve seen for 15 years. Like diametrically the opposite

LOL wut? You disagree that more people = lower experience?

 

[Sirwalterraleigh]

LOL wut? You disagree that more people = lower experience?

I disagree that they’re doing ANYTHING to prevent that…

They’re actually encouraging it and try to exploit it in new tangents


I’ll advise again to not believe one word of an earnings call. Or a D23…for that matter.

 

[Lilofan]

They’re specifically counting on the very slim slice between the top of the middle class and the basement of the upper classes.

Who are the most overextended and the most vulnerable to economic and travel boom/bust

That's true. Post 2008, parents in my area were pulling their kids out of private schools, homes in the area being foreclosed, yard areas overgrown with weeds etc, and the local Mercedes and BMW dealer became flooded with used cars when owners started selling their cars back to the dealers. Reality check for some. Some six figure incomes went to collecting unemployment.

 

[el_super]

I disagree that they’re doing ANYTHING to prevent that…

But this thread literally exists because Disney raised prices.... that's something.

All of these complaints about reservations and Genie+, you don't think they have a negative impact on attendance?

I mean... you're sort of right in saying it doesn't appear they did anything, because attendance is still high and people are buying up Genie+ like it was candy. The only thing here Disney seems to have miscalculated is the tolerance for crowding the guests have. I'm sure, just like here, Disney's guest surveys conveyed an annoyance and frustration with crowds that just doesn't translate into any real action (or inaction) on the part of the consumers.

Disney may have thought the whole "experience" thing was something important to preserve, but it turns out the guests don't care. The only people who really lose out here are Disney, who just wasted a lot of money on rebranding Fastpass for no real discernible gain.

 

[Vegas Disney Fan]

People are no longer afraid of debt. They arent afraid to whip out a credit card for spontaneous wants and desires.... let alone a little billy and little princess sally first second third fourth trip to disney. As mickey says... nothings going to stop us now.

Disney must be seeing a big boost from all the current forgiveness programs also, last year millions of people didn’t have to pay rent, this year millions of people aren’t making student loan payments… that “creates” hundreds, if not thousands, of dollars of disposable income, I wouldn’t be surprised if a lot of that isn’t ending up in Disneys pockets.

Being told you don’t have to repay your debt just incentivizes going deeper into debt.