the cost of disney

[chipndale09]

Hi,

Has the price of a Disney vacation gone out of whack??

We are avid Disney vacationers, we have been every year for the last 6 years and always stay on site, with dining plan, park hopper and more. However, due to logitical reasons, this time we will be off site but close to downtown. We have decided to eat and explore the World on the outside, i.e. boardwalk, downtown and resorts restaurants, no parks. While investigating ADR,S , i came across the individual resorts, The Contemporary is $1000/nite, many moderates are going close to $300/nite. is this crazy???

Has Disney become out of reach for average joe vacationer?? Being Canadian to boot, with the exchange, wow!!

Any thoughts has the pricing been deliberatly set at a higher level??

cheers

 

[chipndale09]

Seasonal pricing has been common practice in the hotel industry since about 5 minutes after the big bang.

You can all it good or bad business, but when you competition does it and your demand exceeds supply, you are wise to follow suit.

Sorry Yoda, I don't agree. First rule is biz, u do not let your competitors dictate how you run your business. U listen to ur customers is the first rule.

Seasonal pricing is another word for greed. If there slow periods, absolutely charge less to fill up the demand. But just cause in xmas, u should more than u normally would??!! well guess what that customer will go to ur competitor who is offering a better price. and most likely will do the same thing in the future cause ur customer had just as a good time.

don't get me wrong, i am not saying Disney should be the cheapeat on the block, there is a price for the convience of staying on site, I get that and i do pay for it. However, the rate that the increases are happening are scary, i am not saying tomorrow they go out of businees, but if this rate continues as is. To me, future isn't bright for the parks (i.e. less maitenance, not as clean and pretty due less cash flow)

It,s kinda like the banks..when is that 9 billion $ profit enough??

 

[jaklgreen]

I Love WDW. I try to go as much as possible(at least once a year). We live in the middle of the country so we always fly. We stopped at 2 kids because everything seems to be made for a family of 4. We also live as cheaply as possible. We go to work and then home. I cook dinner and the kids and hubby take their lunches(I work in a restaurant so I eat free). We only go out to eat for special occasions. We keep our cars until they die. I don't wear jewelry or expensive clothes(Kohls is our fancy clothes store). I see people that come into our restaurant twice a day(for morning coffee and breakfast and then lunch) and these are the people that complain how they have no money to go to WDW. Not saying everyone is like this but I bet there are a bunch of ways you can cut back on extras to save for a vacation. My WDW trips are my priority so I scrimp and save the rest of the year. My sister in law is the same way, she always says how she doesn't understand how we can afford to go on vacation so much. But my brother makes more money then we do but they love to go out to eat and to the bar and she loves to shop. it is all about how you look at it.

 

[Master Yoda]

Sorry Yoda, I don't agree. First rule is biz, u do not let your competitors dictate how you run your business. U listen to ur customers is the first rule.

Seasonal pricing is another word for greed. If there slow periods, absolutely charge less to fill up the demand. But just cause in xmas, u should more than u normally would??!! well guess what that customer will go to ur competitor who is offering a better price. and most likely will do the same thing in the future cause ur customer had just as a good time.

don't get me wrong, i am not saying Disney should be the cheapeat on the block, there is a price for the convience of staying on site, I get that and i do pay for it. However, the rate that the increases are happening are scary, i am not saying tomorrow they go out of businees, but if this rate continues as is. To me, future isn't bright for the parks (i.e. less maitenance, not as clean and pretty due less cash flow)

It,s kinda like the banks..when is that 9 billion $ profit enough??

Just playing devil's advocate, but how do we know that is not exactly what they are doing?

If one day is higher than another you have seasonal pricing. It does not matter if you started at $100 and then dropped to $75 on your off days or started at $75 and went up to $100 on your busy days.

 

[jaklgreen]

Sorry Yoda, I don't agree. First rule is biz, u do not let your competitors dictate how you run your business. U listen to ur customers is the first rule.

Seasonal pricing is another word for greed. If there slow periods, absolutely charge less to fill up the demand. But just cause in xmas, u should more than u normally would??!! well guess what that customer will go to ur competitor who is offering a better price. and most likely will do the same thing in the future cause ur customer had just as a good time.

don't get me wrong, i am not saying Disney should be the cheapeat on the block, there is a price for the convience of staying on site, I get that and i do pay for it. However, the rate that the increases are happening are scary, i am not saying tomorrow they go out of businees, but if this rate continues as is. To me, future isn't bright for the parks (i.e. less maitenance, not as clean and pretty due less cash flow)

It,s kinda like the banks..when is that 9 billion $ profit enough??

Every hotel I have ever used has tiered pricing. When I go to Chicago the hotels are more expensive during the week because of the business travelers. Right or wrong that is the industry. Even restaurants do this with happy hour. Or stores with special sales during the week day mornings.

 

[chipndale09]

I Love WDW. I try to go as much as possible(at least once a year). We live in the middle of the country so we always fly. We stopped at 2 kids because everything seems to be made for a family of 4. We also live as cheaply as possible. We go to work and then home. I cook dinner and the kids and hubby take their lunches(I work in a restaurant so I eat free). We only go out to eat for special occasions. We keep our cars until they die. I don't wear jewelry or expensive clothes(Kohls is our fancy clothes store). I see people that come into our restaurant twice a day(for morning coffee and breakfast and then lunch) and these are the people that complain how they have no money to go to WDW. Not saying everyone is like this but I bet there are a bunch of ways you can cut back on extras to save for a vacation. My WDW trips are my priority so I scrimp and save the rest of the year. My sister in law is the same way, she always says how she doesn't understand how we can afford to go on vacation so much. But my brother makes more money then we do but they love to go out to eat and to the bar and she loves to shop. it is all about how you look at it.

i agree and we do this same thing,(kinda ) but that is sort of the point

Just playing devil's advocate, but how do we know that is not exactly what they are doing?

If one day is higher than another you have seasonal pricing. It does not matter if you started at $100 and then dropped to $75 on your off days or started at $75 and went up to $100 on your busy days.

Don't get me wrong, i am being a little harsh on Disney,(u hurt the one u love ..haha) but ur right, we don't know what they are doing...and i am sure the Disney marketing masters have all this figured out

 

[Master Yoda]

Don't get me wrong, i am being a little harsh on Disney,(u hurt the one u love ..haha) but ur right, we don't know what they are doing...and i am sure the Disney marketing masters have all this figured out

I am sure they do.

As I understand it, the truth is somewhere in the middle. The actual value (if you want to call it that) of the room is what they term as "regular". When demand drops it goes down to "value" and when it increases it goes to "peak", "holiday", etc.

I think Disney has a total of 17 different seasons at this point.

 

[sjhym333]

The bottom line is Disney charges what it does for hotel rooms because people are willing to pay for the rooms. We have been going to WDW since the 1970's. My wife and I honeymooned at the Polynesian for $70 a night. That was a long time ago and expensive at that time but well worth it for us.

It is no longer worth it for us. We have stayed in every resort except the Grand Floridian and some resorts we have stayed in multiple times. For us paying $220 or more dollars to stay at Port Orleans (we paid $75 a night when it opened) or $500 for a deluxe resort no longer makes sense for us. As we have expanded our vacationing horizons over the past 10 years we have come to see that the adage of location, location, location is true and understandable but we also have found when we pay $300-$500 in a large city or beach resort per night the type of experience we get for that money is head above heals better then the Disney experience. I get the lore of staying at a Disney resort but I also think that since Disney doesn't have to work hard to fill rooms the experience is at times lacking. I have said several times on these boards that our experience at Universal's Royal Pacific was cheaper then many of the Disney resorts and the service has been above average and far better then 99% of our Disney stays. But people would rather be content to stay at a moderate Disney resort for just a little less money.

I am happy that people enjoy staying on Disney property. When you work hard during the year you should be able to enjoy the vacation you want. For us however, our vacation plans no longer include a Disney resort hotel stay.

 

[chipndale09]

Every hotel I have ever used has tiered pricing. When I go to Chicago the hotels are more expensive during the week because of the business travelers. Right or wrong that is the industry. Even restaurants do this with happy hour. Or stores with special sales during the week day mornings.

happy hour and sales are lowering prices to entice customers, charging more on week cause of special periods is wrong. you will lose customers cause of that..wouldn't rather want to fill up ur hotel by lowering ur prices a little when u know the crowd is coming and guarantee u fill, that have a rooms open not making revenue.

i'll give u an example, we have indoor golf dome facilty here where i live. The owner charges $40 /hour to hit golf balls. the place and the resto is empty. We keep telling lower it, even to $20/hour. wouldn't u rather have 2 guys at $20/hour than 1 at $40?? He says NO!! We say, u know what is going to happen, those two guys will tell friends that it is only $20 to hit balls. next you know it two others show up, figure it is cheap, hey i have money left over to stop for a beer in the resto/bar..more revenue...and so on...

 

[Gabe1]

If you are claiming that Disney occupancy rates are dropping, you need to review the source of your information. WDW resort occupancy rates are up, and are basically at the industry "full" level of 89%. Just google articles in 2015 to see that the current occupancy rate is about 89%. The Orlando Sentinel, for example, just ran an article last week about Disney occupancy rates.

BTW, quoting a price to Hawaii that is airfare inclusive is misleading at best, especially since you don't include the departure city. I can find much lower prices to Hawaii from LA, than I can from anywhere on the East Coast.

And, I can easily beat your $849 Hawaii vacation quote for a WDW vacation. For example, I can book 5 nights at POP for under $100 per night per ROOM - less than $50 per person - and that is with the Dining Plan. That's the rate my wife and I got on our most recent trip. And, I just found roundtrip airfares to MCO for $75 per person. And, for $300 per person more, I can add a 5-day ticket package for WDW. So, I just found a vacation to WDW - food, airfare, lodging and parks included - for about $625 per person. Oh, and that included one round of free mini golf per person

I like this chart that I just lifted from @ParentsOf4 from another thread. Hope the visual helps.

Note where we are in relationship to post 9/11 and where Disney was in the middle of the graph.

 

[jaklgreen]

happy hour and sales are lowering prices to entice customers, charging more on week cause of special periods is wrong. you will lose customers cause of that..wouldn't rather want to fill up ur hotel by lowering ur prices a little when u know the crowd is coming and guarantee u fill, that have a rooms open not making revenue.

i'll give u an example, we have indoor golf dome facilty here where i live. The owner charges $40 /hour to hit golf balls. the place and the resto is empty. We keep telling lower it, even to $20/hour. wouldn't u rather have 2 guys at $20/hour than 1 at $40?? He says NO!! We say, u know what is going to happen, those two guys will tell friends that it is only $20 to hit balls. next you know it two others show up, figure it is cheap, hey i have money left over to stop for a beer in the resto/bar..more revenue...and so on...

Just look at it as the price during peak time is the real price and you are getting a deal the rest of the year. I am sure there are many reasons why a company charges a certain amount. It makes sense to most people that if they charged less then more people would come but that might not be the case for all businesses. Plus Disney is pretty busy so not sure lowering prices would be a good business move for them. I would love to pay less for my trip, but I also don't want to be walking down main street neck and neck with someone. That's why I go at slower times.

 

[KCheatle]

No that is not good business, that is greed for more money. We own a successful bouncy house, cotton candy face painting business. We are busy and we don't raise our prices just cause we have more rentals. The reason we are busy is cause we offer a great product with great customer service at a great price. That is why people come back to us. Disney already has two of those things in spades. If you drive ur price up so high that average joe cannot afford it, well guess what, no more average joe. (maybe i'm wrong but i think Disney is marketing towards average joe)

It is already happening in the sporting industry, fans are refusing to pay big$ to to watch a game and teams are suffering, whether it is in basketball, football or hockey.

this is just IMHO

I know it's your opinion, but I have to respectfully disagree. Never forget that Disney is a for-profit business. And, they don't seem to be losing customers any time soon. It's not like it's a monopoly. You can stay on property at many price levels of hotel, or you can stay off property for much cheaper. If I'm a Disney exec, and I see that people are willing and able to pay $450/night or more to stay in a resort, then I'm not doing the right thing for my company by not charging that amount. Disney has suites at all levels of resort that charge over $1000/night. And, people pay it! They don't make all of their rooms suites because they know they won't get enough people to do that. But, they also know that some people will do that. So, they've played it pretty well. I'm not saying a local small business could operate the same way because, quite frankly, there probably is much more competition and less demand than Disney faces. But, bottom line, Disney is one of the most successful companies in the world. I think it knows what it's doing.

 

[Gabe1]

That chart does not show capacity. And, it does not show anything for 2015, which at least in the first six weeks of 2015, is showing a trend for higher occupancy than same period in 2014. BTW, I was quoting numbers from Disney, as reported in the Sentinel.

But, to play along with your chart...According to posts in another thread, there are slightly more than 25,300 rooms at WDW which are owned by Disney. If 11% are not full each night, that is over 1 million vacant rooms just in Florida for the year. And, Disney is happy with an 89% occupancy rate, according to the Disney source quoted by the Sentinel. Again, no reason to lower prices, as Disney is having no problem selling rooms at their current prices.

It is not my chart. It is as I credited @ParentsOf4 a member I trust and have confidence in as many on this sight do. If you want to discredit the chart so be it, your prerogative.

 

[chipndale09]

I know it's your opinion, but I have to respectfully disagree. Never forget that Disney is a for-profit business. And, they don't seem to be losing customers any time soon. It's not like it's a monopoly. You can stay on property at many price levels of hotel, or you can stay off property for much cheaper. If I'm a Disney exec, and I see that people are willing and able to pay $450/night or more to stay in a resort, then I'm not doing the right thing for my company by not charging that amount. Disney has suites at all levels of resort that charge over $1000/night. And, people pay it! They don't make all of their rooms suites because they know they won't get enough people to do that. But, they also know that some people will do that. So, they've played it pretty well. I'm not saying a local small business could operate the same way because, quite frankly, there probably is much more competition and less demand than Disney faces. But, bottom line, Disney is one of the most successful companies in the world. I think it knows what it's doing.

I do agree with you , Disney is quite the successful company and indeed it does know what it is doing. They have quite nicely positioned themselves in the entertainment industry, parks ,movies, shows, singers etc.

i just would wonder where they would be if they soley relied on the amusement park industry?? There is no way they would get away with it with the current startgegy. I am sure you have already read in many of forums, Disney world is already losing customers. People are not staying on site or eating in the restaurants, cause of price!

Yes, where 1 will leave , two will come in but it is a slipperly slope to travel.

I just wonder, 2014 Disney Corp operating profit was 10.7 billon dollars...at what point is it enough or is it ever?

 

[CaptainAmerica]

I like this chart that I just lifted from @ParentsOf4 from another thread. Hope the visual helps.

Note where we are in relationship to post 9/11 and where Disney was in the middle of the graph.

That chart is wildly misleading because it completely ignores capacity. If you're 90% full and then you build Art of Animation and remain 90% full, that chart would make it look like a bad thing because the raw number of "empty room nights" is higher.

@ParentsOf4 seems like a fair fellow so I'd love to see the inverse of this chart if he has the data readily available. Disney Domestic Hotels Occupied Room Nights. I'd create the chart myself if it didn't require combing through a decade plus of annual reports.

 

[Master Yoda]

I do agree with you , Disney is quite the successful company and indeed it does know what it is doing. They have quite nicely positioned themselves in the entertainment industry, parks ,movies, shows, singers etc.

i just would wonder where they would be if they soley relied on the amusement park industry?? There is no way they would get away with it with the current startgegy. I am sure you have already read in many of forums, Disney world is already losing customers. People are not staying on site or eating in the restaurants, cause of price!

Yes, where 1 will leave , two will come in but it is a slipperly slope to travel.

I just wonder, 2014 Disney Corp operating profit was 10.7 billon dollars...at what point is it enough or is it ever?

It is a slippery slope every business has to deal with.

Charge too little and you risk leaving money on the table, too much and you risk loosing business. The trick is finding that balance and having a fluid enough model that allows you to rapidly adjust.

The is no earning ceiling, especially if you are in it for the long haul. While you might make 10.7 billion in 2014, all it takes is a recession and you are loosing money to stay open in 2018.

 

[ParentsOf4]

That chart does not show capacity. And, it does not show anything for 2015, which at least in the first six weeks of 2015, is showing a trend for higher occupancy than same period in 2014. BTW, I was quoting numbers from Disney, as reported in the Sentinel.

But, to play along with your chart...According to posts in another thread, there are slightly more than 25,300 rooms at WDW which are owned by Disney. If 11% are not full each night, that is over 1 million vacant rooms just in Florida for the year. And, Disney is happy with an 89% occupancy rate, according to the Disney source quoted by the Sentinel. Again, no reason to lower prices, as Disney is having no problem selling rooms at their current prices.

Yes, Disney most definitely would be happy with 1 million empty room nights in a fiscal year, a number it last saw in 2008.

Disney reports that WDW has "approximately 23,000 rooms and 3,000 vacation club units". The 3,000 DVC units is very close to the actual number of DVC units at WDW (until PVB opens) but the 23,000 hotel rooms is low by a few hundred. It's not a big deal since Disney clearly is rounding to the nearest 1,000.

In Disney's last reported quarter, available room nights is down 29,000, reflecting ~320 rooms taken out of service, representing slightly more than 1% of all domestic rooms. Consequently, Disney's hotel occupancy rate is slightly inflated (by ~1%) compared to previous fiscal years due to fewer available room nights.

WDW hotel occupancy improved in fiscal year 2014 but was soft considering recent increases in theme park attendance. A growing number of WDW Guests are staying offsite but higher theme park attendance helped WDW's hotel occupancy as well.

To your larger point, Disney is very happy with the 89% domestic hotel occupancy rate reported in 1Q2015. It's been several years since domestic occupancy has been this high.

To encourage more onsite stays, Disney has slowed down rack rate increases. In 2014 and 2015, price increases averaged close to 3%, compared to offsite hotels that increased nearly double this. WDW also continues to offer "room only" discounts year round, with comparatively few nights not having one sort of discount or another.

Recently, Disney has been more strategic in its hotel pricing, being more conscious of market trends and its own disappointing hotel occupancy rate.

The number reported in 1Q2015 represents a strong showing by Disney and indicates WDW's hotel pricing and discounts are in line with the current market.

 

[ParentsOf4]

That chart is wildly misleading because it completely ignores capacity. If you're 90% full and then you build Art of Animation and remain 90% full, that chart would make it look like a bad thing because the raw number of "empty room nights" is higher.

@ParentsOf4 seems like a fair fellow so I'd love to see the inverse of this chart if he has the data readily available. Disney Domestic Hotels Occupied Room Nights. I'd create the chart myself if it didn't require combing through a decade plus of annual reports.

The chart is not misleading. It represents unused capacity. Disney has adopted Lean in its theme park and hotel management. It's a reason Disney creates FastPass+. It's a reason Disney converts existing hotels into DVC. Unused capacity represents waste and must be eliminated.

It might be best if you read my original post to give the chart context:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-179#post-6543401

The point to consider is that the improved hotel occupancy rate (representing the elimination of waste) is a relatively recent event.

 

[Gabe1]

That chart is wildly misleading because it completely ignores capacity. If you're 90% full and then you build Art of Animation and remain 90% full, that chart would make it look like a bad thing because the raw number of "empty room nights" is higher.

@ParentsOf4 seems like a fair fellow so I'd love to see the inverse of this chart if he has the data readily available. Disney Domestic Hotels Occupied Room Nights. I'd create the chart myself if it didn't require combing through a decade plus of annual reports.

I don't find the chart misleading it is calculated exactly the way hotel occupancy is calculated everywhere else on a percentage of hotel rooms. Reworking occupancy rates just for Disney seems disingenuous and messing with statistic standards in the industry.

Disney built AoA projecting a larger growth than materialized, that is on them not on how occupancy rates are calculated. The occupancy rates are higher in time shares. Disney converting resort hotel rooms into time shares to me anyhow demonstrates a need to offload the excess of unoccupied hotel rooms. They did this at Animal Kingdom and the occupancy rate for the hotel increased. Now offloaded about 350 more at the Poly and it my understanding the next up will be the Beach Club. Disney is lowering their inventory of hotel rooms helping their occupancy rate statistics. If these deluxe rooms were consistently being rented at $5-600 a night Disney would not take them offline, they would build new timeshares. But since the occupancy rate is higher in their timeshare division it makes sense to lower the available hotel rooms and boost their timeshare inventory. Taking 350 rooms out of 875ish rooms from the Poly will certainly help Disney's occupancy stats there. It isn't that Disney is luring that many more Deluxe hotel craving guests to the resort, it is because the inventory is shrinking the available hotel rooms. It is a brilliant way for Disney to correct guests splitting their time at other Orlando resorts, a trend over the last 10 years has happened and is eroding the overall revenue of Disney hotel rooms. Big picture is the combo of unoccupied hotel rooms since 2008, hotel rooms forfeited to the Disney Timeshare Division and guests splitting their time at other major attraction resorts is not helping the net revenue of Disney Hotel Resorts, thus the constant discounts on rooms, free dining in an attempt to lure guests back on property all of which is eating at the net revenue from their hotel resorts.

 

[CaptainAmerica]

I don't find the chart misleading it is calculated exactly the way hotel occupancy is calculated everywhere else on a percentage of hotel rooms.

No, that's NOT what it's doing. I agree that a chart calculated as a percentage of hotel rooms would be very useful to this conversation. However, the chart in question is not a percentage, it's a raw total. The rest of your post is based on the faulty assumption that occupancy has been declining since DAAR opened, and that's false. Occupancy has largely held, though NUMBER (not percentage) of room nights empty has gone up.

The chart is not misleading. It represents unused capacity. Disney has adopted Lean in its theme park and hotel management. It's a reason Disney creates FastPass+. It's a reason Disney converts existing hotels into DVC. Unused capacity represents waste and must be eliminated.

It might be best if you read my original post to give the chart context:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-179#post-6543401

The point to consider is that the improved hotel occupancy rate (representing the elimination of waste) is a relatively recent event.

I agree that your post was appropriate in its original context but that's not how it's being referenced here. People are using it as an indication that occupancy rates are declining but that's not the case. The increased empty room nights is more a function of increased inventory than declining rates.

I never stated that I did not trust the chart. It just was not showing capacity rates, nor the latest info from 2015 that Disney had shared with the Sentinel. And, my point still stands - the number of empty rooms is really not significant, when you understand the occupancy rate. And, thus, there is still no compelling reason for Disney to lower room rates.

This.

 

[Gabe1]

The chart is not misleading. It represents unused capacity. Disney has adopted Lean in its theme park and hotel management. It's a reason Disney creates FastPass+. It's a reason Disney converts existing hotels into DVC. Unused capacity represents waste and must be eliminated.

It might be best if you read my original post to give the chart context:

http://forums.wdwmagic.com/threads/a-spirited-perfect-ten.894588/page-179#post-6543401

The point to consider is that the improved hotel occupancy rate (representing the elimination of waste) is a relatively recent event.

Ha! Well said. I was writing a similar response as you posted yours.