The Spirited 8th Wonder (WDW's Future & You!)

[GrammieBee]

It's all relative. When I was a child you could get a quart of milk and a loaf of bread for a quarter. If someone earned $1,800. a year,they had a good salary. (Boy, I am just about older than dirt.)

The percentage of families that couldn't afford to go to Disney in 1972,1989,2001 or any other date is probably about the same as those who can't aford to go in 2014. Disney's cost may be out pacing affordability, but a good share of the problem today probably rests on the consumers own shoulders because they expect to have the best and are up to their eyebrows in debt. If you are not carrying a load of debt you can afford a Disney vacation even if you earn less than $100,000. per year. This I know because we have never had that amount of income in a year.

To many families the best means the best they can afford. If they can't afford to stay on property, they stay off property. If they can't afford a deluxe resort, they stay in a value resort. They do not want to cook, but it is an easy matter to eat breakfast in the hotel or motel room. Most motels have a small refrigerator and even a microwave. While these are not the least expensive motels, many offer a very nice complementary breakfast. They can eat at fast food counters instead of sit down restaurants. If they want a sit down meal, a late luncheon is less expensive than a dinner for essentially the same meal. Or they can eat off property. They can bring their own snacks and drink water. They can buy park tickets from a discount vendor. While it is not the most convenient, many motels offer shuttle service to the TTC.

Many of the above options do entail a car rental and parking fees and have to be balanced against staying on property as economically as possible. The thing is, you can't let your desires over ride what you can actually afford or you may never get to go on that vacation. The parks are just as magical whether you are there on a shoestring or an unlimited budget. (Naturally, we would all like the unlimited budget, but that's not the way it is.)

 

[ParentsOf4]

I do appreciate the effort that you put into all those charts and comparisons. My question is, why does it matter that it increased faster then median income. We're not talking about a necessity, we are talking about a luxury that many people on the planet have been able to do without and not even regret it.

Fundamentally, the question is:

What happens to a company when it focuses on its bottom-line instead of the business that got it there?

Hopefully, you'll agree that today's autos are far superior to your 1971 Buick Skylark. Today's autos include safety improvements, new features, better performance, etc. never even dreamed of in 1971. I can purchase a quality auto for well less than that $42,000 price you mentioned, much better than that Buick Skylark.

The Detroit of the 1970s was more focused on the bottom-line than on producing a quality product. It banked a ton of cash for years producing an inferior product until an oil crisis and Japan auto manufacturers knocked it down.

Today's corporate Disney is acting more like the Detroit of the 1970s than the Disney of the 1970s.

Today's corporate Disney is extracting value from WDW. It can do so because previous CEOs built value into WDW. Could corporate Disney do what it's doing today if Roy Disney, Card Walker, and Michael Eisner didn't do what they did?

After the current CEO has raised prices another 20%, what's next? Even more of what we see today, declining quality and delayed additions?

Some of us want to see a company focused on earning the customers' business by adding value rather than simply extracting value.

I suspect nearly everyone who participates in these discussions wants to see WDW improve.

Raising prices is not a path to improvement. Instead, it's a symptom of a bigger problem, a cultural problem at corporate Disney.

As recently as 2009, WDW was the undisputed leader in North American theme park hospitality.

Whether it's Disneyland or Universal, the North American theme park leader in 2014 is very much open to debate.

Walt Disney once said:

Everybody thinks that Disneyland is a goldmine but we have had our problems. You've got to work it and know how to handle it. Even trying to keep that park clean is a tremendous expense. And those sharp-pencil guys tell you, 'Walt, if we cut down on maintenance, we'd save a lot of money.' But I don't believe in that. It's like any other show on the road; it must be kept clean and fresh.​

We want to see a Disney more focused on Walt's vision and less focused on Wall Street's vision.

 

[WDW1974]

Well let's face it...their off site properties (excluding Aulani,) are not really uber-popular vacation destinations... Vero Beach? ...Hilton Head?... they are both nice locations in their own right, but if you were thinking about a "magical vacation destination", I doubt either place would be on the top of the list...

Vero may not be, but Hilton Head is a MAJOR vacation destination and it is wonderful even if you don't golf (I don't) and Disney's resort there is terrific. Aulani is on one of the most popular island destinations on Earth.

And all the locations I discussed that Disney considered certainly were big family vacation destinations.

I think the issue is in your use of the term MAGICal. That we all know is code for Walt Dizzy World!
And no place on Earth be as MAGIC as that, no siree ...

 

[flynnibus]

It's all relative. When I was a child you could get a quart of milk and a loaf of bread for a quarter. If someone earned $1,800. a year,they had a good salary. (Boy, I am just about older than dirt.)

The percentage of families that couldn't afford to go to Disney in 1972,1989,2001 or any other date is probably about the same as those who can't aford to go in 2014. Disney's cost may be out pacing inflation, but a good share of the problem probably rests on the consumers own shoulders because they expect to have the best and are up to their eyebrows in debt.

Your posts shows you have completely ignored the information provided by @lentesta and @ParentsOf4 or failed to digest it.

It IS all relative.. and the point of their discussions is to show how it's not a 1:1 relative.. and that's why it's not just simply inflation.. or lack of disposible income.. but qualifying that Disney prices are accelerating relative to other costs and income.

Sometimes reading this forum makes me think of wind up robot running in the wall.. repeatedly.

 

[WDW1974]

downtown disney hotels also offer character breakfast and dinning?

Also I wonder, I mean.. due of the level Four Seasons is vs the competition in the area.

Yes. They have for decades.

I'm always surprised at how Disney fans know so little about those hotels and their offerings. You can find someone who has taken 34 trips to WDW and never set foot in one and that just amazes me.

And I see my pal @ParentsOf4 putting out great posts I want to comment on, but I have to get back to reality. Maybe later ...

 

[WDW1974]

Nothing in the mailer about getting two extra days when you book five nights. Might be an incentive for new purchases at Aulani and not add ons?

I'm not sure. I was told about it from a DVCer who usually has these things right, so I'll trust her until I hear otherwise.

 

[Bolna]

I'm not sure. I was told about it from a DVCer who usually has these things right, so I'll trust her until I hear otherwise.

Infos can be found here

The relevant bit is this:

Is Hawaii calling your name? Stretch your Vacation Points by booking a 7-night consecutive stay on Vacation Points for the price of a 5-night stay. Spend a week exploring the spectacular Waikolohe Valley and enjoying all the resort amenities with this offer available for most dates from Oct. 19 – Dec. 11, 2014 (please note that Dec. 12, 2014 will be the latest eligible checkout date).

 

[Goofyernmost]

do you seriously need this broken down to you even further?

The point is to illustrate that not only are prices increasing (you can see this at face value) they are increasing faster than AFFORDABILITY. The whole point is are the price increases altering how and who can visit Disney.

This is why he's comparing against median household income instead of just comparing against the CPI - because it's not about prices vs inflation (as measured by the government) but about prices vs the consumer's ability to buy.

Or to put it in your context... It was a non-essential luxury item... is it an even MORE exclusive luxury item now?

As you so sweetly put it... do you need this broken down to you even further? Everything we buy is increasing faster then AFFORDABILITY, with the exception of a McDonalds Sausage Burrito. We have to ask then why are the parks still full, if they are no longer affordable? I think they are overpriced as well, but, that is a personal problem, if others don't have that problem with it or are willing to gripe and go anyway, then that is a matter of personal choice. It is a non-subject in my mind.

Why is a Cadillac so much more expensive then a Chevy? They both do the same job, they both get us from point A to point B, they both consume gasoline and break down if not properly maintained. It is because it is a Cadillac and carries with it a certain status that the Chevy does not. Because of that people pay more for it. Again all is relative. If people continue to pay that rate, then it must be what it is worth to those willing or able to pay it. Just because a few of us think that it is grossly unfair, well, life is a and then we die.

I also think that it is LESS exclusive then it was before. I think, and you can tell by Spirits comments, that it is inhabited by all classes and socioeconomic groups. That wasn't the case early on. Then it was the Sunday go to meeting crowd that frequented the place. All the rest were to busy keeping a roof over their heads to spend money, no matter how little, on such frivolities.

 

[Goofyernmost]

Fundamentally, the question is:

What happens to a company when it focuses on its bottom-line instead of the business that got it there?

Hopefully, you'll agree that today's autos are far superior to your 1971 Buick Skylark. Today's autos include safety improvements, new features, better performance, etc. never even dreamed of in 1971. I can purchase a quality auto for well less than that $42,000 price you mentioned, much better than that Buick Skylark.

The Detroit of the 1970s was more focused on the bottom-line than on producing a quality product. It banked a ton of cash for years producing an inferior product until an oil crisis and Japan auto manufacturers knocked it down.

Today's corporate Disney is acting more like the Detroit of the 1970s than the Disney of the 1970s.

Today's corporate Disney is extracting value from WDW. It can do so because previous CEOs built value into WDW. Could corporate Disney do what it's doing today if Roy Disney, Card Walker, and Michael Eisner didn't do what they did?

After the current CEO has raised prices another 20%, what's next? Even more of what we see today, declining quality and delayed additions?

Some of us want to see a company focused on earning the customers' business by adding value rather than simply extracting value.

I suspect nearly everyone who participates in these discussions wants to see WDW improve.

Raising prices is not a path to improvement. Instead, it's a symptom of a bigger problem, a cultural problem at corporate Disney.

As recently as 2009, WDW was the undisputed leader in North American theme park hospitality.

Whether it's Disneyland or Universal, the North American theme park leader in 2014 is very much open to debate.

Walt Disney once said:

Everybody thinks that Disneyland is a goldmine but we have had our problems. You've got to work it and know how to handle it. Even trying to keep that park clean is a tremendous expense. And those sharp-pencil guys tell you, 'Walt, if we cut down on maintenance, we'd save a lot of money.' But I don't believe in that. It's like any other show on the road; it must be kept clean and fresh.​

We want to see a Disney more focused on Walt's vision and less focused on Wall Street's vision.

I don't disagree with you, but I thought we were talking about affordability not value rated. And if you do go with the value rated measurement, whose value do we base it on? Yours? Mine? It is a subjective thing. It may not be the Disney of Walt's time and by the same token this isn't the world of Walt's time either.

It's not even that much of a problem if all of a sudden people stop paying those prices. All Disney has to do is lower prices and as quick as that... all is good. But that hasn't happened yet. We that have been going since it's early years may or may not see the differences and the lowering of quality. Others going for the first time do not see that. They see what is there and they are coming back again. If we are to speak based on reality, we have to take that into consideration. Will it all catch up with Disney? It is more than possible, but I don't see that happening any time soon. I'm guessing I will be taking my dirt nap before it happens.

 

[flynnibus]

As you so sweetly put it... do you need this broken down to you even further? Everything we buy is increasing faster then AFFORDABILITY, with the exception of a McDonalds Sausage Burrito. We have to ask then why are the parks still full, if they are no longer affordable? I think they are overpriced as well, but, that is a personal problem, if others don't have that problem with it or are willing to gripe and go anyway, then that is a matter of personal choice. It is a non-subject in my mind.

I point you back to lentesla's post for your infinite funds theory. Can you please put the two pieces of data together.

 

[Nemo14]

I think one other thing to consider here is that when we were growing up, (particularly @Goofyernmost and myself) WDW was new and simply was not the "rite of passage" that it seems to have become today. I was lucky enough to go to Disneyland with my parents when I was young, but none of my friends did, and it certainly wasn't the sole destination of our cross-country adventure. Even my first trip to DisneyWorld was just a stopping point on a more inclusive trip throughout the South with a college roommate. I don't know if this means a Disney vacation has increased in "value" any faster, but it certainly factors into the equation.

 

[Cesar R M]

Yes. They have for decades.

I'm always surprised at how Disney fans know so little about those hotels and their offerings. You can find someone who has taken 34 trips to WDW and never set foot in one and that just amazes me.

And I see my pal @ParentsOf4 putting out great posts I want to comment on, but I have to get back to reality. Maybe later ...

In my defence.. I never labelled myself as a "disney fan who knows a lot". I only managed to accomplish my dream on visiting WDW for my first time last year (2013)

 

[GrammieBee]

Your posts shows you have completely ignored the information provided by @lentesta and @ParentsOf4 or failed to digest it.

It IS all relative.. and the point of their discussions is to show how it's not a 1:1 relative.. and that's why it's not just simply inflation.. or lack of disposible income.. but qualifying that Disney prices are accelerating relative to other costs and income.

Sometimes reading this forum makes me think of wind up robot running in the wall.. repeatedly.

Hey! I did read, fully understood and digested your post. I didn't happen to agree with all of it. I learned a long time ago that you shouldn't take as the Gospel truth everything you read just because it was printed somewhere. I probably shouldn't have mentioned the word "inflation." Disney and Universal, both, along with a lot of other things, are outpacing the average family's "affordability". A lot of things have always been just out of reach or seem to be getting further out of reach. You earn a little more to catch up and they increase still more. So what's new about this? Many people will never be able to afford to go to Disney any more than I will ever be able to buy a house in Golden Oaks.

You did not fully understand my point of view that many of todays consumers' troubles are not because of what they earn or because of what things cost, but are of their own making. Too many people are over their heads in debt and have no extra funds because they feel they have to have the best of everything. Do they really need more debt to buy DVC points so they can visit Disney every year? Do their children really need $100. sneakers? Do they really have to have granite countertops and stainless steel appliances? Disney is not the only one doing some brainwashing. They wouldn't have more income, but If they would lower their expectations a little bit they would have more disposable income and could save for special things.

And, I repeat, if you are careful, you do not have to earn $100,000. a year in order to visit Disney at least once. You may have to lower your expectations somewhat, but you can get there. Many people do.

 

[WDW1974]

Beginning to feel that there is no real place in the "real" vacation world for Disney. I wonder what the percentage of tourists to Hawaii, NOT Aulani but Hawaii for Hawaii, actually vacation to WDW? Probably pretty low I assume.

What percentage of NON-DIsney cruisers go to Disney parks?

Seems like the right strategy for DIsney is to limit DVC to theme park resorts and leave the real world alone.

I disagree. I think one of Michael Eisner's biggest mistakes was in dropping plans for DVC all over the world (makes more sense than AbD) and letting folks talk him into more DVC for WDW. Of course, HIS plans for WDW DVC involved more stand alone resorts like Saratoga Springs and the old-Florida era Spanish style resort that was planned (and announced to media) to go where Four Seasons currently sits.

That would have expanded the business organically and moved a line of business outward.

Instead, it has allowed WDW's faulty 'the sky is the limit' pricing increases annually model that has, in turn, forced the conversion of deluxe rooms into timeshare.

 

[WDW1974]

Depends upon how much of a Disney fan they are. To many people, Disney is but one of their vacation destinations. They like Disney, but also visit other non Disney destinations such as Hawaii, Alaska, Las Vegas, etc., cruise with other cruise lines and may even travel by motor home or with a trailer to visit National Parks.

On the other hand, the true Disney fanatic does not want to go anywhere else except maybe on a Disney cruise ship.

That's a very good point and one that often gets lost when folks start debating/arguing the merits of various places.

You can be a theme park fan. You can simply be a Disney theme parks fan (or UNI or SW etc). You can be a fan of one resort (the person who has been to WDW 30-plus times, but hasn't even been to Anaheim once because California scares them!). You can be a fan of a BRAND (meaning you'll do anything that Disney, for this example, offers if you can afford it or desire it.)

You can be exclusive to those categories or enjoy many different kinds of travel.

I enjoy theme parks that are quality regardless of who owns them. I do enjoy many Disney products. I am not exclusive to Disney or any BRAND. I greatly enjoy all types of travel from cruising to taking trains around Europe to hiking in National Parks to baking on a beach in Barbados or Hawaii to visiting museums in NYC or Paris to staying on the Vegas Strip in a suite. I get different things out of all those types of travel, but I enjoy them all.

Some people don't.

For the Massachusetts family of 12 (grandparents included) who travel to WDW for 10 nights at the Beach Club every August and another week at WL at Christmas every third year and NEVER go anywhere (except maybe a weekend at the Cape for July 4th) NOTHING is going to get them to consider even a Disney Cruise likely. They're like my friend who only eats chocolate ice cream because ''I like it.''

 

[WDW1974]

Personally I would love to see some of DLP's hotel capacity converted into DVC rooms at 'normal' point values as well as well priced DVC capacity in Tokyo, Hong Kong and Shanghai. I think that tied with additional investments in related ABD guided trips they could make tidy profits in easing Americans into international travel.

Disney needs to start thinking about the life cycle of vacationing a little more seriously, Orlando is a great jumping off point that can lead to a lot more vacationing with Disney. But you can only do Orlando vacations for so long before you need variety or risk losing the 'magic'.

Addressing that life cycle, IMO, is the key to continued growth and stability.

You just won't see timeshare in Asia. OLC has no interest. Japanese who own timeshare own it ... in Hawaii largely. And in China it is largely a, pun intended, foreign concept.

Also, neither TDR or HKDL have any trouble in filling their hotel inventory.

You could make an argument for Paris, though.

 

[WDW1974]

Also, this may be why I don't get invited to media events anymore.

That's actually a badge of honor considering that largely slimeballs get invited. ... And I used to go frequently, at times as media and others as a VIP guest. I haven't been invited at WDW since 2005 or DLR since 2008. I honestly could not care less.

I am curious, though. Have you ever taken up why you aren't invited anymore? If I were you, I'd want to have in writing why Disney no longer likes you.

I find it all amusing because it seems like just yesterday when I was drinking with Craig Dezern at a Disney-MGM afterhours party and he was crowing about how WDW had standards (unlike DL, which would invite folks like your pal Jim Hill and the folks from Mouseplanet and LaughingPlace and the few big sites that existed a dozen years ago) and would never invite 'those Internet people' ... flash forward to now and 'those people' seem to be about 90% of all the folks Disney invites.

 

[GoofGoof]

Thanks! Here's the section from the book:

RAISE PRICES, RINSE, REPEAT

LONGTIME READERS KNOW that we usually begin this chapter with statistics showing how much more expensive it is to visit Walt Disney World now than in the Good Old Days. For example:

In 1989, a family of four could take a two-night, three-day trip to Walt Disney World, staying at Disney’s Caribbean Beach Resort, for $800 inflation-adjusted dollars, not counting food or transportation. In 2013, the same tickets and hotel cost almost $1,600.

We’ve written about these trends for years. And for years we’ve wondered how long these price increases could continue. For this edition of the Unofficial Guide, we thought we’d find out.

What follows is the spreadsheet equivalent of a back-of-the-napkin calculation about Disney’s prices and who can afford them, based on various US government statistics. If you’re an economist, a stock analyst, or a grad student looking for a research topic, drop us a line and we’ll share the data.

Back to that long weekend at Disney World: The bad news is that it now costs more than an entire year’s travel budget for 80% of US households. If you’re one of the 230 million Americans in a household making less than $100,000 annually, a trip to the World probably isn’t for you.

The good news—for Disney, anyway—is that the top 20% of US households, about 79 million people, spend more on travel each year than the bottom 80% combined: about $3,700, versus $3,200 in 2010. What Disney really cares about is revenue, not attendance, and a pool of 79 million high-spending tourists is a big enough market to fill its parks.

So how much more can Disney charge? After all, every price hike means fewer families can afford to go. Let’s assume that a 5% price increase means the average family has to earn 5% more to pay for the trip. (Actually, it doesn’t, but play along.) Are there enough Americans earning $105,000 who want to visit the World? Yes, per the US Census Bureau. Even if Disney raised prices 10% and targeted only households making $110,000 per year, its revenue would be about the same.

However, 10% is about the limit right now. If Disney marked up its vacations by 15% and targeted only those households making more than $115,000 per year—the top 16%—there aren’t enough Americans with that kind of money to take enough trips to Orlando, and Disney’s revenue would drop. A 20% increase would eliminate 30% of the people in the top-earning US households, and the numbers get uglier from there.

What this means is that you can expect Disney to continue raising prices 2–5% beyond the rate of inflation for the next few years. By the time that strategy runs its course, Disney should have its Avatar-themed land open at Animal Kingdom, which it hopes will draw in folks who’ve saved up for years. The only thing that could derail this plan is—just maybe—a plucky, moderately priced local competitor.

To paraphrase one of Disney’s newest princesses: “Help us, Harry Potter. You’re our only hope.”​

Also, this may be why I don't get invited to media events anymore.

Good stuff. It's really good to see this kind of analysis and information in print in a mainstream publication. We hear similar things on here from members like @WDW1974 and @ParentsOf4 but seeing it in print in one of the most popular WDW focused travel books had to really ruffle some feathers.

 

[TP2000]

I find it all amusing because it seems like just yesterday when I was drinking with Craig Dezern at a Disney-MGM afterhours party and he was crowing about how WDW had standards (unlike DL, which would invite folks like your pal Jim Hill and the folks from Mouseplanet and LaughingPlace and the few big sites that existed a dozen years ago) and would never invite 'those Internet people' ... flash forward to now and 'those people' seem to be about 90% of all the folks Disney invites.

That's fascinating. And such a perfect example of how it all changed in the last five years.

I've been following Disney theme park discussion for almost twenty years now, since the alt.disney.disneyland usenet days, and I've seen websites and web personalities rise and fall and come and go. The apparent monopolization of recent WDW media events by amateur bloggers wearing their best XXL polo shirt to go get free food and have their first glass of wine of the year may also have something to do with the near collapse of newspapers and traditional media. But there are still legit Conde Naste and LA Times and Wall Street Journal reporters out there to wine and dine and schmooze.

How funny to see how the whole media schmooze-fest scenario flipped in the last decade. Is this Craig Dezern person still with Disney? Was he at the infamous California Grille blogfest relaunch party last year? That would have been a fun event to chat him up at.

 

[WDW1974]

As Disney continues its crazy increases, a shrinking number can actually afford WDW ...

If they pay cash.

How many really can afford last Easter week's starting rack rate of $531/night at the Wilderness Lodge? (Rhetorical question.)

Forget the rhetorical part. How insane or out of touch with reality or having too much $$$ and no sense of what it is worth does one have to have in order to pay that?

I say that as someone who spent approximately 150 nights at WL between 1994 and 2006. And stayed at everything from standard view to concierge and never paid more than $165 a night.

Again, how deep must your addiction be?

I sense there aren't nearly enough crazies because if they had then, then they likely wouldn't be in such a hurry to DVC the deluxes.

However, if Disney repackages those Wilderness Lodge rooms as timeshares with long-term financing (at 10% to 20% interest rates), then consumers can go even deeper into debt to finance their vacations for the next 40 years.

Back in the good old days, those who worked for Walt & Roy Disney, Donn Tatum, and Card Walker truly believed in providing customers with value for their money.

The only thing today's corporate Disney truly believes in is your money.

Oh, Michael and Frank believed that too. They also believed, correctly I'd argue, that the place was underpriced when they took over (hence, the price increases).

Pricing has only gotten absurd since Bob Iger took over. No one has nickeled and dimed like The Weatherman.

You should see if The Disney Parks Blog wants your services with posts like these!