The Spirited Seventh Heaven ...

[ParentsOf4]

The question is though, as a business decision, is it really wrong?

People assume Disney's Parks & Resorts (P&R) is just raking in the bucks.

The reality is that the 9 years under Iger, with all its delayed P&R investments, quality cuts, and much higher prices, have been the segment's least profitable period since Disneyland opened in 1955.

Meanwhile, Universal's Theme Parks segment, with all its additions and improved quality, has never been more profitable, with a gross margin that's double Disney's margin.

The sad truth is that Iger & co. are trying to run P&R using an old, discredited business model: improve profitability by reducing investments and cutting corners, by treating customers the way P.T. Barnum used to.

Disney's current leadership is out of its comfort zone with P&R, and there's no one on the horizon who's going to change that when Iger leaves in 2016.

WDW survives with rides that mostly are 20-to-40 years old while Universal's best nearly all date to within the last 15 years.

WDW slowly is becoming a dinosaur, milking its former greatness for every penny, all in the name of nostalgia, much as Detroit did in the 1970s and 1980s.

Universal's way of doing business is the future; Disney's way of doing business is the past.

 

[doctornick]

The reality is that the 9 years under Iger, with all its delayed P&R investments, quality cuts, and much higher prices, have been the segment's least profitable period since Disneyland opened in 1955.

Which begs the question: if these are all reasonably intelligent businessmen, why don't they see that and do something about it? Why isn't Wall St asking questions about it? Forget about the subjective stuff for us as guests, why aren't the pencil pushers trying to figure out how to get to the profit margins of the days of old?

Are they that tone deaf that they can't see that investing in new attractions might actually increase revenues significantly? Have they not reviewed the numbers with Cars Land or have a sense what is going on with Uni Orlando as a peer business?

The sad truth is that Iger & co. are trying to run P&R using an old, discredited business model: improve profitability by reducing investments and cutting corners, by treating customers the way P.T. Barnum used to.

Disney's current leadership is out of its comfort zone with P&R, and there's no one on the horizon who's going to change that when Iger leaves in 2016.

Even if the current leaders don't seem to "get it", shouldn't they see its an issue enough to try to bring in someone who can address the situation?

 

[lazyboy97o]

Universal's way of doing business is the future; Disney's way of doing business is the past.

Which is, oddly enough, based heavily on Disney's past way of doing the theme park business. The "Disney must remain relevant and change their business model" line is just bunk.

And of course I am sure in time we will see the requisite, "Disney's attendance is higher so it must be doing the best ever."

 

[GoofGoof]

Which begs the question: if these are all reasonably intelligent businessmen, why don't they see that and do something about it? Why isn't Wall St asking questions about it? Forget about the subjective stuff for us as guests, why aren't the pencil pushers trying to figure out how to get to the profit margins of the days of old?

Are they that tone deaf that they can't see that investing in new attractions might actually increase revenues significantly? Have they not reviewed the numbers with Cars Land or have a sense what is going on with Uni Orlando as a peer business?



Even if the current leaders don't seem to "get it", shouldn't they see its an issue enough to try to bring in someone who can address the situation?

Total profit is up. Profit margin is down. It's easy to point to increased costs (especially labor and healthcare) and blame that for decreased profit margin.

 

[Bairstow]

Maybe WDW has been overcompensating its underwater queues for the horror that was 20k's queue!

Just remembered how awful that queue was. Hot, barely-themed, and nothing to keep you company but an accordion.

 

[John]

Total profit is up. Profit margin is down. It's easy to point to increased costs (especially labor and healthcare) and blame that for decreased profit margin.

I agree but it doesn't hold water when you consider the ticket increases and increases across the board. Th

Total profit is up. Profit margin is down. It's easy to point to increased costs (especially labor and healthcare) and blame that for decreased profit margin.

@ParentsOf4 I know you have a response to this.....waiting patiently.

 

[Goofyernmost]

Someone tell the aquariums of the world... Apparently they are fundamentally flawed - once you see one fish you've seen them all!

I knew someone would challenge that statement, but, I stand by it. If you can tell one fish from another fish in that same species, I'll take it all back. That's probably why they don't name them. I, obviously, am not an expert nor do I have any real interest in watching fish swim. It seems to me that they just swim back and forth and back and forth. I don't know what, if any, just passed me by a few minutes ago or one that I have never seen before. It's a lot like watching grass grow. I don't see any reason to be all excited because a fish can swim any more then they are jacked up because I can drive a car. They are pretty interesting to watch when you first encounter them, but, the fascination wears off, for me at least, very quickly. After that, if you've seen one fish, you have seen them all. The dolphins (mammals that swim) are fun because they will go fetch a stick (not always), but, the rest don't do anything to entertain me. I do like some of them with tarter sauce though, does that count?

 

[Jeffxz]

I agree but it doesn't hold water when you consider the ticket increases and increases across the board. Th



@ParentsOf4 I know you have a response to this.....waiting patiently.

I'm not PO4 but I think the proper response is that universal has the same increased costs for labor and healthcare and that doesn't stop their margins from climbing.

 

[FigmentJedi]

Love your post but you have to remember that this is the company that uses actual trash bags as "clouds" for the Peter Pan ride...that's how cheap they are!

Don*t forget about the aluminum foil that lines the inside of the Neverland volcano....

And features a Captain Hook voice that sounds absolutely nothing like what Captain Hook sounds like.

 

[Goofyernmost]

Yea, The Baltimore National aquarium had an attendance of 1.55 million people last year. That's a lot of people who never saw fish before.

I'll bet they had kids that hadn't seem them before and since there is not much else to do in Baltimore, the trend of making new kids will probably continue.

 

[Nubs70]

Which begs the question: if these are all reasonably intelligent businessmen, why don't they see that and do something about it? Why isn't Wall St asking questions about it? Forget about the subjective stuff for us as guests, why aren't the pencil pushers trying to figure out how to get to the profit margins of the days of old?

Are they that tone deaf that they can't see that investing in new attractions might actually increase revenues significantly? Have they not reviewed the numbers with Cars Land or have a sense what is going on with Uni Orlando as a peer business?



Even if the current leaders don't seem to "get it", shouldn't they see its an issue enough to try to bring in someone who can address the situation?

If I may,

This is the thought processes of the modern business person. The next quarter is the most important thing. This thought process can found across industries. Iger and friends are simply playing from the songbook written by Wall Street. The goal is to provide a commodity product marketed as a mass customized experience.

 

[PhotoDave219]

Well, their goes my pass to the GA Aquarium right out the window....

By far, my favorite.

 

[ParentsOf4]

Which begs the question: if these are all reasonably intelligent businessmen, why don't they see that and do something about it? Why isn't Wall St asking questions about it?

Wall Street does ask questions.

When Disney's P&R capital investments were briefly up to 23% in 2011 & 2012 (as a result of 2 new cruise ships, Cars Land, and MyMagic+), Wall Street's #1 question was:

"When are you going to cut investments?" ​

(For perspective, Universal's Theme Park capital investments last year were 26% of revenue.)

What everyone has to realize is that if it were up to Wall Street, very little would ever get built.

Having seen what happened in the late 1970s & 1980s, with Wall Street's hostile treatment of Disney during some of its most aggressive growth, I can assure you that if it were up to Wall Street, today's WDW would consist of the Magic Kingdom, Downtown Disney, and a bunch of timeshares.

Wall Street rarely responds well to large, long-term domestic capital investments.

Today's Wall Street loves Iger.

That says a lot.

 

[The Empress Lilly]

Just remembered how awful that queue was. Hot, barely-themed, and nothing to keep you company but an accordion.

Afwul, wasn't it? Hot and slow. ^^ And that is the atmospheric part! ^^

On the upside, only three strollers, barely more than ten kids, an average age of 52, and well dressed guests.

Ah, classic Fantasyland, back when it consisted of rocks and waterfalls and an underwater ride before this area was converted for half a billion into rocks and waterfalls and an underwater ride!

 

[The Empress Lilly]

Wall Street does ask questions.

When Disney's P&R capital investments were briefly up to 23% in 2011 & 2012 (as a result of 2 new cruise ships, Cars Land, and MyMagic+), Wall Street's #1 question was:

"When are you going to cut investments?" ​

(For perspective, Universal's Theme Park capital investments last year were 26% of revenue.)

What everyone has to realize is that if it were up to Wall Street, very little would ever get built.

Having seen what happened in the late 1970s & 1980s, with Wall Street's hostile treatment of Disney during some of its most aggressive growth, I can assure you that if it were up to Wall Street, today's WDW would consist of the Magic Kingdom, Downtown Disney, and a bunch of timeshares.

Wall Street rarely responds well to large, long-term domestic capital investments.

Today's Wall Street loves Iger.

That says a lot.

But Wall Street loved Eisner decade 1, when Disney stock exploded partly on the wave of agressive p&r investments?

 

[GoofGoof]

I'm not PO4 but I think the proper response is that universal has the same increased costs for labor and healthcare and that doesn't stop their margins from climbing.

I agree but it doesn't hold water when you consider the ticket increases and increases across the board. Th



@ParentsOf4 I know you have a response to this.....waiting patiently.

My response wasn't an attempt to defend Disney in any way. I'm just stating a fact. Someone asked why Wall Street doesn't question them on lower profit margin. The answer is they can easily point to the increased expenses and justify the decreased margins. Anyone in a labor intensive business will tell you that those expenses skyrocketed recently.

Universal recently experienced a 30% increases in attendance at IOA in one year. That's like a decade of growth at MK. That kind of super growth in revenues will of course mask increased costs. It's completely apples and oranges. It's not very plausible that any WDW park will ever see a 30% increase in attendance.

Here's a simple way to look at things. We all know revenues are up at WDW. Prices are up. Attendance is up (at least marginally) and although room occupancy numbers are down some the total rooms rented are up vs 10 years ago and the room rates are definitely a lot higher. If profit margin is down but revenue is up that much the only possible reason for it is increased expenses.

 

[EPCOTCenterLover]

@AEfx - read it and weep! A goldmine of what was and what could have been.

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Thank you!

 

[flynnibus]

Sorry.. The uniforms and soundtrack alone made up for 20ks lack of a queue/preshow.

The sounds from the film were intoxicating enough for me. As for tight... That's how boats are! The biggest issue (even today with nemo) is the sight lines allow seeing the water line when in the lagoon

 

[FloridaRes]

Funny thing is, that queue and ride are the only thing I remember from my first every visit back in '71

 

[flynnibus]

But Wall Street loved Eisner decade 1, when Disney stock exploded partly on the wave of agressive p&r investments?

The Disney decade was not just about spending but was aggressively expanding the business of twdc. It was an expansion of what they were doing... Not just incremental adds or refreshing.

Expanding the business vs increasing costs.