The Spirited Sixth Sense ...

[The Mom]

To be fair in my experience it is the normal modus operandi for the few hundred of you that have passports.

Its a bit like UK citizens seeking down Irish pubs across the world for an adult beverage. Except in this case the owner probably hates Brits.

I must confess that we ate at the McDonalds in Moscow - only because we had read that it was the first "western" restaurant opened, and one of the largest McDonalds in the world!

And my son did discover a McDonalds on the top of a mountain in a state park in China, so he just had to eat there. Along with the fact that the food provided that weekend was subpar compared to what he had been eating in Tiajinn. Even the Chinese students were complaining.

We went to an Irish Pub in St Petersburg. We decided it was a money laundering operation - we really felt unwelcome.

Never ate anywhere other than local restaurants in Greece & Turkey - the food was very, very good.

 

[asianway]

While I wouldn't encourage broad use of the ignore feature, I find it helpful for avoiding members who make posts, but don't want to engage in, or contribute much to discussions.

Life's too short to waste a moment reading the ramblings of the jts, Peter, or clever name.

 

[jakeman]

I must confess that we ate at the McDonalds in Moscow - only because we had read that it was the first "western" restaurant opened, and one of the largest McDonalds in the world!

And my son did discover a McDonalds on the top of a mountain in a state park in China, so he just had to eat there.

In my travels I've enjoyed at one stop in a McDonald's at each place just to see the local adaptations and if they were unique enough, did partake.

It was one meal, so it wasn't the end of the world or make me an ignorant American. How cannot you not see a McDonald's in France and not get one Royale with Cheese?

 

[Bolna]

I must confess that we ate at the McDonalds in Moscow - only because we had read that it was the first "western" restaurant opened, and one of the largest McDonalds in the world!

I have eaten there as well! And I am German and was taken there by my Russian friends who wanted to show off their beautiful new restaurant!

I think there is a difference between seeking out a McDonalds that is special or for tasting some of the local offerings. But I have met American tourists who said that they had more or less nothing else than American chain restaurant food for most of their trip through Europe. Well, but then I also know Germans who travel to Mallorca to only eat in German restaurants there...

 

[Pumbas Nakasak]

I must confess that we ate at the McDonalds in Moscow - only because we had read that it was the first "western" restaurant opened, and one of the largest McDonalds in the world!

And my son did discover a McDonalds on the top of a mountain in a state park in China, so he just had to eat there. Along with the fact that the food provided that weekend was subpar compared to what he had been eating in Tiajinn. Even the Chinese students were complaining.

We went to an Irish Pub in St Petersburg. We decided it was a money laundering operation - we really felt unwelcome.

Never ate anywhere other than local restaurants in Greece & Turkey - the food was very, very good.

I "bag" Hard Rock Cafes, not sure if they really count as a British institution, and funnily enough I had a McDs in Rome, but as I was living in Sardinia at the time it was a novelty meal, honest.

I have been known to venture into bars, even one or two who, how can I put it, were family run. But I have found it better to avoid Irish bars in general as you never can tell which ones were keen to see the demise of people in my former employment.

 

[EPCOTCenterLover]

Sorry, MSNBC and/or FOX News are probably the right objective fit then.

Unless this is a race issue and/or flat out anti-Al Gore thing. Because those are the two biggest opponents of the station. Most of which wouldn't bother to tune in and see the sheer volume and quality of work being done.

Sure, those are the only options.

 

[lazyboy97o]

But that's opting out rather than opting in to only folks you agree with.

Finding like minded persons still involves opening oneself to some degree. Even somebody with private Twitter posts has to chance a follower who challenges.

 

[KYWDW]

My problem with wdc and Wall Street is how much Wall Street lets wdc get away with. How many companies can spend 2B+ and not have to answer for it? Not many, let alone deflect questions about nge. Once universal is fully upgraded with all their projects and is putting up non inflated large numbers, then maybe Wall Street will begin to be more demanding.

 

[flynnibus]

My problem with wdc and Wall Street is how much Wall Street lets wdc get away with. How many companies can spend 2B+ and not have to answer for it?

They are getting away with it because they are able to spend that kind of money without it impacting the key metrics. If they had huge dips in profitability and tried to write it off as 'investing with MM+' they'd have to answer for it much more. But they've managed to roll it up without hitting the bottom numbers much.

 

[JimboJones123]

Sure, those are the only options.

Or CNN.

 

[alissafalco]

I "bag" Hard Rock Cafes, not sure if they really count as a British institution, and funnily enough I had a McDs in Rome, but as I was living in Sardinia at the time it was a novelty meal, honest.

I have been known to venture into bars, even one or two who, how can I put it, were family run. But I have found it better to avoid Irish bars in general as you never can tell which ones were keen to see the demise of people in my former employment.

I ate at the McD's in Rome too. I was in Italy for a month so 1 meal at an American chain restaurant was no big deal. It was interesting to see their adaptation of the food we are used to at home.

 

[GoofGoof]

My problem with wdc and Wall Street is how much Wall Street lets wdc get away with. How many companies can spend 2B+ and not have to answer for it? Not many, let alone deflect questions about nge. Once universal is fully upgraded with all their projects and is putting up non inflated large numbers, then maybe Wall Street will begin to be more demanding.

The analysts on the earnings calls have started asking more about the system and it's financial impact. In fairness to them if Disney keeps saying it's still in testing and not fully rolled out then they are in a holding pattern waiting for the company to say its complete. The $2B number is also not commonly discussed by any analysts or the company. The original budget was less than $1B and so far management has not been willing to expand on exactly how much was spent or if it's over or under budget. I wouldn't hold my breath waiting for that number either. If the cost really balloons to over $2B it will have to show up somewhere either on the balance sheet or in operating expenses. So far I haven't really seen too much grumbling from analysts about increases in capital spending or expenses. Maybe it's just not large enough a number to move the needle.

 

[GoofGoof]

They are getting away with it because they are able to spend that kind of money without it impacting the key metrics. If they had huge dips in profitability and tried to write it off as 'investing with MM+' they'd have to answer for it much more. But they've managed to roll it up without hitting the bottom numbers much.

This is true. I wonder if the $2B+ number quoted has a lot of other expenses lumped into it. I know from experience that when my company does a large project or an acquisition that's the best time to get stuff you want for your department. Tack it onto the project budget and it doesn't count against you as a manager or your department's budget. I've been playing that game for years

 

[ParentsOf4]

They are getting away with it because they are able to spend that kind of money without it impacting the key metrics. If they had huge dips in profitability and tried to write it off as 'investing with MM+' they'd have to answer for it much more. But they've managed to roll it up without hitting the bottom numbers much.

What's interesting (to me ) is that as a percentage of total revenue, Disney used to invest much more heavily in the 1970s to 1990s.

As might be expected, the year of greatest investment was 1982, right before the opening of EPCOT. That year, investments were a whopping 62.7% of revenue.

After that, years of double-digits investments were not uncommon.

Understandably, Disney's domestic investments plummeted in 2002 but since then they've never come close to pre-9/11 levels. In 2011, when total investments were up to 5.6% of revenue, Wall Street grilled Iger and Rasulo pretty good. (Questions along the lines of "When is spending going to end"?)

In 2013, investments were at 2.5% of total revenue, with domestic investments approaching a record low. Total investments were at 2.5% in 2002 and bottomed out at 2.0% in 2006.

For Disney, "investments" include all capital expenditures, including maintenance. Recalling what CFO Jay Rasulo said about investments back in 2011:

“Five years ago or so we used to be pretty demonstrative about $1 billion number being an ongoing level without special projects added to it.

You have to remember though that in those five years in the capital projects that we have put in the ground, which each have their own growth strategy, each is filling in different parts of the portfolio, when they are back on board they all need ongoing FF&E and maintenance capital to keep them going.

So I would say that that $1 billion number is low.”​

With baseline capex being at $1B back in 2006 along with inflation and the additional projects brought online since 2006, most of today's domestic "investments" are basic maintenance.

It's possible that 2013 might represent an all-time low for domestic investments at Disney.

Under Eisner, Disney made several major acquisitions and yet Disney continued to invest. Under Iger, those domestic investments have evaporated.

Investments made today are what builds a company's future. Capital budgets can be slashed in the current year and the company will do very well financially for a few years but, long-term, the company's future has been sabotaged.

Wall Street might be happy today.

Will they be happy in 5 to 10 years?

 

[flynnibus]

What's interesting (to me ) is that as a percentage of total revenue, Disney used to invest much more heavily in the 1970s to 1990s.

What number are you referring to as 'investment'... and are you talking P&R or TWDC?

Where is Disney breaking expenses down into labor vs capital vs maintenance?

Edit: ok, I see them tracking capital expense.. but is that what you are trending in your comments?

 

[WDW1974]

Sunday Spirited Musings:

Do you hear that giant sound of hot air being expelled? Yes, the MK debuted its first new parade since 2001 and every Lifestyler has been camped out all day (I think they were peeing in jars) to tell you all about it.

Speaking of Lifestylers, did you see the list of who got into the Muppets screening this weekend? Oh yeah, all the usual suspects. And they'll be at the Captain America one as well because it's a cheap way for Celebration Place to buy them. Me ... I'd rather pay twice the regular price than have to see Scary Steven dressed as Sam Eagle.

OK, why Twitter is bad in one example:
Parkscope ‏@Parkscope 1h
Apparently there's a hoax spreading claiming 16 people died today in a coaster crash at Universal. That's clearly not true.

There's a hoax out there going on, so what do you do? You give it more attention. Folks that have a 140-character (or less) attention span are only going to get DEAD PEOPLE UNI COASTER. Again, that is what this technology platform is best known for.

Yes, I admit it. I live in SoFla and have never been to Calle Ocho. No desire at all.

Are the Voices of Liberty about to be silenced by the budget ax? Not sure, but that is the word going around (see: new thread I just started).

Friends in O-Town that are at the WDW and UNI parks this weekend appear shocked they are busy. Why? This is the heart of college spring break time. And the weather is great for locals too.

No, I won't be here tonight. I'll be watching ABC ... and AMC.

Anyone here every do an Adventures By Disney tour?

So, let me get this straight, Disney is trying to pay off a politician to get a law passed against ticket resellers (which I have no problem with at all), but that will actually criminalize the victims/buyers as well?!?!

Sorry, but that is just BS. If you are not familiar with WDW and its ticketing procedures and you see a booth in front of a legit business like a 7-11 on US192 that has all sorts of official brochures and the like, how is it that you are supposed to know that what they are doing is against the law? Insanity yet again ... much like arresting people and ruining their lives for what's on their computers when, in today's age, someone can download something to your computer from half a world away that you do not want, have not asked for and have no knowledge it is even there. Or being sued for someone breaking into your home or yard and injuring themselves or drowning in your pool etc.

Crazy world. Crazier country. Craziest state.

 

[The Empress Lilly]

I don’t mind Disney making money.

I don’t mind Disney making lots of money.

I mind Disney being stupid about how they do it.

What’s been most disappointing about Parks & Resorts (P&R) leadership of late is that, at WDW, they’ve abandoned a strategy that made them successful for decades and have let the latest trends from lean manufacturing and cost accounting dominate their thinking. In doing so, they’ve extracted details that made WDW great, the cumulative effect of which has been to cheapen the product. They’ve stripped it down to the bare essentials, letting a bunch of self-serving “surveys” justify cost-cutting decisions they’ve already made.

Meanwhile, prices have exploded like never before, all in an attempt to get gross margins back up to levels P&R consistently achieved decade after decade.

WDW leadership broke something a few years ago and no one left has any idea how to fix it.

In 1983, Disney had just opened a theme park at a cost greater than their annual revenue while simultaneously maintaining reasonable prices and an outstanding commitment to quality and service.

Despite this or perhaps even because of this, financial performance was better in 1983 than it is today, with Disney realizing a higher gross margin in its P&R segment; 19.1% in FY1983 vs. 15.8% in FY2013.

Back then, Disney had leadership that fully appreciated the theme park business and were committed to the ideas set forth by Walt Disney, not in using Walt’s name as an advertising slogan.

More recently, during what might be WDW’s peak era of financial performance, the years surrounding the 1998 opening of Disney’s Animal Kingdom when WDW expansion plateaued, P&R gross margin consistently ran around 23%.

WDW built and built and built throughout the 1970s, 1980s, and 1990s and gross margins remained impressive. Yet in recent years with stagnating theme parks and declining quality at WDW, the P&R segment has performed at financial lows.

Today, P&R has a group of “leaders” with no passion for the theme parks and no vision of what to do with them. It’s a group more worried about the sizes of their annual compensation packages than in providing customers with outstanding experiences in order to grow business and earn those compensation packages. They are more worried about keeping their cushy jobs than in driving WDW towards both public praise and financial success.

Scale up WDW’s and DL’s sixfold increase in prices since 1983 and P&R is up to $6B in annual revenue with operating income of $1.2B overwhelmingly from ticket, food, and merchandise sales from just three theme parks.

The folks running P&R now have revenue flowing in from 2 more WDW theme parks, 2 water parks, shopping districts, over a dozen timeshares, tens-of-thousands of additional hotel rooms, Hong Kong Disneyland, Disneyland Paris, and 4 cruise ships yet the best they can do is realize another $1B in operating income?

In Disney’s “horrible” year of 2002 when hotel occupancy was down to 76%, P&R gross margin was at 18.1%. Heck, it was at 16.5% as recently as 2008. P&R revenue is up 22.5% since 2008 driven overwhelmingly by higher prices while operating income is up only 17.0%.

Go back to 2008 and they had 1.0M empty hotel room nights domestically. In 2013, they had 2.2M.

They charge more for less yet still can’t achieve results from only a few years ago. They squeeze and squeeze and haven’t realized that “squeeze the customer” is not a long-term business strategy.

Those making the decisions impacting WDW today don’t understand how to make a theme park resort successful. All they know how to do is cut quality and raise prices. They pinch pennies rather than look for opportunities to realize sustainable growth. They play small ball instead of going for the big inning.

Oh, and offend J.K. Rowling so much that she took her product up the road where it was turned into the greatest theme park success story of the 21st Century.

They were handed a Golden Ticket to success and have squandered it on a rubber band.

Only those with their heads buried too far in their smart phones could have thought MagicBands represented the wave of the future. Only those clinging too tightly to their jobs would have failed to shout “Emperor’s New Clothes”.

Maybe they should examine their own corporate history and figure out what made WDW great in the first place.

Maybe, just maybe, they might realize that success was based on what was happening inside the theme parks.

Am excellent post, Po4.

I do have one big 'but' to the lower profit percentages. ("I like big buts and I can not lie") Disney in 1983 realised higher operating income because back then companies paid taxes. Modern TWDC is all about financineering. Disney's P&R's is more profitable than ever before, Disney has simply succumbed to the art of off-shore accounting.

In effect, the P&R makes huge profits which are held off-shore, abroad, away from the prying eyes of federal and state tax. Although much of these P&R profits finds their way into investments abroad: cruise ships (foreign, not registered in the US), Hong Kong, Shanghai. There is a reason why Disney's profits are apparantly modest, while simultaneously the company seems awash with cash and pays multi-billion dollar investments like pocket change. Disney's hugely profitable P&R pays for non-US expansion with cash withheld from US tax.

In effect, this way the American middle class tax payer (upper and lower classes do not pay taxes) pays for the outsourcing of and competition to its own livelihood in China and elswehere.

For fun, google Wedco Holdings Netherlands B.V., in The Netherlands. That despicable tax haven of a country. Wedco - Walter Elias Disney. The history of Disney P&R's in one acronym, WED. From denoting imagineering up to the 80s, to accounteneering in the 90s and 00s, to financineering in the past decade.

 

[WDW1974]

Spot on. Salaries in newsrooms have dropped 20-30% post 9/11. They want the pros out to save money. If you are in a newsroom for more than 5 years, you are expendable. Most writers in TV newsrooms are a combination of college interns or have less than 3 years journalism experience. Even EPs are working with far less than 5 years of cut and paste experience. Why pay a producer or assignment editor $50-70k when you can pay then $32-40k?

I miss working in a newsroom.

It's such a joke in some markets like Miami.

I see these new newsrooms that were built in the last decade and they cut to someone in them and you see like two dozen empty work stations, that obviously are not being used at all, and a few workers who look like they are 29-years-old, thrilled to be able to say they work at a network affiliate and likely make what the manager of the Pop Century food court makes (about $32,000 a year).

 

[WDW1974]

So, are we talking a full on back side of Main St. here? or multiple entrances/exits either through or around the Town Square area?

If things wind up at their natural conclusion, then one might expect to see a major expansion of dining and shopping (no attractions ... ever!) ...

But I am not jumping ahead beyond what they are doing now.

 

[Robin Of Loxley]

Do you hear that giant sound of hot air being expelled?

My apologies.