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Understanding Why Disney's Magical Express Is Ending

ParentsOf4

Well-Known Member
Original Poster
Throughout the first 30 years of Walt Disney World's (WDW) existence, WDW Guests paid for their own transportation from Orlando International Airport to WDW.

This model worked for decades. Hotel occupancy remained high and corporate Disney built more hotels to meet ever increasing demand.

9/11 changed everything. Annual hotel occupancy plummeted to 77%. This was a historically bad number for WDW, unprecedented really.

During the years that followed, Disney tried to increase occupancy by offering discounts. Despite these discounts, occupancy remained stubbornly low. Even worse, the important Per Room Guest Spending (PRGS) (i.e. how much Guests spend in each occupied room) flatlined. The discounts were not attracting onsite Guests but were hurting revenue. Something needed to be done.

In an attempt to solve these duel problems, Disney created Disney's Magical Express (DME) in 2005.

Maybe if Disney offered free airport transportation, more Guests would stay onsite. By staying onsite without alternate means of transportation, perhaps these Guests would spend all their vacation dollars at WDW. With hotel occupancy and PRGS stuck in a rut, anything was worth a try.

As it turned out, DME succeeded beyond all expectations. From 2006 to 2008, hotel occupancy jumped to an incredible 89% while PRGS increased 13.1.%. DME was a major winner for corporate Disney.

Fast-forward to 2019.

By 2019, annual hotel occupancy was over 90%. For those who might be unfamiliar with how hotel bookings work, once room occupancy reaches levels such as these, it becomes difficult to fill additional rooms. Check-out dates don't line up with check-in dates. Increasing occupancy becomes nearly impossible. Disney's corporate leadership reiterated this point during several earnings calls. From corporate Disney's perspective, the hotels were "full" in 2019.

Third-party services such as Uber created a second issue. With transportation being easier and cheaper, Guests were leaving the "Disney Bubble", meaning Disney was capturing less of their vacation dollars. Indeed, despite hotel price increases of over 5%, PRGS increased by only 2.3% in 2019, the lowest since the Great Recession of 2009.

DME no longer seemed to be needed to fill rooms, while it also no longer was an effective tool for capturing onsite vacation dollars.

The corporate wheels started to turn. DME was expensive but not working. Why not get rid of DME?

By eliminating DME, Disney might lose bookings but some of those lost bookings will be filled by other Guests, Guests who had been unable to get the rooms they wanted due to high occupancy. Besides, even if occupancy drops a bit, the cost of providing DME to all hotel Guests is expected to be greater than revenue lost due to a modest decrease in hotel occupancy.

Ultimately, DME is costing Disney more than it's worth and you, the WDW vacationer, are going to pay the price.
 
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UNCgolf

Well-Known Member
That's definitely the corporate mindset and I'm sure they've done quite a bit of research before pulling the plug, but I'm interested to see how it goes.

I don't think the lack of Magical Express will stop people from making a trip to WDW (at least in any numbers significant enough to matter). I do think it may drive some guests to off-site hotels, though, and I'm not sure those spots will all automatically be filled by other visitors. The elimination of rope drop for off-site guests was almost certainly part of the calculation and an attempt to keep people on-site, but there aren't that many guests that rope drop to begin with (if it was done by the majority of guests, it would stop being beneficial).

I've read some hints that hotel bookings have actually not been especially high at the deluxes in recent years, but I have no idea if that's actually true.
 

UNCgolf

Well-Known Member
There's still one glaring point that doesn't make much sense - why wouldn't Disney try to charge for this service first instead of eliminating it entirely? Even sharing revenue with Mears as their partner, they could have made a good profit that would offset any costs. Disney leaving revenue on the table is a strange thing to see.

One argument would be that they want to push more guests to drive/rent cars in order to bring in more resort parking fees, which would make far more money for Disney if it was an equal one-to-one swap from using a paid Magical Express to having a car on-site.

I don't buy that, though, because I don't think it's going to lead to a dramatic increase in rental cars. There will be an uptick, but probably not enough to make up for the total revenue they could get from charging for Magical Express. Most people that previously used Magical Express will just use the new Mears service or a rideshare.
 

Thelazer

Well-Known Member
They could just easily increase the resort fee for no other reason, than to increase it (see vegas) no reason to hope folks rent a car.

With the traffic nightmare that can be parts of the resort, the LAST thing you'd want (i'd think) is more cars. We've seen the increase in bus usage, bus only lanes, sky liner etc.. all those things tell me, that Disney is really not in a great position to accommodate MORE cars.

My single guess, is this is strictly contract related, MEARS was making too much money.
 

UNCgolf

Well-Known Member
They could just easily increase the resort fee for no other reason, than to increase it (see vegas) no reason to hope folks rent a car.

With the traffic nightmare that can be parts of the resort, the LAST thing you'd want (i'd think) is more cars. We've seen the increase in bus usage, bus only lanes, sky liner etc.. all those things tell me, that Disney is really not in a great position to accommodate MORE cars.

My single guess, is this is strictly contract related, MEARS was making too much money.

I don't think they're doing it for that reason either, as I said above. That's just one argument I've seen people mention.

However, Disney has tons of room for cars to park at resorts. They may not want all those cars out on the roads -- and they likely wouldn't be; why drive to a park when you could use a Disney bus and not have to pay? -- but I've never seen the lots at Port Orleans Riverside even remotely close to being full. Always been plenty of empty spots at Animal Kingdom Lodge too. I'm sure they would love to have many more cars parked at the resorts if they were going to just sit there parked, but there's no way to make that happen.
 

ParentsOf4

Well-Known Member
Original Poster
There's still one glaring point that doesn't make much sense - why wouldn't Disney try to charge for this service first instead of eliminating it entirely? Even sharing revenue with Mears as their partner, they could have made a good profit that would offset any costs. Disney leaving revenue on the table is a strange thing to see.
Don’t forget that a rail service is scheduled to open in a few years.

Between car rentals, Uber, and rail, bus service from MCO to WDW looks to be on a downward spiral.

And with daily parking fees at the hotels now in place, Disney has a good reason to want people to drive.
 
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Sirwalterraleigh

Premium Member
Throughout the first 30 years of Walt Disney World's (WDW) existence, WDW Guests paid for their own transportation from Orlando International Airport to WDW.

This model worked for decades. Hotel occupancy remained high and corporate Disney built more hotels to meet ever increasing demand.

9/11 changed everything. Annual hotel occupancy plummeted to 77%. This was a historically bad number for WDW, unprecedented really.

During the years that followed, Disney tried to increase occupancy by offering discounts. Despite these discounts, occupancy remain stubbornly low. Even worse, the important Per Room Guest Spending (PRGS) (i.e. how much Guests spend in each occupied room) flatlined. The discounts were not attracting onsite Guests but were hurting revenue. Something needed to be done.

In an attempt to solve these duel problems, Disney created Disney's Magical Express (DME) in 2005.

Maybe if Disney offered free airport transportation, more Guests would stay onsite. By staying onsite without alternate means of transportation, perhaps these Guests would spend all their vacation dollars at WDW. With hotel occupancy and PRGS stuck in a rut, anything was worth a try.

As it turned out, DME succeeded beyond all expectations. From 2006 to 2008, hotel occupancy jumped to an incredible 89% while PRGS increased 13.1.%. DME was a major winner for corporate Disney.

Fast-forward to 2019.

By 2019, annual hotel occupancy was over 90%. For those who might be unfamiliar with how hotel bookings work, once room occupancy reaches levels such as these, it becomes difficult to fill additional rooms. Check-out dates don't line up with check-in dates. Increasing occupancy becomes nearly impossible. Disney's corporate leadership reiterated this point during several earnings calls. From corporate Disney's perspective, the hotels were "full" in 2019.

Third-party services such as Uber created a second issue. With transportation being easier and cheaper, Guests were leaving the "Disney Bubble", meaning Disney was capturing less of their vacation dollars. Indeed, despite hotel price increases of over 5%, PRGS increased by only 2.3% in 2019, the lowest since the Great Recession of 2009.

DME no longer seemed to be needed to fill rooms, while it also no longer was an effective tool for capturing onsite vacation dollars.

The corporate wheels started to turn. DME was expensive but not working. Why not get rid of MDE?

By eliminating DME, Disney might lose bookings but some of those lost bookings would be filled by other Guests, Guests who had been unable to get the rooms they wanted due to high occupancy. Besides, even if occupancy dropped a bit, the cost of providing DME to all hotel Guests was greater than revenue that might be lost due to a modest decrease in hotel occupancy.

Ultimately, DME is costing Disney more than it's worth and you, the WDW vacationer, are going to pay the price.

this is so well thought and constructed

however I believe...and frankly I was Involved in the economics in a small way...that just saying “9/11” ignores that it occurred at the intersection of hundreds of factors colliding in a time period. Like a meteor shower.

we could write a hundred pages on this...but this great nonetheless
 

ParentsOf4

Well-Known Member
Original Poster
this is so well thought and constructed

however I believe...and frankly I was Involved in the economics in a small way...that just saying “9/11” ignores that it occurred at the intersection of hundreds of factors colliding in a time period. Like a meteor shower.

we could write a hundred pages on this...but this great nonetheless
The economy was entering a recession but 9/11 was the cliff.

Disney was dealing with thousands of cancellations and closing hotels immediately after 9/11.
 

Sirwalterraleigh

Premium Member
They could just easily increase the resort fee for no other reason, than to increase it (see vegas) no reason to hope folks rent a car.

With the traffic nightmare that can be parts of the resort, the LAST thing you'd want (i'd think) is more cars. We've seen the increase in bus usage, bus only lanes, sky liner etc.. all those things tell me, that Disney is really not in a great position to accommodate MORE cars.

My single guess, is this is strictly contract related, MEARS was making too much money.

I wish I had taken a picture of the lots at boardwalk this past week

the valet lot never had more than TWO cars in it...at all.

only DVC...no rack rooms.

parking is not a problem. And though Disney used to try to “trap” you...it’s quite obvious they view that as untapped revenue now. I think there’s some number crunching going on that points to a brutal, anti-customer reality

and I don’t think “limits attendance” plays into it at all.
 

Sirwalterraleigh

Premium Member
The economy was entering a recession but 9/11 was the cliff.

Disney was dealing with thousands of cancellations and closing hotels immediately after 9/11.

I was there...resort operations 1999-2001 and team Disney in 2002

you don’t have to tell me. But the reality is different than what’s legend on forums...frankly.

but you’re close...the recession was a bigger event and more indicative...not the day.

they began to cross thresholds that you can’t retreat from...as did US/western society.

nobody will ever write it...but a book on Eisner and Iger Fromm 1999-2009 is the least studied and most impactful decade in Disney history. If you step back and look at all the factors
 

Dan Deesnee

Well-Known Member
This most definitely will keep a substantial number of families from going. And families are their bread and butter.

The trips I've taken without our kids are MUCH cheaper. Far less snacks, far less merchandise.

To say the DME was costing more money than it was making them is not possible to know for certain. It's a corporate decision made on a conclusion they believe to be accurate.

As I said in another post, this decision will have ramifications that ripple far into the future. Disney die hards are often created when young. Less families going, less die hards, less AP sales, less DVC owners.
 
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Stitch826

Well-Known Member
Throughout the first 30 years of Walt Disney World's (WDW) existence, WDW Guests paid for their own transportation from Orlando International Airport to WDW.

This model worked for decades. Hotel occupancy remained high and corporate Disney built more hotels to meet ever increasing demand.

9/11 changed everything. Annual hotel occupancy plummeted to 77%. This was a historically bad number for WDW, unprecedented really.

During the years that followed, Disney tried to increase occupancy by offering discounts. Despite these discounts, occupancy remain stubbornly low. Even worse, the important Per Room Guest Spending (PRGS) (i.e. how much Guests spend in each occupied room) flatlined. The discounts were not attracting onsite Guests but were hurting revenue. Something needed to be done.

In an attempt to solve these duel problems, Disney created Disney's Magical Express (DME) in 2005.

Maybe if Disney offered free airport transportation, more Guests would stay onsite. By staying onsite without alternate means of transportation, perhaps these Guests would spend all their vacation dollars at WDW. With hotel occupancy and PRGS stuck in a rut, anything was worth a try.

As it turned out, DME succeeded beyond all expectations. From 2006 to 2008, hotel occupancy jumped to an incredible 89% while PRGS increased 13.1.%. DME was a major winner for corporate Disney.

Fast-forward to 2019.

By 2019, annual hotel occupancy was over 90%. For those who might be unfamiliar with how hotel bookings work, once room occupancy reaches levels such as these, it becomes difficult to fill additional rooms. Check-out dates don't line up with check-in dates. Increasing occupancy becomes nearly impossible. Disney's corporate leadership reiterated this point during several earnings calls. From corporate Disney's perspective, the hotels were "full" in 2019.

Third-party services such as Uber created a second issue. With transportation being easier and cheaper, Guests were leaving the "Disney Bubble", meaning Disney was capturing less of their vacation dollars. Indeed, despite hotel price increases of over 5%, PRGS increased by only 2.3% in 2019, the lowest since the Great Recession of 2009.

DME no longer seemed to be needed to fill rooms, while it also no longer was an effective tool for capturing onsite vacation dollars.

The corporate wheels started to turn. DME was expensive but not working. Why not get rid of MDE?

By eliminating DME, Disney might lose bookings but some of those lost bookings would be filled by other Guests, Guests who had been unable to get the rooms they wanted due to high occupancy. Besides, even if occupancy dropped a bit, the cost of providing DME to all hotel Guests was greater than revenue that might be lost due to a modest decrease in hotel occupancy.

Ultimately, DME is costing Disney more than it's worth and you, the WDW vacationer, are going to pay the price.
You mentioned 9/11 affecting hotel occupancy. Couldn’t it be argued that the pandemic is likely going to have a similar outcome for Disney, at least for a while? Even once social distancing and mask requirements are eliminated and capacity is brought back to normal, it will likely be some time before travel returns back to normal levels, especially for international visitors. Why not keep DME around to attract more visitors?
 

GymLeaderPhil

Well-Known Member
Also factor in that the removal of DME might spur more car rentals resulting in less of a need for those guests to use free internal transportation. Disney has always struggled with bus driver turnover. Less labor and operating cost.

Once COVID related things subside and the Minnie Vans are reintroduced, you can bet they will be up selling this as the way to get from MCO to property.

Operationally, I’m also sure that Disney will be thrilled to no longer have a point of failure with potential logistical challenges/problems of using a third party company to handle luggage.
 

UNCgolf

Well-Known Member
Also factor in that the removal of DME might spur more car rentals resulting in less of a need for those guests to use free internal transportation. Disney has always struggled with bus driver turnover. Less labor and operating cost.

Once COVID related things subside and the Minnie Vans are reintroduced, you can bet they will be up selling this as the way to get from MCO to property.

Operationally, I’m also sure that Disney will be thrilled to no longer have a point of failure with potential logistical challenges/problems of using a third party company to handle luggage.

I don't see why people renting a car wouldn't still use Disney internal transportation to get around the resort. The buses are far more convenient than driving yourself to one of the parks and getting in all the traffic plus having to pay the parking fees.

I have a car when I'm at Disney (because I drive there from Atlanta) and hardly ever use it -- mainly just to go to other resorts for occasional meals. Although I now have to pay the exorbitant resort parking costs (as @Sirwalterraleigh mentioned above with regards to the Boardwalk, when I was at POR last January the lot outside our building was never more than about 5% full), driving to the parks every day would double that expense.
 

GymLeaderPhil

Well-Known Member
I don't see why people renting a car wouldn't still use Disney internal transportation to get around the resort. The buses are far more convenient than driving yourself to one of the parks and getting in all the traffic plus having to pay the parking fees.

I have a car when I'm at Disney (because I drive there from Atlanta) and hardly ever use it -- mainly just to go to other resorts for occasional meals. Although I now have to pay the exorbitant resort parking costs (as @Sirwalterraleigh mentioned above with regards to the Boardwalk, when I was at POR last January the lot outside our building was never more than about 5% full), driving to the parks every day would double that expense.
Resort guests get free parking at the Theme Parks. I’m sure some like the flexibility of hopping in their car whenever they want to leave versus waiting for a bus/boat that could be potentially crowded with sweaty people and screaming children.

Going from one resort to another can also be tricky and time consuming with internal transportation too.
 

GhostHost1000

Well-Known Member
I still think this is a bad move. They could have easily just charged every booking party $50 added onto their vacation cost to use DME and they most likely would have still used it or they could have saved some money eliminating the baggage check at the resorts. I hope MCO realizes how many people will have to checkin at the airport now once this goes away
 

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