Understanding Why Disney's Magical Express Is Ending

[Jrb1979]

The new corporate mantra. Hear it every day.

Agreed. The worst part is how many buy the Covid reasoning.

 

[Kobe!!]

What's the quickest / easiest way to get to Frozen Ever After in Norway at EPCOT at rope drop?

 

[Bpmorley]

I saw plenty of cars available for rental in mid-March. Although it was a business rate, I rented a vehicle for $235 for a week (mid-size and picked an SUV due to my Emerald Aisle membership). But prices are higher now than they have been for a while during non-peak times. I guess that’s what happens when rental car companies dump 1/2 to 3/4 of their inventory during a pandemic.

St Patty's week i paid almost $400 for 9 days in a mid size. Thats over 3 times what I would normally pay. Just got back from clearwater and paid almost 500 for a week in a minivan out of tpa. Rates have skyrocketted

 

[HauntedPirate]

St Patty's week i paid almost $400 for 9 days in a mid size. Thats over 3 times what I would normally pay. Just got back from clearwater and paid almost 500 for a week in a minivan out of tpa. Rates have skyrocketted

That’s what we were looking at for almost the same timeframe before I checked to see what my corporate rate would be. And we wouldn’t have rented at that price, it’s ridiculous. Honestly, that was the first time my corporate was cheaper than what we could find on even Costco Travel.

Personally, I think rental car companies are deliberately keeping inventory lower right now so they can charge exorbitant rates. Then, after people are conditioned to higher rates, they’ll bring more inventory in without reducing prices.

 

[Parker in NYC]

Agreed. The worst part is how many buy the Covid reasoning.

YUP.

 

[Bpmorley]

That’s what we were looking at for almost the same timeframe before I checked to see what my corporate rate would be. And we wouldn’t have rented at that price, it’s ridiculous. Honestly, that was the first time my corporate was cheaper than what we could find on even Costco Travel.

Personally, I think rental car companies are deliberately keeping inventory lower right now so they can charge exorbitant rates. Then, after people are conditioned to higher rates, they’ll bring more inventory in without reducing prices.

I have a friend and his son works for a rental company. He said they were forced to sell off inventory when the country shut down. And until the rest of the country opens they won't be adding any.

 

[JustAFan]

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.

Really don't appreciate your logic and reasoning getting in the way of my convenience.

Seriously though, why not charge for the service? I would pay.

 

[Dranth]

Agreed. The worst part is how many buy the Covid reasoning.

I would bet that in a lot of ways it is the actual reasoning. More than likely they have always had a list of potential cost saving actions floating around they were thinking about. When COVID hit they panicked, messed their pants and with little thought started implementing those half baked ideas.

So, yes, I could see how COVID is the reasoning, it just isn’t a good reason.

 

[Jenny72]

Aside from all the reasons given here, my guess is that they don't want to be in the transportation business any more than they can help it. DME lost your luggage? You go complain to the front desk of the Disney hotel. You waited for 2 hours to get to your resort with DME? You blame Disney. If they exit completely, they not only have cost savings, but they also don't have to deal with the hassle of running a business they're not really interested in (which is why it's contracted with Mears in the first place).

I still think they are botching the transition, though.

 

[Goofyernmost]

A small technical point; I don't believe DVC members can be charged for parking as their dues finance the parking lots.

Also, DME buses were required to depart no later than 30 minutes after the first guest boarded.

That's probably true that they don't pay a parking fee but not because their dues finance the parking lots. It might be in the contract, I don't know because I'm not a DVC member. But the idea of included in the dues is a little shaky, because part of the room rate has always been paying for the parking lots which were probably paid for 40 years ago. I don't know why they don't charge DVC members but I wouldn't be at all shocked if all of a sudden someone realizes that they missed a group and start charging.

 

[Goofyernmost]

Agreed. The worst part is how many buy the Covid reasoning.

It doesn't matter at all who does or doesn't buy it. If you cannot prove they did or didn't it is just another theory. Let's put it this way, it throws enough water on the fire to created a huge smoke screen. Buy the time the smoke clears out the fire will be out as well.

 

[Jrb1979]

It doesn't matter at all who does or doesn't buy it. If you cannot prove they did or didn't it is just another theory. Let's put it this way, it throws enough water on the fire to created a huge smoke screen. Buy the time the smoke clears out the fire will be out as well.

The fire may be out but a lot of destruction happened along the way. Some of the cuts will never come back.

 

[The Colonel]

The parking lots are part of the DVC resort. The resorts and the maintenance are paid for by dues. If they charge for parking there would have to be a corresponding decrease in dues. It is not a profit center for Disney.

 

[TheGuyThatMakesSwords]

Regardless of statistics.... DME is dead. Our family is focusing on alternatives that will actually perform.

 

[Goofyernmost]

The fire may be out but a lot of destruction happened along the way. Some of the cuts will never come back.

I'm sure, but I'm not sure that the drama is all that necessary. We have no way of knowing what exactly they are going to keep or lose. We have some ideas but the only real bad part of that would be the CM's. Show, attractions and other entities come and go regularly, and when the crowd comes back, which it will at some point, those that are still available will return. That happened to thousands of people all over the world due to this virus, we cannot pile all the blame on Disney unless we live in denial about the realities of life.

 

[Goofyernmost]

The parking lots are part of the DVC resort. The resorts and the maintenance are paid for by dues. If they charge for parking there would have to be a corresponding decrease in dues. It is not a profit center for Disney.

You seriously think that Disney does that because they are basically saints. You may not know where the payoff comes from but you can sleep well at night knowing that they get a whole lot of cash from that situation or they wouldn't have done it.

 

[Kobe!!]

MDE of course!

I don't follow?

 

[JoeCamel]

I don't follow?

It was meant to be funny, my reply would have been "I usually walk". Sorry for the humor

 

[the.dreamfinder]

You seriously think that Disney does that because they are basically saints. You may not know where the payoff comes from but you can sleep well at night knowing that they get a whole lot of cash from that situation or they wouldn't have done it.

That’s not what he said. The DVC members have already paid for parking. Therefore, it cannot be surcharged.

 

[kpilcher]

When I used to post regularly on wdwmagic.com, I liked to believe I gained a bit of a reputation for producing charts.

It's been about 4 years since my last chart, so it's time for another.

Let's have a look at Per Room Guest Spending (PRGS), which Disney reports every fiscal quarter (i.e. 4 times each year) in its SEC filings.

Disney defines PRGS as follows:

Per room guest spending is used to analyze guest spending at our hotels and is defined as total revenue from room rentals and sales of food, beverage and merchandise at our hotels, divided by total occupied hotel room nights.​

Disney uses PRGS to track how much you spend at the hotel. Most of this is the cost of the room itself, followed by food. Did you stop by the food court before or after your theme park visit? This is tracked in PRGC. Did you buy some souvenirs at the hotel store? This is tracked in PRGC.

Here's PRGS (per quarter) for the 10 years prior to 2020. (I decided not to include 2020. A disproportionate number of Value and Moderate Resort rooms were closed, skewing the numbers. This makes 2020 extremely difficult to compare to previous years using publicly available data.)

View attachment 548414

Yay!!! An actual @ParentsOf4 chart!!! That’s not only informative, it ends a recession on this forum Seriously, your perspective is always welcome.