Understanding Why Disney's Magical Express Is Ending

[ParentsOf4]

Just one question for clarification if you will?
If the guest opts to pay as they go and not have room charging is their spending captured?

It's my understanding that PRGS represents register receipts. In other words, PRGS doesn't track who spent money at a hotel's restaurant or store, only how much was spent at that restaurant or store. (This does not mean that Disney does not know exactly how much you charged; only that they don't report it in PRGS.)

With this in mind, most Guests eating or shopping at most Disney hotels (e.g. Port Orleans Riverside) are staying at that hotel. Still, it's not perfect. Several Deluxe Resort restaurants attract a disproportionate number of non-resort Guests. I'm guessing the three Monorail Resorts and Disney's Boardwalk are the best examples of this.

Conversely, some extremely popular hotel restaurants (e.g. Beaches & Cream) are difficult to book if you are not staying onsite. Even if you are not staying at the Beach Club, if you are eating at Beaches & Cream, chances are you are staying at one of Disney's hotels.

 

[JoeCamel]

It's my understanding that PRGS represents register receipts. In other words, PRGS doesn't track who spent money at a hotel's restaurant or store, only how much was spent at that restaurant or store. (This does not mean that Disney does not know exactly how much you charged; only that they don't report it in PRGS.)

With this in mind, most Guests eating or shopping at most Disney hotels (e.g. Port Orleans Riverside) are staying at that hotel. Still, it's not perfect. Several Deluxe Resort restaurants attract a disproportionate number of non-resort Guests. I'm guessing the three Monorail Resorts and Disney's Boardwalk are the best examples of this.

Conversely, some extremely popular hotel restaurants (e.g. Beaches & Cream) are difficult to book if you are not staying onsite. Even if you are not staying at the Beach Club, if you are eating at Beaches & Cream, chances are you are staying at one of Disney's hotels.

I would never expect it to be exact but once the 5G chips are enabled and all the antennas installed the mouse will have it down to the penny I'm sure
Thanks

 

[bcoachable]

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

Now we’re talking!!!!

 

[uncle jimmy]

More threads with Graphics and concept drawings, I miss those days!

 

[UNCgolf]

Well clearly Q3 is the least busy time of the year based on those charts.

 

[ParentsOf4]

Well clearly Q3 is the least busy time of the year based on those charts.

Time for another chart!

PRGS is not necessarily the best indicator of crowd levels. Instead, PRGS gives you some insight into hotel discounts.

Hotel occupancy is a better indicator. Not surprisingly, the first quarter (spring break) and fourth quarter (Thanksgiving and Christmas) tend to be the most crowded times of year.

 

[UNCgolf]

Time for another chart!

PRGS is not necessarily the best indicator of crowd levels. Instead, PRGS give you some insight into hotel discounts.

Hotel occupancy is a better indicator. Not surprisingly, the first quarter (spring break) and fourth quarter (Thanksgiving and Christmas) tend to be the most crowded times of year.

View attachment 548507

Looks like Q3 is still the clear winner in terms of least busy times. I wonder what was going on in 2010 to make Q3 so busy (compared to the rest of the year, at least).

 

[ParentsOf4]

I wonder what was going on in 2010 to make Q3 so busy (compared to the rest of the year, at least).

"Free dining" ran from August to December that year. Compare 2010Q3 Per Room Guest Spending (very low) with 2010Q3 hotel occupancy (very high).

 

[Nubs70]

All you have to do is ask.

The numbers for the 4 calendar quarters were $372, $0, $356, and $363.

View attachment 548460

if I am reading this correctly. Interesting that Q4 is pretty static for the last 4 years in spite of increased prices.

 

[Notes from Neverland]

Time for another chart!

PRGS is not necessarily the best indicator of crowd levels. Instead, PRGS give you some insight into hotel discounts.

Hotel occupancy is a better indicator. Not surprisingly, the first quarter (spring break) and fourth quarter (Thanksgiving and Christmas) tend to be the most crowded times of year.

View attachment 548507

Outstanding charts! I'd be very curious to see how occupancy has shifted over the years based on hotel category, assuming the data is out there. Deluxe resorts have reportedly seen lower occupancy over the past few years and I'd love to see how it compares.

 

[Grace1626]

Man, those dot.com years

Indeed. We started going to WDW in 1998, our first ride there from MCO was in a Mears van. The cost was pp, It was a white knuckle trip the whole way! Weaving in and out of traffic at speed. No one said a word. Two gals literally leaped out of the van when we got to their hotel. The driver yanked their luggage out, then squealed out of that driveway as our kids yelled. We finally got to Dixie Landings safely. Never took Mears vans again. Our kids still refer to it as our first thrill ride at WDW.

From then on, we hired a car service, which turned out to be beneficial due to our new DVC membership. It meant we had a 30-minute stop at Publix for groceries. So we never did use DME.

We did, and still do, use the taxi service available at every WDW hotel we have stayed at, on property when we want a quick trip. Cheaper than the Mini vans.

 

[ParentsOf4]

Outstanding charts! I'd be very curious to see how occupancy has shifted over the years based on hotel category, assuming the data is out there. Deluxe resorts have reportedly seen lower occupancy over the past few years and I'd love to see how it compares.

Disney does not report occupancy by hotel category, although Disney has struggled at times to fill its Deluxe Resorts. It's one of the reasons some Deluxe Resort rooms have converted to DVC.

Disney has publicly released hotel occupancy data from as early as 2002. The following shows hotel occupancy for Disney's fiscal year, which runs from October to September.

 

[uncle jimmy]

Time for another chart!

PRGS is not necessarily the best indicator of crowd levels. Instead, PRGS gives you some insight into hotel discounts.

Hotel occupancy is a better indicator. Not surprisingly, the first quarter (spring break) and fourth quarter (Thanksgiving and Christmas) tend to be the most crowded times of year.

Looking at reopening of 2020 and into 2021, the discounts have been there. Safe to think they'll be there for sometime or will demand to get back to WDW cause them to pause discounts with higher demand.
Would you concern this to be similar to the time after 9/11 or the housing/stock market crash?

 

[chriskbrown]

The analysis is spot on - someone convinced Disney execs that subsidizing DME was no longer needed. I subsidizing because yes pre-DME many of us paid our way to/from MCO in some form. Notice that the cost of a hotel room will not be going down come 2022, Disney just created more margin by reducing expenses. And trust me these numbers are watched and published every single day, broken down in so many ways. By hotel, by segment, by park, heck by attraction even.

 

[leonalvarado]

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.

DME was a contract with Myers Coach line so it had a cost associated with it but not as much as if Disney themselves owned the fleet. Prices for any of the Disney resorts have been escalating every year at any rate. If I were them however, I would still offer the service for an additional cost which would cover the cost of the contract with Myers. It certainly was a great feel to land in Orlando and starting your Disney experience right out of the gate. Disney is trying to find ways to rebound financially form the pandemic. Last year's stock dividends were froze until this year. That onto itself tells you were the corporate minds is at. Elevate stock value and instill the stock holder's trust. What does that mean to you? You'll pay more for everything anyway so why not keeping the bus service for an extra charge and keep the positive Disney vibes going?

 

[Sirwalterraleigh]

Looking at reopening of 2020 and into 2021, the discounts have been there. Safe to think they'll be there for sometime or will demand to get back to WDW cause them to pause discounts with higher demand.
Would you concern this to be similar to the time after 9/11 or the housing/stock market crash?

as of right now...this doesn’t line up to either.

the housing crash was actually one of iger’s biggest achievements.

it sucks for us....but they completely outsmarted their consumers

 

[Sirwalterraleigh]

DME was a contract with Myers Coach line so it had a cost associated with it but not as much as if Disney themselves owned the fleet. Prices for any of the Disney resorts have been escalating every year at any rate. If I were them however, I would still offer the service for an additional cost which would cover the cost of the contract with Myers. It certainly was a great feel to land in Orlando and starting your Disney experience right out of the gate. Disney is trying to find ways to rebound financially form the pandemic. Last year's stock dividends were froze until this year. That onto itself tells you were the corporate minds is at. Elevate stock value and instill the stock holder's trust. What does that mean to you? You'll pay more for everything anyway so why not keeping the bus service for an extra charge and keep the positive Disney vibes going?

stock dividends continue to prove the system is rigged...no way a company that suffered an estimated 80% disruption should have even thought about dividends. I’m glad they didn’t go there...but if they had - nothing would have stopped them.

 

[Andriadisney]

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.

Thank you for this post. That was well written and easy to understand. It sounds like you are a Disney insider? Or possibly a teacher! Really nice post!!!

 

[ParentsOf4]

Looking at reopening of 2020 and into 2021, the discounts have been there. Safe to think they'll be there for sometime or will demand to get back to WDW cause them to pause discounts with higher demand.
Would you concern this to be similar to the time after 9/11 or the housing/stock market crash?

Today is a different market.

The stock market is at record levels. Housing remains strong. DVC resale prices are at record levels. The demand is there.

Despite what you might read, the unemployment rate is at a somewhat normal level at the moment; not near historic highs or lows. Still, several industries are experiencing high rates of unemployment, greatly impacting the real rate of unemployment, so the distribution of those unemployed is not even.

IMO, the rate of vaccination is Disney's biggest hurdle to WDW returning to normal. (This assumes vaccines remains effective against future variations.)

 

[chriskbrown]

Disney is counting on strong to historic demand after the next couple of years. People want to travel - went to the beach for Spring Break and it was quite crowded. If anything, Disney has a supply problem coming up