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Understanding Why Disney's Magical Express Is Ending
- Thread starter ParentsOf4
- Start date
I greatly appreciate the speculation about what will happen to PRGS. It's a complex topic and I'm not sure what will happen.
Years ago, I posted an analysis showing how increased ticket prices hurt discretionary spending (what Disney refers to as "merchandise, food, and beverage" sales). Similarly, as others on this thread suggest, Guests who pay more to get to WDW will have less to spend at WDW.
However, please keep in mind that hotel occupancy and PRGS are two different things, and how these are impacted might be different.
Paying for airport transportation will almost certainly impact hotel occupancy - more people will stay offsite. Is it 1%? Is it 10%? Presumably, Disney has data indicating it is closer to the lower number. Disney would be crazy to end MDE if they think occupancy will drop 10%.
To understand why it would be crazy, you have to keep in mind how hotel margins work. Hotel costs are relatively fixed. A 10% increase in the number of Guests staying at a hotel does not result in a 10% increase in Disney's costs. Based on historical data and under normal operating conditions, Disney's break-even seems to be somewhere around 70-75%. Once occupancy gets higher, it's mostly profit. This means that a drop from 90% to 80% represents a tremendous decrease in profitability.
How the end of DME affects PRGS going forward is more complex. Remember, PRGS is spending per occupied room, which is independent of occupancy. If I'm at a Disney hotel, I'm still going to eat breakfast, lunch, and dinner. And if I'm using Grubhub or DoorDash to get my food delivered to the hotel, Disney loses my money even if I used DME to get to the hotel. (Although Disney's hotels sell merchandise, this is the smallest component of PRGS.) So I'm not sure how the end of DME will affect PRGS.
However, the end of MDE might impact what Disney refers to as Per Capita Guest Spending (PCGS):
My guess is that most discretionary spending occurs at the theme parks, not the hotels. I can envision how paying for airport transportation will have a bigger impact on Guest spending at the parks (i.e. PCGS).
Years ago, I posted an analysis showing how increased ticket prices hurt discretionary spending (what Disney refers to as "merchandise, food, and beverage" sales). Similarly, as others on this thread suggest, Guests who pay more to get to WDW will have less to spend at WDW.
However, please keep in mind that hotel occupancy and PRGS are two different things, and how these are impacted might be different.
Paying for airport transportation will almost certainly impact hotel occupancy - more people will stay offsite. Is it 1%? Is it 10%? Presumably, Disney has data indicating it is closer to the lower number. Disney would be crazy to end MDE if they think occupancy will drop 10%.
To understand why it would be crazy, you have to keep in mind how hotel margins work. Hotel costs are relatively fixed. A 10% increase in the number of Guests staying at a hotel does not result in a 10% increase in Disney's costs. Based on historical data and under normal operating conditions, Disney's break-even seems to be somewhere around 70-75%. Once occupancy gets higher, it's mostly profit. This means that a drop from 90% to 80% represents a tremendous decrease in profitability.
How the end of DME affects PRGS going forward is more complex. Remember, PRGS is spending per occupied room, which is independent of occupancy. If I'm at a Disney hotel, I'm still going to eat breakfast, lunch, and dinner. And if I'm using Grubhub or DoorDash to get my food delivered to the hotel, Disney loses my money even if I used DME to get to the hotel. (Although Disney's hotels sell merchandise, this is the smallest component of PRGS.) So I'm not sure how the end of DME will affect PRGS.
However, the end of MDE might impact what Disney refers to as Per Capita Guest Spending (PCGS):
Per capita guest spending is used to analyze guest spending trends and is defined as total revenue from ticket sales and sales of food, beverage and merchandise in our theme parks, divided by total theme park attendance.
My guess is that most discretionary spending occurs at the theme parks, not the hotels. I can envision how paying for airport transportation will have a bigger impact on Guest spending at the parks (i.e. PCGS).
Last edited:
Bpmorley
Well-Known Member
I was thinking more about length of stay.
Parker in NYC
Well-Known Member
I can't understand people paying the exorbitant prices for Disney resorts, park tickets, and food and then griping about parking fees. My friend's mother took us on a trip a few years back for a stay at AKL. We flew in from NY a day earlier and she joined us a day later from DC. I remind you that she paid for our stay. Anyway, she found a flight to Sanford Airport that was something like $80 cheaper. But then still had to figure out how to get to Disney from the airport and lost out on free DME and baggage service... and she doesn't drive anymore. But she saved the going rate for what, $80 + the cost of the Uber since she couldn't find the shuttle - plus the transportation back.
Bpmorley
Well-Known Member
I think its just the point. You've already knocked me over the head now you want to shake my pockets out for the spare change leftover. Personally just add it to the cost of the room. I won't stay anywhere if there is a parking fee.
bcoachable
Well-Known Member
I’m left wondering if disney has something up their sleeve to offer the on property guest if Hotel occupancy drops significantly- like say a max pass-
Goofyernmost
Well-Known Member
And don't forget, if you spend the day at Disney Springs or Golfing or one of the many other activities that you might visit you have to still pay that $25 (or whatever it is now) parking fee that someone offsite wouldn't have to pay. Especially at the startup of normal. Offsite hotels will be competing with each other to get the guest to stay with them. One quick way to look good is to have a big old sign that says "FREE PARKING".
Shortly after Disney instituted the resort parking fee, I went down there to visit WDW, Uni and others. The place I stayed had a giant sign that could be seen from I-4 that read... "We don't charge for parking and never will."
HarperRose
Well-Known Member
Exactly for that reason.
artvandelay
Well-Known Member
Didn’t they replace EMH with early access to each park everyday? On @lentesta ‘s podcast he said this is a huge incentive to staying on property.
UNCgolf
Well-Known Member
They did -- although it's only 30 minutes early -- and I'm sure part of the reason for the change was an attempt to keep guests on-site.
However, there aren't that many people who rope drop. If there were, it would no longer be especially beneficial. It should drive people who care about rope dropping to stay on-site, but it's probably not going to matter that much to the majority of Disney guests.
artvandelay
Well-Known Member
Very true. I’d rather EMH over this, especially night EMH at MK. One Easter, we were at MK past 2am. It was great.
Pffft... where’s the revenue and profit in that?
I truly think the mindset these days is - “If we can monetize it, we will do it.” Sadly.
UNCgolf
Well-Known Member
I would also much rather have the parks open late at night than early in the morning. It made sense to do both from time to time to cater to all types of guests. I imagine now you'll just have to pay for one of the special events to get any extra night time access.
I recall approx 15 years ago evening EMH for MK during last week of the year on certain nights was 1am-4am. MK reopened at 7am.
Goofyernmost
Well-Known Member
What would be the game killer for me would be the fact that the room prices are already very high for what you get. In business you want people to come you provide a place for them to park their car. I was in Atlanta a few years ago staying at the Hilton, if I remember correctly. The parking fee was $50 per night, however, this was in the heart of the city and there were no parking areas close by. Theirs was under the hotel which I can imagine cost a lot to build. That said, the room rate was around $100 per night, not $400 to $600 and all Disney had to do to create their parking lot was to pave an area of land (above ground) that was paid for probably by the time Walt died. Theirs was pure unadulterated greed. That is why there is griping about it. It is a perk that at the very least should be given to those people that are already willing to be fleeced with the room rate. Those rates that they charge now already had parking figured in before they added the parking rate. So, in other words, the parking fee was already in the room cost and then they added a second parking fee on top of that. No one saw the room rates drop by the same amount of the leveled parking fee did they?
The Lochness Monsta
Well-Known Member
They'll bring it back with a price tag. They just don't want to give it for free anymore.
jt04
Well-Known Member
With minimum wage increasing to 15 they won't be able to. Personally I welcome the changes. At least their potential.
I would have no complaint, for instance, with paying an up charge for direct bus service between the parks.
Or an annual parking permit. AAA used to offer a sweet deal. Disney could offer something similar though I know it would cost much more due to the increase in demand. But another potential revenue stream just sitting there.
peter11435
Well-Known Member
This has nothing to do with minimum wage increasing. At all.
jt04
Well-Known Member
Likely speeding up the process though. I agree such changes have been inevitable but the increase in labor costs is a big deal Disney will have to make major adjustments for. And it all can be a net positive for everyone. IMO.
lentesta
Premium Member
It's a huge advantage - at least an hour less standing in line per day, and probably closer to two at the MK. And that's at 35% park capacity.