News WDW Resorts to add fees for parking

[Buried20KLeague]

Did they have a lot of rooms "under construction"? they play with those numbers to make occupancy seem higher. Its hard to tell what are the real numbers. They have them for sure but to report a number lower than 80% would sound quite an alarm.

Bingo.

 

[Rodan75]

That's not the context in which this was discussed. Lower attendance is actually a good thing if the price increase is a greater percentage. It allows for a reduction in operating costs. You'd rather have $200 per day from 25 guests than $100 per day from 50 guests. The revenue is the same but it's a lot cheaper to serve the 25 guests.

True, but it is a balance. 25 ppl need less food and merch than 50. 50 people out on the wild will buy more licensed product outside the park. Disney has to grow both revenue and profit, so they need attendance growth as well as margin growth.

 

[DisneyCane]

Just raise the damn ticket price if ya need to make more money. This nickel and diming business is for the birds.

It's just like bag fees on an airline. Just charge more for the stinking seat.

At least the airlines have a valid excuse: competition drove them to it keep the fare low.

A Disney vacation is not exactly in competition with much else...

With the resort fees, I think they feel that they are competing with other hotels in the area that charge resort fees and therefore artificially lower the nightly rate on search sites. If you are choosing between The Grand Floridian and the Ritz Carlton and the Ritz charges a resort fee and comes up $35 a night cheaper, you might get tricked into staying there.

Personally, I wish that state legislatures would pass laws that require any mandatory fees to be included in the nightly rate at all hotels. That way, consumers are always comparing apples to apples.

With airline bag fees and such, they are not mandatory fees. If you don't check a bag, you don't pay the checked bag fee. At a hotel with a stupid resort fee, you still have to pay the fee if you don't use the gym or pool or whatever they say the fee is paying for.

 

[drizgirl]

True, but it is a balance. 25 ppl need less food and merch than 50. 50 people out on the wild will buy more licensed product outside the park. Disney has to grow both revenue and profit, so they need attendance growth as well as margin growth.

I absolutely agree. Just because attendance is down does not mean Disney intended for that to happen to make life better for people here wishing for it. It just means they over reached. But they will keep trying.

A company that wants attendance down would not have lifted the blackout days on some passes over Easter last year.

 

[Creathir]

With the resort fees, I think they feel that they are competing with other hotels in the area that charge resort fees and therefore artificially lower the nightly rate on search sites. If you are choosing between The Grand Floridian and the Ritz Carlton and the Ritz charges a resort fee and comes up $35 a night cheaper, you might get tricked into staying there.

Personally, I wish that state legislatures would pass laws that require any mandatory fees to be included in the nightly rate at all hotels. That way, consumers are always comparing apples to apples.

With airline bag fees and such, they are not mandatory fees. If you don't check a bag, you don't pay the checked bag fee. At a hotel with a stupid resort fee, you still have to pay the fee if you don't use the gym or pool or whatever they say the fee is paying for.

It's VERY rare to travel without luggage.

Airlines are starting to charge for carry on items now as well.

It's as you said, a way to artificially compete.

 

[DisneyCane]

It's VERY rare to travel without luggage.

Airlines are starting to charge for carry on items now as well.

It's as you said, a way to artificially compete.

Agree. However, you CAN travel without luggage if you don't want to pay the fee. At least with air travel, the airlines can justify that you are paying a-la-carte for the services you use. The fare gives you a seat and then you pay for other things like checked (and in some cases carry-on) luggage.

Hotels charging resort fees can't justify it in the same way. If they charged separately for the room and fitness center or pool access, then it would be nickel and diming but justifiable. The way resort fees are currently, you can't decide not to use the pool or fitness center to save the fee.

Whenever I am planning a trip, I make a spreadsheet where I put in the rates I find and then add the resort fee for each property so I can compare what I will really pay. There are nights in some hotels in Vegas where the resort fee is almost equal to the base room rate.

 

[CaptainAmerica]

True, but it is a balance. 25 ppl need less food and merch than 50. 50 people out on the wild will buy more licensed product outside the park. Disney has to grow both revenue and profit, so they need attendance growth as well as margin growth.

But what you're describing isn't happening. The metric you're looking for is per capita guest spending. The fewer guests are spending more money. It's not just a matter of lower costs driving margin. Revenue itself is increasing because the increase in per capita guest spending is more than offsetting soft attendance.

I absolutely agree. Just because attendance is down does not mean Disney intended for that to happen to make life better for people here wishing for it. It just means they over reached. But they will keep trying.

That's not what I meant. Obviously Disney would like attendance growth and per capita guest spending growth. But given the PCGS growth, they're okay with the flat-to-slightly-down attendance.

 

[RustySpork]

But what you're describing isn't happening. The metric you're looking for is per capita guest spending. The fewer guests are spending more money. It's not just a matter of lower costs driving margin. Revenue itself is increasing because the increase in per capita guest spending is more than offsetting soft attendance.

Plus those few guests spending more in the parks are helping keep the other flailing business units alive. That earnings report was abysmal beyond parks and resorts.

 

[ford91exploder]

Plus those few guests spending more in the parks are helping keep the other flailing business units alive. That earnings report was abysmal beyond parks and resorts.

Notice how Bob talked about Box office receipts from the movies, NOT the actual CASH the movies generated for the studios.

To stay in business irrespective of all the fancy accounting tricks which work for a while all that matters is that you have the same amount or greater cash in the cashbox at the end of the month than you did in the beginning of the month.

 

[Rodan75]

But what you're describing isn't happening. The metric you're looking for is per capita guest spending. The fewer guests are spending more money. It's not just a matter of lower costs driving margin. Revenue itself is increasing because the increase in per capita guest spending is more than offsetting soft attendance.


That's not what I meant. Obviously Disney would like attendance growth and per capita guest spending growth. But given the PCGS growth, they're okay with the flat-to-slightly-down attendance.

My point is that they were okay with that. I don't think they have that luxury any longer. P&R has to start growing again by double digits, domestically and internationally, to help offset the negative drag of ESPN. It is the only unit big enough to have an impact. The Studios proved that having the biggest year ever, of any other studio ever, isn't enough to overcome the Network division slowing.

Overall, it appears that Disney recognizes that some things need to change (and realized it a couple of years ago) when they started shifting more resources to Domestic Parks, ordered more Cruise Ships and started the privatization of Paris, as well as the more aggressive price hikes. They started those moves too late to have a material impact on earnings in contrast to the slowing of ESPN, but they did trigger those moves.

ESPN and the Television Networks will likely always be profitable, but not likely the profit engine that they were. That means P&R needs revenue and profit growth, Interactive has to get its together and that is likely why we will see a headlining acquisition before 2020.

 

[CaptainAmerica]

My point is that they were okay with that. I don't think they have that luxury any longer. P&R has to start growing again by double digits, domestically and internationally, to help offset the negative drag of ESPN. It is the only unit big enough to have an impact. The Studios proved that having the biggest year ever, of any other studio ever, isn't enough to overcome the Network division slowing.

Maybe you missed the headlines following the earnings release:

Walt Disney Earnings: Strength in Parks Not Enough to Overcome Tough "Star Wars" Comparable
Walt Disney Co (NYSEIS)’s Strength Is Theme Parks
Disney earnings top estimates on theme park, movie strength

 

[Rodan75]

Maybe you missed the headlines following the earnings release:

Walt Disney Earnings: Strength in Parks Not Enough to Overcome Tough "Star Wars" Comparable
Walt Disney Co (NYSEIS)’s Strength Is Theme Parks
Disney earnings top estimates on theme park, movie strength

No...that is my point...a 6% growth wasn't enough and the analysts are already pointing out that Disney is over reaching on price increases that will likely start to put a drag on the division. I think we are mostly in alignment here, I'm just saying that they have to rev up P&R group faster and relying on increased guest spending isn't enough to do it, as proved by this quarter's results.

 

[L.C. Clench]

They're simply banking on the new lands and the 50th bailing them out at this point. They'll keep raising prices and making excuses for the lowered attendance waiting for 2021 when they'll pack everywhere regardless of the going price. Then they'll talk about their long term strategy paying off and Iger will retire letting his replacement take the fall when the bubble may burst in 2023.

 

[CaptainAmerica]

They're simply banking on the new lands and the 50th bailing them out at this point. They'll keep raising prices and making excuses for the lowered attendance waiting for 2021 when they'll pack everywhere regardless of the going price. Then they'll talk about their long term strategy paying off and Iger will retire letting his replacement take the fall when the bubble may burst in 2023.

They don't need "bailing out." The parts posted strong results. Analysts are PRAISING the parks. You're acting like the analysts are unhappy with the parks and Disney needs to turn them around.

 

[Bandini]

They're simply banking on the new lands and the 50th bailing them out at this point. They'll keep raising prices and making excuses for the lowered attendance waiting for 2021 when they'll pack everywhere regardless of the going price. Then they'll talk about their long term strategy paying off and Iger will retire letting his replacement take the fall when the bubble may burst in 2023.

Based on their current business planI wouldn't be surprised if for the 50th, they celebrated by giving guests kazoos and hula hoops. Nothing more. It seems that ever since MDE, lowering my expectations has been my best strategy.

 

[L.C. Clench]

They don't need "bailing out." The parts posted strong results. Analysts are PRAISING the parks. You're acting like the analysts are unhappy with the parks and Disney needs to turn them around.

"Analysts" simply look at the numbers and Disney is able to tell a great story with those. Attendance is down but profits are up because they are charging more and reducing staff. Looks great in the books but the question is what is your long term result with this? Reduced service and higher costs is not exactly a strategy that works for a lot of businesses. They may well be able to sell the same story for a while but there is a threshold where raising costs won't compensate for the potential continued loss of attendance. It's not like we haven't already seen this and it's why Eisner and Wells ended up kicking off the Disney decade and we saw amazing deals on packages to try and bring back guests. Timing wise I think they will be protected from seeing the steady decline based on timing but newness wears off and pricing doesn't.

 

[RobbinsDad]

Based on their current business planI wouldn't be surprised if for the 50th, they celebrated by giving guests kazoos and hula hoops. Nothing more. It seems that ever since MDE, lowering my expectations has been my best strategy.

I agree. We keep referring to the upcoming 50th as some sort of wake up moment for WDW. It may be that we get the most awesome promotion WDW has ever done, but I see nothing from the actions of the past decade to encourage me it will happen. It should at least be Year of a Million Dreams level.

 

[The_Jobu]

I agree. We keep referring to the upcoming 50th as some sort of wake up moment for WDW. It may be that we get the most awesome promotion WDW has ever done, but I see nothing from the actions of the past decade to encourage me it will happen. It should at least be Year of a Million Dreams level.

Don't worry, I'm sure they have all manner of anniversary upsell packages planned to help you celebrate better.

 

[Kingtut]

They don't need "bailing out." The parts posted strong results. Analysts are PRAISING the parks. You're acting like the analysts are unhappy with the parks and Disney needs to turn them around.

I think what isn't being said is that analysts have short time frame they usually look at. P&R is essentially capacity limited at this time - even with the new lands coming on line soon ( a few years) they are not adding greatly to the ability to fit more warm bodies in the parks to spend money. With current prices ( IMHO) reaching a tipping point , P&R does not have the ability to significantly increase growth for the company in the near term. Anything new that P&R wants to build will take years to implement.

Also, I just saw where Disney is upping it's stake in Paris and may end up owning the whole thing sooner rather than later. I'm not sure how this would get rolled in but I can't imagine that it will be positive financially in the short term. It may give them a get out of jail free card on a future earning call.

Fewer guests spending more per head can be profitable as long as the parks remain a desired destination - given our fascination with the fad of the day I can envision a scenario where a "Disney vacation is so yesterday!" happens. Coming back from that would be a difficult endeavor.

 

[CaptainAmerica]

I think what isn't being said is that analysts have short time frame they usually look at. P&R is essentially capacity limited at this time - even with the new lands coming on line soon ( a few years) they are not adding greatly to the ability to fit more warm bodies in the parks to spend money. With current prices ( IMHO) reaching a tipping point , P&R does not have the ability to significantly increase growth for the company in the near term. Anything new that P&R wants to build will take years to implement.

The bolded is where I disagree. There's no evidence that current prices are reaching a tipping point. People have been making that claim for a decade.