What is Next for Disney for 2013-2019?

[Pixiedustmaker]

This is a good point. I see here a lot something along the lines of "everyone who will come has come" etc. Or, "I know a lot of people who say they won't do this or that." The fact of the matter is, no matter how many people you think you know, it is such an insignificantly small amount and narrow demographic sample that it can, in no way shape or form be applied to any trend that a company is seeing.

Pixiedustmaker has it right. There is a massive market out there that can still be obtained by Disney, if they want.

There's a lot of rumors about the key demographics at WDW. For a while, folks said that the poor upkeep was due to the fact that a lot of the visitors were the once in a lifetime crowd that wouldn't notice, or it wouldn't matter as they had already decided to come to the property.

Then you've got a rash of WDW television commercials bankings on the nostalgia of WDW, to lure back in repeat customers. Obviously, NextGen/MagicBand is for repeat customers, even if they only come every 7 years. I doubt that a first time visitor from Mars would immediately go online and start reserving their Fast Passes as they'd have no idea as to ride preferences.

For a while it was Uni/SeaWorld mooching customers off of WDW. Now, with the huge increases at Potterland, you've got a legitimate theme park experience which can stand toe to toe with Disney and draw in new customers for themselves.

Obviously, WDW is still a money maker for the company, but it will be interesting to see the 2012 attendance numbers.

Per the following article, http://articles.latimes.com/2012/no...-theme-park-cruises-quarterly-report-20121108, attendance is actually down at WDW:

"The unit benefitted from the launch of a new cruise ship and increased attendance at its parks in Hong Kong and Paris. Attendance was down at Walt Disney World in Orlando, Fla., but up at Disneyland and California Adventure in Anaheim thanks to the new Cars Land attraction, resulting in an overall 3% jump in domestic attendance.

Walt Disney Co. has been investing heavily in its theme parks over the last few years, including not only a $1.1-billion upgrade of California Adventure but new attractions in Hong Kong, the construction of a park in Shanghai and an expansion of Fantasy Land at Walt Disney World."


I think the big picture is that WDW is looking like the company's neglected property, which still makes money, but is not as profitable as it could be and is in danger of stagnant or negative growth over the next decade.

 

[Pixiedustmaker]

I think Disney feels they don't need to build, let the other companies build...and people will still come to Disney. As many have said on this board, the numbers don't show a dramatic drop in attendance...so Disney doesn't need to build rides, they just need to build more shops, restaurants, hotels to get the revenue.

Why build an eticket ride if it doesn't dramatically increase attendance across the board?
So far NFL hasn't brought the numbers Disney expected. I don't think Disney is in any hurry to do anything.

Well, this thinking seems to be contrary to recent experiences with Carsland and what Al Lutz reported with regards to the brass freaking out that FLE isn't getting the type of reception they want, and that it won't draw in the number of guests they're hoping for.

Carsland is a big new land, well done, with an E-Ticket and it has draw in monsters crowds and it will pay for itself. Don't why a new highly detailed land and E-Ticket won't work for WDW, they announced Avatarland and at least attempted something with FLE.

 

[MattM]

There's a lot of rumors about the key demographics at WDW. For a while, folks said that the poor upkeep was due to the fact that a lot of the visitors were the once in a lifetime crowd that wouldn't notice, or it wouldn't matter as they had already decided to come to the property.

Then you've got a rash of WDW television commercials bankings on the nostalgia of WDW, to lure back in repeat customers. Obviously, NextGen/MagicBand is for repeat customers, even if they only come every 7 years. I doubt that a first time visitor from Mars would immediately go online and start reserving their Fast Passes as they'd have no idea as to ride preferences.

For a while it was Uni/SeaWorld mooching customers off of WDW. Now, with the huge increases at Potterland, you've got a legitimate theme park experience which can stand toe to toe with Disney and draw in new customers for themselves.

Obviously, WDW is still a money maker for the company, but it will be interesting to see the 2012 attendance numbers.

Per the following article, http://articles.latimes.com/2012/no...-theme-park-cruises-quarterly-report-20121108, attendance is actually down at WDW:

"The unit benefitted from the launch of a new cruise ship and increased attendance at its parks in Hong Kong and Paris. Attendance was down at Walt Disney World in Orlando, Fla., but up at Disneyland and California Adventure in Anaheim thanks to the new Cars Land attraction, resulting in an overall 3% jump in domestic attendance.

Walt Disney Co. has been investing heavily in its theme parks over the last few years, including not only a $1.1-billion upgrade of California Adventure but new attractions in Hong Kong, the construction of a park in Shanghai and an expansion of Fantasy Land at Walt Disney World."


I think the big picture is that WDW is looking like the company's neglected property, which still makes money, but is not as profitable as it could be and is in danger of stagnant or negative growth over the next decade.

But attendance can't be down because @Jimmy Thick says everything is fine. It's true, I read that on the Internet.

 

[juniorthomas]

It may cost more, but not double (For disney). Disney should eat the dollar or two profit (even though they won't) knowing the money could come right back to them.

American companies can only be so cheap and automate everything. If they don't pay anyone for anything, how do they expect local consumers to buy their products or services? But American consumers do not want to pay a little more. It's a nasty loop to think about.

Disney could eat a dollar or two more, but they also have to respond to their shareholders. I'm guessing a lot of shareholders are more interested in earning more money than attempting to increase production in countries where unions and/or high wages do not necessarily translate into better products. Why would they add a step in an attempt to get their money back, when they could keep production as is and have the money outright?

 

[CinematicFusion]

Well, this thinking seems to be contrary to recent experiences with Carsland and what Al Lutz reported with regards to the brass freaking out that FLE isn't getting the type of reception they want, and that it won't draw in the number of guests they're hoping for.

Carsland is a big new land, well done, with an E-Ticket and it has draw in monsters crowds and it will pay for itself. Don't why a new highly detailed land and E-Ticket won't work for WDW, they announced Avatarland and at least attempted something with FLE.

It's just the impression at disney world I get. They built cars land because California adventure had terrible attendance. WDW doesn't have terrible attendance and they haven't done much to the parks since 2006 as far as major rides. That is a long time not to built in Epcot, AK, DHS(2008 they did build toy story mania)

So have they learned anything at WDW with building new fantasyland?
1. Do they feel they shouldn't open new lands in phases?
2. Do they feel they missed by not adding a major e ticket ride and that is the reason for the lack of interest?
3. Do they feel no matter what they build attendance will not go up substantially at the Orlando parks?

We will find out the answer in August. Does Disney make a mega splash or do they just hype up Dwarfs mine train ride and Grand Floridean expansion?

 

[GiveMeTheMusic]

It's not rocket science. Attendance and guest spending will skyrocket if guests the world over are given a thrilling new incentive to visit. The installation of Potter at UOR has proven this, Cars Land at DCA has proven this and time and time again through Disney's history, new attractions have generated interest and then cash.

New Fantasyland has 2 new rides, one of which hasn't even opened yet.

This is not a hard question. If they want to see WDW's spending/occupancy numbers go through the roof, they need a billion dollar expansion that includes at least one mind-bending E-ticket based on a super hot property. Each park needs to be gone through with a fine-toothed comb, as there are glaring examples of outdated and unused spaces (especially in Epcot).

It's just not that hard.

That said, if I was Iger, I'd be asking WDI the hard questions about why their work costs twice as much as Universal Creative. Then I'd fire a bunch of people.

 

[GoofGoof]

But attendance can't be down because @Jimmy Thick says everything is fine. It's true, I read that on the Internet.

Per the Q1 earnings call WDW attendance was actually up a hair. Depends on what time period you compare it to, but I think we can all agree that it's not growing at 30%+ like Universal. They are barely holding their ground.

 

[GoofGoof]

It's not rocket science. Attendance and guest spending will skyrocket if guests the world over are given a thrilling new incentive to visit. The installation of Potter at UOR has proven this, Cars Land at DCA has proven this and time and time again through Disney's history, new attractions have generated interest and then cash.

New Fantasyland has 2 new rides, one of which hasn't even opened yet.

This is not a hard question. If they want to see WDW's spending/occupancy numbers go through the roof, they need a billion dollar expansion that includes at least one mind-bending E-ticket based on a super hot property. Each park needs to be gone through with a fine-toothed comb, as there are glaring examples of outdated and unused spaces (especially in Epcot).

It's just not that hard.

That said, if I was Iger, I'd be asking WDI the hard questions about why their work costs twice as much as Universal Creative. Then I'd fire a bunch of people.

The real question is does management really want to increase attendance that much? The current infrastructure is stretched to breaking. Transportation and parking are a mess. Nextgen shows a clear trend not to try to increase attendance, but to milk more cash out of each guest coming through the door. New attractions cost initial money to build but maybe more important money to operate and maintain. With increased attendance comes increased revenue, but also increased costs. DCA and IOA both desperately needed to draw more guests. MK, not so much.

 

[Nubs70]

Before Potterland, Uni didn't have much going on, I'd pretty much written off ever visiting after going many years ago before IOA. Potterland is a game changer, and it will guarantee return visits from Potter fans, and the general theme park audience. By adding the Potter mine train ride, Uni will become more of a "must see" for families going to Orlando, they will make money off of it 15, 20 years, and more, in the future as Harry Potter lives on in the books and DVDs. They obviously aren't going to be spending $$$ every single year.

Uni was pretty trashy, IMHO, but they made some pretty good investments so I think I'll visit them the next time I'm in Orlando, and I'm not alone. I think IOA went up about 2.3 million guests a year due to Potter, so let's say that Gringotts increases attedance up to only 3 million additional guests a year. Let's say that after all is said and done, Uni *nets* $100 dollars profit from each additional visit (I'm thinking park admittance, plus food, plus merchandise), so that would be a net profit of $300 million per year, over ten years that is $3 billion dollars. So you can see that huge amounts of money can be made in the theme park business if you do something amazing that guarantees attendance year after year.

Despite fans complaints about upkeep at WDW, the resort still rakes in hundreds of millions of dollars of profit each year, though Uni has taken a slice of their profits.

When WDW looks to invest in a new project or improve quality, it is looked at through the lens of Net Present Value or NPV not simple ROI. NPV evaluates the quality of a project by the expected discounted returns. In common terms, will the returns be better than using the CAPEX funds to invest in something with higher return or pay down debt. If NPV for a project in negative, the investment has reduced the value of the company as a whole, even though the project may have a positive ROI. Simply stated, the funds from CAPEX were put to better use than where they were spent.

Think of having $800B CAPEX to put to use. You can spend it in Orlando or Shanghai. Which will provide a greater increase in value to WDC as a whole?

 

[Pixiedustmaker]

They built cars land because California adventure had terrible attendance. WDW doesn't have terrible attendance and they haven't done much to the parks since 2006 as far as major rides. That is a long time not to built in Epcot, AK, DHS(2008 they did build toy story mania)

So have they learned anything at WDW with building new fantasyland?
1. Do they feel they shouldn't open new lands in phases?
2. Do they feel they missed by not adding a major e ticket ride and that is the reason for the lack of interest?
3. Do they feel no matter what they build attendance will not go up substantially at the Orlando parks?

We will find out the answer in August. Does Disney make a mega splash or do they just hype up Dwarfs mine train ride and Grand Floridean expansion?

It took Burbank a longtime to admit that DCA 1.0 was a mistake. Iger was semi-blunt about it, but he sort of hedged his response by talking about the lack of Disney characters, John Lasseter was very blunt about it at a fan event and he shepherded in Carsland.

It is no secret that the top brass have a problem with admitting their failures are due to restraining WDI with ludicrous budgets and seeing with how cheap they can get by in a new attraction. The whole "we should have opened it in phases" talk is the same thing as the dog ate my homework. I think most of us would agree that if they debuted an E-Ticket Mermaid, with a Beauty and the Beast E-Ticket going in, they'd get the foot traffic they want. They copied and pasted from DCA a ride with mixed reviews. I have read numbers that say that FLE is about $400 million, they do have a great restaurant (Be Our Guest), Dumbo's shaded queue is great for parents, and Enchanted Tales with Belle looks great, but everything else is just landscaping, without a high quality ride.

I doubt that they will admit that FLE isn't working out (before 7DMT opens no less). There is a lot that was needed with FLE, but it doesn't change the fact that MK doesn't have any rides when compared to Disneyland.

And as beautiful as BoG and Belle's village is, Mermaid doesn't match with anything, Dumbo's Circus doesn't match with anything . . . it's not like you're in a place like Carsland.

 

[RSoxNo1]

But since Potter opened, attendance at WDW has not decreased:
2007 2011
MK. 17.06. 17.142
EPCOT. 10.93 10.825
DHS. 9.51. 9.783
AK. 9.49 9.699
Total. 46.99. 47.449

The growth is basically flat, but the opening of Potter did not cut into attendance. They did not take the big hit that many people expected/assume. Very little was added to WDW in those 5 years, but they maintained attendance. IMHO that is partially due to guests who visited Orlando for Potter and still spent some time at WDW. The room occupency rates are down some, but not enough to be considered a big hit. I know those numbers can be manipulated by taking rooms out of service, but since Potter opened Disney has added several thousand rooms to the inventory so even if they took others out of service it evens out. It is possible that when Potter 2.0 opens and the additional resorts at Universal open this trend will change, but it didn't with original Potter even though IOA had 30%+ growth in attendance. The one area that WDW has to be taking a hit on is merchandise. The quality of offerings has gone down hill while Universal has been pumping out Potter goods.

And Bob Iger initially stated that bringing more people to central Florida is a good thing (I believe his words were, "a rising tide lifts all boats"). What Potter shows and Carsland confirms is that the theme park market still has ample room for growth if a company is willing to invest in quality. Disney hasn't been, Universal has.

Disney's assessment of theme parks in Florida has been incorrect, and rather than continue to grow the parks with new attractions, they're sticking with the tried and untrue methods of attempting to hold guests captive. Rather than build attractions that give guests a reason to stay, they're trying to force them to stay through a cruiseline mentality. When people feel like they're forced into doing something they're less receptive to it. This is an absolutely brainless waste of money and I expect it to backfire in many different ways.

 

[WDW1974]

Good point. Very few people would know that TDS is fantastic. Us Disney message boarders are a very small group in the Universal scheme of things.

I know. Been there. Done that. Can NOT wait to do it all over again.

TDS is something to behold.

(Congrats to Ben!)

 

[WDW1974]

The real question is does management really want to increase attendance that much? The current infrastructure is stretched to breaking. Transportation and parking are a mess. Nextgen shows a clear trend not to try to increase attendance, but to milk more cash out of each guest coming through the door. New attractions cost initial money to build but maybe more important money to operate and maintain. With increased attendance comes increased revenue, but also increased costs. DCA and IOA both desperately needed to draw more guests. MK, not so much.

True, WDW though certainly wants to grow attendance. That some folks think they've reached some imaginary threshold where they can't hold more people is crazy.

I know MK has seen huge crowds of late (although one would wonder how much FP, huge strollers and ECVs play in the 'feels packed' dept.) ... but two sets of friends were at EPCOT on different days last week and said it was dead. Disney needs to add capacity to the MK because it is woeful (New Fantasyland is about 20% of what's needed), and it also needs to attract folks to the other parks with compelling product, which also will mean they aren't clogging up the MK.

 

[alissafalco]

I think this is a real possible scenario, although no necessarily a result of Potter. I would think a destination like WDW would eventually reach a point where everyone who is interested in visiting already is, so it would get to a point where it was impossible or at least financially impractical to significantly increase attendance any further. We saw IOA attendance jump 30% when Potter opened, but I don't think it would be possible for Disney to build anything that would get 30% more people to come to WDW that hadn't already planned to come.

Oh yes, Star Wars land would.

 

[alissafalco]

You hit on a real threat to WDW. If Universal makes a big effort to build more resorts then they could threaten room occupancy at WDW. I don't think the rooms that exist now or even the proposed new resorts will tip the scales, but if Universal ends up with say 10,000 rooms that could be a pretty big threat. People could choose to stay at Universal and visit WDW from there rather than the other way around. Disney uses things like DME and free dining packages to keep people on property, but if Universal reached economies of scale with number of rooms they could start matching these offers.

Do you know about any of the details of the proposed on site hotels being built at UNI? Did they start construction? Where will they be located? What will the price point be?

 

[George]

Great discussion. Ultimately, what we all care about is plans for entertainment expansion. The only thing we know for sure is that the Mine Train is getting built. The most likely unknowns seem to be Avatar, Pixar place expansion, and updated/upgraded Imagination. Disney has gotten to a point where I would be overjoyed if they did these 3 things by 2019 and that doesn't seem to really be that much.....

 

[George]

Do you know about any of the details of the proposed on site hotels being built at UNI? Did they start construction? Where will they be located? What will the price point be?

All I know about for sure is this - http://media.universalorlando.com/PressRelease/detail.aspx?id=1351

It's a great move. Uni really needed some more value oriented accomodations.

 

[GoofGoof]

Do you know about any of the details of the proposed on site hotels being built at UNI? Did they start construction? Where will they be located? What will the price point be?

I'm not an expert, but I believe they already broke ground on their 4th hotel, Cabana Bay Beach resort which is on scale with the size of the moderate and value resorts at WDW (around 1,800 rooms). From what I have read it is expected to open in 2014 and will have both family suites and regular rooms offered at lower prices (equivalent of values and/or moderates at WDW). The downside to lower prices is it is rumored to not be offering the front of the line thing for free like the other Uiversal Resorts. The location is on Universal property behind IOA at the corner of Hollywood Way and Turkey Lake Road. It was mentioned in another thread that the city of Orlando is fronting the money for a pedestrian bridge over Hollywood Way to get people from the new resort to the sidewalk next to IOA. It looks from the map in the attached link like there is room in the same area for another adjacent project which could be the 5th hotel if this one is successful. That's just speculation at this point.

http://www.orlandovisiting.com/cabana-bay-beach-resort-universal-orlando-260.html

 

[Mike C]

Do you know about any of the details of the proposed on site hotels being built at UNI? Did they start construction? Where will they be located? What will the price point be?

It's on site across from Islands of Adventure (The corner of Turkey Lake and Hollywood way if you look at a map), and it's already under construction. The main building of it is already 5 or 6 floors high, but many of the other wings haven't gotten that far along yet. It's going to be priced more like a disney value resort, and it will lack the unlimited express perk the other hotels have, but it will have early entry, etc, included. It's quite a large hotel.

It'll have 900 family suite style rooms and 900 regular rooms. Roughly the same number of rooms of all the other deluxe hotels there combined. It looks like they are trying to open it just before the new potter expansion opens.

 

[Pixiedustmaker]

When WDW looks to invest in a new project or improve quality, it is looked at through the lens of Net Present Value or NPV not simple ROI. NPV evaluates the quality of a project by the expected discounted returns. In common terms, will the returns be better than using the CAPEX funds to invest in something with higher return or pay down debt. If NPV for a project in negative, the investment has reduced the value of the company as a whole, even though the project may have a positive ROI. Simply stated, the funds from CAPEX were put to better use than where they were spent.

Think of having $800B CAPEX to put to use. You can spend it in Orlando or Shanghai. Which will provide a greater increase in value to WDC as a whole?

Net Present Value looks at cash flow, and factors in discounts . . . . what discounts are we talking about here with regards to WDW?

I don't understand what you are saying when you say, "NPV evaluates the quality of a project by the expected discounted returns.", in the end, a project is successful if it brings in more guests over the years after completion, I think you are misapplying NPV and comparing apples to oranges when talking about NPV and ROI.

In the theme park industry, I would say that CapEx spent on construction projects often has a ROI of many years, save for an ODV location, or a cheaply built meet and greet. So of course, every project is looked at in terms of profitability, and the time frame for return on the investment.

Obviously, Disney is investing in Shanghai because it is an emerging economy and thus potential for more customers.