What's with the wait times!? (hint.. they're low)

[WDW Pro]

Not all capex is equal.

I don't know how you calculated the 99.7%, but I suspect it includes both maintenance and investment capex. These two serve very different purposes. Quoting something I wrote in November 2016:

"Capital Expenditure (capex) is the purchase of an asset that will benefit a company for several years. Capex can be lumped into two broad categories, maintenance and investment (or growth).

Disney replacing an old bus with a new bus can be thought of as maintenance capex. Disney adding a new bus to increase the size of its fleet can be thought of as growth capex.

When Disney buys that bus, its purchase price does not impact profit immediately. Instead, the cost of the purchase is spread out over the number of years it will be used. This is called "depreciation". It's this depreciation that impacts profit.

Let's say that a Disney bus costs $500K and Disney intends to keep that bus for 10 years. That $500K does not reduce profit by $500K the year it is purchased. Instead, that bus affects profit for 10 years by $50K each year in the form of depreciation. (Disney uses the straight-line method to depreciate assets.)

At the end of 10 years, Disney should sell that bus and buy a new one. However, management types looking to save a buck might decide to keep that bus for 11, 12, or even 13 years. Instead of you and I riding a new bus, we are riding an 11, 12, or 13-year old bus.

Without detailed disclosures, a rule-of-thumb is to estimate maintenance capex to be equal to depreciation. Amounts spent below depreciation are (or should be) for maintenance. Amounts spent above depreciation are for growth (or investment).

Investment (or growth) capex can be negative when depreciation is greater than total capex."

The above quote is in response to a question regarding the following chart, which shows that TWDC had underinvested in its domestic theme parks from 2002 to 2015:

View attachment 388218

The full thread discussing this can be found here:

Walt Disney World’s Biggest Investment since 1998

With the fiscal year complete, it’s time to comment on the financial performance of Disney’s Parks & Resorts (P&R). (Disney’s fiscal year runs from October to September.) Disney’s P&R segment is divided into two unequal parts. Domestic P&R includes Walt Disney World (WDW), Disneyland Resort...

forums.wdwmagic.com

I've frequently posted about TWDC's investment in WDW over the years so am unsure which specific post @HauntedPirate had in mind, but the below chart puts TWDC's investment in WDW and DLR into historical perspective. It adjusts for inflation and takes into consideration how many theme parks Disney had in operation over the decades:

View attachment 388224

As many can vouch for, I used to write about this regularly, although I've felt little need to once TWDC increased domestic investments in 2016.

Those who are too young to appreciate TWDC's pre-9/11 investment levels are having a chance to experience it for the first time now. Those who are old enough are happy to see a return to the old days.

What a fantastic post! I've never seen your contributions here, but I look forward to seeing more.

 

[HauntedPirate]

Not all capex is equal.

I don't know how you calculated the 99.7%, but I suspect it includes both maintenance and investment capex. These two serve very different purposes. Quoting something I wrote in November 2016:

"Capital Expenditure (capex) is the purchase of an asset that will benefit a company for several years. Capex can be lumped into two broad categories, maintenance and investment (or growth).

Disney replacing an old bus with a new bus can be thought of as maintenance capex. Disney adding a new bus to increase the size of its fleet can be thought of as growth capex.

When Disney buys that bus, its purchase price does not impact profit immediately. Instead, the cost of the purchase is spread out over the number of years it will be used. This is called "depreciation". It's this depreciation that impacts profit.

Let's say that a Disney bus costs $500K and Disney intends to keep that bus for 10 years. That $500K does not reduce profit by $500K the year it is purchased. Instead, that bus affects profit for 10 years by $50K each year in the form of depreciation. (Disney uses the straight-line method to depreciate assets.)

At the end of 10 years, Disney should sell that bus and buy a new one. However, management types looking to save a buck might decide to keep that bus for 11, 12, or even 13 years. Instead of you and I riding a new bus, we are riding an 11, 12, or 13-year old bus.

Without detailed disclosures, a rule-of-thumb is to estimate maintenance capex to be equal to depreciation. Amounts spent below depreciation are (or should be) for maintenance. Amounts spent above depreciation are for growth (or investment).

Investment (or growth) capex can be negative when depreciation is greater than total capex."

The above quote is in response to a question regarding the following chart, which shows that TWDC had underinvested in its domestic theme parks from 2002 to 2015:

View attachment 388218

The full thread discussing this can be found here:

https://forums.wdwmagic.com/threads...st-investment-since-1998.922682/#post-7489356

I've frequently posted about TWDC's investment in WDW over the years so am unsure which specific post @HauntedPirate had in mind, but the below chart puts TWDC's investment in WDW and DLR into historical perspective. It adjusts for inflation and takes into consideration how many theme parks Disney had in operation over the decades:

View attachment 388224

As many can vouch for, I used to write about this regularly, although I've felt little need to once TWDC increased domestic investments in 2016.

Those who are too young to appreciate TWDC's pre-9/11 investment levels are having a chance to experience it for the first time now. Those who are old enough are happy to see a return to the old days.

I believe one of those was the one I remembered seeing (but honestly, they are all good!). Thank you, kind sir!

I think your last line sums things up well for many people. Happy to see the investments in the parks, without a doubt. And while we may not be thrilled or 100% agree with how/where the money is being spent overall, it's better than what we have been experiencing for a lot of years.

 

[shambolicdefending]

Not all capex is equal.

I don't know how you calculated the 99.7%, but I suspect it includes both maintenance and investment capex. These two serve very different purposes. Quoting something I wrote in November 2016:

"Capital Expenditure (capex) is the purchase of an asset that will benefit a company for several years. Capex can be lumped into two broad categories, maintenance and investment (or growth).

Disney replacing an old bus with a new bus can be thought of as maintenance capex. Disney adding a new bus to increase the size of its fleet can be thought of as growth capex.

When Disney buys that bus, its purchase price does not impact profit immediately. Instead, the cost of the purchase is spread out over the number of years it will be used. This is called "depreciation". It's this depreciation that impacts profit.

Let's say that a Disney bus costs $500K and Disney intends to keep that bus for 10 years. That $500K does not reduce profit by $500K the year it is purchased. Instead, that bus affects profit for 10 years by $50K each year in the form of depreciation. (Disney uses the straight-line method to depreciate assets.)

At the end of 10 years, Disney should sell that bus and buy a new one. However, management types looking to save a buck might decide to keep that bus for 11, 12, or even 13 years. Instead of you and I riding a new bus, we are riding an 11, 12, or 13-year old bus.

Without detailed disclosures, a rule-of-thumb is to estimate maintenance capex to be equal to depreciation. Amounts spent below depreciation are (or should be) for maintenance. Amounts spent above depreciation are for growth (or investment).

Investment (or growth) capex can be negative when depreciation is greater than total capex."

The above quote is in response to a question regarding the following chart, which shows that TWDC had underinvested in its domestic theme parks from 2002 to 2015:

View attachment 388218

The full thread discussing this can be found here:

https://forums.wdwmagic.com/threads...st-investment-since-1998.922682/#post-7489356

I've frequently posted about TWDC's investment in WDW over the years so am unsure which specific post @HauntedPirate had in mind, but the below chart puts TWDC's investment in WDW and DLR into historical perspective. It adjusts for inflation and takes into consideration how many theme parks Disney had in operation over the decades:

View attachment 388224

As many can vouch for, I used to write about this regularly, although I've felt little need to after TWDC increased domestic investments beginning in 2016.

Those who are too young to appreciate TWDC's pre-9/11 investment levels are having a chance to experience it for the first time now. Those who are old enough to remember are happy to see a return to the old days.

I understand the basic GAAP concepts.

As I mentioned above, domestic theme park spending has often taken a back seat to the foreign ones. And, spending in general has taken some big hits associated with the dot-com, post-9/11, and housing recessions.

But, the idea that Disney is just too cheap and doesn't spend isn't accurate. They've spent plenty. Just not where a lot of us would personally prefer.

p.s. Thanks for the response. We need more objective discussion around here.

 

[JD2000]

It's a Tuesday in summer at 4:30 pm... here are the wait times:

29min

45min

15min

10min

20min

20min

5min

5min

0min

10min

10min

40min

10min

20min

50min

5min

5min

5min

45min

10min

10min

30min

10min

10min

45min

10min

85min

55min

20min

15min

5min

25min

25min

Average Wait

Millennium Falcon: Smugglers Run

Astro Orbitor

Autopia

Big Thunder Mountain Railroad

Buzz Lightyear Astro Blasters

Casey Jr. Circus Train

Disneyland Monorail

Disneyland Railroad

Dumbo the Flying Elephant

Walt Disney's Enchanted Tiki Room

Finding Nemo Submarine Voyage

Gadget's Go Coaster

Haunted Mansion

Indiana Jones™ Adventure

Jungle Cruise

King Arthur Carrousel

Mad Tea Party

Matterhorn Bobsleds

Mickey's House and Meet Mickey

Mr. Toad's Wild Ride

Peter Pan's Flight

Pinocchio's Daring Journey

Pirates of the Caribbean

Roger Rabbit's Car Toon Spin

Snow White's Scary Adventures

Hyperspace Mountain

Splash Mountain

Star Tours – The Adventures Continue

Storybook Land Canal Boats

The Many Adventures of Winnie the Pooh

"it's a small world"

Alice in Wonderlan

That is exactly ONE ride over an hour in wait time. One. So for those saying that Disney should be happy right now with crowd sizes, trust me, they're not. These wait times are indicative of lower ticket sales, and ticket sales mean millions of dollars are being lost daily.

Touring Plans reports busy crowds as expected (i.e normal) for the last five days. But even if the upward trend does not continue and the summer crowds end up hit or miss, lower crowds may lead to increased sales within the park, countering any loss of ticket sales. But I am done with attempting to change the false narrative.

 

[WDW Pro]

Touring Plans reports busy crowds as expected (i.e normal) for the last five days, but even if the upward trend does not continue and the summer crowds end up hit or miss, lower crowds may lead to increased sales within the park, countering any loss of ticket sales. But I am done with attempting to change the false narrative.

That's a statement not based in any sort of logical reality. The idea that lower crowds would lead to present guests spending an equivalent amount extra, beyond what they initially budgeted to spend, that would be greater than missing guests' ticket purchases AND their own discretionary spending inside the park on food and merchandise... well, it's just not a mathematical possibility.

TDA didn't discount tickets more than 50% because they believe one iota of your hypothesis. And they pay people with fancy degrees who run the math many times through sophisticated models to make realistic projections that keep Disney Parks in business.

 

[shambolicdefending]

Touring Plans reports busy crowds as expected (i.e normal) for the last five days. But even if the upward trend does not continue and the summer crowds end up hit or miss, lower crowds may lead to increased sales within the park, countering any loss of ticket sales. But I am done with attempting to change the false narrative.

I saw that Touring Plans reported lower-than-predicted crowds for four of the last five days.

I'm pretty sure that in-park spending is directly correlated to attendance. That's actually one of the things a robust AP program is based on. It's hard to imagine many scenarios where attendance significantly drops, but other guest spending goes up.

 

[JD2000]

I saw that Touring Plans reported lower-than-predicted crowds for four of the last five days.

I'm pretty sure that in-park spending is directly correlated to attendance. That's actually one of the things a robust AP program is based on. It's hard to imagine many scenarios where attendance significantly drops, but other guest spending goes up.

You read wrong. And when guests are not rushed and comfortable, they spend more, even Walt said that.

 

[RobWDW1971]

You read wrong. And when guests are not rushed and comfortable, they spend more, even Walt said that.

I think what he's saying is guests "spending more" doesn't begin to account for less attendance. If you make REALLY rough estimates of guest spending per caps - let's say:

Admission $100
Food $30
Merch $20
Total $150
(Leaving out the parking per cap of about $7 for simplicity)

Admission per cap isn't variable based on guests' enjoyment of the park so let's say they are having a beautiful relaxed day with no lines and plenty of time to shop/eat - what is that increase 10%? 20% Let's go crazy and say 30% (which it is definitely not) - that is a whopping $15 ($50 of food/merch X 30%) incremental spend per guest.

Even one new guest who buys no food/merch is worth 7X that in admission revenue. Even an AP with a no incremental admission per cap is worth probably 3-4X that in food/merch spend.

Yes, extra spending per guest is nice, but turnstile clicks pay the bills.

 

[RobWDW1971]

[QUOTE="ParentsOf4, post: 8772423, member: 24970"

"Capital Expenditure (capex) is the purchase of an asset that will benefit a company for several years. Capex can be lumped into two broad categories, maintenance and investment (or growth).

[/QUOTE]

And everyone should note "maintenance capex" is not the same as "maintenance operating expense" that hits the P&L Operating Income as an operating expense vs in the deprecation line. In other words, if you replace the aging bus with a new bus, that is maintenance capital that will be depreciated over the life of the asset (let's say 10 years), but the cost to keep it clean, repaired, etc. is maintenance operating expense.

Too often on these boards people confuse the two - if the park is dirty, needs repair, and worn, that is not capex spending, that is maintenance expense spending being cut.

Optimally, you'd want to see growth in spending in both categories offset by the increased revenue the expansion and newer/repaired assets are generating.

 

[TROR]

Just for curiosity sake, what’s the assumed percentage of guests buying lightsabers, droids, and all the overpriced merch throughout the parks?

 

[JD2000]

I think what he's saying is guests "spending more" doesn't begin to account for less attendance. If you make REALLY rough estimates of guest spending per caps - let's say:

Admission $100
Food $30
Merch $20
Total $150
(Leaving out the parking per cap of about $7 for simplicity)

Admission per cap isn't variable based on guests' enjoyment of the park so let's say they are having a beautiful relaxed day with no lines and plenty of time to shop/eat - what is that increase 10%? 20% Let's go crazy and say 30% (which it is definitely not) - that is a whopping $15 ($50 of food/merch X 30%) incremental spend per guest.

Even one new guest who buys no food/merch is worth 7X that in admission revenue. Even an AP with a no incremental admission per cap is worth probably 3-4X that in food/merch spend.

Yes, extra spending per guest is nice, but turnstile clicks pay the bills.

True. But do guests return as frequently when it is always overcrowded.

 

[RobWDW1971]

Just for curiosity sake, what’s the assumed percentage of guests buying lightsabers, droids, and all the overpriced merch throughout the parks?

The lightsaber question would be the easier one - let's make ballpark guesses, correct me if you have more intel:

14 light sabers in the "ceremony" X 2 rounds an hour? = 28 sabers X 15 operating hours = 420 light sabers in a day at $200 each = $84,000

Assume 20% for labor/merch cost so you get 80% X $84,000 = $67,200

Not peanuts to be sure, but a rounding error on the entire two park resort merchandise spend.

 

[RobWDW1971]

True. But do guests return as frequently when it is always overcrowded.

That's a whole other equation on intent to return and driving repeat visitation/spend. I'm not getting paid enough to run that model.

 

[Touchdown]

The waits aren’t inflated today they are accurate. MFSR was listed at 55 min when I went midday and it was using its extended queue (I elected for the 15 SR line.). RSR has the longest wait at 70 min, it’s not a ghost town like last month but it’s also not “Pirates and HM line meet” crazy busy a weekend from Oct-Dec either. I also got into the parks at 1:00 pm and WOC and F! FPs were already gone.

 

[shambolicdefending]

You read wrong. And when guests are not rushed and comfortable, they spend more, even Walt said that.

Actually I double checked. I didn't read wrong.

 

[shambolicdefending]

True. But do guests return as frequently when it is always overcrowded.

The theory/assumption is that tourist types might not, but APs still do.

 

[THE 1HAPPY HAUNT]

I have a feeling if they put a dole whip stand in galaxy's edge more people would show up. A blue milk galactic dole whip.

 

[JD2000]

Actually I double checked. I didn't read wrong.

I don’t understand. Are you looking at the individual dates under the calendar? Do they show different numbers somewhere else? As the last six days were: 6/6, 7/7, 1/1, 2/3, 5/5, 5/4.

 

[JD2000]

Actually I double checked. I didn't read wrong.

I don’t understand. Are you looking at the individual dates under the calendar? Do they show different numbers somewhere else? As the last six days were: 6/6, 7/7, 1/1, 2/3, 5/5, 5/4.

I see what you did now. You looked at both parks combined. But even then, it is within the normal margin of error, and last year was even less crowded (then expected). It is quite safe to claim everything is back to normal for recent summers. Nobody can really argue otherwise. And this discussion among everyone can probably die now.

 

[Touchdown]

Except a brand new themed area should have caused a spike in attendance...

But then again you can spin it as even with blocking deluxe and below from DL all summer, DL has managed to keep crowds at the same level.

I have no doubt Disney May view June as a disaster internally, but July is likely to fall into the mild disappointment range.