In its simplest terms, the law of supply and demand involves the relationship between the availability of a good or service and its price. Without getting into a drawn out discussion of microeconomics, when demand increases, then prices increase. When supply increases, then prices decrease. In the case of rooms at WDW, there are over 1 million more room nights available at WDW then when Iger took control. Yet, incrementally, less than 40% of these rooms are being occupied. Supply is up much more than demand. Consequently, prices should decline accordingly to traditional supply and demand thinking.
The phrase “whatever the market to bear” dates back centuries. The modern business idea behind charging “whatever the market to bear” is what is sometimes called price discrimination. In an ideal price discrimination system, a company selling something is able to charge each individual consumer the maximum they are willing to spend. The price of something has no bearing on its cost or what someone else is paying for it. It’s based solely on what that one person is willing to pay, regardless of supply or demand.
In a traditional demonized example, "whatever the market will bear" means charging someone thousands of dollars for a drug they need to survive, even though it costs only pennies to develop and manufacture that drug and the supply of that drug is plentiful.
Disney has been working towards price discrimination for some time and, with the information they intend to collect from MyMagic+, they are trying to create something called “perfect price discrimination”. In a nutshell, it means getting you to spend the absolute greatest amount possible for your WDW vacation even if the person next to you is paying significantly less for essentially the same vacation. To achieve perfect price discrimination, Disney needs as much information about you as possible. MagicBand is designed to allow Disney to collect sufficient information so they can crunch this data in a computer and determine what your threshold of pain is. Since perfect price discrimination is illegal, Disney will have to modify this to offer slightly different packages to groups of consumers so it could reasonably argue that two different groups aren’t paying substantially different prices for identical vacations. Looking at this simplistically, Disney is not going to offer you (for example) “Free Dining” if you are willing to book your vacation without it, even if every other person in the park is receiving “Free Dining”.
People who say “I love Disney so much that I’m willing to pay any price” are effectively telling Disney to charge them more even though their next door neighbor might be paying thousands less for a nearly identical vacation. “I go to WDW because it makes me happy and I don’t care how much it costs.” This is Disney’s ideal consumer.
was that before or after the room discount?
