• Welcome to the WDWMAGIC.COM Forums!
    Please take a look around, and feel free to sign up and join the community.You can use your Twitter or Facebook account to sign up, or register directly.

Why Ticket Prices Are Increasing

ParentsOf4

Well-Known Member
Original Poster
Disney theme park annual passholders have seen two prices increases this year, with corporate Disney strongly hinting that additional increases will be forthcoming for all ticket purchasers.

Disney Parks & Resorts (P&R) Chairman Bob Chapek's statement that:

We have to look at ways to spread out our attendance throughout the year, so we can accommodate demand and avoid bursting at the seams.​

Is just a smokescreen. It's a public excuse for P&R's latest increase and lays the groundwork for more to follow. Disney is giving the public time to absorb this information in the hopes of blunting criticism once these additional increases are implemented.

The reality is that Chapek is seeking to justify his recent appointment to the post, seen as the company's #3 position ever since CEO Bob Iger made current COO Tom Staggs P&R Chairman in 2010. Like Staggs before him, Chapek is attempting to establish his credentials in order to eventually become Disney CEO.

Chapek has big shoes to fill.

During Staggs' brief tenure, P&R's operating income soared from $1.32 billion in 2010 to $2.66 billion in 2014. Operating income is up an additional $317 million in the first 9 months of FY2015 alone. Staggs is Iger's heir apparent exactly because Staggs turned around a division that saw its operating margin plummet to a company record low 12.2% of P&R revenue in 2010 under the now defunct Jay Rasulo. As a result of an improving economy, investment decisions made during Rasulo's reign, and Staggs' aggressive but careful pricing strategy, P&R is the healthiest it's been financially since 9/11.

The truth is, corporate Disney anticipates theme park attendance to remain strong despite the most recent increase; 34.7% at Disneyland ($779 to $1049 for an unrestricted annual pass) and 14.5% at Walt Disney World ($654 to $749 for a similar pass). Next year's almost certainly higher crowds will be used to justify further hikes, slowing only when the next recession hits, impacting the pockets of the tens-of-millions who visit Disney's theme parks annually.

Traditionally, companies satisfy increased demand by increasing production, yet it's now approaching 20 years since Walt Disney World's last major expansion, Disney's Animal Kingdom in 1998. Today's crowd level more than justifies opening a 5th major theme park (a.k.a. "Gate") at Walt Disney World:

WDW attendance to 2025.jpg
(This chart assumes 1% attendance growth in 2016 and beyond.)

Like Disney's other domestic theme parks, a 5th Gate at Walt Disney World would become a gravy train in the decades to follow. Today's P&R is so profitable exactly because former leaders such as Michael Eisner, Card Walker, Roy Disney, and Walt Disney himself saw the money-making opportunity even when traditional investors with little imagination did not. All went against Wall Street conventional wisdom and built for the long-term good of the company, wise investments that helped make Disney the corporate juggernaut that it is today.

However, a 5th Gate would cost billions and require 10-to-20 years to fully recover costs. Today's Wall Street is capital investment adverse and demands immediate returns, despite sage advice from power brokers such as BlackRock CEO Larry Fink, who question the financial soundness of stock repurchases over investments in future growth initiatives.

Make no mistake; this increase is not for theme park expansions, improved Cast Member compensation, or to "thin out the herd" at Disney's overcrowded domestic theme parks.

It's about increasing profitability in order for Chapek to establish himself with Disney shareholders as Staggs' likely successor.
 
Last edited:

sshindel

The Epcot Manifesto
Premium Member
Advertisement
Disney is raising prices because their data tells them that is it the right move.
They have predictive models based on massive amounts of data that they have developed and run various simulations on, and have determined that raising prices is the correct action.
Attendance will not be impacted, unless there is a slight defection among annual pass holders, and if so, it will be more than made up for by the increased price and the non-AP tickets purchased by the former AP holders who couldn't possibly go a year without WDW.
Prices are not increased to justify things, or to impact anything other than the bottom line. Disney didn't raised prices as justification, but you can bet that immense ammounts of justification went into the decision to increase prices.
 

scorp16

Well-Known Member
I believe the price increase on the AP was well over due. The article does have some facts wrong but that's for another thread. Increased attendance is both good and bad. Good from the standpoint of gross revenue bad from the standpoint of retention and operating expenditures. Overcrowded parks lead to a diminishing of the vacation experience correlating to an impact in customer retention. Increased attendance also can negatively impact the parks due to higher operating costs which may negate the majority of the gross revenue gain.

It seems to me what they are looking for is balance more-so than just the bottom line. But it's just the nature of things - that if they find that balance it will positively impact the bottom line.
 
What a bunch of bull! It's all about $$$$.What they don't realize is......they keep this crap up & more people will get enough & go to Universal.
Management makes $$$$$ wants more $$$$ & thinks...so let them complain....there will always be people to repl.them
& those complainers will moan & STILL pay the $$$$. What they fail to realize is they are in competition with Universal...DISNEY is no longer the only game in town! Think I'm out of my mind about the $$$$......really.....ever think you would have to pay $17 to park at Disney...
now it's $20.....this is just extra $$$$$ it's gravey....look at how many cars are in the parking lots at $20 each!
Jim
 

rucifee

Well-Known Member
There are roughly 46100 paid parking spaces at Disney, so they earn nearly $1m/day in parking. Calculate in their estimated costs in running the trams, staffing the lots and the TTC, running the monorails, and ferry..with a very high estimate of $100K in expenses per day, I'd guess that they probably easily earn more than $800K/day. That's seat of pants math though, with no facts other than the rough number of spaces and cost of parking. It also doesn't account for the passholders that lower their numbers with their "free parking".
 

ntn_haqqer

Well-Known Member
It's always "sticker shock" when Disney increases their admission prices. But, people still go (or at least find a way to go).

It would stand to reason that operating expenses would increase due to the technology being used ("Magic Bands") and other technology(ies) used throughout the parks. For what it's worth, if my family and I are still heavily entertained by "the mouse", then so be it. Bring on the next admission price hike!

@ParentsOf4 - How does this compare with Universal Studios? I think they had a price hike not too long ago, too.

It's the cost of doing business....increasing that profit margin.....and entertaining the masses. :)
 

disneyflush

Well-Known Member
I would honestly pay triple the price now if it meant my family could be more spontaneous in the parks with smaller crowds, shorter lines, and no need to schedule all our meals and rides so far out in advance. The current state of crowds, lines, and restaurants at WDW, gives me serious doubts as to the ROI on a $5,000 vacation where I feel shoe-horned the whole week. If we are going to do Disney in an enjoyable way I wouldn't mind spending $15,000 - $20,000 to be able to breathe and actually relax when we go. The $15,000 in that scenario is much better spent than the $5,000 in the current one. I hope the decision makers at WDW understand this.

And why does the Magic Kingdom need to be open all day for everyone anyway? Sell a discounted $75 admission ticket for the hours of 7 AM - 1 PM. Sell a Morning Family Pack to let entire families have gate entry for a flat $199. .Let the employees change shifts and take a mental break and then open it back from 3 PM- 12 AM for guests willing to pay $195 - $249 each. People sensitive to price can go in the morning and save money. Character breakfasts will still be there. All the rides will run. It would be the same experience as now. Crowds will be somewhat lighter than current day as only 75% of the current amount of people are going to be there in the morning I would estimate. People then looking for lighter crowds can go at night which would see the remaining 25% of people paying the higher price by choice. The additional price could go towards some special nighttime entertainment, special shows,etc. The crowds would be a fraction of what they are now and a lot of the chaos would be alleviated. Disney would make more money. The morning crowd could go to Disney Springs and spend money at night. They could have more resort nighttime activities which would justify the increased price to stay at the values and moderates. Morning resort activities would be available to the nighttime guests who could lounge by the pool and relax after they woke up instead of rushing, rushing, rushing.

The people that say they would love to take their kids if they could afford it would be able to afford it. The people that aren't bothered by the price but are bothered by the crowds could find an enjoyable experience.
 

danyoung56

Well-Known Member
And why does the Magic Kingdom need to be open all day for everyone anyway? Sell a discounted $75 admission ticket for the hours of 7 AM - 1 PM.
And how do you enforce something like this? Do you go with wristbands, and only those who have the right bands can stay all day? You're causing way more headaches than you are solving.
 

thomas998

Well-Known Member
Disney theme park annual passholders have seen two prices increases this year, with corporate Disney strongly hinting that additional increases will be forthcoming for all ticket purchasers.

Disney Parks & Resorts (P&R) Chairman Bob Chapek's statement that:

We have to look at ways to spread out our attendance throughout the year, so we can accommodate demand and avoid bursting at the seams.​

Is just a smokescreen. It's a public excuse for P&R's latest increase and lays the groundwork for more to follow. Disney is giving the public time to absorb this information in the hopes of blunting criticism once these additional increases are implemented.

The reality is that Chapek is seeking to justify his recent appointment to the post, seen as the company's #3 position ever since CEO Bob Iger made current COO Tom Staggs P&R Chairman in 2010. Like Staggs before him, Chapek is attempting to establish his credentials in order to eventually become Disney CEO.

Chapek has big shoes to fill.

During Staggs' brief tenure, P&R's operating income soared from $1.32 billion in 2010 to $2.66 billion in 2014. Operating income is up an additional $317 million in the first 9 months of FY2015 alone. Staggs is Iger's heir apparent exactly because Staggs turned around a division that saw its operating margin plummet to a company record low 12.2% of P&R revenue in 2010 under the now defunct Jay Rasulo. As a result of an improving economy, investment decisions made during Rasulo's reign, and Staggs' aggressive but careful pricing strategy, P&R is the healthiest it's been financially since 9/11.

The truth is, corporate Disney anticipates theme park attendance to remain strong despite the most recent increase; 34.7% at Disneyland ($779 to $1049 for an unrestricted annual pass) and 14.5% at Walt Disney World ($654 to $749 for a similar pass). Next year's almost certainly higher crowds will be used to justify further hikes, slowing only when the next recession hits, impacting the pockets of the tens-of-millions who visit Disney's theme parks annually.

Traditionally, companies satisfy increased demand by increasing production, yet it's now approaching 20 years since Walt Disney World's last major expansion, Disney's Animal Kingdom in 1998. Today's crowd level more than justifies opening a 5th major theme park (a.k.a. "Gate") at Walt Disney World:

View attachment 114067
(This chart assumes 1% attendance growth in 2016 and beyond.)

Like Disney's other domestic theme parks, a 5th Gate at Walt Disney World would become a gravy train in the decades to follow. Today's P&R is so profitable exactly because former leaders such as Michael Eisner, Card Walker, Roy Disney, and Walt Disney himself saw the money-making opportunity even when traditional investors with little imagination did not. All went against Wall Street conventional wisdom and built for the long-term good of the company, wise investments that helped make Disney the corporate juggernaut that it is today.

However, a 5th Gate would cost billions and require 10-to-20 years to fully recover costs. Today's Wall Street is capital investment adverse and demands immediate returns, despite sage advice from power brokers such as BlackRock CEO Larry Fink, who question the financial soundness of stock repurchases over investments in future growth initiatives.

Make no mistake; this increase is not for theme park expansions, improved Cast Member compensation, or to "thin out the herd" at Disney's overcrowded domestic theme parks.

It's about increasing profitability in order for Chapek to establish himself with Disney shareholders as Staggs' likely successor.
They raise prices to make more money, no doubt about it.... But if it thins the herd a bit it just means that some of use will get a benefit along with shareholders.

I wish they would double the prices.... I would still go, but instead of having to spend 4 days to do all the rides the family wanted I would probably be able to satisfy everyone in 2 days because I wouldn't be standing in line for 2 hours at popular rides... Which means it might still cost me the same amount of money, but I would have spent less vacation time doing it giving me more free time for other things.
 

ParentsOf4

Well-Known Member
Original Poster
It's always "sticker shock" when Disney increases their admission prices. But, people still go (or at least find a way to go).
Yes and no. People go to WDW when then have the money to go.

However, as Disney increases prices faster than income, its theme parks are becoming increasingly susceptible to economic downturns. Consider the following chart, which shows changes to Parks & Resorts (P&R) revenue along side the timing of major recessions:

P&R Revenue Change.jpg

Back when a WDW vacation was more affordable relative to household income, Disney weathered recessions fairly well. However, as a result of aggressive price increases, WDW is no longer the "good value" it once was. WDW is no longer recession proof, nor is it immune to market forces.
It would stand to reason that operating expenses would increase due to the technology being used ("Magic Bands") and other technology(ies) used throughout the parks.
You might want to rethink that assumption.

In the most recent quarter, P&R operating expense was $2.376 billion. Two years ago, prior to the rollout of MyMagic+, that number was $2.154 billion for the same quarter. With Disney reporting a combined 7% attendance increase for that quarter over the last two years, Disney's per guest costs are essentially flat.

Like nearly all modern corporations, Disney continuously leans its operations. The resulting increased profits don't go into capital improvements or employee benefits; they go into stock buybacks. In FY2014, Disney's total net income from all operations was $7.5 billion while it repurchased $6.5 billion of its own stock.
@ParentsOf4 - How does this compare with Universal Studios? I think they had a price hike not too long ago, too.

It's the cost of doing business....increasing that profit margin.....and entertaining the masses.
I don't want to turn this into yet another Disney vs. Universal debate. However, let me leave you with this tidbit.

In 2014, Universal's Theme Parks division realized an operating margin of 34.1% while reinvesting 25.6% of theme park revenue back into its theme parks.

At Disney, P&R operating margin was 17.6% while its domestic capex was 9.6% of domestic revenue. For some perspective, Six Flags capex was at 9.2% for the year.

Universal is investing in its domestic theme park operations and is realizing a hefty margin as a result. Disney is investing in its stock.
 
Last edited:

Dead2009

Well-Known Member
And how do you enforce something like this? Do you go with wristbands, and only those who have the right bands can stay all day? You're causing way more headaches than you are solving.
It sounds something like "I don't wanna deal with the crowds so let's come up with a plan to let them in all at once in the middle of the day when I'm not here". It's a terrible proposition.
 

SandraAnn

Active Member
Make no mistake; this increase is not for theme park expansions, improved Cast Member compensation, or to "thin out the herd" at Disney's overcrowded domestic theme parks.

It's about increasing profitability in order for Chapek to establish himself with Disney shareholders as Staggs' likely successor.
Great post. Sooo, it's just about the money. Because they can.
 

JoeV

Member
I can believe that explanation. If you go in the middle of September and can barely walk through magic kingdom because of the crowd, you are busting at the seams.
 

DisneyFans4Life

Well-Known Member
Very interesting post. I would be extremely curious to see how a 5th park would do...but I'm not convinced it would be a long term solution. Sure for the first few years people would flock to the new park to see what it was about, but eventually the newness would go away and we're right back to where we're at today. As a lot of people have mentioned, everyone wants to visit the originals.
 
Top Bottom