WSJ: Even Disney Is Worried About The High Cost Of A Disney Vacation (gift link)

[Jrb1979]

I think people are especially tired of the overused "this is the best time there's ever been to visit!" trope that not only did they end the article with but consistently push every year. For over a decade now they've relied on big summer attraction openings to encourage people to visit and while that happened in the past too, most often people would just visit simply because it was a nice place and experience to visit. In this way, Disney has kind of shot themselves in the foot by promoting that its only "the best time" to vist when something new is there. You need to keep people coming back even without new things. Then you realize things that keep people coming back are the cohesiveness of a park, pleasant staff, pleasant guests and not being rushed. All of which have been lost or not invested in at all.

IMO I don't think they care that much. To them with the parks now making up the majority of revenue, they are squeezing them for every last penny. It's to make up for the lost revenue that linear TV gave them.

 

[larryz]

The US dollar is also significantly harming Disney via international guests right now.

Disney would be better off it it fell nearly across the board. International parks would make relatively more, International box office would be worth more, D+ subscriptions would earn the parent company more, more Canadians would be willing to visit WDW. Etc etc.

How very globalist of you...

 

[Disstevefan1]

"The people who could afford to come said it was affordable."

 

[Tha Realest]

Josh’s response to the article would have been better if he didn’t respond at all. They are so out of touch

Give him a break. He’s watching his slim chance of becoming the next CEO go up in smoke.

 

[monothingie]

From Disney this morning:

Disney Offers: Everything You Need to Know | The Walt Disney Company

Prepare for your next visit to a Disney resort by learning about the promotional deals and offers available across a variety of ticket, dining, & hotel options.

t.co

I'm just going to point out that the sentence that starts with "The thing we hear from millions of guests who visit our parks..." is the definition of survivor bias.

I’d be wary if you get an unexpected box of cupcakes from a Mr M. Mouse.

 

[monothingie]

"The people who could afford to come said it was affordable."

 

[Hawkeye_2018]

It seems Disney has really upped their volume of park ads lately.

 

[monothingie]

It’s almost like a 5 year old trying to lie terribly to their parents about getting caught with their hand in the cookie jar.

 

[Dranth]

I don't think people are glossing over it. The problem is those that can afford their product aren't repeat visitors for the most part. There isn't enough of them to replace those they lost.

I don't believe this is true at all. I would bet that most repeat visitors, outside of locals, are currently and likely always have been in the top two quantiles. Plus, that we are even talking about quantiles here means that the top 20% has just as many families in it as any other segment.

That doesn't mean they aren't pricing out people, they absolutely are but in terms of dollars, how much do you think they have lost due to people who could no longer afford to go at all vs. those that could go but no longer think it is worth the money because of what has been removed?

The latter is likely a MUCH higher dollar amount if for no other reason than it requires less of them. This is a bit simplified but, according to Len's numbers, having 10 families in that top quantile not go because of value is the same as having 100 families in the bottom or 40 middle class families not go because of affordability.

Let's take it a step further. In terms of labor, maintenance, utilities, etc. those 100 families are going to cost Disney more than the 40 which will cost Disney more than the 10 so not only are lower quantile families bringing less money to spend, Disney makes less from them amplifying the problem.

It just isn't hard to see why they have shifted. The balancing act is maintaining the value while you shift and that is where I feel like they have fallen on their face a few too many times.

 

[MisterPenguin]

This is why their stock is in deep trouble IMO.

They have completely forgotten/ destroyed the nostalgia opportunity on both sides of the problem.

1. They have priced younger families out, so the future generations don’t grow up going / dreaming of going.

2. They are actively destroying nostalgia on multiple levels within the parks. Rides, lands, restaurants, re-themes, IP integration, all decimates the memories of those who are still paying to return. So the gripe when they return, or feel downtrodden about what was once there, and either don’t return again (with the future generations) or they gripe and discourage the return.

I very much disagree.

As mentioned above WDW is a minority segment of the corporation known as The Walt Disney Company.

Stocks rise and fall on what the whole company is doing, not just the parks.

The huge leaps in DIS stocks 6 and 5 years ago was from Disney blowing past its goals with D+ in its first year. TWDC then reset their goal to a 5 year plan to profitability and pivoting from D+ being a depository for their G-rated audience to a competitor with Netflix. Wall Street was indeed very much on board with this plan because it dealt with the issue of cord-cutting which would kneecap TWDC's main source of income.

The other big boost in stocks happened with the parks closed during lockdowns. Think about that. Parks closed. Stock goes up.

Why? Because linear TV was still bringing in the bacon. And TWDC quarterlies showed the company was pretty much breaking even without the parks running. Investors then dumped money into DIS as a safe place to park their money during the pandemic.

But then after the pandemic, Wall Street switched from caring about subscription numbers to whether DTC was turning a profit. And it wasn't. The plan was to become profitable in 5 years, not 3. And so investors dumped DIS because of the lack of growth, lack of dividends, and not wanting to ride out the investment cycle in D+. Then there was Chapek who laughed off a billion dollar quarterly loss, and the stock tumbled. So, he got tumbled.

Following the stocks closely as a barometer of how TWDC is doing is a fool's game. Parks closed? Stock goes up. President declaring huge tariffs? Stock goes up.

Disney reports that DTC is profitable second quarter in a row and their overall net profit has increased? Stock goes down.

Wall Street is not a rational actor. The major investing firms are telling their clients to go ahead and invest in DIS, and they don't for some reason.

The giant investment houses are holding onto DIS stock, and so, there is a floor to how low day-traders can dump DIS stock.

It's the day traders trying to game the small rises and falls in prices that are making the stock price change day to day and week to week. They don't care about the parks or Disney movies. They care whether the stock has gone up fifty cents and whether to jump in and ride a small high and then dump the stock.

 

[harryk]

It's all about the value proposition. You can have high prices if guests feel like they got enough value for their dollar. The removal of Magical Express, airport check-in, free fast pass, and more has eroded that value and is felt most by the group the article identifies as feeling priced out.

Appears that more has been removed than added. Did the airlines pay for the airport check-in or did WDW subsidize it.
This was a great service and permitted guests to spend more time in the parks, especially if they had late flights out.
How is it affecting the DVC member that sees renewal coming up in a few years. I know I'm certainly looking at it very closely as my 'ownership' is coming shortly. 'Is it worth it?' Losses have exceeded gains in the past few years.

 

[IanDLBZF]

I very much disagree.

As mentioned above WDW is a minority segment of the corporation known as The Walt Disney Company.

Stocks rise and fall on what the whole company is doing, not just the parks.

The huge leaps in DIS stocks 6 and 5 years ago was from Disney blowing past its goals with D+ in its first year. TWDC then reset their goal to a 5 year plan to profitability and pivoting from D+ being a depository for their G-rated audience to a competitor with Netflix. Wall Street was indeed very much on board with this plan because it dealt with the issue of cord-cutting which would kneecap TWDC's main source of income.

The other big boost in stocks happened with the parks closed during lockdowns. Think about that. Parks closed. Stock goes up.

Why? Because linear TV was still bringing in the bacon. And TWDC quarterlies showed the company was pretty much breaking even without the parks running. Investors then dumped money into DIS as a safe place to park their money during the pandemic.

But then after the pandemic, Wall Street switched from caring about subscription numbers to whether DTC was turning a profit. And it wasn't. The plan was to become profitable in 5 years, not 3. And so investors dumped DIS because of the lack of growth, lack of dividends, and not wanting to ride out the investment cycle in D+. Then there was Chapek who laughed off a billion dollar quarterly loss, and the stock tumbled. So, he got tumbled.

Following the stocks closely as a barometer of how TWDC is doing is a fool's game. Parks closed? Stock goes up. President declaring huge tariffs? Stock goes up.

Disney reports that DTC is profitable second quarter in a row and their overall net profit has increased? Stock goes down.

Wall Street is not a rational actor. The major investing firms are telling their clients to go ahead and invest in DIS, and they don't for some reason.

The giant investment houses are holding onto DIS stock, and so, there is a floor to how low day-traders can dump DIS stock.

It's the day traders trying to game the small rises and falls in prices that are making the stock price change day to day and week to week. They don't care about the parks or Disney movies. They care whether the stock has gone up fifty cents and whether to jump in and ride a small high and then dump the stock.

Very good explanation! And I agree, parks isn’t the only factor in TWDC stocks.

 

[Tha Realest]

Appears that more has been removed than added. Did the airlines pay for the airport check-in or did WDW subsidize it.
This was a great service and permitted guests to spend more time in the parks, especially if they had late flights out.
How is it affecting the DVC member that sees renewal coming up in a few years. I know I'm certainly looking at it very closely as my 'ownership' is coming shortly. 'Is it worth it?' Losses have exceeded gains in the past few years.

I’ve often wondered this: what happens when these existing DVC contracts sunset?

 

[Sirwalterraleigh]

Maybe. I also see more of the middle class that used to go to Disney at these places like Dollywood, Myrtle Beach and Pigeon Forge.

Many here view Disney as a high end vacation similar to a cruise or European vacation.

…Myrtle beach is the yinzer riviera

Only 3 states are really allowed to go there

 

[Sirwalterraleigh]

Very good explanation! And I agree, parks isn’t the only factor in TWDC stocks.

Nobody said it was…

Both of you need to try harder and not dust so much

 

[Sirwalterraleigh]

Chapek tried to position them as a technology company.

No…that was Bob too

Slaphead just had less savvy and said the quiet part out loud.

Bob is the one who goes to Sun valley and spends his time schmoozing those that aren’t in his business

 

[Epcotfan21]

Relatable... but after 15 years of having some version of Florida resident annual passes, we've given them up and did not renew.

The cost for a family of 4 has skyrocketed and honestly the joy has been taken out of the parks with the amount of planning and time spent on your phone having to navigate to the next lightning lane or ordering food an hour in advance. I miss the days of waking up in the hotel and asking "what park do you feel like going to today?" and no longer being able to soak the moments in with my family.

We've decided going once a year when Disney offers the Florida resident discovery tickets from January thru May is more cost effective for our family.

 

[Disstevefan1]

Bob TOLD Chapek tried to position them as a technology company.

FTFY

 

[lewisc]

K

Case closed then

Gift link here.

I started working with the WSJ on this back in November. I pointed out - as I've said here - that Disney prices its theme parks for the top 20% of American households by income - those with pre-tax earnings of $264K. And if we're being honest, Disney really focuses on the top 10%, 5%, and 1% of incomes.

Backing up those two sentences ended up being its own 40-page blog post, covering 150+ datasets on everything from household income, to consumer expenditure surveys, to metropolitan populations around NFL cities. Links to the datasets are in the post.

Here's the post: How Much Disney Can America's Middle Class Afford?

Thanks to @wdwmagic for letting me post this. And thanks to all of you for letting me try out here how I ended up explaining it. I appreciate you.

The "gift" link is pay walled.

I'll read the thread later.

 

[Disstevefan1]

No…that was Bob too

Slaphead just had less savvy and said the quiet part out loud.

Bob is the one who goes to Sun valley and spends his time schmoozing those that aren’t in his business

Everyone knows Bob was running the company when Chapek was in there. Chapek tried to think for himself and lead the company and that’s when Chapek was pulled out on a Sunday night.

Bob was, is, and WILL BE running the company well into the future.