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

[Chi84]

Is that why attendance has been up the last couple of years…when more frivolous cash has been spent by the first world than in most of its history combined?

The non-frivolous spenders are being completely priced out.

 

[Sirwalterraleigh]

The non-frivolous spenders are being completely priced out.

Which is why they are losing steam

The normal people aren’t “optional”…they’re fundamental

That journal article nails it…without saying it:

Disney doesn’t deliver a nice enough product to cater to those that can buy anything

They never did. And never will.

 

[Sir_Cliff]

Really interesting article. My guess is that anywhere below the 500k mark, it depends a great deal on cost of living and life circumstances. I also see a lot of articles about people making 250k a year and living paycheck to paycheck these days.

A noteworthy point, I think - in 1980, there were about 226 million people in the US. The top 10% was between 22 and 23 million people (ballpark, not sure if these numbers account for the entire household or just the earners). Today there are 340 million people, meaning the top 10% has presumably added about 12 million people. I assume international travel is also much more prevalent. I think that probably impacts how much Disney has been able to raise prices. There are signs we may be headed for a population decline in the next couple of generations but up to now the growing audience pool has made the parks a more and more limited resource, relatively speaking.

This is an aspect of that article that people seem to be missing. Everyone on here is saying Disney should be targeting the middle class and pointing to slowing revenues as being at least in part due to the middle classes being priced out. What that article says, however, is "Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period."

All of this points to a bit of a conundrum for Disney, at least as far as I can see. Disney wants to keep appealing to mass, middle class audiences as a company and the parks have traditionally been a key part of that. However, that group increasingly lacks the disposable income needed for luxury items in general, which certainly includes Disney vacations. So, they have to make their money and find growth from those who do still have disposable income in the upper income brackets. That doesn't mean completely banishing those in, say, the upper middle class, but this suggests there's no growth for them in attracting that sector which is increasingly unable to afford any luxury spending, Disney price increases or not.

All of that might speak to a need to improve the quality of their offerings but, and it pains me to say this, it does not suggest they are doing the wrong thing from a business perspective by targeting the diminishing group of consumers at the top of the income scale. This speaks to a broader structural problem in the US economy rather than just Disney, as that article at least suggests the US economy as a whole depends more and more on the relatively lavish spending of the few to keep growing.

 

[Sirwalterraleigh]

This is an aspect of that article that people seem to be missing. Everyone on here is saying Disney should be targeting the middle class and pointing to slowing revenues as being at least in part due to the middle classes being priced out. What that article says, however, is "Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period."

All of this points to a bit of a conundrum for Disney, at least as far as I can see. Disney wants to keep appealing to mass, middle class audiences as a company and the parks have traditionally been a key part of that. However, that group increasingly lacks the disposable income needed for luxury items in general, which certainly includes Disney vacations. So, they have to make their money and find growth from those who do still have disposable income in the upper income brackets.

All of that might speak to a need to improve the quality of their offerings but, and it pains me to say this, it does not suggest they are doing the wrong thing from a business perspective by targeting the diminishing group of consumers at the top of the income scale. This speaks to a broader structural problem in the US economy rather than just Disney, as that article at least suggests the US economy as a whole depends more and more on the relatively lavish spending of the few to keep growing.

What you’re missing is the article doesn’t say the highest earners are spending more ON DISNEY…

That’s the other “conundrum”

 

[HauntedPirate]

This is an aspect of that article that people seem to be missing. Everyone on here is saying Disney should be targeting the middle class and pointing to slowing revenues as being at least in part due to the middle classes being priced out. What that article says, however, is "Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period."

All of this points to a bit of a conundrum for Disney, at least as far as I can see. Disney wants to keep appealing to mass, middle class audiences as a company and the parks have traditionally been a key part of that. However, that group increasingly lacks the disposable income needed for luxury items in general, which certainly includes Disney vacations. So, they have to make their money and find growth from those who do still have disposable income in the upper income brackets. That doesn't mean completely banishing those in, say, the upper middle class, but this suggests there's no growth for them in attracting that sector which is increasingly unable to afford any luxury spending, Disney price increases or not.

All of that might speak to a need to improve the quality of their offerings but, and it pains me to say this, it does not suggest they are doing the wrong thing from a business perspective by targeting the diminishing group of consumers at the top of the income scale. This speaks to a broader structural problem in the US economy rather than just Disney, as that article at least suggests the US economy as a whole depends more and more on the relatively lavish spending of the few to keep growing.

Squeezing guests harder instead of a more gradual increase in prices over time is Bob's legacy. And lack of investment in the parks until his hand was forced, not to mention over-reliance on existing IP and being extremely risk-averse to new ideas in the parks.

I've said it in other threads recently - Both resorts went too high, too fast on prices and it's showing. If Epic fails to lift all boats starting in late May, that's the biggest reason why.

 

[JoeCamel]

Really interesting article. My guess is that anywhere below the 500k mark, it depends a great deal on cost of living and life circumstances. I also see a lot of articles about people making 250k a year and living paycheck to paycheck these days.

A noteworthy point, I think - in 1980, there were about 226 million people in the US. The top 10% was between 22 and 23 million people (ballpark, not sure if these numbers account for the entire household or just the earners). Today there are 340 million people, meaning the top 10% has presumably added about 12 million people. I assume international travel is also much more prevalent. I think that probably impacts how much Disney has been able to raise prices. There are signs we may be headed for a population decline in the next couple of generations but up to now the growing audience pool has made the parks a more and more limited resource, relatively speaking.

Not sure where you got those numbers but Google sez there are about 12 million in the top 10% earning bracket 2023. Top was defined as $191K +

 

[Tha Realest]

I live in an area adjacent to one of the wealthiest zip codes in the country. We do well, but no where near as well as those folks. I’m talking multigenerational wealth, summers in the Hamptons, Ivy League legacies, summer camps in the Catskills and Vermont just like great grandfather did, and each generation since. Think of the sort of characters conjured up in the mind of Mike Whitw.

Do they go to Disney? Some, yes, once. And that’s it. They are far more frequent visitors to Vail and Aspen and Cabo and Puerto Vallarta and La Quinta than, say, the Riviera (CBR, not French). Put another way, they’re far more likely to spend a week at Hotel del Coronado than the copycat on the

 

[Chi84]

I live in an area adjacent to one of the wealthiest zip codes in the country. We do well, but no where near as well as those folks. I’m talking multigenerational wealth, summers in the Hamptons, Ivy League legacies, summer camps in the Catskills and Vermont just like great grandfather did, and each generation since. Think of the sort of characters conjured up in the mind of Mike Whitw.

Do they go to Disney? Some, yes, once. And that’s it. They are far more frequent visitors to Vail and Aspen and Cabo and Puerto Vallarta and La Quinta than, say, the Riviera (CBR, not French). Put another way, they’re far more likely to spend a week at Hotel del Coronado than the copycat on the

Disney’s expensive - but not so expensive as to depend for its existence on the people you describe.

 

[Sirwalterraleigh]

Disney’s expensive - but not so expensive as to depend for its existence on the people you describe.

You just made the same point the rest of us are…

So how do they “survive”?

 

[ConfettiCupcake]

I don’t know how far they’ll get targeting wealthier guests with virtually the same product that’s been designed for closer to middle class guests, simply because it now sports a higher price tag.

Anecdote - someone I know recently went and stayed at a DVC resort. Did not bat an eye at the price, but came home pretty unimpressed with the quality of the goods in the room and the state of the room itself. They were fine to spend upwards of $1k a night (they paid cash for a DVC villa), but had heightened expectations that came with the price that were not met. Disney regulars who love the onsite resort experience tend to be aware of the ‘Disney deluxes aren’t real deluxes’ situation, but are these higher spending guests loyal to Disney in the same way to overlook that kind of thing just because they can afford it?

 

[Chi84]

You just made the same point the rest of us are…

So how do they “survive”?

Do they? They may not; it remains to be seen.

 

[Tha Realest]

Disney’s expensive - but not so expensive as to depend for its existence on the people you describe.

But they are increasingly leaning into relying on that very clientele.

 

[Agent H]

Do they? They may not; it remains to be seen.

This is depressing.

 

[Sirwalterraleigh]

Do they? They may not; it remains to be seen.

Crashing the best entertainment complexes ever conceived and built because they have awful management doesn’t seem like the prudent way to “find out”

Unnecessary

 

[Sirwalterraleigh]

This is depressing.

..:all empires fall

 

[Chi84]

But they are increasingly leaning into relying on that very clientele.

I don’t know; that’s a pretty elite group.

 

[Chi84]

This is depressing.

Oh I doubt anything is going to happen for quite some time. But there’s always a possibility.

 

[Chi84]

Crashing the best entertainment complexes ever conceived and built because they have awful management doesn’t seem like the prudent way to “find out”

Unnecessary

Absolutely. But it could very well happen.

 

[flynnibus]

I live in an area adjacent to one of the wealthiest zip codes in the country. We do well, but no where near as well as those folks. I’m talking multigenerational wealth, summers in the Hamptons, Ivy League legacies, summer camps in the Catskills and Vermont just like great grandfather did, and each generation since. Think of the sort of characters conjured up in the mind of Mike Whitw.

Do they go to Disney? Some, yes, once. And that’s it. They are far more frequent visitors to Vail and Aspen and Cabo and Puerto Vallarta and La Quinta than, say, the Riviera (CBR, not French). Put another way, they’re far more likely to spend a week at Hotel del Coronado than the copycat on the

Yeah, but that's even further up the ladder.

Think more the people that have multiple SUVs, or Teslas... have the 700k-1.5M home... pay for the maid service.. Dad is the sales exec.. the kid gets PS5 during launch week, etc. The people who are comfortable rich - not snob rich.

You can have income in the 300-500k/yr range and still be seen as rich and those types are the type willing to throw money at 'conveniences'

 

[Sirwalterraleigh]

Yeah, but that's even further up the ladder.

Think more the people that have multiple SUVs, or Teslas... have the 700k-1.5M home... pay for the maid service.. Dad is the sales exec.. the kid gets PS5 during launch week, etc. The people who are comfortable rich - not snob rich.

You can have income in the 300-500k/yr range and still be seen as rich and those types are the type willing to throw money at 'conveniences'

They’re built to profit off volume and frequency

Which is how they profit

To do that…you need “volume” and “frequency”