Under current economic conditions, the alternative to pricing incentives is to have the resorts at a low occupancy, with corresponding decreases in park attendance, restaurant spending, and retail sales.
Walt Disney World's "Buy 4 Nights, Get 3 Free" deal is brilliant. WDW can fill rooms by getting those guests who are still vacationing despite the economy to stay longer and spend more money. And WDW can attract guests who are looking for bargains, but those guests then have to stay for a week.
Disney is providing an incentive for as many guests as possible to spend a full week. In some ways, it's an extension of Magic Your Way ticket pricing.
This seems to be a lot smarter business strategy than conventional discounting. Also, it seems a lot better than having 30% occupancy (or something along those lines).
Curator of Yesterland, featuring discontinued Disneyland attractions
Kevin made a very valid point on what will happen after 2009 with the "free" birthday admission. Just take a look a few years back when GM and Ford offered 0% financing and employee discounts for the public. They could NEVER go back to reasonable pricing because what not-wit would buy a GM car without these incentives? This is what will happen to the the casual once or twice a year Disney Park guest. They will now expect a yearly incentive!
Part of the problem is that a car is not a one-time cost and subject to varying gas prices. So I think improving mileage would 1, help sales and 2, justify regular/higher prices. Another strategy is what airlines are starting to do, especially with discount tickets,: a la carte pricing. And honestly, I appreciate that Ralph's gives me a couple cents back when I bring in my own shopping bags.
As for the birthday promotion, I think its future depends on how it's used. If you're getting 1, 2, 3 or more paying visitors coming in and spending money with the birthday- that adds up.
Kevin, it never ceases to amaze me when I read your articles. They are a breath of fresh air. It is wonderful to see someone take a critical look at Disney and truly show it for what it is.
I gotta say, I agree with everything you've written in this article. My wife and I have discussed many of the points in your article and this is why, until our daughter is tall enough to ride everything, we won't be visiting Disneyworld for another 6-7 years. It just isn't worth it for us price wise.
I find it funny that Disney World is the leader is ticket price hikes. All the other resorts and themeparks seem to wait for Disney to raise their prices before they do. It used to be that Disney World was worth the price you pay. That is no longer the case.
The Magic Your Way tickets do break down to only $30-$40 a day if you do the math, but then that just seems like the ploy of "why charge $2.00 for something when you can charge $1.99 and people think they are getting a real steal of a deal. For families who can't stay longer, they are penalized by having to pay more.
Food in general for the Walt Disney World resort has declined while pricing has gone up. Pre-booking for restaurants has disabled guests who don't pre-book the option of eating there. They are not forced to eat at a cart. It now costs a family of 4 almost $60 to have one meal. That is $180 a day, not including snacks and such.
Anyway, I agree whole heartedly with your article and find it refreshing that someone is willing to take a look and face reality with Disney World and it's bad decision making. People can blame the economy, but really, as you've said, Disney has set itself up for failure in the long run. All that matters is the here and now and the almighty dollar rather than the principles the park(s) were founded upon.
I'm sure that if Walt were still around, there would be some initiatives to keep the turnstiles turning. However, I firmly believe that the guest experience would not suffer under such conditions.
I find it amazing how many people have the "Oh Well" syndrome when it comes to Disney and it's offerings. For those who were not fortunate enough to be alive at the same time as Walt, here are some quick facts about his passion:
1) Walt's studio was the first to add sound to a cartoon short. HMMM...Wonder why he spent so much money to do that????
2) Walt's studio was the first to add color to it's cartoon shorts. HMMM...Again, wonder why he spent so much money to do that????
3) Walt's studio was the first to release a full length animated feature....HMMM...This cost lots of dollars! Wonder why????
4) Walt completely transformed our perception of "fun parks"...Lots of dollars! Wonder why????
5) Walt had all his "Wonderful World of Disney" TV shows filmed in color when almost everyone owned black and white TVs. Lots of dollars....Wonder why????
Anybody get where I'm going with this??? Walt was all about quality and innovation. Only once did he have to rest on his laurels a bit and that was during WWII. But not for very long. Cinderella was started at the studio shortly after the war ended and was released in 1950.
For the record: During the depression years Walt released or was working on five animated classics that we all know today. Snow White, Pinocchio, Fantasia, Bambi and Dumbo. Each of these films had a price tag of 1.5 Million dollars or more. Only Snow White and Dumbo made money on the first release. Walt took initial losses on Fantasia, Bambi and Pinocchio. He also constructed the first animation studio (employing over 1,000 individuals) in Hollywood during this same time.
Wonder what people would think of such a man today? Off his rocker? Not playing with a full deck? Lights on but nobody's home? Probably...But hey! That's what they thought of him back then too.
Walt's drive was to create the ultimate brand. Walt commented to one of his imagineers, "Walt Disney is a thing. An image that people have in their minds. And I spent my whole life building it."
And for those of you that are satisfied with current managements approach to its theme park business. Walt did not believe in slowing down in any type of economy. From Disneyland's opening in 1955 with 18 attractions here is a year by year look at all the activity that went on. Be warned, the list is long but it shows just how much Walt believed that by continually bringing new and exciting experiences to his audience, the money would continue to flow!!!!
The timeline starts at the opening of Disneyland through 1967 (Right after Walt's death.) In this time frame Walt oversaw the following:
Disneyland added or improved 97 Attractions, Shows and Exhibits during this time and closed 48 Attractions, Shows and Exhibits. Not to mention the starting phase of what would later become Walt Disney World and all the other activities within the company. Extremely impressive compared with todays standards!
July 17 1955 Disneyland Opens at a cost of $17 million Attractions included:
Main Street USA - Disneyland and Santa Fe Railroad, Two Disneyland steam trains (C.K. Holiday and E.P. Ripley) (Opened July) - Main Street Railroad Station (Opened July) - Horse Drawn Street Cars (Opened July) - Horse Drawn Fire Wagon (Opened July, Closed August 1960) - Main Street Cinema (Opened July) - Horse Drawn Surreys (Opened, Closed January 1971) - Main Street Penny Arcade (Opened July) - Main Street Shooting Gallery (Opened July, Closed January 1962) Adventureland
- Jungle Cruise (Opened July)
- King Arthur Carousel (Opened July) - Peter Pan Flight (Opened July) - Mr. Toad’s Wild Ride (Opened July) - Canal Boats of the World (Opened July, Closed September 1955) - Snow White’s Adventures (Opened July) - Casey Jr. Circus Train (Opened July) - Dumbo the Flying Elephant (Opened August) - Mickey Mouse Club Theater (Opened August, Closed January 1964) - Mickey Mouse Club Circus (Opened November, Closed January 1956) - Mad Tea Party (Opened July) Frontierland - Stage Coach (Opened July, Closed February 1956) - Mule Pack (Opened July, Closed February 1956) - Mark Twain Riverboat (Opened July) - Golden Horseshoe Review (Opened July) - Davy Crockett Museum (Opened July, Closed December 1955) - Conestoga Wagons (Opened August, Closed September 1959) - Mike Fink Keel Boats (Opened December) - Indian Village (Opened July, Closed January 1956) - Miniature Horse Corral (Opened July, Closed July 1957) - Frontierland Railroad Station (Opened July) Tomorrowland - Tomorrowland Autopia (Opened July) - Space Station X-1 (Opened July, Closed January 1958) - Cinerama USA (360 degree film, A Tour of the West) (Closed January 1960) - Monsanto Hall of Chemistry (Opened July, Closed September 1966) - Rocket to the Moon (Opened July, Closed September 1966) - Moonliner (Opened July, Closed September 1966) - Clock of the World (Opened July, Closed September 1966) - The World Beneath Us (Opened July, Closed December 1959) - 20,000 Leagues Under the Sea (Opened August, Closed August 1966) - Aluminum Hall of Fame (Opened December, Closed July 1960) - Thimble Drome Flight Circle (Opened September, Closed January 1966) - Hobbyland (Opened September, Closed January 1966) - Dateline Disneyland airs July 17th - Disneyland opens to the public on July 18th - Disneyland opens to the public with admission costing just $1. Cost of attractions ranged from 10 to 35 cents. - September 8, 1955 Elsa Marquez one millionth visitor - Fantasy in the Sky added 1956 - Disneyland Hotel Opens October - Ticket books are first available containing A, B and C tickets (October)
1956: - Astro Jets (Opened March 1956, Closed August 1964) - Bathroom of Tomorrow (Opened April 1956, Closed August 1960) - Storybook Land Canal Boats (Opened June 1956) - Tom Sawyers Island (Opened June 1956) - Fort Wilderness (Opened June 1956) - Tom Sawyer Islands Rafts (Opened June 1956) - Skyway to Tomorrowland and Skyway to Fantasyland (Opened June 1956) - Horseless Carriages (red and yellow) (Opened May 1956) - Rainbow Ridge Pack Mules (Opened June 1956, Closed October 1959) - Rainbow Mountain Stage Coach (Opened June 1956, Closed September 1959) - Rainbow Caverns Mine Train (Opened July 1956, Closed October 1959) - Main Street Omnibus (Opened August 1956) - Indian Village (Opened July 1956) - Indian War Canoes (Opened July 1956) - Junior Autopia. (Opened July 1956, Closed December 1958) - Kelley’s Jungle Killers (Opened February 1956, Closed September 1956) - Color Gallery (Opened March 1956, Closed January 1963) - Tom and Huck’s Treehouse (Opened June 1956) - Phantom Boats (Opened July 1956, Closed October 1956) - Mineral Hall (Opened July 1956, Closed December 1962) - Fantasyland Theater (Opened August 1956) - Fantasyland Railroad Station opens - D tickets are added (January) 1957: - Midget Autopia (Opened April, Closed April 1966) - Sleeping Beauty Castle (walk through) (Opened April) - Holidayland (Opened June, Closed January 1961) - Monsanto House of the Future (Opened June, Closed December 1967) - Viewliner (Opened June, Closed September 1958) - Motor Boat Cruise (Opened June) - Indian Village Rafts (Opened July) - Frontierland Shooting Gallery. (Opened July) - Leigh Woolfender is 10 millionth guest on December 31
1958: - Grand Canyon Diorama (Opened March) - Alice in Wonderland (Opened June) - Columbia Sailing Ship (Opened June) - Motorized Main Street Fire Truck (Opened August) - Satellite View of America (Opened January, Closed February 1960) - Disneyland and Santa Fe Railroad adds Fred Gurley Engine. March 28th - Tomorrowland Railroad Station - Last episode of "Disneyland" television show airs (September 3rd) - ABC changes the name of Disney's TV show from "Disneyland" to "Walt Disney Presents". - First year Candlelight Procession (December) - Disneyland Kennel Opens (January 18th) - Milt Albright founds the Magic Kingdom Club 1959: - Fantasyland Autopia (Opened June) - Submarine Voyage (Opened June) - Disneyland-Alweg Monorail System, Mark I Train on a .8 mile track around Tomorrowland (Opened June 14th) - Matterhorn Bobsleds (Opened June) - Disneyland and Santa Fe Railroad adds Ernest S. Marsh Engine. July 25th - Soviet Premier Nikita Krushchev is denied permission to visit Disneyland, sparking an international incident. - E-tickets added to ticket book (June) - Disneyland welcomes its 15 millionth guest. - The "Mickey Mouse Club" TV show is cancelled. 1960: - Main Street Electric Cars - Art of Animation Exhibit (Opened May, Closed September 1966) - Mine Train Through Nature’s Wonderland (Opened May) - Skull Rock (Opened December) - Pirate’s Cove (Opened December) - New Cinerama Film (America the Beautiful). (Opened July, Closed June 1967) - Catfish Cove (Opened January, Closed January 1964) - Pack Mules Through Nature’s Wonderland (Opened June) - Disney sues the ABC TV network for the right to take their shows elsewhere, and buys ABC's one-third interest in Disneyland for $7.5 million. - Disneyland Welcomes 20 millionth guest. 1961: - Snow White Grotto and Wishing Well (Opened March) - Debut of the Mark II Monorail Extended track length to 2.5 miles, Monorail to the Disneyland Hotel (June) Specs: 112 FT., 4 Car, 108 Person Seating Capacity - Flying Saucers (Opened August, Closed September 1966) - Babes in Toyland Exhibit (Opened December, Closed September 1963) - Disney's TV show changes names from "Walt Disney Presents" to "Walt Disney's Wonderful World of Color" and debuts in color on NBC. (September 24) - First all night grad night party for High School Graduates is held in June. - 25 Millionth Guest welcomed to Disneyland, Dr. Glenn C. Franklin on April 19th. - Tinkerbell has her first flight at Disneyland 1962: - Safari Shooting Gallery (Opened June) - Adventureland Shooting Gallery (Opened January, Closed November 1969) - Indian Village (Expansion) - Jungle Cruise (New scenes added) A group of Audio-Animatronics elephants in the Elephant Bathing Pool are added to the Jungle Cruise at Disneyland. - Swiss Family Tree House. (Opened November) - ”Disneyland After Dark” airs on national TV April 15th - “Meet Me at Disneyland” first airs on national TV June 9th, Last show September 8th 1963: - Enchanted Tiki Room (Introduction of Audio-Animatronics) (Opened June 23rd) - Mickey Mouse Club Headquarters (Opened January, Closed January 1964) - First year for Parade of Toys during the Christmas holiday season. - Disneyland showcases its first “Cavalcade of Big Bands” 1964: - Columbia Sailing Ship (Opened February) - Tomorrowland Jets (Opened August, Closed September 1966) - Jungle Cruise (New scenes added). - The New York World's Fair opens. Walt Disney's WED company constructed pavilions for: Ford ("Magic Skyway"); General Electric ("Progressland"); the state of Illinois ("Great Moments with Mr. Lincoln") and Pepsi-Cola ("It's a Small World"). (April 22) - Disneyland Goes to the World’s Fair, airs for the first time on The Wonderful World of Color May 17th.
1965 - Great Moments with Mr. Lincoln (Transplanted from the 1964-65 World’s Fair in New York. (Opened July) - Fashions and Fabrics Through the Ages (Opened March, Closed December 1965) - First Disneyland Ambassador to the World selected in 1964, begins her duties (Julie Reihm) - The 50 millionth guest is welcomed at Disneyland, Mary Adams on August 12th. - "The Disneyland Tenth Anniversary Show" airs on national TV January 3rd
1966: - “it’s a small world” (Opened May) - Primeval World Diorama (Opened July) - Fort Wilderness (Opened June) - New Orleans Square (Walt Dedicated the first new land to open since Disneyland’s opening in 1955 in July, at a cost of 18 million dollars). - "Disneyland Around the Seasons" airs on national TV December 18th - Walter Elias Disney, dies of cancer at 9:35 AM December 15, at the age of 65. He had been recovering from surgery a month earlier to remove one of his lungs. Roy Disney, his brother, takes over the Disney corporation. 1967: - Pirates of the Caribbean (Opened March 18th) - Circle Vision Featuring America the Beautiful (Opened June, Closed January 1964) - Carousel of Progress (Opened July) - PeopleMover (Opened July) - Rocket Jets (Opened July) - Flight to the Moon (Opened August) - Adventures through Inner Space (Opened August) - Alpine Gardens (Opened December) - Club 33 (Private club) opens in New Orleans Square - In July, The all new Tomorrowland was dedicated, at a cost of 23 million dollars. It was dubbed “A World on the Move”
In conclusion, current Disney management lacks the fire and passion that was WALT DISNEY!!! They just don't get it!!!!!!
The issue is how should a company increase its profits?
One way is to cut unnecessary expenses (such as operational inefficiencies) while increasing prices to levels that most customers are still willing to pay. That leads to a good profit margin on revenue. If the profit margin gets bigger, the profit gets bigger, even if sales are flat.
Companies can't increase their profit margin year after year. There are limits to the cuts and limits to the price increases before a company's product or service suffers and and the company discovers that their customers are spending their money elsewhere. Ultimately, cost cutting and prices increases are not a real growth strategy.
This, to my mind, was Paul Pressler's real problem. He was very good at coming in and cutting costs, finding ways to cut back and to spend less money on new things as well. Which worked for a time, profits go up. But then you need, as Werner says, something else. You need to find new ways to get the customers to come. Well thought investment and creativity are needed. And that's where Pressler hit a wall- at Disney and Gap.
Havn't noticed any quality reductions. What's wrong with added affordability via cost cutting? No budget cuts for the new attractions coming to DCA (or Disneyland proper for that matter). Again, what's so bad about cost cutting?
To Boldly Go Where No MiceChatter Has Gone Before!
Nothing like a Kevin Yee column to get me back to this site (the WDW Board is deader than George Carlin).
A great ... and for you ... short read!
You're very right about Disney still overcharging for things $28.99 seasonal dinner prices at Boma, while cutting quality (hey lose the prime rib and replace it with strip loin they're tourists ... what do they know?) for example ... while at the same time 40% discounts on ALL tees and caps during December?!?!
$49 rooms and 7-for-4 offers while absurd rack rates ($500 a night?!?) abound.
They definitely want to have their pie and eat their cookies too.
Meanwhile, the brand does get damaged. More and more details get cut.
Recently park managers put in lists of attractions, shops and dining locales that will go to seasonal status as soon as the holidays end. There is talk again of shuttering a resort and if that doesn't happen they'll take large sections of others out of inventory (hell, they already are doing so at Caribbean and Coronado now as they renovate both)
Park hours have been cut through April and recently Disney pulled May-July hours off its site because clearly they're going to change and likely not in a fan/guest friendly way.
Worse, ALL new WDI projects at WDW are suspended/on hold except for Idol. Apparently, this doesn't include HoP and Space Mountain rehabs. Just new stuff, although I've gotten conflicting info on whether Imagination 4.0 is mothballed too.
But stuff like the Monsters coaster for The Park Formerly Known as The Disney-MGM Studios ... or the Mermaid clone for MK ... they aren't happening in the 2010-12 timeframe and could possibly never happen.
So we get more of the same ... Four Parks: One Stale World.
Oh, more good news (don't know why Al hasn't broken this one) but if Disney and Beijing can't come to an agreement on the Shanghai resort by early 2009 look for a huge bloodletting at WDI!
The sad thing is this *&it doesn't have to happen. This is a business decision made by people with no vision who don't see beyond the next fiscal quarter.
I think over the past few years there's been quite a bit of support for Kevin's "declining by degrees" concept. But now you have an economic crisis that's affecting everyone (well, except for Road Trip over at Laughingplace!), including the largest of companies. I think we need to give Disney a break on their current cutbacks. They're doing the same things that every other person and company on the globe are doing - trimming expenses while trying to keep the core of their operation afloat. Now is not the time for big new attractions and expansion of parks and plushing out hotels. Now, if the cutback trend continues at Disney past the economic crisis, then it's back to "declining by degrees".
But now you have an economic crisis that's affecting everyone (well, except for Road Trip over at Laughingplace!), including the largest of companies.
However, while it is key for any company to be prudent, I would have thought Disney would really want to attract people, make them forget about their troubles while they are there, and make WDW the only option of choice because of the quality. I would be even more annoyed if I scrimped and saved for a 4* resort and got a Motel 6 hotel experience. Investments will do far more for their bottom line, happy guests are spending guests. Then again, I suppose with the meals already paid for due to DDP, there is less incentive to encourage that.
There are 2 ways to cut costs. One is to strip-mine operations. The other is to look at things like this: Are executives' current salaries and severance equal to their performance? A whole new set of office supplies ordered with each new project, regardless of leftovers- and are those the sort of $30 staplers? A focus on development, trying to get a good sense of things before building. Reasonable scheduling that doesn't require overtime in a rush to meet an opening date. Little things that add up to savings.