Magical Express

[WDW1974]

The whole luggage situation is going to be a fiasco for most travelers. Just another gift that keeps giving from the oil company emperor in the White House, and amazingly poorly run airlines that can't run based on the limited business models they have been following.

US airlines are fast becoming completely third world versus Asian, European and Middle Eastern carriers.

It won't affect me (yet) as I'm an elite flier with my carrier and still get my two freebies. But one wonders how long that will last.

And clearly Disney didn't create DME ever thinking they'd have to charge for baggage. I do think the best solution would be for Disney to collect the fees themselves via room charge (i.e. credit) and pay the airlines. But the administrative costs of that could spell trouble for the whole DME program.

All I know is people are going to stop flying. Last summer a round trip from Fort Lauderdale to Phoenix cost $232. This year, it's $660. That doesn't count the luggage fees.

And simply parking jetliners in the desert and laying workers off isn't going to be a solution. ... I guess a trip back to 2000 is out of the question, sadly.

[halltd]

Originally Posted by WDW1974

And clearly Disney didn't create DME ever thinking they'd have to charge for baggage. I do think the best solution would be for Disney to collect the fees themselves via room charge (i.e. credit) and pay the airlines. But the administrative costs of that could spell trouble for the whole DME program.

We all know DME isn't really free. Someone is paying for it somewhere, somehow. My guess is the same way they pay for the resort transportation - it's built into the cost of resort rooms and possibly even ticket prices. So, adding another "perk" to the program just means other things may go up a little too. Or, they could just say, "you can charge these fees to your room right now, no hassle, for $1 surcharge per bag more" and then still increase fees at the rooms (because we know they would anyways).

They've got a good thing going with DME (at least I assume they do). I doubt they'd let it die now.

As an interesting off-topic comment, back when WDW first opened, the park was a "local" destination. The majority of their guests drove - even from far away - but they still drove. Flying was a privilege back then. It was expensive, not many people did it, etc... I can honestly see it going back to that a little. This was also before the days of "hubs" and seemingly endless amounts of layovers, delays, etc...

Traveling by plane anymore has become so frustrating that I don't even like to do it anymore. I mean there are way too many people trying to fly that either don't know/care about restrictions or just try to get away with it anyways. Going through security is a nightmare, getting on and off the plane is a pain in the you know what, and there are almost ALWAYS delays. Like 1974 said, I could fly from Ft Lauderdale to Cleveland for $200 any time over the past two years. Now it costs me $425 for the same flights on the same airline. I almost drove (but didn't have the time.)

[Lindsy1052]

Just out of curiosity Tim, given the price of gas, what would the cost of gas be to drive round trip from Cleveland? I know it's going to cost me about $200.00 for gas just from Orlando to Myrtle Beach, SC.

[Phonedave]

Originally Posted by halltd

I'm sure Magical Express wasn't easy to set up either. I bet encoding park tickets on your room key and allowing you to use that room key for charging wasn't easy either. Then again, building WDW wasn't easy. But, the end result was well worth it. Disney likes to try and streamline things so it's easier on the guest. That's what they should do here too - eventually. I fully realize this luggage charging thing is unprecedented. But, hopefully they make it a lot easier on guests.

I agree, thats why I said this


Can it all be done? Of course. Does it take a while to set up and test. so there are no guest problems? You betcha.



Extra luggage charges are new. Give them some time to work something out. It may or may not happen, but it would be nice if it did.

-dave

[Phonedave]

Originally Posted by AlwysL8

The grocery stop is the reason we are going with Tiffany Towncar, we will be there for two weeks and plan on stocking up on bottled water, snacks, etc. Plus I have heard some horror stories about your luggage not arriving at your hotel until a couple of hours after you yourself have arrived and that is not a chance I want to take, especially if we end up arriving later in the evening. If it wasn't for those two things I would have probably gone with ME myself.

Thats not a horror story, thats SOP. You luggage comes about 3-4 hours later. They tell you that right up front.

Now here is the thing most people don't realize. When you use DME, Disney acts as your "luggage agent". If anything happens to your luggage, they take care of it. I have hear complaints that luggage did not show up in a room until 8 or 9 hours later. People automaticly assume that its because DME took forever, however there is also a very real possibility that the airline lost it. When you use the DME, if your luggage does not show up at the DME hangar, DME will go looking for it. Thats why you show them your baggage claim tickets at the DME counter. DME knows how many bags you are supposed to have, and if they don't show up, DME does the leg work to track them down with the airlines, the delivers them to your room. If you were not using DME and the airline lost your luggage, guess who gets to spend 2 hours of VRU hell with the airlines when they are supposed to be on vacation? Yep, you do.


-dave

[halltd]

Originally Posted by Lindsy1052

Just out of curiosity Tim, given the price of gas, what would the cost of gas be to drive round trip from Cleveland? I know it's going to cost me about $200.00 for gas just from Orlando to Myrtle Beach, SC.

Well, if I average it out, between $325 and $375 obviously depending on gas prices. Here in south Florida, we're already at $4.10 or higher for regular. But, I'm assuming as you go north it gets cheaper. Orlando was about $0.10 to $0.20 cheaper several weeks ago when I drove up to visit. So, I'm sure states in between will vary as well. My car gets 25-30 miles per gallon on the highway and the trip would be 2346 miles for me.

So, the gas would be cheaper than my plane ticket that's for sure. But, there are other trade offs. That's a two day driving trip really. I put 2400 miles on my car. But, I don't have to pay daily airport parking or luggage charges.

Ultimately, I wanted the time instead of the money, so I opted to fly. But, if airline prices keep going up and service keeps getting worse, I might consider driving next time.

[CleveRocks]

Originally Posted by halltd

We all know DME isn't really free. Someone is paying for it somewhere, somehow. My guess is the same way they pay for the resort transportation - it's built into the cost of resort rooms and possibly even ticket prices.

Hmm ... it actually is free.

In retail, there is the concept of a "loss leader." A loss leader is a product that you sell for way under your own cost for the product (or give away for free) as a method of bringing more people into your store. If you bring more people into your store, then it's only natural that more money will be spent in your store. The extra profit you will earn by selling more "other" products than usual dwarfs the expense you have in your cost of buying the loss leader itself.

It's the same with offering an extra service (it doesn't have to be a product). Let me give you a non-Disney example:

Let's say you own a chain of convenience stores, like 200 of them. You make gobs of money, but you want to make gobs more. You try to think of a way to get more people into your stores. You contract with a bank to have one of the bank's ATMs in each and every one of your stores. In your contract with the bank, you say the bank is not permitted to charge any fees to any customers who use the ATMs in your stores. In other words, someone who isn't a customer of that bank can still use the ATM in your store for free ... no fee!

To make the bank want to forgo that income, you pay them $5 MILLION a year.

Okay, so you've now spent FIVE MILLION DOLLARS. Do you have to raise the prices of everything in your store to "pay for" that 5 million bucks? DO you have to "hide" the cost of your ATMs in the sandwiches and sodas and cigarettes you sell?

HELL NO.

By having those ATMs in your stores (and heavily advertising it), you are drawing in more customers. SOmeone needs some cash. Rather than having to find a bank, or even their own bank (to save an ATM fee), they can just go to one of your stores, which seem to be everywhere. They are going to your store just to get some quick cash. They don't need to buy anything. But hey, while they're there, they might just buy a Slim Jim and a box of Altoids. You would not have sold that Slim Jim and that Altoids box if you didn't have that ATM in your store.

So at the end of the first year with the ATMs in your stores, you check out the books. COmpared to last year, you earned $25 million more this year. You earned more money because you attracted more people into your store than you did last year. Your sales profits increased 25 MILLION DOLLARS. Okay, so the ATMs cost you 5 million dollars. That still means that you netted 20 MILLION DOLLARS more than you did last year. ALL because of your loss leader.

That is the role DME plays for Walt Disney World. Each family (on average) that uses DME spends hundreds of dollars more at WDW than if they had rented a car or used a car service. When they use DME, they don't have the same easy access to the outside world (think outside restaurants, grocery stores, souvenir shops, other entertainment options, etc.). I know full well people can take Mears or a taxi to get other places, but most people won't bother and will just stay pleasantly stranded in WDW.

All those meals eaten at WDW restaurants and NOT eaten on I-Drive or at SeaWorld or in the room (food in the room bought at a local supermarket), all those souvenirs purchased exclusively at WDW and not at Universal or Wal-Mart, and so on and so on ....

DME earns huge gobs of money for WDW. They don't hide the expense for DME in other things. They don't need to. If you cash in golden eggs, you don't need to charge more for them in order to pay for the Purina Goose Chow.

[halltd]

^ Are you positive that's how the system works? I'm familiar with the "loss leader" concept, I was under the impression Disney Transport and DME were not operated in that manner. I thought the resort arm of the company "contracted" with Disney Transport and DME as a "vendor" providing a service and therefor actually paid a fee as such. I could very well be wrong, but that's how I understood it was arranged.

[CleveRocks]

Originally Posted by halltd

^ Are you positive that's how the system works? I'm familiar with the "loss leader" concept, I was under the impression Disney Transport and DME were not operated in that manner. I thought the resort arm of the company "contracted" with Disney Transport and DME as a "vendor" providing a service and therefor actually paid a fee as such. I could very well be wrong, but that's how I understood it was arranged.

I do know that Disney sets the rules ... the policies and procedures ... and that they subcontract out provision of buses and drivers to Mears. The people who "run" DME are Cast Members, not Mears employees.

So even if Disney does pay a fee for DME (they obviously pay Mears), it still makes it a loss leader, just like in my example of your convenience store chain paying the bank to have its ATMs in your stores. You pay the fee to that outside vendor (the bank), that vendor provides the hardware and the service in exchange for the money you pay them, and then YOU enjoy the profits that that service indirectly provides to you (it draws more people into your store).

DME draws more people into (or more correctly, keeps more people in) Disney's "store," and therefore generates a lot of profits for Disney. Mears earns a profit because Disney pays them more than the buses and drivers cost. Disney earns a profit because they have more people who are more of a captive audience. We benefit because we get free airport transfers and some luggage handling to boot.

Everybody's happy.

[Phonedave]

^

The thing about a loss leader though is that you usualy cannot tie it into a single product that would offset the costs. To use your example with the ATM, lets say you wanted to raise the price on something to mke up the $5M, what would you raise? You really don't know. How many of those Altiod and SlimJim combos are sold because of the ATM and how many are sold because people want SlimJim and Altiods. I did work retail for many years, and we used to use loss leaders all the time. The margins in the grocery store business are extremely thin, in fact you can argue the entire core of the store is a loss leader and you make your profits on the perimiter, but I digress.

In WDW's case, they know that for ever DME used, there is a room associated with it. Rasing rack rates to offset the DME would be a very easy accounting.

I am not saying that they are doing such a thing, as the whole "captive guest" thing you were talking about is pure genius on WDW's part, but you never know what they are doing in the magical accounting land. If getting budget money in Disney is anyting like getting budget money where I work, I would not be suprised if there is an offsetting somewhere.

-dave