Posted Friday, June 2, 2017 8:40 AM | Contributed by Jeff
The report compiled by the Themed Entertainment Association and Aecom, an engineering company. Disney does not disclose attendance data for most of its properties, including the Magic Kingdom and five other parks near Orlando, Fla., that make up Walt Disney World. Universal had a very good year, the result of popular new Harry Potter attractions.
Of course, as the financial results show, Disney still made more money, which was always the direction they wanted to go.
Also, this report regularly gets a lot of numbers wrong.
This story just made Chicago's WCPT radio (Chicago's Progressive Talk, because yes, I'm a damn liberal); the breathless lead was attendance was down at all but one Disney park, and then, as an apparent afterthought, Disney parks earned piles of money.
Time flies like an arrow. Fruit flies like a banana.
-- Groucho Marx
Yeah, and I'm waiting for the investment press to proclaim the end of days. I don't remember when, but it was a few years ago, where Disney said on a call that fewer guests spending more was probably preferable. I just think it took them longer than expected to reach those price points.
I don't remember when, but it was a few years ago, where Disney said on a call that fewer guests spending more was probably preferable.
Of course, Gonch has been saying that on CoasterBuzz for over a decade now.
Gonch's Business Model™
(I'm still trying to hunt down the origin post, but here's a thread from 2006 where Gator refers to the "Gonch-approved business model" in reference to a lower volume, higher margin approach)
And yes, I have little to add beyond, "Told you so."
This only makes more and more sense for Disney. They can't seem to price their product high enough. I wonder how far they could push the whole thing? How much more would people pay - especially if you could cut back the crowds by a decent clip? If they already hate poor people, could they truly get it to the point where they become something the middle class simply can't (or isn't meant to) do? Do they want to? I have to admit, I find the idea of a 'luxury theme park experience" intriguing.
I'll admit they've generally priced us out at this point...but a lot of that has to do with our interest as well. Although that's probably true of anyone. The value proposition is how badly you want it vs the cost. Just last month we were staying literally a few blocks from Disneyland and had plenty of free time to do stuff, but couldn't justify what Disney was charging. (but at the same time had no problem paying over $7 for a hot dog - I guess I like weiners in my mouth more than I like Mickey)
How can Disney be making money after paying the royalties on "Gonch's Business Model™?"
This Isn't A Hospital--It's An Insane Asylum!
The only risk with fewer visitors at a higher price is that your revenue stream is not as diversified and you are more susceptible to weather, economics, and other outside factors having a proportionally larger impact on your financials. I doubt that would have a meaningful impact for Disney, but at the same time if you are publicly traded, sustained growth is key.Last edited by Fun, Friday, June 2, 2017 12:53 PM
And diversity has to be something they're worried about with the ESPN and broadcast business in flux. The cruise line continues to hike fares as well, and they're building two more boats. I think it's worth it, because you can't touch the service level, but if things get rough, some people may be willing to risk a Carnival cruise because it's cheaper.
a Carnival cruise ?
Now that is really showing hate for poor people.
I things get rough, Disney can discount as necessary. Discounted/"free" dining plans. Discount types of rooms or at resorts where demand is soft.
Also, this report regularly gets a lot of numbers wrong.
From what I've seen over the years, I'd say they get more wrong than right any day of the week and twice on Sundays.
If you're at the point where you can't price your product high enough, why not expand? This is the longest stretch Walt Disney World has gone without a park (they're on the cusp of twenty years). I'm not overly concerned about it right now, and I know that nobody is entitled to Walt Disney World, but I think that given the choice between making what is arguably the world's most famous and popular resort something that only the upper class could ever hope to attend, which I know is an exaggeration, or adding in a fifth park that cuts down on crowds at any one park by distributing them throughout more parks, I'd probably go for the latter.
With the expansion at Fantasyland and Pandora and Star Wars Land and Toy Story Land, I think they are expanding. Just without opening separate gates. Seems to me to be more conservative approach which accomplishes the same goal of expanding capacity.
I haven't seen plans for new resorts (though I haven't looked). But they are expanding some of their existing resorts which accomplishes the same goal of increasing room capacity.
If you're at the point where you can't price your product high enough, why not expand?
Because what people are willing to pay and how many people want to come are two different things.
Like in the GotG thread, I can't help but give the benefit of the doubt to Disney on this one and suspect there's a reason another gate isn't the plan.
Plus, in the case of some kind of downturn (temporary or permanent - as mentioned above), I imagine pricing is an easier fix with less risk than the infrastructure and cost of an entire park.
A valid point, and one supported by the fact that some attractions/restaurants are only open seasonally. I do think that the new lands might distribute people better as it seems like only the Magic Kingdom has a full attraction lineup while the rest are catching up a bit, and so not only will some of the pressure be taken off of the signature park, but even at those other parks, there's more for people to do.
I think that the more parks you add, the longer people have to stay to experience everything. I know that there's definitely some maximum limit on the number of parks you can really offer before people can't afford to spend enough time to visit them all. I just think that there's room for one more park, especially with all the IPs Disney has bought up in recent years. Maybe a Marvel park?
Of course, I'm nobody. They probably have figured everything out and are already making the smartest decisions for the business.
I agree with sirloinedude. Instead of adding new attractions that attract people, maybe they should do like they did with Dumbo and TSM, and double capacity for as many rides as possible. No one will race to the park to see a ride that has newly added additional capacity, but it would improve the experience, and allow for more people top visit the parks, bringing in more money.
For the record, Epcot has been expanding for years, in the most economical and high margin way possible: longer and more "festivals." I wouldn't expect the geeks and enthusiasts to see it, but the numbers of people they pack in to spend huge per-caps, about 3/4 of the year now, is staggering. Attractions are not always things that cost hundreds of millions of dollars. Sometimes they're new food stands with high end food and drink at a few bucks a portion.
I can't help but think that Iger and company are very measured in their approach to adding another gate in Florida because they have spent a significant amount of money and time tinkering with the last 2 parks opened in the US to get them where they want them. I'm also not convinced that building a 5th park in Florida fixes any perceived crowd issues. If you buy into the theory of induced demand, you might see some short term spreading out of the crowd, but in the long term, it will just mean more crowds to fill in the increased capacity. I call the crowd issue "perceived" since I've seen nothing from Disney or the hordes of people continuing to visit that crowds are an actual problem. The company seems content to using pricing to simply take the edge off of the crowds.
For the record, Epcot has been expanding for years, in the most economical and high margin way possible: longer and more "festivals." I wouldn't expect the geeks and enthusiasts to see it, but the numbers of people they pack in to spend huge per-caps, about 3/4 of the year now, is staggering. Sometimes they're new food stands with high end food and drink at a few bucks a portion.
Clearly this model is working from both an attendance and revenue standpoint, otherwise Disney wouldn't be growing the festival concept. But I'd be curious to know the negative revenue impact to the permanent restaurants throughout Epcot during these events, especially Food & Wine, where the food kiosks are a central part of the experience.
I can't tell you the last time I actually ate in one of the permanent restaurants at Epcot during F&W; and as we all know, there are some really decent places to grab a meal there that sets Epcot apart from the other parks.
I've done a couple of festivals at EPCOT as well as restaurants during the same visits. My impression was that neither were suffering on account of the other. Reservations were still hot and stand by waits were long. Increased crowds for such events could probably account for all seats filled, especially during F&W. Plus, dining plans can't be used at kiosks, so the sit downs have that going for them.Last edited by RCMAC, Sunday, June 4, 2017 5:02 PM
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