Disney dogged more and more by analysts

Tuesday, November 4, 2008 10:11 AM

Jeff said:If Disney World allowed itself to have little autonomous kingdoms, the properties would compete with each other, which wouldn't make sense because they'd drive each other's prices down.

The Magic Fiefdom?

Everything that Disney does leads me to believe that they have a target per cap for each financial demographic, and it's decided at the Disney World level how best to achieve that number with a balance of hotel, ticket, food and merchandise pricing to get there. And given that target, reducing room rates as the means to induce spending elsewhere is no different than unlimited soft drinks at Holiday World or 49-cent Coke at the grocery store.

I wouldn't expect any other business in the US to truly *get* this concept - "profit centers" are the paradigm of the day....but I wouldn't be TOO shocked to find out Disney operates differently, with the bigger picture in mind from the very outset.

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Tuesday, November 4, 2008 10:25 AM

January post-holidays through the first week or two of February is about the deadest time year round now that they've managed to plug some of the hurricane season holes in September. That $49 AP rate is the same as it was last year at that time, so there's nothing new there.

(Dude, tell me you're not actually going to stay in a Value resort...)

That said, there was some more aggressive discounting in the November/December period compared to the same time 2007. We'll see what happens when we get to President's Week through Easter---that's the bread-and-butter season, when the northerners escape the cold. Disney rack rates are higher than than any time other than Christmas.

I've already got my timeshare exchange confirmation for a 2BR at Old Key West for our late February week, and could have confirmed a couple more units since then. Last year I only managed to snag a 1BR. So, anecdotal demand for that peak period does seem to be down a little bit.

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Tuesday, November 4, 2008 10:25 AM

Hey, what industry fared just fine during the great depression? Tick tock...the entertainment industry. I'd rather own stock in Disney than a bank these days.

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Tuesday, November 4, 2008 10:45 AM

Hey, my original book was for Animal Kingdom Lodge, but when I stopped and thought about how much time I'd actually be in my room, even as a hotel snob it seemed like kind of a waste. So yeah, Pop Century it is for me!

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Tuesday, November 4, 2008 12:28 PM

Jeff said:
Whether or not they're dropping rates to fill rooms is a different issue from whether or not the properties have autonomy to set prices. And I'm saying that they don't.

So am I. But I think they have expectations for those properties.

If Disney World allowed itself to have little autonomous kingdoms, the properties would compete with each other, which wouldn't make sense because they'd drive each other's prices down.

Again agreed. That's what I said.

Even when they do have profit, like the meal plan, they can't arbitrarily reward a restaurant at Epcot if someone is eating at a hotel food court.

Agreed yet again. And why would they? That's not what I'm suggesting.

Everything that Disney does leads me to believe that they have a target per cap for each financial demographic, and it's decided at the Disney World level how best to achieve that number with a balance of hotel, ticket, food and merchandise pricing to get there. And given that target, reducing room rates as the means to induce spending elsewhere is no different than unlimited soft drinks at Holiday World or 49-cent Coke at the grocery store.

And I think reducing room rates is the means to get people there. Not to stimulate per caps for people already visiting.

Brian Noble said:
(Dude, tell me you're not actually going to stay in a Value resort...)

Oh God, no. Just can't believe that rate.

Perhaps Jeff is more right than I think. If so, they might as well find a place to milk another $49 from each visiting family (which sounds ridiculously easy) and offer free hotel rooms. :)

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Tuesday, November 4, 2008 1:20 PM

Now I see why your debates with others go on forever. Your little quote by quote thing is annoying. :)

So now you agree that it would be crazy for each hotel to be autonomous in terms of setting pricing, yes?

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Tuesday, November 4, 2008 1:34 PM

Arrrgh! I never said it wasn't. I was the one who first said that didn't make sense because they'd be competing with each other!

My entire argument was that the different resorts have expectations and need to meet those.

I think somewhere along the way we began debating different points.

I'm arguing the what and you're arguing the how.

(no quotes, you big baby :) )

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Tuesday, November 4, 2008 3:21 PM

Lord Gonchar said:
My entire argument was that the different resorts have expectations and need to meet those.

After reading a few of these, I saw something in one of Jeff's posts that leads me to a new conclusion. Whether I'm right or not, we'll see.

There aren't 13 or 14 resorts at Disney, there is 1 (yes, one). It has 13 or 14 sections which are nicely grouped together, priced together and themed together, but at the end of the day it is one entity. At the end of the day, the resorts as a whole need to meet whatever goals the execs have set for the department.

If that's by bumping up the price of the high-end rooms by 49 bucks so they can offer the "trailerpark" resorts at an even cheaper rate then they've broken even. Its obvious they don't compete against one another, but I think the way they are viewed from higher up is much different than most of us would think.

Again this is all speculation based on a couple comments I gleaned while reading through the rest of the discussion.

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Tuesday, November 4, 2008 3:33 PM

Juggalotus said:
There aren't 13 or 14 resorts at Disney, there is 1 (yes, one). It has 13 or 14 sections which are nicely grouped together, priced together and themed together, but at the end of the day it is one entity.

Yeah, I get the concept.

But that still seems to imply that if one of the resorts sits pretty much empty for the year, that it's ok. It's not.

The park most likely has a 'resorts division' on paper that includes all of the properties as one revenue generating entity, but to say it doesn't matter what any given proerty does just doesn't make any sense. Each of those properties under Disney's umbrella has certain expectations.

They expect the Caribbean Beach Resort to do X amount, the Wilderness Lodge to do X amount, the Pop Century to do X amount, etc. Not just the resorts overall to do X.

And yes as Jeff suggests, the bottom line is really all that matters regardless of where it came from, but that doesn't mean they don't set goals and creat a plan for where it's going to come from. If it didn't matter that one of those resorts made X amount of $$$, then it wouldn't be there.

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Tuesday, November 4, 2008 4:11 PM

But that still seems to imply that if one of the resorts sits pretty much empty for the year, that it's ok. It's not.

We actually know what happens in this case, though. During the 9/11 travel crash, the Port Orleans resorts were alternately shuttered for months on end---just taken off the books entirely. It was spun as a refurbishment, but really it was just a reduction in inventory to avoid a price collapse.

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Tuesday, November 4, 2008 7:14 PM

And I don't think anyone was suggesting that anyway.

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Thursday, November 6, 2008 6:09 PM

Back to the original question at hand: earnings came out today for TWDC, and news was not good.

on a conference call with analysts, executives said attendance at its U.S. theme parks is down 1 percent so far in the current quarter and that bookings for the first two quarters of fiscal 2009 are down "a little under 10 percent"from last year.

Not coincidentally, they just announced a major promotion for the first half of 2009 at the Orlando resort: pay for four resort nights, get three more free. If you're booking for the first three months, they'll throw in a $200 gift card.

Last edited by Brian Noble, Thursday, November 6, 2008 6:10 PM
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Thursday, November 6, 2008 7:05 PM

Nice. Feeling better than ever about moving our trip from Oct to Feb.

Even with having to pay to change our flight, it looks like we'll end up ahead. :)

EDIT - is it only for Value resorts?

Last edited by Lord Gonchar, Thursday, November 6, 2008 7:21 PM
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Thursday, November 6, 2008 7:23 PM

No---they just quote that price in the promo literature because it's the cheapest. Should apply to any resort/view with sufficient availability.

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Tuesday, December 2, 2008 2:07 PM

More on the state of Disney and the resorts. (It's Jim Hill so take it with a grain of salt if you must)

"There are some very scary rumors currently making the rounds about how far down advance reservations for the Resort are for the month of January. According to one Disney insider that I spoke with late late week, to date only 35% of the resort's available room nights have been booked for the coming month."

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Tuesday, December 2, 2008 3:11 PM

Yeah, I believe what I read on Disney fan sites as far as I can throw them, but I wouldn't be surprised either. I think the economic situation will get worse before it gets better. I was at the mall this afternoon, and while not a ghost town, it sure wasn't very busy for December. If retail is gonna take it in the nuts, the tourism business can't be much better off.

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Thursday, December 4, 2008 7:22 AM

Next your, tourism's gonna get clobbered. Maybe not so much here in New England where a lot of people come from less than 100 miles away, but Sandusky, watch out.

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Thursday, December 4, 2008 9:26 AM

I have a feeling everything will be OK with no significant drop in attendance, but a perhaps a drop will occur in air travel.

Remember how all this was supposed to happen this year too? Gas prices were too high. No one would travel. People still traveled.

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Thursday, December 4, 2008 10:47 AM

Hopman said:
Next your, tourism's gonna get clobbered. Maybe not so much here in New England where a lot of people come from less than 100 miles away, but Sandusky, watch out.

Nonsense. Regional parks experienced exactly the opposite, especially late in the year.

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Thursday, December 4, 2008 1:48 PM

^The "close-to-home staycations" (like CP is for Clevelanders) did pretty well under the circumstances. Places like Myrtle and the FL panhandle got hurt. Hard to say what's going to happen next year...gas prices have come down to the point where people COULD travel - but that requires that they have jobs, and that there are enough people left behind to do the job SHOULD they be allowed to take a vacation.

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