Does Disney have a price problem?

CNN thinks so.

https://www.cnn.com/2024/08...index.html

But if the park is full all the time, that doesn’t feel like a price problem to me? Sure, perception seems to be that it’s too expensive, but people have always said that, yet continue to fork over their money anyways .

thoughts?

I keep seeing headlines like this, and they're mostly based on the statements made in their last earnings call about "moderating demand." If you spent any time in those parks the last two years, you might feel that it's unreasonable to expect attendance to stay that ridiculous.

Their margins will be fine, but I don't see how they get back to top line growth unless something else spurs demand. That doesn't make it a failing business. The press and investors are obsessed with growth.

Jeff:

The press and investors are obsessed with growth.

Right. Im not sure they can grow much larger without sacrificing the customer experience some. They are probably already there or close to it.

I think they already have, and the Lightning Lane stuff makes it worse. They're never going to back to Fastpass, which is a bummer, but ultimately that would be the easiest way to improve the experience, and solve the DAS abuse.

Jeff:

The press and investors are obsessed with growth.

Ah, the cornerstone of capitalism. But infinite growth just isn’t possible. With the reduced birth rates Disney might actually see some reductions in the future years.

The birthrate may be declining, but the population is far from shrinking. According to the CDC, there were about 3.1 million deaths, and 3.6 million births. The US Census says we have a net gain of one person every 14 seconds. And the funny thing is that, in politics right now, the same people who want more people don't want people from elsewhere.

I don't think that Disney is any serious danger. Yeah the attendance will ebb and flow, as it always has. Net trends over the long term will still inch up, with recessions and pandemics and what not causing peaks and valleys. As much as I don't care for the LL situation, the quality of the attraction product since I first moved into the neighborhood is staggeringly higher. I couldn't have imagined something like Guardians or Rise when I first got here.

The NYT is getting in on the action too, talking about debt incurred to visit.

Nothing super new there, but I don't understand the desire to make "perfect trips" when kids are so young. They won't remember. My 14-year-old doesn't remember his first visit when he was 3. If you wanna do it for your own memory, fine, but don't pretend it's for the kid.

I read that NYT piece. The message to me isn't "Disney is too expensive," but rather "Disney is viewed as an essential rite of passage." (That's almost a direct quote from the article.) Secondarily, I am struck by how effective Disney is at getting people to add flourishes onto a trip. The guy who spent an extra $2K, in part because he wanted to use the Disney-branded ride share instead of just getting on a bus, for example.

What I don't get is how a family that makes $250K a year has to finance a $6K vacation.

Well, it likely depends on what else they spend their money on. They could have stupid cars, more house than they need, expensive clothing habits, etc. It's like the stories of people in that income bracket being "crushed" by student debt, but only because of their other decisions. We've spent way more than $6k on what I'd call an epic vacation, on significantly less family income, and not by borrowing (but with real damage to our savings).

I get the mental block on this. I did this all of the time in my 20's, on things large and small. Logically, once you've time shifted the cash flow to spend with non-credit, you're living at the same "level" but without the interest expense. But when I was doing that, rates were like 2% or less, with promo transfer rates all of the time. Now you're looking at 20% minimum. There's no universe where I use credit cards to finance anything.

Re: student debt.

My Mom told me once that when we were young, she wondered why all their friends had fancy houses, cars, and vacations, while my family did not. After all, they all had roughly the same income, what's the deal? Then when everyone's kids were in college, she watched those same people take out second mortgages on their homes while all three of us had our undergraduate degrees fully paid for out of the savings my Dad had been setting aside, with money left over.

Reminds me of the family featured in an article who was barely getting by and blamed the federal government. I wish I could find it. They owned a house near where the Obamas lived. They possessed TWO cars in one of the most transit connected cities in the US and of course they weren't Subarus or Volkswagens. I am pretty certain they employed a live in nanny, hired a gardner, etc. It was absurd.

Seems like the personal responsibility gene has gotten evolved out of existence somehow.

We have taken the same approach to college for our kids as Brian's parents. We are not hurting by any stretch, but comparing our 1200 sq ft house to our friend's much larger houses, does get us a tad jealous at times.

I’m not sure this is all that new. The whole point of advertising is to convince people they need things they may not need, and people have been buying things on credit for as long as there has been credit.

The difference, if there is one, is that there is MUCH LESS friction in obtaining credit than there used to be.

Financial literacy is not commonly taught in schools, so you learn whatever you learn from your parents.

Jeff:

Well, it likely depends on what else they spend their money on. They could have stupid cars, more house than they need, expensive clothing habits, etc. It's like the stories of people in that income bracket being "crushed" by student debt, but only because of their other decisions. We've spent way more than $6k on what I'd call an epic vacation, on significantly less family income, and not by borrowing (but with real damage to our savings).

I get the mental block on this. I did this all of the time in my 20's, on things large and small. Logically, once you've time shifted the cash flow to spend with non-credit, you're living at the same "level" but without the interest expense. But when I was doing that, rates were like 2% or less, with promo transfer rates all of the time. Now you're looking at 20% minimum. There's no universe where I use credit cards to finance anything.

I second everything you said here. When average cars payments got to be over $600 a month, I was out of that game. I can afford a $1000 a month car payment, I just refuse to ever do that. I’m perfectly fine with an older , more affordable vehicle.

It the Wealthy Barber and Millionaire Next Door concepts. But ultimately, financial literacy is worse than horrible for a lot of people. Leads to a lot of less than optimal spending (at least from consumer standpoint) but there are a lot of people who benefit from spending and have no interest in it going away. Dealing with people with a minimum level of financial literacy changes your approach (for a lot of things).

I don't understand the people who believe they can or are entitled to skip the roommates-and-ramen phase of life. I'm surprised by the number of younger people especially who don't get that.

In terms of long-term financial literacy, to be fair, I partly grew into it because I worked for a company that had a crazy good 401k match that I would have been dumb to not do, and I kept making more and more in a lucrative career. By the time I finally "got it," doing all the right things was easy because I was less constrained. What didn't change is that I never "leveled up" my lifestyle relative to income. I suspect that I am atypical in that sense, given the cultural fascination with celebrity and the performative nature of "social" media. There are more "Joneses" to keep up with. I'm not patting myself on the back, it's just how I think I'm wired. Many of my peers do not share this view.

I totally agree with the general sentiment here. I've already got most of multiple private 4 year college tuitions socked away for my three kids, the oldest of which just hit high school. I'll actually be surprised if we don't end up with a surplus in the 529's when all is said and done. I also agree that financial literacy and denying instant gratification are both horrendous problems in general.

However, I do also want to point out that salaries have not kept up with cost of living in forever and real needs (housing, transportation, food, education, medical care) are slowly (or quickly) becoming out of reach for someone who doesn't have some kind of leg up (generational wealth, connections, family culture, etc.). It's not as simple as "skip the Starbucks and you can afford a 3 bedroom house" and a medical emergency can easily cause bankruptcy.

Big fan of the spend passionately on things you love, and ruthlessly cut things you don’t. I will admit to starting to inflate my travel expenses (I’m much more of a Hilton/Embassy Suites guy then a Hampton guy now, and I stay on property at Disney World and Universal something that wasn’t always true) but I still live in the same apartment I moved into 8 years ago, pack my lunch to work and don’t go out to eat much at home.

My salary has helped tremendously but ever since I got finance in 2021 I’ve saved as much as I spend (not including state and federal income taxes, that’s its own category.). I’ve been amazed what the stock market can do if you follow some simple rules (index funds people.) That said, I don’t know how lower and lower middle class are doing if they didn’t have assets prior to the pandemic. I feel bad for them.

The_Orient_of_Express:

I second everything you said here. When average cars payments got to be over $600 a month, I was out of that game. I can afford a $1000 a month car payment, I just refuse to ever do that. I’m perfectly fine with an older , more affordable vehicle.

My car is twenty years old this year and is in perfect working order. Something major will likely break at some point and I expect it'll be uneconomical to fix -- but until that happens I see no reason to replace it.

Jeff:

I don't understand the people who believe they can or are entitled to skip the roommates-and-ramen phase of life.

Shakes fist. KIDS THESE DAYS. You mean it’s expensive to live by yourself in the most desirable neighborhood in Austin? I never would have guessed that. I rant to my wife about this all the time and she puts up with it because she loves me.