Opinion: Disney price hikes about more than profit

Just missed the graphic, but I think Florida depends a lot on where you live. No state and local income tax adds a lot back into your check, and property taxes are certainly better than they are in Ohio.

Jeff said:

I guess I have to ask... if Disney is out of range for people, is it because it's too expensive or is it because as Americans we have different priorities? I won't even judge whether or not they're "wrong" (although I suppose I already did), but is it just that they're different?

To me, I think its more a matter of priorities being different than being right/wrong. Maybe the woman you work with values her clothes and I-phone more than lunch with her co-workers. I wouldn't say that is right or wrong. Just different.

I work with someone who is already thinking about his next car when he drives one off the lot. He keeps cars for on average about a year. Car dealer's dream. Every financial planner on the planet (and just common sense) tells you its a hugely dumb financial move. But apparently he can afford it (spends less on other things) and he is really into cars. Is that wrong? As someone who drives Hondas I would tend to say yes. But in reality its just different.

In terms of Disney, or any provider of higher end products/services, affordability (whether real or theoretical or perceived) is important. Someone who could afford Disney if they just made different choices is no more able to afford Disney (at least in the short term) than someone who simply cannot afford Disney no matter what their priorities (think family of 4 living under the federal poverty line -- which I believe is about $24k/year). Good news for Disney is its an experience that a lot of people are willing to make a priority. And my guess is that everything still works for them if only about 25-30% of the country can afford a trip.

I pretty much agree with everything you said. Where I take issue is the articles and opinion pieces full of people bitching and moaning about the cost and how unfair it is. If for those people it really is just about the choices they make and prioritization, and I strongly suspect it is, then I don't have any empathy for them.

I'm going to build Dizney-Lite - with Mikey and Missy Mouse, for the lower-middle class crowd to go and have an OK vacation with the kids. For people on a tight budget, who want to spend some mid-quality time with the family.

(Not sure if this gets a *wink* or not - please advise).

If you can get Walmart as a sponsor, I will invest immediately.

I think we're also having the typical confusion between mean and median. The mean i.e. average in America (as in pretty much every place) is way, way, way higher than the median. For non-statisticians, the gist of that is that a few people make a huge amount above the average and a *lot* of people make a bit below the average.

I am also appalled at how little long term thinking the average (or median ;)) American displays in terms of savings. College and retirement are our biggest items (still 12 and 30 years away respectively) but we also have separate emergency fund line items for cars, house, human medical, and pet medical. Of course, the odds of having an emergency in all of those categories at the same time is astronomically low, but it gives me peace of mind to split them all out instead of just having one monolithic emergency fund. And we just shuffle the numbers around whenever one gets below its threshold. In my experience, most people with teenagers still aren't even in the right order of magnitude (literally) for college saving.

Another interesting, or alarming, piece of information I heard on a radio talk show recently is that a little over 70% of U.S. households live paycheck to paycheck with no money left over for savings. Having all these emergency lines of funding saved up makes you atypical of what is going on. Along the same lines, if there is no money left for savings, there will be no money for any type of expensive vacation. I'm sure much of this is because of irresponsible spending and high credit card debt, but it doesn't change the reality of this.

I wonder if that's really the rub. Perhaps it's not that $40K can't get you a Disney vacation, it's that the discipline required to stretch that $40K over years of savings for the Disney vacation always falls to the immediate gratification of the newest, freshest whatever...or maybe $40K just isn't enough money.

Jeff said:

I guess I have to ask... if Disney is out of range for people, is it because it's too expensive or is it because as Americans we have different priorities?

To me, "too expensive" is just the inverse of the "different priorities" discussion. What is "too expensive" to most people - I think that's going to be a matter of what your priorities are and what you value?

Perhaps the more correct phrasing is that more and more people are no longer finding the value proposition in a WDW vacation?

I keep going back to what I said before - it's subjective. And subjectively, the general tone is that going to WDW is becoming less and less attainable - regardless of how far you try to rationalize it. Perception is reality.

Maybe we're looking at it from entirely the wrong angle. How much does the average family spend on vacation and how do the possible Disney experiences compare? That seems like it'd clear up a lot.

That is probably true. But I would argue that close to half of that group *could* make better decisions about spending. There is an extremely high number of Americans that have no concept of budgetary responsibility. I would, by no means consider myself wealthy, but I have my own home and my own car which is more than many people my age cannot say. I am thankful for that. I also know that if I want to spend a week at Disney, I will need to make a conscious effort to plan for it and budget for it.

Understanding of finance/economics is horrible in the US. Should be required K-12 classes. And then in college thereafter. In addition to helping with personal finances, much of the political garbage we see every day could go away.

Lord Gonchar said:

To me, "too expensive" is just the inverse of the "different priorities" discussion. What is "too expensive" to most people - I think that's going to be a matter of what your priorities are and what you value?

Perhaps the more correct phrasing is that more and more people are no longer finding the value proposition in a WDW vacation?

That is probably true also. With high debt load, living paycheck to paycheck, many people have a choice to make of where their discretionary spending goes. People who are wealthy enough can get all of their toys and still have money for a Disney vacation if deisred. Others, who could only spend one way, would rather have their day to day cable TV, Netflix, streaming music account, luxury car, fine dining, etc. and an annual trip to Cedar Point (or similar) over saving for an expensive multi-day vacation at a Disney resort.

How much does a Disney vacation really cost?

Pretty interesting given the discussion and their conclusion falls in line with what I would tend to estimate - $3000 to $5000 for a family of four for a week...depending.

And that's the rub, I think.

I'll be the first to admit Disney offers a premiere vacation experience. I'm also a fan of theme park, rides and crap like that.

And even I have a hard time saying I'm ok with dropping $5000 for a week a WDW simply because I can do so...much...more with the money elsewhere. (in vacationing, general entertainment, fun spending...whatever)

Flat out....and this is going to sound weird...while I feel that the Disney experience is worth that, I'm not sure I see it as the best value for that money. Does that make sense?

I think this is what the whole discussion really comes down to on some level.

Can I use my entire fun budget to take the family to Disney for a week? Sure. Do I want to do that? Nope.

I think that's manifesting itself as complaints of pricing people out. And really, too flipping bad, people. Disney is crying for you all the way to the bank based on the 50 million people who do spend their money there.

See that's why we have Universal right down the street. That's where the value consumer is going to more and more, which is probably why Comcast is investing so much money into them now. I mean I paid $2100 for my family of seven to have the power passes this year, but I did it by stretching out the payments and it was still a better deal than Disney passes. For my wife and I Universal feels like it has more to offer for all of my family (including adults) whereas Disney seems more like it's aimed at my younger kids. So for us it was a no brainer to get passes for Universal. I certainly would go visit Disney if it were cheaper but to shell out an extra $150-200 per person for annual passes seems like a little too much to me, and I know that visiting all of the parks thoroughly requires multiple days per park which makes tickets seem like a waste of money as well. I'm not saying Disney is not a premium product, I'm just saying that I can get better value from other parks for the same amount of money. Heck I can have Universal and Sea World 2 park passes for the same price, and probably a six flags gold combo pass as well.

While there are probably some people being priced out literally I think in more cases it falls into the category Gonch pointed out. Do you really want to spend all of your entertainment money to get to Disney? Is it really that important to you? Do you yearn for it that badly? For the people who have the extra funds available to make the trip without sacrificing something else it's affordable. For anyone not in that position it becomes not a matter of can you come up with the money but is it worth the scrifice you have to make to come up with the money? In many cases no. In my case no. I would have to give up too much. For a friend of mine the answer is yes and she goes every October. She has mentioned being tired of people telling her "Must be nice" when they find out how often she goes to Disney without taking into consideration what she gives up in order to be able to do that. This argument goes on for just about every park I'm sure because I see it myself with people whining that nobody can afford Cedar Point anymore. Once in a while I get the "must be nice" treatment about how often I go there but there are things I give up to have that luxury that I'm pretty sure many other people would not. At the same time I know there are plenty of people that just don't no matter how they tweak their budget have the means to have that ability.

I agree about Universal when I was younger, but I didn't find it cheaper (especially staying on-property). It just made more sense to me before having a kid.

Lord Gonchar said:
Perhaps the more correct phrasing is that more and more people are no longer finding the value proposition in a WDW vacation?

If that were true, attendance would be on the decline, not setting records every year.

Jeff said:

If that were true, attendance would be on the decline, not setting records every year.

I totally disagree. You can easily lose potential customers but still grow business. Especially if the situation is as we're describing - pricing out the bottom end.

You don't need the entire spectrum of customers buying your product to show growth.

But then, those people didn't see the value proposition in the first place, or they would have been going.

I think they were going. That's why you're suddenly hearing the complaining. If they weren't going before, I'm not sure they'd be complaining about being priced out now.

Quite simply, I think Disney is shifting their theme park audience up the scale.

EDIT - Wait. Let me clarify that.

I think the market is shifting. It goes back to earlier posts in this thread where I said the market has spoken. The Disney customer base is willing to pay a lot for the premiere experience Disney offers. I don't think it's unreasonable to think the lower end may be getting cut off in the process.

EDIT AGAIN - There are several ariticles online that cite tourism bureau Visit Orlando:

"Indeed, the average annual income of an Orlando tourist peaked at about $93,000 in recent years, according to data from the tourism bureau Visit Orlando – about $25,000 above the nation’s average annual income, according to the Census Bureau."

The average annual income of an Orlando tourist. That's top 24% in the US according to the old NYT percentage tool.

I think that's the shift happening the last few years. Orlando has, for whatever reason, become a more upscale vacation. Orlando is synonymous with Disney and I think they're just catering to the market. If it went the other way and suddenly there wasn't demand for that, trust me, a trip to WDW would get real affordable, real fast. But it doesn't have to.

There's some truth to that I'm sure. I mean, remember how crappy I-Drive was even ten years ago?