Posted Friday, July 9, 2010 12:09 PM | Contributed by Jeff
It's time again to ask if the industry is using this value voodoo for good or evil. At what point do Walt Disney World, SeaWorld and Busch Gardens become so reliant on luring guests through discounts that the spell can't be broken?
Read more from The Orlando Sentinel.
Similar to selling cars at 0% interest rates. My last 2 cars have had deep discounts.
This article strikes me as being behind the curve. Disney has never resorted to discounting admission beyond a token amount, and is already starting to reel in the resort discounts---the dining promotion has been extended into winter, but the minimum stay is longer, the minimum ticket purchase is longer, the cheapest resorts only get the cheapest plan, and it is only in the least-popular weeks during the period, not the entire duration. Universal actually *increased* their multi-day ticket prices a few months back (in some cases, sharply) in anticipation of Potter-driven demand.
I think Universal's situation is unique, in that the Potter addition is almost unprecedented for an existing park addition. Perhaps not in size, but certainly in its ability to command attention and media.
The question I have is what signs of a recovery are there? Vegas bookings (aside from certain heavy demand weekends, either a boxing match, etc) are still tracking flat against last year's severely depressed 2009 numbers. Granted rates are no longer falling month over month, showing some stabilization, but they're not going up, which would indicate rising demand.
I've yet to see anything to indicate jobs/housing/etc are rebounding in any significant way, and nationwide lodging properties are being thrown back to the banks at higher than normal rates. I doubt that everyone is going to Orlando this year, in lieu of every other destination, so where is this recovery people are talking about?
The question in the article about the discounting and packaging misses the larger point which is Disney now has a harder battle to keep people on its property, now that Wizarding World has opened. Bundling a package/food/lodging/free bus ride from the airport so as to prevent a rental car, is a very nice way to do that.Last edited by CreditWh0re, Friday, July 9, 2010 2:17 PM
I agree, Creditwhore. I am beginning to think that a double dip recession is probable. In my area at least, the housing market is crap, and the unemployment rate is skyrocketing. Kennedy space center is shedding people like fur, and even my company is having layoff rumors. I'm glad there are some who are optimistic though. I think these discounts may stick around, atleast until consumer confidence start rising again. .
One of the side effects of the crappy economy is that people are being a lot more careful too. I forget what the stat was, but savings account usage has grown to some absurd amount relative to just two years ago. I think the "recovery" looks more like a plateau than booming expansion.
That's why I think the article asks an interesting question. Tourism in some places was built on booming expansion. That's definitely true for Las Vegas at least (seriously, Venetian/Palazzo, I get it, I can stay for $109 plus credits), but Orlando has not expanded as fast.
But getting back to the article, I think the point was that there was a point in time where very little was ever discounted. I agree that Universal has gone quite the opposite direction, on an increase path now for several years, as evidenced by their decline in attendance with an increase in profitability.
I think Universal started significant discounting from day zero. They gave away free tickets like water that first year when the only functioning attractions were Murder She Wrote and the Alfred Hitchcock 3-D movie, and it's rare that I don't see some combination of buy one day get x numbers free.
In fact, when I went for Potter previews, I could buy a 3 day ticket for 135, or I could buy an almost Annual Power Pass (good every day, incl. saturdays, except July 4, Turkey day, Christmas-New years, and easter week) for $119.
Yes, that's right, the almost annual pass was cheaper than the stated 3 day ticket, but you had to ask for it, or at least question the ticket office to tell you "al of the various options". Not the first time I've experienced that at Uni Orlando either.
but, back to Jeff's point, Universal was slowly decreasing the obvious discounts, thus while suffering gate decline, but increase profitability. I'm eager to see how much less discounting they do with Potter now online. Anyone seen any ads for post August specials or room rates?
The way I remember the first year was two day tickets at the price of one. I went in the first few months and got to ride virtually everything (E.T., King Kong, Earthquake, Ghostbusters, etc.) that opened with the park.
I think that Universal doesn't operate all that differently than Disney in a composite sense, it's just that their mix is different. None of their on-site hotels are "value" resorts. Even in 2008, with heavy discounting on annual passes which scored discounts on rooms, I've still yet to achieve the kind of composite per-diem rate I have at Disney. But I'm also making the incorrect assumption that as many people stay on-property (as a percentage) as they do at Disney, and I think we know that ain't what happens.
Orlando will be very interesting to watch. My youngest sister talks to me about wanting to go to the "Harry Potter Theme Park" without any recognition that it is even part of Islands of Adventure. I know that in the past if I had made a trip to Orlando with my parents and siblings, I would have been hard pressed to convince them to go to Islands of Adventure over Universal Studios (we loved Hollywood) or a day at any Disney park. I agree that this really is going to be a hit and hopes it delivers.
Economy side note: I don't think there is any credible evidence the economy is recovering. Jeff may well be right about the amount people are saving, but debt has generally started to drop (for the first time in a long time) for individuals because of the number of defaults much more than the amount of savings (even if it is often not reported that way). Additionally, additional credit being taken out is continuing to plummet by pretty much everyone except the government. Given that credit was expanding almost everywhere in the 90s and early 2000s (and that money was being put into the economy), we shouldn't expect an economy anything like that for a long time (unless credit starts taking off again, which I don't think it can and wouldn't be good beyond the short term anyway).
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