Could Disney World Crash at $1,000? | Disney World


  • Disney Ticket Price Increase 2015Disney World crashed the $1,000 barrier. Not good.

    And often not seen in any positive sense.

    That figure was often used in headlines to describe admission price changes at Walt Disney World and its California sister property.

    One report said:

    “The ‘happiest place on Earth’ might be a little less happy these days as Disney World fans turn grumpy over a new round of price increases -- including the introduction of an annual pass that costs more than $1,000.”

    Said another:

    “The Internet is having a Donald Duck-like tantrum after hearing news that Disney’s popular theme park annual passes jumped by up to 35 percent, crossing the psychologically important $1,000-a-year-mark. ”
    Not good news.
    “This was the last straw for us,” exclaimed a long-time fan.

    “Sad day,” noted a commenter on the Theme Park Insider blog. “This price increase is just ridiculous and like others have commented, Disney World is truly pricing regular folks out.”

    One thousand dollars gets you multi-time entrance

    One blogger responding calmly to both single ticket and annual price said in a more positive tone:

    “It's called an annual pass. Go three or four times a YEAR and it pays for itself. FL residents get a great discount for them, too.”

    But another wrote:

    “I will never go again. Way too high and for a family of 4 that is $400 just to get inside. Never mind food, fast passes and the like. I will take the approx $800 (by now) and discover the USA!”

    Wrote another:

    “It stinks but I don't blame them for raising their ticket prices. It's not just about corporate greed, it's about the market and inflation. If people really thought it was too expensive, they'd stop going, but the parks are packed with people every single day.”

    As Orlando Sentinel columnist Beth Kassab put it: the added options were worthy of both a “yay” and a “boo.”

    She particularly objected to the raised prices of $20 for parking.

    She said it “may be one of the most galling retail feats in history: Disney World raised parking prices from $17 to $20.”

    Parking costs up, too

    She added:

    “This is, again, rooted in crowd control. A $20 parking tab on top of a $105 single-day ticket at the Magic Kingdom is hopefully insulting enough to discourage some people from coming, or at least make sure hotel guests take the bus and keep their cars off the roads.”

    The good news was also that all annual and seasonal passes now include parking.

    One of her mildest comments was that the new tiered price structure was totally confusing. It rivaled a college term paper, some complained.

    In honesty, there were probably more negatives than positives.

    But there’s often other ways of looking at it.

    That should include those $1,000 prices and maybe some other factors you might not have thought about.

    So let’s look at 16 or so different ways of seeing this.

     

    As for that $1,000 price, let’s compare it. It does involve multiple admission costs, after all. And one or a single ice cream sundae, believe it or not, can cost just that. It was cited in a news story a year or two ago at a New York City ice cream counter where the special sundae had a high cost because it was covered in 23-carat gold.

    Silly, maybe.

    But more reflective of your own everyday life: what does a typical Disney vacation really cost or how much do guests’ generally pay? One study found that for families that have $500…or half of that $1,000…they simply can’t afford even a single day. A shame perhaps, but that’s the way it is. Reality.

    The average family of four needs about $1,000 a day for any of Disney’s two theme parks, according to one study. 

    Let’s look at those negative reactions to higher prices in general.

    Simple.

    No one likes to pay more.

    But everything costs more.

    Blame inflation

    Prices have always gone up.

    Honestly, nothing new or startling here.

    Disney has rolled out admission increases on an annual basis for ages. You have to go all the way back to 1988 to find the last year that one-day tickets didn't move higher, according to Disney watchers. 

    Do you know what surge pricing is? There’s little question that is the ultimate goal of Disney.

    Disney is trying to thin crowds at the busiest times. Or at least it appears that way.

    The changes appear to discourage visits to the theme parks during the most convenient times when the weather is cooler, children are excused from school and the general public is enjoying holiday times such as Christmas.

    So you can still visit at Christmas or the school’s spring break, but it’s going to cost more than ever, and more than before. 

    What does this do to planning, which just about everyone recommends?

    The answer: a lot.

    The days of buying a single-day ticket and wandering through the gates are over, folks.

    Time to learn to make more detailed plans based largely on how often you want to visit, and when (if by chance you have not already done it).

    This depends in part whether you are a Florida resident, and whether you say “no sweat” to the heat of Central Florida summers.  

    But will the move really spread out the crowds, which just keep on coming?

    Yes.

    Probably…

    …but who really knows?

    This is all a good move for travel agents, whom many visitors will find even more useful than ever to sort through the often confusing array of ticket prices.

    Expect to see more advertising from agents dealing with Disney not just for theme park tickets but across the board for cruises as well.

    Surge pricing models will continue to be unveiled. 

    You might view this in large part as Disney’s attempt to control overcrowding.

    Walt Disney Parks and Resorts have set attendance records in the last three fiscal years.

    In the latest quarter, records again. Disneyland has also been struggling with overcrowding. During a 24-hour party in May to launch the Anaheim park’s 60th anniversary celebration, the entrance gates were temporarily closed twice when the park reached capacity — an estimated 80,000 guests, according to insiders.

    The same thing happens occasionally during the Christmas holiday season.

    What would you do to control crowds?

    A spokesman said:

    “Typically on those days we would stop allowing guests in at some point midday … and then usually we would reopen to guests sometime in the early evening.”

    All of this also applies to Walt Disney World in Orlando, of course. 

    Still another way to view this:Disney’s parks have become a victim of their own success.

    It’s a classic win-win for Disney, says Per Sjofors, founder of Atenga, a consulting firm that specializes in pricing research.

    “Attendance keeps on growing, and the parks only have limited space,” he explains.

    Increases, he adds, are designed to leverage customers’ willingness to pay more while also controlling the number of guests at a theme park. 

    Competition is nipping at Disney heels.

    Specifically, Universal.

    The rival theme park has been growing faster than Disney since opening The Wizarding World of Harry Potter just a few summers ago. Expansions of Harry led to owner Comcast’s theme park revenues soaring nearly one third in a recent earnings report.

    Disney is reacting to more competitive parks 

    Back to surge pricing. Not evil or awful.

    There are plenty of other industries–such as restaurants, barbershops, and health clubs–that traditionally have benefitted from surge pricing.

    Surge pricing has typically been used in industries with perishable goods (e.g., hotel rooms), but it can be used any time when demand varies.

    Managers are often wary of raising prices during times of high demand because they fear a consumer backlash. It’s a fair concern, but it’s worth noting that consumers are becoming desensitized to surge pricing – high/low pricing is being used more often in more industries. If you have flown recently, you have seen it in the airline industry. 

    Surge pricing is also discounted pricing. Sometimes.

    It’s also called protecting the brand

    If well-known companies that are fiercely protective of their brands–such as Disney and Major League Baseball teams–are contemplating (and using) surge pricing, other companies are certainly going to follow the leader. Expect to see more of it. And of course, another way to view this strategy is instead of raising prices, you are offering discounts during low-demand periods. 

    In light of the competition, you might think Disney should not raise but cut prices.

    Wrong, say experts.

    The improving economy justifies price hikes. Most Disney guests still arrive by auto. And the sharp drop in gas prices alone is a good reason to raise prices. So do added attractions. 

    If you believe the Harvard Business Review, Disney’s move is a good one.

    Raising prices during popular times {such as Spring Break or Christmas) capitalizes on higher consumer valuations. Is this gouging?

    Some observers think so, and companies such as Uber have faced criticism for the practice. But if customers are willing to pay more in certain instances, this process makes sense.

    Guests: willing to pay more for less

    The Business Review’ argument is that a good strategy to stimulate more business is to offer lower admission on slower days. It’s a move that will probably encourage some guests who were previously reluctant to come at the higher prices. This will result in growth. Since theme parks are high fixed cost/low variable cost entities, revenue from discount-enticed new customers is virtually all profit…or free money. At least from Disney accountant standpoints. These newly activated “dormant customers” would also likely show up hungry and snap up food and souvenirs… more “free money.” An example of how this works is Randy’s Car Wash across the street from the Business Review. It offers a $5.99 wash special on Tuesdays. The result: demand is so strong on some Tuesdays that a police officer has to direct traffic. What you tell buyers or guests’ in Disney’s price hike: “Yes, customers or theme park guests…we’ve raised prices on popular days, but you now have the option to visit at a much lower price on certain days.”

    Options are prized

    Framing pricing options in this manner makes a price increase more palatable, proponents argue. This provides guests with options that empowers them, as the experts say, to make their own choices. 

    Harvard writers and others admit prices that push some out of the guest market do not match a Disney “magic” image. Nothing magic about it. But what it does eventually is reduce crowds. By doing that, the Disney magic is restored, in a sense, because crowds are fewer. And guests can enjoy the experience even more. Everyone has a better time.

    Hence: magic. 

    Walt Disney World has its limiting factor, too: rides. You might be surprised to find which Disney Parks have the fewest actual rides. Epcot may be huge in acerage, but when a moderate sized crowd is dumped into the park, Epcot’s major rides are instantly swamped and overrun. Same with Animal Kingdom and Hollywood Studios. When waits at long, guest enjoyment is diminished. It’s almost a mathematical formula.

    Added costs equals more rides. 

    From a purely business standpoint, Disney stock should rise as a rule with these higher prices. This is good news not only for stockholders but for guests. Credit CEO Robert Iger for this foresight, analysts say. He’s solidly behind multi-billion dollar new park investments. They have helped Disney shares to appreciate 207 percent in just a five-year period. The recently announced Star Wars addition should also have a positive impact on stock prices. Not to mention the feature film out later this year. 

    So while it might not always be obvious on the surface, higher prices are not just to benefit a park’s profitability, but can lead to an overall better experience for its guests.

    Or so the argument has it.

    If you still aren’t convinced by now, there’s always the other alternative:

    Staying home. ###