What I find is missed by "Disney is a business"

[JodieJRanch]

Pete put it out there again today about changes being "good" or "bad" based on being financially successful.

Good business from a consumer point of view gives a product that surpasses the cost of the product.

Yes you can explain why Disney does something by stating "they are a business" but that does not make it a correct or proper move. This also applies to companies like Nintendo, Apple, and others.

If it isn't a proper move and the stock prices/profits don't rise to projected levels, the Board will prompt the Chairman to replace or shuffle Presidents' and it rolls down hill from there. It's as simple as that.

 

[raidermatt]

If it isn't a proper move and the stock prices/profits don't rise to projected levels, the Board will prompt the Chairman to replace or shuffle Presidents' and it rolls down hill from there. It's as simple as that.

Two problems with this. One, it usually takes mistakes on a massive scale for the Board to prompt the Chairman to make changes. Certainly this is the case when it applies to the Chairman himself. And two, the stock performance results, in part, from the sum total of all decisions made. A rising stock price does not mean every decision was proper, no more than a falling stock price means every decision was improper.

If you have no interest in discussing the merits of individual decisions, that's your prerogative.

 

[Miffy]

I didn't hear the podcast but wanted to respond to something.

The purpose of a business is not to make money--it's to provide a product or service and to glean a profit from the sale of that product or service.

If the only purpose of a business was to make money, there'd be far fewer types of businesses and a lot more banks and casinos, which are pretty much guaranteed moneymakers.

The question "How much profit?" is up for debate as is the question "What do we do with the profit?" and "What happens in quarters/years when there is no profit?"

I love WDW and have yet to regret any money I've spent there. I've never felt gypped or fleeced. Yet. We'll see what the future holds.

 

[JodieJRanch]

I didn't hear the podcast but wanted to respond to something.

The purpose of a business is not to make money--it's to provide a product or service and to glean a profit from the sale of that product or service.

If the only purpose of a business was to make money, there'd be far fewer types of businesses and a lot more banks and casinos, which are pretty much guaranteed moneymakers.

The question "How much profit?" is up for debate as is the question "What do we do with the profit?" and "What happens in quarters/years when there is no profit?"

I love WDW and have yet to regret any money I've spent there. I've never felt gypped or fleeced. Yet. We'll see what the future holds.

Uuuuuuuuuuuuuuuuuuuh the goal of every business is to make money period. As much money as possible. After making money, the goal is to make more money.

 

[PirateBrigade]

If the only purpose of a business was to make money, there'd be far fewer types of businesses and a lot more banks and casinos, which are pretty much guaranteed moneymakers.

But banks and casinos are definitely NOT going to be moneymakers if you are the 500th national entrant in the field.

The key to making money is having the greatest monopoly legally allowed over a specific demand.

Airlines are notorious money losers, but I guarantee that being the only airline in the United States sure beats being bank # 21,593.

In Disney's case, it's like a firenado of demand because of the strength of its IP. Cedar Fair can compete with generic roller coasters, but that has zero demand in my family!

 

[JodieJRanch]

Two problems with this. One, it usually takes mistakes on a massive scale for the Board to prompt the Chairman to make changes. Certainly this is the case when it applies to the Chairman himself. And two, the stock performance results, in part, from the sum total of all decisions made. A rising stock price does not mean every decision was proper, no more than a falling stock price means every decision was improper.

If you have no interest in discussing the merits of individual decisions, that's your prerogative.

Yes my explanation may have been a little simplistic, but the Chairman typically gives the Board growth, revenue, expense, profit and stock projections for each of the upcoming quarters and year. The Chairman also points out potential economic pitfalls which could affect each sector the company operates in and discusses any top management changes and any major acquisitions, investments and cost saving measures that are planned to be made. The Board typically doesn't get caught up in the minutia, and only typically comes to life when it's time to pick a new CEO and/or Chairman. They may question all of the above and give advice, but that's about it. The Chairman and/or CEO would only be replaced by the Board if the stock price doesn't CONSISTANTLY meet expectations. The CEO/Chairman also gives Wall Street the same dog and pony show. Wall Street is a little more discriminating. If Wall Street doesn't like it, the Board won't like it, because the Board listens a whole lot closer to Wall Street than they do to the Chairman.

 

[raidermatt]

Yes my explanation may have been a little simplistic, but the Chairman typically gives the Board growth, revenue, expense, profit and stock projections for each of the upcoming quarters and year. The Chairman also points out potential economic pitfalls which could affect each sector the company operates in and discusses any top management changes and any major acquisitions, investments and cost saving measures that are planned to be made. The Board typically doesn't get caught up in the minutia, and only typically comes to life when it's time to pick a new CEO and/or Chairman. They may question all of the above and give advice, but that's about it. The Chairman and/or CEO would only be replaced by the Board if the stock price doesn't CONSISTANTLY meet expectations. The CEO/Chairman also gives Wall Street the same dog and pony show. Wall Street is a little more discriminating. If Wall Street doesn't like it, the Board won't like it, because the Board listens a whole lot closer to Wall Street than they do to the Chairman.

Again, while more or less true (if you squint really hard, and even then only in some circumstances), largely irrelevant to the context of the thread. Given that most of the decisions discussed here are drops in Disney's financial bucket, the process you describe would never come into play, unless Disney pretty much screwed up every single one of them.

Further, what you describe is a way to evaluate the sum total of all decisions the entire company makes. Hardly applicable when discussing whether Disney is right to eliminate Magical Express or take evening extra hours away from Value/Moderate guests.

 

[viper17d]

The issue I have with the Chapek-era business model is that it has turned Disney’s long held value proposition and turned it on its head.

For years, Disney has taken the stance that if you provide an unparalleled, unique, always improving, high quality experience, people will come and you can charge what you want. Prices go up, sure. People complain, sure. But the driving force has been quality. Improve the quality of experience, increase prices.

Now, Chapek’s Disney has taken an unnecessary (see their stock price for God’s sake) knee-jerk reaction of: “we need to bounce back from Covid in a big way, let’s cut costs and raise prices. Maximize the per-guest profit.”

Any MBA grad would look at the market and suggest to do the same thing - cut the fat and raise prices until the customer tells us to stop (by not paying anymore). The problem is that this completely upends Disney’s long term strategy. People are coming back to the parks, and coming to the parks for the first time, and having a subpar experience.

They’re still paying an arm and a leg, if not more, but the parks are more crowded, there’s no FastPass (which hits families with young kids particularly hard), there are fewer dining options/menu items, no character meets, scaled back parades, less entertainment, fewer on-site resort benefits, soon-to-be no magical express, and the parks are less clean. Some of this is still Covid-related, but most is not. And I’m telling you that whatever Chapek can keep cut out, he will.

I’ve been traveling to Disney World three times per year for a while, and in the past six months I’ve had three separate family friends come to me after their first WDW trips with young kids, and all of them said it wasn’t worth it. It was crazy, lines were impossible, and it just wasn’t special.

That’s not the Disney I know, but it will keep happening, and Chapek will keep driving away an entire generation of families so long as his Disney business model prioritizes short term profit over park quality.

 

[Queen2PrincessG]

^ Exactly and again goes back to greed. They are no longer interested in providing an amazing experience. Imagine if instead of this current running initiative they gave a little more. Like offering any multiple day onsite park package a free day of unlimited fast passes? Or free breakfast? Something to tap into the fact that families want to be together at Disney. A real welcoming back to parks.

 

[JodieJRanch]

Again, while more or less true (if you squint really hard, and even then only in some circumstances), largely irrelevant to the context of the thread. Given that most of the decisions discussed here are drops in Disney's financial bucket, the process you describe would never come into play, unless Disney pretty much screwed up every single one of them.

Further, what you describe is a way to evaluate the sum total of all decisions the entire company makes. Hardly applicable when discussing whether Disney is right to eliminate Magical Express or take evening extra hours away from Value/Moderate guests.

Only Disney knows if it was a right move to eliminate Magical Express. I personally believe it was. Now I haven't heard that Extra Magic Hours will be taken away from Value/Moderate guest. That would be a mistake. If anything, it should be taken away from the On-Property, Non-Disney owned properties like the Swan and Dauphin, The Four Seasons, The Waldorf and any other Disney Partnership Resorts not owned by Disney. If I were Disney, any guest staying On-Property at a Disney owned resort would get (1 hour) of Morning extra hours at each park every day. The On-Property guest only should also be offered the option to purchase a pass that cost an extra $25-$30 per person that included (2 hours) of Evening Extra Magic Hours, limited to one park per day.

 

[Starport Seven-Five]

Only Disney knows if it was a right move to eliminate Magical Express. I personally believe it was.

I think it's going to hurt them on the value resorts somewhat. The prices are significantly higher than off-site and they keep cutting perks that justify that higher price. Taking a valued perk away is enough to cause a portion of the population to look elsewhere and when you can pay 1/2 the price per night off property and get a similar quality room... it becomes hard to justify.

Now I haven't heard that Extra Magic Hours will be taken away from Value/Moderate guest.

My understanding is that there will still be Extra Magic Hours but there are also going to be Extended Evening hours for Deluxe Resorts:
https://disneyworld.disney.go.com/guest-services/extended-evening/

 

[OneinThree]

These price adjustments are a long time in coming. This I believe, makes it difficult to assess value right now. Taken with rumors that Disney is no longer interested in flooding their property with bodies, it may seem reasonable to suggest that we are in fact seeing the beginning of long term strategy change. Clearly, demand remains elastic, ie people are willing to pay $300/night for a value resort. The issue comes where customers expect the same perks for their $300 as they did when that money bought them a night at a deluxe, for example. Revenues in the 80's and 90's were driven more by room rates and ticket sales than they've been in some time. Returning to that model *may* mean returning to what was a far better guest experience. As price continues to address demand, off-property hotels will most certainly be ready to serve customers not interested in paying the significant premium. During such a time, I would say it's crucial that WDW ensures quality and service reflects the high price tag, however.

 

[Lee Matthews]

We can’t lay this solely with Chapek, as much as I liked Bob Iger, he is the reason why the parks are like they are.

sticking a fan favourite like Josh D’maro also doesn’t really move the needle.

I’ve said countless times that I am in the minority when it comes to price rises. I don’t want stupidly busy parks and wait times of up to an hour or more so if surging prices is what solves it then that’s what needs to be done.

 

[Starport Seven-Five]

Apples to oranges but Cedar Point announced $99 season passes today with free parking included. Good for remainder of 2021 and all of 2022.

1 day at WDW or 1.5 years at Cedar Point… kind of wild to think about how different those business strategies are. Cedar Point is paying their ride ops $20/hour too.

 

[JodieJRanch]

I think it's going to hurt them on the value resorts somewhat. The prices are significantly higher than off-site and they keep cutting perks that justify that higher price. Taking a valued perk away is enough to cause a portion of the population to look elsewhere and when you can pay 1/2 the price per night off property and get a similar quality room... it becomes hard to justify.

My understanding is that there will still be Extra Magic Hours but there are also going to be Extended Evening hours for Deluxe Resorts:
https://disneyworld.disney.go.com/guest-services/extended-evening/

A WDW vacation already cost $$$$ no matter what level of resort you stay at and a few extra bucks may stop a few people, but Disney is gambling it won't be that significant. Magical Express to begin with was a pre-emptive strike at Universal which had already announced that Harry Potter Land was coming. After years of evaluation, Disney decided the cost just wasn't worth it and Uber was already cutting into Magical Express's business.

 

[Suzabella]

We're at a point where inflation is outpacing individual salaries. People have less expendable cash as the costs of housing, food, medical care and taxes rise. So as Disney is raising prices to increase profit, people's ability to pay for multiple trips per year or even 1 trip per year is dwindling. There will be more 1 time trips, more trips with less park days, more eating and staying off property, parkless stays at DVC properties while Vero DVC and DHHIR will be harder to make reservations at as people decide to take 'cheaper' trips that still give them some taste of Disney. People will find ways to save that money or spend that money going someplace else.

There's a tipping point. Has Disney reached it or are they merely getting closer? It'll be interesting to see.

 

[ctl]

Both these posts miss the point Pete was making IMO. The current atmosphere and spending habits by the consumer is what is allowing Disney to do these price hikes. COVID was a convenient vehicle to implement these changes in warp speed. Also, comparing consumer spending from 1955 or 1971 to now is not responsible.

I think one of the things that stuck out to me from what Pete said, and I totally agree with, is that pre COVID everyone complained about crowds. There aren’t many ways for them to limit or lower crowds and pricing is probably there most effective strategy. When Pete mentioned his conversation with the head of DL and he said that “they weren’t going to be trying to slam as many people into the place as possible anymore” it really made things clear. It seemed like their goal pre COVID was as many people as possible. Now I can see a transition to less people, more expensive, better experience.

I also don’t agree with the notion that this will price the average American family out completely. I think it could, but what it probably does is modify the vacation. It makes a 7 day trip a 4 day trip at the same or similar price. Some people won’t come, but those that do will spend a lot more money.

IAs one of those average American families I can assure you it will stop us from traveling to WDW. We used to go every year, but not with these price increases. We used to buy annual passes so that we could go twice in 12 months and move our vacation a week back in the second year to afford to go. We never went anywhere else for vacation as my kids loved Disney. At the current prices this is not an every 3 year trip even.
As far as price increases, they have been increasing the ticket prices annually for years now. WDW will increase the prices AND pack folks in like sardines as before (but now they will be overseas guests). Disney spent a heck of a lot of money on upgrading to the magic armbands, when I was fine with a good old plastic or paper tickets. They spent even more money on Disney Plus streaming service development and are getting plenty of revenue from it. WDW has outpriced itself for me in terms of staying onsite, going to after parties, or visiting the parks.

 

[JodieJRanch]

We're at a point where inflation is outpacing individual salaries. People have less expendable cash as the costs of housing, food, medical care and taxes rise. So as Disney is raising prices to increase profit, people's ability to pay for multiple trips per year or even 1 trip per year is dwindling. There will be more 1 time trips, more trips with less park days, more eating and staying off property, parkless stays at DVC properties while Vero DVC and DHHIR will be harder to make reservations at as people decide to take 'cheaper' trips that still give them some taste of Disney. People will find ways to save that money or spend that money going someplace else.

There's a tipping point. Has Disney reached it or are they merely getting closer? It'll be interesting to see.

Disney is raising prices to hopefully make and or maintain a profit. Since Covid the corporation has taken a major hit and they're doing what they can to gain the trust of Wall Street again.

 

[tony67]

IMO - Service and quality has been going downhill at Disney for years - I finally stopped going in 2016.
I cant be the only one.

I think it will catch up to them at some point - I can see it here - far less people are defending Disney no matter what.
There was a time when if you even questioned Disney you were attacked on this site relentlessly.
The whole attitude that even if the food is bad quality that you should enjoy it because its Disney is ridiculous - and yes I have had that response.

They are eating up a lot of the good will they earned over the years - and the attitude of someone else will just replace you - I don't buy that either - that can only last so long.

This has not stopped me from making money on DIS stock - but it has stopped me from giving them my money.
I dont travel there two to three time's a year - I dont buy Annual passes - I no longer have their credit cards - I have shifted my business to Universal. If I do go to Disney Ill stay at Universal and travel to Disney for a day or two with a hopper once the reservation system is gone.

I also think that the demographics will/are shifting to Universal, Harry Potter and Nintendo are a big deal and when the Gen Z folks have kids they may be more interested in taking their families to Universal.
Time will tell - but at some point you have to treat your customers like customers and not cattle.

Yes profit is the bottom line for a business - but to maintain profit you also need customer satisfaction and to provide a service that is seen as value for money.

 

[JodieJRanch]

IMO - Service and quality has been going downhill at Disney for years - I finally stopped going in 2016.
I cant be the only one.

I think it will catch up to them at some point - I can see it here - far less people are defending Disney no matter what.
There was a time when if you even questioned Disney you were attacked on this site relentlessly.
The whole attitude that even if the food is bad quality that you should enjoy it because its Disney is ridiculous - and yes I have had that response.

They are eating up a lot of the good will they earned over the years - and the attitude of someone else will just replace you - I don't buy that either - that can only last so long.

This has not stopped me from making money on DIS stock - but it has stopped me from giving them my money.
I dont travel there two to three time's a year - I dont buy Annual passes - I no longer have their credit cards - I have shifted my business to Universal. If I do go to Disney Ill stay at Universal and travel to Disney for a day or two with a hopper once the reservation system is gone.

I also think that the demographics will/are shifting to Universal, Harry Potter and Nintendo are a big deal and when the Gen Z folks have kids they may be more interested in taking their families to Universal.
Time will tell - but at some point you have to treat your customers like customers and not cattle.

Yes profit is the bottom line for a business - but to maintain profit you also need customer satisfaction and to provide a service that is seen as value for money.

Disney raises prices every year to account for inflation and corporate growth goals. How much it will be is determined by zillion factors, but one simplistic scenario is that accounting tells management that to account for a projected inflation (which is now skyrocketing) and to meet corporate growth goals of lets say 5%, they must increase revenue (and/or) cut expenses by 10%. They don't want to increase prices by 10%, because that would drive too many people away. There is a calculated number of how many people they expect to lose by each % they increase prices. When they get to the max number they can live with, they make the rest up with reducing expenses. That's where your service quality cuts come into play. Disney walks a fine line between increasing prices and cutting service quality. Unfortunately, we all have an assist in the inflation that's going on now, so we can thank our selves for at least a portion of the price hikes and service cuts.