Discounts fill parks but are they profitable?
Rides like Toy Story Mania had 80 minute queues during Easter, people were saying "where's the recession?" Parks seemed to be packed with only a 4 percent drop in attendance. But the real question is, what percentage of loss will be reported to Wall street within a few days?
Comments from most guests suggests if there had been no discount, they would not have come. But Bob Iger's philosophy is simple, keep exposing the the world to Disney brands and keep the turnstiles clicking. But will that avert a sell-off of some Disney's assets in the months to come? We don't think so.
There has been a trade-off between attendance and profits during the worst economic times since the Great Depression. As guest walked through the parks, all the restaurants were booked to capacity for dinner. But although attendance was propped up, there has been an erosion to profits. Disney certainly would not be able to sustain these discounts without sale of assets or layoffs in the months to come. But it's all in the name of sustaining the Disney brand as viable.
We had predicted discounts in park ticket prices at the end of 2008, albeit Disney sustained attendance, all the promotions were at the end of the day discounts to Disney Hotels, park passes, and discounted merchandise using gift cards. Let's dig in a bit more.
When Disney reports it's 1st quarter earning within a few days, Analysts are expecting it to reflect nearly 27% decline in hotel reservations that account for 1/5 of the balance sheet. So, a modest decline in attendance will still reflect a steep drop in revenue. By in large, Universal's financial status is even bleaker with a 20% decline in attendance.
Bob Iger feels that word-of-mouth aspect of maintaining the Disney brand by maintaining attendance is more valuable having a long-term factor. Disney's creative promotions include a Buy 4 And Get 3 Free Nights promotion which kicked off at the beginning of the year. Those 3 free nights cost Disney a fortune with an emphasis on attendance and exposure to the brand.
But the most visible discount to park tickets came in the form of a $99 two day resident base ticket that caused shock waves through-out the ticket sales industry. Most travel agencies or ticket kiosks suffered a decline of ticket sales during this promotion. In fact, Disney used the economic downturn to rob market shares from it's rivals Universal & Sea World Orlando.
But Disney's primary concern was to maintain the experience while weathering the storm.
Comments from most guests suggests if there had been no discount, they would not have come. But Bob Iger's philosophy is simple, keep exposing the the world to Disney brands and keep the turnstiles clicking. But will that avert a sell-off of some Disney's assets in the months to come? We don't think so.
There has been a trade-off between attendance and profits during the worst economic times since the Great Depression. As guest walked through the parks, all the restaurants were booked to capacity for dinner. But although attendance was propped up, there has been an erosion to profits. Disney certainly would not be able to sustain these discounts without sale of assets or layoffs in the months to come. But it's all in the name of sustaining the Disney brand as viable.
We had predicted discounts in park ticket prices at the end of 2008, albeit Disney sustained attendance, all the promotions were at the end of the day discounts to Disney Hotels, park passes, and discounted merchandise using gift cards. Let's dig in a bit more.
When Disney reports it's 1st quarter earning within a few days, Analysts are expecting it to reflect nearly 27% decline in hotel reservations that account for 1/5 of the balance sheet. So, a modest decline in attendance will still reflect a steep drop in revenue. By in large, Universal's financial status is even bleaker with a 20% decline in attendance.
Bob Iger feels that word-of-mouth aspect of maintaining the Disney brand by maintaining attendance is more valuable having a long-term factor. Disney's creative promotions include a Buy 4 And Get 3 Free Nights promotion which kicked off at the beginning of the year. Those 3 free nights cost Disney a fortune with an emphasis on attendance and exposure to the brand.
But the most visible discount to park tickets came in the form of a $99 two day resident base ticket that caused shock waves through-out the ticket sales industry. Most travel agencies or ticket kiosks suffered a decline of ticket sales during this promotion. In fact, Disney used the economic downturn to rob market shares from it's rivals Universal & Sea World Orlando.
But Disney's primary concern was to maintain the experience while weathering the storm.
posted by michael at
7:21 AM
