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September 26, 2018
Disney WorldÕs Latest Pricing Changes Take Aim at Crowd Control
They were right. This week, Disney announced a new model that will tie all tickets at Walt Disney World Resort in Florida Ñ for a single day or multiple days Ð to a specific date. Prices will be set in advance according to historic demand, and the booking site will give guests the option of searching for the cheapest time to visit.
ÒI think that anyone paying attention saw this coming a mile away,Ó Martin Lewison, an assistant professor of business management at Farmingdale State College in New York who studies theme parks, said in an email. ÒThe Feb. 2016 switch to tiered pricing for one-day one-park tickets made [MondayÕs] announced changes a forgone conclusion, and we just had to wait to see how it would be implemented.Ó
Unlike airline or hotel models, the ticket prices will not fluctuate once they are set, a spokesperson said. The new model applies to all purchases starting Oct. 16.
Disney is not characterizing the change as a straightforward price hike Ñ that happened in February Ñ but as a change in how tickets are sold.
The range of prices for single-day tickets now is $102-$129 depending on the park and time of year; under the new system, the range will be $109-$129. In other words, the highest price for a single-day ticket wonÕt increase, although the lowest price will.
A spokeswoman pointed out that, depending on the date and length of a visit, prices could end up lower, the same, or higher than they would have been before the change.
Attendance at three of DisneyÕs four Florida parks increased last year, according to an industry estimate, and new attractions coming up are expected to draw huge crowds.
ÒAs our parks have increased in popularity, there are more and more guests who wish to experience our world-class attractions,Ó the company wrote in a blog post. ÒIntroducing date-based tickets and pricing will allow us to better distribute attendance throughout the year so that we can continue to improve and deliver a great experience.Ó
Disney CEO Bob Iger has consistently said he would be willing to sacrifice some crowds if it improved the guest experience in parks.
ÒWeÕve made a number of steps to essentially grow revenue, in some cases actually at the expense of some attendance where weÕre changing our pricing approach sometimes in part to moderate attendance so the park experience is a little bit better,Ó he said during a May 2016 earnings call.
Lewison said it would be ÒinsanityÓ not to raise multi-day ticket prices during the highest demand periods.
ÒThe busiest days are already barely tolerable in terms of guest experience, and [Walt Disney World] has recently opened or is currently doing construction for nearly a dozen new major lands and attractions, some of them the most anticipated theme park additions ever,Ó he said in an email.
PREPARING FOR FUTURE EXPANSION
The Orlando-area resort opened Toy Story Land at DisneyÕs Hollywood Studios this year, but the blockbuster expansion is coming late next year at the same park. Star Wars: GalaxyÕs Edge and an accompanying immersive hotel are drawing significant interest, with massive numbers of visitors expected.
ÒYou think people have sticker shock right now, wait until Star Wars opens,Ó said Scott Smith, an associate professor in the University of South CarolinaÕs College of Hospitality, Retail, and Sports Management. ÒThis is what I would do if I were running a company: I would get people used to this idea now so that when I do open up Star Wars, IÕm able to push the price up very high and say this is just demand-based pricing.Ó
Additions to Epcot and Magic Kingdom are expected to be finished in time for Walt Disney WorldÕs 50th anniversary in 2021, which will also likely draw huge crowds.
Smith, an expert on theme parks and revenue management who once worked at Disney, said people ask him all the time why Disney charges such high prices.
ÒThe answer is because they can,Ó he said. ÒAnecdotally, I have observed that Disney could significantly increase their prices and not see what we would call a significant decreaseÓ in attendance.
Smith and Lewison pointed out that Disney has spent tremendous amounts of money to make these expansions possible, on top of the $4 billion purchase of Lucasfilm to get the rights to Star Wars.
ÒThey are putting billions of investment into the parks, and those investments need to be paid for,Ó Lewison said. ÒItÕs not exactly a money grab É if [Walt Disney World] guests think that all of the cool new stuff like Star Wars is going to come for free, then their heads are in the sand.Ó
But, he said, the company also needs to manage the capacity that comes to see all the cool new stuff. Expansions at DisneyÕs Hollywood Studios, DisneyÕs Animal Kingdom, and Epcot are meant to attract some of the crowds that overwhelm Magic Kingdom, which drew an estimated 20.4 million people last year. That park occasionally has to close because it reaches capacity.
ÒDemand for Disney remains insanely strong, and as long as that is the case, Disney will have to act more like a company with a fixed inventory of admissions that is outstripped by demand,Ó Lewison said. ÒThe currently strong economy is exacerbating that condition, and they have to deal with it.Ó
As usual, fans of Disney were not necessarily fans of DisneyÕs new pricing move. The publication Money summed it up this way: Disney WorldÕs New Ticket Pricing Is Super Confusing and People Are NOT Happy.
ÒFans are complaining about this now, but they complain about every pricing change at the resorts,Ó Robert Niles, founder and editor of Theme Park Insider, said in an email. ÒI expect another round of complaints when Disney releases the new prices next month and then for Disney to set new attendance records next year when its Star Wars lands open at Disneyland and Walt Disney World.Ó
He added: ÒDisney didnÕt get to be the industry leader in theme parks by doing stupid things. It knows that guests ultimately will accept and buy date-specific tickets.Ó
Theme parks have been implementing some type of variable pricing for the last several years, so DisneyÕs latest move shouldnÕt feel foreign. Niles said he expects Universal, which introduced demand-based pricing for one-day tickets in 2016, to match DisneyÕs multi-day pricing system.
Greg Antonelle, chief brand officer for the Disney-only travel agency MickeyTravels, said in an email that some clients have said they feel nickel-and-dimed by the changes, especially on top of other changes such as parking fees for Disney resort guests.
Antonelle said Monday was one of the companyÕs most productive days in September for newly booked trips, a possible sign that travelers want to book before the changes go into effect.
ÒThe reality is that thereÕs the initial ÔshockÕ of learning the news, but it wears off and the clients get on with planning their trips and canÕt wait to experience the magic that awaits them,Ó he said. ÒThere has been a bit of an outcry on social media, but a lot of that is from travel agents and not clients.Ó
In addition to changing the pricing system, DisneyÕs revamped booking tool, which will go live Oct. 16 at DisneyWorld.com, will include overviews of what each park includes, tips on what not to miss during the amount of time available, and customized recommendations based on what the guest is interested in Ñ food and wine, for example, or thrills or activities for young kids.
ÒOur new online vacation-planning destination offers several new tools designed to simplify the booking experience for guests and help them easily customize their visit based on their unique needs and interests,Ó Jacquee Wahler, a Walt Disney World Resort spokeswoman, said in a statement.
Under the new system, Disney will no longer charge different prices for different parks in Florida. Currently, a one-day ticket at Magic Kingdom costs more than at the resortÕs other three theme parks.
Guests with multi-day tickets will no longer have 14 days from the time they first visit to use the rest of the days; while tickets donÕt need to be used on consecutive days, the amount of time will vary according to the type of ticket they bought. For example, a three-day pass needs to be used within five days of the start date, while a guest has 12 days to use an eight-day pass.
Modifications can be made up until midnight prior to the selected date; if a traveler changed to a more expensive date, they would be responsible to pay the difference as part of the modification, a spokesperson said.
Tickets with a flexible start date will also be available Ñ at a higher price point, of course.
Copyright 2018 Skift. All rights reserved. From https://www.skift.com. By Hannah Sampson, Skift.
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