Budget cuts at Walt Disney World

[DisOrBust]

I think they are having way bigger problems and Shaghai is good excuse or tipped them over the abyss.

How much did the magic band fiasco Cost? If I remember correctly that was done to increase guest speding in the parks. Yet someone posted that if you read throught the anual report that although the parks are at a all time profit( due to tcket increases), average guest spending is down 9%. So that sounds like an epic financial fail. How much is Pandora over budget? Also another fail financially. Then there is Shanghai and just have to wonder that they are thinking like the article said if its another DCA. Did Star Wars really make them that much money? I see nothing but SW merch on the clearance racks.

These profit generating decisions and cost cutting measure are happening during an improving economy, not Post 9/11 or the economic meltdown. Even during those times Disney didn't react this extreme.

 

[rteetz]

I think they are having way bigger problems and Shaghai is good excuse or tipped them over the abyss.

How much did the magic band fiasco Cost? If I remember correctly that was done to increase guest speding in the parks. Yet someone posted that if you read throught the anual report that although the parks are at a all time profit( due to tcket increases), average guest spending is down 9%. So that sounds like an epic financial fail. How much is Pandora over budget? Also another fail financially. Then there is Shanghai and just have to wonder that they are thinking like the article said if its another DCA. Did Star Wars really make them that much money? I see nothing but SW merch on the clearance racks.

These profit generating decisions and cost cutting measure are happening during an improving economy, not Post 9/11 or the economic meltdown. Even during those times Disney didn't react this extreme.

It's most definitely a lot of things that have caused this. MyMagic+ cost over 2 billion. Shanghai is now likely over $6 billion. Avatar well over $700 million. Disney has a problem sticking to a budget. Really Star Wars on clearance racks? Star Wars is one of the biggest merchandise money makers of any brand.

 

[Mackenzie Click-Mickelson]

Did Star Wars really make them that much money? I see nothing but SW merch on the clearance racks.

That's actually quite funny you say that. I was at Khol's the other day (they're another place with $ problems but still) and all of their couture Star Wars women's clothes were on the clearance racks and my guess is that was the case on juniors, boys, mens, girls too. Just 1 1/2 months ago that stuff was full price or with a smallish sale attached to it. I wasn't expecting it to be clearanced especially with the DVD/Blu-Ray releasing really soon which would likely peak people's interest again.

 

[adam.adbe]

Really Star Wars on clearance racks? Star Wars is one of the biggest merchandise money makers of any brand.

That's not even remotely hard. Note: I'm assuming the poster is talking in general, not just at WDW where clearance prices would be basically normal sticker for the same product at Target.

Margins on most of that merchandise are insane, and the push is to move massive amounts when either the buzz is at it's highest, or during the Christmas period. In SWs case, those were the same, so they needed to move a lot of merchandise onto the market and out of shop doors very quickly. It's far better to oversaturate the Christmas market and then sell the remaining stock at much lower (but still healthy) margins later. The alternative is lost sales.

Also, Iger seemingly doesn't believe in slow-and-steady. A sustained push is not half as exciting to Wall Street as a blow-out quarter. As long as there's another big money pump in waiting in the wings ready to be pumped dry, today's Disney have little interest in building legacies.

 

[ChipnDale79]

average guest spending is down 9%

9%? Really? That much?

I'm actually a little surprised by that number.

 

[DisOrBust]

Trying to find where i saw the 9% for this last report. Heres the comment from 2014.

"e know that Disney has been increasing prices through the roof, so the guest spending numbers are basically irrelevant too. Just like the numbers hidden in this quarter's earnings report of increasing tickets 12% but spending only increases 8%"

As far as Sw clearance, I was referring to department stores. I know Disney made alot of merch for SW but how much of it sold and how much is in inventory?

 

[adam.adbe]

Trying to find where i saw the 9% for this last report. Heres the comment from 2014.

"e know that Disney has been increasing prices through the roof, so the guest spending numbers are basically irrelevant too. Just like the numbers hidden in this quarter's earnings report of increasing tickets 12% but spending only increases 8%"

As far as Sw clearance, I was referring to department stores. I know Disney made alot of merch for SW but how much of it sold and how much is in inventory?

Disney messed up somewhat with TFA, as they were banking on BB8, Kylo Ren and the shiny stormtrooper being the hottest items, and were caught somewhat flatfooted by the high demand for Rey merchandise. BB8 sold well, Kylo Ren did not. That said, I can say from experience, trying to find particular SW merchandise 8 days out from Christmas was pretty much not an option. There's always some merchandise left because manufacturers can use the threat of withholding big sellers to force stores to accept slower sellers also.

 

[Mackenzie Click-Mickelson]

Disney messed up somewhat with TFA, as they were banking on BB8, Kylo Ren and the shiny stormtrooper being the hottest items, and were caught somewhat flatfooted by the high demand for Rey merchandise. BB8 sold well, Kylo Ren did not. That said, I can say from experience, trying to find particular SW merchandise 8 days out from Christmas was pretty much not an option. There's always some merchandise left because manufacturers can use the threat of withholding big sellers to force stores to accept slower sellers also.

I don't know much about the sales of the Force Awakens merchandise but based on your comment I find it interesting that in today's world they didn't expect a lead female character to resonate enough with people to produce enough of a high volume of merchandise for that character. It's a gamble either way for sure but still.

 

[adam.adbe]

I find it interesting that in today's world they didn't expect a lead female character to resonate enough with people to produce enough of a high volume of merchandise for that character. It's a gamble either way for sure but still.

I doubt they'll make that mistake again. Rumors from both the merchandising worlds, and from the studio worlds with respect to SW VIII, suggest that Disney have realized that Rey is a much bigger deal than they'd anticipated. Whether they understand *why* remains to be seen.

 

[ThurlFan]

Well that does it for me. Even though its at DL I know its also bad at WDW. I just cancelled my May trip and all my ADRs. There are to many other places to vacation where Im not paying more and getting less because of idiot corporate decisons. I dont want to go and be frustrated with poor service and cutbakcs.

I hope you shared your reasons with them when you cancelled - couldn't hurt!

 

[Lee Matthews]

Im hoping that cast members cuts are more short term until at most Shanghai is open because while it will take a while to make a profit, it will make money.

Im more angry but Lunch menus going away in favour of all day dinner menus than any of the other cuts. I understand that ticket prices rise (although quicker than inflation) year on year but like people have said they have to be careful with all these cuts as well.

WDW and Universal are currently doing their biggest ever Park investments and I am excited for the competition but it's also at 'what cost' to the experiences

 

[ChipnDale79]

I hope you shared your reasons with them when you cancelled - couldn't hurt!

FWIW I did email Guest Relations last month to notify them that we decided to skip out on 2016 and possibly 2017 because of the increases, this was before the announcement of premium parking, the after hours “party” and the rumor of the morning hours “party”. I did this because I felt I wanted it on record somewhere that someone, even if it was one person, canceled their vacation because of the cost increases.

Much to my surprise, I did get a phone call from a Cast Member, he understood where I was coming from, but did tell me that until they see a reduction in the number of guests, Disney is going to continue raising prices. I was surprised that was the response I got.

I’m doing my part, we aren’t going this year, 2017 looks less likely, hopefully there are others out there that are doing the same thing and hopefully can stop the increases at some point.

Disney has a lot of issues, but I have to admit I was surprised someone reached out to me. Normally when you email a company the size of Disney, your email goes into a black hole and no one ever reads it. We had some major issues with My Magic plus or whatever you call it when it first rolled out, my wife kept track of the time she spent on the phone to correct the issues and it amounted to a little over 6 hours combined. Disney made it right on our end, so I have hope that they can still do things right.

 

[mom2rtk]

FWIW I did email Guest Relations last month to notify them that we decided to skip out on 2016 and possibly 2017 because of the increases, this was before the announcement of premium parking, the after hours “party” and the rumor of the morning hours “party”. I did this because I felt I wanted it on record somewhere that someone, even if it was one person, canceled their vacation because of the cost increases.

Much to my surprise, I did get a phone call from a Cast Member, he understood where I was coming from, but did tell me that until they see a reduction in the number of guests, Disney is going to continue raising prices. I was surprised that was the response I got.

I’m doing my part, we aren’t going this year, 2017 looks less likely, hopefully there are others out there that are doing the same thing and hopefully can stop the increases at some point.

Disney has a lot of issues, but I have to admit I was surprised someone reached out to me. Normally when you email a company the size of Disney, your email goes into a black hole and no one ever reads it. We had some major issues with My Magic plus or whatever you call it when it first rolled out, my wife kept track of the time she spent on the phone to correct the issues and it amounted to a little over 6 hours combined. Disney made it right on our end, so I have hope that they can still do things right.

Disney is definitely very good at the "talk down" game.

 

[Anal Annie]

That's ugly and makes me wonder what else they might cut at WDW.

We have trips planned for both June and September - they may both suffer because of this. They should have known what they were getting into with the Chinese labor market before they started and accounted for it in the budget and planning....

 

[Lee Matthews]

OK, so i can totally understand that nobody likes the price hikes, so what reason are the parks getting busier and busier if everything is going up in price? Is it stronger ip's like Frozen and Star Wars that is attracting people?

 

[Eoghann]

OK, so i can totally understand that nobody likes the price hikes, so what reason are the parks getting busier and busier if everything is going up in price? Is it stronger ip's like Frozen and Star Wars that is attracting people?

Aggressive marketing (constant advertising), media saturation (try watching an ABC event with out Disney product placement) and their success in creating a "must do" destination. If you can reach that plateau of public consciousness, like say the iPhone, then you become almost immune to pricing.

 

[Lee Matthews]

Yeah, that certainly made sense.

Maybe should have waited until DHS, Avatar land are all complete and maybe opening a 5th gate to cope with the crowds. Least it means they can chuck in another price hike before they all open

As a former cast member, it makes the job miserable when the crowds are as manic as they have been recently.

 

[Bluegrrl]

I wonder how the current North Korea/South Korea/China political situation will affect international tourism as well.

My curiosity about Shanghi and Hong Kong Disney was a little peaked, but with NK breathing down SK and Japan's back about nuclear weapons, it makes me a little nervous.

Plus, Disney can't merchandise anything that isn't a princess or a car. Frozen was a mess and Toy Stoy - a movie based on toys was an equal mess.
They didn't understand the oddities of SW people and adult collectors. Also, there was such secrecy regarding the movie, causing mistakes like people assuming Finn would be the Jedi, not Rey. And people love them Jedi! Even Lego made mistakes with the tie fighters and x-wings b/c of the limited information.

Not saying they should have leaked everything, just that they can't Merch/advertise properly.

 

[rteetz]

Disney is definitely very good at the "talk down" game.

Yep that's a typical Disney response.

 

[MouseOfCards]

California is close to passing a $15 minimum wage bill. How will this impact Disneyland? Do Disney employees in California earn more than minimum wage? Will this cause budget cuts similar to WDW?