What's up with all the cutbacks?

[Yarbogash]

Wow!... I've never seen so much negativity and misinformation. As far as your comment "there's a lot of cutbacks going on." Really? The company is spending hundreds of millions of dollars just in Orlando. That's not accurate. Disney is opening new attractions/rides/experiences at every park. You obviously haven't been there lately. (Avatar and Pandora have been a huge success) and they continue to bring record guests to Animal Kingdom. The stock is at an all time high. The resorts are packed during September (normally the slowest month of the year)...and there are construction cranes and new roads, hotels, rides and shows being added everywhere! Well...everyone is entitled to their opinion. You can go through life complaining that the glass is half empty or half full...it's the same glass.

Problem from my pov is that while they are (finally) building some major new attractions what I call the street level experience has suffered a lot. The streets of the parks use to be alive with entertainment and things going on. Now they seem to be just crammed with people and not much else. They seem to be intent on doing away with anything that they can't feature in a major advertising campaign. This has been going on for years and years. These latest cuts are just more of the same,

 

[snappy]

Problem from my pov is that while they are (finally) building some major new attractions what I call the street level experience has suffered a lot. The streets of the parks use to be alive with entertainment and things going on. Now they seem to be just crammed with people and not much else. They seem to be intent on doing away with anything that they can't feature in a major advertising campaign. This has been going on for years and years. These latest cuts are just more of the same,

Agree. I see it as going for quantity over quality. I really miss interaction with street performers.

I met a lady in HS several years ago who was retired and once worked in the same profession as I once did. Her home is elsewhere but lives in Orlando part time and is some sort of ambassador for Disney while in town. We had a lengthy, leisurely talk while I was resting on a park bench. She said that Disney had gutted the program that she was in. I imagine she’s not around anymore. Wish I had gotten her contact info. We had a lot in common.

 

[disneyseniors]

To recap: here is Len Testa's analysis of what happened in early 2018 with reduced operating capacity at WDW.
This is a 25 min. Dis Boards Pod Cast interview that is worth your time.

http://1e2e79e255ccc28ed3b5-b1ba41d...cf1.rackcdn.com/bonus-len-testa-interview.mp3

Keep in mind that Disney CHOSE to reduce operating capacity while charging guests full price for tickets. This resulted in a major increase in wait times for basically everything from rides to restaurants.

This is further proof that Disney is only concerned with the stock price and the guest experience is of minor concern.

If you are paying attention you'll see it in MANY different ways. Cuts, reductions, deferments and scale backs in resorts, dining, transportation and parks. Pick your favorite area and you can find examples. Yeah sure every company experiences these kinds of things from time to time but long time observers have seen that this is the new way of thinking to prop up the stock price at all costs.

All of these cuts and scale backs come at a time when the company is EXTREMELY profitable. They are happening at YOUR EXPENSE.

~NM

PS. My favorite line of Disney B.S. is "We HAVE to raise Ticket Prices because guests are telling us the parks are too crowded". Don't swallow that kool aid. Disney is depending on you to drink it up. Perhaps if you thought about it from the perspective of "We have to raise the price of those poor quality frozen pizza's we are serving because they are so delicious" you will finally see it. Disney is selling you on a price increases intended to bolster the stock price with logic that you would be uninformed enough to believe.

THanks, Ninja Mom: Len Testa's interview was very eye opening, and just solidifies what I and others have been thinking Disney was doing. Too bad it's always about the almighty dollar now! I do feel people are getting fed up with this and that is one reason why attendance is down in this great economy!IMO

 

[snappy]

I agree! I got an email today from Travelzoo offering reduced prices for Halloween parties. Maybe these are offered every year? I don’t know as I have never been interested in those events.

 

[Yarbogash]

I agree! I got an email today from Travelzoo offering reduced prices for Halloween parties. Maybe these are offered every year? I don’t know as I have never been interested in those events.

I got that too. I've been subscribing to the Travelzoo offers for a long time and this is the first time I've seen that.

 

[Future_WorldPhonencian]

Testa had a follow up to that podcast on his disney dish podcast with jim hill where he claimed that the drastic ride capacity reductions during february were a test and they failed miserably and called it off... although the evidence ppl are giving suggests they may be trying it again. It can be found on disneydish.bandcamp.com although i cant remember which episode...

My 5cents worth: Disneys attendance numbers are waaay down bc everyone is either waiting on galaxys edge and/or the 50th anniversary. They can make cuts and upcharge experiences to balance the books but when TEA numbers come out next may/june its gonna look rough... I cant understand why they announced the new ticket system 3weeks ahead of time either... i think they are bracing for one rough year leading up to SWGE... but are willing to take the hits now so they can cash in when everyone finally comes back

 

[snappy]

Testa had a follow up to that podcast on his disney dish podcast with jim hill where he claimed that the drastic ride capacity reductions during february were a test and they failed miserably and called it off... although the evidence ppl are giving suggests they may be trying it again. It can be found on disneydish.bandcamp.com although i cant remember which episode...

My 5cents worth: Disneys attendance numbers are waaay down bc everyone is either waiting on galaxys edge and/or the 50th anniversary. They can make cuts and upcharge experiences to balance the books but when TEA numbers come out next may/june its gonna look rough... I cant understand why they announced the new ticket system 3weeks ahead of time either... i think they are bracing for one rough year leading up to SWGE... but are willing to take the hits now so they can cash in when everyone finally comes back

Thanks for the link. I agree they may be managing the losses by quarter and year. May backfire depending on what happens in the economy.

 

[lambdabeta]

Thanks for the link. I agree they may be managing the losses by quarter and year. May backfire depending on what happens in the economy.

The funny thing is they aren't losing money in the parks. They are just not making as much profit MAYBE but they aren't operating at a loss. That is what makes this such BULL.

 

[Liljo22]

The funny thing is they aren't losing money in the parks. They are just not making as much profit MAYBE but they aren't operating at a loss. That is what makes this such BULL.

While its not an operating loss, missing earnings estimates is a loss to shareholders. I know everyone only wants Disney to worry about their guests but they are a public company. They have a responsibility to look out for their shareholders also. If that means cutting budget in areas they can get by without drastically affecting customers, they are going to do it.

 

[momandmousefan]

Wow!... I've never seen so much negativity and misinformation. As far as your comment "there's a lot of cutbacks going on." Really? The company is spending hundreds of millions of dollars just in Orlando. That's not accurate. Disney is opening new attractions/rides/experiences at every park. You obviously haven't been there lately. (Avatar and Pandora have been a huge success) and they continue to bring record guests to Animal Kingdom. The stock is at an all time high. The resorts are packed during September (normally the slowest month of the year)...and there are construction cranes and new roads, hotels, rides and shows being added everywhere! Well...everyone is entitled to their opinion. You can go through life complaining that the glass is half empty or half full...it's the same glass.

Omg...breathe dude. Do you need a paper bag?

That was a way over emotional response to something pretty calmly questioned.


How long have you visited the parks and/or held stock in them?

From a 38+ year park goer and 20+ year shareholder perspective this discussion is totally valid. It’s interesting and relevant to discuss for those who like to analyze changes and company behavior. Let’s just chill a bit.

Disney has catered to stock holders for years and used to be able to build things without such obvious cutbacks (note I said “obvious”...they certainly had penny pinching going on in places all throughout their history) and investment into the PARKS was certainly higher in the past if you adjust for inflation. That being said, funds have clearly been diverted a bit from parks in the last decade+ to invest in other ventures. I think the discussion is just pondering on how these funds are all being redistributed as well as a bit of discussion of cause and effect. I don’t think anyone is trying to be negative per say...most just seem interested in the money trail.

 

[lambdabeta]

While its not an operating loss, missing earnings estimates is a loss to shareholders. I know everyone only wants Disney to worry about their guests but they are a public company. They have a responsibility to look out for their shareholders also. If that means cutting budget in areas they can get by without drastically affecting customers, they are going to do it.

The reasons everyone seems to be giving for why they made these "cuts" doesn't make sense. Disney as a company has been making profits all year. Their stock is up. Third quarter 2017 parks and resorts made $4.9 billion and same quarter 2018 they made $5.2 billion. This is just parks and resorts. Their profits are up in every division except consumer products for the third quarter 2018. So what projections did they not make that forced them to make cuts to entertainment in the parks? Don't forget supposedly occupancy was down in the third quarter. That would have been June, July and Aug but there is still profits and stocks are up so not a stock problem.

I have worked for companies with multiple businesses under one umbrella and as long as the whole company is doing well the individuals can make slightly less than others because it all comes out in the end. IOW all the parks don't have to make the same amount of profit as long as the division is.

The direction that WDW is taking right now is not a good one IMO(I am not just referring to the most recent "cuts"). They are based on customer service. That is what they are selling and when you cut that to squeeze every penny out of revenue it affects customers good will and affects profits in the long run.

 

[snappy]

While its not an operating loss, missing earnings estimates is a loss to shareholders. I know everyone only wants Disney to worry about their guests but they are a public company. They have a responsibility to look out for their shareholders also. If that means cutting budget in areas they can get by without drastically affecting customers, they are going to do it.

The public company excuse rears its ugly head again. Trust me, they manipulate their earnings every quarter, through deferrals and accruals.

 

[toonaspie]

Just theorizing but I think it might have to do with Disney taking on far more expansion projects than they thought they could handle. Very surprise by the amount of projects being tackled in WDW alone these past several years. I was worried the money would eventually start to wane and these cutbacks might be an indicator of that.

 

[Future_WorldPhonencian]

It also just occured to me that the trade war might be playing a part in some of these decisions. Tariffs on materials like steel and aluminum could be affecting Disneys bottom line with construction costs and they may also be anticipating the impact on consumers in a few months. It takes a while for the increased prices on raw materials to work down to the consumer level but its otw and US consumers are going to get hit hard.

 

[Planogirl]

It also just occured to me that the trade war might be playing a part in some of these decisions. Tariffs on materials like steel and aluminum could be affecting Disneys bottom line with construction costs and they may also be anticipating the impact on consumers in a few months. It takes a while for the increased prices on raw materials to work down to the consumer level but its otw and US consumers are going to get hit hard.

Interesting thought. I can see it affecting construction for sure. I wonder how it might affect the consumer otherwise?

 

[manning]

The nice thing is that most things tend to go full circle. And every incoming leader wants to make their mark and shake things up - do things different from the last guy.

Having worked in a big corporation 30+ years I have seen this happen many times. And often not for the good. I once saw a high efficiency department get destroyed. Sad thing upper management didn't have a clue until it was too late. Someone was sleeping at the helm. Maybe he was too busy making his mark.

 

[mshanson3121]

Interesting thought. I can see it affecting construction for sure. I wonder how it might affect the consumer otherwise?

Well it varies. But I can tell you as a Canadian, there are many things we're now subject to a tariff if we bring it bck across the border. Which of course means we're now spending quite a bit more money - either because of the tariff, or we're now buying it in Canada where it's higher priced. And of course retail cost of now-tariffed goods are going up as well. It all results in less money in pocket to spend at Disney

 

[Future_WorldPhonencian]

Interesting thought. I can see it affecting construction for sure. I wonder how it might affect the consumer otherwise?

things like merchandise, t shirts, mickey ears, plastics, toys are all made abroad mostly assembled in china... a 30% tariff would raise prices for the co importing which in turn will cut into production prices... the consumer in turn will pay the upcharge only if they choose to buy the item

 

[manning]

While its not an operating loss, missing earnings estimates is a loss to shareholders. I know everyone only wants Disney to worry about their guests but they are a public company. They have a responsibility to look out for their shareholders also. If that means cutting budget in areas they can get by without drastically affecting customers, they are going to do it.

It's called a fiduciary responsibly to the stockholder and could open up lawsuits to the board.

The advantage to a privately owned company is that they don't have to worry about the stockholder and could if they want put all the profits back into the company.

 

[KatrinfromGermany]

I'd love to invite you all to the Walt Disney Studios Park at Disneyland Paris. This is a failed theme park with tons of cut-offs.
For me, the parcs in Orlando are great (last visit in February 2018). Yes, there are cut-offs obviously, but - hey - you are getting Star Wars Land, the TRon Coaster, a new Illuminations Show etc.! I think this is soooo exciting!