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Monday Mouse Watch: Finding new ways to milk the WDW cash cow

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Monday Mouse Watch: Finding new ways to milk the WDW cash cow

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Some Disneyana fans are still scratching their heads over last week's news. When the Walt Disney Company revealed that it would soon be partnering with the Four Seasons Hotels & Resorts to convert WDW's Eagle Pines & Osprey Ridge golf courses into a luxury resort & golf community as well as working with several yet-to-be-named third parties to add 4,000 - 5,000 value-priced hotel rooms to the Western Way section of Disney World property.

Given that this is the first time since construction of the Swan & Dolphin were completed back in 1990 that the Mouse has actually allowed an outsider to come on property and build a resort ... Well, a lot of people are wondering what the real significance of this announcement is. The actual reason that Disney just did what they did.

To be honest, one of the main reasons that Mickey got in bed with the Four Seasons people was for the name recognition. By that I mean: There's a certain type of traveler who insists on a specific level of luxury that the Walt Disney World Resort has yet to be able to provide.

Oh, sure. The Grand Flo -- with its 90 suites & spa -- is considered to be the flagship of WDW's resorts. The very best resort on property. But were you to go over to Fodors.com, you'd be able to read entry after entry where Disney World visitors say that this 900-room hotel may be " ... the best at Disney World but it's not the Four Seasons."

So by making this deal, Disney finally deals with that issue. In effect creating a high-end on-property resort that could then cater to the Four Seasons crowd. You know? Those deep-pocketed types who aren't in the habit of vacationing at Walt Disney World. Not yet, anyway. But who might start dropping by the Magic Kingdom if there were a luxury hotel to their liking in the Lake Buena Vista area.

Copyright Four Seasons Hotels and Resorts

Now -- in regards to the Western Way development -- this project is actually aimed at the opposite end of the economic food chain. As in: Those folks who would dearly love to stay on property as part of their Disney World vacation but just can't afford the $100-a-night that the Mouse is now charging for a room at its lowest-price resort, the Pop Century.

By getting those yet-unnamed-third-parties to build 4,000 - 5,000 additional hotel rooms along Western Way ... Well, that would effectively allow Disney to then start going after the tourists who usually stay out in those low-priced resorts & motels along 192.

Of course, in the case of both the Four Seasons resort as well as the Western Way development, the Mouse will obviously be well compensated for allowing these two projects to be built on property. Though whether it's through an annual fee or just a straight cut of the proceeds remains to been seen.

Best of all, Disney won't have to spend much of its own money to fund the construction of this dual-purpose expansion project. Which -- by 2010 -- will be funneling thousands of additional guests daily into the four WDW theme parks. Which -- to Disney management's way of thinking -- is a very good thing. Especially when you're dealing with an increasingly mature resort like Walt Disney World.

I have to tell you, folks, that that is the word that's currently being used in-house to describe the Disney World Resort. Mature. As in: "These days, We're not looking to put all that much cash back into our Central Florida properties. Right now, it's all about getting the money out. Finding new ways to milk the WDW cash cow."

And some of the ideas that Disney execs have come up with over the past five years have been highly successful. The Disney's Magical Express program (Which effectively strands vacationers at Disney World. Leaving them with no cost-effective way to get off-property to visit Universal Studios or Sea World) has supposedly had a significant impact on the company's coffers. Likewise Disney's PhotoPass, which allows the Mouse to continue selling souvenir pictures to tourists long after they've returned home from their WDW vacations.

Mind you, not everything that Disney has tried to generate new revenue streams for the WDW Resort has succeeded. Take -- for example -- the Pirate and Princess Party, a hard ticket event that's being held after-hours on select evenings in the Magic Kingdom now through March 8th. Though the Mouse had high hopes that this new event might turn out to be WDW's next Mickey's Very Merry Christmas Party and/or Mickey's Not-So-Scary Halloween Party, given how poorly attended the Pirate & Princess Party has been ... Well, it's now quite doubtful that this particular hard ticket will return in 2008.

Still, for every special event that doesn't quite make it, there are those that just take right off and surprise everyone. Magical Beginnings is a perfect example of that. Previously, the Mouse has had trouble convincing parents who have kids under six to come vacation at the WDW resort. Given that there's a belief out there that children in that age group won't appreciate and/or even remember a Disney World vacation.

Copyright 2007 Disney Enterprises, Inc.

But by creating a vacation program that specifically catered to the preschool crowd, with age-appropriate special entertainment for the under-six set, Mickey made a lot of moola last year. Which is why Magical Beginnings will be back this September, bigger and better than ever.

Of course, then there are those moments where it seems like the Mouse has just gone too far with its attempt to squeeze every possible dollar out of people who are visiting Walt Disney World. I recall one recent phone call that I had with a friend who was furious with the staff at Casey's Corner (You know? That hotdog place at the end of Main Street U.S.A. in the Magic Kingdom?).

So why was my pal so upset? Because the counter crew at Casey's had charged him a dollar extra for some cheese sauce to dip his hot pretzel in. Which (up until just recently) had been an item that Disney used to throw in for free whenever you ordered a hot pretzel at this particular Magic Kingdom eatery.

If I'm remembering correctly, my friend's rant went something like this:

"It's not that I don't enjoy going to the parks anymore. It's just that this relentless nickel-and-dime-ing is starting to wear me down. With the company continually raising admission prices, tacking another dollar onto the parking fee every year, it's become increasingly obvious these days that Disney is less concerned about delivering a quality product and more concerned about turning a profit.

I'd almost prefer it if, as I entered the park, they just picked me up by my ankles and shook me until all of the money fell out of my wallet. That way, they'd at least be honest about what their ultimate goal was. But all of this raising prices slightly here, tacking on an additional fee there, that just makes Disney seem disingenuous and greedy."

To be fair, I guess I should remind JHM readers that the Walt Disney Company is a business. Which means that this publicly held, multi-national corporation is expected to turn a profit. Which the Mouse is really going to need if it's going to proceed with its ambitious plans for China, India and Russia.

Don't get me wrong, folks. It's not as though Mickey will actually be cutting back on the number of new rides, shows & attractions that it will be building at Walt Disney World. After all, they really need to give those tourists a reason to return to this Central Florida resort every three or four years. Which is why there's already a program in place to regularly freshen up WDW's theme parks.

Though -- that said -- you should probably be aware that this program calls for far fewer new stand-alone attractions (I.E. "Expedition Everest: Legend of the Forbidden Mountain," a brand-new thrill ride that was built from the ground up) and far more rethemings & retoolings (EX: Adding that Johnny Depp AA figure to "Pirates of the Caribbean" in an effort to make this 25-year-old attraction seem more exciting to WDW visitors).

Copyright 2007 Disney Enterprises, Inc.

And then when you take into consideration some of the other ideas that Mouse House executives are reportedly toying with in order to create additional revenue streams for the Central Florida resort (EX: Renting out the Cinderella Suite to high rollers after the "Year of a Million Dreams" promotion is over as well as making an unlimited FASTPASS a perk that you can purchase as part of your WDW vacation package) ... Well, there's that whole greedy & disingenuous thing again.

Mind you, this "Take as much money as possible out of the resort while putting as little as possible back in" attitude doesn't extend to the Disneyland Resort. Of course, that may have something to do with its radically different fan base (I.E. 70% of all visitors to Walt Disney World come from out of state, while -- out in Anaheim -- 60% of all Disneyland guests travel less than 100 miles in order to visit that theme park) as well as DCA's continuing problems.

But what do you folks think? Is it fair that the Mouse now uses the 5M method to manage its Central Florida properties (I.E. "Since Disney World is now Mature, it's crucial that we Maximize the amount of Money that the company can take out of this resort while still doing just enough to Maintain our Market share") in order to fund the Disney corporation's ambitious overseas expansion plans? Or should more of the money that's made in Orlando actually stay in the Orlando area, funding projects there?

Your thoughts?

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  • I'd like for the money spent in Orlando to stay in Orlando.  But that's obviously wishful thinking on my part.  I wouldn't have as much trouble with the money going to overseas development if I knew that when those overseas properties matured that some of their money would come back this way.  But alas, that's never going to happen either.

    As for the Four Seasons and other non-Disney resort developments, I sure hope they have a better plan than they did when the Swan and Dolphin were built.  Seeing them from inside the parks still irks me a little bit.  Those two resorts are quite interesting but they just don't fit with the rest of WDW, IMO.  I just hope we're not seeing another of the same mistakes being made here.

  • Well, I gotta say, Jim, even if your report is a bit light on specifics (though thanks for the renderings!), it's spot-on in its theme.

    That Disney even HAS managers who use words like "mature" is unbelievable.  That it has executives who don't automatically FIRE managers like that is unconscionable.  The minute a company stops believing in the inherent appeal of its own product is the minute a company starts facing a very unhappy future.  Why can companies and brands like McDonald's, Toyota, Coca-Cola and Kodak (yes, even Kodak!) stay fresh and keep reinventing themselves, while Disney can't even keep its 35-year-old theme resort feeling new?  Because those companies mandate a belief in the product and its perpetual appeal -- or, at least, the challenge of reviving a brand that was on the wane and now has to reinvent itself.

    Disney seems, increasingly, to have thrown in the towel on its theme parks.  It wants to treat them like consumer products, simple "brand propositions," rather than incredible, amazing places that everyone has to visit.  For crying out loud, even the latest round of national commercials underscores "it's affordable!" as if Disney is selling blue jeans or canned soup.

    Actively inviting another hotel chain onto Disney property is not simply a surprising move -- it's a hugely earthshaking move that recalls an extraordinary precedent: the last time Disney did this, it was in dire financial straits and the company was on the brink of ruin.  Now, it's in great financial shape and it STILL wants more money.  Not only that, it's voluntarily undermining the integrity of its own hotel brand.  It wasn't THAT long ago that travel magazines and reviewers fell over themselves to heap praise on Disney for its deluxe resorts.  Now, as it has done with EPCOT, Disney basically is throwing in the towel, admitting that it can't or doesn't want to spend the time and effort to turn its own properties back into to world-class offerings.  It would rather let someone else come in and run that show.  Unbelievable.

    It may take five years, it may take 10 years or more, but I believe the actions we have seen by the current and recent management regimes at Disney may ultimately undo the company.  Even while analysts and Wall Street insist that Disney has never been stronger, these small steps to undermine the industry-leading positions that it once had are starting to trickle down to the rest of the company. The mindset that began with animation ("Gee, other people are doing what we used to do so well, so let's just turn tail and run instead of risking the ire of Wall Street by investing money into our struggling business") started seeping into the theme parks when EPCOT and Disney-MGM Studios began getting homogenized with the Disney brand.  It extended to the Disney Store ("Sell it off and pocket the cash, even if the new owner DOES do better than us!"), and now it's moving into the realm of the resorts.  The "DVC mentality" -- pay us MORE, suckers! -- wasn't enough, now Disney's selling off the land its founder fought so very hard to acquire and building on it like one of those brash developers who bulldozes over historic buildings because they're old (not caring if they're historic).

    Increasingly, Disney is doing anything it can to generate higher revenue and OI.  They'll strip-mine the company for everything its worth, and when they're done, they'll all walk away with gigantic bonuses and fat wallets, and the poor "Disney guest" won't know what's hit 'em.

    Maybe I'm paranoid about all of this, but those are the thoughts I had reading your latest column.  Something's rotten about this whole thing.

  • Beyond the dangers outlined by Epcot82 (thanks), the "value hotels" addition in this proposal strike me as exceptionally studpid and short sighted.  If the All-Star/Pop-Century resorts go for $100/night, and the on property Super 8 (or whatever) goes for say $75/night I think they'll lose business to the cheaper option.  I doubt the person staying a $50/night off property hotel will suddenly say "HEY! I'll stay on property."  But very likely, the guest who would have stayed at one of the Disney value resorts will suddenly be inclined to take the cheaper on property option.  Robbing Peter to pay... you know what I mean.

  • What I don't understand is why they are adding so much hotel space.  I was there this last December, when all 4 parks were at capacity, and they closed 3 of them.

    Being in a park that is at capacity stinks.  Fastpasses for 9pm when you finally get into the park, two and three hour standby lines for the best rides, one hour lines for the meh rides... I swore never again to go in peak season.  And yet the existing Disney hotels weren't full.  If that's the case at max capacity, then at other times there should be quite a bit of empty hotel space... instead of building more hotel rooms that will just result in even more empty hotel rooms, why not just lower the price of some of the rooms at the other resorts during the low season?

  • I find the entire Walt Disney World Resort nothing more than a big Red Light District anymore ... with Disney playing the role of the pimp and the guests playing the role of the ... well ... I think you can guess what role we play.

    Honestly, if I didn't live so darn far away from DL, I'd never go to WDW again. And trust me, it pains me to say that. I grew up on WDW, but it's really just barely a shell of what it once was. I'd say I'd miss Epcot, but anymore would I really? What's there to miss? Soarin' is great, but hey ... it's in DL, too! I'd miss World Showcase, I guess, but .... I'd get over it! And Furture World?? Please ... what a disjointed mess THAT'S become!

    To me WDW is exactly what Jim calls it ... Disney's exploitable cash cow. They look for every way to milk every nickel they can out of their guests (I mean they've actually taken to OUTSOURCING guest service positions!!!) and that's really all it is to them.

    Which, given what Walt originally intended to do with all that property when he bought it, is almost criminal.

    I gotta be honest ... if it weren't for my kids, I'm pretty much over Disney on a personal level. I had some hopes when Iger took over that things might get better, but he looks more and more to be nothing more than a new head pimp in a different five-thousand dollar suit.

    It's very sad ... watching the final death throes of a once great American cultural icon as it's slowly strangled by another one of today's new corporate behemoths.

  • this looks great. i would loves to visit this place someday

  • WDWacky said: "Which, given what Walt originally intended to do with all that property when he bought it, is almost criminal."

    Most people tend to forget that Walt did not want to build a resort with numerous hotels and golf courses.  He only wanted the "Vacation Kingdom" to attract people to the area to see his Experimental Prototype Community of Tomorrow or E.P.C.O.T.  It was to be a city... not a resort.

  • Well, the WDW property *is* mature. It's aged well in some places, and not so gracefully in others. New ways to bring in additional revenue from the property need to be explored. Yes, it looks a lot like money-grubbing by a few corporate fatcats, but really it's just the functional needs of a modern business of the size and scope of Disney.

    What Disney needs to do with WDW, first and foremost, is to improve the end guest experience. If this is done, then all of the speculation and fussing on the Internet won't mean anything...well, not that it means much now.

    So what do they need to do? It's fairly simple, really - come up with cost-effective, or additional-cost-free methods of improving the guest experience. Train and retrain cast members on customer service. Start diligently enforcing the standards laid down by company for cast member appearance, attitude, and disposition. Heck, bring in some new standards. Run a tight ship, in the area of cast members. They are, in all ways, ambassadors of the Disney way to every guest that visits the park. If they are surly or disinterested, then the guests they come into contact with will begin to reflect that, and it's just a downward spiral from there.

    I'm not just talking about the cast member working the cash register at a store in the park, or one manning a ride's loading dock. I'm talking about the hotel managers, the waitstaff at every restaurant, bus drivers...each and every employee on WDW property that comes into contact with guests. Have middle and upper management interact with the cast members in their environment, to check their performance and gauge their adherence to the standards. If they don't measure up, then it's time to train and retrain or replace...it's that simple.

    It may sound harsh, but that's just the way it needs to be. The only other thing that is anywhere near as important is in the first-impressions and visual perception department, and there's really no non-cost way to improve this. Things should be clean, things should be working, and things should be freshly painted. This one gets expensive fast, though, so change and improvements will have to come in incremental, baby steps, if they come at all.

  • "I have to tell you, folks, that that is the word that's currently being used in-house to describe the Disney World Resort. Mature. As in: "These days, We're not looking to put all that much cash back into our Central Florida properties. Right now, it's all about getting the money out. Finding new ways to milk the WDW cash cow."

    If you're wondering about the validity of this statement, just check out TWDC's annual report for 2006.  It's already happening.  I'm just wondering what Iger's ultimate plan for Disney is.  Is he going to be the Gordon Gekko (Wall Street) of TWDC selling it off piece-by-piece to maximize profits?  Is the Four Seasons deal the first step?

  • >>Train and retrain cast members on customer service. <<

    Of course, as executives attempt to strangle the goose laying the golden eggs, let's get on the back of the minimum wage workers.

    If the problem is you have a mature park, then you add new attractions.  Is this Disney world or Great Adventure?

    There used to be a saying in the business world..."you have to spend a buck to make a buck."  Obviously, that belief is dead.

  • It's funny, the "nickel-and-dime-ing" and "just picked me up by my ankles and shook me until all of the money fell out of my wallet" phrases were something I remember my dad saying when we visited Disneyland... 20 years ago. Welcome to the Wonderful World of Disney, where they charge for everything.

    Frankly, I'm surprised so many people are shocked by this. I EXPECT Disney to charge for everything. I expect my souvenirs to cost 3x what they would in the "real" world. And mostly, I bring that understanding with me on a Disney vacation. I pay more, but comparitively, I usually have a better time than on most of my other vacations. The atmosphere, the family friendliness, the non stop activities - these are the things that make Disney World a great vacation for me (and many others).

    And thinking back to those many trips from my youth to Disneyland, there rarely seemed to be new rides to me. Sure, once in a while a new big ticket item would open (Star Tours comes to mind) but it seems that Disney World is much on the same scehdule. But here's the thing - I don't think a lot of people re-visit Disney World because they've got a new ride. That's a nice plus - but the reason people keep coming back (every few years) is because it makes for a great family vacation. And it's worth it. Just my 2 cents (which by the end of this message will be worth $2.00 due to Disney inflation).

  • I've heard the "M" word being tossed around by Disney executives before, but I was hoping that saner heads would prevail. Guess not. The fact of the matter is that Disney pretty much sees the US parks as a dead end that's not worth plunking a ton of money into becuase Americans aren't as willing to fork over money willy-nilly for theme park experiences anymore. Why it's never occurred to anyone at Disney (or anyone else in the industry) that guests' unwillingness to spend more has more to do with a tendency to provide less satisfying options (theme parks and new attractions designed and built on the cheap, more generic merchandise) combined with a tendency to keep guests paying through the nose than the "maturing" of the theme park industry is anybody's guess.

    All the stuff we've seen in the last year or so - the outsourcing of more and more cast jobs, the cutbacks in show quality standards, the nickel and diming of guests, the overexpansion of DVC, and now a dependency on third parties to build and run resorts that in the past would have been done in-house - are all symptoms of this desire to squeeze every last bit of milk out of their cash cow before it runs dry.

    Ironically, by doing so, Disney may be just bringing on the day Bossie's going to the meat-packing plant a little colser by squeezing on the udders so much.

  • boo friggen hoo.

    "the parks arent like they used to be"

    "the disney company should do something about x"

    I get so so so so sick of hearing these Disney Dweebs go on and on about how much better they could do it.

    Its not Disney World that needs to change, its your mindset about how YOU choose to view this company. Its a company. Not a non for profit. They need to market to everyone. Rich people, poor people, disney dweebs, first timers, etc.

    Thanks Jim for the information.

    Its not shocker that Pirates and Princesses didnt do well. They had about a 6000 ticket turn-out for each event, and 6 x's the 15 or so nights they had, roughly equals out to Annual Passholders and locals. Why for? That time of year is SLOW. Which is why its a value season.

    Pirates and Princesses was THE best event ive ever been to at a disney park. And weve went to the others for years. Best parade. Best fireworks. Best atmosphere. It was amazing. Marketing did a poor job marketing it to anyone outside of orlando. Plain and simple.

    YOu want to change the Disney company? Go to disneycareers.com or buy a share of stock and go to a stockholders meeting. Otherwise your opinion doesnt matter. Because us Disney Dweebs take up 1% of the population and if ANY company started marketing to 1% of its audience and only 1% that would be ridiculous and would be pointed out as so.

    Go to the parks, enjoy them and quit nitpicking. The parks havent lost ANY of their magic. At least not for my family, we go twice monthly and it gets more and more magical each time we go.

  • I remember reading something about the cheese sauce on another site -- something to the effect of it being a reaction to guests who were using the topping bars to avoid paying for meals and that's why the sauce was taken off the bars. Casey's may not have a topping bar (I don't recall) but charging the dollar may have discouraged people from getting a free dollop of sauce and carrying it over to a topping bar elsewhere. Stranger things have been known to happen.

    One thing to also keep in mind is that there are still those within the company who came from the toothpaste and detergent companies because of the previous top management's desire to break with so many sound traditions. Some of those people may still think that Disney is like any other brand, but to be fair, many have realized that it is not. I'd like to think that it's a matter of time before the influences of the previous regime is diltued and more sensible thinking prevails.

    Finally, as Donna Reed used to say on a Nick at Nite promo, with tears in her eyes, "I like cheese!"

  • i agree with you, greenyskp.

    i've gone to wdw since i was little and in the past 3 years since i moved to orlando have gone quite often.  both my wife and i still love going there and still find it magical.  

    i agree with what you are saying as far as what would happen if disney tried to run the company based on the 1% of disney fans.

    if disney said, "we're closing carousel of progress"...do you think even half the people who go to disney world even know what carousel of progress is?  i don't.  

    as far as what alex dolce said about the cast members...i agree that it's important how they act, which adds to the magicalness of disney...but, it's pretty hard to keep track of everyone when you have 50,000 people that you have to look after.  when we moved down here, we went to the casting bldg and i couldn't believe how many people were there...they must interview hundreds a day...it's hard to pick people who are going to be 'great' cast members when you have to sort through that many people.  could you train them better?  maybe, but, it's hard to keep tabs on everyone...and even so, it's hard to let someone go for not being cheery when it's hard to find someone to hire.

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