WDW officials knew that ’09 was going to be a real challenge

Jim Hill

16 years ago

Wayne C. sent in an interesting follow-up question to yesterday’s article:

“When exactly did Disney World executives realize that their resort was about to hit a rough patch? Based on some of the things they’ve done over the past six months (EX: Announcing back in July that they’d be closing Pleasure Island down at the end of September), they clearly must have known that something serious was about to happen. But the way today’s story was written, you make it sound as though Wall Street’s freefall caught these guys totally by surprise. So when did they know that they were in trouble?”

Based on what I’ve been told, the folks who work at Disney’s Reservation Centers began raising red flags back in January. Even then, there was enough of a deviation from the way that people typically made their Disney World reservations, the numbers of days that Guests were opting to stay on Property, the types of packages that they were booking to suggest that late 2008 / early 2009 was going to be a real challenge for the Resort.

Which is why — starting in February — WDW management began getting aggressive about cost containment. They started by shutting down PI’s Rock ‘n’ Roll Beach Club. They then asked managers all over Property to come up with new ways to save money at the Parks & Resorts which (hopefully) wouldn’t be all that obvious to the Guests.

Okay. Admittedly some of these cost saving measures (i.e. pulling the plug on PI) were a lot more noticeable than others. But there have been lots of other changes made at the Resort that you may not have noticed. Not yet, anyway.

Take — for example — the operational changes that have recently been made over at “Monsters, Inc. Laugh Floor.” This Tomorrowland attraction used to open at the exact same time that the Magic Kingdom did. But these days, “MILF” doesn’t start presenting shows ’til an hour after that theme park officially opens for the day. It now also closes its doors a full hour before the Magic Kingdom shuts down for the night. Which then allows the Mouse to cut back on the number of Cast Members who typically work at the “Laugh Floor.”

Mind you, “Monsters, Inc. Laugh Floor” isn’t the only attraction that has recently shortened its hours. Over at Disney’s Hollywood Studios, “Walt Disney: One Man’s Dream” has begun closing its doors in mid-afternoon, hours ahead of when that theme park actually closes for the day. Again with an eye toward reducing the number of Cast Members that WDW actually needs in order to operate this DHS walk-thru attraction.

So for every obvious change that’s been made (i.e. When they stopped serving lunch at Epcot‘s Garden Grill earlier this week), there have other not-so-obvious changes. Like the removal of some of the pricier items from buffets all over Property. Not to mention the reduction of portion sizes. All with an eye toward lowering overhead, reducing payroll costs and/or just saving money.

“So when does Disney expect things to really start getting bad?,” you ask. Well, if you’ll recall the changes that have already been put in the pipeline for January (i.e. “Fantasmic!” will be cutting back to just two nights of performances each week then and the Liberty Tree Tavern will be discontinuing character dining just about this same time), it’s pretty obvious that Mouse House managers think that the first three months of 2009 are going to be rough on the Resort

And when you take into consideration that WDW officials knew at least 9 months ago that we were headed into some tough times economically … Well, that then puts Disney Parks & Resorts’ “What Will You Celebrate” campaign in a whole new light.

I mean, think about it. Knowing now what they knew about how the Resort’s advance reservations were falling off (at least from its stateside customer base), wasn’t it clever — gutsy even — for Disney to craft a promotional campaign that would actually take into account the coming bad times? Which would then offer Guests free admission to a Disney theme park at a time when people might need an incentive like that in order to make a trip to the Parks & Resorts seem that much more affordable?

I know, I know. There are tons of strings attached to that “free admission” (i.e. registering in advance, producing a valid I.D. that then verifies your birthdate, etc). But strictly from a PR point of view, this is a very savvy maneuver by Mickey. To give something away at a time when people would genuinely appreciate getting a freebie. That — to my way of thinking, anyway — was a really smart move on Disney’s part. Particularly given this economy.

And then — when you factor in what this “What Will You Celebrate?” balloon-based promotion will actually cost the Company versus what Disney must have spent on some of those earlier, far higher profile promotions that were done for the Parks — this one looks like it’ll be far more affordable. Which once again brings us back to Disney’s recent focus on cost containment.

As WDW management getting caught by surprise … The one place where (I think) Disney slipped up is that they didn’t take into account what might happen if the U.S.’s financial problems were to suddenly spread overseas. Which is obviously going to have an impact on the number of tourists who can now afford to fly in from Europe, South America & Asia for an Orlando vacation.

This is why the postponement of the Fantasyland facelift project caught so many people within the Company by surprise. It had always been assumed that — as long as there was this steady stream of international Guests coming in to Walt Disney World to compensate for any U.S. -based attendance shortfalls — that the Resort would then be able to weather any sort of economic downturn. That WDW would chug along as it always has. But now that it’s not just Wall Street that’s gone weird but also the overseas stock markets … All bets are off.

Which brings me back to your original question, Wayne: Based on everything that I’ve heard, WDW officials were aware that something was up as far back as January.Which is why they really got proactive about cost cutting starting in February.

But they — just like everybody else — never dreamed that things could get this bad this fast. With Citi cutting the target price for Disney’s stock yesterday because Disneyland & Walt Disney World’s room prices are approximately 30% off of what they were this time last year.

Which is why no one who works for the Resorts right now is looking forward to the start of 2009. Which is when the real hurting is supposed to begin.

Your thoughts?