As Disney World Turns 40, its Strategy Shifts

[Carol]

As Disney World Turns 40, its Strategy Shifts

September 30, 2011
By Jason Garcia, Orlando Sentinel

Walt Disney World turns 40 this weekend, and in many respects, the place looks a lot like it did at 30. The resort hasn't built a new theme park in 13 years. It hasn't added a water park in 16 years. It hasn't opened a company-owned hotel in eight years, though a new one is under construction.

It is in sharp contrast with Disney World's first three decades, which began when the Magic Kingdom debuted Oct. 1, 1971. Disney's original Florida theme park was followed by Epcot (1982), Disney's Hollywood Studios (1989) and Disney's Animal Kingdom (1998), plus a trio of water parks (one now closed), 15 hotels, a 120-acre retail district and more.

The slowdown reflects a new philosophy that has taken root at Disney World during the past decade: Rather than continuing to expand, the giant resort's focus has shifted to wringing more out of everything it has already built.

Where Disney World was once able to grow simply by getting travelers to take longer vacations and visit more theme parks, Disney World today is searching for growth by stitching together strategies such as persuading more people to stay in its hotels and to spend extra money in its parks, finding untapped pockets of potential customers, and attracting more people during slow, "shoulder" periods.

"The challenge for Disney World is that the average vacation is getting shorter and the average family income for vacations is getting less," said Chad Emerson, a Disney World historian. "The effect of that is that Disney can't count anymore on increasing vacation length."

Although the Walt Disney Co. doesn't break out individual financial results for Disney World, the performance of its broader theme-park division overall illustrate how much tougher growth has become.

Total revenue at Walt Disney Parks and Resorts grew 59 percent, from $6.8 billion to $10.8 billion, from 2000 to 2010. But operating profit tumbled 19 percent, from $1.6 billion to $1.3 billion, during the same period. Disney World is by far the largest business in the parks division.

Disney says its recent profit margins have been slimmer because it is in the midst of an unusually large slate of capital projects, including two new cruise ships; a Hawaiian hotel and time share; a new park in Shanghai; and multiple park expansions around the world.

Disney World certainly hasn't stopped expanding its existing theme parks during the past decade. The company spent more than $100 million each, for instance, on Mission: Space in Epcot (2003) and Expedition Everest in Animal Kingdom (2006), as well as an additional $80 million on Toy Story Mania! in Hollywood Studios (2008).

But none of its brick-and-mortar attractions has matched the effect of another initiative launched during the past decade: Magic Your Way, the ticket-pricing overhaul introduced in 2005, through which Disney sharply reduced the price of multiday park passes (even as it increased the prices of one-day passes by 9 percent). The difference between a five-day pass and a seven-day pass, for instance, fell from $60 to just $6 under the new structure.

But the Magic Your Way strategy involved more than ticket prices. As part of the overhaul, Disney also launched a series of other initiatives, including Disney's Magical Express, a complimentary airport shuttle-and-luggage service for guests using resort hotels; Extra Magic Hours, in which the parks offered extended, early-morning or late-evening hours exclusively for Disney hotel guests; and the Disney Dining Plan, a prepaid meal plan in which buyers got discounted prices at Disney restaurants.

The combined effect was to make it almost irresistible for many Orlando vacationers to spend more — if not all — of their time on Disney's property, sleeping in its hotels, eating in its restaurants and going back to its theme parks rather than taking a day at Universal Orlando or SeaWorld Orlando.

Company executives have credited Magic Your Way with lifting attendance, hotel occupancy and per-capita spending. The strategy has also helped Disney World weather the global economic downturn and the heightened competition from Universal's new Wizarding World of Harry Potter.

Top Disney executives cite another, less-obvious initiative as among the biggest developments of the past 10 years. They call it "The Basics" — a program, launched in 2007, to re-emphasize and improve customer service across the resort.

All of the resort's roughly 60,000 employees, or "cast members," have been given tiny pocket cards with reminders such as, "I am courteous and respectful to all guests, including children." But Disney says it also began more closely measuring guest satisfaction and used the research to make tangible changes — from personalized greetings for people checking into hotels to new crowd-flow techniques at busy theme-park restaurants — that have led to improved ratings and, ultimately, repeat visits.

[waymickey]

I wish moreof the CMs would read that card in their pocket. I have found thme less magical less polite. They are now ordinary theme park attendants that can be found in any theme park around the world.

[cuteduck223]

we've found this strategy works. We've always stayed on property anyway, but the added benefits to resort guests are nice. We also found that in the past--if we went to universal or sea world, it was still fun.

During our last few trips, we've found that if we did disney even for 2 or 3 days first, then venturing out to the Universal or Sea world--there is still a noticible difference in quality of food and treatment.

On one trip we took my Brother and sister-in-law--both first timers. We went to sea world on arrival day. They loved it. Then 3 days at disney--and we were off to universal. THEY HATED IT (this was of course before the wizarding world) and we actually did everything they wanted to do (at both parks) and made it back to HS for Fantasmic! My BIL actually commented that the food was even a much worse quality.

Our most recent trip, we took a 14 yr old girl who had never been and who had lived with us for the summer (we went in January) --so she could "nanny" for us. We saved sea world until last, because she was most excited about that. SHE hated it. No matter how many complaints people may have about Disney--they are still going above and beyond and it shows if you visit another park mid-stay. Our next trip, we plan to go to legoland (DD3)--at the START of our trip but the other parks aren't even being considered.

[mdricks]

This is timely for me. Just the other day I was comparing about 6 years of disney vacation costs and found that the room rate gets cheaper every year while my total cost continues to rise 5-7%.

[princessgirls]

OK...I feel like I am the target family for this article.
This is how I think. I LIKE the package Disney offers.

I went on a family reunion trip to Orlando in the summer of 2010 that cost us MORE MONEY, and we ate at "regular" places in Orlando (applebees, fridays, olive garden...hey I have those ALL at home) and went to Sea World once, stayed at my inlaws time share listening to how wonderful it was to be an "owner" and how they just like to sit at the pool all day, when all I wanted to do was be on Disney property running around the parks.
I did get to Disney one day during that week, and loved every minute of the 14 hours we spent there.
1. Love Magical Express. Saves money on a rental car which is very appealing to me.
2. Love staying on Disney property! You never leave the Magic until you check out.
3. It is safe on Disney property. Orlando has some scary areas.
4. Enjoy the DDP! Yes...I do. We enjoy eating at our favorites.
5. Disney Rewards Visa, not the best rewards plan out there, but I have spent every one of my reward dollars in the parks on tips for dinner, drinks, and extras. Works for me.

Flying to Orlando staying off property and sitting a pool for a weeks time...not for me!
Thanks for letting me vent.
Julie

[tigmickey]

I have to say as a DVC member I am glad that some of the perks, i.e.DDP, are available to us using points!

[Aurora]

It hasn't opened a company-owned hotel in eight years, though a new one is under construction.

Technically correct but wildly misleading. Saratoga, Animal Kingdom and BLT were all built for Disney Vacation Club by Disney Vacation Development, a subsidiary of The Walt Disney Company.

But operating profit tumbled 19 percent, from $1.6 billion to $1.3 billion, during the same period (2000-2010). Disney World is by far the largest business in the parks division.

$1.3 BILLION???? Not bad, considering that "period" included the worst recession in the theme parks' existence. But oooo, it "tumbled" 19 percent. A little perspective would be nice.