Year of the Discount at Disney World?
I’ll start with my prediction: we will see more significant discounts for next year than at any time in the last 7 years. This post takes a look at the economic, political, and other variables that form the bases for my prediction.
For those of you hoping the title was just lighthearted clickbait for a junk-reading filled with my dumb jokes, you might be disappointed to find a fairly dense post with statistics and other such nonsense. (But please come back tomorrow when we turn our attention to the 13 best drinking fountains at Walt Disney World!)
Moving along…discounts are a direct reflection of attendance projections. One of my go-to lines on the blog is that Walt Disney World doesn’t offer discounts in the spirit of corporate benevolence, they do it to bolster attendance numbers.
It thus follows that discounting is more aggressive when attendance projections are lower, and less aggressive when attendance is anticipated to be higher. That’s a core premise of this post, and I think there’s little dispute as to its tenability.
I believe attendance projections will be down for a few reasons. The first driving factor is (another) drop in international tourists. There’s been a lot of speculation that Walt Disney World attendance was down this summer prior to mid-July.
Anecdotal observations don’t tell nearly as much as quarterly reports (maybe attendance was down but spending was up enough to offset?), but our recent experience with light-for-summer crowds supports the basic idea that attendance has been down. Much of this speculation revolves around international visitors, who often flock to the parks in the summer months.
Unfortunately, Walt Disney World doesn’t release attendance numbers, let alone demographic breakdowns. We do know that international numbers rose 7% in 2013 because Disney itself reported that. Estimates at that time pegged international tourists as accounting for 18-22% of all guests to Walt Disney World.
This is a fairly significant chunk of Disney’s visitation, and I would speculate that international guests account for proportionately more in revenue than they do in attendance (based on length of stay averages and reports on spending patterns).
Florida’s official tourism arm does release visitation numbers, and it’s safe to assume that the state numbers more or less reflect Walt Disney World’s numbers. Per these numbers, the three origin countries that account for the most Florida tourists are Canada, United Kingdom, and Brazil. The most recent sets of data show decreases of 4% and 10% for Canada and Brazil, with the UK up 1%.
In the case of Canada, a slumping currency as compared to the USD and weak forecast is the main explanation. With their purchasing power diminished, Canadians are less inclined to travel to the United States. By contrast, a weak dollar as compared to the pound, in particular, has led to UK guests being Walt Disney World’s “whales” for many years, with 21-day ticket purchases (yes, 21 days), long hotel stays, and more.
However, in the aftermath of the Brexit, a Florida vacation is far more expensive for these UK guests, a reality that will undoubtedly be reflected in bookings next year. While that is likely to ease long-term if/when the pound rallies, it’s unlikely Brits will be as spend-happy as they have been for the last several years.
Brazil faces pronounced, multi-factor economic challenges. The country is in deep recession and the real dropping 30% against the USD, and a similarly grim year thus far. Diminished purchasing power isn’t the only issue, as Brazil is in the midst of a political crisis and further strife following the impeachment of its president. As a Walt Disney World trip has become something of a rite of passage for Brazil’s middle class, these groups will continue to come, but not in the same numbers–or spending as much. A quick bounce-back doesn’t seem plausible.
Of course, dips in visitors from other countries–who Disney will probably try to lure with regionally-targeted offers–doesn’t impact domestic visitors unless there is a corresponding lull in their numbers…
Any decline won’t just be driven by a decrease in international guests, or spending among those guests. In turning back to the above-mentioned numbers compiled by Visit Florida, we can also see a strong recovery in Florida’s travel and tourism sector in the 5 years after the low point of the global economic crisis that started in 2007 and peaked in 2009. Other studies demonstrate the severity of that financial crisis on travel, reporting that prices plummeted twice as much during the economic crisis as they did post 9/11.
Barring another economic catastrophe, it’s unlikely that we will see a slump on par with that (although further bursting of China’s bubble or the housing market suffering a setback–either of which would impact the global economy–are not outside the realm of possibilities). It’s also reasonable to expect we won’t be riding the same wave as the last few years.
Domestic concerns regarding the economy and terrorism are both reasonable. While there was no immediate fallout from the Orlando nightclub shooting (given that most vacations are pre-planned and cancellation would be a costly proposition), the potential for a long-term decline remains. Although other variables are at play there, France’s tourism sector has been hit hard this year. Paris, also highly reliant on tourism, could present a cautionary tale for Orlando.
In addition to the Pulse shooting, the fatal alligator attack at the Grand Floridian could have an impact. That incident tugged at emotional heartstrings and resonated deeply with Disney’s prime demographic. The long term ramifications of this fairly unprecedented (in terms of public response) are unknown, but could be pronounced.
It’s also possible that the impact of both events will be minimal. Numerous terrorist attacks occurred in the aftermath of Pulse, meaning that the Orlando shooting did not have a prolonged run in the global news cycle. The family of the boy killed by the alligator has indicated that they will not sue Disney, which would have extended the news cycle on that story, as well. By the time people are seriously contemplating their vacation plans this winter, both tragedies could be distant memories for many people.
Another long-shot possibility is that Florida–slow to act on the virus–will face a local Zika epidemic. The CDC has issued travel alerts, but there has yet to be a confirmed non-travel related instance of Zika in the United States. However, local infections are suspected in two current Florida cases of the virus. If a local outbreak occurs, it could have the same degree of impact on Florida’s tourism as it has in the Caribbean. (In fact, British media has already warned readers to “think twice” before visiting Orlando.)
On the domestic economic front, there’s the highly divisive election this November and the Presidential Election Cycle Theory, both of which will have some consumers skittish when contemplating bookings come this fall and winter. A recent study by UBS observed markets from 1914 until present and postulated that markets move in 4-year cycles in a pattern that coincides with the presidential election. The UBS study seems to support the existence of such an election phenomenon (although skeptics point to the recent Clinton and Bush (43) Presidencies as disproving it).
These trends show that the first year under a new president is typically the low point in these cycles. This occurs irrespective of the party elected, so if you subscribe to this theory, it will play out again regardless of the candidate elected. (In fairness, economic studies can be contorted just like scientific ones, and correlation doesn’t equal causation–which is underscored by the Super Bowl Indicator.)
This isn’t altogether surprising. Markets favor stability and predictability, and with a new president comes potential volatility through new policy that alters the status quo. I’m betting most of you don’t come to Disney blogs for political economy theory and shop talk, so I’ll curtail this before we get too deep or veer off into personal politics (which I’ve been careful to avoid, so please do likewise in the comments).
The takeaway is that there’s a strong probability next year will bring with it a bear market, which potentially could be exacerbated depending upon the perceived unpredictability of whomever is elected.
Assuming all of this–or even some of it–unfolds as expected, there will be a decent level of reluctance and uncertainty among consumers that businesses will need to overcome. They will have to work harder to entice customers, and this extends to Disney. This could come in a couple of forms: new attractions and entertainment offerings that lure in guests and/or aggressive discounting.
We already know Pandora: World of Avatar opens. As the largest scale addition since New Fantasyland (and let’s be honest, well before that), this will draw a lot of Disney fans to the parks. This, plus a serious summer push (akin to how Summer Nightastic brought guests in droves for Summer 2010) will certainly help. However, if consumer confidence is weak, I doubt this will be sufficient alone for casual tourists, who represent a far larger segment of Disney guests.
I don’t envision many scenarios in which people will say, “I’m really worried about the economy, but who cares about that because I can’t wait to step foot in Pandora!” I suspect the new Avatar-based land will move the needle, but not with potential guests who have monetary apprehension. The concerns of those people will need to be overcome by monetary incentives to woo them down to Walt Disney World.
In this regard, it will be interesting to see the approach Disney favors: lower prices on bare bones packages to get guests in the door, or all-inclusive (e.g. Free Dining) packages that guarantee a certain amount of per guest spending. While there will undoubtedly be a mix of both (as there always is), my prediction is for several particularly enticing all-inclusive packages as the main push.
As consumer confidence has trended upwards since bottoming out after the economic crisis, consumers have been less price sensitive. This has benefited Disney, which has been able to raise prices without seeing dips in per guest spending. If consumer confidence falls it’s likely that consumers will be more price sensitive. At that point, it will be interesting to see whether guests start balking at merchandise and dining prices, and Disney again sees a decrease in per guest spending. That $16 burger at Pecos Bill will be a tougher sell for guests paying a la carte.
Higher levels of price sensitivity is what leads me to believe Disney will focus on packages, even if those feature a larger, up-front price tag. (I wouldn’t be surprised to see some of the hybrid room/dining discounts previously reserved for international visitors.) These packages will be able to tout deep discounts, and also offer guests the illusion of predictability, which they crave.
From Disney’s perspective, packages like this lock-in a level of spending on the front-end, which is also favored. It’s easier to sell consumers on a high fixed price in advance–once people start scrutinizing per item prices that they can contextualize, they find those individual purchases more difficult to justify.
This is what I think is most likely to occur, and why I suspect we will see massive package discounts for Walt Disney World.
Just like theorizing about which attraction rumors will come to fruition, all of this is speculation. Like even the most bona fide rumors, none of this could end up happening. International markets–those mentioned or other ones–could rally, bringing an influx of new guests. American consumer confidence could soar after the election leading to increased bookings and skyrocketing prices. While I think those things (or anything else that will preclude the need for aggressive discounting) are highly unlikely to occur, I don’t have a crystal ball. I’m just looking at available information, speculating, and drawing my own conclusions. Whether you find it fun food for thought or pointless conjecture is a matter of personal opinion.
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Your Thoughts
So…what do you think? Is all of this pointless conjecture, or do you think these are the bases for a legitimate prediction that Walt Disney World’s numbers will be down, necessitating significant discounts? Any other factors you think should be considered? Other thoughts or questions–please share in the comments!
I agree with all of this. We are hoping to go in 2018 (from outside the US) and the gun-happy culture and alligator attack are still in my mind. With the alligator, seeing the video of a couple of them within magic kingdom a few years back is of more concern to me at present. Zika………that virus has been around for 60+ years but now receiving a lot of press so not sure that would sway us but then again…..Disneyland is looking a lot better.
Ah, but Disneyland is much smaller.
As a FL resident, I would respectfully proffer my view: alligators are a non-issue , even if your boating in a personal watercraft on the lake. I have never in 40 years heard of a person attacked by an alligator while in a watercraft. As far as Zika goes mosquitoes are not much of a problem at Disney World and you can always put repellent done. The only reason I would for a coat Disney World for Disneyland was if you truly prefer that park. It has a mystique of its own just as Walt Disney World does.
Hi Tom- question about when the best time to book Oct 2017 would be in regards to the release of discount packages? Do you think they will release them similarly to past years? Also- we are considering going w DVC points- I have heard conflicting info that you cannot receive free dining or any additional booking perks if have your room using points? Thanks for all your great blogs- my go-to for reliable information so far!!
I booked already for an October 2017 trip, and I wasn’t even looking to book…it was spur of the moment due to such a great deal. (I live in the uk) I’m thinking I probably booked at the right time as post ‘brexit’ exchange rates have been poor. Although we still have the spending money to account for which may end up costing more if the pound doesn’t recover.
My week after Thanksgiving 2017 trip now looks even better! I wonder if the pin codes I keep getting will get better as well or will it be primarily discounts to the general public?
Awesome read….I hope your predictions are correct as I plan on visiting WDW fall 2017!! I’d imagine I still have to wait quite a bit for those packages and discounts to show up?!! Not sure how the timing works for the release of discounts for Spring/Fall/Winter etc…?!
For the past 9 years we have gone to WDW at least once per year. I am no longer feeling the offerings are worth the cost. Our upcoming trip in October we are only doing two holiday parties (which have gotten REALLY expensive so will probably be the last time) and no days in the parks. The price has just gotten too expensive. In 2017 we plan to go to Europe instead. It is less expensive.
I’m curious what the implementation timeframe for these discounts might be and how long in the future Disney plans. DVC members have to book their rooms 7 or even 11 months in advance, but those aren’t the customers that would be affected by package discounts. But even the average person is making ADR’s at 6 months out, so from that perspective we’re already into 2017.
Despite lacking your traditional brand of humor (which I also share), I really enjoyed this article. Since our brief visit in May, our family’s conversations about WDW have turned to discussing the current politics surrounding a WDW trip, and we’ve all agreed that we’re not going to hurry back anytime soon. The price point has finally become high enough that we don’t feel that we are getting a great return on investment; the new offerings simply aren’t enough to warrant coming back so soon, once you factor in the exponentially rising costs of meals, lodging, and tickets.
I sincerely hope that the folks at Disney will be willing to make some strides towards greater guest satisfaction in their parks and resorts; there are definitely some areas where they are still firing on all cylinders, and I hope they will continue to make changes where they are needed!
You are incorrect about the non-travel zika case. The first one was documented in Miami this past week.
“However, local infections are suspected in two current Florida cases of the virus.” (Click the link in that sentence.) 🙂
We booked our April 2017 trip a month ago, in anticipation of price increases. We’re no longer package deal people, as we find it too costly. At least, for us. We order ala carte and share. So that $16 Pecos Bill’s burger is really $8 each for us (although, we don’t go to Pecos Bill’s anymore).
Two emails came from Disney World today, one personal, one generic, inviting us to book trips. They even offered discounts. I thought that was odd. Now from what you said, I expect more will come. I think attendance is down, well, I know it’s down. Cast members know it’s down. And, yes, there’s a lot going on in the world that could affect Disney’s bottom line. But I’d be more concerned with the Zika virus than alligator attacks. You can avoid alligators.
You’re right, no one can predict the future, but the times, they are a changing, and I don’t know if it will be for the better. Only time will tell.
I went to WDW in Dec 2015 and I’m intending to visit again in September 2017 from Australia. It’s 28 hours of traveling and a shocking exchange rate so I guess I am a rather dedicated fan. A 3 week visit to Orlando costs around AUD $10,000 per person including flights, accommodation, park passes (gee Universal is expensive!), food and spending money. Australians don’t get the packages offered to UK residents most likely due to our smaller population and therefore smaller market. My dream is that Disney comes to Australia. Highly unlikely due to aforementioned small market but a girl can live in hope
I hope you are correct. I would like to visit in February 2017. I have been playing with the packages that they have on the website, and the price actually increased , when I checked the same dates a few weeks apart. Granted it was about $100.00 more but still an increase in a matter of 2 weeks for the same dates and same hotel.
So do you think DVC owners will be left out of any benefits? Or will we maybe see discounted dining packages? Further discounted APs??
They are already slowly reducing and removing our benefits. I believe Disney’s stance on members is that they already have us hooked and therefore why offer us anything else. Sorry, mixers don’t count.
I am planning a honeymoon that includes Disney World and a cruise, so your speculations could end up benefitting me.
This is a really great article. It was a great read. Covers a lot on how things are going to look for Florida since tourists are number 1 in the state.
I worry/wonder also about the Zika and how that will play out. I think a breakout like that will be extremely damaging to the whole state. People can move past the other things but a small mystery virus could have many canceling their trips.
I’m actually a bit surprised that the tourism industry hasn’t pushed Florida to be more proactive in dealing with Zika. The state has just sort of sat on its hands instead of pursuing (available) potential prophylactic measures.
I would’ve though that the Disneyland measles outbreak would have been a lesson in this. If there is a Zika outbreak in Florida, it could be devastating for Walt Disney World. Heck, it wouldn’t even take an outbreak–just a few local cases and the media finding a way to tie one of those to Disney, since that’s the “sexy” story angle.
I’d only be concerned with Zika arriving in Orlando if I were pregnant or planning. We live with Lyme threat around here. My son was infected 10 years ago, luckily it was low-grade & caught immediately. The risks of Zika do not seem so great to the average person that we should change our Orlando plans. For now, at least.
In terms of Disney’s demographics, “pregnant or planning” probably includes a lot of people (my guess would be double digits percentage-wise). With Rick Scott confirming that these were local cases this morning, we’ll see if there’s any immediate impact, but my guess is that it will take an event in Orlando (which seems an inevitability at this point) before vacation planners seriously take notice.
Combining two of my favorite topics, economics and Disney World. Great post, I know it is somewhat of a one off, but anymore in the future would be great.
I think another factor could be waiting for Star Wars land to open. For those who don’t visit Disney every year or two I can see them waiting for Star Wars land for their big trip. It also feels like Disney has a weak link right now with Hollywood studios and I could see a lot of people opting for a universal day over the studios. Great article!
That’s a really good point.
Not to walk back my last comment about fall/winter not be impacting, but to an extent, I could see the holiday season seeing lighter guest numbers, ESPECIALLY Hollywood Studios. The Osborne Lights were a huge draw for that park at Christmas-time, and that–on top of other closures–is a huge gap in the Christmas lineup.
I’m honestly surprised they haven’t announced some sort of replacement at DHS for Christmas. Not a scaled-back version of Osborne Lights, but a stage show, fireworks–something–to draw in guests. There are a lot of regular visitors who come every year for a Christmas trip (it’s an especially popular time for DVC members) and nothing to replace the Osborne Lights could have a noticeable impact on bookings.
Anna & Elsa’s Frozen Christmas Dance Party!!! 🙂
Stephen, that was my exact thought re: Star Wars.
We just went this year and don’t see the point of returning before the opening of a major new attraction. If someone was planning a family trip and it was their ONE trip ever, or at least their one trip for a long time, do they go just before the “big new thing” opens? Probably not. Add in the recent excitement of new Star Wars movies and the new additions become an even bigger enticement to wait until after the Star Wars attractions open.
Sorry about the typos. Fat thumb syndrome.
What kind of attendance numbers are yiu thinking for the is Fall/ Holiday season? Slower, busier, or about the same as always? I know it’s all conditional. Just wondering about your thoughts.
I don’t think much I’ve covered here will impact this fall or the holidays, except maybe on a local (Floridian) level. Domestic travel is largely already booked by that point and international travel isn’t as significant at those times.
I’ve heard projections for this fall are fairly strong, which isn’t too surprising given the current economy. You might start to see people being apprehensive in the lead-up to the election, but the fact that those trips are already paid for minimizes that. I wouldn’t be surprised if October-December are especially busy, in fact.
This article mostly concerns travel for Spring 2017 and beyond.
Thank you for your response! Appreciated!
Thoughtful analysis!
I’m interested in 2017 Bounce Backs, which should come out soon. I think they’ll be an early indicator of what we can expect for the year ahead.
I would expect bounceback offers to remain consistent with past years. Even if TWDC has the same concerns I’ve raised here, I doubt they would act on it this soon, rather than taking more of a wait and see approach. (Which, I think, is the appropriate course of action–a lot could change between now and March/April 2017.)