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!
Loved this article! We are an every other year visiting family, odd years, so this may work great for us. I did not know the FD Bounceback offer included dates for next summer. That is wild!
We went in July after coming of a Disney Dream Cruise. We thought it would be packed. It was less crowded than when we went in Fall 2015. It’s great to get free Dinning and other promotions but I’ll skip that to have a less crowded resort and parks.
We have visited WDW twice from Australia, but it doesn’t seem to give us any incentive to do so, like other international visitors. At least Disneyland has a 10 day pass for Aussies and a much shorter flight. I don’t think we will head to Orlando again
I have already booked my 2017 trip but I am hoping that a Stay/Play/Dine or even Free dining is going to become available for our stay. We are staying at the Bay Tower and I know that in the past the villas have been exempt from those discounts, but maybe with projected low numbers we will see these offers across the board? I hope so since I already booked my dining with fingers crossed! If we don’t get one of those discounts I’m going to have to cancel most of our reservations.
Thanks for that informative article, Tom. 🙂 My husband and I are gong to WDW in early November, and I’ve wondered if we should cancel and rebook in Feb/March 2017? It sounds like there will likely be discounts then. I know, no one has a crystal ball, but your arguments are interesting. As far as Brexit, we have friends from London, and they have already booked their trip this November (which is prepaid). So, I think it might impact WDW more next year, when people have to pay for next years trips. This year, they can ride on their prepaid packages. Just my thoughts:)
Really enjoyed your thoughts and insight. Very interesting! Really appreciate the Brickers!
This is great news – I am pregnant and will be majorly bummed if the Zika travel warnings extend to Orlando by my September trip forcing me to cancel. I guess I will console myself by planning a trip for next summer instead. One that might even be cheaper than what I had originally planned 🙂
an intelligently written report. Let’s see more of it!
Another WDW blog said that the crowds that were anticipated for the month of June in the parks did not materialize. Disney management was adding additional park hours in July and August because they thought the big crowds would arrive then. July has come and gone and Disney is offering discounted room rates starting on August first to AP’s. Discounts during the last month of peak touring season? My guess, the discounting has begun in 2016.
I wouldn’t necessarily disagree with you there, but I think the fall will be key. If the parks see huge crowds starting in October, it could be that people modified their plans. If those crowds don’t materialize, either, I think the floodgates will be opened in terms of discounting.
I really enjoyed this post! Though we’ve long discussed the effects of Brexit on the global economy, we had not considered the (staggering) effects it might have on Disney! I have always appreciated your keeping politics out of this blog, and you did a wonderful job here of including it’s existence enough to properly cover all economic factors without riling anyone up. Thank you for such a thoughtful and analytical post.
this is what happens when lawyers smoke weed
We’ve done over 8 trips to WDW over the past 20 years, and never received a pin code/extra discount offer. We’re Canadian, so the drop in our dollar significantly affects the price of a trip, and we haven’t gone since 2013. This year we received pin codes twice, which leads me to believe that there has been a noticeable drop in Canadian guests. The pin codes weren’t enough of a discount to tempt us to return – they barely covered the difference in the dollar. We calculated that to do the same trip we did in 2013 would cost us $1200CAN more.
It isn’t just the cost increases/staff cutting/having to plan 6 months in advance/degrading of experience in WDW though. It is a royal pain to travel by air – we can spend up to 8 hours travelling to airports and standing in lines for a trip that is 2 1/2 hours airport to airport. We have come to hate the experience so much, we just decided to stay home, and see parts of our own country we haven’t seen that don’t require flights. This summer it will be Quebec City. Disney is going to have to offer one whopping big discount to lure us back anytime soon.
Got back Jul 26 from a WDW vacation. Exhibit 1 in the argument against your prediction of discounts is the huge increase in annual pass prices- completely unprecedented in my 20+ year experience . Exhibit 2 is the price of the rooms : I stayed at the Riverside and did not find them discounted at all. Exhibit one in the argument for your prediction of discounts is an offer of a 30% discount I received, but only on deluxe rooms if booked before checkout. But that actually is inferior to offers I received in previous years when staying on the property. Exhibit to supporting your argument for discounts is the extremely weak economic performance of the US just reported for the 2nd quarter. Maybe the discounts will appear later on this year, if the weakness continues.
Well yeah… The article is about 2017 discounts… Not 2016. Everyone at WDW in July and August booked a looong time ago, which is why… you know what did you even read the article? Because I’m about to repeat everything poor Tom already stated.
Walking around Epcot today, and the crowds just feel light. Short wait times for most rides (except for Frozen), and plenty of elbow room. Also very short wait times for all of the Character Spot meet and greets. Anna and Elsa were 15 minutes. Wasn’t even that hot today by July standards. Anecdotal for certain, but today didn’t feel that much different than the first week of March when we were last here (aside from temperatures).
The Canada / US exchange rate got sharply worse very quickly in very late 2014 / early 2015 after having an unusually good exchange rate for a couple of years. The current exchange rate is more towards what we are used to over the longer term. My last WDW trip was in late 2014.
Three key things that WDW has done since that time is (1) increase annual passes by over $100 USD / person for photopasses we don’t want, (2) increase Tables in Wonderland by $50 USD and (3) increase lunch buffets to dinner prices and (4) close down a number of attractions in several parks. (I am excluding the onsite hotel since that varies by season, days booked etc).
To go to WDW right now would probably cost me for two people an extra $1,000 USD to $1,500 USD per year (this is before the exchange rate increase and any hotel increases) to get the same trip (but less after taking into account attraction closures).
When WDW opens the bulk of their new attractions would be a good time to go.
I don’t buy packages.
I noticed that WDW would send emails while I had an annual pass. Since that time, I don’t recall getting any emails promoting themselves. I don’t know why.
The alligators and Pulse attack have not affected any decision regarding WDW or the USA in general. I still go elsewhere in the USA.
Thus, I view our not going to WDW as being large increases over an extremely short time in USD of WDW specific costs and the current closure / construction of a large portion of WDW.
But have they even released this autumn’s packages? I’ve been waiting for months.
I’m about ready to cancel this trip entirely and book for Disneyland next year… so aggravating.
About 2 or 3 weeks ago, I got an email offer from Disney to upgrade our all ready booked Nov 2016 resort from a moderate to a deluxe for only $40 more per night. I did some quick math, saw what the going nightly rate was for the resort we were being offered, and after discussing with the wife when I got home, jumped on the offer. The saving come out to about $90 per night (somewhere in the 20 to 25% range).
I also noticed after the gator attack, an opening in restaurants that had been off limits when I tried to book at 6:00 am the morning our reservation window opened.
If this is happening in 2016, I’m wondering what 2017 will bring. Perhaps I spoke too soon when telling my daughter to not expect to go to Disney World every year for vacation.
Between internat’l guest losses & people balking at price increases, this outlook seems spot-on. Thanx for the details, quite interesting to see them listed together. I don’t see families avoiding WDW for the alligator incident alone. They’ll just consider being more cautious in their surroundings, as it should be. And the Pulse tragedy shouldn’t sway many to forego Orlando either. We take similar risks daily in public.
Arggh, ’17 *was* the year we planned to skip, harder to do if they send us an irresistible code. With prices severely raised over the past few years, a 40%off package isn’t as great as it seems and we should wait for SWs-land 😉 Right? lol
We come from Washington state, a fair ways to travel. We skipped 2016, as the past couple of years (our trips in 2014 and 2015) has seen too much construction going on all at once (and too many walls), and the closing of some old favorites (Osborne Lights and Disney Quest). We go every year (my boys are adults now, we don’t always have to go in summer anymore!), but the last couple we have been going in fall for free dining, arriving at the end of Oct. for Halloween fun, and staying 14 days to have Xmas fun, too. This year, we were pretty shocked to see no free dining dates in October, not even starting until mid-Nov (yes, I still do Disney research almost daily, even when I have no trip planned). And the price of the party tickets this year? Whoa! We’ve been going to both during our trip. We used to stay at Wilderness Lodge every year (still feels like home when we eat there) but have switched to Pop Century the last few years since all we do is sleep there. Still, the last few years Disney has been finding ways to raise prices to a ridiculous level, and started having paid parties within parties? And creating $500 packages to dress as a Star Wars spy and run around Hollywood Studios! Why have they gotten so greedy? And all the new stores in Disney Springs are so designer, I don’t think we can afford to shop in them (and how many for families and kids?). Hope you’re right about 2017, we planned to go back late fall, early winter. I guess we’ll see.
Pandora was a mistake, imo. I’m sure it’ll be cool, but I don’t see people rushing to it like Harry Potter at Universal or the future Star Wars land.
So interesting! I totally geek out over information like this! I also appreciated all of the relevant Disney photos throughout the post haha.