“Will Walt Disney World offer deals when the parks & resorts reopen?” and “will WDW raise prices to make up for lost revenue during the closure?” are two common reader questions right now. While they’re phrased very differently, the idea is the same, and we’ll attempt to answer here based on history and our expectations.
This is going to be an ongoing series, coming in response to feedback and concerns raised in response to our Will Walt Disney World Reopen on April 1, 2020? post. Other topics we’ll tackle along these lines include how crowded the parks will be for the remainder of 2020 and how Disney will modify the guest experience in light of the current (and potentially ongoing) public health crisis.
A few people, presumably new to the blog and not familiar with my “methodical” (a nice way of saying long and rambling) approach, felt the previous post was verbose. Our short and sweet answer is that Walt Disney World will eventually end up offering incredible discounts after reopening. If you want to be notified immediately when these deals are released, sign up here for our FREE Disney newsletter here. What follows is the why and when of that…
For starters, let’s dispense with the question of whether Walt Disney World will raise prices to make up for the lost revenue during the closure? We’ve addressed this countless times in the past, but to reiterate: Disney charges what the market will bear. They don’t hold off on price increases as a nice gesture to guests.
When Disney increases prices, the company does so not at the rate of inflation or because its costs are increasing at a commensurate level, but because they can. When they offer discounts, it’s out of necessity, not corporate benevolence. Walt Disney World is an extremely savvy and sophisticated business—they are going to maximize profits to the greatest degree economically feasible.
It’s not as if Walt Disney World has ever dropped prices when attendance was high and increased prices when attendance was low. To the contrary, Disney charges the highest prices when demand is up (e.g. Christmas and New Year’s) and drops them when attendance is low (e.g. September). Simply put, if Walt Disney World could have freely increased prices without seeing a corresponding lack of demand, the company already would have.
I think this is difficult for some Walt Disney World fans to grasp because our view of the parks is fundamentally different than the vast majority of guests. For many of us, visiting the Disney parks is a near-essential. Sure, we’re keen on deals and cutting costs. However, one way or another, we will find a way to go, even if that means financial belt-tightening in other aspects of life.
This is not how the vast majority of guests view Walt Disney World. While there might be an emotional component to the calculation for that “rite of passage” vacation, most people are not willing to pay any amount that Disney tells them is the cost. They do have a balking point or price ceiling.
If middle class Americans considering a first-time trip–far and away Walt Disney World’s single largest demographic–go to price out a vacation on DisneyWorld.com and the package price is staggering, that’s it–they’re done. They move on to the next-best alternative, whether that’s the local Six Flags or a road trip to see America’s National Parks.
For regular readers, we probably sound like a broken record with regard to Walt Disney World’s pricing. Exactly two years ago, we published Is Walt Disney World Eroding Fan Goodwill?, which is an assessment that could’ve been written two weeks ago. Just last month, here’s what we wrote in response to ticket price increases:
At this point, it would seem that price increases will continue unabated until the next economic downturn. Given the staggering number of “Most Expensive Day Ever” and “#BROKE” shirts (among hundreds of other similar Etsy designs) visible in the parks right now, we do think Walt Disney World has a serious pricing reputation and perception problem.
However, as long as consumer confidence remains high, people will pay the prices…and then spend even more to wear shirts complaining about said prices. The serious issue will come down the road when people are not feeling so hot about their economic circumstances and future.
At that point, it’s a question of whether discounting will be enough to incentivize guests to return, or if irreparable brand damage will have been done during the last decade or so of increases. We don’t have an answer to that—no one does—but it’s definitely something about which we’re curious.
This is all to say that Walt Disney World’s long-held reputation of being expensive has accelerated in recent years, and there’s now the perception even among guests who choose to go that it’s overpriced. Just a few weeks ago, it was something many laughed off by spending even more money on shirts poking fun at that fact.
That now feels like an entirely different era–a time when the economy was booming and consumer confidence was at record highs. Since then, the stock market has plummeted and estimates of unemployment have skyrocketed at a record rate. The former has yet to find its bottom, while the latter will continue to rise until the current situation is under control.
It’s entirely possible that the economic recovery will be swift, with the stock market recouping its losses in short order and many furloughed or laid off employees quickly going back to work. Things could be largely back to normal by Christmas. It’s also entirely possible that things will worsen and theme parks are the last thing on any minds this holiday season. There are also a number of possible scenarios in between the extremes.
It should go without saying, but there’s so much future history here that remains to be written. Two weeks ago, how many of you would’ve predicted what your lives look like today? It’s safe to say that any forecasting of the future two months or even two more weeks from now is inherently unreliable.
One thing that is safe to assume is that the longer this drags out, the less likely it is that the United States economy quickly bounces back, and the more likely there’s lasting or even irreparable damage. For many small business owners and their employees, things are already at that point. Even if the overall economy recovers quickly, it’s very difficult to envision unemployment numbers going back to where they were at any point in the next 2 years.
Ditto consumer confidence, which is the best indicator of how willing people are to spend big on lavish vacations. Just as with past recessions, this will take a psychological toll–our collective memory of this won’t immediately be vanquished from minds once people can get out of the house and go back to work. At least initially, consumers will be more conservative with spending and cautious about saving.
Once this is over, there will unquestionably be pent-up demand and a strong desire for vacations. In some regards, Walt Disney World will likely benefit from this. That’s especially true as the parks offer a good mix of nostalgia, safety, comfort, and escapism–all things Americans will almost certainly be seeking after all of this.
However, a desire to get out of the house and put this in the rearview mirror does not equate to on-site hotel occupancy (the main consideration for offering deals–and why this is a separate post from our crowd predictions). First, there’s the obvious–desire doesn’t translate to ability or action. If economic circumstances, anxiety, or available credit don’t allow for a trip, it’s not happening.
Second, people can visit the theme parks without staying in Disney-owned hotels. We’ve been asking the question, Is Walt Disney World’s On-Site Advantage Disappearing? for a while now. In good times, many people brush it off–they want to stay on-site to be immersed in the “Disney Bubble.”
It’s as simple as that–cost and value for money considerations don’t even come into play. Going forward, if staying off-site is the difference between going and not going, we suspect that calculus will change for many people.
History is somewhat instructive on both of these points. Post 9-11, Americans were eager to prove that we wouldn’t live in fear, but we were still collectively apprehensive of air travel. Following the Great Recession, there was anxiety about personal finances and savings. At the very least, everyone knew someone who lost their job or home. Although it’s still early, it seems like the aftermath of this is poised to have a mix of the two moods.
Most of my knowledge of deals post-9/11 comes via anecdotes, as my family was still staying at Shades of Green at that point (and thus insulated from the realities of WDW’s actual pricing). However, there are numerous stories online of people paying <$200 per night for Deluxe Resorts, Wilderness Lodge in the low $100s, with Value and Moderate Resorts in the $40-80 per night range.
We vividly remember the deals during and coming out of the Great Recession. It was a great time for Free Dining, along with other more novel discounts. We did several inexpensive stays at Pop Century and Saratoga Springs Resort thanks to deep-discounts and stacking deals. We were also big fans of the “Buy 4, Get 3 Free” deal, which provided 3 free hotel nights and ticket days–plus a $200 gift card–when you booked 4 nights.
Once the current crisis is behind us, we would similarly expect Walt Disney World to get creative with ways to increase hotel occupancy as well as the average length of stay (that 4/3 deal accomplished both). It’s also likely we’ll see a surge in “traditional” deals like Free Dining and room-only discounts (likely ‘sweetened’ versions of both) as well as Disney dumping unsold inventory onto blind-booking sites.
Speaking of the Free Disney Dining Plan Deal–as that is one specific promo about which many of you have asked–we would absolutely expect another wave of that offer to be released for late 2020 travel dates. We previously would’ve anticipated this being released in April 2020, as is normally the case.
However, we now expect the second wave of 2020 Free Dining to be released at least a few weeks after Walt Disney World’s official reopening plans are unveiled. This is both so Disney can space out demand on its phone lines and can gauge what hotel occupancy numbers are looking like for the remainder of the year.
As for timing of other discounts, that largely depends upon internal projections of hotel occupancy and attendance upon reopening. Even though the Great Recession and 9/11 are instructive, this is still fairly unprecedented. My fear here is that people within the company will initially overestimate the strength and resilience of the parks & resorts.
Walt Disney World has enjoyed an era of unprecedented prosperity–a time during which it felt like the business segment’s leaders could do no wrong. Even unpopular decisions were begrudgingly accepted, and Disney reaped incredible financial results. A decade like the last one can give rise to delusions of invincibility, and a lack of appreciation for the fickleness of consumers.
From my outsider’s perspective, the current closure would be an ideal opportunity for Walt Disney World to hit reset on a lot of things. We’ve previously remarked that Disney takes the Kohl’s approach to pricing–never lowering “tag” prices, just offering aggressive and sometimes illusory discounts for their psychological appeal.
Now would be a good time for that to be rethought. Use the closure as a sort of soft reboot, eliminating fees that have not been well-received (the hotel parking fee is top of mind there) and correcting other prices for the current and future market. My fear is that Walt Disney World’s recent memories of success will result in a slower pivot, with aggressive discounting taking more time to roll out.
During both recent economic downturns, Walt Disney World also made operational changes–some of which we could see play out here. Post 9/11, some venues were mothballed and costs were cut to the greatest extent possible. It was almost as if the Y2K party was over. Following the Great Recession the approach was very different, with Disney leaning in to the idea of a party. The parks had some of their longest hours ever, “What Will You Celebrate?” was the promotional campaign, and the “Summer Nightastic!” event debuted.
What path Walt Disney World takes here on the road to recovery remains to be seen. If I had to guess based upon corporate attitudes and recent strategies, I’d bet on a period of austerity measures followed by a massive party. That might not seem like a bold prediction given likely attendance patterns and Walt Disney World’s 50th Anniversary on the horizon, though. We’ll tackle those two topics in follow-up posts, so stay tuned!
Do you think Walt Disney World’s prices will rise or fall once the parks & resorts reopen? Are you anticipating colossal savings on hotels, tickets, or dining? Will you be ready to pounce on deals–or will you wait for a full economic bounceback? Do you agree or disagree with our commentary? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!