Airline-Style Dynamic Pricing at Disney World & Disneyland?
Walt Disney World and Disneyland management is working on adopting a dynamic pricing model similar to airlines, in which prices fluctuate depending on when tickets are purchased. This is what’s being reported in a fascinating new Wall Street Journal article. In this post, we’ll discuss that article a bit, and offer thoughts on dynamic pricing at Walt Disney World and Disneyland.
Per this WSJ article, internal projections at Disney demonstrate that even following 5 years of price increases at roughly double the rate of inflation, Walt Disney World and Disneyland could still charge significantly higher prices without driving away too many guests. Interestingly, the key consideration in management’s decision-making is not whether guests would pay higher prices, but how further spikes would be perceived. “The company, however, is wary of appearing to gouge customers, according to theme-park executives and analysts, and going against founder Walt Disney’s vision of affordable family entertainment.”
That article goes on to discuss the current tiered ticket price increase, and discusses up-charge events and how those are being introduced as parallel revenue streams. It also shares some of the fan outrage over recent price hikes. All familiar territory for anyone who has read the comments section of this blog or any online forum. From our perspective, the interesting aspect of the WSJ article is the dynamic pricing model, so that’s primarily what we’ll discuss here…
To be blunt, I question whether Disney is in a position to introduce dynamic pricing a la the airlines. Not whether Disney has the desire to raise prices, because I think we all know the answer to that. Rather, if Disney has the technical sophistication to implement a system that’s truly dynamic. This might seem ridiculous; conventional ‘wisdom’ is that Disney is tracking and monitoring everything we do, and has access to incredibly thorough analytics thanks to MagicBands, My Disney Experience, and other technology that’s part of MyMagic+.
In a FastCompany article from 3 years ago that described Bob Iger’s initial approval of the MyMagic+ system that would overhaul the digital infrastructure of Walt Disney World, there was a passage describing numerous components of the program, including the potential challenges and upsides. The line that probably sticks out from that today is Iger’s blunt and stern statement to Tom Staggs after the MyMagic+ pitch to Disney’s Board of Directors: “This better work…this better work.”
Given Staggs’ fate with Disney following the completed rollout of MyMagic+, we arguably already have our answer as to whether it worked. Looking deeper into the article, there are all sorts of unrealized promises about what MyMagic+ could deliver. “By monitoring where crowds were forming, the company could better optimize flow. Say the sensors noted that one section of Magic Kingdom was becoming overwhelmed with guests: Operators could immediately respond with a character parade around the corner, to disperse traffic and ease strain on cast members.”
I don’t dispute for a second that Walt Disney World has access to extensive guest analytics. Hypothetically, those analytics could be used to ascertain the optimal price point to charge each of us if Disney properly leveraged that data. I dispute to what extent they actually use, and are even equipped to use, that data.
We have heard multiple reports from people with knowledge of different departments that Walt Disney World’s backend systems are largely a patchwork of antiquated methods (calling them “systems” might even be generous) that aren’t able to utilize any analytics from MyMagic+.
The point of this is not to criticize Walt Disney World for how it has harnessed MyMagic+. The resort complex is large, employs so many people, serves so many guests, and has so many moving parts that it’s no surprise that rollout and implementation is still a work in progress.
Moreover, I’m not sure Disney better utilizing this data would necessarily be a win-win for both Disney and guests. There would definitely be some upsides for us, but I fear better crowd management and resource allocation would negatively impact how many attractions savvy guests (like readers of this blog) could experience each day.
But we digress. Circling back to the main point of this, we don’t think Walt Disney World is currently in a position to implement truly dynamic pricing like that utilized by the big players in the airline and hotel industries. (In fact, airlines are looking to introduce even more sophisticated dynamic pricing based upon IP address and your personal flight history.) By this, we mean dynamic pricing in the sense that it’s tied to inventory levels and employs inter-temporal price discrimination.
We think a “dumb” version of dynamic pricing could be introduced, or rather, expanded upon. For hotels, this is partially achieved via seasonal rate charts. It’s also accomplished in a round-about way via discount offers like Free Dining and percentage-savings that are offered closer to travel dates. (Raising prices as dates draw nearer is another matter.)
Disney could expand upon its tiered pricing model (they’ve already announced tiered prices will be coming to multi-day tickets later this year) to achieve more inter-temporal price discrimination. In terms of tickets, a good example of such a strategy already in use would be pricing for Mickey’s Not So Scary Halloween Party (or the Christmas Party). Not only are early-season, weekday tickets cheaper, but there’s a day-of surcharge.
Price-points for that event are no doubt made with assumptions about demand in mind, but hard ticket event prices are set in stone months in advance based on (at best) information from the previous year and an “optimistic” outlook on how aggressive pricing can be for the following year.
The problem we’ve seen with this is that those assumptions are often wildly inaccurate. We’ve attended three consecutive early-season Halloween Parties with sparser attendance than the parties we attended during the Great Recession. These recent parties have occurred at times when attendance was generally up at Walt Disney World, but we have heard reports of discounts on the events being extended to Cast Members due to a lack of demand from guests. (In fairness, attendance for the Christmas Parties is much more consistent–and higher.)
The Pixar Pier Premiere cited in the Wall Street Journal article is potentially another good example of Disney’s pricing ‘methodology’ not working…or at least being imprecise. Since the Pixar Pier Premiere Preview was announced a couple of months ago, there have been follow-up articles promoting in on the Disney Parks Blog. Anecdotally, I’ve seen countless promoted posts across social media (Twitter, Facebook, and Instagram).
While Disney Parks Blog moderates its comments, those social media accounts don’t/can’t moderate replies, and the reception to this event has been poor, and that’s an understatement. Of course, how the vocal minority reacts to events is not indicative of ticket sales, but that there have been blog posts and promoted posts across social media certainly does.
We’ve been discussing the extended paid previews Disney is likely to offer for Star Wars: Galaxy’s Edge for a while, so we won’t totally retread that ground here. It is a near-certainty that Galaxy’s Edge will have paid previews, and we’d assume the price points will be higher than the Pixar Pier event.
We’ve noted that all things Star Wars are a license to print money, and between that and the presumptive high quality of the land, we don’t think Disney will have any difficulty selling out these events on either coast. They could do months of the previews a la the Christmas or Halloween Parties at $400/ticket and may not even have trouble selling out any of them in California.
However, there’s a big difference between Star Wars: Galaxy’s Edge and Pixar Pier. Not just in fan following, but in quality. No, I haven’t stepped foot into either, but I think we can draw some reasonable deductions based on budgets and details that have been released and come to a reasonable conclusion that Galaxy’s Edge will be at least “slightly” better than Pixar Pier. Just slightly. And yet, there’s a $300/person preview for Pixar Pier.
From my perspective, the pricing of the Pixar Pier preview doesn’t so much demonstrate Disney being savvy with up-charges, but Disney being wildly inconsistent with up-charge events. We’ve seen this “throw it at the wall and see what sticks” approach with up-charges for the past few years. Some have been successful and some have failed spectacularly. Quality and pricing certainly matter, and Disney has not demonstrated that it has a good handle on either.
All of this is a very long-winded way of saying that while we agree with some of the premises in the Wall Street Journal article, and don’t doubt for a second that there’s an internal desire to introduce airline-style dynamic pricing, we question some of the near-term conclusions. We also don’t doubt that Disney wants to introduce more up-charge events–it’s really a question of their aptitude for these events. As for dynamic pricing, at some point down the road it’s an inevitability. Whether Disney’s current technology infrastructure will allow for a sophisticated dynamic pricing model prior to the debut of Star Wars: Galaxy’s Edge remains to be seen.
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Your Thoughts
What do you think about the prospect of dynamic pricing at Walt Disney World and Disneyland? When it comes to price increases, do you just assume that “Disney will find a way”? Do you agree or disagree with our take? Any questions? Hearing your feedback is interesting to us (even when you disagree!), so please share your thoughts below in the comments!
Your point is well-taken Tom, though many seem to have missed it. Disney can and probably should keep raising prices–as much as we all hate it. Their product is in very high demand. That’s economics. Failing to appropriately raise prices means even more competition for resort rooms, restaurants, and space to walk in the parks, all of which lowers guest satisfaction.
I agree whole-heartedly, though, that their tech and data mining are not sophisticated enough (at all) for dynamic pricing as of now. Their booking systems nearly crumble when any new packages or promos are released. Their tech is embarrassingly inept for such a large, respected company.
as long as foreigners (think about all the Brazilians you saw on your last Disney vaca) will pay the outrageous prices…. Disney doesn’t care about your average American family being able to afford a Disney vacation. GREED… one of the 7 DEADLY sins.
I do wonder about perspective. As a kid on the east coast, a Disney World trip was a super big deal, and I remember my parents and my friends’ parents talking about with at least some degree of excitement. I’m all grown up with kids in the SF Bay Area now and all the other parents at my kids’ school are emphatically against even going to Disneyland because it’s just not worth the money. My family was seen as the odd ducks for going to Disneyland more than once a year (rather than once during childhood), and even we’re being priced out this year. It’s also the first year as DVC members we actually rented out our points because we couldn’t swing a trip before they’d expire. We’re pretty diehard Disney fans – we did Disney World for our honeymoon – and I’m honestly wondering if Disney knows or cares how disillusioned young families are getting.
I think there needs to be a consideration that a “Disney” vacation is on many families bucket list, BUT, there is a limit to what we will be able to spend on this.
You need to be very careful to not price yourself out of your guests reach.
I love Disney and have probably been a total of 15 +/- times beginning in 1972. But $400 for a specific “event” is a little much.
Please don’t get us to the point where we think you’re “price gouging”
I live just a few miles from WDW and have been a season pass holder for years. The last couple of years Disney has raised prices, but gone cheap on the once yearly gift they give passholders (last year was a button, this year a magnet). The two years prior were a nice wine glass and then a tumbler. The only reason I renewed for this year was because my kids (In their 30’s) talked me into it. But I doubt I will renew again next year. Disney is no longer an affordable or enjoyable place to go, and I think Walt would be rolling over in his grave. How many times can you go on a ride that hasn’t been updated in 50 years? Does anyone really care about the Swiss Family Robinson Treehouse? The fast pass is useless for spontaneous trips, and (from what I’ve heard) Disney is now opening fewer que lines on slow days to save money on personnel. That means that even on low attendance days you’re still going to wait an hour and a half or more to ride one ride. The past several years I’ve seen the demographics appear to change from American to mostly European. I suspect that it’s become too expensive for most Americans.
Attendance went up when they opened Avatar land, but it’s only two rides (Only 1 worth going on) and now is a 4 hour wait in 100% humidity. It’s become an unpleasant experience unless you stay in a Disney hotel and utilize Extra Magic Hours. As Universal continues to draw increased crowds (cheaper tickets and better and updated rides) and Disney squeezes out middle and lower income Americans, I have to wonder how sustainable their long term plan is?
Agree on all points 100%. I live in Canada and the US exchange rate also makes it less affordable for us. It makes me sad.
I suspect that Disney know’s their demographics alot better than any of us but I do think that long term trends are hard to predict and by no means certain. From my admittedly narrow perspective, parents these days seem to take great pride in turning their kids into mini versions of themselves asap. My daughter is an early teen and most of her friends have very little interest in Disney anymore and the parents are thrilled not having to spend the money or be tortured in long, hot lines. Given the global appeal however, I suspect it will be a long while before Disney runs out of guests willing to pay whatever they ask.
Has anybody looked at the attendance numbers? As the article points out, Disney could continue raising prices and still continue to increase profits because unlike many of these posts claim, attendance has increased even with the price hikes. If you ran a store, and people were willing to pay $10 for an item you were currently selling for $5, would you change the price? I totally get that it I expensive, but if people keep going in droves Disney has no reason to lower prices – and more incentive to raise them further.
I’m not sure which posts are claiming attendance is down–everything I’ve read suggests overall attendance is up (per park patterns have changed, as have seasonal trends, but it’s still up overall).
Interesting comments here. My family moved to FL in 1970 when I was a young kid and I’ve been going to the parks for decades. Now with my own family. Have been annual pass-holders for years. Just completed our current year and for the first time I don’t think we’ll renew and with a teenager, we may never. While many will disagree, the parks just scream “money grab” more than I can ever remember. As a FL resident it’s virtually impossible to go spontaneously since it’s simultaneously become almost impossible to ride without a fast-pass and impossible to get one without months of lead time – which is impossible without staying on property – which has become incredibly expensive. We were only able to get a fast-pass once all year for Avatar with every visit being planned at least a month ahead. Haven’t been to Be Our Guest since it opened, etc. Premium prices MIGHT fly but it is not a premium experience. They spent nearly $1Billion on Avatar and the wait is anywhere from 90 minutes to 4 hours continuously? Clearly they could double, triple or 10x the ride’s capacity but choose not to because they want you have to spend days in each park to see attractions. Shame on us as consumers to not even ask why, at these prices there should be ANY significant wait. Congrats Disney, you’ve normalized 4 hour waits in people’s minds…..I figure this year having gone 4 times for long weekends with the passes, hotel, food and incidentals we spent close to $10,000. I am blessed with a 6 figure+ salary but that’s an unsustainable amount of my income to spend any more. Not for what you get.
Wow. Great comment and insight. I don’t live in FL so I have always wondered how those who live close make fast passes and dining work on a spur of the moment trip…..which is the whole point of getting to live close by!
Like Tom said, I imagine that a “dumb” version of dynamic pricing will be expanded upon with seasonal rates applied to all bigger ticket items, or higher base prices with many highly variable discounts. Just because Disney has data doesn’t mean that they will use it in the most hamfisted way possible; if anything, highly knowledgeable Disney park fans with the ability to avoid dynamic pricing love our discounts!
I thought it was very telling that D23 sold a Pixar Pier preview for $75 and it sold out quickly. The $299 price included park admission and it drove many to wonder why that was included when so many other events and regularly scheduled specials always state that admission is separate. Maybe it was a trial balloon for price points on the SWGE previews. (many posts I have read still think there will be AP previews, even for a fee – I doubt it). And on the technology front Disney historically has had trouble (at least for events on the west coast) of planning for high capacity usage of their web sites for registration. RunDisney, merchandise events, special ticketed events, all seem to crash or experience significant issues. I would think that if they did try some sort of algorithm development for dynamic pricing they just wouldn’t get it right.
I’m not so sure that dynamic pricing is as much about revenue as it is crowd control. As a CM, one of the complaints I hear frequently is about how crowded Magic Kingdom is on any given day. Disney is actively exploring ways to reduce the crowd level without reducing revenue. Some of these include the special events like Disney After Hours that allow a limited number of guests access to many of the best attractions for three hours after the park has closed to regular day guests. Since purchasers of these tickets can enter as early as 7:00 PM, they get three hours with the crowd, the fireworks show, and then three uncrowded hours to experience attractions that usually have long waits. If I were a single day guest with the option to pay $122 all day and fight the crowd or $129 for six hours, most of that while the hordes are watching the fireworks, I’d choose the $129 option.
From what I have seen while working at the resort, Disney knows it has a problem with too many people at certain times. Some of the moves seen by some as price gouging are efforts to disperse the crowds across some of the slower time periods. It seems to have had some effect on people without school-age kids but not those who are tied to the school schedule. Father’s Day this past weekend was very low in attendance at Magic Kingdom. We arrived at 2:00 PM and were directed to a spot in the first row behind the ‘preferred’ parking. They had just started filling that lot when we arrived. Usually, at 2:00 PM on a summer Sunday, we’d be parking well out in Ursula or Scar.
Thank you, Brent for this informative add on to the article. As someone who watches what Disney does over time, I appreciate this kind of information from people like yourself. It’s nice to know from someone on the inside that Disney is working on the issues!
Interesting point about the After Hours tickets….might be worth exploring the next time I go, IF I didn’t have a young school age child who runs out of steam. But, I can see how it could be beneficial to others (for the reasons you’ve stated).
This has been my experience with upcharges too–they help limit crowds. We went to the Christmas party last year on December 21 and did not watch a single holiday show, parade, or the fireworks. Why? Because every ride in MK was a walk-on!!! When else can you experience that during Christmas week?
It puzzles me when people say the price hikes are terrible because it means they have to shorten their stay, or visit less frequently, and then complain everything is way too crowded. If Disney priced cheaply enough that people could still go for two or three week stays like in the “good old days,” imagine how much more crowded the parks would be than in the present system where a week or less is the average?
I’m not going to get into all the mistakes Disney has made with it’s IT staffing decisions. But Disney has a history of underwhelming rollouts of technology (to put it mildly). Dynamic pricing has all the makings of a PR disaster.
And if I were Disney, I’d want to eliminate any reference to airlines. The only airline that engenders any sense of loyalty and satisfaction is Southwest airlines. And that is an airline that has one seat for everyone and 2 free checked bags which is the opposite approach every other airline is taking. The last thing Disney should want to do is to be associated with an airline model.
IMO Disney shouldn’t mess with the gate ticket pricing like that. When you offer a special experience, people may not like it and may complain, but in the end they didn’t have to pay for it. Everyone that didn’t pay for it still gets the same opportunity for the same experience. Once you mess around with the pricing, you have somebody who enters the park today for more or less than somebody who went yesterday. And the worst thing that could happen is people paying differing amounts for entry into the park on the same day (although that still happens somewhat due to multi-day passes and discount tickets through UT).
Disney already has problems with people taking advantage of systems designed to help others (disability programs). Throw in all sorts of ticketing issues and can you imagine the complaints?
If Disney wants to make more money they should figure out a way to monetize people waiting in line to get into the park and waiting at guest relations windows.
Your last line made me LOL because remember that before MagicBands, we never would’ve imagined Disney finding a way to charge for the ticket medium itself!
“Oh, you want a MagicBand with Minnie Mouse on it? That’ll be another $35, please!”
I think what really bothers me is that even beyond price gouging, I feel like more and more Disney is double and even triple-dipping in order to maximize their revenues.
The last couple of weekends we’ve experienced something at the Magic Kingdom that I’d never heard of before – staggered closings for restaurants – wherein Pecos Bill’s, Columbia Harbor House, and Pinocchio Village Haus are all closing up hours before the park actually closes, leaving only Casey’s Corner and Cosmic Ray’s for counter service options two hours before park close. The park was packed with summer crowds, so it’s clearly not due to low demand – just a random effort to reduce costs.
…which would be fine if Disney was struggling to keep the parks open, but when price increases dwarf inflation by multiples?! Aside from refurbishments which are understandable, when I pay to visit a theme park I expect THE ENTIRE PARK to be open for the entire day!
It’s a thousand stupid little things like this – adding parking fees at the resorts, RFID-enabled soda fountains, no light parade replacement at MK, less crowd control present on Main Street after fireworks – that really make me cynical towards magic vs profit.
So Imagineering can’t figure out how to make Scuttle greet guests with their MagicBands, but they’re drilling in hard on how to use the technology to make me pay 30% more for my hamburger and fries for lunch. Wonderful.
I agree with you completely. Disney is banking on the ignorance of the 1st time, trip of a lifetime guest who have no clue about how badly they are going to be ripped off with high prices and an inferior experience. The bad news for Disney is that the economy is eroding people’s ability to purchase a Disney Vacation experience. Disney does not even pay it’s cast members a living wage. So, with living expenses getting higher, wages being stagnant or eroding who is going to take these trips? Affluent people have better vacation choices. Less affluent people can no longer afford to take a Disney Vacation. Disney is cannibalizing their reputation for excellence and making the sole company emphasis their stock price. In this age of social media, it’s easy for people to catch on that Disney has made a vacation at their properties NOT worth it any longer.
Yes I agree with what you said!
Walt Disney would be turning in his grave knowing that children around the United States cannot even enjoy Disneyland. It is disgusting to see what a moneymaking scam all this has become. I used to go spent 10 days there with my children, every year We were middle-class and would struggle when we got home but it was worth it. Now middle-class people can’t even enjoy a Disneyland vacation and it’s not fair to children! Every child should be able to enjoy Mickey and Minnie at their home. If Walt only knew that his employees that work in the park don’t even make a livable wage and 100’s of thousands of children will never be able to experience a Disney vacation,it would bring tears to his eyes. I used to take my sons friends with us to disneyland who I knew would not be able to go otherwise and it really was awesome to see them so thankful and happy! Now as adults It is beautiful to see them take their own children.
Everybody should just not go to Disneyland for a year or 2 and let them see how we can boycott their high prices and hit them where it counts.
My family growing up was middle class, and we started visiting Disney World shortly after it opened.
I have to say, we never had a week long stay, let alone a 2 week stay, even back in the seventies. And, we, at most, would visit every 5 years or so. Once we moved to Florida, we went 4 or 5 times a year on day trips.
Many of the employees in the parks are part-time employees, and many are college students. I don’t think they are looking for a living wage – that is not what you seek part-time work for. You do it for extra cash.
Disney’s big problem is that the population of the US is more than 50% higher than it was in 1971 when WDW opened, and large portions of that population make very good incomes. The population of Florida ( season pass holders ) has TRIPLED.
There also seem to be more foreigners than ever before, and they are willing to spend for a vacation of a lifetime, too. And there are a huge number who have invested in timeshares in the Orlando area, who also go to WDW.
The only way to keep the crowds – which are greater than they were even 20 years ago – from becoming wall to wall every day of the year – is by increasing ticket prices. Disney has a big problem which does not have an easy solution. They have made some missteps, but they are going in the right direction, by building out the theme parks and building value resorts.
I would think the best way to roll out dynamic pricing is to do just theme park tickets on that model first. Keep resort packages as they are and the tickets that are just purchased without a package are targets of this policy.
I am not knowledgeable enough to know what percentage of the tickets purchased are not package tickets, but just a thought on how to ease into dynamic pricing
The Pixar Pier preview can only be a “market test” for the SW GE opening strategy. While I personally don’t see the value of the $299 preview of a re-skinned area, this is just gauging the market for those willing to pay for a “premium experience” at Disney. I imagine you are correct that they will have no issues selling the preview events in California, will be interesting to see how that efffects pricing at WDW, and if they get it right or overestimate the WDW market.
The sentence I find interesting is ” the key consideration in management’s decision-making is not whether guests would pay higher prices, but how further spikes would be perceived.” Does anyone thing that airlines are perceived as good companies by the general public (United and Spirit made the top 20 “most hated businesses” list?
Why Disney parks have been so successful is due to a large combination of reasons, but public goodwill for the product/company is up there. I think some of that has eroded in the past few years with the already due to price hikes/declining value proposition. I don’t think that modelling yourself after an airline will help.
Totally agreed.
For Disney, I think the question is one of long-term consequences as the parks’ reputations are predicated upon being rite of passage destinations. If that changes, it has a cascading negative effect for future generations.
On the other hand, Disney has become pretty savvy in diversifying its audience. The parks are now trendy with twenty-somethings, and Walt Disney World has become a top location for convention business. Visitors without kids now represents an increasingly large demographic. (With no kids, presumably, comes more disposable income, too.)
I wonder how successful they’d be at keeping the twenty-something and adults without kids markets in the longterm though if WDW and Disneyland were ever to decline as “rite of passage” destinations. The strength of Disney parks as tourist destinations largely lies in the lifelong relationships it builds with its guests. Nostalgia plays an enormous part in luring adult patrons (I know that’s true for me!), so I’d have to think that if the number of families taking that rite of passage trip goes into decline, there’d be a similar decline in the adult market 10-20 years afterward.
I agree–the perception issue here is really interesting for me, too. I laughed at the idea that they worry about “going against founder Walt Disney’s vision of affordable family entertainment.” I’d argue that for most families, Disney is not affordable and is becoming less and less so. Do they do any market research on how many folks finance Disney vacations, or how many years they save up to go? I don’t know the answer to that, but would be intrigued to see if the numbers have gone up (as in, more folks financing and trips occurring with less frequency because people have to save longer to afford the vacation).
And why on earth would you ever want to model yourself on an airline if you want people to associate you with goodwill and good experiences?
The hangman’s noose of corporate greed around Mickey’s neck is getting tighter. I can only wonder, after he has taken his last breath, who will replace him? Will it be a Star Wars storm trooper or perhaps a marvel character? I don’t now but it looks certain to come.
What? Most corporations would kill to have the corporate image of United!
Only in the gravest emergency will I travel on United, again. Gladly pay more to avoid it. (Do it for the pets!)