By Ben Fritz
Nikole Zivalich uses her annual pass to go to Disneyland more
than 15 times a year, but has long stayed away on Saturdays, which
are almost always jam-packed with visitors.
Now, however, she also doesn't go within a week of any major
holiday and is wary of Sundays, Fridays and Mondays. On one recent
visit Main Street was so clogged that she was funneled by security
behind the scenes, where she walked by dumpsters and the plywood
backs of facades.
"I remember being bummed I had to see a nonmagical part of
Disneyland," said the 28-year-old television producer.
Maintaining the magic at its theme parks is becoming
increasingly challenging for Walt Disney Co., amid crowds drawn by
new attractions, an improving economy and the popularity of
franchises like "Frozen" and "Star Wars." Both Walt Disney World in
Orlando, Fla., and Disneyland in Anaheim, Calif., have posted
record attendance for each of the past three fiscal years, as well
as for the spring quarter that ended in June.
As a result, for the first time in the 60 years since Disneyland
opened, Disney is considering switching to demand-based pricing at
its domestic parks, where tickets would cost less or provide added
benefits on slower days, and cost extra or come with more
restrictions on dates when there tend to be too many people.
"We have to look at ways to spread out our attendance throughout
the year so we can accommodate demand and avoid bursting at the
seams," said Walt Disney Parks and Resorts Chairman Bob Chapek.
Among the benefits Disney could offer with tickets are free
parking and family photos.
Continuing to raise overall prices, as Disney has done at well
above the inflation rate for several years, wouldn't fully solve
the problem, said Mr. Chapek, as he is also seeking to raise
attendance during slower times of the year. In addition, for
Disney's brand, keeping park vacations within the reach of
middle-class families is important.
Gruelingly long lines and gate closures, which Disney parks
sometimes have to implement on the busiest days, lead to unhappy
visitors, exactly what the operators of the "Happiest Place on
Earth" want to avoid.
If the company can instead keep Disneyland and Walt Disney World
full but not mobbed for more of the year, that would likely benefit
the bottom line, with spending on food and hotels more than making
up for any ticket price reductions. In the first nine months of the
fiscal year ended in September, Disney's parks and resorts revenue
grew 6% to $11.8 billion and operating income was up 16% to $2.3
billion.
Adjusting prices due to demand is common at hotels and airlines
and Disney itself has long had tiers of annual passes that don't
include admission on certain dates. But for single- or multiday
tickets, the cost has always been the same at its domestic parks
whether one goes on a rainy Wednesday in January or Memorial Day
weekend, save for occasional Disneyland promotions for area
residents.
This week, Disney will begin surveying previous visitors to
gauge their reactions to different variable-pricing options. Mr.
Chapek said that finding ways to "steer demand" through ticket
options was critical, but that he has no predetermined conclusions
about how exactly the company will do it or when.
Given the way demand-based pricing works in other industries, it
isn't difficult to foresee a time when visiting one of Disney's
parks on a major holiday would cost substantially more than the
current $105 maximum price for a single day adult ticket in Orlando
and $99 in Anaheim. Visiting on a weekday in the winter, by
contrast, could come at a significant discount.
The company has offered tiered pricing at Disneyland Paris since
last year, currently ranging from $64 for an adult ticket good only
during "low season" to $94 for one that works year-round. Due in
part to economic conditions, financial results have been stronger
at Disney's two domestic parks recently than the three--soon to be
four--overseas.
Disney has been in the midst of a multibillion-dollar expansion
of its domestic parks over the past several years, including the
new Cars Land in Anaheim's California Adventure, a revamp of
Fantasy Land at Orlando's Magic Kingdom, and "Avatar" and "Frozen"
attractions under construction in Orlando. Those help to expand the
parks' capacity, Mr. Chapek noted, but spur even greater increases
in demand, ultimately making the crowding problem worse.
"It's a problem that is going to grow over time as we expand the
size of our parks," he said. Next year, Disney breaks ground in
Orlando and Anaheim on new "Star Wars"-themed areas.
Another tool Disney has been using to manage crowds at its parks
is technology, particularly the new My Magic Plus wristbands that
let Disney World visitors reserve times for certain rides and meals
before their arrival. That has increased capacity at the Magic
Kingdom by 5,000 people, said Disney Parks & Resorts finance
chief Spencer Neumann.
In a related initiative, Disney on Sunday is revamping its
lineup of annual passes at both Disneyland and Walt Disney World.
It added new options with date restrictions and raised prices about
10% in Anaheim, where the use of annual passes by local residents
is much more common than in Orlando. The price of a "premier" pass
that allows unlimited visits in both parks is rising more than 30%,
to $1,439 from $1,099.
Write to Ben Fritz at ben.fritz@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 04, 2015 08:14 ET (12:14 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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