By Tyler Rizzo, Storyland Studios
In the world of location-based entertainment, no company comes close to the synergy and scale that Disney can leverage. For decades Disney has been able to lure visitors to Central Florida, sequestering them on its 43-square-mile property with direct transportation, multiple theme park gates, and a world-class RD&E district. But its latest offer, and the timing trend over the last few years, is a shift that could be a warning light for the upcoming year.
A few weeks ago, Disney+ released a special offer to its subscriber base: purchase a 4+ night stay at the Walt Disney World Resort, with Park Hopper tickets, and receive a free Disney Dining Plan.
The level of dining plan received corresponds with the level of hotel booked. Selecting a moderate resort or lower gives access to quick-service locations, while deluxe or higher allows a trade-up to a sit-down restaurant for one meal.
The strategy behind Disney offers
The strategy behind this offer is simple and effective. A clear and tangible value – “free food”, in exchange for booking on-site and in a higher category of admissions ticket. On the guest side, it is easy to understand the value.
If I book at “X” I receive the value of “Y”. Psychologically, it takes the hassle and stress out of budgeting and purchasing food at a theme park, where the perception is that dining is overpriced. It’s a huge driver of guest behavior and very likely to resonate.
This is the same concept behind plans like All Day Dining at SeaWorld parks, or All-Season Dining at Cedar Fair parks. Creating a high perceived value will drive sales, and make consumers feel better about spending more money in return. For the operators the math is straightforward.
The incremental dollars spent upfront offset any margin compression from guests who are heavy users of the system. Much like insurance, as the penetration of the program grows, the median consumption on the plans normalizes, driving additional profits.
A sign of softness?
For anyone familiar with Disney and the various levers they pull to entice incremental visitation to the resort, this isn’t a new offer. What has been new, specifically in the last few years during and after the pandemic, is the timing of the offer. Historically, the major offers or sales contingencies focus on the “shoulder” season.
For Disney, this has usually meant offers that are valid from mid-August through early October, that soft period where many districts around the country have restarted school, and the highly attended Fall events like Food & Wine or Mickey’s Not So Scary have not fully ramped up.
But this latest offer expands upon those dates in an interesting way. The current promotion pushes the starting period up to July 1, including the entirety of the peak summer months. This 45-day date change seems minor but could indicate that early bookings for the resort are still not recovering at the pace hoped for. I would be hard-pressed to find a company with a more comprehensive insights and analytics team, especially in the themed entertainment industry.
So, this shift appears to be an indicator of softness in the forecast.
While the summer is 6 months away, the planning and purchasing cycle for such vacations is now. Any report that would indicate a softness in visitation would need to be reacted to now to meaningfully impact the trend.
The purpose of theme park offers
In general, the US theme park industry saw softness in visitation in 2023. Major players like SeaWorld, Six Flags and Cedar Fair are still not at pre-pandemic visitation. While Disney and Universal have had more encouraging visitation reports, both have been cited as saying the Orlando market has lagged behind, with the China parks seeing a bounce from restrictions finally being over, and the SoCal parks seeing a lift with massive hits like Super Nintendo World.
Last year, Universal ran a 3-month free promotion on its Annual Pass program, effectively a 25% discount, just as the summer season started to ramp up. They extended this program to renewals, looking to entice the existing base to sign back up for another 15 months of fun. This was an addition to a multitude of multi-day discrete ticket offers, all meant to drive visitation to the resort.
There have been plenty of headwinds to prevent a theme park visit; wars in Europe and the Middle East, multiple years of high inflation, and a year that saw low consumer confidence. But in general (knock-on-wood), the long-term trends have been improving, with inflation slowing and consumer confidence on the rise.
Between the Universal contingencies last year, and the early Disney offers in 2024, it will be interesting to see how the coming 12 months shape up for the major theme parks of Orlando and around the US. I am optimistic that we will see trends improve, and contingencies like the ones discussed today are false alarms, but we may be in for another year of lower-than-expected visitation, especially in Orlando as guests may wait for something…Epic?
