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April 19, 2018
Mouse moves: Disney and the middle class

Photo: Garth Vaughan/Disney

Florida Statewide Roudup

Mouse moves: Disney and the middle class

Has Disney really abandoned the middle class to chase well-heeled visitors?

Jason Garcia | 10/28/2015

A report earlier this year in the Washington Post suggested Walt Disney World and other big theme parks have raised prices so steeply over the last 40 years that they have "left the middle class behind."

Reality is much more complicated.

A key bit of evidence cited in the article is the price of a one-day ticket to the Magic Kingdom, which has ballooned from $3.50 in 1971 ($21 in today's dollars) to $105 today. That's true, but it ignores a couple of things.

First, in 1971, Disney also charged admission to its rides. The $3.50 ticket got you into the park but not on Space Mountain. You had to buy separate tickets for the rides. Today, park visitors no longer have to pay separately for the rides.

Second, the $105 price today is for a basic one-day, one-park ticket. But those one-day passes now account for a minority of Disney World ticket sales. A decade ago, Disney World, which now has four theme parks, priced tickets on a sliding scale in an effort to keep people on its property longer. So while a one-day Magic Kingdom ticket costs $105, a two-day ticket costs $192, a three-day ticket costs $275, a four-day ticket costs $305, a five-day ticket costs $315, etc.

The idea, of course, is to induce visitors into choosing an additional day at Disney instead of leaving for a competing attraction. Assume a visitor has decided to spend five days in theme parks. Disney's price structure means that the visitor can buy a fifth day at a Disney World park at an incremental cost of $10 versus leaving Disney after four days and spending $100 on a one-day ticket to Universal or SeaWorld.

Today, Disney World sells far more multiday passes than one-day tickets, with four- and five-day passes among the most popular options. The high, one-day price exists in part to steer people into choosing the multiday passes by making them a better value. An added benefit: It helps to maximize revenue from locals who have to go once when family members come into town.

The "abandon the middle class" narrative also overlooks the fact that Disney's central hotel strategy over the last 15 years has been to bring more middle-income travelers onto its property.

Disney World divides its hotels into three price categories: Deluxe, moderate and value (which can sometimes book for less than $100 per night). The first two hotels Disney ever built were deluxe hotels. But since 2001, it has built nothing but value hotels. Twenty years ago, about 55% of Disney's hotel rooms were value or moderate. Today, about 80% are.

Disney's other big lodging play during that period is building timeshares, which carry deluxe rental rates - but whose target market is primarily middle-income families who are fanatical about Disney and who buy because Disney effectively markets the notion that they are saving money over the long run.

In addition, while Disney has continued to raise sticker prices, it also regularly discounts (though the discounts are usually concentrated on the hotel side). During the recession, for instance, Disney kept its parks full by selling seven hotel nights for the price of four. And it does an annual "free dining" promotion in which it includes meal plans with hotel rentals.

Disney has added more products and services catering to the wealthy, such as VIP tours, but that is a tiny niche within Disney's overall business.

Disney Parks & Resorts' profits have ballooned over the last few decades, and aggressive price increases at Disney World have helped to fuel that. But Disney World is also drawing bigger crowds than ever: Combined visits to its four theme parks rose 27% between 2004 and 2014, to 51.5 million visitors. The biggest growth-driver for Disney World has been in getting more people to spend more days - and more of each of those days - on its property.

Tags: Central, Around Florida

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