Rumor of future discounts

[Hooked On The Mouse]

Drops in discounts will not effect the "one-time" market, the people who think of WDW as a once in a lifetime trip, book it without worrying about discounts and then are shocked at the expense and never go back again. What it probably will effect are some of the repeat visitors who remember discounts. We love Disney and prefer to stay onsite, but we always have a car anyway and as a family of 5 can't stay in a value, so the value resorts and the free transportation do nothing for us. We have already been looking at condos and other resorts/hotels in the area, and we have actually liked what we see. Our family won't pay rack rate for Disney hotels, just because we feel it's overpriced. In the future, our Disney vacations may have to be Florida vacations, which is fine.

 

[havoc315]

As we all anticipate discounts shortly..... to control our optimism, I'll remind us all what the Disney CEO said 3 months ago:

"On the parks trend side, Ben, you know, we work really hard to wean the consumer of the discount. And it worked in the second quarter, where we had slightly improved, if you factor out Easter attendance and occupancy rates, and better pricing, which was really important.
The goal remains the same for the third quarter, where as Jay mentioned we're running very slightly behind last year this time, bookings-wise, about 2.5%, but our pricing is up in the mid-single digits. And we feel that's basically in line with where we would like to be -- sorry, pricing is up in the double digits right now for the hotels that are reserved on the books.
And so with that in mind, we think that the consumer is willing to pay higher prices for good product, that's a good thing. They're still booking late, though. And I think that's interesting, because I think there's still an expectation in the marketplace that there's going to be some discounting. And that's probably why we're seeing the trends that we're seeing.
...
And we're going to continue to watch our pricing carefully with an eye toward not driving for volume at the expense of pricing -- continue to keep our pricing higher, so that we can send the signal that we need to send to the consumer that the economy is stronger than it was a few years ago, and that discounting that we obviously had to implement during the downturn is something of the past."

Just a reminder to have realistic expectations of the types of discounts to expect.

 

[flickwizard]

They absolutely do know that. And they have estimates of expected cancellations. I have no clue how many people there are like that. But if the number is small enough.... 1-2%... Disney may simply not care.

You are absolutely right. Disney has numerous models on all of their typical resort and non-resort guests. They know the spending habits of Deluxe, Moderate, Value and off-site guests, including length of stays, food, park tickets, merchandise, and various other ways people spend money at WDW. They may very well have models that tell them that the average Deluxe guest does not care about discounts and that if none were offered, they'd still achieve a 97% - 98% occupancy rate (I'm not referring to people who upgrade from Value or Mod because of a discount). Their models will also project the likelihood of downgrades from Deluxe to Mod, or from Mod to Value, if no discount was offerred, as well as the projected occupancy rates of those resorts, and then also project the percentage of those people who will go off-site (which does not mean no revenue to Disney; there are still park tickets, food, merchandise, etc.). There will be an occupancy threshold that Disney does not want to go below, where it makes economical sense to offer targeted discounts to boost up that rate. In the end, it all comes down to financial modeling. If Disney thinks they can increase their earnings (either through maintaining or increasing revenue by eliminating discounts, raising ticket prices, etc., and/or lowering expenses through associated cost-cutting measures), they will not offer discounts, much to our dismay. However, if they project earnings will suffer, then they will continue to offer discounts, even though they may not "want" to.

 

[kerplop]

I love how he says that like there really is a turn-around in the economy. Maybe a small one, but we're hardly back to the point where they should be trying to jack it up to pre-recession levels. Maybe he's hoping if they say that's the way it is, it will be

 

[flickwizard]

As we all anticipate discounts shortly..... to control our optimism, I'll remind us all what the Disney CEO said 3 months ago:

"And so with that in mind, we think that the consumer is willing to pay higher prices for good product, that's a good thing....
And we're going to continue to watch our pricing carefully with an eye toward not driving for volume at the expense of pricing -- continue to keep our pricing higher, so that we can send the signal that we need to send to the consumer that the economy is stronger than it was a few years ago, and that discounting that we obviously had to implement during the downturn is something of the past."

Not to get too wordy (too late!), but the above statement is very interesting. Discounts in the hotel industry is common, regardless of economic environment. Disney however, views their resorts as an experience. They assume, and they're right, that people will pay more, if they can, for a good product. The problem comes when the perceived value of the product for the dollars spent is low. Consumers of all stripes do not like to "overpay" (which means different things to different people). Do people view $450 a night at the Poly as a good value for what they're getting? Some do because of theming, EMH, ME, monorail, etc. For others, not so much.

Disney is trying to change the mindset of the public. However, the public votes with their wallet/pocketbook. If people think they're getting something of value for they dollar, they will pay. If not, they won't. If affordability is the issue, well that's why there are Mods and Values. If the perceived value of those resorts is low, people will go elsewhere. Disney will then have to respond to the consumer behavior, regardless of what they really want to do.

 

[BrerMama]

Disney is trying to change the mindset of the public. However, the public votes with their wallet/pocketbook. If people think they're getting something of value for they dollar, they will pay. If not, they won't. If affordability is the issue, well that's why there are Mods and Values. If the perceived value of those resorts is low, people will go elsewhere. Disney will then have to respond to the consumer behavior, regardless of what they really want to do.

Exactly. I have no issues with paying appropriate prices for a good product. I'll buy Schwan's bacon every time (at $10/pound or whatever), order my kids the Lands End backpacks, etc. No problem doing that if I think it's a good product.

The problem is that for my family of 5, Disney does not have a good product. I don't want to stay in a value. I teach pre-K special ed and don't want to vacation in a place that reminds me of my classroom. I can't stomach the deluxe prices because no hotel room, no matter how close to a Disney park, is worth those prices. We love Riverside, but there's rumors Disney is doing away with the trundles... and it's probably not fair for me to ask my 18 year old, 6 foot tall son to sleep on a trundle just because we love the resort. (My other two are girls, so really the only choice is for him to use the trundle.)

Free dining is the only thing that will convince me to stay onsite. Free hopping/water parks just isn't going to do it (although that's what we used the last two trips and were grateful for it). Otherwise, I think we're going offsite. That means we'll eat offsite more often, spend our souvenir money offsite, and visit other parks. Disney's loss.

And no, the economy is not better. Disney is blind if they think that.

 

[johnnyr]

I love how he says that like there really is a turn-around in the economy.

This is also what the government wants us all to believe too. I for one am not buying it. I know too many people either struggling to keep a roof over their head and food on the table or are out of work.

 

[chrisw127]

I have thought for sometime that we might at some point in the future see Disney's new promotions be for "New Reservations Only" anything is possible afterall



Back when the %off room discounts that ended on March 27th, the announcement stated the promotion was due to start on Monday Jan 3rd but it was in the CRO system at 7am on Saturday Jan 1, I know since I happened to be one of the ones that called after reading on the DIS here of people being able to book it late Friday evening, of course I read that too late to call on Friday Night.

Could be that is what the TA is counting on happening again this time around?

Isn't that what's happening right now with the "game on" pins? I haven't had a client apply it (although a number of them are getting FD pins for fall, so that's good news) so I haven't seen one personally, but aren't they non-refundable? If so then a guest is basically stuck with a so-so room discount when they could do a lot better with free dining when that comes out.

Again, I haven't seen the pins myself.

 

[kerplop]

This is also what the government wants us all to believe too. I for one am not buying it. I know too many people either struggling to keep a roof over their head and food on the table or are out of work.

My thoughts exactly. I have quite a few friends who have not been nearly as fortunate as us and even if they have a job, it's making far less than they were before. I'll still continue to go on a vacation because thankfully our life has not been badly impacted, but it's still not back to normal or even at a place where I'll consider staying on-site without a discount. I think right now wishful thinking is great and I'm sure there are a lot of people who will still go and pay out the whazoo for Disney's experience. But there are a lot of other people who don't have that luxury and will do what they can, even if that's not having the same experience.

 

[Colleen27]

...
And we're going to continue to watch our pricing carefully with an eye toward not driving for volume at the expense of pricing -- continue to keep our pricing higher, so that we can send the signal that we need to send to the consumer that the economy is stronger than it was a few years ago, and that discounting that we obviously had to implement during the downturn is something of the past."

Just a reminder to have realistic expectations of the types of discounts to expect.

I think someone needs to work with the Disney corporate folks on those "realistic expectations". We've only seen the barest hints of economic recovery, most of us are still dealing with wage/benefit cuts, and the economy appears to be headed for another sharp decline by most forecasts. That's hardly the ideal climate for a luxury brand like Disney to decide to scale back to pre-recession discounts (particularly since room rates are up sharply even through the recession - the discount we got on our '08 trip would only take today's room rates back down to '08's rack rate!)

I believe Disney could get away with a substantial reduction in discounts if they strictly limited rack rate price increases, OR they can continue to raise rack rates by 5-10% or more each year and continue to discount heavily to bring those rates back down to a competitive level (the "Kohls" pricing strategy), but I don't think in the current climate they can successfully do both.

 

[Disneylvr]

We are fortunate in my family as we both still have our jobs and they are secure, but not high paying. We also have not received raises for 3 years but everything else, utilities, groceries, insurance etc.., keep going up 10% or more each year. Something has to give and this year it was sadly our Disney vacation. We went on a shorter and much cheaper trip to Gulf Shores instead and had a fabulous time. Of course we still missed Disney. We hope to go next year and have a non-discounted package booked at POP but even that is $700 more than the discounted package we paid last year at Caribbean Beach for the same dates.

 

[maryj11]

45% would be a record... It's not happening.
40% has been offered in the past, but I wouldn't count on it again. I'd be quite pleased with 30-35%.

Last year, there were 3 offers: Free dining, up to $500 gift card, or room only discounts.

Do you remember what the room only deluxe discounts were last year ?

 

[Colleen27]

Exactly. I have no issues with paying appropriate prices for a good product. I'll buy Schwan's bacon every time (at $10/pound or whatever), order my kids the Lands End backpacks, etc. No problem doing that if I think it's a good product.

The problem is that for my family of 5, Disney does not have a good product. I don't want to stay in a value. I teach pre-K special ed and don't want to vacation in a place that reminds me of my classroom. I can't stomach the deluxe prices because no hotel room, no matter how close to a Disney park, is worth those prices. We love Riverside, but there's rumors Disney is doing away with the trundles... and it's probably not fair for me to ask my 18 year old, 6 foot tall son to sleep on a trundle just because we love the resort. (My other two are girls, so really the only choice is for him to use the trundle.)

Free dining is the only thing that will convince me to stay onsite. Free hopping/water parks just isn't going to do it (although that's what we used the last two trips and were grateful for it). Otherwise, I think we're going offsite. That means we'll eat offsite more often, spend our souvenir money offsite, and visit other parks. Disney's loss.

And no, the economy is not better. Disney is blind if they think that.

That's it in a nutshell for us too. We're a family of 5 and often a travel party of 6, so it is two rooms (at a mod or better; DH & I don't share a double bed well!) or an ASMu suite.

Right now I'm in "wait and see" mode. Free dining will convince me to book on site for sure. Free ticket upgrades are worthless to us because we don't do the waterparks in the winter and find hopping a hassle and a waste of time. A decent room offer would leave me on the fence, and I'm not really sure whether I'd take onsite convenience or more space/more luxury offsite. I've never been tempted to stay offsite before this year but the price gap has gotten HUGE - $1500ish more to be onsite in 2 moderate rooms or a Ft Wilderness cabin, prior to any discount - and EMH and transportation isn't worth that.

 

[Goofypop]

I only see one "upside" of the no free dining discounts..... the parks will be back to half empty. More room for us. I don't care if there is a FreeDPP promo. The promo would be nice, but I'll still go to WDW. In 2005 they did not have the FreeDDP (or at least it wasn't in effect when we were there) and the parks were just about empty. It was literally a "walk-on" on every single ride, all day. Maybe a few rides took 5 minutes to load but most were "walk-ons". Wow, that was nice.

 

[Colleen27]

I only see one "upside" of the no free dining discounts..... the parks will be back to half empty. More room for us. I don't care if there is a FreeDPP promo. The promo would be nice, but I'll still go to WDW. In 2005 they did not have the FreeDDP (or at least it wasn't in effect when we were there) and the parks were just about empty. It was literally a "walk-on" on every single ride, all day. Maybe a few rides took 5 minutes to load but most were "walk-ons". Wow, that was nice.

2005 was the first year of the free dining promo and even while it was running the parks were fairly empty because it didn't have the devoted following it has now. We checked in on the last day to get the deal, which was 9/29? 9/30? or thereabouts, and aside from making the mistake of going to Epcot on Saturday of the first weekend of Food & Wine and to the only MNSSHP that overlapped the FD offer (back when they started in late Sept rather than running for 2 months) we didn't wait in any lines all week.

 

[Goofypop]

That must have been why I didn't think they had a FreeDDP promo. We went October 14th - 23rd and it ended in late Sept. Man I miss those low crowd levels!

 

[havoc315]

Not to get too wordy (too late!), but the above statement is very interesting. Discounts in the hotel industry is common, regardless of economic environment. Disney however, views their resorts as an experience. They assume, and they're right, that people will pay more, if they can, for a good product. The problem comes when the perceived value of the product for the dollars spent is low. Consumers of all stripes do not like to "overpay" (which means different things to different people). Do people view $450 a night at the Poly as a good value for what they're getting? Some do because of theming, EMH, ME, monorail, etc. For others, not so much.

Disney is trying to change the mindset of the public. However, the public votes with their wallet/pocketbook. If people think they're getting something of value for they dollar, they will pay. If not, they won't. If affordability is the issue, well that's why there are Mods and Values. If the perceived value of those resorts is low, people will go elsewhere. Disney will then have to respond to the consumer behavior, regardless of what they really want to do.

Agree with every statement. And yes, Disney may find they must give discounts, or else occupancy will suffer too much. But at least we see their thinking and progress as of May.

There is no question that Deluxe rack rates are ridiculous, compared to other Orlando hotels. But, hotels are basically real estate-- where the golden rule is "location, location, location."
A deluxe hotel in Manhattan, will run the same price as the Polynesian. Orlando isn't Manhattan....
But there are less than 3,000 rooms in hotels that offer views of the Magic Kingdom, and that give you a chance to be within 15 minutes of the Magic Kingdom gate.

So while Orlando isn't Manhattan..... They believe they have a premium location, that people are willing to spend on. Of course, the real verdict will be the actual booking rates.

 

[flickwizard]

That's it in a nutshell for us too. We're a family of 5 and often a travel party of 6, so it is two rooms (at a mod or better; DH & I don't share a double bed well!) or an ASMu suite.

Right now I'm in "wait and see" mode. Free dining will convince me to book on site for sure. Free ticket upgrades are worthless to us because we don't do the waterparks in the winter and find hopping a hassle and a waste of time. A decent room offer would leave me on the fence, and I'm not really sure whether I'd take onsite convenience or more space/more luxury offsite. I've never been tempted to stay offsite before this year but the price gap has gotten HUGE - $1500ish more to be onsite in 2 moderate rooms or a Ft Wilderness cabin, prior to any discount - and EMH and transportation isn't worth that.

We're in the same boat. We're a family of 7, so it's 2 rooms at either a mod or WL/AKL (which is what I'm hoping for - 2 standard rooms at the Poly during the cheapest value season in 2012 is still $810 per night! ).

If discounts were not offered, then I'm looking at either the Swan/Dolphin, or offsite, or not at all. I don't care about FD - we have too many picky eaters for it to work for us or ticket upgrades. For us, we're looking for room discounts only.

That's what I meant in previous post about perceived value. What's the value of a Disney vacation versus something else? How much is it worth? For 1st timers, it might be more (parents feel like they "owe" it to their kids to go to Disney). For people who've been 10+ times and more (who do that!? ), the value may not be there relative to a different family vacation.

 

[ElizabethB]

Wow -- that quote from Disney indicates that management hasn't spoken with any independent economists. If so, management couldn't possibly make the wishful thinking statement that the economy is stronger than it was a few years ago.

I would note we have gotten 40% off deluxe hotels routinely, even before the 2007-2008 economic downturn. Moreover, as another poster has noted, Disney has succeded in raising rack rate prices so much that 40% off now means a room rate that is nearly double what it was 5 years ago!

It's been fascinating to watch what has happened at Disneyworld during the Iger tenure. The strategy appears to be just keep raising prices higher and higher and keep cutting quality. It's as if management thinks people have no option but to book at Disneyworld trip. If management thinks a Disney vacation is something for which people will pay any price, management is seriously deluded.

Odd comparison I know -- but funeral homes took the same approach. They just kept raising prices, feeling that people had no alternatives, that they were caught in an emotionally fragile time, and that prices could be raised steadily with no consequences. Well, funeral services are certainly far more of a necessity than a Disney vacation. Even so, I have noticed a serious sea change. People seem to be paying for the bare necessities -- coffin and burial. But, they are balking at paying for a funeral service with all the expenses that entails. For a recent death of a friend, there was no funeral. Her family instead held a kind of memorial open house at someone's home where people could stop by and share memories. Same thing for my cousin who died a few days ago. His family has shunned a funeral and has booked a private dining room at a local hotel. People are invited to stop by and share their memories.

We have GF RPC booked next month because we enjoy it so much. But, the 40% off rate in the slow season is about $450 a night. Three years ago, 40% off was about $250 per night.

We are splitting our stay equally between GF RPC and Portofino Bay Hotel Club Level. We have stayed PBH CL before and for quality of service, lounge offerings, etc., it blows RPC out of the water. And, we just got an offer for 40% off, so we booked PBH CL at $235 per night. We are considering shortening our GF stay and adding to our PBH stay -- or even cancelling our GF stay altogether and staying the entire time at PBH.

Disney pricing is way, way out of line. The economy is taking a second nose dive. I predict we will see significant room discounts and a free dining offer shortly after the current promotions expire in mid-August.

 

[MikeP22]

Out of curiosity, do they usually limit the types of room available for the room-only discounts?
For example, let's say that they release 40% off deluxe; do you think that getting the Arusha view room (with the discount) would be possible?

How about # of days?