Why Passholders Are Less Profitable

[bigcatrik]

True, I didn't buy much in the parks the last time I had an AP, but buying the AP itself gave Disney a heck of a lot more money than any year I didn't have an AP.

I did go on NYE, which is the only day I remember being there when the main gate closed, but every other day I was just one more person in a non-capacity park so I'm sure they were happy to get my $600 lump sum payment, or whatever it was way back then. Comparatively, the following year I saw a Star Wars movie, meaning I gave Disney whatever their share of the $15 ticket was -- for the entire year.

What I think is really interesting about annual pass/"monthly membership" programs at amusement parks is that Six Flags has benefits for their "monthly memberships" that are completely unavailable to annual passes, indicating that those monthly money drips from individuals are more desirable to them than any amount of annual lump sum. I've never known Magic Mountain to close its gates for capacity, though, so their "supply" seems to be effectively limitless (reopening limitations may change that).

[Sun Bonnet]

True, I didn't buy much in the parks the last time I had an AP, but buying the AP itself gave Disney a heck of a lot more money than any year I didn't have an AP.

I did go on NYE, which is the only day I remember being there when the main gate closed, but every other day I was just one more person in a non-capacity park so I'm sure they were happy to get my $600 lump sum payment, or whatever it was way back then. Comparatively, the following year I saw a Star Wars movie, meaning I gave Disney whatever their share of the $15 ticket was -- for the entire year.

What I think is really interesting about annual pass/"monthly membership" programs at amusement parks is that Six Flags has benefits for their "monthly memberships" that are completely unavailable to annual passes, indicating that those monthly money drips from individuals are more desirable to them than any amount of annual lump sum. I've never known Magic Mountain to close its gates for capacity, though, so their "supply" seems to be effectively limitless (reopening limitations may change that).

Oh, that's interesting. I don't go to Six Flags so I had no idea about this. I went and checked out their offerings. The monthly memberships are much more desirable. I'm guessing Disney thinks so too.

[JerrodDRagon]

Speaking of six flags.....how do they make money with APs sooo low....they give out a lot of free passes as well for friends and my food pass must be costing them more then it costs me.

[jcruise86]

Speaking of six flags.....how do they make money with APs sooo low....

SNARK alert for this, my revenge on Magic Mountain post:
Based on my old visits I'd guess that Magic Mtn only spent $1,000 on gardening a year for the whole park.
And the bad food I had there seemed like it cost them about 24 cents, & they charged me $12 or so for it.
(The following sentence is exaggeration free.) We got our two tickets at a school's silent auction for $20 each after no one would bid the suggested minimum bid of $40 each.

I will give them another chance --probably at Halloween-- now that they have an indoor shooter ride & have some coasters I'd like to ride. It's still a lot better than Disney's studios park at Disneyland Paris. Seriously. Also, the hills in & around the park are beautiful, and Cal Arts, which is on the way to the park, is cool & was co-founded by Walt Disney.

For me, a "bad day" at Magic Mountain is still better than a "great day" fishing, golfing, or sailing. I'm weird that way & I suspect a few of you are too.
And I love Knott's, Cedar Fair, and 7 of the 9 Disney parks I've visited, which I mention just so I don't seem totally negative.

[Golden Zephyr]

Speaking of six flags.....how do they make money with APs sooo low....they give out a lot of free passes as well for friends and my food pass must be costing them more then it costs me.

You, Sun Bonnet, and jcruise86 are hitting on an important point, capacity, namely unsold capacity. Unsold capacity is largely already a sunk cost the company, Six Flags, Disney, Cedar Fair etc.Six Flags in particular often has LOTS of excess unsold capacity each day.

One of the reasons Disney did away with APs is because of the attendance cap. The whole premise of AP type program is to monetize likely unsold capacity each day as a block (a presale) based on statistical modeling and predictive analysis. APs have bought an option to use some of that capacity, but in reality most don't. That's the bet, sometimes it pays off, sometimes it doesn't. Every day there is unsold capacity, that capacity spoils and has no value. If you can sell a portion of that excess capacity, then you make profit with little added cost. How much of that unsold capacity each day gets used is variable, but priced accordingly (that's if you can plan). Note that every theme park in the world had an AP type program, it wasn't just Disney, because the economics are similar

Much of that also varies on how much the guest experience is impacted and the variable costs with additional service levels. As jcruise86 noted, Six Flags has shall we stay a "different standard" when it comes to per guest operational spending than say Disney.

But for a park with high demand all of that is out the window with capacity limitations.

With Disneyland, they are a very high demand product and Disney has no idea how long the capacity caps will last or if there will be future limitations based on COVID. Disney can not plan for future crowds like they did in the past, so how can you sell possible access and try and honor your commitments. In short, you can't, thus Disney has dropped the program. 40 years of statistical data essentially irrelevant for planning in the next couple of years.

Disney will introduce something once they get a handle on what a new "normal" is and figure out how much $$$$ that's worth as Eagleman has astutely noted

[jish5555]

As I've brought up before, the thing about APs is that unlike people who go on vacation to the parks, which aren't always a guarantee, APs are always guaranteed revenue, making up over $300 mill a year alone. Add on how APs who go more often also have a higher chance of buying food and merch, and that means even more for Disney. Then let's not ignore how many APs tend to go a 2-4 hours a trip, which without an AP means now they're less likely to go and only go once or twice a year instead of the 4 times a month/twice a month/once a month, which in turn means that Disney loses a solid $150-$200 mill in revenue because now the aps are far less likely to go. The reason this is important is that the out of towners and people who go once a year aren't going to change as that is normal, where they will only take a trip once and be done, and there's a very high probability that that won't increase just because aps aren't there (since crowds were never a problem before since people will still go, crowded or not).

[JerrodDRagon]

As I've brought up before, the thing about APs is that unlike people who go on vacation to the parks, which aren't always a guarantee, APs are always guaranteed revenue, making up over $300 mill a year alone. Add on how APs who go more often also have a higher chance of buying food and merch, and that means even more for Disney. Then let's not ignore how many APs tend to go a 2-4 hours a trip, which without an AP means now they're less likely to go and only go once or twice a year instead of the 4 times a month/twice a month/once a month, which in turn means that Disney loses a solid $150-$200 mill in revenue because now the aps are far less likely to go. The reason this is important is that the out of towners and people who go once a year aren't going to change as that is normal, where they will only take a trip once and be done, and there's a very high probability that that won't increase just because aps aren't there (since crowds were never a problem before since people will still go, crowded or not).

Sure but APs will come no matter what...just put limits on them and its a win win for everyone but those who go weekly.

[mickdaddy]

I think the biggest reveal to how the AP program effects the revenue of the parks division will be what the AP program looks like when the park is open at full capacity and they bring some form of it back. My guess is you will see 3 tiers at most and no monthly payment plan.

[Tomorrowland_1967]

I'll take a small article written by someone without access to the real numbers with somewhat of a grain of salt.

First thing that went through my head - Disney does not release attendance figures/stats. And it is suspected.... once the parks do reopen, they don’t want a flood of local APers jam packing the park. And my guess is they will reintroduce the AP, at a later time. Maybe an overhauled version of it.

[Eagleman]

IMO
If Disney bring back any form of the AP's.......I sure Disney will also bring back monthly payment plan as well .
It all about "$ $ $ $ $" !

As I share before , that most Theme Parks has payment plan......
it is part of a lot Big Business.

As for My self ,
I will still pay for product up front.

[Eagleman]

First thing that went through my head - Disney does not release attendance figures/stats. And it is suspected.... once the parks do reopen, they don’t want a flood of local APers jam packing the park. And my guess is they will reintroduce the AP, at a later time. Maybe an overhauled version of it.

Yes your right -Disney does not release attendance figures/stats.

It must been a policy for MANY ,many ,many ,years......
I recall way back ,when Disneyland had coupon's books.......

One Day - I call them to ask, if the they think the park going be crowded that day......
and they told me then, they do not release attendance figures/stats.

[jish5555]

Sure but APs will come no matter what...just put limits on them and its a win win for everyone but those who go weekly.

that's not a win win if Disney loses money and in turn needs to raise prices so as to counter the revenue loss, especially when previous aps will be less likely to go, dropping their attendance by 80% which in turn means a loss of $150-$200 mill yearly on just ticket prices alone since without aps, means they go from going on a regular basis to going once to twice a year. The main reason for this is that now, without aps, many people who had an annual pass can't just go for a few hours a trip since now they need to feel like they're getting their money's worth, so now will only go when they feel they can do a full day. This means Disney went from making over $1000 to now making $150-$400 off them, which isn't good for business. Then let's add on all the extra food and merch not getting sold because past ap holders aren't showing up much and there's no actual increase in park attendance (since people who only go once a year aren't going to suddenly increase due to lack of aps, which means Disney's not making more money off them).

[ravencroft]

This is just my opinion. If it takes eliminating the AP and charging $300 per day ticket to eliminate overcrowding, then I support that. The oversubscription of the California resort is my #1 criticism of the Disney Resort and appears to be unsolvable otherwise. The California Resort is sort of a victim of the success of Southern California attracting so many people from around the world to call this place home. There are 38 million people in California. 19 Million in Northern CA and 19 Million in Southern California.

[Golden Zephyr]

This is just my opinion. If it takes eliminating the AP and charging $300 per day ticket to eliminate overcrowding, then I support that. The oversubscription of the California resort is my #1 criticism of the Disney Resort and appears to be unsolvable otherwise. The California Resort is sort of a victim of the success of Southern California attracting so many people from around the world to call this place home. There are 38 million people in California. 19 Million in Northern CA and 19 Million in Southern California.

An interesting proposition. However, I suspect that Disneyland simply isn't worth that cost to most, and the marginal price per additional unit drops dramatically, which is why a second day is priced significantly less than the first and the 3rd day yet more to where on a 5 day ticket, the additional day was only $25.

You can however purchase an "uncrowded experience" anytime of the year by purchasing a VIP tour. If you have a group, your "ticket" is more like an additional $300/person, but comes with unlimited fastpasses and instant reservations at restaurants, parades, shows, and fireworks.

If the general admission price was $300, they would likely sell too few tickets to make the park viable to operate and why they haven't priced it at that. The marginal utility for the first unit of consumption is always the highest, but utility drops dramatically as a consumer moves to satiety.

The marginal revenue/marginal cost curve dictates where the pricing would be set and there is a fine line between crowd levels that incentivize the park to operate or shutdown.

The big question is, where does that lie in a post COVID world?

[Eagleman]

An interesting proposition. However, I suspect that Disneyland simply isn't worth that cost to most, and the marginal price per additional unit drops dramatically, which is why a second day is priced significantly less than the first and the 3rd day yet more to where on a 5 day ticket, the additional day was only $25.

You can however purchase an "uncrowded experience" anytime of the year by purchasing a VIP tour. If you have a group, your "ticket" is more like an additional $300/person, but comes with unlimited fastpasses and instant reservations at restaurants, parades, shows, and fireworks.

If the general admission price was $300, they would likely sell too few tickets to make the park viable to operate and why they haven't priced it at that. The marginal utility for the first unit of consumption is always the highest, but utility drops dramatically as a consumer moves to satiety.

The marginal revenue/marginal cost curve dictates where the pricing would be set and there is a fine line between crowd levels that incentivize the park to operate or shutdown.

The big question is, where does that lie in a post COVID world?

Time will tell.........
But most Business is not ,going be run ,same old way in a post COVID world!

[Chief Leaky War Canoe]

Slippery slope I say. They get the guaranteed money from AP's whether the APH goes or not. In 2017 I had reached my threshold regarding the over-crowding and chose not to renew when it expired, (I was an AP and part of the problem I suppose...also didn't go nearly as much as I did in previous years). I'd be interested in seeing data how many AP's went enough times to "get their money's worth" v.s. how many took a "loss" on it and didn't get their moneys worth. While a single-day ticket purchaser might by a couple meals throughout the day, they might also be so strapped by the price of admission that they brought their own food to eat.

Good points. As a former SoCal local AP holder for years, our goal was always to just get one or two more park visits beyond what the same would be for same day park hopper tickets. So, if at least one more visit which could be considered "free" then good.

And that being said, having the pass meant that NONE of those visits felt like we needed to max out on rides or attractions; it meant a more slow and leisurely day in the park. Actually not even a day usually; generally only a few hours. Hours where we were not among those of any type of attendance (pass or single day ticket) who would impacting operations by being in lines or taking up space. We would be spending more on food, drinks, or merchandise instead---- far more than most average guests. Especially when you factor in our dollars spent in far fewer hours.

The data I would like to see is how my particular brand of AP holder actually was a big money maker for Disney. We renewed every year for many years, and then attended very, very limited times. We always "broke even", but we never treated it like a "all you can eat" buffet. I have to think Disney made big margins on AP holders like us and that going forward they ought to offer some kind of limited use pass geared to people who want to spend a lot of money inside the parks while not impacting rides or other attractions.

[JerrodDRagon]

that's not a win win if Disney loses money and in turn needs to raise prices so as to counter the revenue loss, especially when previous aps will be less likely to go, dropping their attendance by 80% which in turn means a loss of $150-$200 mill yearly on just ticket prices alone since without aps, means they go from going on a regular basis to going once to twice a year. The main reason for this is that now, without aps, many people who had an annual pass can't just go for a few hours a trip since now they need to feel like they're getting their money's worth, so now will only go when they feel they can do a full day. This means Disney went from making over $1000 to now making $150-$400 off them, which isn't good for business. Then let's add on all the extra food and merch not getting sold because past ap holders aren't showing up much and there's no actual increase in park attendance (since people who only go once a year aren't going to suddenly increase due to lack of aps, which means Disney's not making more money off them).

Thats if they lose money....I think at least for the first year after Covid they will get a huge influx of people wanting to go to the parks at any price and buy things just because. Disney will then be able to see how it will work without Aps and price from there.

[linkeq2001]

that's not a win win if Disney loses money and in turn needs to raise prices so as to counter the revenue loss, especially when previous aps will be less likely to go, dropping their attendance by 80% which in turn means a loss of $150-$200 mill yearly on just ticket prices alone since without aps, means they go from going on a regular basis to going once to twice a year. The main reason for this is that now, without aps, many people who had an annual pass can't just go for a few hours a trip since now they need to feel like they're getting their money's worth, so now will only go when they feel they can do a full day. This means Disney went from making over $1000 to now making $150-$400 off them, which isn't good for business. Then let's add on all the extra food and merch not getting sold because past ap holders aren't showing up much and there's no actual increase in park attendance (since people who only go once a year aren't going to suddenly increase due to lack of aps, which means Disney's not making more money off them).

A lot of the "APs spend so much" anecdotes are often quoted by super fans, if you are on this board you are a super fan. I can pretty much guarantee you that the vast majority of lower tier APs are not dropping hundreds of dollars per visit at the park.

[Mr. Blue]

A lot of the "APs spend so much" anecdotes are often quoted by super fans, if you are on this board you are a super fan. I can pretty much guarantee you that the vast majority of lower tier APs are not dropping hundreds of dollars per visit at the park.

That may be true, but if you are talking about ANNUAL revenue for the business, you have to look at cumulative total spend over the course of a full year by each unique visitor to the park. APs may spend less on a single visit, but the multiple visits likely do average out to a much higher "Per Customer, Per Year" spend rate than most non-AP visitors. A lot of these "Per Visit" revenue discussions therefore miss the mark, in my opinion. If you look at how much each individual customer spends during a calendar year, I suspect APs compare quite favorably against casual visitors. This, of course, doesn't address the overcrowding issues, but it seems like a thoughtfully-implemented reservation system is a reasonable way to manage that going forward.

[SuperHappyCM]

This is just my opinion. If it takes eliminating the AP and charging $300 per day ticket to eliminate overcrowding, then I support that. The oversubscription of the California resort is my #1 criticism of the Disney Resort and appears to be unsolvable otherwise. The California Resort is sort of a victim of the success of Southern California attracting so many people from around the world to call this place home. There are 38 million people in California. 19 Million in Northern CA and 19 Million in Southern California.

Totally agree