Dis­ney prices leave parks’ roots be­hind

The Washington Post Sunday - - BUSINESS - BY DREW HAR­WELL

When Walt Dis­ney World opened in an Or­lando swamp in 1971, with its penny ar­cade and march­ing-band pa­rade down Main Street U. S.A., ad­mis­sion for an adult cost $3.50, about as much then as three gal­lons of milk.

Dis­ney has raised the gate price for the Magic King­dom 41 times since, nearly dou­bling it over the past decade. This year, a ticket in­side the “most mag­i­cal place on Earth” rock­eted past $100 for the first time in his­tory.

Bal­loon­ing costs have not slowed the mouse-eared masses flood­ing into the world’s busiest theme park. Dis­ney’s main at­trac­tion hosted a record 19 mil­lion vis­i­tors last year, a num­ber nearly as large as the pop­u­la­tion of New York state.

But ris­ing prices have changed the

char­ac­ter of Big Mouse’s fam­i­lyfriendly em­pire in un­avoid­ably glitzy ways. A vis­i­tor to Dis­ney’s cen­tral Florida fan­ta­sy­land can now dine on a $115 steak, en­joy a $53-per-plate dessert party and sleep in a bun­ga­low on the Seven Seas La­goon for $2,100 a night.

For Amer­ica’s mid­dle-in­come va­ca­tion­ers, the Mickey Mouse club, long pro­moted as “made for you and me,” seems in­creas­ingly made for some­one else. But far from eas­ing back, the theme park’s prices are ex­pected to climb even more through a de­mand-pric­ing sys­tem that could bring a sum­mer’s day of rides to $125.

“If Walt [Dis­ney] were alive to­day, he would prob­a­bly be un­com­fort­able with the prices they’re charg­ing right now,” said Scott Smith, an as­sis­tant pro­fes­sor of hos­pi­tal­ity at the Uni­ver­sity of South Carolina whose first job was as a cast mem­ber in Dis­ney’s Haunted Man­sion. “They’ve priced mid­dle-class fam­i­lies out.”

As one of the big­gest man-made at­trac­tions on the planet, Dis­ney World has led the way for the theme-park in­dus­try to boost its prices, of­ten on a yearly ba­sis. Uni­ver­sal, Six Flags and other parks in Or­lando, South­ern Cal­i­for­nia and else­where have fol­lowed in Mickey’s big foot­prints, wor­ried they will oth­er­wise look like bar­gain-bar­rel run­ners-up.

Dis­ney and peers de­fend their ris­ing prices as a log­i­cal re­sponse to record-set­ting at­ten­dance, with Dis­ney spokes­woman Jac­quee Wahler say­ing the com­pany is “com­mit­ted to en­sur­ing all our guests have a mag­i­cal ex­pe­ri­ence.”

“We con­tin­u­ally add new ex­pe­ri­ences, and many of our guests se­lect multi-day tick­ets or an­nual passes, which pro­vide great value and ad­di­tional sav­ings,” Wahler said. “A day at a Dis­ney park is un­like any other in the world.”

But some see Dis­ney’s mag­i­cally as­cend­ing price tag as a re­flec­tion of the coun­try’s econ­omy, where stag­nant wages and grow­ing in­equal­ity have trans­formed even the way Amer­i­cans take time off.

“When Walt cre­ated Dis­ney­land, this was a mid­dle-class coun­try. But Dis­ney now . . . as far as pric­ing out the mid­dle class, they think: What mid­dle class?” said Robert Niles, the edi­tor of Theme Park In­sider, an in­dus­try blog.

“Dis­ney’s made a strate­gic de­ci­sion that they’re not go­ing to dis­count to hold on to peo­ple at the mid­dle part of the econ­omy,” he said. “They’re go­ing to set their prices at the top 10 per­cent of fam­ily in­comes and make their money where the money is.”

Prices rise, busi­ness booms

Amer­i­can theme parks were built on deep roots in mid­dle-class fam­ily en­ter­tain­ment, hav­ing ex­panded as out­growths of low-cost getaways such as New York’s Coney Is­land, dubbed the “Nickel Em­pire” for its thrift.

When Walt Dis­ney, the car­toon and busi­ness mogul, opened Dis­ney­land in South­ern Cal­i­for­nia in the mid-’50s for $1 a ticket, many ex­pected it would fail. Most amuse­ment parks then were rau­cous af­fairs, with free ad­mis­sion.

“I could never con­vince the fi­nanciers that Dis­ney­land was fea­si­ble,” Dis­ney once said, “be­cause dreams of­fer too lit­tle col­lat­eral.”

But over the years, as Dis­ney’s movie and toy deals helped it ex­plode into a $184 bil­lion be­he­moth, its theme parks be­came un­stop­pable mon­ey­mak­ers. Dis­ney’s parks’ and re­sorts’ prof­its have nearly dou­bled in the past five years, to $2.6 bil­lion in fis­cal 2014.

Ad­ver­tised for years as a oncein-a-life­time ex­pe­ri­ence, they have con­tin­u­ally set vis­i­tor records: Dur­ing the win­ter hol­i­days, Dis­ney’s Or­lando parks hosted 250,000 guests at a time, chief ex­ec­u­tive Bob Iger told an­a­lysts. At­ten­dance rose 17 per­cent last year at Uni­ver­sal Stu­dios Florida, the coun­try’s big­gest non-Dis­ney park, be­cause of the suc­cess of its Harry Pot­ter-themed mini-towns.

Dis­ney’s ad­mis­sions rev­enue grew about 10 per­cent ev­ery year for the past decade, to to­tal over $5 bil­lion in 2014, fi­nan­cial fil­ings show. (That’s not in­clud­ing food, drinks or mer­chan­dise, which brought in an­other $5 bil­lion.)

The parks have faced lit­tle re­sis­tance, even as prices climb. Tick­ets for the Magic King­dom in­creased 6 per­cent this year, to$105 plus tax, while en­trance to other Or­lando parks — Ep­cot, An­i­mal King­dom, Uni­ver­sal Stu­dios — can’t be bought for less than $90.

Those costs have in re­cent years helped shunt tourists to smaller re­gional parks, but many of those have raised prices as well. Six Flags, which runs 800 rides across 18 North Amer­i­can parks, in­creased prices last spring and charges $62 at its Mary­land park.

At U.S. theme parks, per-per­son spend­ing has climbed 33 per­cent since 2008, to about $56.23, ac­cord­ing to data from the In­ter­na­tional As­so­ci­a­tion of Amuse­ment Parks and At­trac­tions.

Park watch­ers have wor­ried that the ris­ing costs are block­ing out wish­ful vis­i­tors, es­pe­cially be­cause one-third of the Amer­i­cans vis­it­ing the coun­try’s theme parks are younger than 18, ac­cord­ing to data from in­dus­try re­searcher IBIS World. Ina re­port this month, the Themed En­ter­tain­ment As­so­ci­a­tion, an in­dus­try group, called “the con­tin­ued stag­na­tion of mid­dle-class in­comes” one of its big­gest chal­lenges.

But as long as places like the Magic King­dom can pull in more than 80,000 vis­i­tors a day, ex­perts say, the in­dus­try is happy to profit off a richer clien­tele. In re­cent years, Or­lando tourists’ av­er­age house­hold in­come peaked at about $93,000, more than $20,000 higher than the av­er­age U.S. house­hold wage, ac­cord­ing to the tourism bureau Visit Or­lando.

The price hikes won’t slow un­til the park sees a dip in de­mand, ex­perts say. If any­thing, Dis­ney is ex­per­i­ment­ing with how to per­suade park­go­ers to pay even more.

Dis­ney sur­veys sent last month to guests sug­gested the gi­ant was con­sid­er­ing a tiered pric­ing struc­ture that would clock peak-time “Gold” tick­ets, dur­ing sum­mer and win­ter hol­i­days, at $125. “Bronze”-level $105 tick­ets would al­low en­trance dur­ing less busy times, such as week­days.

Wahler, the Dis­ney spokeswom- an, would not say whether the pric­ing would change, adding, “We reg­u­larly sur­vey our guests on a va­ri­ety of ideas.” But an­a­lysts say it could prove one of Dis­ney’s big­gest, bold­est pric­ing hikes yet.

“They’ve been ag­gres­sively rais­ing pric­ing be­cause they’re look­ing at them­selves as a pre­mium price, a pre­mium brand,” said Scott San­ders, vice pres­i­dent of pric­ing for Dis­ney’s parks and re­sorts be­tween 2004 and 2009.

“Ev­ery child feels like they’re en­ti­tled to a Dis­ney va­ca­tion, and I think they’ve played off that, let­ting the emo­tions lay in un­til the fam­ily says to do it. They’re rec­og­niz­ing they can cap­ture de­mand across the price curve. So why not take ad­van­tage of what peo­ple are will­ing to pay?”

Cater­ing to ‘Wall Street dads’

Dis­ney says it has made an ef­fort to keep its gates open to all, of­fer­ing packages such as mul­ti­day tick­ets and yearly passes to help bal­ance out the costs. The “Mag­i­cal Ex­press,” a free shut­tle from the air­port into the sprawl­ing park’s cen­ter, also shep­herds tourists past the rental cars and ri­val at­trac­tions that would al­low them to spend more time and money out­side its gates.

The fun-per-hour value of the ex­pe­ri­ence is still high, Dis­ney ex­ec­u­tives say, be­cause a tourist can spend all day there. They add that higher gate prices help Dis­ney in­vest in new, bet­ter at­trac­tions.

Dis­ney World last year spent $425 mil­lion to ex­pand Fan­ta­sy­land, marked by the open­ing of a new Seven Dwarfs Mine Train roller coaster. Next spring at Ep­cot, Dis­ney will re­tool its Nor­we­gian­flume ride, Mael­strom, into Frozen Ever Af­ter, where vis­i­tors will float past a skat­ing Olaf and Elsa in an ice cas­tle, singing “Let It Go” amid a sparkling, sim­u­lated snow.

But much of the re­cent in­no­va­tion in the in­dus­try, ac­cord­ing to ex­perts, has gone into cre­at­ing a play­ground for the rich and their kids. The in­dus­try has in­creas­ingly “strat­i­fied its of­fer­ings,” said San­ders, Dis­ney’s for­mer pric­ing ex­ec­u­tive, by of­fer­ing more to at­tract “the ‘ Wall Street dads,’ who have the obli­ga­tion to bring the kids to Dis­ney but want to do it as quickly as they can and are least sen­si­tive to pric­ing of any­one.”

Parks now of­fer a va­ri­ety of spe­cial up­grades aimed at the va­ca­tion­ing 1 per­cent, in­clud­ing af­ter-hours par­ties, dine-with princess events and guided tours such as SeaWorld Or­lando’s “Pri­vate Elite VIP tour,” which bumps buy­ers to the fronts of lines and lets them feed dol­phins and rays.

Dis­ney’s two Bib­bidi Bob­bidi Bou­tiques sell a $195 pam­per­ing for lit­tle girls that in­cludes a makeover, hairstyling, a cos­tume and a princess sash.

The luxury has found its way back to the ho­tel room, as well. The Poly­ne­sian Vil­lage Re­sort — one of Dis­ney World’s first themed ho­tels, where rents started at about $29 (or $171 in to­day’s dol­lars) — re­opened this year with stilted Bora Bora Bun­ga­lows that can cost up to $3,400 a night.

In Au­gust, Or­lando’s first fives­tar re­sort, a Four Sea­sons, opened on the Dis­ney grounds, with a 1,000-pound chan­de­lier im­ported from the Czech Repub­lic and rooms start­ing at $449 a night.

With gilded of­fer­ings like that, Dis­ney clearly has some­thing go­ing for it, and few ex­pect the park will lose its lus­ter with Amer­i­can va­ca­tion­ers any­time soon. If any­thing, the as­cend­ing prices could help solve an­other of Dis­ney’s prob­lems, by thin­ning its snaking lines and re­lent­less crowds.

But that hasn’t stopped some Dis­ney lovers from mourn­ing a time when the magic of parks like Dis­ney­land, the “hap­pi­est place on Earth,” was some­thing nearly ev­ery­one could en­joy.

“As a busi­ness pro­fes­sor, it’s the right strat­egy,” said Smith. “But as a kid who started there with his first job at 16, steeped in the tra­di­tion? It does make me sad that some­thing that was setup by Walt, who wanted all fam­i­lies to be able to spend time to­gether in a fun at­mos­phere and be able to af­ford it, is go­ing by the way­side.”

MARK ASH­MAN

JOE BUR­BANK/OR­LANDO SEN­TINEL VIA AS­SO­CI­ATED PRESS

The price of a one-day ticket forWalt Dis­ney­World’sMagic King­dom rose to $105 (not in­clud­ing tax) this year, and ex­perts say the price hikes won’t slow un­til the park sees a drop in de­mand. If any­thing, the park may be ex­per­i­ment­ing with ways to in­crease prices fur­ther.

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