Planning a Disney Trip - 2022 Why is Disney So Expensive

 Planning a Disney Trip - 2022 Why is Disney so Expensive

Over the last few weeks all we have seen are articles about Disney prices.  Its ironic that they started to really come out after their earnings release.  Personally I am a bit torn over this because a part of me gets it however another part of me it does strike a nerve.  So lets take a look:

Disney earnings were released February 8th 2022 and here are some highlights that may have sparked these articles:

• Park revenue for the quarter $7.2 billion up over 100% year over year

• Domestic park revenue increased to $4.8 billion in Q1 2022 compared to $1.5 billion in the same period last year (Yes we are aware of COVID)

• Christine McCarthy -- Senior Executive Vice President and Chief Financial Officer:
• "Per capita spending at our domestic parks was up more than 40% versus fiscal first quarter 2019 driven by a more favorable guest and ticket mix, higher food, beverage and merchandise spending and contributions from Genie+ and Lightning Lane."

• Ticket prices are going to increase

• So lets take a logical and financial approach to understanding some of this basic information and try to understand this:

• Disney went thru one of the worst health induced economic crisis's for a company in the last few decades - especially for a business segment that requires people to be in their parks in public settings.

• 50th Anniversary celebration was kicked off in October and people were stuck inside for the last few months - they were ready to get their families out for a vacation domestically - this means they are going to spend more increasing Disney's revenue.

• Look I don't want to make this political, but poor policy and high inflation is 2-fold and can impact planning for such a great Disney Vacation as they see all of these factors - remember they are a for profit company
• Wage increase come for the employee - GREAT
• Price of goods and service go up - sometimes negating any wage increase - OUCH
• Supply chain constraints - these add to costs and will take time to resolve - OUCH

SO WHAT DOES IT ALL MEAN!!

• Making the Case for Disney
• Wage and benefit increases cost Disney more - companies can only absorb so much and the rest has to get passed on to the consumer in some form
• Supply chain constraints cause higher costs - if we want it now we pay more or we have to try and source from additional higher priced vendors to maintain product demand 
• Building new experiences costs.  Construction costs that may have been forecasted have been turned upside down with COVID.  This also includes refurbishments
• Disney is a business and unfortunately they have to make money
• Lastly, people have more discretionary income and spending patterns are not slowing.  Even with increased prices demand is still outpacing previous years

• Making a Case AGAINST Disney
• With more and more companies going to subscription type services  - I do think it was a poor choice to start charging for Lightning Lane/Genie + service.  I get the revenue benefit, but there is no other optic from a consumer standpoint that doesn't make it look greedy. 
• What I wish they would do: Go back to offering customers a few per day for free when booking thru Disney - you can at least pick up the revenue when they stay at your resorts this way
• Sticker shock of the dining experiences.  I still don't like that they do not have the dining packages available.  I think its a poor choice as this was a way for family's to have an idea of a budget for vacation that is almost ALL INCLUSIVE (to an extent)
• What I wish they would do: Go back to the dining plan even if it costs a bit more as it was a way for a family to get an idea of the total cost 
• Value Added Services in General:  I think it was a bad choice to stop things like the magical express as well as not roll out more value added items with the increases.  By only rolling out the increases and not providing additional value added services at the parks and resorts - it looks very greedy.  
• What I wish they would do: Drive people thru their Magic Your Way planning and offer more value added services thru that channel of booking.  I think it is a great way to provide people with a feeling of exclusivity and "VIP" type feel - adding more value. 
• Lastly, I can't not mention executive compensation. Bob received almost $32.5 million in 2021.  US median household income in 2021 was $79,900.  Bob's compensation was roughly 407 times the household median income.  To put it into perspective that is roughly 5,118 individual vacation packages that I referenced in a previous article (Includes flight, resort stay, food, tickets etc).  
• What I wish they would do: Weight executive compensation proposals with customer satisfaction metrics.  This would ensure that the customer experience is getting included

Thanks for reading as this was a post that was a little outside of the norm, but I felt it should be discussed.  At the end of the day, I feel you should ignore the static about prices. You can't put a price on a memory for your family that will last their lifetime.