Originally Posted By Darkbeer Is Disney trying to maximize profits by cutting down on the guest experence? <a href="http://www.miceage.com/kevinyee/ky120506a.htm" target="_blank">http://www.miceage.com/kevinye e/ky120506a.htm</a> >>On the one hand, maybe this isn't surprising. A publicly-traded company, Disney is supposed to maximize shareholder value. One school of thought holds that an effective way to do that is to cut costs. It may make sense to curb profligate and unnecessary spending. Thus, some managers opt to cut spending until the customer notices. Why not just take away what the market can bear? It's the ultimate application of the free market thought process. Problem is, it doesn't work that way at Disney. These aren't automobiles or digital cameras or frozen turkeys—what Disney is selling is much less tangible: experiences. What constitutes the magic? Who decides exactly which spending is "unnecessary"? What focus group can really, truly, honestly discover which details the guests are noticing? Walt Disney knew that the accumulation of thousands of minute details, most of them registered only subconsciously, is what generates the Immersion Toward Interesting Illusion (a tenet I've made reference to many times over the years). If you take away the details until the guests start noticing, then you've moved several orders of magnitude below the level of experience that USED to be de rigeur at Disney.<< And if that Churro cart (by the Great Movie Ride) was placed inside of Disneyland, I wonder how many folks would be complaining.....
Originally Posted By SoThisIsLove Is it over-saturation? DL, WDW, Disney cruises, theme parks all over the world, time shares, movies, TV.......perhaps if they would concentrate on doing just a few things very, very well, the magic would return. It's Disney Lite. Or becoming Insert-Generic-Theme-Park-Here. I agree with the author that every employee right down to the churro cart needs to have pixie dust all over it (in so many words).
Originally Posted By RoadTrip <<I agree with the author that every employee right down to the churro cart needs to have pixie dust all over it (in so many words).>> I don't know that you lose this with out-sourced employees. Disney may even gain. If a regular CM has performance issues there is a whole bunch of stuff that has to happen before the employee can be dismissed. This is not unique to Disney... firing union employees is not easily done at any company. On the other hand, if an outsourced employee is seen giving service that is not up to standards Disney can call the contractor and say that they don't want to see Joe Smith on property again. The performance problem has now been resolved in one day rather than one year. Disney has been scrambling to hire enough employees at WDW for the past half-dozen years. I think it makes perfect sense for Disney to determine which positions could be handled by outsourced employees without degrading the guest experience.
Originally Posted By mrichmondj I would be interested in hearing how the author feels WDW could generate greater efficiencies without doing the list of items that are described as declining measures. If you disagreee with the cost cutting, what would you do differently to ensure the business is sustainable? WDW requires profits because that is how Disney finances all of its new construction projects and resort improvement. When you read the balance sheet, every capital expenditure for a new ride, hotel, or major rehab comes out of the profits from the parks. If the parks are not profitable, Disney has to borrow the money to do these things which is not a sustainable business model. I was particularly scratching my head over the complaint about reducing the time for the torches being lit at EPCOT. We're talking about some pretty hefty consumption of natural gas for that effect -- the price of which has skyrocketed over the past several years along with every other petroleum based fuel. From a conservation as well as an economic standpoint, it doesn't take a rocket scientist to determine that a few minutes less each day burning these massive torches is a responsible way to reign in rising costs so that they don't have to be passed on to guests or result in diminishing other aspects of the attraction.
Originally Posted By DigitalDisney Unfortunately, WDW is just too large for its own good. If the resorts can't make money, then the parks need to make money for them (or vice versa). On top of that, WDW needs to maintain the huge transportation network that WDW requires. The outsourcing of workers is fine so long as it doesn't impact a guest's visit. The nighttime custodial crew won't affect a guest's visit, but replacing people like the bus drivers certainly does. I'm glad that Everest wasn't done "on the cheap" and that they are seeing a huge attendance increase as a direct result of spending a lot of money on a quality attraction. Hopefully we'll see more of this trend in the near future.
Originally Posted By Darkbeer As someone who follows theme/amusement parks, the above is an interesting comment. Parks like Six Flags have no problem spending rens of millions of dollars on new rides (and the marketing push they give), but many fans say, take a break from building the new stuff, and spend some money on basic park maintenance and some of the "lesser" rides. It seems like WDW is going down that path (and a path Disneyland was going down until a few folks made some SMART decisions).... New rides and attractions are important, but maintaining what you have is also important.
Originally Posted By Spirit of 74 WDW is broken in so many areas. The pro-management spin needs to stop at some point. Since the mid-90s WDW has employed a slash-and-burn management plan to squeeze every last penny out of guests and cast and the product has been WalMarted greatly. It was all designed to prop up the stock and Michael Eisner's ridiculous 20% returns he guaranteed shareholders. Yet until this year, the stock has been hovering close to half of what it was when the decade began. You can only cut so much flesh and muscle before you hit bone. I want Disney to do well financially. But it always has when it's produced top quality creative product. The worst ... most insidious part of this decade of decay has been the acceptance by so many fans of Disney no longer looking to EXCEED GUESTS EXPECTATIONS but rather to attempt and meet their greatly reduced expectations. I see it even on fan sites where some fans, along with corporate plants, try to explain why its good business to throw out billions of dollars on internet venture, sports franchises, payouts to exec mistakes, regional entertainment ventures etc ... but wrong to expect Disney Details in the parks, wrong to expect them to be spotless any more, wrong to expect CMs who care and speak English, wrong to expect a new parade every five years, wrong to expect an E-Ticket every decade, wrong to expect attractions be to be show quality ... it just makes me ill that people have become so jaded they don't believe in quality anymore.
Originally Posted By vbdad55 ^^^^^^^^^ an eerie parallel to the US auto industry in the mide 70's to early 80's...not a good thing
Originally Posted By RoadTrip <<it just makes me ill that people have become so jaded they don't believe in quality anymore.>> I still believe in quality. I just don't think current day capitalism can deliver it.
Originally Posted By Spirit of 74 <<I still believe in quality. I just don't think current day capitalism can deliver it.>> That's the point, really, Trippy. And so much of what people refer to as capitalism (like WalMart and off-shoring all of our jobs) is not. I want quality and I am willing to pay for it, but American companies no longer want to deliver it (and our pro-business leadership is doing everything it can to make it easier for our companies to screw Americans.) I guess I am jaded too. I'm jaded for humanity, though.
Originally Posted By vbdad55 ^^^^ tell that to Four Seasons' Hotels, BMW , Toyota/Lexus, Honda/Acura, Harley Davidson, Starbucks, Apple, Abercrombie & Fitch etc..... and before someone says these are all high end products in their markets, there is a reason people pay for them......look at the price of a WDW Disney vacation..why should the expectations not be the same?
Originally Posted By Spirit of 74 Unfortunately, VBDAD, Disney has conditioned its guests to accept a lot less. I am old-school Disney and I expect to get what I pay for (and, yeah, I would like if if they also exceeded my diminished expectations.)
Originally Posted By hopemax ^ IMO, because the consumer has not held up its end of the deal. The "invisible hand" does not work if one side conceeds, or loses faith, or believes the mistruths that the other side spreads. Consumers have every right to be as greedy and demanding as the profiteers. IMO, it's required.
Originally Posted By RoadTrip <<^^^^ tell that to Four Seasons' Hotels, BMW , Toyota/Lexus, Honda/Acura, Harley Davidson, Starbucks, Apple, Abercrombie & Fitch etc..... and before someone says these are all high end products in their markets, there is a reason people pay for them......look at the price of a WDW Disney vacation..why should the expectations not be the same?>> Well... Of the brands you mentioned I will say Four Season's Hotels, Lexus, Acura, and Harley Davidson are significantly better than competing products. Toyota, Honda, Starbucks and Apple are not significantly better than their competition and are priced accordingly. Abercrombie and Fitch; that's a joke, right? A&F is nothing but Old Navy with a big advertising budget. Nordstrom... I'll give you. Saks... I'll give you. Von Mauer... I'll give you (local to MN and IA -- you've probably never seen it). But Abercrombie and Fitch???? I love ya dude, but this upscale suburban living has been rotting your brain! ;-)
Originally Posted By RoadTrip ^^^ Oops... I forgot to follow up on my point. I HATE what 11:00 PM and 3 glasses of wine will do to the quality of one's posts!! Of the brands you mentioned that I consider to be true quality brands: <<Four Season's Hotels, Lexus, Acura, and Harley Davidson>> How many Americans have ever spent money on one of those brands? I would guess 5-10% at most. Disney can not make any money targeting that small an audience. Disney has become like Marshal Fields (now Macy's, darn it). They may offer slightly better quality than other mass merchandisers, but they can't offer the quality (and pricing) of Nordstrom's or they would go out of business.
Originally Posted By SuperDry I found Kevin's article to be somewhat interesting. He describes a lot of the cuts, but I do think he gets it a bit wrong in what the cause is. <<< A publicly-traded company, Disney is supposed to maximize shareholder value. One school of thought holds that an effective way to do that is to cut costs. It may make sense to curb profligate and unnecessary spending. Thus, some managers opt to cut spending until the customer notices. Why not just take away what the market can bear? It's the ultimate application of the free market thought process. >>> I don't think that Disney tries to cut every possible expense at every opportunity. If so, a lot of the more recent cuts would have happened a long time ago. I think Spirit is hitting closer to the mark: <<< Since the mid-90s WDW has employed a slash-and-burn management plan to squeeze every last penny out of guests and cast and the product has been WalMarted greatly. It was all designed to prop up the stock and Michael Eisner's ridiculous 20% returns he guaranteed shareholders. Yet until this year, the stock has been hovering close to half of what it was when the decade began. >>> I don't know what the goal is today (is still 20%?) but there certainly is a target. The company as a whole must at almost any cost deliver the earnings growth that Wall Street expects. And within the theme park division, HKDL and DLRP almost certainly are a downward drag, such that it would not surprise me at all if WDW had pretty high targets in order for the whole division to deliver a good number. Ideally, growth would always come from increased attendance. But as Disney has pointed out, attendance was very strong last year due to the 50th, and they grew only 5% at WDW in the quarter ending Sept 30. The earnings growth target at WDW was certainly much higher than that. The price increase helped, but it's almost certain that cost-cutting was a contributing factor to meet the earnings growth goal. It's just this sort of situation that can cause cost cutting to become necessary even in terms of increasing attendance and a price increase. I don't know how WDW budgeting is organized (is it by park or by operational area?), but let's say it was by park: Whoever makes these decisions for, say, Epcot will need to come up with X cost reductions, given a projected Y attendance change and Z price increase / spend increase, where X+Y+Z = The Goal. They're going to go around and try to figure out how to accomplish it, but you can pretty much take it to the bank that accomplish it they will. Saving 20 minutes of gas each night on the torches is one thing they apparently implemented. Someone must have decided that that was better for the guest experience than whatever the next reduction on the list was. <<< <<it just makes me ill that people have become so jaded they don't believe in quality anymore.>> I still believe in quality. I just don't think current day capitalism can deliver it. >>> Well, there certainly are some problems created by how the equity market currently works, and the changes over the last 15 years.
Originally Posted By Spirit of 74 <<Disney can not make any money targeting that small an audience. Disney has become like Marshal Fields (now Macy's, darn it). They may offer slightly better quality than other mass merchandisers, but they can't offer the quality (and pricing) of Nordstrom's or they would go out of business.>> Trippy, you just helped illustrate my point perfectly. You see, I would say Disney was comparable to Macy's 20 years ago. It delivered an upper-middle class type of entertainment that still was aimed at a wide ... mass market. Much like Macy's. It may have not been Nordstrom or Saks ... but it wasn't JC Penny and it certainly wasn's Sears or Ward's or WalMart! Now, Disney has spread itself very thin with 11 parks now worldwide and more to come. And Macy's has bought up just about every competitor and pushed their names into history ... like Field's in Chicago, Burdines here in Fla, Filene's in New England etc ... Macy's is all over now. But, guess what? They aren't upper middle class anymore. They're now the Olive Garden of department stores. All over. With the same exact merchandise. Cluttered, dirty stores. There's not the cache in being a Macy's shopper there was 20 years ago because they watered down the brand ... and, worse, killed a dozen major brands across the USA in doing so. Disney is very much like that. Despite the tremendous cost a WDW vacation can be, although we know there are ways to make it very affordable (like going for 10 nights in Sept and staying at POP with free dining) ... a WDW vacation doesn't deliver an upper-middle class experience unless you stay at a deluxe suite with concierge (at a price that would make the Four Seasons look cheap, I might add). A WDW vacation has become like Macy's ... sure, it still has the name. But the name doesn't stand for what it once did. Hope I made some sense with this because I do think this strikes the heart of the whole issue. The perception of WDW to most upper middle class folks I know, and some wealthy ones, is that Disney charges a premium to elite price for an (at best) mid level product.
Originally Posted By Spirit of 74 SuperDry, I am too tired to respond with one of my typical long-winded posts (good thing I don't have to work Wednesday!), but your theory about how WDW operates as far as parks goes is fairly accurate. Every park, and then lands/sections ... departments ... locations all have to reach quotas. It wasn't that way until the mid-90s. That's when things like the Penny Arcade disappeared because that piece of land had to bring in XX number of $$. That's also when merchandise started to be standardized as well as food items because of simplified buying as well as having each location 'pull it's weight.' Well, that meant shops that were more for theming and show -- like the perfume shop in Liberty Square -- were destined to disappear because atmosphere and show no longer mattered. That's the very condensed version.
Originally Posted By RoadTrip <<The perception of WDW to most upper middle class folks I know, and some wealthy ones, is that Disney charges a premium to elite price for an (at best) mid level product.>> Which explains the great success of DVC. By owning in DVC you can pay a mid level price for a mid-level to upper mid-level product (at least as far as lodging goes). Being a DVC owner is the ONLY way you can truly get what you are paying for.
