Exploring the Backlash to Disney’s Price Hikes

Posted by Elizabeth Alton on Friday, October 23rd, 2015

Disney Crowd

The Wall Street Journal recently reported that Disney has implemented a new survey program this week to ask past visitors about demand-based pricing models. The demand-based pricing discussion comes in the wake of a public backlash to increased prices at Disney parks. An annual pass with no blackout dates to Disneyland now costs in excess of $1000. The media has posed the question, “How high is too high?” and some fans have threatened to lower pass levels or boycott the park.

But it’s important to put the pricing discussions into context. Disney’s parks have achieved record attendance levels for the last three years, despite price hikes. While there’s always some general discontent that accompanies a price hike, they’re clearly not affecting long-term attendance. Here’s the rub: decreased attendance – or at least more evenly distributed attendance –  is exactly what Disney is hoping that the price hikes will achieve.

Main Street Crowd

Last year, TIME published an interesting piece “How Theme Parks Are Killing Spontaneous Fun.” The premise was simple: the price increases at Disney and other parks are making it more difficult for fans to pick up and visit the parks on a whim. Whether you live within driving distance and decide to do a last minute trip or you’re visiting California or Florida and want to squeeze in a visit, it’s extra pricey to go to Disney on short notice. The structure is pushing guests toward purchasing multi-day packages that reward consumers for planning vacations well in advance.

There are a couple of reasons that Disney is moving in this direction; one of the primary considerations is crowd control. It’s hard to manage crowds and deliver a stellar experience when your attendance surges without warning. In an interview with the WSJ about demand-based pricing, Walt Disney Parks and Resorts Chairman Bob Chapek said,“We have to look at ways to spread out our attendance throughout the year so we can accommodate demand and avoid bursting at the seams.”

Disney has recently made headlines for exceedingly long lines and even a few gate closures. That’s a recipe that leaves The Happiest Place on Earth with unhappy visitors. By raising prices and looking at models that use demand to drive pricing, the goal is to thin out the crowds. Premium periods such as weekends and holidays would ease up; Disney would also have a more even cash flow and foot traffic flow during lower demand periods since consumers would have incentives to visit during those times. It solves some of the overflow issue, while also potentially driving up profits.

The popularity of franchises like Frozen is only increasing the Disney fervor. Ultimately, the key to managing the Disney pricing issue is open communication. By soliciting guest feedback through surveys and focusing on consumer benefits when discussing pricing changes, Disney remains in a largely positive position. Budget conscious consumers can travel during low demand seasons. Consumers seeking a premium experience have to deal with less crowding. Everyone gets a closer approximation of the Disney experience that they want, with pricing being an important tool that allows the brand to deliver that.

Crowd at Turnstyles - Disney

So what are we left to make of all the discussions around pricing? It’s unlikely that Disney is going to make pricing decisions that make the parks completely unaffordable to middle class consumers. Families remain the brand’s bread and butter. At the same time, there is frustration at the high cost of a trip to the parks at a time when many families are still recovering from the last recession. If Disney moves forward with demand-based pricing, it could create opportunities to have the Disney experience at a lower price, even though it’s likely to restrict the times when those guests could travel.

Demand-based pricing itself isn’t without detractors. Uber’s surge pricing is a public example of where the model can create backlash. There’s also a general feeling that demand-based pricing favors wealthier consumers. Two big lessons emerge. The first is that communication will remain essential as Disney moves forward with its plans; if their actions to date are any indication, they’ll handle it perfectly. The second is that while there is some grumbling among fans, it’s unlikely to truly impact attendance at least in the short-term. We’re interested to see what direction Disney’s pricing model evolves in the next few years and how fans and the media will respond. Their decisions are likely to set a new standard for the industry and potentially create growth opportunities for less expensive parks in specific markets.

Images sourced courtesy of Magic Kingdoms, Flickr, YouTube

2 responses to “Exploring the Backlash to Disney’s Price Hikes”

  1. Doug Bain says:

    “It’s unlikely that Disney is going to make pricing decisions that make the parks completely unaffordable to middle class consumers.” ???

    Too late.

  2. Dan Heaton says:

    I think demand-based pricing is okay in theory, but it’s most likely to mean increases in peak times (not decreases in slower times). I doubt that Disney would lower prices in slower times, so what it would mean is just higher prices in the summer and holidays.

    Also, so many of Disney’s guests are locked into going at a certain time period. So I don’t believe their pricing strategy will make a huge difference. It’s most likely to cause guests to be upset at paying such a high price.

    Disney needs to focus more on building capacity in its parks through new attractions. They’ve looked for shortcuts like FastPass Plus and higher prices. Neither is a good long-term strategy to keep guests coming back for years to come.

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