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Why This Strategy Might Be a Mistake for Disney Long-Term

Walt Disney World is a success because of its cultural ubiquity. Everyone knows what it is, and a large percentage of the U.S. population has visited it at least once. There are a number of reasons for that, but the biggest is its accessibility.

For generations, Walt Disney World was an attainable vacation destination for millions of middle-class families. So attainable, in fact, that many made it an annual tradition. Out of this annual tradition, the Disney Vacation Club was born. That business has been so popular, each year seems to see the announcement of new construction projects for DVC properties.

Now, with price increases being what they are, the average returning Disney guest will be back once every three years. As the prices for tickets and lodging continue to rise, the time between visits will grow as well.

When an annual Disney trip was an attainable dream for a middle-class family, that family’s connection to the place was more powerful. They couldn’t afford to go to Paris, no, but they could visit the World Showcase. Now, if it’s a more fleeting memory, the passion wanes and – in time – so too will the desire to spend more money on it.

And so, what Disney is hoping is that a new class of wealthy traveler will chose to visit Disney, thereby making up the cost of those families who don’t vacation to Disney each year. The fault in this logic, however, is that it assumes those wealthy travelers will return again and again – not a certainty when you consider the price of a Disney trip is now on par with a European vacation. Why keep coming back to Walt Disney World when you can see the rest of the world, too?

For Disney to continue to grow with a smaller consumer base, it has to continue to grow, change and differentiate itself from its competition. At a more expensive price point, that competition includes pretty much anywhere else people want to take a vacation. If it continues to operate at the lackadaisical pace it has been operating at when it comes to developing new rides, attractions, hotels, and experiences, that smaller consumer base will move on to something else.

If Disney wants to be more like Apple, it needs to give the same level of instant gratification Apple does with its new product launches, which come nearly every year. That means it can’t keep taking most of a decade to build things like Pandora: The World of Avatar.

Why the Middle-Class Should Matter to Disney

Perhaps with America’s dwindling middle class, Disney is making the right move by turning itself into a luxury commodity, but it’s hard not to look at its newest parks abroad – those in Shanghai and Hong Kong – and see destinations bolstered by China’s burgeoning middle class. Clearly Disney sees the virtue of that demographic overseas, but perhaps it thinks America’s middle class isn’t large enough to be worth the effort.

But if Disney continues to price out the middle class, it will be in for a shock if that middle class grows once again in the United States. It was in such an environment in the 1950s that America’s first recreation boom came about – seeing the growth of things like bowling alleys, movie theaters, and amusement parks. If that happens again, Americans will once again look to leisure activities, but if the middle class can’t afford Walt Disney World, their eyes might turn elsewhere – like, maybe, Universal.

That would be a real tragedy for Disney, a company which grew into the enormous enterprise it is today due to the devotion of the middle class to its works. Disneyland was built for the vacationers of the 1950s. The old cinemas were filled with Disney films. Disney was the company of leisure, and generations felt connected to them because of it.

The goal of a vacation should be to escape all of these problems – to turn your mind off and simply relax. And for now, Walt Disney World is still such a place. But as the prices continue to rise, it’s hard not to enjoy it while also having a nagging thought in the back of your head: “Yes, I’m enjoying it – but is it actually worth it?” For some, that answer will always be yes – even if they have to come back less and less often just so they can afford it.

For others, the answer will be no, meaning their children will no longer have that same emotional connection to the place, and so on down the line. The experience Disney is selling will, to that next generation, be worth slightly less.

And so, for Disney, the goal shouldn't always be to make the most money in the short-term, or even the near long-term. There's added value in teaching the next generation to love Disney, even if that means making a little less per family. We're all Disney fans because of the memories we created there -- but those memories aren't tied to a hotel room, a MagicBand or a Fastpass+ reservation. They're tied to the people we were with and the times we spent together. And families will continue to have those experiences, they just might not be at Walt Disney World.

Thus, years from now, when the next generation takes their own kids to enjoy the world beyond the Mouse, Disney will have no one to blame but themselves.

Or, rather, itself -- it's a corporation, remember?

 
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Comments

Have to agree. We would definitely go more often if prices were more reasonable.

We would totally agree. We are in the middle class, and we typically went every year, then started going every other year. Six years ago we joined the Disney Vacation Club, and went on our first Disney cruse, and to a Disney resort all in one year. After a few years of going to the resorts again every year, we have now started spreading the time out between visits. Our last visit was just after Thanksgiving of last year, and we all came home feeling a little disappointed for the whole trip. Everybody felt like we saw less, and did less than ever before. We were also disappointed by the recent "improvements" (new castles, new rides). We are now looking in to other places we might go for vacation next. Problem is, what to do with our vacation points. It will be sad to see them expire, but this last trip was too expensive, and too much work to have everybody so disappointed. If we were offered membership in the vacation club now, after our last visit, we would pass on it and use the money somewhere else.

In reply to by Steve Taylor (not verified)

@Steve Taylor,

There are websites out there (like on DISboards.com)where you can rent your DVC points out. That way you're not losing out on the money you paid for them.

As DVC members we have invested a lot of money in Disney and as time has gone on we have seen DVC member perks all but go away. We did not renew our annual pass in 2015 and we aren't looking at buying them in 2016. I agree that there hasn't really been any new attractions worth the uptick in ticket prices. We were there 4 weeks ago and even though we had tickets we only spent about 45% of our time in the parks. Our next trip is planned for May, but I'm not sure we will even go to any of the Disney parks. We are thinking Universal, Sea World and Busch Gardens.

Glad it's not just me, thinking this way. I've seen people on these pages complain about the price before, only to be shutdown and told they're stupid for not knowing how to stay on the cheap. You shouldn't have to know! We've taken two family trips to WDW in the past few years, one with my wife's parents and one without. Between the two, we paid $19,000 beef the cost of driving 1/2 of the way across the country and associated lodging and meals. We stayed in the Poly once and the Contemporary the next time (Garden Wing!) and stuffed as many people in as few rooms as possible. We are, admittedly, pretty well-off. But even my eyes water when I start looking at the prices for the GF, much less the new villas and the like... We'll go back b/c we can. But I hate that others can't get the same experience b/c of the cost...

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