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Disney offers buy-outs to 600 managers; Universal lays off 70*

By Robert Niles
Published: January 21, 2009 at 8:08 PM
Substantial hotel and ticket discounts have helped slow the expected loss of visitors at Walt Disney World and Disneyland this year, but not enough to save some employees' jobs.

Disney announced today that it's offering buy-outs to 600 managers at its U.S. theme parks. If not enough take the offer to leave (and the company didn't say how many that would be), then Disney might start laying off employees.

Disney also said that advance bookings at Disney's hotels were down six percent for the first six months of 2009, compared with the same period one year ago. That's a better showing the 10 percent drop the company forecast earlier, when it announced its current round of discounts.

*Update: (From the comments) Universal Orlando lays off 70 employees.

Readers' Opinions

From Joshua Counsil on January 21, 2009 at 8:23 PM
Man ... what would you do in that situation if you were a manager? I wonder how much the buy-out delivers ...
From Corey Romberg on January 21, 2009 at 9:30 PM
Wow. This hard news to swallow. As a cast member, this is certainly worrisome to me. Not only do I know a lot of managers, and I feel so bad for them, but this also means that the hiring freeze wasnt enough, and we are in such bad economic shape that hourly CMs may even be getting laid off soon if things dont get any better.

Im not too afraid about losing my job, since Im seasonal, but this is a big blow to my hopes of going from seasonal to full time anytime soon. Id be lucky if I get enough hours to keep my seasonal status...

From Derek Potter on January 21, 2009 at 11:33 PM
My prediction for the past few months has been that Disney would start feeling the economic heat. They have spent freely on hotels, attractions, you name it, for years...100 million dollars for Expedition Everest alone. The fact that they, the most popular and most affluent theme park chain...are worried about cutting costs, says something to me. It also makes me wonder about their pecking order. 600 managers is a lot of suits for a couple of parks and a handful of hotels. It seems to me that perhaps they were a little top heavy to begin with.

The question is, how ready are they for this year? They have had robust attendance for a long time, but they are a vacation destination, and an expensive one at that. People are cutting costs this year, and that will likely include vacations as well. The Disney parks live by their attention to detail...it's what separates them from most others, and cost cutting has a tendency of putting detail on the back burner. Are they prepared to sacrifice some of that Disney "magic"?

I'm sure that attendance will be ok at the Disney parks, but mark my words. This is the year of the regional amusement park.

From Dan Babbitt on January 21, 2009 at 11:55 PM
This buyout is only offered to people with 6 figures and up. So people who have the the titles of director, vice president and higher. http://biz.yahoo.com/ap/090121/disney_buyout.html?.v=1
From James Rao on January 22, 2009 at 5:37 AM
From a purely selfish perspective, this news is "good news" for people like me who are waffling on their trip to WDW. If the bookings are still down, then perhaps Disney will extend their 4 for 7 deal into the fall. Maybe even sweeten it a little bit with a free dining plan offer as they have in the past. If that happens, there is a real good chance I will make the trip. In fact, I would definitely take a trip this fall if 4 for 7 were extended and sweetened with some sort of dining discount.

As for service issues, I think buying out a bunch of highly compensated suits is probably not going to have much of an impact. If things continue to go south (what the hell happened to that big, beautiful tomorrow Obama promised us?), then you could see the visitor experience impacted with shortened hours, fewer showtimes, days without parades/night time spectaculars, and even park closures (you know a certain park closed each day to cut costs). I don't think Disneyland is in nearly as much danger as WDW just because the local population is more capable of propping that park up, but WDW could see some even more severe downturns. When you are the #1 vacation destination in the world, and the economy is such that vacations are less likely, then you are going to be hurt more than others.

And I believe Everest was $200 million, Derek, which adds even more fuel to your fire. We sure like it when Disney throws wads of cash at their parks and builds new attractions, but when the going rate for a top notch narrative experiences like Toy Story Mania runs $80 million, you can see why WDW is standing pat this year and opting to spend $$$ on improving/fixing/maintaining what they have and not bundling all their assets up into one big new $100+ mil attraction.

For all of our sakes, I hope things start turning around quickly, but most "experts" who aren't screaming about the end of the world, are figuring on 18 months before we see some sustained positive changes in the economy. Not good news for Disney, but good news for bargain hunters like me. At least until I lose my job, anyway.

From Don Neal on January 22, 2009 at 7:32 AM
We are still going to go to Disney in June but we are staying off site at a condo near Disney's south gate. Awesome amenities for about half the price of a nice Disney resort. But still $1250 for a 6 day park hopper pass for our family of 5 is steep! We were this close to going to Universal instead for about $800 less but decided to cut back in other areas so we could save more money to make up the difference.
From Anthony Murphy on January 22, 2009 at 8:51 AM
We are staying on site in May, but we were lucky enough to get DVC in the early 90's. Now that was an investment which is looking better this year. But that is the other weird thing, DVC seems to be not taking that big of a hit.


I think this is very worrisome for everyone working for Disney (as I at the Disney Store with little to no hours), but its not the first time its happened (I think when Eisner took over they had this problem) and it shouldn't be too suprising since many other businesses are cutting back too!

From Deidre Dennis on January 22, 2009 at 10:34 AM
Our June trip for 11 days was booked awhile back. Usually when we plan any vacation, we don't book everything until mid to late February. This year I decided to jump on it early. We're staying on site at a value resort simple because my son loves the themes and it's much less expensive than the others. Plus we don't spend much time in the rooms, either.

All this to say, I'm very curious to see what the attendance will be like when we arrive, (anyone know?). I think that if people are budgeting and planning early enough, they will still go and the parks will be packed. I always worry when people start losing their jobs, however, 600 managers does sound quite top heavy.

From Heather Lawless on January 22, 2009 at 1:14 PM
I can't believe bookings are down. We just returned on Sunday from a week long stay and the place was packed. We stayed at Disney the same week last year and we never had to wait in line for rides or transportation. Last week, we had to wait a minimum of 30 mintues for most rides.
From Robert Niles on January 22, 2009 at 4:01 PM
Universal Orlando laid off 70 employees today. (Can't paste link since I'm on iPhone at the airport gate.)
From Pyra Dong on January 22, 2009 at 5:18 PM
Robert, do you know if those Universal employees were seasonal, part-time, managers, etc?
I think all theme park employees may be a little worried now.
From TH Creative on January 22, 2009 at 8:01 PM
Mr. Potter writes: My prediction for the past few months has been that Disney would start feeling the economic heat.

I Respond: How bold.

Mr. Rao claims Expedition Everest cost $200 million to build.

I Respond: As a person with experience in attraction construction I assure readers the number is closer to $125 million -- regardless of what outsiders have estimated -- and I would also note that these costs (based upon a typical construction schedule of values) are extended (inccluding concept and design) over the last eight or nine years.

The real story regarding Disney and the economy is its aggressive marketing. The company has really pushed forward -- with the free birthday admissions, the discounts for military personnel, the "Are you 23" campaign and the "buy four nights get seven" hotel deals.

My spouse is a cast member and we have regularly joked that the amount we have spent inside the parks (on her main gate pass -- including the time we spent in California last summer) is far greater (more than double) what she is paid in salary.

And while it is always chic for media types to examine Disney during times of economic turbulence, perhaps we need to acknowledge its standing as an industry barometer.

In other words, if Disney is having problems, imagine how the second tier parks are doing.

That big black and white fish has to eat every day.

(P.S. I know its a mammal).

From James Rao on January 22, 2009 at 8:48 PM
Rumors abound on EE's costs. $125 mil may be right, it might not. By the time Disney fixes the Yeti so it can function in "A Mode" again, who knows what the final bill will be? Maybe if they had spent $200 mil in the first place the Yeti wouldn't be broken down.

The point is that when Disney cuts back on work force, they suffer more than other, more traditional, midway-style, amusement parks, because the Disney Experience requires lots and lots of bodies! If Disney can't make magic, then why should someone travel 3000 miles to make it a destination?

And while Disney may be a barometer for the parks in Florida, a downturn at Disney may actually be helpful to places like Worlds of Fun in Kansas City, MO. In fact WOF may have a banner year thanks to people like me staying at home and getting their amusment park fix nearby.

(Granted it is a cheap fix, but even cheap fixes can bring short term satisfaction!).

From Derek Potter on January 23, 2009 at 11:06 AM
TH, some people with mouse on the brain think that Disney is invincible and that they can continue business as usual through a potential depression. Some of these marketing promotions that you speak so highly of would never happen if the company was meeting it's financial goals. They would never hand out three free nights at one of their resorts if business was up, and probably wouldn't give people free admission on their birthday either. While their marketing is good and aggressive, it's indicative of some problems.

The real potential issue here is that Disney is a destination vacation, and an expensive one at that. Families watching their money will for the time being, be inclined to forgo expensive vacations this in favor of closer attractions and activities. The $3000 Orlando trip will more often give way to the $500 weekend at the local amusement park or some other inexpensive alternative.

The two words that I never hear at Disney are "cut costs", and offering buyouts to six figure suits is just the beginning. You talk about feeding a big black and white fish, well how about the monster that is Disney. The attractions and hotels were expensive to build in the first place, but imagine the operating costs they incur every day. The bottom line is that the "magic" of Disney requires it's own wad of cash and a lot of customers to operate. It will get worse before it gets better, and I'll be interested to see how they handle this whole thing.

Disneys standing as an industry barometer goes about as far as Florida's border. The increases in attendance and revenue at Six Flags and Cedar Fair, as well as other parks around the country tell that. If anything, a well run regional park stands to gain some market share in this economy.

From Mike West on January 23, 2009 at 4:34 PM
Speaking as a Tour & Travel Manager, and from the AAA club that sells more Disney than any Travel agency in the U.S. let me say that EVERYONE in this industry is at risk. The Mouse is strong enough in other sales (merchandise, video etc.) that they will survive. But even before this all happened, how many D stores were closed? That already showed a downturn in their economy, and a barometer for us all. The good news is that typical Disney pricing may come down for the first time enough so that those who couldn't afford it before, (& who keep their jobs)will finally get there. Not since the abolition of the ticket system might it have been this way. I bet there's some truth that you won't see any influx of big money into new attractions for a while, but with several added in Cali, we are set for a little while. I just wonder what will come of Carsland now. Hopefully they won't make the same discounted version that happened with the Rocket Rods Debaucle.
From James Rao on January 23, 2009 at 5:29 PM
Everything I have read says that all the monies for the DCA "fix" have been allotted and approved.

This note is from Al Lutz over at Miceage.com:

The Imagineers assigned to...multiple DCA project [teams] can't believe the luck they had in getting all of [their projects] approved and fully funded when they did in ‘07, as the economic crisis of ‘08 has literally put a stop to nearly everything [else]..."

Sure, anything can change, but right now DCA Imagineers are just thanking their lucky stars that they got all their projects approved before the big economic downturn.

From Larry Zimmerman on January 23, 2009 at 7:03 PM
I agree -- the regional and local parks will see an upswing this year as the longer trips will just cost too much, even with gas prices down 30 or more percent from last summer. Now I wish I had bought that Cedar Fair stock last fall when I was thinking about it...

On another tack, Disney's aggressive discounting is what's driving the crowds right now. But that means they're only getting 60% of lodging revenue (giving away 3 nights out of 7) and I'm sure those using that lodging are being more creative (read "economical") in their dining and miscellaneous purchases. Here's hoping the market, banking, housing and job situations turn around soon...

but don't hold yer breath.

From TH Creative on January 25, 2009 at 5:56 AM
The promotions Disney has launched (three nights free; complimentary birthday admissions; discounts for military personnel) are being supported by television advertisement and web campaigns that we produced months before the programs were announced. Jim Hill Media reported that Disney launched into full cost cutting mode as early as January 2008.

Having said this, the same site reported that constrcution activity has picked up at the Pop Century resort -- where the company plans to build family suites.

My team is continuing to work on the pirate renovation at the Caribbean Beach Resort.

In my opinion Disney has positioned itself to ride the storm out -- enjoying the benefits of years of financial success and the foresight to know when the rough economy was going to arrive.

From TH Creative on January 25, 2009 at 9:45 AM
Mr. Potter Writes: The two words that I never hear at Disney are "cut costs."

I respond: You have GOT to be kidding. Disney is constantantly looking for ways to reduce costs. Where to begin? From the food services for cast members (employee cafeterias, etc.) being contracted out to an outside company, to the reductions in entertainment at all the Florida parks, to the closing of the clubs at Pleasure Island, to the intermittent opening of the Life and Health pavilion, there are a myriad of places Disney has reduced its operating expenses.

Jim Hill Media (and this was Published LAST JULY): "Finding new ways to cut costs as well as increase profits ... That's Mickey's new mantra. Particularly since Mouse House managers are anticipating that -- what with the higher costs of jet fuel & heating oil -- far fewer Guests will be flying on down to Disney this winter.

This is why -- in anticipation of these coming tough times -- Disney's being proactive. They're instituting all sorts of cost savings measures around property these days. Doing everything from limiting the amount of overtime that’s available to WDW cast members to removing some of the less popular / more expensive items from the menus of the resort's buffet restaurants."

Having said of of that, Mr. Hill recently reported some good news!

Jim Hill Media (January 13, 2009) :For most of 2008, WDW officials knew that 2009 was going to be a real challenge for the Resort. Which is why -- as far back as July -- they began putting cost containment measures in place. Doing whatever they could to lower Disney World's operating costs (i.e. cutting Fantasmic! back to just two performances a week, eliminating character dining at the Liberty Tree Tavern, etc.).

But then in October of last year, Disney Parks & Resorts execs got some scary, scary news. Due to what was happening on Wall Street and the continuing credit crisis, WDW's advance bookings had fallen off precipitously. And unless something was done and fast, the Magic Kingdom (which can hold 65,000 - 67,000 Guests on its busiest days) might see weekdays in January of 2009 where its attendance level would fall into the teens.

This was why Disney Parks & Resorts rolled out that Buy-4-Get-3-Free promotion back in early November. Which seems to have done just what the Company had hoped it would. Given that -- during the first 10 days of January -- the Magic Kingdom saw weekday attendance levels in the 30,000s.

Now anecdotally speaking my (gorgeous) wife who works in entertainment just got done playing what we refer to as the Sunday Disney Scratch-Off Game. That's where she gets her cup of coffee, sits down at the computer and checks her schedule. As a part time cast member she has managed to get three days of shifts scheduled every week this year. No cut backs.

Meanwhile, my pal Chris, will arrive on January 29th from Chicago, to stay at the Poly -- where he is taking advantage of the buy four get three deal.

From Dan Babbitt on January 28, 2009 at 11:32 AM
Smartley put TH Creative! I've been a seasonal cast member down at WDW for 2 years now and the last couple of trip I took down there in Sept, Oct-Nov, and Dec I have been able to get 1 or 2 shifts for each trip. For some reason last year at these times I wasn't able to get at least 1 shift but now I have been able to get more more shifts and the parks have been busy! I was surprised last trip that the parks have been packed for the traditionally slow times. Either its because of the promotion that they have been doing or because of the preventative measures that Disney has put into place as early as last year, and then maybe aslo due to shorter hours and less atractions that are open.

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