What will the future hold for Disneyland's annual pass program?
Should increasing annual attendance be the top goal for a theme park? Ask someone in the industry, and I'll guess that you will get a response along the lines of, "sure... but not really." That's because the ultimate goal of theme parks — as with any for-profit business — is to make money. And while increasing attendance is a strong indicator that more money is flowing through the gates, it's no guarantee.
Sometimes, you can make more with less.
That's the theme of my Orange County Register column this week, which looks at Disneyland's reported attendance dip last year to ask, Could slightly lower attendance at Disneyland be a good thing?
The amount of money a theme park makes is based on two factors: how many people come into the park, and how much each visitor spends while there. With its enormous base of annual passholders, the Disneyland Resort is facing a challenge from its parks filling on many days with low-spending annual passholders, potentially crowding out more free-spending daily ticket guests.
Annual passes provide a great way for parks to establish a loyal base of customers. Once you've bought an AP, the marginal cost for you to come back to the park on any day that the pass is valid is... zero. How often would you visit your favorite park if you had a free ticket?
Of course, the visit isn't always free. If parking isn't included in your pass, you will pay for that. And then there are snacks, drinks, meals, and the souvenirs you might buy while at the park. The effectively-discounted admission becomes a loss leader for the parks to spur ancillary spending by their most loyal visitors. Top parks, such as Disneyland, also offer a variety of AP tiers, with varying blockout dates, as a way to shift attendance by some of those loyal, but price-conscious, visitors to traditionally less-visited days at the park, to even crowd levels and maximize income.
But theme parks now have found more effective ways of shifting attendance during the year. With date-variable ticket pricing, parks can encourage visitors to come on formerly less-popular days. And selling multi-day tickets to local residents, in lieu of annual passes, can encourage them to spend full days when they come to the park during the former "slow" season, instead of just dropping in for a few hours whenever. That, in turn, means more spending per guest.
With the per-guest spending gap between annual passholders and "regular" guests growing at Disneyland, I'd like to offer some predictions for the future of Disneyland's annual pass program. Before I do, a disclaimer. Often, when I make "predictions" on this site, I'm actually telling you information that's already been confirmed to me — but it came to me "off the record," so that I cannot report it yet as official, confirmed fact. That's not the case here. This is just me, reading the tea leaves, and drawing what I believe to be a logical conclusion from them. (I hope that my divination skills will prove than Sybill Trelawney's.)
I would not be surprised to see the Disneyland Resort consolidate its current five annual pass tiers to three or fewer, sometime before Star Wars Land opens in 2019. And that Disneyland's lowest-price AP tier will end up costing at least $600. (Currently, the lowest-priced, Southern California Select tier, sells for $339.) Monthly payment plans will remain, but Disneyland will offer more multi-day resident ticket offers as the effective replacement for its lowest-priced AP tiers. Those tickets will have a restriction on how many days they will be valid after first use, in an attempt to prevent the gate-slamming rush of visitors on the tickets' last valid days, as happened this spring. And finally, some of these AP tiers and seasonal resident tickets will not be valid for admission to Star Wars land, when it opens. That will be left for people paying for the highest-priced APs and day tickets, as a way to encourage fans to visit the park using them, instead.
What do you think about these predictions? Got some of your own? The comments await.
Read Robert's column:
Rate and Review:
No matter what happens, Disney will disappoint people. There's just too much demand, and not enough space for everyone. Disneyland needs to get rid of new annual passholders, and only give existing passholders the option to renew. Evenctually, as the number of passholders dwindle, Disneyland can slow down their excessive price increases, and focus on getting people in the gates, and making money off food, merchandise, and hotel revenue, not admission, which is in a way what they're already doing.
"low-spending annual passholders"
How do you predict the holders of lower priced APs and multi-day tickets will be prevented from entering the Star Wars section? Will there only be timed ticket entry into the land, and targeted admission media will not grant access? Imagine the communication that will need to accompany that change.
Rob, I'm guessing that the land's entry points will have what essentially functions as another park entry gate. You'll need to tap in a valid ticket to gain entry to the land, much like you have to show a valid Park-to-Park ticket to get on the Hogwarts Express at Universal Orlando.
So Robert, are you insinuating that Star Wars would be an upcharge, as if it were a 3rd park of the Disneyland Resort? If they did that, I think it would create a HUGE backlash, even more than the limitations USH put on passes before WWoHP opened that eventually had to be rolled back.
It'd be a soft upcharge. If you're paying for a regularly priced single or multiday DL ticket, you're in. If you're visiting on a discounted DL ticket, you're not.
I think that would be a rather ruthless maneuver, and create tons of confusion. I haven't visited UO enough to tell whether the Hogwart's Express issue creates a big mess, though I have personally seen many guests visibly frustrated that they couldn't ride on a single park ticket, only to shell out the upcharge cost because their kids were there expecting to ride. To make Star Wars an upcharge, whether "soft" or standard, would create a PR nightmare unless they truly make it a separate gate, divisible and able to be visited independently from Disneyland.
Disney should obviously eliminate the monthly payment plans.
One way or another, I think a crowd management nightmare is in the bag with SWL.
I think the idea of a dedicated Star Wars entrance gate is interesting. If (and that's a big IF) that were to occur at Disneyland, would that also be the way Hollywood Studios goes?
I'm thinking SWL might be perfectly solved through FP+, and kind of what the new system is designed for. Guests would be required to have a FP+ reservation for the land, which would allow for specific window. The only tricky part would be figuring out how to get people to leave so more guests can come in - would they forcibly remove guests that overstayed their window or simply prevent those guests from accessing the attractions once the window passes?
Personally, I can't wait for Star Wars Land to open. While everyone is flocking to that park/part of the park - my son and I (who are Star Wars haters - not exaggerating - HATERS) - will be enjoying the less congested other areas.
Disneyland's walkways aren't built to accommodate the crowds that Star Wars Land will bring. Disneyland is based on the nostalgia of older visitors and the appeal to younger visitors; their numbers will grow exponentially each year, while the surface area remains the same. No matter what they do, it will irritate people, but it's obvious that changes need to happen. Before long, each day will feel like Christmas day at Disneyland: hours long waits at even the smallest attractions, and even a queue for the bathroom (oh wait, it's already like that!). I love the park and realize that lots of other people do too. Gone are the days of low attendance!
The debate over APs on whether someone is a low or high spending ignores the fact that Disney can't make anyone buy their merchandise or food and they can't even sell them as observed with the long lines. Heck, some popular items like the Groot bread is sold out very early in the morning. The only guaranteed revenue is gate receipts or parking so Disney is either maximizing it or not. Sometimes, it might be a good idea to have bargains for a sale is better than no sale. Disney is leaving money on the table regardless.
I think Robert is on the money with SWL. And Russell, the problem is that what they may have not anticipated is how rabid the SW fans are. They will be nothing compared to the Potterfans. I would be content to going to the Orlando parks and only visiting the Potter areas. There will be Star Wars fans that will travel to DL and WDW to do just that. There will be parents that don't fully understand FP+ that take their kids to the parks just for Star Wars where they cannot experience the attractions at all. Certainly there will be issues at first, but unless something significantly different is done with the current system, there will be issues for a long, long time.
Are we watching an accident in slow motion here, with DLR?
Once upon a time, stockholders could get a discount on admission. Then that was dropped, but stockholders got free membership to the gold card club. It seems that stockholders get nothing now. I understand that owning one share of stock shouldn't give any great rewards, but a tiered system based on the number of shares would be nice. But it seems as if Disney is eliminating the discounts. And I do understand that the demand is part of the reason. Why offer a discount if they can fill the parks at full price?
I look at AP cost slightly different.
Universal decided to penalize one park per day ticket holders by not allowing them to ride their train, so I stopped going to Universal. If Disney slaps a similar upcharge on SWL, I'm done with them too.
A lot of people say that Disney should eliminate the lower tier APs and the payment plans, but Disney hasn't done it. Why? The year after the 60th anniversary would have been a good time to start such a program. They easily could have increased prices on the lower tier passes much more than they have. Why wait? Star Wars Land is only two years away, it would be disastrous PR to institute large increases in a short time.
I'm 99% confident that the AP system as it exists today will not be the system in use in 2019. However, I have no idea what will actually end up happening. At the moment, the two things Disneyland needs to do is discourage visitors who are not profitable for the park and eliminate the unpredictable crowd surges that the park currently experiences. Therefore, my best guess is the following:
I think people should be required to get a microchip injected under their skin to access Star Wars land. Blah Blah Blah. We need younger people's perspective on theme park discussions because you elderly analysts suck the fun out of it and quantify the crap out of everything.
As an owner of a vacation rental property in the Orlando area, I have AP's to all the major parks. I use my properties when occupancy in the area is low. I like a fun night out,and for me and my partner, that is going to dinner in the parks. We use our AP as an entrance ticket , maybe we will do a ride or 2 but the ambience and food is what we are there for.. We leave before the fireworks and a good night is had by all. My expense on the dinners and beverages far exceed the savings for the AP.. BUT if they eliminate the AP I will be less likely to use the parks as a date night out.
That still doesn't answer the question, why hasn't Disney either raised the SoCal AP prices or eliminated them yet? The past price increases have been $20 or $30, they could have easily raised them $40 or more. The largest yearly price increases have been for the highest passes.
I don't see anything wrong with 3 tiers. While I realize the goal is to maximize profits, don't do it at the cost of losing your customer. I still know of friends and family that have not returned after the last rounds of AP changes/increases and the secession of local plans. They have no intention of returning. I know if 3 families that have not been there since 2011.
Counting 52 weeks in a year, a SoCal Select passholder can go, estimating conservatively, 40 weeks. If half of those visits he spends $20 on food, he is spending $400 for the year. A once a year visitor may spend $120 ($10 lunch and $20 dinner) on food for a family of four. So I'm sure a good number of SoCal passholders are spending enough to make it worthwhile for Disney.
"I think it's more prudent for Disney to have a customer base who sees their product as a 'must have' than a once a year or so luxury."
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