Universal's strategy is pretty good, too, but not without its flaws. The new coaster and HP lands should draw fans, but will they be worth traveling from afar?
When it comes to discounts, the ones we watch for are usually hotel-related.
Perhaps they could learn a few things from some amusement parks, many of whom saw increases last year despite high fuel costs and sagging economic conditions. They did so because they don't have the luxury of deep pockets, and had to learn how to manage the money they had, while still being competitive.
So then, what does all this bad news mean? Well, it means Disney will have to continue to toe the line, cut costs, stream-line operations, and focus on the things they do best: provide unmatched hospitality and exceptional customer service. In fact, the quality of a visitor's theme park experience may actually improve in a down economy. With unemployment on the rise, Disney has an over-abundance of quality cast members who are staying put because better opportunities are few and far between right now. So, for those who do make it to WDW in '09, I think they will have maybe their best visit in years.
And the discounts ARE good enough right now that people are more likely to go ahead and take a trip. I for one debated furiously over spending a week in Orlando later this year, before finally deciding next year will be better after the Space Mt refurb is complete. My point is that I was dead set against travel until the 4 for 7 deal was announced and extended (now through mid August, btw). I may yet change my mind if the 4 for 7 gets extended further into the fall. We'll have to see...
So I tend to agree with Josh, I think Disney (and Universal) are really taking the bull by the horns in this market, and doing everything they can to weather the storm (that's a lot of cliches for one sentence!). And as you wrote about the regional amusment parks: in the long run, WDW (and Universal) will offer an even better theme park experience because of the belt tightening lessons they are learning today.
And one last note: it is not all rosey for the regional theme parks right now either. While attendance is up at some regional parks, per visitor spending is down...so having more people is not really translating into increased revenues. In fact, my local park is selling their annual passes at their lowest prices in years, despite the fact that they are adding a new coaster. Regional parks may be used to operating within a tight budget, but they can't be happy about the way things are looking economically. No one is escaping unscathed in this devastating market (except Wal-mart and McDonald's, unfortunately).
In this situation, I think of Disney as the rich guy who used to have all this money to spend and doesn't now, but still has a mansion and a lot of bills to pay. I think of amusement parks as the middle class who have to watch their spending, and have to spend wisely when they actually do it...thus making them experienced in handling the lean times. I suspect that we will see what some of these companies are made of in the next year or two.
Seriously, while I don't argue with your points on the surface, I do argue with your notion that Disney just throws money away like a chronic gambler in a Vegas casino. I think Disney, while bloated with excess profits over the years, is fiscally responsible for the most part. Sure there is fat to be trimmed, but the the giant of the industry has a very long way to fall before they are truly hurting (honestly, if they fall that far, then all the other parks will already have gone under completely). And just because Disney has farther to fall than Six Flags does not mean that fall will actually occur. There are some pretty smart business folks working at Disney, and they are adjusting quickly to the new economy. Things will stabilize eventually and while you may not see any expensive additions like Everest or Toy Story Mania for a few years at WDW (DLR on the other hand is getting a flood of expansion of the next few years), the Florida parks will still be top notch and the experience will still be worth a week of your vacation time. Not to mention that spillover from Manta and Rip, Ride, Rockit in 2009 as well as Harry Potter in 2010 will ensure a steady stream of business for WDW without spending a single cent on expansion.
And we can't let Cedar Fair off the hook completely, can we? What are they adding to their flagship property this year or next? I haven't heard a single official announcement. Perhaps GCI has visited the park, perhaps not, but it is doubtful there will be anything new in 2009 except maybe a few rehabs and show changes. So while some of the peripheral CF parks are getting economical additions, Cedar Point is just as stagnate as WDW right now.
Regardless of prior earnings expectations, ALL the theme park companies are feeling the pain of this recession.
The recession is here, and you are right...all of the parks are being affected. What I'm saying is that the big theme parks will be affected more than the amusement parks. Disney may not be wasting money, but their "magical experience", which is the product that draws so many visitors...costs them a lot of money. By comparison, the average amusement park's operating costs are much less. They have been discounting tickets for a long time, and for many it's pretty much built into their budget to do so. Disney is used to people forking over thousands for a few days on their property, and the word discount has never been part of their vocabulary. For now, those spending days are over. Disney faces the challenge of maintaining their product while trying to maintain their bottom line. It isn't going to be easy.