Theme park attendance shows the power of Disney's Magic Your Way

May 26, 2016, 11:03 AM · The Walt Disney World theme parks continued to post strong attendance gains in 2015, even as Disney continued to raise prices in the absence of major new attractions at the resort, according to yesterday's 2015 TEA/AECOM Theme Index and Museum Index. If you're wondering how Disney managed to pull off that feat, you need to look back not to 2015... but to 10 years earlier.

Walt Disney World's introduction of the Magic Your Way ticket system in 2005 paved the way for a decade in consistent attendance gains at the Walt Disney World Resort, allowing Disney to take visitors from its Orlando rivals while protecting the resort from one of the biggest economic downturns in recent history.

Although attendance finally dipped in early 2016, according to company reports, Magic Your Way has allowed the Walt Disney World theme parks to succeed as a single unit, where improvements in one park can help drive attendance across all four, even as other parks languish with relatively few additions.

How did Disney do it? Let's look at the math.

Under Magic Your Way the price of visiting a Walt Disney World theme park for the day decreases significantly with the more days you buy on a multi-day ticket to the resort. Disney's one-day theme park tickets grab the headlines — it's easy to incite outrage over a $124 one-day price — but the overwhelming majority of visitors to Disney World are entering the parks with multi-day tickets. And with those multi-day tickets, the price of going to Disney World can drop to as low as $40 per day.

How does this affect other Orlando-area theme parks?

Most visitors to Central Florida come to Orlando to visit Disney. If they do anything else in the area, they will plan those additional visits — to the beach, other parks, shopping malls, or other local attractions — around their days at the Disney theme parks. So the first thing that people will commit to buying is their Disney ticket.

That's where Magic Your Way comes into play. Let's say you start simple — There are four theme parks at the Walt Disney World Resort, so you plan on four days at Disney, one for each park. But you'll be in Orlando for a week. What will you do on those other days?

You could go to Universal. You could go to SeaWorld. You could go to the beach, the Kennedy Space Center, or dozens of other local attractions. But you'll probably start pricing those options to see which is the best deal for you and your family.

Under Magic Your Way, though, the difference between a four-day ticket to Disney and a five-day is just... 15 bucks. That means it costs a visitor who's already committed to spending four days at Walt Disney World just $15 to go to a Disney theme park for another day. No other Orlando-area attraction can match, much less beat, Disney on price for that.

Even going to the beach for a day doesn't seem like much of a deal in comparison, once you figure in the cost of gas to drive there and back. Heck, if you fly to Orlando to stay at a Disney resort hotel and use the free Disney's Magical Express bus from the airport, you probably won't even be renting a car anyway.

For as much as some Disney fans complain about the current state of Disney's Hollywood Studios, with closed attractions and ongoing construction projects, it's hard to make an argument that the park - even in its current state - isn't worth visiting for 15 bucks. (Or even $39, if you look at the upcharge for extending a three-day ticket to visit the other three parks to a four-day to visit all.)

When Walt Disney World introduced Magic Your Way in 2005, it absolutely murdered Universal Orlando. Disney's theme parks showed strong attendance gains that year, while Universal Orlando's theme parks each suffered a brutal 8.5 percent drop in attendance, according to the AECOM report for that year. SeaWorld held serve with a tiny 0.2 percent increase, but things were about to turn for that park.

When the Great Recession hit in 2008, the Disney World theme parks continued to stay positive on attendance, while Universal and SeaWorld Orlando saw their attendance drop. Universal only recovered in 2010, when The Wizarding World of Harry Potter opened at Islands of Adventure, and attendance surged at both Universal parks. SeaWorld, however, was left further behind, suffering a 12.1 percent drop in attendance that year and being passed in overall attendance by both Universal Orlando, from which it has yet to recover, despite holding the line on its top-line ticket prices and offering abundant discounts in the market.

The lesson? With Magic Your Way, Walt Disney World has made it impossible for other Orlando-area parks to compete successfully with Disney on price. The only way to beat Magic Your Way is with high-quality attractions that make people want to give up a deeply discounted extra day at Disney. So long as Disney remains the dominant motivation for people to visit Central Florida, Magic Your Way will allow Disney to undercut any discount strategy by its competitors trying to lure Disney's visitors away from the resort for their "extra" vacation days.

What can a competitor do? At this point, SeaWorld's best friend is Universal Orlando. With Potter, Universal now is enticing visitors to come to Orlando to see Universal instead of Disney, rather than in addition to it. Since Universal has just two theme parks, that helps put a visit to SeaWorld back in play for vacationers spending a full week in Orlando. Once people have spent their two, three, or four days at Universal Orlando, SeaWorld now competes with Disney's more-expensive one- and two-day ticket prices rather than its dirt-cheap fifth-day-and-beyond upcharges for people who already bought Disney tickets. And with Universal selling Orlando FlexTickets that include SeaWorld admission, the incremental cost for adding a day at SeaWorld to a Universal Orlando vacation becomes as cheap as adding an extra day at Disney to a Disney World vacation. It's a "Magic Your Way"-type pricing strategy that helps SeaWorld, instead of crippling it.

That said, the FlexTicket and Universal's emerging role in driving visits to Orlando only helps SeaWorld as long as Universal doesn't get as big as Disney. With Universal moving forward with plans for a third theme park on International Drive, SeaWorld might face another squeeze as Universal visitors choose to spend more of their Orlando vacation days at that resort.

Magic Your Way has allowed Walt Disney World to exercise its market power to cripple its competition. But Universal's success with Harry Potter shows the limits of using price as a weapon in the marketplace. If you create a premium experience, people will be willing to pay a premium price for it, even if the competition is offering deep discounts for loading up on its product instead.

Ultimately, that's the real lesson for SeaWorld or any other potential competitor thinking about getting into the Orlando market. If you want to compete with Disney and Universal, you can't undercut them on price. If you want to compete successfully, you have to outperform Disney and Universal on quality.

If you understand that, then what's happening in these annual theme park attendance reports makes a great deal more sense.

Replies (25)

May 26, 2016 at 12:50 PM · Annnnnnnnd .... Scene.
May 26, 2016 at 1:10 PM · I wonder why Disney is advertising 30% discount for their so called deluxe resorts if their attendance is so high? Why do they feel the need for that? The promotion is already going for a few months and you can still get it...
May 26, 2016 at 1:33 PM · On a slightly different note, I am very excited about this line mentioned by Robert: "With Universal moving forward with plans for a third theme park on International Drive."

I have lived in Florida my entire life, and I have lived in Orlando for the past 3 years. I have visited all the parks here, and I have been a concurrent passholder for both Universal and Disney since moving to Orlando.

Without a doubt, my girlfriend and I get more excited for a weekend trip to Disney than a weekend trip to Universal. A lot of that has to do with the difference in atmosphere between the resorts. Walt Disney simply had a grander scheme (and a lot more money) when creating Disney World, and it shows to this day. However, with Universal Creative's newfound talent (and money), I believe that an entire park on the same level of Harry Potter could be a game-changer.

I sincerely hope we get a "Theme Park Battle" that encourages implementing new, next-gen rides at our local parks.

May 26, 2016 at 2:03 PM · OT: "I wonder why Disney is advertising 30% discount for their so called deluxe resorts if their attendance is so high?

I Respond: 30% off what rate?

May 26, 2016 at 2:08 PM · OT writes: "Why do they feel the need for that (marketing discounts on room rates)?"

I Respond: Maybe so people will direct attention to it in the comment sections of theme park websites. Way to support the cause OT! Mr. Iger would be grateful for your efforts.

May 26, 2016 at 2:34 PM · As a Disney obsessed family, even when we go to Universal we tend to come back and finish the day with a late closing park-depending on the time of year. We enjoy Universal but are only just considering staying on their property but it is for a only a 2 day stay. Coming from Nevada and DVC members, staying elsewhere just doesn't make sense but we have NOT given Universal its due. I want to stay with them and experience them from their perspective. Again, it will only be for 2 days as I have always been able to see each park in its entirety for 1 day each.
May 26, 2016 at 4:20 PM · Excellent article. It's true that multi-day tickets offer an excellent value for your travel dollar. However, so does the Orlando Flex ticket. We will probably be using both on our next trip.

Even though adding a couple more Disney days would have been the cheapest option for us, we always carve out two or three days at Universal. Too many good rides to pass up.

May 26, 2016 at 5:34 PM · Magic Your Way tickets is about pricing three theme parks at such a high amount that adding additional days is an advantage that squeezed out the pocket book of tourists to afford other theme parks. Also, getting people to buy 4 to 6 day trips doesn't give much time for Universal and SeaWorld. Most people vacation for one week. The psychology of the situation changed. Notice how Universal Hollywood is botching the launch of Harry Potter by eliminating the two day or more passes. It forces people to buy single day tickets or Annual Passes when the situation might require more flexibility.
May 26, 2016 at 8:12 PM · "If you create a premium experience, people will be willing to pay a premium price for it, even if the competition is offering deep discounts for loading up on its product instead."

Disney has been skating on it's reputation too long, it allowed Universal to catch up. Universal can make a 3-day multi ticket with Sea World, can it make it 4 days by partnering with Legoland? That would be a true alternative to Disney.

May 26, 2016 at 9:00 PM · Your logic is wrong. This is an example of the typical clueless Robert reporting that TPI is known for.
May 26, 2016 at 10:18 PM · Let's acknowledge that parks have been offering per-day discounts on multi-day tickets long before Magic Your Way. But Magic Your Way simplified and standardized the per-day costs of tickets to the WDW parks, making it easy for anyone to compare the cost of adding an extra day at Disney to the price of doing something else while on their vacation. That clarity allowed Disney to maximize its pricing power in keeping visitors on property throughout their stay in Central Florida.
May 26, 2016 at 11:16 PM · Clueless? I would love to hear your analysis, 166.
May 26, 2016 at 11:58 PM · "Your logic is wrong. This is an example of the typical clueless Robert reporting that TPI is known for."

Completely agree with this!

May 27, 2016 at 12:55 AM · Robert is right. I live in France and when I go to Orlando it is for 2 weeks. A lot of people tell me that I'm a fool (not to say other words...) to buy 14 days tickets at Walt Disney World (we stay in a villa outside) because they think I will pay 125 $/day. Then, I tell them that I pay 455 $ for everything (hopper and water parks and more on the UK website) per peson for 14 days and then their jaw drops... It's less than the equivalent in days for a good ski resort in France (I am talking about only the price to get to the slopes, not with hotel, food, and so on, so it is like a "park ticket"). That is less than 31 $ per day. Even if I don't go everyday it is still a good bargain. Also, if we do something like shopping, visiting other Orlando attractions, we can finish the day at one of the 4 parks without too much thinking about the price. Except the parking.
May 27, 2016 at 2:05 AM · Robert what a great insight. I always read your articles and find them very useful and informative.

I travel from Ireland so I apreciate you view from a european perspective. I read other websites but I always find yours to be very helpful fair and unbiased.

May 27, 2016 at 4:26 AM · I love the way Robert refuses to take the bait from an anonymous hack like Niles is like one of those fuzzy hat guards in front of Buckingham Palace. Throw all the shade you want and he ain't gonna flinch.

Watch this.

Niles is so clueless that at 2 PM on Christmas day in the Magic Kingdom he tells his family, "Come on! Let's get in line for 'Peter Pan's Flight' and then find a spot on Main Street USA to watch the three o'clock parade!"

May 27, 2016 at 5:10 AM · Outstanding reporting!

I am glad that you pointed out the point that not that many people are really paying $124 a day.

It is also a great point that Disney is still the reason why people are coming to Orlando. Any additional days gets split up to Universal, Sea World, and anything else.

Universal has a long way to catch up with Walt Disney World. They do not have the reputation, money, or land to go on offense. Universal is playing for the short term (and doing quite well). Disney is playing the long game. Either way, both resorts need each other to stay fresh.

May 27, 2016 at 6:31 AM · Nice One TH Creative - "Niles is like one of those fuzzy hat guards in front of Buckingham Palace. Throw all the shade you want and he ain't gonna flinch." - hahahahahahahaa....

Robert - Is there any way you can find out the number of AP Holders in Orlando for Disney VS Universal?

May 27, 2016 at 6:42 AM · @TH - :D :D :D
May 27, 2016 at 6:48 AM · If Universal buys Sea World Parks ( SW, Bush Gardens + 3 water parks ) than we would get a fair game. 4 theme parks and 2 water parks for Disney and 4 theme parks and 4 water parks for Universal. Then people will need to choose to vacation either in Disney or in Universal.
May 27, 2016 at 11:25 AM · Flavio: why not. Interesting. However, Disney still have this "nostalgia advantage". I discovered WDW when I was 10 in the mid 1970s. After, I wanted to have my kids go there. And my kids? Maybe they could do the same. My daughter talk about it, jokingly however as she is a teenager. Can Universal build such a momentum with IP like Potter or King Kong? Time will tell. One thing is sure: I will always thanks Universal for having awaken the Mouse in Orlando that was resting on its laurels.
May 27, 2016 at 1:22 PM · Of'course they make it cheaper to spend more days there. More days, more money on food, drinks, cheap plastic crap toys, souvenirs and hotels if staying on site.
May 27, 2016 at 8:55 PM · @Flavio - Not quite fair game, as Sea World, Universal, and Busch Gardens are not a single resort. Getting from Magic Kingdom to Animal Kingdom is an easier sell than getting from Universal to Busch Gardens. On paper, and in the wallet, it may shake out the same. But a 75 minute bus ride (there AND back) really makes for too much work, and far too long of a day.

Even with a dedicated fleet of buses, and/or alternative transportation options, it isn't very user-friendly. That will be the determining factor of how successful a 3rd Universal gate will be. Transportation.

Monorail FTW!

May 29, 2016 at 3:14 PM ·, and your point is.....? Of course Disney makes their money back in other ways. Everybody does that! Why do you think Fastpass was created? You are not in line? Why not eat something in a restaurant or buy a souvenir?
May 30, 2016 at 9:11 AM · My family and I have been making annual trips to WDW ever since our very first trip in 1982. We discovered the joys of staying on property about 10 years ago and have been doing it ever since. Over the years our trips progressed from one day at each park to seven to ten days to maximize the magic your way ticket. Three years ago we extended our stay for four days and visited Universal Studios Florida for the first time in 40 years. We now make two week long trips each year, one to WDW and one to USF. We love everything Harry Potter and we're very surprised at the quality and size of USF. I find it cheaper to buy season passes to USF which was about the same cost as four days. We then visit seven days, plan our next visit within 365 days, and get another seven days on the same season pass.

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