Has Disney found the 'one percent' solution to expanding its business?

February 3, 2017, 10:36 AM · If you suspect that the Disney theme parks have been trying harder and harder over the past several years to appeal to wealthy visitors, you're not wrong. Last week's viral astonishment over Disneyland's new $15,000 private dining experience provided just the latest example of how Disney is trying to extend its customer base all the way to the upper reaches of the one percent.

But Disney's not trying to leave its middle class base behind. With tens of thousands of hotel rooms to fill every night at the Walt Disney World Resort and a collective daily capacity at its US theme parks that can accommodate hundreds of thousands of visitors, Disney needs to book a volume of guests that all the friends of Scrooge McDuck simply can't provide. I wrote about that difficult balancing act in my Orange County Register column this week: Is dinner for $15,000 part of Disney's strategy to court the wealthy?

If you look at the attendance data, Disney's doing a pretty good job of serving a broad audience of wealthy and middle class fans. The company's theme park attendance has been rising for years, with only an occasional blip of a down year here and there. And that's happened as the middle class in America has shrunk over the past generation.

As I wrote in my column, if you're running a middle class tourist destination — as theme parks traditionally have been — and the middle class is shrinking, you've got a tough choice: Accept a shrinking market, or go after wealthier customers.

The trick is to find a way to appeal to wealthy visitors without turning off your base. No-interest monthly payment plans for annual passes and discounts such as free dining plans and resident ticket deals have helped keep Disney visits affordable for many fans. But even as they take advantage of discounts, people still want to feel like they're not getting a cut-rate experience. That's why "behind closed doors" perks like Disneyland's private dining have the potential to work so well. It's private, so it feels exclusive to the wealthy guests paying for it. And being private, it doesn't bother those who are left out of the experience.

Now, if you feel like Disney's appeals to the wealthy are getting more and more extravagant, you're also not wrong about that. I've never been wealthy (yay, journalism career!), but I went to school with people who were. Growing up, when clipping coupons and comparison shopping were just the way we did things, I wondered how rich people shopped. What's the point of looking around when you can afford anything?

When I got to know friends who'd grown up in wealth, I discovered the answer. They still shopped around, but instead of looking for the lowest price, they looked for the highest quality. It wasn't about getting a deal — they could afford any price point. It was about getting the very best of whatever they wanted: the best car, the best stereo speakers, the best computer... and the best vacation.

Of course, that puts businesses selling to wealthy customers into a never-ending race to be that best option. That's why the best luxury hotels are always renovating, adding and improving amenities in order to remain the "best."

And that's why Walt Disney World built the Polynesian bungalows, added a Four Seasons and developed a luxury home community for affluent fans. (Disclosure: As some of you might already know, my mother is a Walt Disney World cast member and sales agent for Golden Oak.)

That's why Disneyland had to renovate Club 33, add theme suites to the Disneyland Hotel... and come up with this 21 Royal private dining experience. Lots of businesses want to land the great whale. But there are so few to land that businesses must compete fiercely for these customers.

Which is my way of saying... that $15,000 private dining experience won't be the ultimate extravagance from Disney Parks and Resorts. Far from it. So long as other hospitality companies keep raising the stakes, Disney will keep trying to top them.

Read Robert's column:

Replies (15)

February 3, 2017 at 11:33 AM · It's true that private shindigs like this ridiculous 15K dinner won't affect the experience of most guests. But Disney, in its relentless efforts to squeeze ever more $$$ from the parks, has been encroaching on the guest experience in other ways. Too many Halloween and Christmas parties. Too many dessert parties hogging prime viewing sports for nighttime events. Too much crowding, capped at a claustrophobic, sardine-can capacity number.

There are limits, and the parks are reaching them. But there seems to be no limit to greed.

February 3, 2017 at 12:20 PM · Disney is going to price most middle class families out of their theme parks. You can't keep raising prices on parking, tickets, food and hotels and customers aren't getting pay raises.
February 3, 2017 at 12:22 PM · Fireworks, parades, night spectaculars are all included in your ticket price. Stop paying for them twice! Say NO to dining packages, dessert parties [sic], etc.
February 3, 2017 at 12:28 PM · And just as I post this, here's Disney's latest price point: A $200 upcharge to skip the lines at 10 popular Magic Kingdom attractions. It's the Ultimate Disney Classics VIP Tour.
February 3, 2017 at 12:31 PM · Disney has always been my favorite vacation spot. But I also see things about Disney that irritate me. Yes, their greed is one of those things. $15,000 is a bit out of reach for more than 99% of the people. The snobs that would pay that just don't impress me. If someone has that much money to throw away on dinner, they make too much. Disney seems to be hurt by ESPN. I never watch ESPN, and probably never will. I don't even like the Disney Channel any more. I'm tired of seeing all the advertising throughout the parks... e.g., "Sponsored by..."

You mentioned quality... Don't even try to convince me that the stuff people buy in Disney are "quality". Why can't they have some trading pins "Made in the USA"? They probably pay 20 cents for the cheap ones and still try to sell them for BIG bucks.

But I can't blame Disney for wanting more money. They have to pay their executives ridiculous salaries.

February 3, 2017 at 12:41 PM · Robert: You said, "A $200 upcharge to skip the lines at 10 popular Magic Kingdom attractions." That's $20 extra per attraction. If I am in line and someone gets to skip the line because they're rich enough to be a snob... maybe that's a good reason why I shouldn't be a Disney Fan. It's still the same show.

One time I went to the Polynesian Dinner show. After the show we went to catch the bus back to a park. After waiting about 15 minutes, a bus came and a lot of people crowded line saying that they stay in this hotel and they get priority... and they cut in line. Yes, they were dressed in gowns and expensive suits. As a guest, I don't like that attitude, and I see Disney accepting of that. Money talks. At this rate, they may really irritate the average guest, and be way out of reach for less fortunate people.

Pop Century is a value resort. Art of Animation is also a value resort, but it's a LOT more expensive. It should have been developed as the other half of the Century as it was originally planned. Why pay so much more. OK, I haven't stayed in Art of Animation (yet). Do they really offer anything worth the difference in price?

February 3, 2017 at 12:57 PM · You got a point Robert: "behind closed doors" perks as you wrote offer the exclusive experience without bothering the others. The $200 VIP tour is a lot less "behind closed doors" of course, but should not be too annoying if they don't sell too much of this one (the price should be a limit factor by itself). Perhaps this is the "price to pay" to see ambitious developments as I have the feeling that attractions budgets have skyrocketed like Hollywood movies. Pandora is a hundreds of millions of dollars project for example. Of course it is more advanced that the "old rides". Is there a possibility to know how much these "perks for the 1%" add to the bottom line of Disney parks? Just to see if these really help to have new rides...
February 3, 2017 at 1:12 PM · When you say that the middle class is shrinking, does that mean that more people are getting richer, or getting poorer? I agree that things like the annual pass payment plans make Disneyland more affordable, but the biggest problem there is overcrowding.

If Disney really wanted to solve the overcrowding problem, they should have built the third theme park. Yes, I've heard arguments about infrastructure being built first, but they did it when they built DCA. And yes, I realize that a third theme park would mean an increase in prices, maybe at least by a third, but this would still have been the best solution.

February 3, 2017 at 1:30 PM · Has the middle class shrunk or does the definition need to be updated? I think the later.
February 3, 2017 at 1:38 PM · So according to George Brungot one should not be rewarded for their efforts. So a business owner with a successful business should be capped at what they can potentially earn? Apparently that number is somewhere below what one must earn to view a $15,000 dinner as affordable (please note that dinner is for 10). Yeah...talk about an economy killing idea my friend. Take away the incentive and there will be no point to opening a business, working hard, growing your business and creating jobs.

If someone can afford the $15,000 dinner (I can) and they feel there is value in what they will receive (I don't) then that doesn't make them so be it, they don't deserve the rude label of being a rich snob. They should be applauded for their success, not publicly shamed.

February 3, 2017 at 5:03 PM · Unpopular Opinion: I cannot afford experiences like this at all, but I think they make sense.

I'm referring only to special experiences. Here's how I see it: Disney is, first and foremost, a business. It needs to be able to turn a profit. I think Robert is right that they middle-class they once appealed to is shrinking. We, the theme park community, constantly push for bigger, better, and more expensive attractions and areas. So, they're left with only a few options.

They could ignore that push, quickly rendering them obsolete within the industry.

They could boost ticket prices even more than they have been to make up for the costs. Fewer people would be able to go, which would in turn drive prices up even higher to make up for losses. Eventually, This would completely shut out everyone except the ultra-rich, which is something neither Disney or its fans want.

Or, they could have experiences like this. It's a way for them to turn a profit by using the ultra-rich to their advantage without destroying the parks for the rest of us.

February 3, 2017 at 6:15 PM · That's a good point, DPCC. In my post above, I said that 15K was ridiculous, but if rich people want to squander money, that's their business. At least it doesn't encroach on the guest experience, unlike the other examples I gave.

I just hope most of that money goes back into the parks, not just into executive's pockets.

February 4, 2017 at 10:38 AM · Man, if you don't have the money to spend on these additional experiences there is a lot of hate around here for those that do. Why punish those that can and are willing to spend the money on a $15K dinner? Or $200 worth of front of the line passes for that matter. Call them snobs, squanderers, or dumb all you want. If a man or woman earns enough to afford these things (and no it does not mean they earn too much) then let them be. They can enjoy their perks and Disney will profit the way it should...as a business.
February 5, 2017 at 3:53 PM · I don't get it. These parks where always successful, well maintained and had new rides regularly without all the dlc and paywall stuff. But now, all at once, due to the middle class extinction they are forced to do these "pay-to-play" practices.
On the other hand Universal is adding rides and having amazing profits quarter after quarter, year after year.
February 5, 2017 at 11:07 PM · You know that 200 Million new attraction you will love? Every overpriced souvenir, every up-charge event, every $3000 a night bungalow, whatever, that all helps pay for it, while adding little to park crowding.

If Disney only charged Six Flags pricing, then they would only be able to build Six Flags level attractions, because where would the money to finance spectacular new things come from?

I say bring it on - why not a $100 000 dinner - or even a $1 000 000 dinner - that will help pay for attraction expansion in a hurry. I will then pay $50 a day on a multi-day ticket, choose not to pay for any of these "extra" things (which no will will force me to) , and be amazed by the new Disney wonders other very rich people have effectively subsidized for me and you both.

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