What will the future hold for Disneyland's annual pass program?

June 8, 2017, 9:55 AM · 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.

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Replies (28)

June 8, 2017 at 10:23 AM · 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.
June 8, 2017 at 10:35 AM · "low-spending annual passholders"

While I understand where you're coming from, I think there are 2 sides to that coin. Passholders may not spend as much on each individual visit, but depending upon how many times they actually visit the park, they may be paying more than a day guest just to walk through the gate. Most annual passes require a guest to make 5 or 6 visits just to break even compared to paying the gate price every time you enter the park. I would contend that there's a significant percentage of annual passholders that never break even on their annual pass (probably just as many or more that use their APs to the extreme by going 20+ times). I would also contend that those "super users" that visit 20+ times a year are the ones that buy the most expensive souvenirs and purchase extravagant meals at least a few times throughout the year. Day trippers are not buying $200+ Mickey jewelry or spending 2+ hours eating
a 6-course meal with a bottle of wine at Carthay Circle.

So let's put it in numbers...I'd guesstimate that about 20% of the passholders don't break even on the cost of their pass and another 20% that pay what amounts to 25% of the gate price to enter each day throughout the year, but make up for it by purchasing extravagances. So you've got 60% of the passholders that visit enough to reduce the per visit admission 30-50% below the gate price and probably don't make up the full difference through in-park spending. However, those AP-ers form a guaranteed revenue stream that Disney can invest and make money off of for a full year (yeah yea, there are some that are on payment plans, but for the sake of argument let's forget about that since Disney seems to be phasing those out).

I think Disney should maintain their AP tiers with school-year weekday passes (prohibiting Friday entry after 4 PM) representing the "Value" tier, Full-year weekday pass representing the "moderate" tier, and an everyday pass representing the deluxe tier. The 2 lower tiers could gain weekend and Friday evening admission as a pre-reserved, select your day, upcharge (subject to availability and could not be purchased day of entry). Also, passholders should be given in-park discounts based on their tier level (value gets 10% off souvenirs and 5% off food, moderate gets 10% of souvenirs and 10% off food, while deluxe gets 15% of souvenirs, 15% off food, and free parking).

June 8, 2017 at 10:40 AM · Math's back on the menu
June 8, 2017 at 10:41 AM · 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.
When I visited USJ there were Express style tickets for WWOHP entry I seem to remember that there was a stand by line too, but I may be mistaken about that.
I agree that the AP program needs to be tightened up. The quickest way to thin the herd however would be to stop the payment program. That would be extremely unpopular, and would take a year to from initiation to make an impact, but it would keep a lot of families from participating.
June 8, 2017 at 10:46 AM · 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.

This is spitball stuff within Disney at this point, but if I were charged with trying to keep park attendance manageable while maximizing revenue, that's the approach I would suggest taking.

June 8, 2017 at 10:53 AM · 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.

I think the elimination of payment plans (unless they includes interest) would thin the herd a lot without making huge waves. Then a refocusing of the tiers to simplify while restrict use to limit weekend and Friday night crowds is the way Disney needs to go. They also need to throw in more "carrots" to make the highest level AP more valuable. If I'm shelling out $1,500 for an AP, I want to feel like the parks are like a second home, and those passholders should be given exclusive (though not to Club 33 level) access and perks that lower tier APs don't get.

June 8, 2017 at 10:58 AM · 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.
June 8, 2017 at 11:09 AM · 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.
June 8, 2017 at 11:44 AM · Disney should obviously eliminate the monthly payment plans.
June 8, 2017 at 12:00 PM · One way or another, I think a crowd management nightmare is in the bag with SWL.
June 8, 2017 at 12:06 PM · 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?

And a related thought - why didn't Animal Kingdom do that for Pandora? Seems it would be a good test bed for something like this down the road that will affect TWO parks.

Regarding the overall point of the article, I definitely think Disney needs to revamp and reduce the options for passholders, while at the same time, increasing prices. Sure, it'll reduce the guest count, but that will make for a more comfortable experience, and if you're able to afford a more expensive AP, you are probably (I'm guessing) the type of person who has enough money to spend on souvenirs and meals.

June 8, 2017 at 1:04 PM · 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?

Nonetheless, they wouldn't need to charge anyone, and could use FP+ as a way to manage crowds. Honestly, that's how I thought they would manage crowds in Pandora, but it seems they're just doing it the same way Universal did with WWoHP by creating a physical queue at the land's entrances.

I think physically making it a separate gate from Disneyland (or DHS) would be logistically difficult and would require significant construction to allow direct access to the back corners of each park. Perhaps they could work it like Ferrari Land at Port Adventura which is a "park within a park". While people won't like having to pay extra to get into Star Wars Land, they most certainly will. The question would be then how much could Disney charge to get into SWL. I think guests would pay upwards of $75/person (on top of admission to DL/DHS) to enter SWL, and they'd still have issues with crowd control on busy days.

June 8, 2017 at 1:45 PM · 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.
June 8, 2017 at 1:58 PM · 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!
June 8, 2017 at 2:21 PM · 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.

Disneyland itself is overdue for infrastructure spending. I'm not talking about the new Star Wars Land, which actually is a good thing if they succeed in increasing park capacity by at least 10 to 15%. Disneyland needs wider walkways with less pathway obstructions like planters and trees. Much decorations are unneeded with the flood of humanity. Clear out the Hub planters/trees and Tomorrowland People Mover/Astro Orbiter for better fireworks and parade viewing. Adventureland/Frontierland are horribly congested and in need of a solution. Utilize the treehouse as overflow Standby wait queue for Pirates.

Time to increase bathroom sizes.

My trip to Tokyo DisneySeas was instructive on how they managed to make a park seem spacious with a lot of people. Have more ways to divide the attention of people so they aren't in one spot only.

Disneyland must keep expanding capacity. They need the growth and customers from all income ranges.

The APs are due for consolidation as well as a good locals admissions pass, but Disney wants a crowded park regardless. Any fix to the AP should not decrease attendance.

June 8, 2017 at 2:38 PM · 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.
June 8, 2017 at 2:55 PM · Are we watching an accident in slow motion here, with DLR?
June 8, 2017 at 3:46 PM · 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?
June 8, 2017 at 4:36 PM · I look at AP cost slightly different.

If you pay for the AP outright then it's the cost divided by the number of days you're allowed to use it.

If you purchase the AP on their monthly 0% financing plan then it the monthly cost divided by the number of days that month you are allowed to use it. You don't get to claim the full cost until you've paid it!

Either way the AP holder just by the shear number of days available pay little compared to the vacationer that buys daily tickets. Now if they don't use all of the days then that's simply their own fault and problem not Disney's.

Go to any of the Disney related forums on Facebook and watch all of the AP holders claim they pay way more than daily ticket buyers and are basing it on their FULL AP cost compared to a 4 or 5 day ticket.

June 8, 2017 at 6:18 PM · 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.

At a recent business party, Brian L. Roberts, CEO of Comcast, and Bob A. Iger, CEO of Disney, were rumored to have uproariously shouted the same infamous quote at the same exact time: "The point is, ladies and gentlemen, that greed, for lack of a better word, is good."

It was a mirth filled moment that led to much laughter and rejoicing among the gathered stockholders.

But somewhere in the darkness, just outside the party, where so many of the elite had gathered to feast on the fatness of ever growing profits, a starving dog howled and limped away in despair.

June 8, 2017 at 10:20 PM · 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 would argue that Disney wants the big crowds, even if they're made of lower paying passholders, they are just trying to figure out how to manage the crowds. I can't say for sure whether big crowds mean more souvenir and food spending, but it would make sense. Yes, some cheap people don't eat in the parks, but maybe spending is proportional to crowd levels.

As someone mentioned, there are probably a good number of people who don't take full advantage of their APs. Those people may not buy an AP at all if the price was too high.

I noticed that Disneyland has been less crowded in the past couple of weeks before the SoCal select pass is blocked out. With the TEA/AECOM attendance figures reporting that Disneyland attendance was down 1.8%, it may not be a good time for Disney to further discourage AP sales.

June 9, 2017 at 12:06 AM · 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:

-Eliminate three of the current five tiers. The two So Cal passes will be eliminated completely, as will the Signature Plus. The remaining passes will remain mostly the same, but Signature will now allow one visit during the two week winter break period.
-In place of the lower tier passes, offer 5 and 10 visit annual tickets. These tickets can be used for 365 days from first use and can be upgraded to a pass if desired. By default, the tickets are only valid at one park per day, with hopper tickets available at an additional fee.
-To prevent Star Wars Land from becoming overwhelmed, for the first year after opening, all APs are required to wait at least two weeks between Disneyland visits (one exception may be made with a confirmed hotel stay, which allows up to 3 days of Disneyland admission within a 5 day period). In addition, the Deluxe pass and annual tickets would be DCA-only on weekends and holidays for the first few months after Star Wars Land opens.
-Lastly, Star Wars Land will be reservation only at first. Reservation times will be distributed on a first-come, first-serve basis inside the park. Guests will be able to select a two hour return window in which they may enter Star Wars Land. Once inside, guests may remain as long as desired, but re-entry is not permitted. If the land reaches capacity, guests will be permitted to either wait in a standby line upon returning or trade their reservation for an admittance pass to any attraction at the resort. Lastly, guests staying on property will have guaranteed access to Star Wars Land and may make entry reservations upon check-in.

June 9, 2017 at 6:42 AM · 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.

Walt built this for ALL people to be able to enjoy it. It's not always about the money. If that is what it has soley become to the current leadership than we need new leadership with a new perspective.

June 9, 2017 at 10:02 AM · 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.
June 9, 2017 at 1:16 PM · 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'm assuming that Disney has a plan in place, if they were going to increase prices on the lower passes, it just makes sense they would have started increasing them two years ago. It would not be smart now to go from $339 to $600 in two years, that would cause a big backlash.

I have no inside knowledge, but it seems like Disney wants to keep the SoCal passes to fill the park on slower days. Yes it's a mad house on some days, but I think it would be smarter for Disney to thin the crowds other ways besides eliminating the SoCal passes. If you eliminate those passes, I think you would see a LARGE I mean LARGE drop in pass sales.

Same with the payment plan. The easiest thing Disney could do is to charge interest. Again, they haven't done that. Maybe they will now, but the payment plan must be adding a lot more pass sales.

Disneyland has some set operating costs, for example, they have to run all the attractions every day. The fluctuating costs are probably labor, they schedule more or less according to the expected crowd level.

The two assumptions people make is that the passholders who have the lower passes are cheap and spend less and don't buy food in the parks. But if Disney is going to run all the attractions anyway, they might as well fill the park with people who, potentially at least, may buy or eat something extra. There are probably some uber fans who have SoCal passes and buy lots of stuff. When they sold out of the Rose Cups and Pirate Cups and had long lines at the Red Rose Taverne, do you think that was only the higher pass levels? I don't think so.

A SoCal passholder who comes in the evening to enjoy the park, watch the parade/fireworks and ride a couple of rides and may eat dinner is not going to add that much more, if anything to the operating costs for Disney. They're already running the rides, etc. The only increase in costs would be more labor to control the crowds.

I also think that a significant number of people don't take full advantage of the value of their APs. The people who read this web site are probably the ones who visit the park often, but not everyone is a Disney nut who visits once a week or more. Disney is probably making money off those passes, like people who buy gift cards but don't use them for one reason or another.

It seems like Disney is taking a measured approach to increasing prices and thinning the crowds. A 1.8% drop in attendance last year, yes it may partially be because of Star Wars Land construction, but price increases may also be the reason.

As for Star Wars Land, maybe Disney is going to use the Maxpass to control the crowds. Maybe they will eliminate paper Fastpasses and make Maxpass like the extra charge front of the line passes at other parks.

I know people are going to cry if that happens, but severely limiting Fastpasses may actually be a good thing. Make it only for people who want to pay extra for it. Make the 'regular' people stand in an old fashioned line and relieve the crowded walkways. Actually, last week I stood in the standby line for Star Tours, and stood still for it seemed like 5 minutes at a time while Fastpass holders passed me by. Not a good experience, if I'm going to stand in line, I at least want it to keep moving, not stand still.

I would pay $10 extra, maybe even more for Maxpass to get into Star Wars Land when it first opens, if they limit other Fastpasses, it's better than paying $150 for a preview party.

June 9, 2017 at 5:28 PM · 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.

If you examine it carefully, it is not fair that out of State APs have to pay at once so I do think its fair to create a level playing field and cut the payment plans completely.

APs should have some type of additional incentive to stay in the parks such as a PRIORITY website/mobile app for reservations and 20% on dinning. It cost very little and enhances the customer experience. At one point I was and AP my merchandise purchases were restricted to World of Disney. If this has not changed they should open it resort-wide. That would generate the purchase that they are seeking from APs.

As for SWL, I have to stick with a level playing field, do not block APs simply lower your AP access days for 2018-2020 and require 10 day advance reservation based on availability and restore those days and lift the restrictions in 2021. (like the deluxe used to be 315 days, lower it to 280) Don't raise prices. I also did not feel inconvenienced on blackout restrictions either because they were during time frame where I did not want to go or could not go. That's the benefit to the AP, you know upfront when you can go. They already know when they will have crowds. It also means that more people will purchase regular passes in lieu of AP that year. Raising prices does not always mean angry customers. Sometimes you can price people out of your market altogether and Disney needs to avoid that at all costs.

June 9, 2017 at 11:04 PM · 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 anyone who buys a Disney AP must be a fairly big Disney fan, because I have rich friends who can afford the pass but still think it's too expensive, but I think the real reason is that they're not that into Disney, and would rather spend on other things. But if you have a SoCal passholder who's a big Disney fan, he probably will spend on collectibles, pins, Vinylmation and the latest cool cups and popcorn buckets. I don't think Disney can afford to lose that market.

I think a more accurate profile of the SoCal passholder is a middle class person whose schedule is flexible, or likes to come to the park on weekdays after work. The higher pass levels are people who still like Disney, but whose schedules are not flexible, and can only come on the weekends. The SoCal passholders are not necessarily more cheap, it's just that their schedules allow them to come on the weekdays.

I'm a fairly big Disney fan, if you couldn't tell, and I see my SoCal annual pass as a 'must have'. But if the price was doubled or if I was forced to get a Deluxe pass, I might start seeing it as a luxury. 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.

June 12, 2017 at 11:18 AM · "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."

I think I mentioned this on another thread. I strongly believe that Disney would like to be seen as a luxury brand. While it's nice to have that guaranteed stable revenue coming in every year from AP holders, Disney would much rather have that foreign visitor that will spend the entire day at the park and perhaps stay a few nights or more in a resort hotel.

I think at the very least, Disney needs to blackout Friday evening entry, with the compromise of allowing AP holders to purchase a certain number of discounted (maybe $20/visit) "upgrade" passes that allows admission on Fridays, Saturdays, Sundays, and other holiday weekdays as long as visiting days are locked in at least a week in advance (subject to availability).

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