Is There a Future for Disneyland's Annual Pass Program?

October 23, 2020, 9:34 PM · This week, the Tokyo Disney Resort announced that it is ending its annual pass program — at least for now. Could this provide a glimpse of the future at California's Disneyland?

The home to Tokyo Disneyland and Tokyo DisneySea has been conducting a lottery to determine which annual passholders may visit the park on any given day, due to overwhelming demand while the parks' capacities are limited. The resort will stop conducting the lottery for assignments after December 2020 and will begin issuing refunds for pro-rated annual passholders. The resort also will not extend annual passes for the period that the parks were closed, as it had offered during the pandemic shutdown.

Tokyo Disney said that it will provide an update on the future of its annual pass program by the end of March 2021.

The Walt Disney Company does not own or operate the Tokyo Disney Resort. The Oriental Land Co. operates the resort under license from Disney. But Tokyo Disney's location in one of the world's largest cities and its dependence upon a mostly local audience sometimes make its operation a better reference for California's Disneyland than Florida's Walt Disney World Resort, which is driven largely by out-of-market visitors.

With capacities reduced due to the need to promote safe physical distancing during this pandemic, theme parks would much rather have those valuable spots taken up by freer-spending guests on day tickets rather than annual passholders. That's why it has been easier on some days to get a reservation under Walt Disney World's Disney Park Pass system as a resort guest or day ticket holder than as an annual passholder. Disney never wants to see a resort guest blocked out of the parks because of annual passholders.

Many Disneyland fans have been wondering how the company would handle APs once the parks in California reopen. This week's news from the state of California suggests that a reopening might not happen for months, which leaves Disney plenty of time to make a decision. But if what is happening in Tokyo provides any guidance, Disneyland might just decide that going without annual passholders — at least for a while — provides the path of least resistance for its operations.

After the state of California this week announced its reopening rules for theme parks, Disneyland sent its annual passholders an email saying "we will have more to share with you on the future of our AP Program soon."

Disneyland has suspended the collection of monthly payments on annual passes while its parks are closed. Since Disney is not selling or renewing passes, more and more annual passes are expiring as the closure continues. Disneyland offered passholders the opportunity to call in and postpone their monthly payments until the parks return, effectively extending their pass by the number of months that the parks were closed. But since Tokyo Disney just pulled that opportunity, it's possible that Disneyland could choose to do so, as well.

If Disney were to do pull that trigger and the California parks remained closed through March 2021, the resort would not have to officially cancel its annual pass program, as Tokyo did. All Disneyland APs would have expired by then. The only task left would be to refund those passholders who had paid in full and not yet requested refunds.

The elimination of annual passes would simplify greatly managing who could visit the Disneyland theme parks when they return. Disneyland would not need to implement a passholder lottery or endure the website-crashing crush of annual passholders looking to book spots under a Disney Parks Pass reservation system.

Nor would it have to deal with the fallout from passholders who had bought higher-priced passes than the Disney Flex Pass, which was the Disneyland annual pass that required making advance reservations for most days. Part of the appeal of the Deluxe, Signature, and Signature Plus APs was that you could visit on any valid day and did not have to make a reservation, as you did with a Flex Pass. If Disney started requiring reservations for all passholders, people who had bought those higher-priced passes were going to complain that they were paying for a feature they were no longer getting.

Disneyland avoids these issues if all of its APs (or even the vast majority of them) simply go away. And if capacity limits are to continue in California indefinitely, getting out from under AP obligations would allow Disneyland an opportunity to see what its visitation base looks like without passholders... and whether it needs to add a rebooted AP program to fill the park or not.

No matter what Disneyland chooses to do in the future, it appears that many thousands of Disneyland annual passholders already have seen their passes expire, changing the mix of who will be looking to get into the parks whenever they do return.

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Replies (7)

October 23, 2020 at 10:55 PM

“ All Disneyland APs would have expired by then. The only task left would be to refund those passholders who had paid in full and not yet requested refunds.”

Am I missing something? My understanding is that AP’s will be extended for the length of time the park has been closed, and therefore not expire at a set date.

October 24, 2020 at 11:48 AM

Annual passes have long been guaranteed income for Disney, but as you argued, discontinuing or postponing the program would simplify the process of limiting attendance. The eternal argument is who spends more, the day visitor or the AP. I would argue that the AP, especially the die hard Disney fan, spends more over the course of the year. The die hard fan probably often dines in the restaurants and buys collectibles. The casual AP probably goes to the parks less frequently, but his AP cost is still in Disney's bank, so his spending is probably a toss up. If Disney does suspend the AP program, the other thing to consider is that Disney is probably not in a position to raise prices, especially for as long as the pandemic lasts, and maybe longer. Less people are going to be able to afford Disney.

October 24, 2020 at 1:24 PM

Before all this, Disneyland had a plan to revamp the AP system after Avengers Campus opened. From what I could tell, the Signature tiers would remain unchanged, while Flex would replace everything else (possibly with a second value flex option that had more blackouts and/or no park hopping). I wouldn't be surprised to see something like this happen once the resort feels ready to start selling passes again. While I don't know that APs will be available once the resort reopens (and I'd personally be surprised if they were), I'm pretty confident the program isn't going away permanently. With about 3/4 of the resort's guests being So Cal residents and consistently having around a million passholders, it would be foolish to end it.

What I think is more likely upon reopening is that they'll sell tickets good for a certain number of visits before the end of 2021 with no restriction on when those visits occur (subject to reservation availability, of course). Essentially, think of something like the So Cal discount tickets, but available for all visitors. Once they've got a good sense of demand and capacity allows for restoring APs, it will happen. However, they probably need a capacity cap of at least 50% (if not 75%) to even consider that without risking a lawsuit due to passholders not securing reservations.

As for current passholders, if they can't open in the near future a prorated refund is really the only viable option. Holders of unused tickets will more likely be able to apply the value to a future ticket purchase than refunding it. That said, I have heard whispers of a plan to allow Disneyland guests to exchange unused tickets for the equivalent ticket to Walt Disney World in 2021, which would be a great way to spite the state.

October 24, 2020 at 3:31 PM

I am an annual passholder, and I called to extend my expiration date to match the length of the closure. So I would like to see Disney put the AP program on hold, rather than discontinue it. If attendance can go over 75%, let APs back in. Up to that point, AP holders can either pay the same price as the day visitor on a separate ticket or be given a discount, with reservation required. Kind of like the Taste of Knott's, where season passholders still had to buy a separate ticket, but were given a discount. Just brainstorming here.

October 25, 2020 at 3:44 PM

Disney Parks has continually danced around the edges of becoming a fully integrated "all included" vacation, but post-COVID, we may see them more fully take the plunge. Consider Disneyland, which obviously has a much larger local audience base and relies somewhat less on out-of-market visitors.

Estimates place a "normal summer day" at Disneyland at about 60k guests; for the sake of discussion, let's put just half that many at DCA, for a total "normal" headcount of 90k. Now knock that down to 25% capacity for COVID, and you get just over 20k between the two parks.

Disneyland doesn't have anywhere NEAR the hotel capacity to fill 20k "guest slots" in its parks, and that's where you can start to see a new model emerge.

Between its three hotels, Disneyland offers 2,490 rooms. If we presume an average 3-person booking per night, that's just under 7,500 guests per night staying "on property," or less than half the parks' reduced capacity. So your "first class" guests will become those staying on-property, and I could see Disney moving to include park admission in the room rates (as Disneyland Paris does). I could even see your "Park Pass" reservations being made as part of your room booking, giving you a strong reason to stay on-property and book early.

This actually puts the nearby "Good Neighbor" hotels in a difficult position, because there's now going to be a lot of reason to NOT stay "just off property." That might even diminish the value of those businesses to the point where Disney could snap them up and build their own "value resorts" instead, perhaps eventually doubling the company-owned hotel inventory and filling 15k guests per day from their own beds. Again, this is a fully integrated sales experience: one purchase gets you your room, your tickets, your Park Pass days, and everything. Costs for PhotoPass and everything else would be baked in. FastPass might well become the norm for all guests, moving to a more-virtual queuing system to avoid long, physically distanced queues.

That leaves a small number of day guests, who'd be at the whim of the Park Pass system. Indeed, I could see tickets and Park Pass becoming fully integrated, where you simply buy a ticket for a specific park, for a specific day, and can't use it elsewhere or elsewhen.

Room rates might even grow to include a version of the Disney Dining Plan, as is often the case at WDW. One all-inclusive rate gets you EVERYTHING, leveling out and somewhat guaranteeing guest spend and making a more predictable revenue pipe. Even without purchasing the nearby motels and hotels, Disney could more or less force the "Good Neighbor" hotels into this program, by simply selling them date-specific tickets to resell to their guests. Run a 100-room motel? We'll let you buy up to 100 tickets per day, with no refunds for unused inventory. Oh, and those tickets include the Dining Plan, too.

At some point, once you've basically forced everyone to buy a ticket and a room and their food in a single package, you move the park turnstiles to the Harbor and Downtown Disney entrances, making Disneyland and DCA a combined park. After all, you no longer need to "justify" the cost of a day ticket or upset "park hopping," because you've combined all of a guest's expenses into one, difficult-to-deconstruct price.

Slow season? Fine, dump some of the unneeded tickets back into the "Day Guest" pool. But Disney's gotten pretty experienced at minimizing "slow seasons," with special holiday events, festivals, and whatnot encouraging visitors—even from out of market.

Yeah, the cost of the Disneyland vacation would become even more expensive—but there are people who can afford that, and they'd end up being the guests who get in.

October 26, 2020 at 8:22 AM

Given California's million-plus AP holders, and pent up demand, limiting park capacity at DLR would be problematic at best. Of course Disney would want to reopen in Cali as soon as they're permitted to, but they would first need to figure out how to control the mobs at the gate.

October 26, 2020 at 11:15 AM

Don Jones, nice scenario, but it's too much of a fantasy movie, only based on actual "abnormal" Covid-19 visitor numbers.
When the pandemic is over, it would become obsolete.
You always have different categories of visitors, that's not part of the park, that's part of the world as the world is. Excluding 3 categories of the classic 4, would be lunatic (from a commercial viewpoint).
Cheers

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