Disney price increase hurting Universal & Sea World

[Mouseman]

I found this on Orlandosentinel.com. He brings up some very good points. It will be interesting to see how it plays out. Any opinions?



Disney passes putting squeeze on rival parks

Published August 10, 2006



I remember when Mickey Mouse took out Church Street Station with brutal efficiency by building Pleasure Island. In a few years, downtown's bustling tourist spot was deserted.

I hope Universal Orlando and SeaWorld paid attention. They're next.

The tourism industry is undergoing a tectonic shift, and the Mouse is positioning himself to deal with it.

Tourism has gone from an economic thrill ride to "mature industry."

There will be no new parks. There will be no huge annual increases in the number of visitors.

To keep those turnstiles turning faster, or even to keep pace with past attendance figures, the theme parks must capture a greater share of the market. That means they must cannibalize one another's crowds.

This is exactly what Disney had in mind when it came out with a new pricing structure in January 2005 called "Magic Your Way."

Naturally, it involved a price hike for daily admissions. But then came this carrot. Prices would plunge the longer you stayed at the parks.

For example, a basic three-day pass costs $192. For only $10 more, you get admission for a fourth day. For only $4 more, you get a fifth. From there, it is only $2 more for each additional day up to 10 days.

Disney has four parks. The average out-of-state visitor stays about six days. One might assume this average visitor would spend a day at each Disney park, then maybe head to Universal and/or SeaWorld.

Now plug in Magic Your Way.

Let's say your family of four is visiting Disney for six days. You've been to each park and now are considering options for days five and six. With Disney's pricing, you could get the whole family into the Disney parks -- there's still plenty left to see -- on both days for a total of only $24.

But if you took the family to Universal Orlando and/or SeaWorld for those two days, the tickets could cost you about $500.

Has this had an impact?

Last year, attendance at SeaWorld was stagnant, while attendance at Universal Orlando plunged 8.5 percent.

But attendance at Disney parks was up between 5 percent and 6.5 percent.

I think this success was behind Disney's recent price hike, the second this year. The Mouse smells blood.

Not only does this help make up for lost revenue from the discounted days, it also makes the longer stays an even better deal.

The major theme parks have a tradition of matching one another's price increases. Nobody wants to look like a discount attraction.

But Disney has put SeaWorld and Universal in a box. If they do raise prices, they simply make Magic Your Way a better alternative to their parks.

Universal and SeaWorld also have multiday-pass discounts, but they are not multiday destinations.

In the long run, the only way they may be able to compete is to hold down prices on their one-day admissions. The Disney squeeze is on, as both are offering various discounts. SeaWorld now is offering adult tickets at child prices on its Internet site.

When you cut a company's revenue growth, you cut its ability to invest in the product. This could give Disney what it has long wanted for its competitors, and what Universal and SeaWorld have long tried to avoid -- second-tier status.

Mike Thomas can be reached at 407-420-5525 or mthomas@orlandosentinel.com.

[JMSuperHeroTeam]

great article, mouseman.

I live in Minnesota (quite a long way from Orlando!) and I love that when I go to WDW everything is covered. We went to Universal and Sea World last year, but won't be back for a few more. It was a pain to get out there and a pain to get back to our hotel. Disney has so many perks (Magical Express, Dining Plan, etc) that you can practically have an all inclusive vacation. It is not that way at the other three parks. Sea World was looking particularily dated when we went, not to mention there was only one restaurant that served two vegetarian options in the whole park. Being a vegetarian, this was particularily frustrating. Going to Disney, I know that there will always be an option for me, and if there's not, they'll make it.

Disney has raised the bar that it initially set high. Universal and Sea World are going to have to step up. Maybe they should join forces???

[DisneyFREAK91]

MWAHAHAHAHAHAHAHAHAHAHA

YAY Disney is taking over!

[Hakuna Matata]

yay disney!!, i agree that the magic your way passes has helped them a lot, we always buy passes for a 6th day because they don't cost much at all.

[ERich2010]

The Mouse smells blood.

lol! good line! made me laugh! kinda like this...hahahahaha!!!!! oh boy is it late...

[mini-V]

I've been to Sea World, but it was because we got a free ticket at some point. Sea World is interesting, but a far cry from a day in any of the WDW parks. I've never been to Universal, and really don't see spending the cash to check out the competition. Disney knows that if they can make staying at the park more convenient and cheaper than going elsewhere, they will be money ahead. You may not have to spend a lot of money to get in the park if you can take advantage of the magic for more deal, but you'll still end up spending money in the park for food, drinks, and maybe a few more sourvenirs. It's a great marketing idea and one I favor. Yes, the mouse smells blood..and funnier still...there are sharks in both of the competitive parks.

[DisneyFREAK91]

Universal is a pretty darn good park. Well, at least Islands of Adventure is. I have to admit, they did an amazing job with that park.

But Disney did better. They aren't service oriented like Disney is

[Maestr034]

Man I love how ruthless Disney is. They are like a strategic general in a war and the are pushing the enemy back. I love it. Send in the cavalry Disney you got them on the ropes. Bring Indiana Jones over from Disneyland and they will be forced to wave the white flag and Orlando will be all yours.

[Mouseman]

This just came out on orlandosentinel.com. It looks like they forced Universals hand. It will be interesting to see how it plays out. I wonder what SeaWorld will do? Read the last paragraph that cannot be good news for Universal.


Universal raising ticket prices
Theme park announces a host of ticket price changes this afternoon.


By Scott Powers | Sentinel Staff Writer
Posted August 11, 2006, 2:13 PM EDT











On the heels of Walt Disney World, Universal Orlando increased its basic, one-day, one-park adult ticket price to $67, starting Saturday.

Universal announced a host of ticket price changes this afternoon, keeping most of their prices in line with Disney's, which went up on Sunday. Previously, Universal's one-day ticket cost $63. Universal runs two theme parks, Universal Studios and Islands of Adventure.

However, Universal spokesman Tom Schroder said his company is not changing the price on the ticket deal he said is the company's most popular: a two-day, two-park ticket available over the Internet that offers three free days, and allows children ages 9 and under to get in free. That ticket remains at $99.95.

Schroder said very few people buy one-day, one-park tickets anymore, because of all of the other options, particularly those available over the Internet.

He would not comment on whether Universal was trying to keep up with Disney, except to say that the new prices are "about remaining competitive in the marketplace."

"We've adjusted our basic pricing so that it stays in line with the marketplace," he said. "But at the same time, we've worked to provide great value for those people who represent the majority of our business: Florida residents and people who buy online, in advance and people who are looking for great multi-day values."

Universal's standard one-day, one-park price for Florida residents goes up to $60.30, from $56.70. However, Universal is offering a special promotion, selling such tickets over the Internet to Florida residents for $49.95.

Standard tickets for children also went up, as did most two-park tickets and most Internet deals. However, Universal is still offering a promotion in which people can buy a one-day, one-park ticket over the Internet for $63 and receive four free days.

Universal's price increases follow a historic trend in which Central Florida's theme parks all have raised their ticket prices at about the same time, to about the same levels. Universal last raised its prices in January, same as Disney. SeaWorld, which sells its basic ticket at $61.95, last raised its price in December, and has not given any indication that it intends to raise prices again anytime soon.

Unlike Disney World, Universal has struggled in recent times with attendance. On Wednesday, Disney reported a 7 percent increase in attendance at Disney World during the third quarter of 2006, which ended July 2. The resort also has reported steadily-increasing attendance in previous quarters, Universal second-quarter attendance figures, for the period ending July 2, are due out next week; but previous reports showed steadily declining attendance.

Scott Powers can be reached at spowers@orlandosentinel.com or 407-420-5441.

[nicks10]

wow, very interesting article!

[Maestr034]

All I can do is laugh.

[nick.jeschke]

This is so good for Disney, Mickey has them right where he wants them.

[DisneyFREAK91]

YAY!

Go Disney!!

*Waves pom poms and is wearing a cheer outfit with a "WDW" on it*

[dxer07002]

And now Universal is raising their prices to $67.00.... So you get two mediocre parks compared to 4 awesome parks from Disney, for roughly the same amount... Bye Universal.. You were an eye sore while you lasted...

[Soccergirl426]

I like Disney way better. Yes, Universal may get in the young adult crowd with their thrill rides, but Disney has the magic touch - and is unstoppable. For example, compare the commericials. For Universal, some 7, 8, and 9 year old kids are saying they stopped liking fairy tales when they were 5, and saying they have given up on everything that Disney (surprise there) offers. Disney's commericial, on the other hand, a family looking happy together as they meet characters, go on rides, watch shows, parades, and fireworks, and other happy things like that as far as I can remember. For me, I would rather go to Disney World.
Thanks for the nice articles Mouseman!