Walt Disney (NYSE: DIS) introduced variable pricing at its Florida theme parks last October. Designed to entice consumers to visit during less-crowded times, the pricing plan made tickets more expensive on higher-traffic days.
Now, the company has once again raised its prices with single-day tickets during the peak Christmas period. The prices are jumping from $124 to $159, according to data from Theme Park Tourist. Other peak periods -- generally, any time kids are out of school aside from summer -- will cost $139 for a one-day, single-park pass.
Continue Reading Below
Prices for single-day tickets were pushed slightly higher on most days with only the "value" tier (August and September) remaining unchanged, at $109 per one-day single-park ticket. Multi-day ticket prices were raised, as well, by 15%-30%, depending on when you go. Adding the "park hopper" feature, which lets you visit multiple parks in a single day, has increased by $5. Annual passholder prices were raised earlier this year, as well.
These moves were expected due to the upcoming launch of Star Wars: Galaxy Edge, but the company may not have gone far enough. While Disney has made visiting at certain times challenging for many American families, it has not solved its crowd problems.
What is Disney doing?
The company wants to maximize revenue. In some ways, that means charging customers as much as it can. It also means balancing user experience against cost to make sure consumers have a good enough time to be willing to come back.
Disney doesn't release day-by-day attendance numbers, but as an annual "Gold" passholder who visited its parks and the surrounding attractions (resorts and Disney Springs) on more than 30 days last year, I have not seen a change in traffic patterns. Holiday weekends were still packed with parks (usually Magic Kingdom) sometimes no longer admitting guests until others leave.
Yes, my knowledge is anecdotal -- I only visit one or two parks per visit -- but passholder message boards are filled with people talking about how crowded the parks remain during peak periods. Attendance clearly remains very strong on these days which suggests Disney could push the prices even higher as a way to get some visitors to shift their visits to lower-volume days.
As a local and a passholder, I'm not under pressure to fit everything in on any one visit. I can visit, do my three Fastpass selections, see a show, or eat something, and then leave to come back another day. People on vacation staying on Disney property (and select partner hotels) do get early morning or late evening "Magic Hours" at some parks, but during peak periods the bulk of the day is spent in long lines -- even Fastpass queues can be long.
The real trick for Disney would be raising peak prices until it actually pushes some customers into changing their travel dates. It's, of course, possible that raising prices won't dissuade enough people or that it will push some to not come at all, but there's likely a sweet spot where Disney could maximize revenue and get the behaviorz it's trying to get by having variable prices (maximized revenues, a more even flow of customers, and a better -in park experience for the people paying the highest prices).
It's a big world
When you look at the revenue mix for Walt Disney World, it's not just about tickets and resort prices. You also have to factor in premium experiences -- events like Mickey's Not-So-Scary Halloween, which allow access to the Magic Kingdom for a few hours at night with a much smaller crowd -- and even food/beverage and merchandise sales.
Crowded days, of course, create demand for those upsell experiences because some visitors will want a chance to experience shorter lines and much less-crowded parks. It's a problem, however, if the demand is generated not because people want to have even more fun but because their days in the parks during normal hours are unpleasant due to overcrowding.
Having visited all four Florida parks and Disney Springs extensively over my 2 1/2 years holding a pass as a Florida resident, I'd say there's a line between crowded (which the parks almost always are) and too crowded. When just getting to a ride or show so you can wait in line takes significant effort -- that's too crowded. That's a line that varies by person, but the shoulder-to-shoulder crowds that are common during holidays and lessening that a bit would likely result in people paying peak prices to feel like they got better value from paying more.
Disney can use variable pricing to price some people out of peak periods while enticing even well-off visitors to consider slower periods. That could be managed in a way to both maximize revenue and deliver an improved user experience that entices repeat visits. Slower times would be a little more crowded (but still offer value), while busier times will be just a little less crowded -- making the premium price feel more worth it.
Find out why Walt Disney is one of the 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
Tom and David just revealed their ten top stock picks for investors to buy right now. Walt Disney is on the list -- but there are nine others you may be overlooking.
*Stock Advisor returns as of March 1, 2019