Tuesday, April 9, 2013

The Walt Disney World Ticket Price Inflation

NOTE: The historical Walt Disney World ticket prices in this article were taken from the WDW Historical Ticket pages on AllEars.net and adjusted for inflation using the inflation calculator located here, then rounded up to the nearest dollar to estimate 2013 prices.

The Walt Disney Company is a for-profit corporation. Although many people think of it as some kind of beloved public institution, that is not really the case. It’s a private business and its only obligation is to be successful, which our economic system defines mostly as posting higher profits at the end of each financial quarter than they did for the same quarter in the previous year. I’m not going to make the argument here that Disney has some kind of obligation to make sure that their theme park offerings are affordable to everyone, because they really don’t.

That being said, let’s talk about Walt Disney World ticket prices. They’re expensive, no doubt about it. It’s easy to assume that the annual price increases merely adjust the ticket prices for inflation, and that their relative cost has actually remained fairly constant over the years. But is that really the case? Let’s take a look.

We’ll start on the most basic level: the price of a one day/one park ticket. The chart below traces the price of a one day/one park ticket from 1981 (the first year a ticket was available that included both admission to the park and all attractions and shows therein) to 2012, which was the last time that prices were increased. I’m sure this table will quickly become outdated in a few months when Disney announces their annual price increases.

YEAR TICKET PRICE TICKET PRICE (Inflation Adjusted)
1981 $11.50 $29
1982-EPCOT Center opens $15 $36
1989-Disney-MGM Studios opens $29 $53
1998-Animal Kingdom opens $42 $59
2005-Magic Your Way debuts $59.75 $70
2012 $89 $89

I was in a Twitter conversation recently (or maybe it was more of an argument, I’m not really sure) about WDW ticket prices where the opinion was expressed that the prices need to be as high as they currently are to maintain the profitability of everything on property: the four theme parks, the two water parks, Downtown Disney, the miniature golf course, and all the resort hotels. Sounds logical, right?

By that reasoning, the above chart should show a steady rise in prices as more new things were added to the property, but the price should then basically plateau when Disney stopped adding things. But that’s not what happened. Let’s take a look at the same data in a more visual form:

image

As I mentioned in my last post, park admission was seriously underpriced in the early 1980s. In the years following Michael Eisner’s arrival ticket prices went up sharply as the new regime brought them back into line with their actual value, thus the sharp increase between 1982 and 1989.

Of course, those years also saw the opening of Disney-MGM Studios, Typhoon Lagoon, Pleasure Island, the addition of five new pavilions at EPCOT Center, and the opening of the Grand Floridian and Caribbean Beach resort hotels, which certainly gives credence to the idea that prices need to rise as more things are added to the property.

Now let’s fast-forward to 1998, the year of Walt Disney World’s last big addition: Animal Kingdom. During the nine-year period between 1989 and 1998 the property had gained one new water park (Blizzard Beach) fourteen resort hotels, the Boardwalk, Wide World of Sports, and Downtown Disney’s West Side. Yet the inflation-adjusted price of a one-day ticket at the end of that year was about $59, a mere six-dollar increase from nine years earlier. It’s almost as if the company didn’t need to drastically raise ticket prices to maintain overall profitability as more and more things were added.

But maybe I’m wrong. Maybe admission prices were artificially low in 1998 and really needed to be raised to keep Disney World’s finances comfortably in the black. Let’s fast-forward again to 2005, seven years later. Although there were no significant additions to the property during those years, the price curve moves rather sharply upward to $70, kind of like it did between 1982 and 1989.

So that’s it, right? There have been no new theme parks or water parks constructed since 1998. And although the Magic Kingdom has seen some expansion, far more has been subtracted since the last theme park opened: Downtown Disney’s Pleasure Island was shut down in 2008, EPCOT’s Wonders of Life pavilion closed permanently on the first day of 2007, and the second floor of the Imagination pavilion and huge swaths of Innoventions exhibition space remain vacant. By all rights, the inflation-adjusted price of a one-day ticket should have remained basically unchanged since 2005, and the line on our chart should flatten out.

But that’s not what we see. In fact, the price rose just as sharply between 2012 and 2005 as it did between 2005 and 1998. How was Disney able to do this without igniting a firestorm of consumer outrage? Easy. They just rigged the system to make multi-day trips look like a better deal.

You see, at some point the Disney World Number Crunching Brigade figured out that the customers who stayed multiple days on property spent more money per person per day on things like dining and merchandise than day-trippers. And then they probably started having visions of what it would be like if a greater percentage of the 150,000 people who visit the theme parks each day belonged to that lucrative segment of multi-day vacationers.

scrooge_moneyThe visions looked a lot like this

The problem, of course, was that a multi-day trip with a stay in a Disney resort is way more expensive than just one day in the parks. And while tourists are not the most intelligent group of people (who else willingly spends time outside during Florida’s brutal summer months?) they’re at least smart enough to figure that out. So Disney set about making multi-day vacations look like a better deal than they actually are while at the same time discouraging the concept of simply visiting for the day. Enter the Magic Your Way pricing scheme.

When it was introduced, I’m sure Magic Your Way was marketed as this great thing whose sole purpose was to save Disney’s customers money and give them more choices because they’re such wonderfully nice people and the company loves them. Of course that was a lie. Its actual purpose was to discourage one-day trips and push customers into more lucrative multi-day stays. To see how it accomplishes this, let’s look at another couple of charts:

Days

MYW Base Ticket Price

Price Per Day

1 $89.00 $89.00
2 $176.00 $88.00
3 $242.00 $80.67
4 $239 $59.75
5 $268 $53.60
6 $278 $46.33
7 $288 $41.14
8 $298 $37.25
9 $308 $34.22
10 $318 $31.80

Here’s a visual expression of the same data:

image

As you can see, as your length of stay increases, your price per day decreases. A one-day ticket costs $89. But if you’re one of those really affluent customers who can afford 10 days on property, then your per-day ticket price is only going to be $31.80!

So the vacationer who plans to come to Orlando, stay in one of the hotels on International Drive, and mix a couple days at Disney World in with trips to Universal Studios, Sea World, and other points of interest is more likely to rethink his plans when he sees the high price of only one or two days on the property. And that’s the way Disney wants it, because they’d much rather he spend all his money on their property instead of spreading it around other Orlando-area attractions.

Another way that Disney steers customers toward its most profitable offerings is with clever marketing, like this TV commercial:

See, it’s really best for Disney if their customers don’t try to break apart and analyze the cost of the various aspects of their vacation like ticket prices, dining, and resort rates, because then they might make choices that are in their own best interest and not Disney’s. So the company ties everything up into a nice, neat Vacation Package and expresses its cost a way that makes it sound inexpensive. ($99 per person per day!) Another nice thing about vacation packages is that it makes it easier to coax more money from customers via upselling them to things like a better Dining Plan, or a Moderate resort room instead of a Value.

But what about locals who just want to come for the day, or people who are driving down I-4 on their way to somewhere else and want to spend part of a day at Disney World but can’t make a whole vacation out of it? They can either shell out big bucks for an Annual Pass or pay the $89 one-day ticket price. And if those artificially high prices make them decide against coming to Disney World at all, then the company doesn’t have a problem with that. Again, I have absolutely no inside information, but I think the Disney World Number Crunching Brigade has decided that one-day customers are not really worth it for them. If those customers want to visit Disney World bad enough to pay $89 plus parking to be there, okay, but the company won’t go out of its way to attract them.

So, to sum this all up, Disney World’s ticket prices are structured to be artificially high on the low end and then get progressively cheaper per day the more time you spend on Disney property. It’s one of those “the more you spend, the more you save” ploys that gets people to spend more money on something than they really want to. And once the MyMagic+ system goes live in the next year or two and gives the company a a brand-new product to bundle into park admission (and that’s a whole other subject) Disney World admission will become even more absurdly expensive.

And now you’re probably expecting me to wag my finger at Disney’s obvious greed and call on them to return to the simpler days of yore when park admission was more affordable. But that’s not what I’m going to do. After all, the Walt Disney Company doesn’t exist in a vacuum. It operates in an economic system that encourages and rewards greed. If there was not an obvious financial benefit to the way Disney’s offerings are priced, then they would not price them that way.

Everyone should do their homework. Don’t blindly plunk down however much money Disney wants from you just to get your dose of “Disney Magic”. Use the Internet to look up prices. Analyze how much your vacation is really going to cost, not just in airfares, room rates and ticket prices, but also in food and merchandise prices.

Maybe you’ll decide a Disney vacation is worth it, or maybe you won’t. But at least your decision will be based on solid information and an honest assessment of what’s right for you, instead of the feelings aroused by the clever marketing of a corporate entity that, at the end of the day, doesn’t love you back.

UPDATE: The original version of this article contained a chart stating that the inflation-adjusted price of a 4-Day Park Hopper pass had dropped from $504 to $313 between 2004 and 2013. That was not correct; in fact the inflation-adjusted price of a 4-Day Park Hopper ticket was around $264. I have no idea how I made such a gigantic error. This post has been edited to remove that chart and the erroneous conclusion that was drawn from it. Huge thanks to commenter M.C. Bold for pointing out my mistake.

7 comments:

  1. Excellent job with this post. In our recent trips to Disney World, I've come to terms with the fact that the ticket prices are so high. It's the same situation for a one-day trip to Universal. Going to both parks cost $120 per person for a day.

    What I've done is exactly what you describe in the last few paragraphs. The biggest places to save money are hotels and food. I'd much rather stay a few miles outside Disney World for less than $100 a night. With that price, I can get multiple bedrooms and a kitchen inside a spacious villa. This also saves on breakfast costs and sometimes on dinner if we don't stay in the parks. Plus, it's a lot more comfortable. In the parks, we usually get counter service food and buy a few snacks. We avoid the wallet-killing sit-down meals that can run in the hundreds of dollars.

    There are plenty of ways to save money, but I do have concerns with how Disney keeps charging more for less. Unlike in California, they aren't adding many new attractions and are removing services. If they kept adding things in proportion to the '90s level, the ticket prices would be fine. The issue is the diminishing services and disregard for the customers, and the high price just adds to it.

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    1. Thanks for the comment, Dan!

      I certainly agree that Disney is continually charging more for less. It's the main reason why I haven't been to WDW in two years and have no real plans to go back anytime soon.

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  2. Nice Post..thanks for the information friend!

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  3. Disney may be hyper-inflating prices for reasons not directly tied to inflation:

    1) Rising cost of oil = greater cost for shipping & fuel.
    2) Rising cost of electricity & construction materials, esp. copper.
    3) Recoup losses to failed gambits, whether big like Disney's California Adventure, or the Mighty Ducks, or small like new attractions that cost too much to build/operate, yet fail to attract.

    4) Overseas parks may not be garnering the interest/attendance that would make them profitable. WDC may be adjusting costs to support the floundering parks, focusing on long-term salvation rather than closing them down as a normal business might consider. To close their doors and accept a loss could be, to the corporate heads, unthinkable. If economic success is viewed as a war, would you want your leaders giving up even one inch of ground? WDC could just be too big to steer at this point.

    5) Disney's bad corporate structure. Even in a for-profit system it is still bad to rape peoples' wallets. Walt Disney would be rolling over in his grave if he saw what was happening to his brand/name. He wanted a place that was magical, special. Roy E. hated Eisner's handling of the WDC. He called the company a "rapacious, soul-less" conglomerate. It's not good business to inflate prices beyond reason/understanding. Unfortunately, we are a captive audience and they know it. I had season passes to Disneyland in the 90s. They were about $100 for the SoCal Annual (4 tiers: Premium, Deluxe, SoCal, SoCal Select). In 2013, the same 3rd tier pass sells for $359. In 2012, they were $329. In 2011, the same tickets were $239. If that's not a prime indicator of Disney's wayward path, how about the lamebrain notion of the "Disney vault," wherein classic Disney movies come out for a brief time to be transferred to DVD or Blu-Ray, and then they return? Did Disney want his movies to be locked away from the people, especially children? If that's not a good enough reason for people to pirate Disney movies in protest, I don't know what is.

    6) Disney may not be making enough on movie sales due to P2P sharing of Disney IP. WDC has an open hole in their collective wallet in the Disney Channel and possibly ABC. Have you SEEN the underwhelming cartoons they are churning out? This is NOT WDC's heyday for film/animation. What happened to quality entertainment like the Wonderful World of Disney, or Duck Tails, or Rescue Rangers, or Tail Spin, or Darkwing Duck? Pirates was a box office smash but the sequels were, well, sequels. Haunted House tanked. I've bought Disney DVDs in the past, but have you SEEN what those DVDs & Blu-Rays are like? Called "Disney Fast Play," when DVDs are inserted, they play automatically. But you must be subjected to more commercial spam than if you downloaded "free smileys" on the internet. WDC is constantly pitching products. Why? Is it greed or desperation? Or both? Does Disney believe shrinking profits in a slow economy is a sign of failure?

    7) Disney may be adding more behind the scenes than you think. They have so many shows and performers, it is impossible to see/do everything in the park in one or even two days even with Fast Pass or disabled guest head-of-line privileges. Shows are bringing in talented "cast members," whose salaries must surely be constantly rising. Or are they?

    8) Disney may be raising prices to "thin the crowds," esp. during summer (as reported by the OC Register) and then, woops!, forgetting to lower them again.

    9) Disney is a deep-pocket target for lawsuits.

    10) It could be a conspiracy by Disney's corporate leaders to defraud the Disney name, while getting rich in the process.

    11) Disney could be raising money for an election campaign and will run for POTUS in 2016.

    12) Park guests may LIKE paying as much as they do, and they vote on price increases with their dollars.

    13) Magicka de Spell may have finally taken lucky dime and now controls Duckburg.

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  4. Thanks for sharing this article, its been a really interesting read. I've personally never dealt much with walt disney world discount tickets before. I'm excited to see how it's all going to turn out, thanks again for sharing!

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  5. This article states that there was a supposed $200 price drop (in real terms) between 2004 and 2013 for a 4 day park hopper ticket. I believe that conclusion is incorrect. Per the data source used by the author (allears.net), a 4 day hopper was last priced at $233 (amount at the gate) in late 2004, just before the new pricing structure (MYM) was introduced. In 2013 dollars that is about $286. The 2013 actual (nominal) price for a 4 day hopper was about $313, so in fact 4 day hoppers have been going up in price faster than inflation. See the following links:

    http://allears.net/pl/phpticket.htm
    http://allears.net/tix/MYWhistory.htm

    I bring this up now because a current article on Disney pricing quotes this blog post as a data source. See:

    http://finance.yahoo.com/news/disneys-magic-kingdom-nears-100-190423737.html

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    1. Thank you for bringing that to my attention! I have no clue how I made such a gigantic mistake, but I've edited the article to remove the incorrect information. Thanks again!

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Thanks for taking the time to comment!