Walt Disney World Resort has greatly limited the benefits of its Annual Passholders. Last week, the value of annual passes were degraded further.
Disney World’s Prior Benefit Reductions
Walt Disney World Resort Annual Passholders enjoyed a host of benefits especially at the Platinum level or higher. With this pass, guests can visit any day, any of the four parks they like as often as they choose with the exception of a two-week period. Moving from park to park is called park-hopping and the theme park sells passes that allow this for those that do not hold an annual pass. Park hopping has been discontinued due to COVID-19 park restrictions and the ability to manage crowds and anticipate traffic.
The theme park has re-opened to visitors but annual passholders find scant availability. The park is open to single-day ticket purchasers nearly every day on the calendar. Passholders, subject to diminished availability, find opportunities few and far between and rarely together making it difficult to visit even within Florida for those that do not live in Orlando.
Fastpasses were also suspended. Fastpasses allow any guest that registers to secure a time to visit a ride without waiting in the standby line. The reasoning behind disallowing Fastpasses seemed thin, why and how would this be affected by crowd control? Wouldn’t it make more sense to schedule guests evenly across the resort at different rides to keep guests apart from each other in line?
Disney’s Latest Degradation
This week, Disney World announced that all four resorts will reduce hours in September. The Magic Kingdom Park and, the currently next-to-impossible to reserve, Hollywood Studios lose one hour each. Epcot and Disney’s Animal Kingdom each drop two hours.
The lost hours are in the evening which makes it even tougher for annual pass holders to take their children to Disney even for just a few hours after school and the workday has finished. That only matters if pass holders can find a date in which they can gain entry anyway.
My family always found that our night owl child was able to ride the most rides after the early riser families had left for the day utilizing extra magic hours offered by area hotels. That would be impossible to achieve now.
Is This a Winning Strategy?
Disney, and companies like it, want a mixture of new guests and annual revenue. Some have noticed the subscription model for everything these days. Subscriptions provide consistent, planned revenue that sustains healthy growth for businesses especially those with seasonality. Annual Passholders are Disney’s subscription customers. They pay either monthly (Florida residents-only) or upfront for the year and provide revenue bursts on each visit in the form of food and beverage sales, merchandise, and other items.
However, Disney makes far more money from one-time visitors. Think of the family that saves up for years to go to Disney World. They are much more likely to stay at a Disney-owned resort on property, allowing Disney to secure a premium on their resorts and capture more of the guest’s total spend. On an annual basis, the spend is likely lower net lower for one-time visitors than annual passholders, but with capacity restrictions in place, the company has to choose their crowd.
That strategy, however, may deliver more in the short term but upset the consistent and higher value absolute customers. Annual Passholders will spend $6,000/year for a family of three just on park entry. The company doesn’t release total value of customer subsets, but from my experience, those guests are likely spending closer to $10,000/year in total, some much more. At least I racked up 3x Chase Ultimate Rewards points on my Disney spend.
In order to trade customer groups and remain legally compliant, Disney had to allow Annual Passholders an escape and a refund of the unused remainder of their contract. Many Passholders have canceled their contract until restrictions are removed and COVID-19 adjustments have gone away. How many will come back when life resumes normally? How many will instead try Universal and find that they enjoy the change of pace?
Disney is doing its best to remain profitable, but their method is one many businesses struggle with. Consider if an airline began restricting their frequent flyers access to flights in order to serve customers who may have never flown with the carrier and may never do so again. Those flyers may be worth more today, but will they be worth more tomorrow, next year, and the year after?
The Walt Disney Company’s west coast operations are another matter. Disneyland and Disney California Adventure, unlike Walt Disney World Theme Parks in Florida have not been able to re-open. Disneyland Resort annual passport holders (similar to Disney World annual pass program) have not been able to access the resort at all. They are able to receive discounts if they hold a premier passport at Downtown Disney (the west coast version of shopping complex, Disney Springs) but the Disney parks are a different story.
It’s a tale of two Orange Counties where some Disney annual pass holders have some options while others have none.
All businesses struggle with offering benefits, discounts, and special privileges to their most frequent customers while weighing the cost of acquiring new ones. I don’t think that this strategy plays well for Disney in the long term. Annual Passholders are a loyal crowd with long memories and the more that Disney reduces the value of their passes for the same amount of money while blocking them entry to the parks over walk-up guests, the less likely they are to maintain the business relationship.
What do you think? Is Disney just trying to cope? If you were/are an Annual Passholder, would/did you cancel?