Narrator: In 2018, Disney
World raised its ticket prices, twice. Take the park's platinum pass for example, it's the standard option
that grants access to all four parks with no blackout dates. In February, the price went from $779 to $849, then in October its
price jumped from $849 to $894, as Disney unveiled
its dynamic pricing model. That's a 15% increase in just one year. This is the fourth time in
park history that annual pass prices were raised
twice in the same year. The first time was 1997
in anticipation of Animal Kingdom's 1998 opening.
Similarly, the price markups in 2018 are in advance of
Disney World and Disneyland's 14 acre Star Wars theme
lands, called "Galaxy's Edge." And Disney parks expansion
doesn't stop there. Hong Kong Disneyland is
spending $1.4 billion on Avengers and Frozen themed attractions. On top of that, it's adding
capacity to Tokyo Disney Sea, and updating Epcot and
Disney Studio park at Disneyland Paris. Despite all the costly expansions,
Disney Parks and Resorts reported a $4.5 billion
operating profit for the 2018 fiscal year. That's over 100% increase from 2013. So, if it is steadily profiting, why are Disney Parks
becoming so expensive? From the mid-80s into the early 2000s, Disney Parks pulled way
ahead of its competition. In 2002, Magic Kingdom's
attendance alone nearly doubled its closest non-Disney
competitor, MGM Studios. But in 2010, that changed
when Universal opened the Wizarding World of Harry Potter. Robert Niles: It was game on in this business all of a sudden Disney had a competitor again and Disney does not like to lose, not just lose, Disney
doesn't even like to compete. Disney wants to dominate its competition. Narrator: Disney launched a
full out retaliation against Universal and other competitors. In 2011, it announced
Pandora, its Avatar themed attraction located in Animal Kingdom. Then over the following
six years, it opened new attractions in all four
major parks. And by 2017 Disney Parks claimed 55%
of North American theme park attendance. Niles: This has been really successful, so everybody wants to come during summer
vacation and Christmas when their kids are out of school. And the trouble is that
if you spent billions of dollars really to build
these attraction facilities. They are open 365 days a
year. It's just not efficient to have them filled to the
brim for four, five, six weeks out of the year and
then not so much the rest of the time. So, they really want to
use all of their pricing and promotions to try
and equalize the crowds throughout the year. Narrator: Disney World's
second price hike of 2018 included a switch to dynamic pricing. Charging higher prices
during those peak summer months and winter holidays and
encouraging volume purchases. Niles: Disney understands
the demographic changes that are happening in the United
States at this point. They understand what's
happening with income and economic inequality. They know that the money
is in the upper level, the top 10%, the top 1%. They've created a wide
variety of new products to try and, frankly, extract
more money out of the people who have money to spare. Narrator: Disney has several
new offerings targeted at its wealthiest visitors,
including dinners with Disney princesses, two
Bibbidi Bobbidi Boutiques that offer a makeover,
hairstyling, and costumes. And even private VIP tours
of the parks. But the luxury offerings go beyond
activities in the parks. In 2014, Orlando's first
five-star resort opened on the Disney grounds, a Four
Seasons resort with rooms starting at $449 a night.
And Bora Bora Bungalows that cost $29 dollars
when the park first opened can reach prices of $3,400 today. Niles: Now the down side with that is if you are one of those
remaining middle class people in America, you
could get squeezed here. Narrator: Since 2000, Disney
World prices have steadily increased while wage growth
has been falling from its 2001 high of 5.4%. And in 2018, Disney Parks
reported a 5% increase in per capita spending in
the parks and an 8% uptick in per room revenue in hotels. Niles: Disney's done such a good job at becoming a cultural
institution in the United States. It's done such
a good job of becoming a lifestyle brand that
some of the people who may have been early adopters
to this brand are really feeling some pressure
right now, because of the way the company is growing. People who were early
adopters to this are used to a middle class pricing
model that just doesn't really work in the modern
economy anymore. And they feel frustrated that they
put a lot of loyalty into this brand, into this company
and now they feel like they really have to stretch to keep up. And that's tough, but at
the same time, if Disney's going to grow, it's got
to go where the money is. It's got to go in a direction
that allows it to get maximum value from its
investments and limiting itself only to its early adopters
isn't going to allow the company to do that.
Idk, 894 for unlimited access to Disney World for a year doesn't seem like that high of a price.
We didn’t renew our passes this year. Price was one factor we used to decide. The cost adds up for a family.
We went for the first time yesterday, purchased two platinum passes for the year.. I was originally a little bit hesitate before purchasing and before actually using... We just went to one park yesterday and I can say the price is worth what you get. Magic Kingdom yesterday and Ebcot here we come next weekend!