How Disney Vacations Became Too Expensive For Many Americans

Summary

The video script discusses the rising costs of visiting Disney parks, with ticket prices increasing significantly since 2012. Despite the magic and nostalgia, the high expenses are affecting attendance, with Disney reporting a drop in operating profits. The script explores the financial strain on families, the impact on super fans and annual passholders, and Disney's strategies to maintain its customer base. It also touches on the broader theme park industry and consumer choices, questioning if the high prices will deter visitors and affect Disney's dominance.

Takeaways

• 🎫 Disney park ticket prices have significantly increased, with a one-day base ticket at Disney World averaging $89 in 2012 and $147 in 2022, reflecting an approximate 5% annual growth.
• 📉 Disney reported a 3% drop in operating profits year-over-year in Q3 2024, indicating a potential consumer pushback against rising prices.
• 💸 The high cost of Disney experiences, including food and merchandise, has led to some consumers questioning the value, especially as the company's stock has dropped over 15% in six months.
• 👪 Disney's pricing strategy may be affecting its customer base, with families feeling the financial strain and considering Disney vacations as a luxury expense.
• 🏰 Despite the price hikes, Disney Parks remain a significant revenue and profit driver for the company, accounting for about 40% of total revenue and around 65% of total operating profit.
• 📊 A comparison by a travel blogger showed a 44% increase in the cost of a one-day Disney World visit between 2017 and 2024, which is much higher than the national inflation rate.
• 🌐 The script suggests that Disney is not alone in increasing prices, with competitors like Universal Studios also raising their ticket prices, impacting the theme park industry as a whole.
• 👶 Disney is making efforts to keep its parks accessible to a wide audience, including offering lower-priced tickets for children and maintaining its lowest entry point ticket for several years.
• 🔄 Disney's CEO, Bob Iger, has reversed some unpopular Covid-era changes, such as reintroducing free parking for resort guests and enhancing the Genie Plus service into Lightning Lanes.
• 🌟 Disney Parks' strategy focuses on creating lifelong fans and super fans, which may involve balancing price increases with efforts to maintain guest satisfaction and intent to return.

Q & A

What is the significance of Disney parks in American culture?

Disney parks are considered a quintessential American vacation, often seen as a rite of passage for parents and children, and a place where childhood memories are made.

How has the cost of visiting Disney parks changed over the past decade?

The cost of visiting Disney parks has increased significantly. A one-day base level ticket to Disney World averaged $89 in 2012 and $147 in 2022, with an annual growth rate of about 5%.

What financial challenges did Disney face in Q3 2024?

In Q3 2024, Disney reported disappointing park numbers with operating profits dropping by 3% year-over-year, and its stock was down more than 15% in six months.

Why did Disney's consumer demand decrease according to their Q3 2024 report?

Disney blamed the decrease in consumer demand on a softening consumer environment, indicating that demand wasn't as high as they anticipated.

How has the increase in prices affected the consumer experience at Disney parks?

The increase in prices has led to some consumers pushing back, with Disney parks being described as 'incredibly expensive' and potentially getting too costly for inflation-weary American families.

What is the role of Disney's parks business in the company's overall profits?

Disney's parks business is crucial to its profits, accounting for about 40% of total revenue and around 65% of total operating profit.

How does Disney encourage guests to spend more even when attendance is stagnant?

Disney encourages guests to spend more through various means such as food, merchandise, upgraded park passes like Genie Plus, and other add-ons that allow for skipping lines.

What is the average cost increase for a one-day trip to Disney World from 2017 to 2024?

The average cost for a one-day trip to Disney World for two adults increased by almost $320 between 2017 and 2024, representing a 44% increase.

How has Disney responded to the perception of becoming too expensive?

Disney has made some changes to address the issue, such as keeping the lowest ticket tier stable since 2019 and offering flexibility in pricing on off-peak days.

What steps has Disney taken to maintain its appeal to families despite rising prices?

Disney has introduced lower-cost options like a $50 kids ticket and has not changed its lowest entry point ticket price in five years, aiming to make the parks accessible to a wider audience.

What is the current status of Disney's theme park visitation compared to other operators?

Disney remains the top global theme park operator, with 142 million visitors across all its parks in 2023, despite the challenges of rising prices.

Outlines

00:00

🎟️ Disney's Financial Strains: Pricing and Attendance

Disney World and Disneyland are iconic American vacation destinations, known for their magical experiences and childhood memories. However, the script discusses the financial challenges Disney is facing due to rising costs and a recent drop in operating profits. Ticket prices have seen a steady increase, with a 5% annual growth rate, leading to a significant rise from $89 in 2012 to $147 in 2022. Despite these high prices, Disney reported disappointing park numbers in their Q3 2024 results, with a 3% drop in operating profits year-over-year. The company has blamed this on a softening consumer environment and increased competition from other luxury vacation spots. The script also highlights the pressure on consumers, with some taking on debt to afford Disney vacations, and the potential impact on Disney's super fans and annual passholders due to the rising costs.

05:01

📈 Disney's Pricing Strategy and Consumer Response

The second paragraph delves into the specific financial implications of Disney's pricing strategy. It reveals a 44% increase in the cost of a one-day trip to Disney in seven years, which significantly outpaces inflation. Despite fewer people in the parks, the experience feels more crowded and less satisfying. Disney has maintained its lowest ticket tier since 2019, offering some stability, but has been criticized for removing or monetizing previously free amenities. The average cost for a multi-day Disney World vacation is compared to high-end trips to other destinations, highlighting the financial burden on families. The script also discusses the consumer response, with some guests reconsidering their visits due to cost and others taking on debt to afford the experience. It raises questions about Disney's pricing and its impact on the consumer experience.

10:05

🚫 The Changing Landscape of Disney Park Amenities

The third paragraph focuses on the changes Disney has made to its park amenities and their impact on consumer sentiment. It discusses the removal of free services like the fast pass system and the introduction of paid alternatives like Lightning Lanes. The narrative also touches on the psychological aspects of consumer behavior, including the sunk cost fallacy and the pressure parents feel to provide Disney experiences for their children. The script presents the perspective of a long-term Disney passholder who decided not to renew due to the diminishing value of the pass and the company's shift towards catering to wealthier travelers. It raises the question of whether Disney's pricing strategy is sustainable and how it affects the brand's relationship with its most loyal customers.

15:10

🌟 Disney's Commitment to Accessibility and Long-term Strategy

The final paragraph addresses Disney's efforts to make its parks accessible and the company's long-term strategy to create lifelong fans. It mentions recent changes made by CEO Bob Iger to improve guest satisfaction, such as reinstating free parking and modifying the Genie Plus service. The script emphasizes Disney's goal to offer value through the totality of its offerings and the high guest satisfaction rates. Despite raising ticket prices again in 2025, Disney is committed to not pricing out children and aims to maintain its position as the top global theme park operator. The paragraph concludes with a reflection on the potential breaking point for consumers and the importance of guest feedback in shaping the industry.

Keywords

💡Magical

In the context of the video, 'magical' is used to describe the enchanting and almost surreal atmosphere of Disney parks, especially during dusk. It's a term often associated with Disney to evoke a sense of wonder and fantasy that is central to the Disney experience. The video mentions the 'magic' of Disney parks, suggesting that despite the high costs, there's an intangible quality that continues to draw visitors.

💡Rite of passage

The term 'rite of passage' refers to a ceremony or event that marks a person's transition from one stage of life to another. In the video, it is used to highlight how a trip to Disney for parents and children is considered a significant milestone in American culture, symbolizing the shared experience of family bonding and creating lasting memories.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video discusses how the cost of visiting Disney parks has risen at a rate that outpaces national inflation, making the experience increasingly expensive for consumers. This is a key concern as it affects the affordability of a Disney vacation.

💡Operating Profit

Operating profit, also known as operating income, refers to the profit a company earns from its core business operations, excluding any income from investments or ventures outside of its main business. The video mentions that Disney's parks business is a significant contributor to its operating profit, indicating the importance of the parks to Disney's overall financial health.

💡Pricing Strategy

Pricing strategy is a marketing approach used to set the price of a product or service, taking into account factors such as competition, cost, and perceived customer value. The video discusses Disney's pricing strategy, noting how the company has increased prices over the years, which has led to a debate about whether the cost of a Disney experience is becoming prohibitive for many consumers.

💡Consumer Environment

The consumer environment refers to the external factors that influence consumer behavior, including economic conditions, cultural trends, and market dynamics. Disney cited a 'softening consumer environment' as a reason for lower than expected demand, suggesting that economic pressures and changing consumer preferences might be affecting the number of people willing to spend on a Disney vacation.

💡Debt

Debt in this context refers to the obligation to pay back borrowed money. The video reveals that a significant number of parents take on debt to afford a Disney vacation, indicating the financial strain that the high costs of a Disney trip can place on families. This highlights the emotional and financial investment that many are willing to make for the Disney experience.

💡Super Fans

Super fans are individuals who show an exceptional level of enthusiasm and loyalty towards a particular brand, in this case, Disney. The video discusses how Disney aims to create lifelong fans and how pricing strategies might impact this group. It also mentions that even long-term passholders might reconsider their loyalty due to rising costs, which could potentially affect Disney's core customer base.

💡Disney's Parks Business

Disney's parks business refers to the segment of the company that operates theme parks, such as Disney World and Disneyland. The video emphasizes that this business is crucial for Disney's revenue and profits, accounting for a significant portion of both. It also points out that any changes in consumer behavior or economic conditions can have a substantial impact on this segment.

💡Ticket Tiers

Ticket tiers refer to the different pricing levels for park admission, often based on factors like the time of year, the demand, and the type of access provided. The video notes that while Disney has kept its lowest ticket tier stable, other tiers and additional costs have increased, contributing to the overall higher cost of a Disney visit.

💡Value Proposition

A value proposition is a promise of value to be delivered through a product or service, outlining the reason why a customer should buy. The video discusses Disney's value proposition in the context of rising prices and the need for the company to ensure that the experience justifies the cost for consumers, especially as they face more choices in how to spend their leisure dollars.

Highlights

Disney's parks have evolved from early attractions like Frontierland and Pirates of the Caribbean to modern additions like Star Wars: Galaxy's Edge.

Disney's park ticket prices have increased significantly, with a 5% annual growth rate, rising from $89 in 2012 to $147 in 2022.

In Q3 2024, Disney reported a 3% year-over-year drop in operating profits for its parks, pointing to a softening consumer environment.

The overall cost of visiting Disney has surged, with a one-day trip for two adults costing $886 in 2024, up 44% from $567 in 2017.

Disney parks have seen a 56% increase in ticket prices over the past decade, outpacing the national rate of inflation.

Free amenities such as FastPass and MagicBands have been replaced by paid options like Genie+ and Lightning Lanes, frustrating long-time visitors.

The cost of a five-night Disney World vacation in 2024 is around $5,000, positioning Disney as an upper-middle-class luxury experience.

A significant number of visitors, particularly parents, take on debt to afford Disney trips, with 45% of parents with children under 18 borrowing money for such vacations.

Despite high prices, 59% of visitors who took on debt for their Disney trip reported having no regrets, viewing it as a worthwhile experience.

Since 2022, Disney has reintroduced some perks, such as free parking for resort guests, to address guest dissatisfaction with price increases and reduced benefits.

Universal Studios has also raised its prices, but Disney remains the primary driver of visitation to Orlando, making Universal's success dependent on Disney's draw.

Disney's multi-day trips are now compared to luxury vacations like those to Vail or the Bahamas, making domestic theme parks an expensive alternative.

Many Disney super fans and long-time passholders are reconsidering their loyalty due to the removal of perks and escalating prices, leading them to seek value elsewhere.

Disney parks remain the most visited theme parks globally, with 142 million visitors in 2023, despite rising prices and consumer dissatisfaction.

Disney's strategic focus is on creating lifelong fans, especially among children, with measures like a $50 kids' ticket to make visits more accessible for younger guests.

Transcripts

Disney World and Disneyland.

The quintessential American vacation.

There is something about the energy in a Disney park at dusk that is.

I hate to use the word magical, but it kind of.

There's something about it.

A place where magic comes to life.

Where childhood memories are made.

A trip to Disney for parents and for little kids is really a

rite of passage in this country, practically.

From the early days of Frontierland and Pirates of the Caribbean to modern day additions like Star Wars

Galaxy's Edge, the Disney parks have brought in guests from far and wide.

I mean, who can forget their first step onto Main Street, U.S.A.?

The castle, the characters, the food, the balloons, the I'm sorry, this balloon

cost. How much?

What's happening now is Disney is an incredibly expensive and incredibly like, magical

experience.

Disney's park prices are up.

More on average than in a normal year.

And a one day base level ticket to Disney World was averaged

$89 in 2012, and averages averaged $147 in

2022, and that the growth rate of that cost has been about 5%

annually.

But in its Q3 2024 results, Disney reported disappointing park numbers, with operating profits

dropping 3% year-over-year, a concerning trend from one of the company's biggest moneymakers, and another

blow to a stock that's down more than 15% in six months.

The price hikes at parks was enormous over the last few years.

Same for some of the food.

You know, just every every time they could they would either make packages smaller, higher priced whatever.

If that consumer is just pushing back on that.

Disney blamed the slip in performance on a softening consumer environment, saying demand isn't where

they thought it would be. An issue it said could linger for several quarters, meaning Disney parks are

not immune to what is becoming an industry wide issue.

Universal's parent company, Comcast, saw a nearly 11% drop in theme park revenue, driven by lower attendance

in that same quarter.

Certainly, there are going to be questions about the health of the consumer and whether the company got

ahead of itself in its pricing.

Above the entrance to the Disneyland park, there was a quote from Walt that says, to all who

come to this happy place, welcome.

And we focus our energy on the all.

But is it really?

Or is it a trip to Disney just getting too expensive for inflation-weary American families?

Parks is huge as an investor for Walt Disney Parks because it's about about 40% of their total

revenue, but it's two thirds or 65% of their total operating profit.

When it comes to Disney's profits, its park business plays a huge role.

In Q3 2020 2024, Disney's domestic parks brought in $5.8 billion, a

3% increase from the year prior.

However, its operating income for the same period actually slid 6% year-over-year.

Everything post Covid is going through the roof because a lot of these physical venues closed for a year or two

because of Covid, and now they have to make up also a lot of increases in labor costs.

Given the linear television has been disappointing Disney and everybody else in that

business for the last decade.

It stands to reason that Disney might have responded to that by pricing at parks a little more

aggressively in order to prop up its financial results.

While Disney acknowledged a slowing consumer environment as reasoning for a drop in demand, it also

noted saw an uptick in guest spending at the parks due to its higher prices.

For things like food or merchandise, or upgraded park passes like Genie plus, ways to

skip lines. There are lots of ways Disney gets you to spend more, even when traffic stagnates.

Over the past ten years, the average cost for a Disney World single park ticket has inflated more than

56%, well above the national rate of inflation.

And that, of course, doesn't include the cost of food, merchandise, lightning lanes, hotels and airfare.

At a glance looking at how the Disney experience has evolved, it's gotten a lot more difficult for the

average person to jump into.

This is Jake Williams.

He's a YouTuber and travel blogger and set out this year to answer the same question — has Disney gotten

too expensive? So he went to Disney World and compared the price of a one day trip in 2024 to that same

trip in 2017.

So when we add everything up the hotel, the park, the park, add ons, all the food, the total cost

for a single day at Disney for two adults came out to a jaw dropping

$886 USD.

The exact same trip in 2017 would have cost a total of $567.

That's almost a $320 difference between two trips.

That's a 44% increase in just seven years, far outpacing inflation, which

is around 24% since 2017.

The park experience also feels more crowded and worse overall, despite there

being less people in the parks this year.

We're back to a point where things should be returning to normal, but usually we don't see the consumer

experience following that trend.

But while prices on everything from hotels and photo passes to Mickey ears and churros have been climbing,

Disney Parks has kept its lowest ticket tier stable since 2019 at Walt Disney World.

That's $109 for a single day single park ticket on off peak days.

When you begin to think about, you know, inflationary pressure and disposable income and some of

those components that weigh on consumers, we hear that very clearly and we react to

that with, again, offers or ways for people to go from, well, I was going to

come on Thursday and the price is one number on a Thursday, or I could come

on a Tuesday and the price is a different number.

There's flex flexibility and options for our guests.

And I think that's what they're now being more careful and thoughtful as they make their choices.

Another frustration from Disney goers — over the past ten years, the parks have been chipping away at

previously free amenities, things like the fast pass system, which was replaced in 2014 by MagicBands, and

then again by Disney Plus, and now Lightning Lanes, which now start at $30 per ticket per day.

And those previously free MagicBands given to resort guests are now only available to purchase.

Even the free shuttle bus between the Orlando airport to Disney World resorts has been replaced with a

private for-cost bus company.

When you look at all the stuff that they've they've been making a lot more expensive or just eliminating

complimentary altogether, that to me seems anti-consumer.

You know, there's no benefit to the consumer.

But what about guests that are going for more than one day?

With Disney World four parks and Disneyland's two, guests often visit for days at a time

packaging park hoppers, lightning lanes, resort stays, and character dinners.

The average cost of a five-night Disney World vacation in 2024, with all the bells and whistles, comes to

around $5,000.

Comparatively, a high-end trip to Mexico costs around $6,000.

Disney has positioned a multi-day trip to Disney World as a form of

upper middle class luxury travel, and priced it accordingly.

The median annual income in the United States is $74,580, meaning a

family of four bringing in an average salary would need to pay almost an entire month's income for a

multi-day trip to Disney World.

Continues to be a premium experience.

That puts pressure on the more price sensitive cohort of customers that

want to go there and struggle with the cost.

Of course, Disney isn't the only theme park to raise prices.

A one day single park ticket at Universal Studios Orlando now ranges between $119

to $179, an increase of up to $20 in just one year.

Keeping pace with Disney World one day ticket average of $147 and an average

three day, four night trip for a family of four to Universal orlando comes in at around $4,700,

comparable to an even longer five night trip at Disney World.

But while parks like Universal Studios Orlando see significantly less guests annually, it's also been able

to stabilize its annual visitation post-pandemic, where Disney World in Orlando has yet to see its

visitation fully recover.

Universal can rise above it because it rides on Disney's

coattails. Disney parks are the primary driver of visitation to Orlando, and once

people make the decision to visit, Universal is an attractive stop for a lot of

them. And in that way, it's interesting to consider whether Universal would

succeed without a Disney nearby.

I think it's fair to say that attendance and prices would be lower, that the business wouldn't be as good

if it weren't drafting off of the visitation driven by Disney.

So then that begs the question — if it's gotten too expensive to go to Disney, how are people paying for

this?

The power of the Disney brand and their connection with so

many American families is so strong that there's always going to be people who are willing

to go into debt to go to one of these parks.

A recent survey of 2000 people by LendingTree found 45% of parents with children

under 18 who visited a Disney park took on debt to do so.

If we broaden that out to all Disney goers, almost a quarter of all visitors take on some form of debt

to visit the parks, a trend that's actually not exclusive to Disney parks.

Another survey found 36% of U.S.

travelers plan to take on debt for their summer trips this year.

There's so much pressure to a degree that parents put on themselves to make this happen.

And there's also kind of the keeping up with the Joneses thing as well.

It is expensive just to get in the park at Disney.

Then you have hotels and airfare and on down the line.

Disney World or Disneyland, depending upon your location, is basically a tax on being a

parent.

But just how much debt are people taking on?

The average family with young kids is taking on a little less than

$2,000 in debt, and all Disney goers who are taking on debt

are taking on between $1600 and $1700.

For many park goers, the added debt is worth it.

59% of those who took on debt for Disney said they had no regrets, with a Disney trip falling

into what some would consider good debt.

For a lot of people, the pandemic kind of changed their views on

things, and they made them think of how fragile life can

be. So if there's something that they want to do, whether it's going to Disney or

starting a small business or anything in between.

A lot of people are still saying, you know what, I'm just going to jump in.

No better time than now.

And this brings up another question — do higher prices actually change people's minds about going to Disney?

Well, according to that same survey, yes.

When it came to people who had never visited a Disney park, over half 60% of

respondents said cost was the number one factor.

Most of the spending at Disney World is done by middle and upper middle class

families.

Clearly, a lot of Americans are willing to take on a little bit of debt for

this sort of trip.

We also see that for maybe more Americans, that

extra cost, that extra debt that they'd be bringing on is just a bridge too far.

But what about Disney's super fans, the die hards, annual passholders, Disney Vacation Club members?

Are higher prices turning them away?

I'm a long-term Disney passholder, and, you know, a traveler of

probably 50 or 60 trips in the last 25 years or so.

So when I first was able to go as a young adult, you know, I was just blown away.

And it really started a love of, you know, allocating a few of my vacations a year would be to go to Disney.

This is Brian Brennan.

Brennan was a Disney Passholder for almost 20 years, a Disney World devotee that would take several

trips to Orlando every year.

The math would work out to where, oh, it's a better option for me to be a passholder, get some discounts on

dining. I get free parking, so the perks times the number of days going, you know, made it

financially viable.

That is until this past year when he decided not to renew his annual pass.

Then they took the fast passes away.

Then they took the extra magic hours away.

And then suddenly you wake up one day and you go, you know, the 10% refund that I'm getting on discount

at restaurants isn't necessarily adding up to the value when all those other things have gone

away.

There is a sunk cost fallacy with with Disney where people have put so much time,

so much of their identity is associated with Disney in the parks.

It's hard to admit when the company is diluting what you love.

And after canceling his annual pass, Brendan has started using his money to travel elsewhere.

Lately, I've found a lot of value in going on a cruise.

I'm going to go on this beautiful ship, and they're going to give me all of my meals and all of my drinks,

and they're going to take me to Bermuda.

And I couldn't even, you know, get into a Disney moderate resort.

Forget the food, forget the tickets, you know, the same prices that.

If you have enough money to afford to come to the Walt Disney Parks every year, you also have a lot of other

choices. So you're probably not coming every year.

And that's the problem for Disney, catering to wealthier travelers means catering to people that often

have more options when it comes to where they travel, meaning Disney parks are now competing with luxury

vacation spots, places like Vail or the Bahamas, where a high-end vacation costs just a couple

thousand more.

If you price it out, you can do a lot of stuff with the price that it costs to go to Disney.

When going to a domestic theme park is costing more than, say, like, hey, we could spend a week in

Paris, you know, it really is going to start making that choice more difficult.

I think what we're seeing is consumers have a lot of choices, and they're making thoughtful

decisions as to where they want to go, which means it's a competitive environment, which means that we

need to be smart and thoughtful about making sure we're listening to what their needs are and how do we

appeal to their needs.

The idea here is to make this wonderful beloved resort, or really any of our parks

around the world, you know, accessible to as many people as we possibly can.

There are areas where Disney parks have started to make changes.

Every decision they make at this, at this corporation is what would Walt do?

And so when when Bob Iger answers that question, Walt would not do that.

He changes something.

Since returning to the helm of Disney in 2022, CEO Bob Iger has already made steps to reverse some

Covid-era changes that weren't the most popular with guests.

Things like bringing back free parking for resort guests and retooling Genie Plus into Lightning Lanes,

with the new app offering additional perks to guests staying on Disney property.

The notion that we give more privileges to people who stay in our resort and stay seven days than we do

people who don't stay in our resorts or only stay two days.

Like that's really smart because it keeps money in the Disney ecosystem and at the end of the

day, they're trying to create Disney super fans.

Disney is playing an extremely long game, a generational long game with the end goal of making

lifelong Disney fans.

And if families are priced out, that means less trips, less magic, and less lifetime super fans.

Disney already announced it is raising ticket prices again by $5 to $10 for some tickets in

2025.

If you have seven days with your kid in a Disney park, the odds are you might

you might be a super fan.

But more likely, your kids are going to be super fans forever.

And that's what they're going for.

And that's one group Disney Parks are actively working not to price out, kids.

We have a $50 kids ticket.

Children under nine can come to this park for $50.

We have our lowest entry point ticket is $104.

And by the way, hasn't changed in five years.

The reality is, Disney parks are still the most visited theme parks in the world with 142 million

visitors across all its parks in 2023.

That leads us to the big question, does it matter?

Disney is still the top global theme park operator in the world, so are rising price is enough to make a

serious dent in their visitation?

One of the things that we're getting time and time again is our guest satisfaction is terrific.

Our intent to return, our intent to visit.

You know, people want to come here because of the totality of what we offer and the

value that we deliver.

That is that there is not a breaking point, that people will continue to pay the Parenthood

tax that is Disney.

If people don't vote with their wallet and aren't vocal about these changes

across the industry, not just Disney, across the whole travel industry, then nothing's ever going to change.