Yesterday was a busy day for Disney, though not because of news on upcoming attractions. Instead, the announcement of overnight parking fees at Walt Disney World resorts drew a negative uproar from many fans. Adding another $13-$24 per night to your trip might not seem like a huge expense, but it can make a difference. Increased ticket fees and hotel rates are a larger culprit, and each additional fee makes it trickier to budget for the next vacation. The parking fees drew the attention, but another change should have a greater impact. A massive restructuring at Disney shifts the company’s alignment and reinforces concerns for the future.
Disney’s Consumer Products and Parks and Resorts will now function as a single entity, with Bob Chapek as the chairman. It’s not a huge surprise given his background leading that area. I’ve always had the impression that Chapek is more comfortable selling products than excitement about the parks. There’s little vision in his D23 Expo presentations; they sound more like sales pitches than exciting reveals. Chapek will now have the chance to sell in direct alignment with the parks. It feels like a smart business move that will keep yielding large profits from intellectual properties like Marvel, Star Wars, and more in the parks.
If you focus solely on theme parks, this restructuring just nails home the idea that Disney only cares about selling IP at every park. Guests visit theme parks as consumers, so why not ensure that the business focuses on that sphere? This approach builds a context for the hotel parking fees and similar charges from recent years. Disney provides services we love, so why not charge as much as possible? This isn’t an evil approach and fits within the supply-and-demand model. On the other hand, that strategy dismisses why Disney became so popular in the first place.
Theme Parks as Profit Centers
Before we delve more into the current situation, let’s take a quick look back at the early days of Disney’s theme parks. Disneyland was arguably the first of its kind and changed the landscape for theme parks. We’ve heard countless stories of how Walt Disney ignored conventional wisdom from industry experts while building Disneyland. That park succeeded because it didn’t follow the industry standard with attractions, design, and prices. And it made huge profits! Disneyland was successful because it subverted the obvious consumer trends.
Disney has continued this trend at Disney World in too many ways to mention here. EPCOT Center was unlike any park we’d seen at the time (and since that point). The transportation systems, infrastructure, and massive layout of the Disney World resort were unmatched across the world. High standards for customer service, cleanliness, and unique attractions set the mold for others to chase. Creative choices that Disney made at the resort helped deliver its massive success. The profits came from treating the parks like they were more than consumer products.
On the surface, theme parks exist as business vehicles to further the growth of the Walt Disney Company. That doesn’t mean they also can’t transcend those confines and be something more. The same is true of a great film or amazing song, which also are consumer products. Those examples can become art while also serving commercial needs of artists and corporations. People spend money to buy albums or see a movie, and that process generates revenues. That’s how business works. The danger is assuming that all products are created equal and should receive the same treatment. Forgetting the reasons why something was successful is dangerous.
Short-Term Gains
It’s true that overnight parking fees are common at hotels, including the Universal resorts and at Disneyland. They’re an easy way to monetize the existing space without increasing room rates. On the other hand, no one likes parking fees. They diminish goodwill among guests that already pay a premium to stay at a Disney resort. It’s also different than raising ticket prices, which you can partially explain as helping to cover expenses of big-budget expansions. The parking spaces were free and now they aren’t, so there’s little justification beyond more profits.
This feeling brings me back to placing Parks and Resorts in the Consumer Products division. Disney has focused on bringing more IP into the parks, particularly Epcot. Branding is a primary goal, which connects to the new structure. When a film like Black Panther is a phenomenon, Disney needs to find ways to incorporate that property into the parks. There’s nothing wrong with that approach on the surface. However, the danger is prioritizing that goal beyond all others. Selling to the consumer is important, but it shouldn’t disregard what’s made Disney successful.
Despite the fan anger, I suspect that most of us won’t dramatically change our habits. We’ll still choose on-site resorts due to the convenience and theming. If we drive a car, we’ll add the parking fee to our budget and adjust our spending accordingly. Disney will see the profits from the rates and will probably increase the charges in the future. That’s only part of the story, though. Disney can survey guests and gauge online reaction, but those are just short-term results. In the long run, it’s a bad look for Disney and just confirms trends from recent years.
The Guest Experience
When you consider all the unfortunate news in today’s world, it may feel silly to get angry about parking fees at Disney World. They represent a small portion of guest spending, and many will barely notice the change. The outrage is reactionary but stems from the strong emotional connection that fans have with Disney’s theme parks. We visit them for comfort and expect more from Disney than other vendors. Nostalgia for past trips drives our need to visit once again. We place Disney on a pedestal because the parks and resorts are amazing places.
Disney’s corporate restructuring is probably wise to streamline their business processes. There are obvious connections between Consumer Products and Parks and Resorts. The alarm bells go off when I observe that move in conjunction with many recent business decisions, though. The parking charge is just one example of ways that Disney is concentrating on consumers, not guests. My distinction between these terms is the way that Disney makes money in each case.
The word “guest” is a brilliant choice to describe what Disney is selling with its parks. We aren’t tourists or casual visitors to Disney World; we’re part of the experience. It’s a two-way street, however. As guests, we expect the highest level of service and quality from Disney. If they deliver on that promise, spending thousands of dollars is a no brainer. Charging extra for a parking space doesn’t fit in this equation. It’s more in the realm of processing fees to buy concert tickets.
Why Theme Parks Matter
Despite the increased focus on IP in recent years, Disney has still created incredible spaces while following that mission. The perfect example is Pandora, which transcends the confines of its source material and transforms the Avatar film into something greater. That area’s success reminds us how good theme parks can be. These inviting, beautiful spaces are more than just escapist worlds too. The best examples help to enhance our daily lives beyond the parks.
Disney created Pandora under their branding-focusing leadership, and it still works. That fact gives me hope for expansions on the horizon, especially Galaxy’s Edge. What’s important is that Disney learns the right lessons from the achievements of Pandora. The IP is not the reason why this space connects so well. It’s way down the list of what’s important to the area. The immersive design, attention to detail, and originality combine to deliver an amazing space.
I’ve mentioned Pandora because I recognize that Disney can still do remarkable things. A company that can build that area should be too good for hotel parking fees. That’s what lesser players do! There are ways to maximize profits without making guests feel icky about handing over their money. Disney must focus on the guest over the consumer or risk a backlash. Discontent takes years to fester, but it’s out there. I suspect we’ll see new fees on the horizon, and Disney must be careful and take the long view. Popularity ebbs and flows, and taking guests for granted is never a wise strategy.
Related Articles: Consumer Products
Photo Essay: Exploring Pandora: The World of Avatar (February 8, 2018)
Sources: “Disney restructures its business as digital disruption shakes up the media industry” (LA Times, March 14), “Walt Disney World hotel guests to pay new parking fees” (Orlando Sentinel, March 15)
Stay updated on all the latest blogs and podcasts; join The Tomorrow Society today!
Follow The Tomorrow Society on Facebook, Instagram, and Twitter!
Melanie B. says
Very interesting article, Dan. I enjoy when people ponder what we, as themepark-goers, are seeking out when we visit these places, and how we are seen by park management, and how much it matters. We are touched on such a deep level by what we see, feel, and experience at theme parks, and it is fascinating to examine the how and why behind it. Thank you for asking the hard questions!
Dan Heaton says
Thanks Melanie. It’s such a tricky subject because Disney is offering something that we want and are willing to pay for to experience. However, there’s always that fine line between providing something amazing and charging so much that the value is lost.