Cruise Dreams

As Honor Hunter posted last night on his Blue Sky Disney blog, it looks like the Disney Wonder will be the first cruise ship to move to the west coast from Florida. 

As I’m sure most of you no doubt know, the Wonder has spent most of its life plying the waters of the Caribbean playing host to mostly the 3 and 4 day Bahamian cruises offered out of Port Canaveral.  This has left the Magic to work the longer 7 day and international cruises that Disney offers, including next summer’s trip to Europe.

The first of the new Disney Cruise ships will of course make its home in the Bahamas as do all of the other cruise ships in the Disney line I presume and it will be primarily embarking from the Port Canaveral facility.  I wouldn’t be surprised if the new Disney Dream and the Magic switch places, with the new ship doing the 7 days cruises and the overseas stints, while the Magic takes care of the 3 and 4 day package cruises. 

Disney has been pretty mum about the layout of the ship which isn’t all that unusual given that the hull is almost independent of what does inside (or more technically on top of) and the power plant is probably already mostly chosen.  That’s why construction has been able to begin on some of the steel.

My guess is that the Magic and the Wonder will become ‘entry’ cruises for short destination hops to give people a chance to try out a cruise without a 7 day commitment (for many folks a 4 day is plenty for the first time out after all).  I don’t know how successful they have been with the cruise/DisneyWorld hookup but anecdotal evidence from the number of buses at resort hotels is that it’s done well enough.  The Dream and the Fantasy will become the long haul cruisers because they can probably pack in more people for a smaller increment in operating cost, therefore making the long trips even more profitable if they book out at a decent occupancy rate. 

Cabins for certain won’t be any smaller and I’d bet there will be more variation at the top and maybe even in the middle classes.  Right now it can be difficult to book a comfortable trip for even a family of 4 in one cabin due to limited closet space, etc.  I’d especially expect the higher class cabin to be bigger than the current ones.  After all, the only major difference in general for the upper class room is if you have a veranda or not:  the room sizes and amenities are almost exactly the same.

So the Magic will no doubt go down for a big rehab before moving west (it’s due now in some instances from my observations of our trip last month), but they’ll likely only do what they have to in the next dry dock until a more formal period can be had.  My guess is the Dream will come on and then the Magic will go off to rehab before Disney does another sell out Panama Canal trip, as they’ve done every time they’ve made that journey that I’m aware of.  That leeway will let them do a more paced overhaul, but it will probably still be a butt buster like the last 14 day all out overhaul of the Magic (if you want to see that, make sure you catch the Travel Channel story about it . . . they did an amazing amount of work in that short time).

As for west coast itineraries, I’d say they’ll spend most of their LA time going to Mexico or Canada in general, with possible longer trips to Hawaii.  The Hawaii trips will be tricky though, since even most of the current trips are 12 night hops from LA that leave you in Hawaii.  So they’ll probably try to follow the European model they’ve established here and sell a 12 night out (5 days at sea, the others in the islands) and then spend a month or two doing 5-7 days cruises in the Hawaiian Islands before offering another 12 day back to the west coast.  They will also be able to offer 7 day cruises to Mexico and one way 7 days cruises to Vancouver via Alaska as several others do.  Given the current local market for Disneyland that isn’t likely to change until mid-next decade, I doubt they will try to mimic the park/cruise combo of the east coast for awhile. 

They will certainly NOT be making a Panama Canal run with the new ships anytime soon, since both of the new ships are what’s called ‘Post Panamax’ ships.  That means they are too wide to fit in the current Panama Canal.  The current expansion of the canal isn’t expected to be complete until 2014 at the earliest.  They could fit nicely in the Suez Canal, but I’m not certain there is enough of a reason to go that way at the moment to warrant wondering about it.  Certainly it would be nice if they offered some cruises to locations in the Southern Hemisphere, but we’ll have to wait and see.

It will be interesting to see what they do with the other big ship, the Fantasy.  I wonder if Disney will try to edge in on some of the longer 20+ day cruises that other high end lines currently offer?   

D23 Charter Gift

I didn’t post about this item in my post the other day because I figured it was common knowledge as to what the exclusive charter gift was for new members to D23.

Then I saw the Mouseplanet post this morning from Steve Russo that says:

If only we knew what the “Surprise Collectible Gift” is. While Disney has stated it's “not a pin,” could it be something of equal value? My bet is that this will be something unique enough and with a coolness-factor high enough to make the true Disney fan take notice. I'd also wager that if this gift is nice enough, D23 enrollment might increase significantly. (As I write this, there are some early, unconfirmed reports that it's a 20” x 30” lithograph of Mickey's 80th birthday celebration. These reports also state that it's not signed or a limited edition so I may be off on the coolness factor. We'll have to wait and see.)

Well I have mine and I can confirm that it is in fact a lithograph of Mickey’s 80th anniversary painting.  Below are copies of the material that came with it, so you can decide how you feel about it.  The print is NOT signed or serialized, but it IS embossed with the same stamp you see on the bottom right corner of the Certificate of Authenticity (the Disney Archives/D23 shield).

I happen to think it’s pretty nice, but that’s just me.

 

More on D23

I now have received all of my initial information and the parts of the membership kit for my D23 membership. I thought I’d share with you what I think of the different parts to date (some of which you can see online here).

First though we should address a couple of things based on some e-mails and other feedback about the ‘opinion’ piece I wrote the other day in support of D23.

The Anonymous blogger who mentioned that I was using flawed logic in the comments also mentioned that several other companies are doing things like this with little to no cost to the consumer, but offered no examples. I told you I could give you examples, but was choosing not too. I feel compelled now however to give you at least one side of why I think $75 isn’t ridiculous (maybe expensive yes, but not ridiculous) in comparison to some other similar ‘clubs’.

We could also do a business analysis based on some assumption of cost for the magazine, the number of people in the D23 group already (the magazine alone lists probably the equivalent of 10 man years worth of effort already attached to the D23 overhead), and then the number of people that would have to sign up to even break even before other costs (some quick back of the napkin numbers say it would probably take on the order of 15,000 members just to break even on the fixed costs depending on how many variable costs there are in the mix). . . but I digress.

Here are a couple of examples of similar types of clubs and their offerings (this isn’t definitive, just ones I’m familiar with through friends and relatives):

Porsche Club of America – www.pca.org – Price $42 per year

• Monthly magazine – community written, plus heavy advertising
• Community website at pca.org
• Local chapters that host regional meetings, etc., usually on a volunteer basis
• National convention – Porsche Parade (discounted entry)
• Local track events, usually hosted by the local chapters

Gold Wing Riders Association – www.gwrra.com Price $45 per year

• Monthly magazine – staff written?, plus heavy advertising
• Community website at www.gwrra.com
• Local chapters that host regional meetings, etc., usually on a volunteer basis
• National Wing Ding convention
• Rider towing for 35 miles and a list of approved service centers
• Discounted rider education

Harley Owners Group (HOG) – www.hog.com – Price $45 per year

• Quarterly subscription to HOG magazine – staff written and heavy advertising
• Community website
• Local chapters
• HOG Touring Handbook
• Sponsored Events

Disney D23 – www.disney.com/D23 – Price $75 per year

• Quarterly 23 magazine – staff written, large format, NO advertising
• Community website
• National Expo - ‘convention’ – discounted entry
• Special events and exclusive merchandise

I don’t pretend to run an affinity group, heck I didn’t even stay at a Holiday Inn Express last night. . . but I think you’ll see that one MAJOR difference above is - - - ADVERTISING.

Yep. That dirty word that propels Google’s insane stock price, props up some of my fellow bloggers based on Google/Yahoo/MSN rankings, and to some extent makes free TV possible, etc. (Full disclosure: I run Google Ads and Amazon links on my site too, but to date I’ve ‘earned’ a whopping $6.23 cents from clicks.)

As one other point of comparison, the highly received Laughing Place magazine (NOTE: I’m a subscriber) is $36 per year for 4 issues. It’s probably of equally high quality in most eyes (though on thinner magazine stock and smaller in size). As far as I can tell from their opening credits, there are 3 people who work on that magazine, though I can’t surmise if it’s full time or not; my guess is I doubt it. They are the only other Disneyana magazine I know of however that is a somewhat similar format and has no advertising.

That doesn’t mean you have to like the price or the offering, or that you don’t think the price is ridiculous, etc. etc. etc. It just is one way of looking at a business problem to try and show it’s not completely on another planet. I’m sure if Disney offered advertising in their magazine, then the price could be $9.95 or some such per issue.

I suspect the price will come down as Disney gets a better feeling for the type of group they are attracting and the volume.

As for the print material to date. . . it’s pretty decent for a first time out. The articles are nice, the pictures are vibrant and the print and stock quality of the magazine are top notch. There is still some room for improvement of course. The styles from page to page are a bit inconsistent in flow and in some cases you’d almost like to have a break with a ‘plain’ page here and there to break things up a little (ads help with this in regular print material).

The D23 website has been being updated fairly regularly with new news and other information. The latest post I can find is 2 days ago on Mission Possible, the Epcot Kim Possible attraction. The web writing has been of pretty good quality as well. My main complaint about the web site so far is it can be hard to separate new content from old (though not much is old yet) as you can’t see the post date until you open the article. Likewise, I’d REALLY like to see an RSS feed for the site so I can track it and articles in my RSS reader along side all of my other news reading.

There are still many things to do before any of us will consider it a success, but so far the quality seems to be there, lets just hope for the consistency and follow through.

For the record, I’m still glad I joined.

Giving 23 a Chance

The initial hullabaloo over the new official Disney fan club, Club 23, has settled down some, so I thought I’d take a second to share with you my thoughts on this new offering…  I’m giving it a chance.

I WANT the company to succeed (heck, I want my blog and my job quests and President Obama to succeed too).  I want it to succeed so much so that I’m willing to put my money where my mouth is and pony up to give Disney (and more importantly the folks inside of Disney) championing this cause a chance to prove something.  To prove that we folks who are ardent fans are worth catering too… that we love our times in the parks, but desire a closer ‘relationship’ with the company and the many faces behind it.  That we can be a part of a community that can be accepting and still be critical, without being stupid, ideological or even plain rude.

I’m also willing to step out and be part of something that is, in many cases, wholly unnatural for a company of both the size of a Disney Company and the history of the Disney Company…  very few companies that are over 10 years old are willing to acknowledge the community thing and ever fewer ‘get’ the community thing.  Possibly the closest example I can think of are some of the pseudo company sponsored auto clubs like the Harley Owners Group (HOG) or maybe the Porsche Club of America (PCA) as examples.  Can you name another company (besides Apple) that has a large a following as Disney and yet has no official outlet? 

I could regale you with analysis this and analysis that about the price point in comparison to other groups or the how much the membership is only a little more than the 4 issues of the magazine I would have bought anyhow… but I won’t.

I’m simply going to say this… if you want the guys and gals like us inside to win the discussion about how important the Disney community is and can be and how much the community has to offer.  If you truly want that, then you need to think long and hard about if they deserve your vote of confidence in giving them a chance to earn your respect (and more than get your money’s worth in the end). 

Numbers speak volumes…

The Things You Find When You Read A 10k

Some of you who are familiar with business filings will know what a 10k is without me saying.  Others of you might first think I’m talking about a race, but then you’d ask ‘How do you READ a race?’  Simple, you don’t.  A 10k is the annual filing that every publicly traded company in the US must file with the US Securities & Exchange Commission (the SEC). 

The interesting thing about a 10k is it is a LEGAL document.  Unlike the nice glossy Annual Report you stock holders get from the company, the 10k often contains much more detailed information than the annual report.  It is also required to be filed in a specific electronic format.

Anyhow, here are some of the interesting things I pulled out of this year’s 10k that I hadn’t noticed about Disney before.  Maybe some of this is new info for you too.

• Disney owns 41 Radio Disney radio stations that reach 60% of the market.  What I didn’t realize is that almost all of those stations are AM!
• Disney has been deeply involved in building a ‘city’ area adjacent Disneyland Paris.  At first I thought it might be like Celebration, but an exploration of their website shows it’s MUCH larger than anything Celebration could ever be.  Online at Val D’Europe.
• Since 1923 Disney Studios has released 928 live action and 80 animated features.
• Interestingly they own 1,407 such titles under the Disney Home Entertainment brand.
• Disney now owns 7 record labels under the Disney Music Group.
• There are FIVE pages of risks that the company feels are material to it’s operations.  No surprises, but it’s always interesting to see such things written out.
• There are over 1 million shareholders of Disney stock.
• The Lehman Brothers implosion cost Disney’s shareholders 3 cents a share on dealings the company had with LB.
• Disney effectively completed the cost of absorbing Pixar in FY 08.
• The domestic parks had 89% occupancy and the average room spent $233 a day (which includes room price, as well as spending on food and merchandise at the hotel (not the park)).
• Consumer Products had the largest bottom line growth, with a 14% increase in income. P&R grew at 11% as did Media Networks.  The Studio posted a 9% loss.
• Disney’s effective income tax rate is 36.1%, so for every dollar in profit, they send 36 cents of it to Uncle Sam.  And you thought your tax bill was high???
• Domestic investment in P&R was inline with the previous year at $793 million.  That includes the parks, hotels and cruise ships. However, foreign park investment is down to $140 million in 08 (and likely to go lower with the Paris line tapped out and the recent pull back for any expansion in HK).
• The Company still owes almost $2.5 BILLION in debt for Disneyland Paris and $1.25 Billion for HK Disneyland.
• Disney and the Hong Kong government came to an agreement on the last day of September to allow Disney to extend a line of credit to the owning company of HK Disneyland to meet it’s debt obligations.  Further, Disney has agreed to to WAIVE the 2008 AND 2009 management fees for the park (notice that’s not DEFER, but WAIVE) and to DEFER royalties until some future date. They have NOT come to an agreement about expansion though.
• Euro Disney, under the terms of its restructuring, has limits on its investment and financing activities.  The recent expansions have been due to financing and money provided by the Disney Company.
• For film and tv shows the company uses a 10 YEAR window to estimate revenues.
• The company has about $10.5 billion in in contractual obligations and commitments in FY 09 to pay and seems to have plenty of access to debt that isn’t due soon (Roy would be proud).
• movies.com went for $17 million when it was sold last year, where as the 39.5% stake in E! was sold to Comcast for $1.23 billion
• It’s stated in a double negative sentenance, but it appears that Disney met its long term goals at Euro Disney in FY 08, allowing it to be paid some management fees that would have otherwise been deferred or subordinated
• The company expects to amortize (i.e. write off) a whopping 83% of their current fielded TV and film catalog in the next 3 years!
• The company pays an effective interest rate on all debt of about 4.5%.  Wish I could borrow for that.
• An investment group entered into a contract with Disney in 2005 to fund up to $500 million for 40% of up to 32 non-sequel, live action movies.  In return, those investors get 40% of the net revenues.  The last film under this agreement is schedule to come out this year
• If your a Disney employee with stock options, you’re crying these days at the current trading price as the average stock option has a strike price of $27.72…  OUCH!

Would You Like It as Much If It Was Cheaper?

So I’ve been thinking a lot about the fate of the parks and Disney in general since I last posted (sorry for the delay, but these thinking things can take awhile to come to enough of a conclusion worth typing about). . .

Our recent sea voyage and trip to Disney World certainly confirmed a couple of things that are in the blog-o-sphere..  attendance is still there and the cruise business is still packing people in (our cruise was clear full, somewhat to our surprise).  So the question for Disney isn’t ‘are we getting people’ but ‘are we getting people who have money to spend as usual’?  That of course is where the whole ‘average revenue per room’ that Disney tracks comes from in their quarterly and annual reports…  and I think we can all safely say that number has continued to decline, despite only modest declines in attendance.

Which got me to thinking about the complaints people make about a Disney vacation expense (along with the recent revelation from Six Flags that they might be in bankruptcy before the summer is out).  Here is my question to you:  would you like a trip to a Disney park if it was really that much cheaper? 

Stop that initial ‘Yes, of course!’ reaction that you just had and really think this through okay?  We’d all like our vacation to be ‘cheaper’, but what is the value of something that costs you only $1???  Usually not much.

So walk with me here just a second, because this discussion goes beyond just you and me and our immediate out of pocket expenses. 

If the average trip to Disney was say 50% of the current price for 5 nights and tickets, what would that do?  If the advertised price for that package in a value resort is $1500 for what Disney calls a typical family of 4 (mom, dad, teen and child), and it was suddenly only $750, what are the second order changes that would make on the environment?

Certainly you could make a case that attendance would go up, but would it go up twice as much to maintain the current margins?  Further, would you like it if they did double and the parks were always twice as busy as they are now?  The lines these days, even on a slow day, are still plenty long… imagine every day being like a busy holiday, and holiday’s being outrageous (as if they aren’t already).

Would the food service be better if it had to crank out 1.5 to 2 times the current throughput?  Even on modest days you can stand in line for 15-20 minutes at a counter service to get lunch.

And where would all those other people come from?  Is it that likely that people who can’t afford a $1500 vacation can suddenly afford a $750 one?  What kind of people would these be?  I’d hypothesize that they WOULD NOT be the kind of guests who would suddenly have more money to spend on trinkets and other purchases… no, my bet is that it would still be a stretch vacation for many of these new customers and the lower price would get them in the gate, but only the concessions would stand to make much money from the increased throughput.  Would you buy more stuff just because you suddenly could go with $750 more? 

Even more interesting is where would you put all of these people?  The Value resorts today are increasingly hard to get into, especially with the current discounts.  The Moderate price difference is still too much to generally make it an alternative for people on a budget, and the hotel’s in Downtown Disney are no cheaper (and in many cases more expensive after resort fees and other such nonsense…  we stayed at the Buena Vista Palace this last trip and a simple buffet breakfast for 2 adults was $50!!!  And you thought the Disney food courts were expensive????)

Beyond all of that, I doubt attendance would double so Disney would have no course but to cut services to maintain profitability.  We already complain about ‘declines by degrees’, but think of what it would be if the price and attendance were different? 

There is very carefully managed balance between anticipated attendance and costs and the perception of the value received for them.  I’m not so sure we’d all like it nearly as much if it went from being Walt Disney World to Mickey’s Discount Vacation World…

Disney Cruise Line

Back from our 4 day cruise trip and visit to Disney World! 

I have to say, I’ve never been on another cruise line other than Disney, and I’m not sure I will ever have a reason too.  These cruises really are a good time if you’ve never been on one. 

Of course it just so happens that today is the day Disney Cruise Line announced the cutting of the first steel for their two new boats.

I have other things to post from our trip on the cruise line and around the World, but in honor of first steel I wanted to share an official Disney website I found recently that shows more of the ‘behind the scenes’ from the cruise ship business at Disney. 

Click on over and take a look here:  Disney Cruise Line

Especially take a look at the DCL Experience Video under ‘The DCL Experience’.