Disney Does Dynamic Pricing
We have a saying in New England and it goes like this, “If you don’t like the weather, wait a minute.”
Over the years whenever I’ve been asked what the cost would be to go to Disneyland or Walt Disney World I’ve immediately started off saying, “Well it depends…” and then I go down the variables.
It goes without saying that Disney policies and pricing are prone to change moreso than you think.
I’m a few days late talking about this new Disney dynamic pricing approach but I felt it necessary for me to digest this information for a few days to try and understand exactly how it works and how it will affect us; you know…the guests.
This dynamic pricing approach was discussed last week by Disney CFO Hugh Johnston who joined Disney about two years ago. He came from Pepsi.
Last week his contract with Disney was extended to January 31, 2029. With it came an increased long-term equity incentive to $16.5 million, up from $14 million. Oh there is more. I believe that his total pay package last year was in the neighborhood of $24.4 million. I don’t know why I am telling you this but I think it’s because I always feel that these highly paid executives removed from the common guest profile.
Anyway, let’s get to this dynamic pricing deal.
Dynamic Pricing: A Definition
Dynamic pricing is also known as surge pricing, demand pricing, time-based pricing and variable pricing. It is said to be a pricing strategy in which businesses set flexible prices for products or services based on current market demands. I think you know where I am heading with this.
Dynamic pricing involves raising prices during periods of peak demand and lowering prices during periods of low demand.
Supposedly it encourages consumers to make purchases during periods of low demand (such as buying tickets well in advance of an event or buying meals outside of lunch and dinner rushes) and discourages them during periods of high demand (such as using less electricity during peak electricity hours.
I’m not sure if this is the same for the average Disney resort guest because sometimes what motivates us is the times when we expect the lowest crowds.
If you read enough about dynamic pricing you may see some opinionated authors describe it as very sneaky price gouging.
Dynamic pricing is not a new thing. It’s been used for many years in such industries as hospitality, tourism, entertainment, retail, electricity, and public transport. Each industry takes a slightly different approach to dynamic pricing based on its individual needs and the demand for the product.
I think the best way to describe it is how the airlines handle it. We all know that certain times of the year (especially holidays like Thanksgiving) means higher airfare prices because of high demand…and lower prices when demand is…well, also low.
Disneyland Paris: Test Pilot
Disney has been using Disneyland Paris to pilot this dynamic pricing strategy. Actually, they have been testing it for a year and according to Johnston, “…It’s off to a very good start.”
What does that mean? Does it mean that the program has increased the Disney coffers? Does it mean it has balanced out the crowd levels over the course of the year? Does it mean that a trip to Disneyland Paris has become more affordable for those who need this affordability?
For those of you have been visiting Walt Disney World over the last few ears you may have noticed dynamic pricing for resort hotels. That is, rack rates will vary depending upon several factors. For instance, late August through probably the end of September is a great time to look for a deal on a resort room because demand drops once schools are back in session. Also, if you haven’t noticed by now….nightly rates of Sunday through Thursday are slightly lower than Friday and Saturday night rates.
For that matter times the upcoming Thanksgiving holiday will see some of the highest room rates of the year for obvious reasons…high demand.
To his credit Johnston did admit that launching dynamic pricing to Disney’s domestic theme parks will boost incremental revenue.
No kidding.
We have seen in recent years the tweaking of ticket prices, food and beverages, merchandise, Lightning Lane and Private VIP Tours. So get ready for more.
Ticket Price Impact
Some folks feel that under a dynamic pricing model, date-based theme park tickets could become cheaper or more expensive as the day approaches, based on weather forecasts, changes in anticipated demand, and other external factors. AgainWalt Disney World Resort already does this with hotel room prices, where price hikes often come when guests search the Disney website for a last-minute room.
Regarding the pilot in France, at Disneyland Paris Resort, the ticket calendar dates are organized by color, and each color corresponds to a specific range of prices, determined by weather forecasts, predicted crowd levels, and other factors.
The cost can change at any time; however, once guests make a selection, they are locked into their chosen ticket price for one hour.
If and when dynamic ticket pricing is implemented at Disneyland Resort and Walt Disney World Resort, date-based theme park ticket prices would probably change the closer to their chosen date (as is often the case with Disney Resort hotel rooms).
So when could we see Dynamic pricing at either Disneyland and Walt Disney World?
The jury is out on that for now. The company has not shared a timeline for the domestic rollout of dynamic theme park ticket pricing beyond the next few years. Also, we have not heard whether Walt Disney World Resort and Disneyland Resort would also offer the non-date-based, flat-rate ticket that Disneyland Paris Resort currently offers.
The dynamic pricing system introduced last year at Disneyland Paris offers better visibility of date-based ticket prices, thanks to an expanded 18 month window for pre-purchasing park tickets, as compared to 12 months previously. The price shown during the online purchase remains locked-in for 60 minutes, so no seeing one price in your cart and having that rate jump at the order confirmation screen.
From what it appears it seems that there is a wider range and increased variety of ticket prices to encourage visitors to book in advance to secure lower prices. I do like the flexibility given guests to change dates or cancel tickets and receive a full refund up to three days before their visit.
The Bottom Line
Personally I think that although we hear how dynamic pricing will help guests figure out the less expensive times to go I cannot help but think that this approach will increase the AVERAGE price of the cost to enter the parks.
That’s right.
In a subtle way Disney will be able to increase their ticket revenue by talking about how dynamic pricing will help the consumer but let’s face it….would this program ever get off the ground if Disney did not benefit from it?
I see heads shaking and people thinking…”Uhhhhh….NO!”
One more Time With Gusto: What to do!
I thought I would end this discussion with some reminders on how to get the most out of a Disney vacation. That is, getting the best value for your vacation dollar
If possible go mid-January to mid-February, late April to early May, late August through September for not only the lowest prices but also the lowest crowds.
It’s called “group villa strategy” when a large group gets together and splits the cost of a villa or suite. In almost all cases this can be less expensive than booking two resort rooms. Do the math…always do the math.
Use authorized resellers like UndercoverTourist or AAA to purchase tickets. Also check club deals like Costco. Even if the savings are minimal they are still “savings.”
there are plenty of Disney forums out there on places like Reddit or WDWMagic and others where you can find proven strategy.
Be spontaneous. I think that if/when this dynamic pricing hits there will be occasionally some good deals…but last-minute plans are few and far between but let’s see what happens. I say this because I know that in the past Disney has lowered prices because projections are low.
Wrapping it Up
I’m not sure if I’ve done a suitable job regarding this dynamic pricing idea but I would hope that others who talk about it will, like me, admit that we really don’t know how this will truly work. As always we’ll have to wait and see…like we do with the weather in New England.
See you next time.