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Robert Trigaux

Disney calls on 9-11 era to manage slow times

7

November

Wake up and good morning. Time to talk about Walt Disney Co. theme parks. Typically made of Teflon in their ability to let hard economic times slide right off their balance sheets, the parks are increasingly vulnerable to this nasty U.S. downturn. "Even the best product out there is feeling the effect," said Disney CEO Robert Iger. He added:

"Our brand and the experiences we offer have never been stronger. But consumer confidence is the lowest we've seen in over three decades."

In the fourth quarter, the good news is combined attendance at Disney's domestic parks came in slightly above last year’s fourth quarter. A modest attendance increase at Walt Disney World in Orlando offset a slight decline at Disneyland in Anaheim, Calif.

In an earnings conference call (here's the complete transcript), Iger said a decline in consumer spending was catching up with his company and would only worsen next year. He said the company's theme-park division, which accounts for about 30 percent of overall revenue, could hang on through the holidays, and that bookings for the Christmas season were down only 1 percent at Walt Disney World in Orlando. But he warned of a potentially sharp drop in attendance in early 2009, and said that in the past month bookings across the company's resorts "have fallen off considerably." Here's the Orlando Sentinel take on things.

Still, Disney is no slouch and the company has had to deal with difficult times in the past. (Hey, defunct Lehman Brothers even owes Disney money.) Here are some highlights of Disney's strategy ahead:

1. At parks and resorts, Disney's experience during previous downturns, especially the challenging period after 9-11, taught it how to manage expenses based on "variable" demand. "We will do this while preserving the quality of the guest experience, something we consider sacred," Iger said. Translation? Cutting the frequency of some theme park entertainment when the crowds are lighter.

2. Watch for new marketing initiatives and what Disney calls "accompanying pricing incentives" designed to stimulate bookings and attendance during the first half of 2009. Details of this promotional offer were announced by the parks but here's a big piece of it: A "four-plus-three package" giving people the ability to basically pay for four days and four nights in Disney parks and hotels, but stay for seven. Also, there is an offering that (if folks book fairly soon, Disney says) people will get a $200 gift card to spend on food and merchandise. Here are the specific details. And it always pays to also keep up with Florida resident offers.

3. Part of the marketing push is playing off visitors' desire to celebrate. (Disney lets people in free now on their birthdays.)  About seven in 10 people who vacationed in the last year said they vacationed to celebrate something, Iger said.

4. Disney reminds us it remains a creative force. "Our strategy for creating and building franchises is working well, illustrated most recently by the success of High School Musical and Fairies. We remain excited about the prospect of and will continue to invest in key franchises, from Cars to Princesses and from Pirates to Toy Story, Mickey Mouse, Pooh, Hannah Montana, and The Jonas Brothers," Iger said.

That's one heck of a deep bench. Iger elaborates, a bit, in an interview titled "Can Disney Magic Defeat Recession?" on CNBC. Check it out here.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:22pm]

    

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