Intro (00:01):
Pixie Dust & Profits is a podcast for small business owners who love Disney and want to sprinkle some of that magic onto their own businesses. Join your host, Nicole Boucher and Yasmine Spencer as they explore the mouse’s $12.6 billion operation and break down exactly how you can apply these big-scale concepts to your own.

Yasmine (00:27):
Hi guys. Welcome back to another episode of Pixie Dust & Profits. It is August 31st, 2021, or we’re recording this and this is relevant because normally when Nicole and I sit down to talk to you guys, we’ve actually mapped out the episode in advance. Like we think about the topic we want to talk about what the business lessons are, do some research to make sure everything’s backed up with facts, and then really dig down into the business takeaways that you can apply to your business right today. We’re going to do something a little bit different because Disney just dropped something really huge yesterday on August 30th, and we have to talk about it. So if we don’t really follow our traditional format, bear with us, but I promise we’ll, we’ll hit up on those takeaways. So what are we talking about? Disney has brought back their annual pass holder program.

Yasmine (01:12):
Now benefits of an annual pass holder program is if you’re actually going to Disney more than 10 days in a year, it becomes cheaper. Basically means like every trip after that tends to technically be free because historically the annual pass was equivalent to a 10 day park ticket, a Disney trip. So you go regularly. If you’re a resident of Florida you are someone who lives close or does fanatics like Nicole and I, where you had to Orlando on the regular, as long as borders are open you have meal passes. That makes sense. Well, Disney has revamped their program. I think technically they’ve added in additional tiers and they’re charging more for less. So they’ve actually taken like perks that have historically been included with the annual pass. And they’re now out on. So let’s take a quick look at the four options available to us.

Nicole (02:11):
Let’s back up for a second though. Like let’s just talk about annual passes in general. Okay. So they’re not for every customer that you already have, like a set type of customer who is buying the annual pass. Like you said, usually break even was 10 days, but breakeven could actually be less than that. If you were taking separate trips because the cost of entry, the way Disney has always priced their tickets has been like it’s $200 for one day, two 50 for two days, 2 75. Like it starts getting to be like the price per day goes down when you stay longer. So if you were going to take two, four day trips in a year, an annual pass might make sense because that first, that first like, Hey, of the 200 or $300, it’s really, really rough. And so in the past, the annual pass holder program has been great, especially for locals and for people who go essentially more than once a year is what I would say. It was a good, a good plan. And we definitely took advantage of this because we would do things like go in January. And then when we would go to the next December. So it felt like a full year, but we were still using our same tickets. So we didn’t have to pay for tickets for both trips. And that’s why we’ve been able to go on so many trips at times we loved it. And now I don’t know how I feel about these changes.

Yasmine (03:32):
Yeah. And like the other thing to consider with annual passes is it came with perks. So one bonus that you get is a discount off a certain restaurants. So if you’re doing a table service restaurant, for the most part, you got 10% off your meal. That’s also included if you are a DVC blue card member you also got discount on merged throughout the park. So it ranged between 10 to 20%, depending on the location in store, they also included PhotoPass which, you know, all those photographers at the park who take your photos, all those ride photos that you get when you’re like on mine train and like space, mountain, pretty much everybody that had photos, all of those would go on to your magic band and you would have them to look up afterwards if you had an AOL pass. And the beauty of it is like only one person in your party really needed it for you all to have your pictures.

Nicole (04:24):
Yeah. There’s definitely times where I’ve had an annual pass, but my husband and son did not. And so I got all the pictures for everybody because I knew I was traveling for work or whatever other reason. And now Disney has decided has they have for quite a few other things recently that things like the photo pass, which made annual passes great because your pictures were included for all of the trips you’ve taken, it’s now an upsell it’s not included in the base level. So you now need to pay an extra $99 a year to have your photos from your vacation. And that I’m pretty sure $99 was how much photo pass was like per trip for other people. So that price is probably up to I just think it’s just, it just feels very nickel and dime me. I’ve always gotten the pictures for my trips and I will admit that we used to love taking pictures with the characters and everything when my kid was little, but as he’s gotten older, his tolerance for wanting to wait in line to take a picture with a character has dwindled to nothing.

Nicole (05:26):
So I don’t think I would pay the $99 a year extra to get my pictures because we get so just fewer photos in general than we used to. And then you’re adding on this extra charge. And the other thing too is like, if you want some cool PhotoPass photos, you’re waiting in a little line to get to the photo pass photographer, who’s taking the picture and they’ve, you know, laid off quite a few PhotoPass photographer. So there’s less locations. So not only are you charging me something that I got for free for very many years, but now there’s less locations. I have to wait in line for it. My kid’s not even interested in it. And all for that one magical shot. Like I it’s just not just feels not so magical to me.

Yasmine (06:13):
And then on top of that, like the base prices for the annual passes Nicole have increased. So let’s go back to what the options are. So there’s two Florida resident passes, which mean you have to live in Florida in order to be eligible for them. There’s a third pass that is only for Florida residents or Disney vacation club members like Nicole and I, and then there’s like the general past, which is called the Disney credit pass that like anyone who is basically Knopfler resident or DVC, my work can get. So the pixie pass starts at $400 for four residents. And it basically has like weekends blocked out in a lot of dates, blocked out. The Disney pirate pass has weekends, but a lot of like popular time periods throughout the year, like Christmas, Thanksgiving, Spring Break,

Nicole (07:02):
I think all of Spring Break is, you know, marched, April’s blacked out of there, like mid November to New Year’s is blocked out. Which is probably great for annual pass people who live in Florida. They may not care about going during the really busy times of year. So those passes might still work out, but they’re still significantly higher than they used to be. I mean, the pirate passes $700. And I swear the first time I bought an annual pass, it was around that much.

Yasmine (07:30):
Yeah. And that was like the price that we used to actually be eligible for when we bought our DVC pass. And it basically had most states except the holiday season. So it’s interesting. I still have my annual pass that I bought like two and a half years ago that I never was able to activate because COVID happened. I was supposed to activate it first on a March 20, 20 trip with Nicole, if I recall correctly, remember

Nicole (07:57):
Yep. Supposed to stay at the Polynesian and do some podcast planning.

Yasmine (08:03):
Yup. Yup. And it’s honestly 21. Yeah. So yeah, there’s quite a few dates in October, November, like all of, pretty much December, like any race weekend or anything in January, man. There’s like a lot of days close. And then after that you have the Disney story.

Nicole (08:24):
Sure. Surpass, I love the new names. Okay. Like let’s give some prompts for some of the things they did. They did. The logo is just, it’s modern yet throwback at the same time. I love it. I, I want that magnet. Please send it to me whenever I renew, because I will renew, even though these prices are crazy, but you know, like I love that. I love the names that they’ve come up for the annual passes. So they did some things. Right. But yes, let’s get into Disney source or a pass. Okay. So this is hundred dollars plus tax it’s always plus stuff. They always tell you the price without the tax included. And then you get hit with another $70 on top of how much the product is. This one is, is I think it’s a new level. There used to only be two levels like Florida resident than Florida resident and D or DVC member.

Nicole (09:12):
And now there’s three members, three levels for Florida residents. The top tier is Florida residence or DVC. So this is probably the one that I would be interested in and it’s $900 and still has blackout dates during holiday periods. I haven’t actually gotten a chance to look at the calendar to see if they’ve extended those, but historically those blackout dates have basically been the two weeks of Christmas to new year’s and then usually like a week or two around Easter. But that’s it. So I haven’t gotten to see if they’ve extended that he asked me, do you know?

Yasmine (09:47):
Yep. So I just took a peak it’s basically Thanksgiving weekend. And then the holiday like Christmas from the 18th to the 31st of 2022. And that’s it. Everything else is open.

Nicole (09:58):
Well, that’s not bad because I think they know that one of the most popular times of year for DVC members to go down to Disney as the first week of December, the first two weeks of December, because there’s typically lower crowds, but the Christmas decorations are out. And the points for rooms are really low. Then they have adjusted that the P points have gone up to, to levels that they weren’t before. But I’m glad I was worried that they were gonna, you know, say this is for DVC members, but then block out our favorite dates here and then force you into the in credit pass, which is the past that’s available to everyone who isn’t a Florida residence or DVC member and taking this back a step. It’s not all DVC members either. If you buy your DVC real estate contract from a resale market and not from Disney directly, you do not have the ability to purchase the DVC perked, Pasch. So it’s not every DVC member that can even do that. So the vast majority of this offer is the credit pass, which is $1,300 plus tax for people. It doesn’t have any blackout dates, but it’s $1,300 in it still, it doesn’t include photos or

Yasmine (11:11):
Access to the water

Nicole (11:12):
Parks. Oh yeah, yeah, no water, but this is just the four, just the four parks magic kingdom, Epcot and walking through and Hollywood studios. And I think the annual pass before this, that, you know, non-residents would get was probably around that $900 mark. I mean, this is a significant jump up at least $200, maybe $300. And that’s for one person, when you start thinking about the typical people traveling, I’d say for kids, you know, for a family of four family of five, I mean, this is just a level of just, it’s just so overpriced. And I don’t want to say overpriced. It’s just very high it’s, it’s an investment. And then we talked about like photos aren’t included anymore. The other thing is they they’ve recently taken away the magic bands. And so you have to pay like 10 or 20 or $30 for your magic band, which, you know, as an annual pass holder, whatever, I have a closet full of magic bands.

Nicole (12:03):
So I didn’t always want a new one every trip and it is only $10, but it’s like, if it’s only $10, it probably costs them what, $5, $2 to manufacturer, just throw it in. When we get the annual pass, you know, we’re coming again, you know, we’re spending on all of your overpriced food, like throw us a bone, you know, we’re really, we’re your top paying customers. And then I will say it is nice that they now have this option to include water parks. You know, you can upgrade to tap your photo, but you can upgrade to include the water parks. I don’t know that that that’s technically worth it because I think a waterpark pass is probably around the $60 mark or a $70 on a hundred dollars a year for like unlimited. So you’d have to go to the water parks twice to, to use it.

Nicole (12:52):
And, you know, despite our best intentions, I think we only ever get to the water parks once. Every other trip, even though we love them. And that’s just because the weather doesn’t always work out the way you want it to, or you’re just tired and don’t want to be in the sun and the resorts have really great pools. The other thing that these passes have introduced, I don’t know if the park reservation system is sticking around after COVID, it’s clearly here right now. And if you don’t know what that is, basically, if you plan to go to a park, you need to have a reservation in advance and that, so they can do some crowd planning. If you want to park cop and go to another park at like, if you want to go to Epcot, after going to Magic Kingdom in the morning, you have to wait until after 2:00 PM and you have to have that park cropping past.

Nicole (13:39):
And so these annual passes now have caps on how many park reservations you can hold at any one time. So the lowest, the Florida resident only $400 a year. They can only hold three park reservations at a time. Now the exemption to this is that if you have, if you have resort reservations at a Disney resort, you can have Parker’s operations for the full length of your stay. So if you’re staying 10 days on Disney property, you can have park reservations for those 10 days, no problems. This is just a limit of, without reservations to their whose works. You can only book three park passes. So if you have an annual pass and you like to stay off site, or, I mean, I know people who have second properties down there or timeshares that aren’t Disney timeshares, and they’re only going to be able to book three days.

Nicole (14:35):
And so it goes all the way up to five days on the highest pass. So I think this is really interesting because we probably talked about this in a past episode where they started giving all these perks to being a resort, stay to area hotels that weren’t Disney hotels, things like fast passes being booked at 90 days out, which FastPasses, aren’t a thing anymore. We did last week’s episode talking about that, but you know, the fast passes, the park reservations, like restaurant reservations, they started branching out and letting area hotels get those same perks and started feeling like, well, why are you staying on Disney property? If you know a hotel at a quarter of the price is getting the same perks. Well, here’s why, because if you’re not staying at Disney property now, and you have an annual pass, you can only book three to five days of your trip. And then you can just cross your fingers and hope that you’ll get a Hollywood Studio spot, but you probably won’t.

Yasmine (15:31):
[Inaudible] On top of that. If you’re also staying on-site, they’ve added additional perks. Like you can go to the parks a half hour early in the mornings, and if you’re staying at deluxe resorts, you get an additional hour on select evenings at various parks. So they’re really trying to push people to spend more at Disney and like Nicole and I like Disney apologists to a degree, you know like we love Disney. But the takeaway here is that every business has to look at their business model and what they’re offering and increase prices at some point, because, you know, there’s increased cost of labor right now, Florida’s going through. And like a lot of the United States, they’re going through a massive labor shortage. They’re trying to hire for many spots. And, you know, in some cases paying a lot more hourly than they did historically before the pandemic.

Yasmine (16:26):
And I mean, that’s a great thing. People are getting living wages and you could argue, well, they’re still not spending more than they used to, but they’re still making more than they used to because they’re operating at limited capacity. They’ve been dealing with losses for several quarters because of shutdowns and the pandemic. So like financially, while Disney has a lot of money, like they’re not in the best place or not where they have been. And they need to deliver shareholder value and make sure the company is profitable and raise prices. And, you know, we look at this in our client’s businesses all the time shipping goes up for items. The cost of goods sold increases significantly because manufacturing costs have increased for their products. When they look at their services and their programs and courses, the amount of time that they’re investing in it to deliver the most value to their student students is a lot more than they originally anticipated when they price out the program.

Yasmine (17:24):
So, you know, it’s fair to charge for that value is Disney charging appropriately for that value maybe, but we’re just used to getting such a great deal that we’re going to renew, but we’re kind of doing it begrudgingly. And what we want to say here is like one year of reevaluating things, there’s ways to do it without necessarily off your most loyal customers. Let them know that this is coming down the pipeline and explain why with a few of my clients, when we had to increase prices due to just insane shipping costs and manufacturing increases, we’d let them know in advance. Like we gave them like 30 to 60 days warning that like, Hey, prices are going to go up in this timeframe. We’ve tried to hold off on increasing prices as much as we could, but we’re at a point where like, it’s just, it’s literally no longer when we’ve profitable for us to continue selling you the product at this cost.

Yasmine (18:18):
And we’re doing a marginal increase. Let them know, explain why. And for the most part, like people will understand if you give them a reasonable explanation, but you know, timing in there with radically increased pricing, shiny new brand, which is like fun. We love it. Okay. It doesn’t really sit well with your customers. And like I said, Nicole and I were, we’re going to renew it at the end of the day. It will still end up being more cost effective than us getting like individual tickets. Every time we go. But it’s like 20 Disney years for me.

Nicole (18:56):
Yeah. Well, and the hard part too, is that renewal is always one of those decisions that you sit there and you’re like, do I bother? Or do I not? Am I going to go? Like, if you don’t have a trip planned, you start questioning it. But the renewal price is $150 less than getting a new pass. So if you don’t renew, when you do go back and you have to go buy that annual pass, you’re paying $150 more for something you could have already had. And so it just gets to be like, I don’t want to do this, but I kind of have to, am I booking a trip in here? So I’m honestly going to have to look at, you know, my vacation club points, situation, my family situation, and see are we going to bother to renew? Because you know, we might take a six day trip next year, but my kids getting older, we have to go during school breaks.

Nicole (19:45):
Now it’s a completely different way of vacationing than when we used to be able to go on a whim because, you know, he was in daycare and not in school school. So we’re going to have to evaluate all that stuff. And I just think that we knew something was up with annual passes because we weren’t able to buy them. I, fortunately, was able to renew mine before it all went to a state of flux. So I still have mine active, I believe until like April and then I’ll be able to renew into this new program. And then like we do, it’s going to come back with a price increase. But I think the thing that really surprised a lot of people was that it came back not just with a huge price increase, but also with restrictions that didn’t exist before perks that you had before taken away.

Nicole (20:34):
And honestly, I’m a little bit worried now because all of the Disney vacation club, blue card perks, all the blue cards expire this December. And so like, what are they going to do to that program? And I know that you have never buy a timeshare based on perks or anything like that, and that the perks can go away at any time. But it definitely is like, okay, if you’re doing this to your annual pass holders, what are you going to take away from us? Like, I really love the 20% discount that I get for souvenirs in the stores. And you know, 20% adds up when you’re buying things here and there, it doesn’t really work for like that water bottle or anything. But we bought clue the last time we were there and we shopped at the, even the Lego store, even the Lego store in Disney Springs, you get a discount.

Nicole (21:17):
So not 20%, I think it’s 10, but the Lego store giving a discount. Yeah. Take my money. Are they going to get rid of that? I don’t know. I don’t really trust them right now. They’ve taken away fast passes. They’ve charged and they’re charging us for that. They’ve taken away, like PhotoPass from our annual passes that it’s just, I don’t know how I feel about all these nickel and diming. And so there’s something to be said. When you were thinking about your own business, do you bundle everything, you make it an inclusion or do you piecemeal everything and let everyone pick their own plan and try to market that as a park, like choose the plan that works for you. Okay. But that always ends up more expensive than if you just give me the bundle option. Right. So just think about these things as you’re building your offers and your products and the sales and types of promotions you have.

Nicole (22:08):
And also like I’ve talked to quite a few people recently who want to just double the price of their course or their program. And it’s like, okay, you might think that leads to more revenue, but stop and consider this from the customer’s point of view, like, what is your end goal? Are you trying to serve more people or you’re trying to empower more people? Are you just trying to get more money in your bank account? Because I don’t know that doubling the price of your product or program or course, or whatever is going to increase your revenue because your pool of people who are going to buy into it might shrink drastically that you’re actually spending as much effort to get a fewer quantity of purchases for this same revenue net in the end. And so those are things to consider while you’re thinking about this and you know, why am I am, why am I increasing the price? And what is the justification for this? We know because we follow Disney’s, you know, quarterly reports to investors that they’re down quite a bit of money. Cause they were closed for a really long time because of the coronavirus. So I understand that they have been losing money and they’re looking for ways to increase that, but don’t treat the customers like they’re dumb, like clue them in into that too. It’s something we try to put so much pixie dust on it that it backfires.

Yasmine (23:30):
Yeah. And like the other thing you need to think about is like, think about what changing your practices actually signals to your customer base. Like beyond the fact that, you know, they’re trying to make up for a rough year, really one comment that we’re seeing pop up time and time again in groups lately is that Disney is no longer affordable to the average American family. So they’re actually changing their target in some ways to go after more fluent customer base who will spend more on a vacation. And you know, they’re saying like, well, it’s going to be like less people are going to come to Disney. Well, maybe, but that’s actually a good thing in their eyes because they’re making, you know, maybe the same amount of money servicing fewer customers and that helps with capacity issues. Exactly, exactly. So that could be another way that Disney’s are going about things right now.

Yasmine (24:24):
And you know, now that the average family, or like the budget Disney family might not be able to afford to go with a lot of these changes and like they might not buying a passes. They might just like you to go for a four-day trip and buy their tickets. But ticket prices have gone up. We talked about Bubash in last season’s episode where the annual Halloween parties historically have been like 1 29 at their peak. And we spent over $200 per person for a different type of party. And after hours of that three hours, it doesn’t have all the like items and events and prays and fireworks. For our event in October, that’s twice as much for like technically like half the value, but it was something that we were really excited to try and do. Again, these events are now being priced out of what the average like family can afford. So it looks like with these changes, Disney is also trying to pivot their market a little bit to go after a more affluent customer base and probably help their capacity issues because frankly, the only way that they can serve more people is if they open a fifth gate, which we know isn’t on the horizon anytime soon, especially after what happened with COVID. So it’ll be interesting to see how this plays out and what other changes are coming to Disney in the future.

Nicole (25:40):
Yeah. I just, my strategic thinker in me is just, are they thinking about the future of who who’s going to come here after the affluent, you know, to do all income child-free millennial demographic starts moving on, starts getting older. Like my kid has a love for Disney because we have gone so many times and because that’s our annual family vacation, but if you’re pricing him out of this, like, are you going to have another generation to pass this down to? And so I don’t, I’m sure they have brilliant minds working on all of these things. And I’m sure they’re thinking about that, but I think back to the Michael Eisner days where Disney wasn’t a cool place to be, it was like dad’s in grumpy t-shirts and Fanny packs and like millennials in some ways kind of revived Disney to be like, oh look, this fun, magical place.

Nicole (26:37):
Like I can disconnect from everyday horrors and realities and just like live in pixie dust and get some cool foods and just here’s an experience and experience it with me. And it did change the trajectory of who’s the target customer now. And I just hope they’re keeping that in mind with just Disney’s here for generations. And if you continue pricing people out, like, what is that going to mean for the future? So that’s probably too meta for a 20 minute episode, but we hoped you like this one, this was really off the cuff for us, but we started out originally going to record what we had planned. And then we were like, did you see the annual pass stuff? And it just turned out. Let’s just talk about it because we had a lot to say. So and join us next week for another episode. And if you are on Instagram, check us out there @pixiedustandprofits, we also have free goodies for you at magic.pixiedustandprofits.com, go check them out. We would love to hear from you and yeah, we’ll see you real soon.