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There’s no doubt that in the attraction and theme park space, Disney is the most revered and imitated brand. Disney’s innovations are closely monitored, analyzed, and often set the pace for the rest of the industry’s players.

As early as 2013, there was speculation that Disney would move to a variable pricing model – charging different admission prices depending on when a guest chose to visit the park and how far in advance the tickets were purchased.

When Disney World launched its variable pricing strategy in 2018, they pitched it to the public as making “the ‘Happiest Place on Earth’ a little more affordable” while at the same time “trying to find ways to help spread out visitation.”

What Disney was really doing was joining the growing number of sectors – such as airlines and hotels — that had moved away from charging the same price for the same booking, depending on where, when, and how it was booked. Once Disney’s variable pricing was launched, regardless of the number of days the guest booked, their ticket price would be based on the first day of their park visit.

This was not the first time Disney tinkered with its ticket pricing. In 2016, it introduced seasonal pricing at its parks, based on the time of year of a visit. It divided its calendar into three periods — Value, Regular and Peak — with the new “demand-based” pricing plan applying to one-day tickets. The 2018 change to variable pricing was altogether different. The biggest change was that there was no longer a definitive way to answer the question, “How much does it cost to visit a Disney theme park?” The only answer now was, “It depends.”

Technology Made Variable Pricing Possible

Commonly deployed in part to maximize revenues, variable pricing strategies in general have been brought into the light by the increased number of consumers – particularly out-of-town ones – purchasing their tickets online. Managing different prices based on different dates, locations, duration of a visit, and number of guests in the party is a complex sale. To handle the complexity, Disney World simultaneously launched a new “online destination for vacation planning” tool for consumers to use.

This front-end tool allowed prospective guests to view a calendar and ticket pricing based on the dates and duration of their visit. With six Disney World parks to select from, the guest could also then customize their purchase for the number of parks or park access options they wanted. In order for this to work, the back-end booking engine had to handle all the aspects Disney’s variable pricing strategy demanded.

Theories about Disney’s Variable Pricing Strategy

Disney is notoriously mum on details of park operations. Except for what they’ve said publicly about their new variable pricing strategy, they have not revealed their business reasons for implementing it. That said, there are a few assumptions that can be considered:

• Disney theme parks compete heavily in Florida and California – their two strongest locations — against Universal Studio parks. Whenever a solid market competitor is present, the leader can feel pricing pressure. Changing how a product is priced or sold is one strategy to offset a competitor’s moves.
  
• It is possible Disney was trying to maximize sales of multi-day tickets and/or multiple trips per customer over narrow, single day revenues.
  It is possible Disney was optimizing to sell more upgraded packages versus park admission only.
  
• Disney has a portfolio of other products, with tons of cross-selling opportunities. By providing tools for guests to create profiles, Disney can use the first-party data they gather on guests to make cross-selling suggestions. They can also use this first-party data to conduct marketing campaigns and continue to build up the means to target, sell, and service guests in a more personalized way.
  
• It is possible Disney was trying to strengthen their position and data for the launch of their Disney+ online streaming service, which was announced nearly a year later in November 2019.
  
• Disney has a much stronger brand than most attractions, so its reasons for any pricing strategy may differ from those of other theme park brands.

While consumers never like a price increase, more than one expert observer back in the first year of Disney’s variable pricing roll-out (and before the pandemic forced voluntary capacity limitations) felt that Disney very much knows its customers: Guests who come for and expect a premium experience which also comes with a premium price tag (substantiated by the continued growth of its park offerings such as the new Star Wars: Galaxy’s Edge in 2019, for which Disney World raised its ticket prices again).

Some experts also perceived that there was no real “change in traffic patterns,” with “packed holiday weekends and parks (usually Magic Kingdom) sometimes no longer admitting guests until others leave.” As mentioned earlier, Disney in part justified its switch to variable pricing as a way to “help spread out visitation.” Parks and attractions have successfully used variable pricing as a way to accomplish this goal as well as to aid park operations.

Learn, but Don’t Necessarily Replicate

While Disney is arguably the industry’s brand and pricing leader, the strategy by which it has chosen to price its admissions should not necessarily be adopted by every other attraction. Variable pricing has its pros and cons, and Disney has its own very specific (albeit elusive) reasons for choosing this approach to pricing that we speculated about above.

Attractions, theme parks, and entertainment centers need to consider all pricing strategies and select the one that will work best for them. For instance, there’s a difference between a date-based and quantity-based pricing approach.

In the date-based approach, the operator, i.e. Disney, defines specific peak and non-peak periods ahead of time and uses calendar dates to trigger price increases. In the quantity-based pricing approach, prices increase only as demand increases, triggered using limited quantities of tickets at distinct tiers: as more tickets are sold to near capacity in a lower-priced tier, the next pricing tier gets triggered. In doing so, the attraction minimizes the risk of raising prices when demand isn’t there, but is more easily able to capitalize on demand spikes.

Be mindful of pricing hygiene, too. Pricing hygiene is a discipline that avoids reactive, often last-minute deep discounting pricing decisions due to external factors.

Factors that tend to lead to reactive pricing can include:

• Lower than expected sales
• Bad weather – actual or forecasted – that leads to too many cancellations
• When a new competitor or threat enters the market
• When milestones approach and attendance numbers are too low

Whereas consistent pricing trains consumers to trust the attraction’s pricing wherever they see it, last-minute discounts turn the consumer into a hedger on the hunt for a better deal.

Even Disney may not be immune to provoking this common behavior.
The summer after Disney launched its new variable pricing strategy, though many guests still felt the parks were just as crowded as ever, the attendance at Disney World was actually down. From its own August 2019 earnings report: “The decrease in operating income at our domestic parks and resorts was due to higher costs and lower volume…” To combat this, Disney “introduced several limited-time discounts over the summer, hoping to boost attendance that it had previously tried to ‘manage’.”

Learn more about Pricing Hygiene

Sell By Price Alone, Die By Price

There’s an old saying in sales: “Sell by price; die by price.” That is why in the Experiences industry, how guests perceive the value of the experience they’re paying for is so important. Therefore, any study of Disney cannot be a study of its ticket pricing alone. From as early as 1925, Disney took merchandising into account as an important part of its business revenue and strategy. It licensed books, toys, hats, and watches as some of the most well-known legacy products.

Disney also banked on its theme parks becoming a destination unto themselves. Other than locals, most people don’t visit a Disney park for just one day. In 1982, with the opening of EPCOT in Florida, Disney World also evolved from selling based on an entry fee plus ride tickets to an all-inclusive “passport” priced by the duration of days. In the early 1990s, Disney World’s pricing for multi-day passes and associated park access for each pass continued to change.

With the introduction of its variable pricing strategy, Disney changed its length-of-days offering once again. The way Disney now merchandises their park admission is more similar to ski resorts, meaning the guest buys a multi-day pass, which is priced based on the first day of use, but that guest does not need to visit and use their pass on consecutive days. For example, a guest to a ski resort could buy a three-day pass to be used over five consecutive days.
Ski resorts and other attractions selling multi-day tickets have gotten very creative with how their products (tickets) can be sold: morning-, afternoon-, night-time- and weekend-only passes, for instance. The lure of calendar flexibility and the convenience of a single purchase likely helps to aid conversion rates. The same applies to Disney ticket purchases.

Finally, when there’s ample opportunities to upsell customers, from merchandise to food & beverage to VIP experiences and the like, it changes the mental calculation of the value of a ticket price alone. This is the kind of strategic thinking a company like Disney does to help offset its steady ticket price increases over the years.

For Most Attractions, The Magic Lies in Its Partnerships

Like other hospitality leaders, Disney hires the best and the brightest. It has whole departments to lead, discuss, set, manage, and analyze its audiences, its revenues, its pricing, and its data. Due to lack of resources, most attractions cannot even begin to replicate the Disney model, nor should they try. But partnering with a software provider, like Catalate, can provide attractions the ability to harness some of the Disney magic for themselves, by capitalizing on many years of data and expertise to set a customized pricing strategy.

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Catalate is a global pricing and e-commerce company empowering ski resorts, parks, and attractions to increase online revenue. As the only purpose-built ticketing platform for the industry, Catalate has developed successful strategies for hundreds of Partners across $1 billion in online sales. Get in touch today.