Universal buys 100 acres of land

[jknezek]

Wdw doesn't want the middle class budget...but they want their population numbers...

What's often lost is that they want 75 million (conservatively) visitors per year...

So everytime someone says "they're now luxury"...I laugh...those sustainable numbers don't exist. People act as though there's 10,000 people there a day...

Oh man... That's thin ice because it's a horribly misleading statistic. Disney needs the gates to spin 75 million times. They don't need 75 million different visitors. If you assume the average length of stay involves 4 days at the parks, they need only 18.75 million individual people per year. If you further posit that the average guest cluster size is 3 people (think families as an example), that is 6.25 million units per year taking one trip. With 125.82 households in the U.S., they need less than 4.8% of U.S. households to visit to get to the 75 million people. And that assumes no foreign visitors. If you assume that 20% of all WDW visitors are foreign, then that number drops to 3.97% of households. If you start assuming 10% of guests go more than once a year, it drops even further.

The top 5% of households in the U.S. have an annual income of $214,462 or more, almost 4X the median income of $56,516. Basically, the sustainable numbers do exist to make it mostly a luxury good, assuming the top 20% of households in the U.S. visit once every 5 year. Depending on your definition of luxury of course.

Now, do I think that is actually the case? No. I don't think the top 20% of households visit once every 5 years. But I do think you could probably take the top 20% of households in the U.S., basically 25 million households, and assume that you can price out the bottom 80% and be just fine thanks to foreigners and repeats and people outside that level making once in a decade or once in a lifetime type trips. And I know for a fact that Disney has many bean counters that have narrowed this down way more than I have, because there are plenty of analysts on the street that I know that work with this kind of math all the time when assessing all different kinds of company growth prospects. Disney, with better access to their own information, will know exactly what income level they need to target. Much better than my oversimplified example.

 

[lockedoutlogic]

Oh man... That's thin ice because it's a horribly misleading statistic. Disney needs the gates to spin 75 million times. They don't need 75 million different visitors. If you assume the average length of stay involves 4 days at the parks, they need only 18.75 million individual people per year. If you further posit that the average guest cluster size is 3 people (think families as an example), that is 6.25 million units per year taking one trip. With 125.82 households in the U.S., they need less than 4.8% of U.S. households to visit to get to the 75 million people. And that assumes no foreign visitors. If you assume that 20% of all WDW visitors are foreign, then that number drops to 3.97% of households. If you start assuming 10% of guests go more than once a year, it drops even further.

The top 5% of households in the U.S. have an annual income of $214,462 or more, almost 4X the median income of $56,516. Basically, the sustainable numbers do exist to make it mostly a luxury good, assuming the top 20% of households in the U.S. visit once every 5 year. Depending on your definition of luxury of course.

Now, do I think that is actually the case? No. I don't think the top 20% of households visit once every 5 years. But I do think you could probably take the top 20% of households in the U.S., basically 25 million households, and assume that you can price out the bottom 80% and be just fine thanks to foreigners and repeats and people outside that level making once in a decade or once in a lifetime type trips. And I know for a fact that Disney has many bean counters that have narrowed this down way more than I have, because there are plenty of analysts on the street that I know that work with this kind of math all the time when assessing all different kinds of company growth prospects. Disney, with better access to their own information, will know exactly what income level they need to target. Much better than my oversimplified example.

Even if you spin the numbers down to 20...there isn't a sustainable market big enough...I used to do just this sort of thing

 

[jknezek]

Even if you spin the numbers down to 20...there isn't a sustainable market big enough...I used to do just this sort of thing

Considering I do this sort of thing, it should be relatively sustainable at about 20-30%. Toward 20% if you can up your foreign visitors, toward 30% if you lose them. But since I don't have Disney's actual numbers it's not worth really getting into.

The facts are, they don't need 75 million visitors every year. They need 6-7 million families buying 4 days worth of park tickets every year. It's two completely different things.

 

[lockedoutlogic]

Considering I do this sort of thing, it should be relatively sustainable at about 20-30%. Toward 20% if you can up your foreign visitors, toward 30% if you lose them. But since I don't have Disney's actual numbers it's not worth really getting into.

The facts are, they don't need 75 million visitors every year. They need 6-7 million families buying 4 days worth of park tickets every year. It's two completely different things.

At wdw?

...anyway...this is the disboards, so none of us thinking completely straight about the popularity of Disney vacations...we all think ALOT More people want them than actually do.

It was always the middle/upper class line that provided the backbone, repeat business that parks must have. I've said this many times and no one seems to believe me - except those that built them in the historical record and theme park analysts - but I'll say it again: disney parks were designed specifically to be a middle class destination.

I know it probably seems like everyone in the street in the burbs goes to wdw once or twice every few years...but statistically it's a small fraction of that.

Those numbers aren't as easily attained as you dry stats say they are...

 

[jknezek]

At wdw?

...anyway...this is the disboards, so none of us thinking completely straight about the popularity of Disney vacations...we all think ALOT More people want them than actually do.

It was always the middle/upper class line that provided the backbone, repeat business that parks must have. I've said this many times and no one seems to believe me - except those that built them in the historical record and theme park analysts - but I'll say it again: disney parks were designed specifically to be a middle class destination.

I know it probably seems like everyone in the street in the burbs goes to wdw once or twice every few years...but statistically it's a small fraction of that.

Those numbers aren't as easily attained as you dry stats say they are...

Obviously I don't do it at WDW. I said as much in the beginning. However, when I say you need less than 4% of households to go for a 4 day stay to make numbers, that is hardly "everyone in the street in the burbs goes to wdw once or twice every few years". It IS a statistically small fraction of that. The fact that it is a much more accurate statistic than the one you started with "What's often lost is that they want 75 million (conservatively) visitors per year..." is the important fact.

Once again, it's ok to admit you dropped the point. Just like before. It's ok to say "my original stat was horribly misleading and we don't need almost 1/4 of the U.S. population to attend every year. We need just a small fraction of those households to come. A fraction that primarily does come from the top 20-30% of income earning households, regardless of what Walt originally wanted."

I know you can do it. Try it. It might make you feel better.

 

[lockedoutlogic]

Obviously I don't do it at WDW. I said as much in the beginning. However, when I say you need less than 4% of households to go for a 4 day stay to make numbers, that is hardly "everyone in the street in the burbs goes to wdw once or twice every few years". It IS a statistically small fraction of that. The fact that it is a much more accurate statistic than the one you started with "What's often lost is that they want 75 million (conservatively) visitors per year..." is the important fact.

Once again, it's ok to admit you dropped the point. Just like before. It's ok to say "my original stat was horribly misleading and we don't need almost 1/4 of the U.S. population to attend every year. We need just a small fraction of those households to come. A fraction that primarily does come from the top 20-30% of income earning households, regardless of what Walt originally wanted."

I know you can do it. Try it. It might make you feel better.

I'm not gonna debate this again...you're trying to apply a $140 dollar college textbook approach to something I've seen the data on (albeit dated now)...

It's just not a matter (AxB/pie + Z factor) of simple math...sustaining the mass market needs has been a problem since the Eisner expansion and will continue to be...not only that they will have to get more people to support the loss of business in other sectors of the disney business...

Besides...you're assuming that a 4 day ticket is the average and it's historically been much lower...we don't have that data available - so we can't debate. But I'm guessing 4 is still not an average. That changes a lot.

 

[jknezek]

I'm not gonna debate this again...you're trying to apply a $140 dollar college textbook approach to something I've seen the data on (albeit dated now)...

It's just not a matter (AxB/pie + Z factor) of simple math...sustaining the mass market needs has been a problem since the Eisner expansion and will continue to be...not only that they will have to get more people to support the loss of business in other sectors of the disney business...

Besides...you're assuming that a 4 day ticket is the average and it's historically been much lower...we don't have that data available - so we can't debate. But I'm guessing 4 is still not an average. That changes a lot.

It's not a college textbook. It's almost 20 years of doing statistical analysis on companies with publicly released data to derive underlying conditions to come up with current value of future cash flows. Granted this analysis is about 1000x simpler than what I do for a living, mainly because I'm only scratching the variables and providing truly simplistic logic when a custom monte carlo model with bounded probabilities for a variety of variables would provide a true estimate of the numbers needed within a standard deviation or two, but the fact is, they don't need 75 million visitors.

They need a very small percentage of American households to show up for a few days supplemented by a healthy percentage of foreign guests and a small number of repeat visitors, probably totaling less than 18 million individuals. The margin requires the vast majority of that small percentage of households to come from the the top 20 to 30% of family incomes, and the marketing, price increases, and add-on strategies we've seen going on for the last decade prove out that Disney knows this and has gone hard in that direction. It does them no good to pull the vast majority of their patrons from the ever shrinking lower middle and middle class, the margin per visitor isn't high enough and the pool is growing smaller.

As for increasing the numbers to make up for other parts of the business, that is a different discussion. The parks need a number to support themselves. The company as a whole may need something else, and that then becomes the argument for keeping a conglomerate together or selling off individual pieces. If the parks can sustain themselves and earn a profit on X, but they require X+Y to sustain the conglomerate, then you analyze whether the conglomerate works or should be broken up. See GE's recent tailspin where the market has decided the conglomerate is failing or Berkshire Hathaway where the market has decided the conglomerate works, or at least no one is willing to challenge it until Buffett dies.

But that is a completely different discussion than what the parks need. Walt's vision is of a middle class resort has been dieing for years along with the disposable income of what is left of the middle class in this country. You can't appeal to something that doesn't exist.

 

[lockedoutlogic]

It's not a college textbook. It's almost 20 years of doing statistical analysis on companies with publicly released data to derive underlying conditions to come up with current value of future cash flows. Granted this analysis is about 1000x simpler than what I do for a living, mainly because I'm only scratching the variables and providing truly simplistic logic when a custom monte carlo model with bounded probabilities for a variety of variables would provide a true estimate of the numbers needed within a standard deviation or two, but the fact is, they don't need 75 million visitors.

They need a very small percentage of American households to show up for a few days supplemented by a healthy percentage of foreign guests and a small number of repeat visitors, probably totaling less than 18 million individuals. The margin requires the vast majority of that small percentage of households to come from the the top 20 to 30% of family incomes, and the marketing, price increases, and add-on strategies we've seen going on for the last decade prove out that Disney knows this and has gone hard in that direction. It does them no good to pull the vast majority of their patrons from the ever shrinking lower middle and middle class, the margin per visitor isn't high enough and the pool is growing smaller.

As for increasing the numbers to make up for other parts of the business, that is a different discussion. The parks need a number to support themselves. The company as a whole may need something else, and that then becomes the argument for keeping a conglomerate together or selling off individual pieces. If the parks can sustain themselves and earn a profit on X, but they require X+Y to sustain the conglomerate, then you analyze whether the conglomerate works or should be broken up. See GE's recent tailspin where the market has decided the conglomerate is failing or Berkshire Hathaway where the market has decided the conglomerate works, or at least no one is willing to challenge it until Buffett dies.

But that is a completely different discussion than what the parks need. Walt's vision is of a middle class resort has been dieing for years along with the disposable income of what is left of the middle class in this country. You can't appeal to something that doesn't exist.

I think you're out of your league here...

As in you're applying too advanced statistical analysis to the realities of travel to disney parks.

I wish we had current data...I'd like to see your breakdown in a non-theorerical format. But that data isn't disclosed...just widely and somewhat blindly speculated.

To be honest...I don't really trust the attendance figures that much...they don't correct them as reported, so we take it as confirmation.

I will say that while your statistical take on the percentages of populace needed to attend is valid from a numeric sense...the simplicity of how easy it is to get that number is being overstated.

And you're ideas of what's needed as far as foreign and repeat customers needed are not correct...you're actually backwards on those if past trends have held.

But it's pretty theoretical without confirmed data.

 

[embracejg]

So no one wants to actually discuss UNIVERSAL--you know, the company which just bought all this land and which was the point of this whole thread?

 

[lockedoutlogic]

So no one wants to actually discuss UNIVERSAL--you know, the company which just bought all this land and which was the point of this whole thread?

Sure...

"They're up to something..."

...more to follow

 

[beer dave]

I don't know if Comcast is ready/willing to take the jump and double the complex...which is what we're talking about here.

The advantage to that is they can do investment before they get really crushed by declining cable revenues...which is already starting.

I love it either way...because that POS disney board can't sit on their hands and do nothing...which is all they want to do...just bleed it.

More darts chucked toward Burbank...I say...

And I love Dunedin all the way down to Sarasota...that's my "strip" I would relocate to...

Don't tell anyone! We're supposed to keep it a secret..... otherwise we may as well be Fort Myers.....

 

[lockedoutlogic]

Don't tell anyone! We're supposed to keep it a secret..... otherwise we may as well be Fort Myers.....

Ugh...no...other than spring training games there's no Appeal there

 

[sachilles]

.....and I'll take the bet we'll see the castle bulldozed in our life time(in favor of a bigger and badder one). That's PRIME real estate that doesn't do much in the grand scheme of things. Besides if it's bigger you can put several dream suites in, and the most epic club 33 and.

Universal's 100 acre buy isn't a huge surprise. I imagine they are trying to buy anything in the area they can. If they learn anything from Disney(Anaheim), you don't want to be land locked. The problem for them is trying to avoid being gouged in the process.

 

[jknezek]

I think you're out of your league here...

As in you're applying too advanced statistical analysis to the realities of travel to disney parks.

I wish we had current data...I'd like to see your breakdown in a non-theorerical format. But that data isn't disclosed...just widely and somewhat blindly speculated.

To be honest...I don't really trust the attendance figures that much...they don't correct them as reported, so we take it as confirmation.

I will say that while your statistical take on the percentages of populace needed to attend is valid from a numeric sense...the simplicity of how easy it is to get that number is being overstated.

And you're ideas of what's needed as far as foreign and repeat customers needed are not correct...you're actually backwards on those if past trends have held.

But it's pretty theoretical without confirmed data.

Considering it's my job to analyze these numbers for a variety of companies I'm not out of my league, I'm just not treating it as my job. We rarely have the information we need, that's why we have bounded variables and millions of data simulations. Although in this case I'm using neither because no one at my firm covers Disney for a variety of irrelevant reasons for this conversation.

The attendance figures are ballparks obviously. I doubt they are off by all that much. Disney wants to be listed as #1. It makes no sense to short change them from a marketing point of view.

I never said it was easy. I said it was possible and necessary. You keep saying I said it was easy. Two different things. If it was easy they wouldn't need their marketing budget.

Foreign and repeat could be backward. But so long as they simply reverse and cancel out, which for the purposes of this analysis I hardly used them at all showing the household number without any foreign guests at all under 5%, is good enough. My estimates for foreigners dropped that number to less than 4%. Relevant, but again hardly disproving the general premise that you need to pull the vast majority of WDW visitors from the top 20-30% of American income families.

And yes, when you use a model, it's all theoretical.

 

[jknezek]

So no one wants to actually discuss UNIVERSAL--you know, the company which just bought all this land and which was the point of this whole thread?

We did. We put up maps, speculated about the usage and reason for purpose and are eagerly awaiting an announcement that probably won't come soon on what they are actually going to do with the land and what timeframe they have. Sure we got sidetracked, but that's probably a function of not being able to do anything else with the topic until we get more information.

Do you have anything interesting to add or are you just complaining we aren't beating your sacred cow to death and are discussing something else?

 

[TheMaxRebo]

So no one wants to actually discuss UNIVERSAL--you know, the company which just bought all this land and which was the point of this whole thread?

well, I started to and even made a map!

I'll try to keep it going though - I think this is very exciting and where the land is, as someone else mentioned, there is a clear shot down for building some sort of elevated rail or other transportation system (Gondolas? ) to connect the areas. And would love if they added a Harry Potter area to the new park (Ministry of Magic?) and made it like you were connected between the areas via a "floo" system

 

[lockedoutlogic]

We did. We put up maps, speculated about the usage and reason for purpose and are eagerly awaiting an announcement that probably won't come soon on what they are actually going to do with the land and what timeframe they have. Sure we got sidetracked, but that's probably a function of not being able to do anything else with the topic until we get more information.

Do you have anything interesting to add or are you just complaining we aren't beating your sacred cow to death and are discussing something else?

You know discussion is bad when it doesn't involve adrs or fireworks fast passes.

 

[lockedoutlogic]

Discussing land purchases in Orlando is somewhat pointless...

They could be doing it for tax purposes...they could flip it in 6 months...it could be to block hotel development.

We'll see. The main issue is how would they link/integrate over I-4?

I think they're moving beyond shuttle buses...And the "Dreamliner" isn't an option...or whatever it's called.

 

[jknezek]

Discussing land purchases in Orlando is somewhat pointless...

They could be doing it for tax purposes...they could flip it in 6 months...it could be to block hotel development.

We'll see. The main issue is how would they link/integrate over I-4?

I think they're moving beyond shuttle buses...And the "Dreamliner" isn't an option...or whatever it's called.

And I really don't see Orlando giving them permission on public roadway to build a private rapid transit of any kind to connect just their parks. Orlando is going to want some kind of public benefit. See the fights over Disney's desire to be the first stop on the maglev train that has been proposed for the new rail station. Apparently Disney won't help with the funding unless they are the first stop, not just a stop. So Disney was completely cut out, and now the whole project, which was something of a pipe dream anyway, is beyond jeopardy and probably into lost cause status.

 

[TheMaxRebo]

You know discussion is bad when it doesn't involve adrs or fireworks fast passes.

I think this discussion is good and very interesting .... but perhaps moved to a new thread called "statistical analysis of potentional for 5th Disney gate" rather than this thread as new people would be coming looking for info/discussion on Universal and this new land and would be awfully confused