Guest Column: Rethinking Annual Passports
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First of all, I need to issue an apology. Normally I just write-up whatever some executive said at some investment conference. Today I am going to share my views on a very controversial subject: The State of the Annual Passholder at the Disneyland Resort. I thought I should weigh in with my thoughts on the subject. Whether or not you agree with me is unimportant. The important part is that you think about the issues so you have a greater understanding.
There has been much discussion in recent times on how Annual Passholders affect the business of The Disneyland Resort. Many have weighed in on this issue, as they should, for it will have a major impact on the course the Resort takes in the near future. There is no doubt in my mind that a Disneyland Resort Annual Passport is one of the best values in entertainment. Let’s take the premium pass as an example. Right now it is $225. Take away $40 for the free parking and you get $185. Take away another $20 for the Disney Magazine subscription and you end up with $165. That is less than the price of a five-day ticket ($184). If you do visit five times a year, it is like paying only $33 per visit. This is less than a ticket to ONE Laker game. Of course this is a crude analysis, but you get my point.
You don’t need to go to Disneyland a lot, to make to AP a good value. I am not sure this is good business sense. Is it a good idea to sell an annual pass to everyone is Southern California? I believe you end up with a lot of "free-loaders" that come to the park without paying and at the same time don’t spend a lot on food and merchandise because instead of being tourists who spend money on such things without a care, you end up with locals who are going to Disneyland because it is a good value. The amount a guest spends on food and merchandise is called "per capita spending" because it is the amount of money spent per person when they visit the parks, and the original thought behind selling APs was that the guests would come to the park and spend a lot of money on food and merchandise. That theory proved to be flawed because APs tend to spend little money. What would I do about the low per capita spending of local annual passholders? Well, if I were President of the Disneyland Resort, which thankfully I am not, I would raise the price of the annual passports while maintaining or lowering the price of multi-day passports for locals. My reasoning behind this is I still want locals to visit the parks, but I don’t want them to look to Disneyland as a value, I want them to look to Disneyland as a special treat that they get to enjoy frequently because of their location. When they visited with their multi-day ticket it would not be a value experience, it would return to be a special experience. This would undoubtedly raise their per capita spending. A guest’s mentality has the most direct relationship with spending habits.
Now I am sure some of you are wondering how I feel about you. After all, I have just said that the Disneyland Resort should take more of your money by raising the AP price. You go to Disneyland so much that you have to get an AP so why should you endorse my scheme if it only means its going to cost you more money? Well let me start off by saying Disney fans are the most important guests out there and should be valued by the Resort. I am not just saying this in the typical, "Annual Passholders are our most valued guests because marketing told us to say this" way. If Disney raises the price of the AP, it will also have to dramatically change the relationship it has with its passholders. The first step is to show the Annual Passholder that they are appreciated and valued. The Resort needs to be proactive on this front. The first thing I would do is rebrand the program to emphasize a membership and insider mentality. Just by owning a pass a guest will know they are special. Small innovative perks could assist this ideal like having an exclusive time when APs could ride Indiana Jones with the work lights on. I would also hold expos that showcase what the Resort and the rest of The Walt Disney Company was working on. I think an efficient way to improve AP relations is to have someone the APs can talk to on a face-to-face basis. I know many members of the executive leadership team have been dedicated to talking to APs on a proactive level, but of their responsibilities there has not been a consistency that is required to build a relationship with the APs. I think it would be beneficial to have someone who as part of their role was to be an ambassador to annual passholders by attending merchandise events, fan club meetings, and informal focus groups. This cast member could share information about the Resort to the fans and conversely share with the Resort what the AP community feels about what is going on at the Resort. Many Resort teams have a hard time understanding the AP market and have unknowingly committed several faux pas. If they had an "AP advisor" I think the success of that business unit would improve dramatically.
The end result of all of the initiatives is to make them feel as though they are part of the Resort. The positive effects of this for the Resort are two fold. The AP will be happier with the Resort and increase their own per cap, in addition they will be marketing tools that will spread news and information about all the wonderful things Disneyland is doing. If the AP is more connected and content with the Resort, one day ticket sales will go up because they will spread the word. Most entertainment properties know the importance of their fan base. They know fans talk to members of the general community which can be a lot more powerful than conventional advertising. For example, most film studios will do preview screenings for a selection of film buffs. They know the film fan will discuss the film with others and, if they enjoyed the film, encourage others to see it. Positive word of mouth grows exponentially and has helped and hurt many movies. Disneyland needs to understand this. All the executives need to do is ride the Mickey and Friends Tram to see what I mean. As the tram heads to the entrance plaza you can hear passholders discussing the Resort to new guests and affecting their day at the park. Their passion is a powerful tool that the Eesort needs to harness.
There is no substitution for quality. The Resort’s success is most dependent on that simple ideal. But by allowing the AP to be an insider and part of the family, the likelihood that quality projects will succeed will increase. There is no substitution for listening to guests, but by listing to APs the Resort will gain invaluable insight from insightful guests that are dedicated like no other.
It doesn’t matter if you agree with me or not. I’ve just offered my perspective. I have learned that in all businesses you gain invaluable insight by understanding a variety of perspectives. I hope that all of you think about the future of the Resort and your place in it. We all love Disneyland and want to see it prosper. We might have different ways of looking at the challenges the park faces, but we all want the same thing in the end.
Discuss It
-- Posted by Benji Breitbart
-- February 2, 2004