Has Disney Lost Its Mind With Its Latest Annual Pass Hike?
Disney (DIS) is no stranger to price hikes at its theme parks. It's been raising the cost of its one-day tickets to Disney World on an annual basis since 1989, and more often than not that means eventually boosting the price for its annual passes.
Some are arguing that Disney may have gone too far with its latest move, jacking up the price for a full year of access to Disneyland by as much as 35 percent. The increases at Disney World weren't as severe, but all comparable annual passes have gone up in the double digits.
It's not just annual pass holders feeling the pain: Your car is going to be paying more the next time it wants to visit one of Disney's six domestic theme parks. Disneyland parking prices increased by a buck, with Disney World's parking lots rolling out a steep $3 hike.
Use the Force, Luke
The increases are substantial, and they might seem to be coming at the most unlikely time. Disney's boldest expansion project -- the 14-acre Star Wars Land that will spice things up at both Disney's Hollywood Studios in Florida and Disneyland in California -- is still several years away.
Some of Disney's parks are woefully incomplete, for now. Animal Kingdom in Florida is closing at 6 p.m. or 6:30 p.m. most days this month. That will change when a nighttime Rivers of Light show debuts in a few months, along with an Avatar-themed expansion that will follow a year later. Disney's Hollywood Studios is even more barren. It has gone from Disney's third most visited park to its fourth most visited park after gutting several attractions over the past two years. Most of the additions up to this point have been petty, replacing former attractions with temporary "Frozen"-themed shows or the saddest lounge you will ever see.
%VIRTUAL-WSSCourseInline-884%However, making this move when the parks are in an inspirational lull is a smarter move than you might think. For starters, keep in mind that annual pass holders don't pay the new rates until their current passes expire. That could be as far as a year away, when Disney's parks should offer more than they do right now. Between Epcot's "Frozen" ride and "Star Wars" Launch Bay pavilions opening in a few months, the parks will already be on the upswing before the hike kicks in.
Patrons also play lower renewal rates on these passes, creating an incentive to renew now rather than pay even more for a pass once the new attractions go live. From Star Wars Land on both coasts to the arrival of Pixar Land at Disney's Hollywood Studios, the parks will be a lot more magnetic in the future. Disney's just asking investors to make an investment now.
New pricing tiers also find Disney offering value passes with blackout dates. The cheaper annual passes don't include summer and/or key travel holidays. That may be a deal breaker for out-of-town regulars, but for locals it's one way to save money while also pushing them through the turnstiles on quieter non-peak days. That's part of Disney's master plan to alleviate the heavy crowds that converge on both resorts in late December and during the spring break holiday.
A New Perk That's Sheer Genius on Disney's Part
One thing that Disney's doing to ease the sting of higher prices is including free PhotoPass access to all guests at the higher annual pass tiers. PhotoPass is the cloud-based storage solution whereby guests have all of their snapshots taken on rides and by roaming staff photographers. Disney's making digital downloads available to many pass holders at no additional charge.
That's a pretty big deal for folks who take a lot of pictures, but one can also suggest that annual pass holders aren't the type to be posing with park photographers outside of Cinderella's castle. They are regulars, and that makes them less likely to value a pro snapshot the way that an infrequent visitor would.
However, that's also what makes this brilliant for Disney. It will get annual pass holders to collect more digital downloads of their in-park photographs and in this day of social media, it likely means sharing them on Instagram and Facebook (FB).
Even annual pass holders who don't normally spring for photos of crazy Splash Mountain poses will be tempted to see the perceived value in the perk. It doesn't cost Disney a thing, beyond possibly hiring more staff photographers to account for the spike in snapshot requests.
So, sure, higher-price annual passes aren't fun, but between new attractions on the way and a new clever perk, Disney's got you just where it wants you.
Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Facebook and Walt Disney. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's one great stock to buy for 2015 and beyond.