Disney
Evaluation
Prepared For: Professor Egelhoff
Prepared on: 4/14/11
Presented By:
Jennifer Kasper
Payal Thawani
Shawn Campbell
Stefanie Cedro
Jess DePalma
Josh Strauss
2
3
Strategy Statement: Disney Parks & Resorts
Domain Sought
● Design and market the "unparalleled entertainment experience" for families through
world-class Disney theme parks and resorts, Disney cruise line, and Adventures by
Disney guided group vacation program. These vacation experiences emphasize superior
guest service and dedication to the promise of "turning the ordinary into the
extraordinary" and "making dreams come true every day."
● Sell to families (including men, and children) around the world; with an emphasis on
families with young children.
Resource Conversion Technology:
● Product Development: Disney has a team of highly innovative “imagineers”
that continually develop, design, create, and improve Disney parks and resorts'
product mix including rides, attractions, musicals, and dining. This product
mix continues to grow as the brand is highly in tune with customer demands.
● Quality Service: Resorts are staffed with Disney's distinctive "Cast Members"
to ensure a high quality vacation experience for families. Cast members go
through rigorous training to maintain quality service and safety.
● Product Marketing: Disney maintains and builds its brand image through strong
product management, an emphasis on "unparalleled entertainment experience"
family vacation, as well as utilizing Disney characters, movies, television shows,
and website to expand the brand overall
● Sales: Disney sells vacation packages directly to consumers via online,
telephone, and travel agents. Disney also employs new avenues to contact
younger generation of families including social/digital media.
● Communications/Strategic Partnerships: Disney relies on word-of-mouth,
advertising, public relations, and direct printed and electronic communications
(email and website) for securing business affiliations with suitable partners,
customers and travel agents.
Differential Advantages and Parities Sought
● Best brand and image (as the world’s leader in high quality family entertainment; the
Disney name is uniquely powerful, as it is synonymous with excellence, it evokes trust,
and it generates loyalty)
● Best product development and long-standing focus on leveraging technology and
innovation throughout the business.
● Most comprehensive offering for family vacation services globally under one brand
name.
● Best quality service through superior staff and guest services.
● Incredible wealth of the outstanding intellectual property and creative talent.
● Cost parity with serious competitors (for family vacation services) including family
resorts, cruise lines, and theme parks
Strategic Thrusts
● Grow established assets (expand Disney California Adventure, open The Little
Mermaid – Ariel’s Undersea Adventure and 12-acre Cars Land; grow Fantasyland,
4
Dumbo The Flying Elephant, Toy Story Land, Grizzly Gulch, Mystic Point and build
Snow White and the Seven Dwarfs mine coaster)
● Building out new businesses (build Art of Animation Resort at Walt Disney World;
launch two new Disney Cruise ships; grow eight Disney Vacation Club resort
membership)
● Expanding in geographic markets (open resort in Hawaii; launch Disney theme park in
Shanghai; add Egypt to growing list of guided excursions)
● Increase advanced technology that maximizes the quality and reach of current and new
product offerings
Targets
● Maintain position as the world’s leader in high quality family entertainment
● Improve current operations and lower operational costs
● Grow revenues, maximize earnings, cash flow and profits over the long term
● Deliver double-digit returns on invested capital
Industry Analysis
There are many factors that determine the level of profitability and intensity of
competition within an industry. One popularly used framework for analyzing these
features was developed by Michael Porter. He has classified the five main forces as entry
barriers, rivalry, bargaining power of the buyer, bargaining power of the supplier, and the
threat of substitutes. Each of these elements impacts a sector to varying extents. In order
to thrive in a competitive environment, a firm needs to address these forces in its business
strategy. In the case at hand, Michael Porter’s model enables us to determine which
factors most influence the theme parks and resorts industry, as well as the cruise sector.
Entry Barriers
One of Michael Porter’s five forces is entry barriers in the market. Barriers to
entry is comprised of economies of scale, proprietary product differences, brand identity,
switching costs, capital requirements, access to distribution, proprietary learning costs,
access to necessary inputs, government policy, and expected retaliation. For the parks
5
and resorts industry as well as the cruise business, it appears that there are high entry
barriers.
A major entry barrier in both industries is the extensive capital requirements. It is
expensive to create and maintain theme parks, resorts and cruise liners. It is very difficult
to enter these industries because of the immense capital requirements needed to buy land,
rides, and ships. Case in point: Six Flags recently filed for bankruptcy because of large
capital demands. This high capital requirement keeps competition to a minimum.
Secondly, for theme parks, there is an intense level of proprietary product
differences, which also contributes to high barriers to entry. Whether it is Universal’s
Harry Potter theme park, Disney’s Dumbo ride, or Six Flag’s Superman attraction, the
unique characters associated with each of these attractions act as a barrier to entry for
others without such extensive character libraries. Conversely, for resorts and cruises,
proprietary product differences are not as influential, although Disney Cruises would be
one exception as its character library helps to appeal to a very dedicated fan base.
Brand identity is also a noteworthy barrier to new entrants. Vacationers want to
go to a theme park or travel on a cruise ship that has a reputable name. In order for a
potential competitor to build an identity such as Carnival Cruises or Walt Disney World,
it takes time and it is expensive. Thus, brand identity acts as a high entrance barrier.
Despite the fact that the other elements of entry barriers are low or not applicable,
overall, these barriers are high. Immense capital investment, brand identity, and
propriety differentiation all make it extremely difficult for other firms to enter the market.
Rivalry
6
One of the key challenges facing the vacation service industries is that there is
significant rivalry among firms. An analysis using Michael Porter’s model demonstrates
that rivalry, which is the extent of pressure firms put on each other, is predominantly
driven by a diversity of competitors, a high degree of brand identity, expensive exit
barriers and pricey fixed costs.
The large diversity of competitors is one main driver of rivalry. The competition
among firms for customers interested in booking vacations at amusement parks, resorts
and on cruise ships is fierce: According to research, there are 400 amusement parks and
attractions in the U.S. alone (2), a world fleet of 230 cruise ships (1) and 1,548 timeshare
resorts domestically(3). The vacation services industry is crowded even further by private
rentals, chain hotels and motels. This presence of a large number of vacation-related
businesses immensely contributes to the competitive environment.
Brand identity is a second major influencing factor of rivalry. According to an
article in “Journal of Travel & Tourism Marketing,” brands have “been increasingly
considered as primary capital, termed brand equity, for the hospitality industry to obtain
the competitive advantage the underlying characteristics of the product or service” (4).
From Carnival Cruises to Great Adventure to Universal Studios, each of these companies
spends a great deal of money promoting their brands. With slogans like "Six Flags, More
Flags, More Fun!" these businesses are focused on building a name because they know
that, by-and-large, customers are shelling out a lot of money for a vacation and thus want
to go with a widely known brand.
Lastly, fixed costs and expensive exit barriers also contribute to a high degree of
rivalry. The Oasis of the Seas, the world’s largest cruise ship, cost $1.24 billion to build
7
(5). The new Harry Potter theme park cost an estimated $200 million dollar to construct
(6). Even single rides are expensive: the price tag of the roller coaster the Top Thrill
Dragster in Ohio was $25 million (7). To pay for these fixed costs, firms are constantly
under pressure to operate at maximum capacity. These high fixed costs also result in
significant exit barriers by keeping firms in the industry, even when they are not
profitable, thus further stubbornly crowding the market.
For the vacation services sector, a diversity of competitors, a high degree of brand
identity, expensive exit barriers and fixed costs are all significant contributors to rivalry.
In addition, following Michael Porter’s approach, customer switching costs, slow
industry growth and excess production capacity due to seasonality also contribute to the
competition, although arguably to a lesser extent. By using Michael Porter’s approach to
identify all of these factors, firms are better able to understand what’s driving the rivalry
within an industry.
Threat of Substitutes
In the theme parks, resorts, and cruises segments, there is a large threat of
substitutes. In a broad sense, any activity that consumers would consider spending their
discretionary income on could be considered a possible substitute. An analysis using
Michael Porter’s model demonstrates that the threat of substitutes, which includes price
performance of substitutes, switching costs and buyer propensity to substitute, is very
real.
When it comes to the price performance of substitutes, theme parks are most
threatened by lower-priced substitute products. Instead of going to Dorney Park, a
customer might opt for a cheaper county fair. Alternatively, a customer may buy a
8
concert ticket, which averages $50, versus the $112 Universal Studios admission ticket.
When analyzing resorts and cruises, cheaper substitutes could come in the form of
timeshares, house rentals, hotels or camping trips. While some may argue that a cruise to
the Caribbean is not the same as camping in the Rockies, when it comes down to it, both
are vacations and therefore are valid substitutes.
Secondly, switching costs throughout the vacation industries are very low,
contributing to a high threat of substitutes. Customers can easily switch from one theme
park or cruise line to the next without having to spend more resources, including time and
money. Furthermore, with the advent of trip insurance, customers can book a vacation
and back out at the last minute without many consequences.
The buyer’s propensity to substitute across the vacation industries is also very
high. For example, even with its leading brand, Disney loses consumers to other parks
and run-of-the-mill family oriented-entertainment. Some of the propensity to substitute is
based on cost, which is evident especially during tough economic times. Travelers tend to
have a propensity not to return to the same vacation spot over and over again because
many want to visit different destinations, whether it be a safari or a European tour.
A close substitute product acts as a major constraint on a business sector. The
vacation services industries face fierce competition because there is a high level of
substitute products, switching costs are low, and buyers are willing to try alternative
vacations. Therefore, there is a very real threat of substitutes.
Bargaining Power of Buyers
Another challenge facing the theme park and resorts industry, as well as the cruise
sector, is the bargaining power of buyer. This is the pressure consumers exert on
9
businesses to get them to produce higher quality products, better customer service, and
lower prices. According to Michael Porter’s five forces, the bargaining power of buyers
is comprised of eight sub-forces: buyer concentration, buyer volume, buyer switching
costs, accessibility to information, the threat of backward integration, standardization of
products, the fraction of buyer cost, and if the buyer earns low profits. For the purpose of
this analysis, the focus will be on buyer switching costs and accessibility to information
as they deem to be the most critical for the parks and resorts and cruise industries.
First, switching costs for consumers across the vacation services industries are
very low, thus contributing to a high level of bargaining power for buyers. As previously
addressed in the segment on bargaining power of buyers force, customers can easily
change from one theme park, resort or one cruise line, to the next without having to spend
more money or resources.
A second factor contributing to bargaining power of buyers is the consumer’s
accessibility to information. With the Internet, information about park prices, company
earnings, safety violations, and other corporate news is all easily available to the public.
By having data at their fingertips, customers are more informed in their decision-making
process and as result, they have greater bargaining power.
While switching costs and accessibility to information certainly influence
competition, overall the bargaining power of buyers is low in comparison to the other
four elements of Michael Porter’s model. This is because by and large, the other subforces do not favor consumers. For example, buyers cannot integrate backward to
construct a major roller coaster. Consumers are also at a disadvantage because their
individual purchases are not a sizeable percentage of the industry’s total sales.
10
Bargaining Power of Suppliers
Revenue for the theme park industry has doubled in the past two decades: in 1990
it was valued at $5.7 million and by 2007 it grew to $12 billion. Needles to say, there’s a
lot of money at stake. The ability of each supplier to get a chunk of this pie depends on a
number of characteristics, most importantly, differentiation of inputs, switching costs and
importance of volume to supplier.
The one element of supplier bargaining power that gives the advantage to the
supplier is the importance of the product to the buyer. For example, Carnival wants to
ensure its ship isn’t going to sink, just as Universal Studios doesn’t want one of its rollers
coasters to run off the tracks. Quality is essential in the hospitality business. Hotels,
theme parks, and cruise ships are in the business of creating an enjoyable vacation with
luxury items consumers don’t typically have at their disposal. Therefore, the bed sheets
must be comfortable, the food must be tasty, and Mickey’s costume must look authentic.
When the product is of importance to the buyer, the suppliers are at an advantage.
A supplier will be powerful if they offer a differentiated product. Engineering and
architecture firms have moderate power as their million-dollar ideas help define the park,
resort, or ship experience. On the other hand, the suppliers of towels at the hotel pools
will have very little power – they will compete strictly on price – because their product is
basic. Therefore, the verdict is split when it comes to how the differentiation of inputs
affects supplier bargaining power.
Similarly, switching costs as a determinant of supplier bargaining power are
dependent on the type of purchase by a theme park, resort or cruise company. For
variable purchases such as food, beverages, and hotel linens, companies like Marriott and
11
Norwegian Cruise lines have the upper hand because there are so many suppliers that can
offer similar or identical products at the same price. Conversely, it could be quite costly
for a theme park to have to switch to a new steel supplier for a roller coaster, or perhaps
more dramatically, for a cruise company to opt for a different ship builder. Therefore,
again, the type of purchase—a fixed cost item or variable item—will determine who has
the advantage in the buyer-seller relationship.
Aside from suppliers that provide a product a buyer deems important, suppliers
are largely at the mercy of those in the vacation business because most of the factors that
influence bargaining power are low. For example, the risk of forward integration –
suppliers joining the theme park industry by opening their own properties – is basically
non-existent. Additionally, there are a large number of suppliers that offer hospitalityrelated products as well as engineering services for the construction of hotels and,
surprisingly, even roller coasters. Thus overall, resorts, theme parks and cruise companies
hold power over their suppliers, choosing which inputs to include in their properties.
Threat of Substitutes
Throughout the Disney organization, and specifically within the theme parks and
resorts line of business, there exists a high level of potential for the threat of substitutes.
In a broad sense, anything that families, and in certain cases individuals, would consider
spending their discretionary income on could be considered a possible substitute for
Disney entertainment. The threat of substitutes significantly impacts the Disney theme
parks and resorts business. According to International Association of Amusement Parks
and Attractions, there are over 400 amusement parks in the United States and over 300 in
Europe. In Asia, where Disney is making a strong push to gain market share, four of the
12
top ten most visited amusement parks in the world host millions guests each year. An
analysis of the sector using Michael Porter’s model demonstrates that the treat of
substitutes for Disney’s theme park and resorts business is very real. Disney’s challenge
is to analyze the threat of substitutes and counteract it with its strengths and
opportunities.
It can be rather difficult to compare the price performance of substitutes because
each theme park and resort has different offerings than the next. That being said, Disney
is considered comparable in price point compared to its top competitors. In the Disney
strategy statement cost parity is sought with serious competitors (for family vacation
services) including family resorts, cruise lines and theme parks. At Disneyworld and
Disneyland, the price for one adult one-day pass is the same as Universal Studios
Orlando, Florida, SeaWorld and Bush Gardens are slightly less. However, there is a wide
variety option for vacation packages sold directly to consumers via the internet, telephone
and through travel agents. This can make it difficult to compare apples to apples. Given
the strength of the Disney brand, achieving cost parity will enable the theme parks and
resorts to remain competitive.
Switching costs for consumers of the vacation services industry are very low.
Customers can switch from one theme park, or one cruise line, to the next without having
to learn new products or processes in order to enjoy the full experience. With the advent
of trip insurance, customers can book a trip and back out at the last minute without many
consequences. With the high number of alternatives and very low switching costs, the
competition for Disney is very high. By continuing to build on its leading brand and
13
image and focusing on cost parity, Disney can somewhat mitigate the consequences of
the low switching costs.
The buyer propensity to substitute in the vacation services industry is very high.
Even with its leading brand, Disney loses would-be consumers to other family oriented
entertainment. Some of the propensity to substitute is based on cost. Most of Disney’s
revenue is derived from discretionary income. If the economy is down, there is likely to
be less discretionary income on average, which could impact the decision to visit one of
Disney’s theme parks and resorts. With switching costs very low and high levels of
competition, the buyer propensity to substitute can continue to increase. However, by
continuing to offer a high level of service and the most comprehensive offerings under
one leading brand, Disney can battle the propensity to substitute and encourage
consumers’ sense of loyalty to keep visitors coming back year after year.
Industry Analysis Conclusion
The competitive environment of an industry has a strong influence on the
performance of an individual company. For the theme park and resorts industry, as well
as the cruise sector, Michael Porter’s analysis reveals that the main forces that shape
these business segments are high barriers to entry, intense rivalry among firms and a
serious threat of substitutes, while the other two forces are not as influential. By
understanding the leverage possessed by each of these forces we can compare the
business strategy of a company such as Disney and evaluate whether it can successfully
compete against others in the industry.
Evaluation of the Disney Strategy
14
The Disney theme parks and resorts strategy statement defines their domain
sought as an effort to design and market an "unparalleled entertainment experience" for
families through world-class Disney theme parks and resorts, Disney cruise line and
Adventures by Disney guided group vacation program. Since first opening their doors in
1971, they have continued to focus on families by emphasizing superior guest service and
dedication to the promise of "turning the ordinary into the extraordinary" and "making
dreams come true every day." The parks and resorts business segment has averaged
approximately 17 million visitors annually since first opening. Disney relies on word-ofmouth advertising, public relations, and direct printed and electronic communications
(email and website) to secure business affiliations with suitable partners, customers and
travel agents, while also employing new avenues to contact younger generations of
families through social and digital media. Disney maintains and builds a superior brand
image through strong product management, emphasizing "unparalleled entertainment
experiences," leveraging characters, movies, television shows, and websites to expand the
brand. Resorts are staffed with Disney's distinctive "Cast Members," who are specially
trained to ensure a top quality, entertaining vacation experience for families. This focus
on quality allows Disney to maintain a competitive advantage. To further evaluate
Disney’s strategy statement, a SWOT analysis has been completed to determine the
Disney’s viability and longevity.
The strengths of any firm determine their advantages over other industry players.
One of Disney’s strengths is its ability to innovate and re-innovate their brand. Disney’s
team of highly creative “imagineers” continually develop, design, create and improve
Disney parks and resorts' product mix including rides, attractions, musicals, and dining.
15
This product mix continues to grow as the brand is highly in tune with customer
demands. They have also continued to develop new offerings at existing locations, which
has also helped in attracting repeat visitors and increased brand loyalty. With switching
costs low, they have sought to go “above and beyond” with their services to entice
families to return to Disney.
Disney’s main opportunities stem from its proprietary character and product line.
Other theme park competitors can easily open better attractions; there is nothing
preventing Six Flags from opening a new high-speed roller coaster that could draw away
vacationers from Disney. However, their proprietary line has allowed Disney to combat
this by continuously developing new products and services to draw in new and repeat
customers every year. They not only match the construction of rides and attractions
through their best product development, but also add value with their extensive line of
proprietary information including characters from the past and present. As we further
expand our research below, we see how Disney has mitigated their weaknesses and
threats in their theme parks and resorts business segment.
Twp key weakness Disney faces is the fact that vacations are “luxury items” and
the seasonality of the vacation industry. Despite the fact that vacation spending is
discretionary, Disney has used its strength as the best brand to successfully convince
families that they must take a Disney vacation while competitors have not been as
successful in this realm. In reference to the seasonality, the theme park sector is
notorious for peak demands during the summer season, when children are out of school.
Disney, however, has been able to address this issue, more so than its competitors, with
its strength as a provider of comprehensive vacation services in multiple locations.
16
Expanding geographically has allowed Disney to insulate itself from localized economic
downturns and to stimulate growth, especially in developing areas such as China. This is
evidenced by the opening of a theme parks in Shanghai and the launch of guided
excursions in Egypt. This global expansion has led to strengthening the Disney brand
throughout the world. With the brand being one of the strongest competitive advantages
for Disney, it is important to take advantages of expansion opportunities into markets like
Asia. Revenue in the theme park industry has more than doubled over the last decade,
with much of that growth coming from Asian countries as their economies expand and
discretionary income rises. Four of the top ten most visited amusement parks in the world
are located in Asia, so there is immense opportunity for growth in these locations. By
expanding into these geographic areas, Disney can leverage its brand name and many
other competitive advantages to capture a strong market share of a growing industry. In
comparison, competitors such as Six Flags and Busch Gardens, theme parks
predominantly in the U.S., are more severely impacted by summer seasonality because of
their lack of product offering abroad.
Another key weakness facing Disney is its large capital requirement needed for
capital investments and high operating costs. However, Disney has been able to address
this industry weakness with its strength in comprehensive product services offering. By
offering a variety of vacation services, Disney has several forms of revenue, all of which
could offset poor-performance from one park or ride. For example, Epcot is notoriously
known for not being a top performer among Disney vacationers, but by having
Disneyworld, Magic Kingdom, and Typhoon Lagoon in the same vicinity Disney is able
to offset any weaknesses from Epcot. Also, within the theme park segment itself, they
17
have come across economies of scale, which can cost millions and in some cases billions
of dollars to develop, however, the cost is basically the same to offer a roller coaster ride
to one guest as it is to millions of guests. Disney certainly seeks to leverage these
economies of scale and bring in as many guests as possible. Each year there are new
rides and attractions that Disney must develop in order to “keep up with the Joneses”.
Fortunately for Disney, it was one of the first movers in the industry and has been able to
maintain its superior brand and image to continue to attract customers.
A threat to Disney is unforeseen events such as hurricanes, a political crisis,
and/or outbreaks of war which can easily shutter a business in the vacation industry. For
example, the BP Gulf oil disaster put many companies out of business. Disney has been
able to protect against this risk by creating business opportunities in other nations. By
diversifying geographically as well as in the type of services it offers, Disney has not put
all of its eggs in one basket and has therefore provided itself with some cushioning from
major catastrophic events.
The strategy for the theme parks and resorts business for Disney may seem, at
first glance, to be unsustainable. Disney’s main differential advantages are its brand
name, quality of service, product development, intellectual property, and creative talents.
If the question was asked; “Are these differential advantages sustainable?” it could be
argued that they are not sustainable. It is possible that a competitor could equal or surpass
Disney in all of these advantages. However, Disney, with the advantage of being a first
mover in the industry, has been able to establish itself as the leader in the industry. The
strength of the Disney brand should not be taken lightly, and through the course of many
years, Disney’s management has invested a great deal of resources into building and
18
maintaining the superior brand and image of Disney. Since their entrance into the market
in 1952, Disney has established themselves as the worldwide leader in the vacation
services industry. Based on the storied history of Disney, it seems likely that its existing
differential advantages can be sustainable, so long as the proper focus is paid to
maintaining them. The Disney theme parks and resorts strategy is certainly focused on
maintaining its position as a market leader and expanding it to potential growth areas.
Disney is poised to reach its targets by maintaining its differential advantages and
executing its strategic thrusts.
Recommendation for Strategy Improvement
To ensure that Disney sustains its competitive edge in theme park and vacation
resort industry, the company must focus on new product offerings, geographical
expansion, and customer service.
First, Disney must continue to provide a diverse set of product offerings to its
vacationers. Disney can successfully do this by consistently launching new, innovative
rides, games and attractions that distinctly correlate with its extensive line of new and
existing proprietary characters and stories that uniquely set Disney apart from other
companies. To stay relevant and ahead of the competition, Disney must faithfully employ
its quintessential mantra of "the magic of Disney," spanning multi-generations and
inspiring young and old when developing and rolling out its new product offerings.
Disney theme parks and resorts can leverage The Walt Disney Company's entertainment
sector as it creates popular television shows, and movies, and then incorporates those
characters into Disney's parks and resorts. The success of The Walt Disney Company's
19
proprietary assets must be sustained, as it will relate to success of the theme parks and
resorts division.
Because Disney theme parks and resorts compete with other theme parks, cruise
ships, timeshares, beach rentals and vacation destinations, Disney must continue to
expand geographically. Entering new markets will allow Disney to capture consumers
who want to travel or currently live beyond the regions where Disney theme parks and
resorts exist, and cruise ships travel. Already having expanded into France, Hong Kong,
Egypt and other countries, Disney has been able to insulate itself amongst the economic
downturn by stimulating growth and global brand awareness abroad. As revenue in the
theme park industry has more than doubled over the last decade with much of the growth
coming from developing countries like China, there is indeed a large market share to be
captured by Disney theme parks and resorts in international locations. However, Disney
has expanded beyond American borders as a part-owner, but control over operations, in
various locations; Disney should consider taking complete ownership of these locations
to ensure Disney will be able to maintain its brands’ standards on a global level.
In addition to Disney possessing the "gold standard" in terms of its brand, product
development, intellectual property, and creative talent, Disney's high-touch, personalized
customer service is one of Disney's competitive advantages. Disney should re-look at its
compensation packages (salary, benefits, perks, etc.) and training processes for its
employees since tenure and ability to build lasting, trusting relationships with consumers
is imperative. The customer service division encompasses a wide range of products, such
as ticketing, cuisine, and safety. Currently, ticket prices to Disney are at the upper end of
theme park price scales, with limited family package options and flexibility. Travel
20
agencies and online sales offer Disney tickets to vacation planners, so Disney must
maintain tight control of these partnerships to avoid price cutting and loss of revenue.
The practice “no refunds” practice followed by many theme parks is not favorable for a
family vacation where a child becomes ill and cannot enter that day, so the customer
loses the ability to return a product they cannot use. Disney would be a forerunner in
recognizing that despite losing revenue, consumers will attribute this refund to Disney
acting in a customer-focused manner.
A strategic thrust that would impact customer service ratings would be in
improvement in the quality of food. Frommer’s is a noted travel ratings service and of the
63 restaurants at Walt Disney World Resort, just four of these restaurants earned a three
star rating (the best), four earned two stars and 19 received one star.1 Interestingly,
among Epcot’s fifteen restaurants, only two of received positive ratings – and only one
star each. Epcot is a park built to showcase the cultures of the world, so how authentic an
experience is Disney offering with overall low-quality food and service? In a continuing
pattern, just three of the seven Disneyland California restaurants received positive
Frommer’s reviews and one of two of the high-price Disneyland Paris restaurants were
recommended. To confirm these ratings, another travel site, Fodor’s Travel Intelligence,
only recommended seven of the Walt Disney World restaurants to its consumers.2
This leads to another area where Disney can improve its brand image - safety.
Unfortunately, since 2000 there have been nine deaths in twelve significant instances
involving guests or “cast members,” in which the Occupational Safety and Health
Administration has administered fines for not following protocol. The media reports
1
http://www.frommers.com/destinations/waltdisneyworld/549_inddin.html
21
promote the idea that Disney profits from allowing more people to enter and contribute to
unsafe conditions, and the settlements paid to families have no significant impact on their
financial statements. This is a cause for concern among many potential consumers, who
do not trust that Disney has made the necessary changes that would address the reasons
for these deaths. While accidents occur at many theme parks, not just Disney, the image
of greed and indifference is directly at odds with the “family-friendly” experience Disney
advertises.
A smaller, less consequential growth opportunity is to market to young adults
who are looking for a great theme park or vacation experience without the familyfriendly bells and whistles. Disney has not targeted teenagers and young adults to visit its
theme parks because of the abundance of characters and amenities focused on children’s
positive experiences, with parents enjoying their children’s excitement. However, these
young adults are visiting competitive parks and traveling through competitive cruise ship
lines, proving there is a market that Disney has not tapped. By creating separate park
restaurants, hotels, nightclub areas, and thrill rides, adults without children would visit
more often.
Sources:
(1) "Cruise Ships." GlobalSecurity.org - Reliable Security Information. Web. 27 Mar.
2011. <http://www.globalsecurity.org/military/systems/ship/passengercruise.htm>.
(2) "Amusement_Park_Industry_Statistics." IAAPA - The International Association
of Amusement Parks and Attractions. Web. 27 Mar. 2011.
(3) "Amusement_Park_Industry_Statistics." IAAPA - The International Association
of Amusement Parks and Attractions. Web. 27 Mar. 2011.
<http://www.iaapa.org/pressroom/Amusement_Park_Industry_Statistics.asp>.
2
http://www.fodors.com/world/north-america/usa/florida/walt-disney-world-orlando/restaurantsnam_fodors_choice.html
22
(4) Tsai, Henry , Song, Haiyan and Wong, Kevin K. F. “Tourism and Hotel
Competitiveness Research,” Journal of Travel & Tourism Marketing, 26:5, 522 546
(5) "Oasis of the Seas Luxury Cruise Liner." Ship Technology. Web. 27 Mar. 2011.
<http://www.ship-technology.com/projects/oasisoftheseas/>.
(6) Brown, Georgia. "Muggles Away: New Harry Potter Theme Park Opens in
Florida | Travel | Guardian.co.uk." Latest News, Comment and Reviews from the
Guardian | Guardian.co.uk. Web. 27 Mar. 2011.
<http://www.guardian.co.uk/travel/2010/jun/18/harry-potter-theme-park>.
(7) "Top Thrill Dragster (Cedar Point)." Roller Coaster DataBase. Web. 27 Mar.
2011. <http://www.rcdb.com/1896.htm>.