Do the Disneyland and Walt Disney World of today seem expensive to you on a “gut-check” level? If so, you’re not alone. And you’re not wrong. An analysis of prices from a couple of decades ago, adjusted for inflation, shows that prices HAVE risen more than inflation over time. In some cases, the soaring cost increased at twice the rate of inflation, so some sticker shock is actually to be expected.

Let’s begin, as they say, at the beginning. The origins of a Disney theme park come from several evolving ideas. In one vision, Walt wanted a place for his Studio employees and their families to have a recreational area with a miniature train and a ferry boat. In another, he upended the traditional amusement park mentality in favor of something that offered only gentle rides that the entire (extended) family could enjoy together.

As part of the family focus, Walt wanted the park experience to NOT be one that looked/felt like a money grab. He hated the constant reaching into pocketbooks of ride prices, so the invention after the first year of a coupon system (A-tickets through D-tickets in that first go around) was a definite plus. Walt wasn’t there for the all-admission passport that came about several years after his death, but it keeps with his vision that the park was meant to be enjoyed by everyone.







What does all that have to do with pricing? Walt’s populist vision meant that “on the ground” pricing was meant to be accessible to all audiences. In other words, the park wasn’t meant to reap incredible marginal returns on sales of food or merchandise. Instead, those things were meant to mostly pay for themselves, but otherwise “sell” the park in a marketing sense.

There’s a famous story that Walt insisted that souvenir guides to the park, heavy on color photos, be sold “at cost”, or very nearly that point. His view was that such publications would serve as cheap/free advertisements for the park around the country. When past visitors kept such paper booklets on the coffee table, it created opportunities for future visitors to become entranced. At the end of the day, extra visitors would create marginal profit.

As forward-thinking as that sounds, such practices no longer dominate the retail division. Nor are they part of the food & beverage division.

To dive into this, let’s look at a couple of food items I knew well from my time as a Disneyland Cast Member in the late 1980s. The clam chowder breadbowl was, in those days, $2.95 before tax. Fast-forward to 2017. The clam chowder breadbowl is now $11. Let’s do a full stop here and investigate. According to the Westegg inflation calculator, a $2.95 item in 1987 should cost $6.32 in 2016 (admittedly, that calculator is a year behind). This is a differential of $4.68, or about 75% higher than it “should” be.

Let’s double-check if we are being unfair by jumping forward a decade. In 1998, a Monte Cristo sandwich in the Blue Bayou cost $9.95 for lunch. The same inflation calculator suggests $15 is the current price for such a meal, yet the actual price is $21.00 (this dish is now only available at the Cafe Orleans). In this case, the meal is “only” 40% higher than it should be–and let’s keep in mind the premium in the old days was the indoor waterside atmosphere, which is missing at the current price for Cafe Orleans.

The most visible price, of course, is the admission ticket. Let’s use those same dates – 1987 and 1998 – as anchor points. The one-day admission ticket to WDW in 1987 was $28/adult and it was $42 in 1998. Adjusting for 2016 dollars, that’s the equivalent of $60 in 1987 and $63 in 1998. Today’s MK price is $124 on peak days, giving us a jump of 107% since 1987 and a jump of 97% since 1998.

Over at Disneyland, it was $18 in 1987 and $38 in 1998, compared to $124 for peak now. That’s pretty different from WDW. Adjusting for inflation, we get $39 for 1987 and $57 for 1998. From 1987, prices have jumped 218%. From 1998, prices have jumped 118%.

In all these admissions examples, these over-100-percent price hikes are reflective of the jump AFTER inflation. If we were to do the calculation as if inflation didn’t exist, we’d see things like a 588% jump in prices.

So let’s try to put that into perspective. Are other things in society 6x more expensive now than in 1987, the way DL is? A Honda Civic had an MSRP of $7,500 in 1987. In 2017, the MSRP is now about $19,000 – this is about 150% higher, compared with Disneyland’s dramatic jump of almost 600%).

How about entertainment? In 1987, general admission to Dodgers Stadium cost $3. Now it costs $45 on average (with quite a bit of variation based on the opponent). In this case, the multipler is higher on baseball tickets than on Disneyland admission! So Disney is not alone in raising prices on experiences that are viewed as premium. Of course, down the freeway, tickets to an Angels game could be had for half that price, which is about the increase in prices Disneyland itself has experienced.

So where does this leave us? I don’t think many readers will be shocked by an analysis that prices have risen more than inflation. We feel the truth of that in our gut (and more importantly, in our pocketbook). For me, the surprise was that food prices have NOT risen as dramatically as admission prices–they only seem that way in my head. But when you calculate percentages, the food prices have had more modest and moderate increases, at least when compared with the gate prices.

A bit of reflection suggests the reason may be that prices for goods/services *in* the park have much less elasticity than admission prices. The short version of elasticity would be to say that a small jump in prices for the Main Gate doesn’t seem to affect demand, but a similarly small jump (by percentage) of prices for food DOES affect demand. In this case, that’s likely because Disneyland is frequented by a large percentage of locals, some of whom only come for part of the day, and others who know they can bring food into the park for far less money than it would cost to buy it. Were we to do this analysis for WDW, we’d likely see a different story. With more people on vacation and willing to spend big for that one dream getaway, WDW can charge more per meal and still see demand stay high.

What’s not going to show up in those numbers, however, is the irritation customers may feel when paying what seems, intuitively, like high prices. Eventually, all this can and will have an effect on loyalty. Some people will reach an invisible red line mentally, and decide they will come less often, or simply choose different destinations altogether. Indeed, there is ample evidence of such conclusions on every Disney discussion board and web forum.

Yet if you are Disney, you have a silver lining in Anaheim: the metropolitan area is SO large, and full of SO many people, that one person’s lost attendance is easily replaced by someone standing in line right behind that same person, waiting to buy. “Charge what the market will bear,” goes the axiom, and it’s useful to keep in mind that “the market” is not a single individual. Even if one person won’t pay such prices anymore, there are others who will.

Over in Orlando, there is no such cushion of nearby residents. However, Disney can count on a different kind of loyalty. These East Coast parks have been the family destination of choice for a few generations, so parents feel almost obligated to expose their children to the same vacation they once had; this creates a resiliency in the demand that SoCal doesn’t enjoy nearly as well–there’s a specialness to traveling out of state.

But both of those silver linings are not enough. In a world of just pure up-front pricing, Disney would start to lose money (or at least make less marginal profit) on things with poor price elasticity. But they aren’t content to leave it like that. Since they can’t raise food prices as fast as park admission, they are on the prowl for ways to replace that “lost” income.

In Anaheim, they’ve found it by dramatically increasing the price of the annual pass. Up from $300-something about a decade ago, the top pass without blackouts now costs $1,050 – and with hundreds of thousands of people buying at least some form of annual pass, these numbers add up quickly.

In Orlando, they’ve found it by transforming the theme park business into the hotel business. By offering such things as Free Dining in the “slow” months, they can put “heads in beds” year round. By using park festivals and marathons and other key events wisely, they can spread out what counts as a “busy” season to most of the year. While the food business may suffer a bit from free dining on paper, the overall division of Parks and Resorts looks positively rosy, with occupancy rates truly the envy of the entire hospitality world.

On top of all that, consider the role of FastPass. On the surface, you’ve got something that looks like a Guest-friendly perk. Scratch at the surface just a bit, though, and you see something else. For starters, you see a competitive advantage. If Disney is the only one around offering a free line-reservation system, you’re more likely to choose Disney for your one day of recreation (remember the earlier discussion of loyalty? Now suddenly FastPass has an actual dollar value you can attach to it).

Over in Orlando, FastPasses are not created equally. If you are staying at a Disney hotel, you can make reservations weeks before everyone else, which creates a pretty solid reason to stay at the Disney hotels. Again, they are more in the hotel business than the theme park business.

Even Disneyland, with its smaller hotel footprint, has found a way to make FastPass work for the bottom line, via the introduction of MaxPass (paid FastPass). Speaking as someone who now lives on the East Coast, yes, I probably will buy the app-based line-skipping ability the next time I visit Disneyland. Time is money, as they say.

Rewind a bit to our discussion of admission prices 1987 to 2017. Given the role of FastPass/MaxPass, we aren’t talking an apples-to-apples comparison. The parks were much less busy in 1987, and you could get on more rides, and didn’t have to worry about reservations.

We could do a similarly deep dive into things that used to be included, and now aren’t. Experiences once included are now upcharge events (think Epcot festivals); park hours are shorter than they used to be, and even the hard ticket events include fewer bundled items than they used to, like a free family photo.

To sum all this up, yes, you are paying more for Disney park products than you used to. But it’s worse than that. You are paying more in ways that are masked from plain view. Because of price elasticity, people will stop paying for goods when the perceived price is too high, but Disney has switched to a strategy over the past several years to bake enhanced prices into the structure, to provide incentives to pay the higher prices, and to unbundle services once included.

It’s a brave new (Disney) world, after all, and I think we can expect these kinds of pricing schemes and hidden costs to continue. “A luxury once sampled becomes a necessity,” goes the old adage, and the annual sojourn to Disney is part of that. We will increasingly see a test of what the market will bear, and if it won’t bear direct costs, I think we can expect the addition of even more indirect costs.





Sharing is caring!