Is Mickey Mouse a snob? According to this article from the blog Theme Park Insider (reprinted by Quartz), while once Disney (NYSE: DIS) was all about welcoming the middle class into its parks, these days you have to be rich to party with the well-heeled rodent and his friends. Park prices and add-ons are on the rise, and if that keeps some out of the Happiest Place on Earth, it is making shareholders perfectly happy. It’s a story that is only partly correct.
The crux of the argument is that Disney has been raising prices for its offerings much more quickly than inflation, which is certainly true. Earlier this year, the company made headlines when it pushed the basic price of a ticket to the Magic Kingdom up to $105. When the park opened in 1971, tickets were $3.50 each, or about $20 in current dollars, and, as Time magazine has calculated, park tickets have doubled in the last decade alone. As well, these days Disney is offering a lot more ‘extras’ (meals, events, merchandise) at hefty price tags as well. The cost of going to Disney (as anyone who has done it recently, particularly with kids, knows) is not cheap.
And of course we know that incomes, particularly middle class incomes, have not been keeping pace with inflation. As the article points out, median U.S. household incomes, adjusted for inflation, have barely budged since the 1970s. The Canadian numbers are a little better, but nowhere in North America have median incomes doubled over the last ten years. So yes, Disney is more expensive. Does that make it a playground for the rich alone though?
In truth, the reality of who goes to Disney is much more complicated than this article would have you believe. For one thing, while the inflation-adjusted price of park tickets may have been rising for decades, the price of plane tickets has been falling. When I was a kid in Montreal in the 1970s, very few of my classmates had been to Disney, not because their (middle class) parents balked at the price of a park ticket, but because they were not about to pay for airfare for a family of five or whatever. Plane trips, even three or four decades ago, were still something of a luxury while these days the airports are full of (not rich) tourists from all over. As well, the cost of many other budget mainstays – like food and clothing – have declined in inflation adjusted terms over the past decades, potentially leaving some room in the family budget.
In fact, these days going to Disney is such a middle-class rite of passage that Id argue that everyone goes – whether or not they can afford it. For sure, incomes have been stagnant for a long time, but spending on travel has by and large gone up in the U.S. (and in Canada and other developed countries too). Savings rates have also waned for most of the period, and let’s not even talk about the debacle of re-mortgaging the house and spending the money on something fun. The middle class has been making their way to Disney just fine – or at least they were until 2008, when the recession was deep enough to prompt some sober looks at the family budget.
Where I do absolutely agree with the author is that in the years since the recession, there has indeed been a re-thinking of strategy not just by Disney but by many other companies as well. Going after some mythical middle class with a squeezed income makes a lot less sense than finding more expensive offerings and selling them to those who are willing to pay for them. I’ll still argue that it’s a group a lot wider than the ‘rich’ who are forking out for the Crown Package at the Bibbidi Bobbidi Boutique (that’s a princess makeover for your princess, at a cost starting at $59.95) or even the Castle Package ($194.95 and up, includes a costume and a photo package) but it is certainly a group that is willing to live like they are (at least minor) royalty.
It’s a strategy that appears to be working. When Disney released their latest results in May, they reported that revenue at their theme parks was up by 6 percent over the year, and that the operating income for the parks was up 24 percent. The increase reflected higher ticket prices, as well as higher prices for hotel rooms and higher spending on food, drinks and merchandise.
So yes, Mickey is not as accessible as he once was. That’s true in a literal sense: while once he used to roam the Magic Kingdom casually, these days you need to line up to see him in his dressing room at designated hours. Velvet ropes keep the hoards of autograph seekers in check, and there are invisible barriers keeping people away as well.