Wednesday, March 30, 2016

Yield Management & Pricing: Disney To Have Demand Based Fares In Its Theme Parks

Yield management pricing is a common technique used in the tourism business. Depending on the demand, prices vary in order to secure both revenues and full hotel occupancy. Disney has decided to adapt its pricing policy in order to apply different fares depending on the park's business

"Tickets at Disneyland from Monday to Thursday will be deemed "value" tickets and will be priced at $95. "Regular" tickets include most weekends and the summer season, and they will be priced at $105. "Peak" tickets will include most of the month of December, spring break and July weekends, and they will cost $119, according to The Orange County Register.
Disneyworld's Magic Kingdom will be affected in a similar way, but prices will be higher,The New York Times reported. "Regular" tickets will cost $110, "Value" tickets will remain at $105, and "peak" tickets will cost a whopping $124."
Now I am not sure about the move. Indeed, you need to be cautious about these kinds of move.
  • Firstly, you need to change your pricing policy, and you may turn off some of your loyal customers. How could they understand such a dramatic move, especially as it results in highering the ticket price.
  • Secondly, you also need to have a clear benefit from the seasonal tickets. Would you have less people in line? Extra shows? Special features? If not, I think it will turn more people off than lead extra revenues from the higher prices.
Now, I don't say it is a bad pricing strategy, as it works well for example in the airline business, but it did mostly as it resulted in having lower fares to limit costs of half empty airplanes. We will see how it goes in the long run.