Disney Rethinking Adventures By Disney

[Melanie]

Orlando Sentinel
By Jason Garcia
Sentinel Staff Writer
September 21, 2009


Disney's guided-tour business catches its breath

Amid the global economic downturn, the Walt Disney Co. is rethinking Adventures By Disney, the guided-tour business that executives hope can develop into a valuable niche in the company's theme-parks division.

For the first time since Adventures' inception, Disney is scaling it back. The company has cut scores of trips from Adventures' 2010 schedule and has dropped a handful of destinations — including Spain, Austria and the Czech Republic — entirely.

Analysts say the pullback reflects the difficulties even brand icons such as Disney face selling premium vacations — such as $6,500-a-person safaris through South Africa — in the midst of the worst economy since the Great Depression.

Adventures By Disney, said Sanford C. Bernstein & Co. stock analyst Michael Nathanson, "is being affected by intense pressure on the more-expensive family trip options."

Disney acknowledges that Adventures has been squeezed. "When you think about the economy, it's hard not to think of any business, in any industry sector, that hasn't been impacted," said Karl Holz, president of Disney Cruise Line and New Vacation Operations, which includes Adventures.

But the company says the reduced schedule is primarily the result of a strategic shift in which Adventures will offer fewer trips up front and add more later on if demand warrants. Boosters say the new approach will make the operation more flexible, more efficient and, ultimately, a better experience for guests.

Disney says it remains bullish about the future of Adventures By Disney. Company executives view their tour business — like their expanding cruise line and the stand-alone resorts planned in Hawaii and Washington, D.C. — as a way to diversify Disney's vacation offerings "outside the berm" of their signature theme-park resorts.

"You have to take a look at this business as an exceptionally young business. This business is really in its infancy," Holz said. "It's just giving our guests that trust and love Disney options away from our traditional destinations."

Disney tiptoed into the tour industry in 2005, offering only a limited number of summer trips to Hawaii and Wyoming.

But Adventures By Disney grew rapidly from there. This year's schedule includes more than 400 trips to 17 countries, with sights ranging from the lost Incan city of Machu Picchu and the 19th century Bavarian castle that inspired Sleeping Beauty's Castle at Disneyland to a Chinese giant-panda preserve.

The guided-tour industry appeals to Disney for a variety of reasons. Most important, it offers Disney — which has built a reputation for detailed customer service and storytelling in its theme parks — a chance to tap into the billions of dollars that families spend every year on nonpark vacations.

With sprawling theme-park resorts in Orlando, California, Paris, Tokyo and Hong Kong — and another in mainland China on the horizon — Disney dominates the theme-park business. But theme parks account for only a fraction of total leisure travel: Only about 6 percent of vacations include theme park visits, according to the most recent research by the U.S. Travel Association.

The same rationale is driving two of Walt Disney Parks and Resorts' biggest capital projects right now: The expansion of Disney Cruise Line, with two new 4,000-passenger ships; and the construction of an 830-room Hawaiian resort, with a mix of hotel rooms and Disney Vacation Club time shares.

"You know, a lot of people who visit our parks don't come back, and yet they continue to take family vacations," Disney Co. Chief Executive Officer Bob Iger said last year, after being asked about Adventures By Disney at a conference. "We would like to capture a little bit more of that spend with an experience that has all the brand attributes of the experience they might have when they go to our parks."

In addition, Disney says ventures such as Adventures By Disney help stimulate demand for the company's other products by introducing its brands to consumers in new markets. And Adventures' tours require little capital investment — Disney contracts out for services during its tours, rather than building its own infrastructure — so it generates relatively high returns.

Not everyone is convinced that Adventures can become a significant growth engine.

"Adventures By Disney is too small to be considered a major growth driver for the company," Nathanson said. "At best it is a nice brand extension that reinforces the qualities and attributes of Disney."

It certainly looks like it will be smaller next year. The 2010 schedule has 272 trips, down nearly 40 percent from the 429 scheduled this year. The number of itineraries has been reduced from 22 to 19.

Disney says some changes are the result of the usual vagaries of the tour business, in which some itineraries are often put "on hiatus" for a year or two while new ones are introduced. But it says the reductions are in large part driven by its new approach to scheduling.

Instead of scheduling large numbers of tours at the start of the year — and giving consumers more dates to choose from — Disney is now focusing on fewer tours around the dates that have proven to be most popular in the past. It can then add extra trips if there is sufficient demand.

Steering travelers into a condensed number of trips should make each Adventures tour more profitable for Disney and help blunt continued fallout from the sagging economy. But Disney says the move also benefits guests because it will lessen the chances that Disney will have to cancel trips that only small numbers of guests have booked, which forces those guests to reschedule their vacations.

Holz said the shift brings Disney's fledgling tour business more in line with how other operators schedule.

[Ian]

I've always found these sort of intruiging and have to admit I've looked into them.

The truth is, they seemed to be more proportionally more expensive than other, similar tour experiences so I kind of shelved the idea.

I didn't see anything that really made them worth all the extra money they were charging.

[lockedoutlogic]

I've always found these sort of intruiging and have to admit I've looked into them.

The truth is, they seemed to be more proportionally more expensive than other, similar tour experiences so I kind of shelved the idea.

I didn't see anything that really made them worth all the extra money they were charging.

That's the disney difference

Seriously, I'd love to do these and they are undoubtedly some of the finest offerings around....but the costs are outta the solar system for what you get...and like it or not...Disney can't slap "Disney" on everything.

Just as there are millions of fanatics that would live in a hotel in WDW if you let them....there are tens if not hundreds more that really are turned off by Disney and what it stands for in general.

The point is that they aren't going to be able to weasel in to every market - at least not on their terms. And there terms are ridiculously high profit margin and product tie in. and those terms are not really negotiable in the Media Conglomerate Disney handbook.

So i never really saw much of a future in this...long story short

they're kinda lucky the cruise thing has worked...and that is largely because they basically run half of florida - my opinion

Karl Holz is a good man, by the way...I wasn't sure he was still with Disney...nice to see he is

[TheRustyScupper]

1) I am still dizzy from the "spin" Disney put on this.
2) i wish they would have just said "reductions due to low bookings".

[DizneyRox]

1) I am still dizzy from the "spin" Disney put on this.
2) i wish they would have just said "reductions due to low bookings".

Surveys have indicated that guests would rather we concentrate on higher profitability tours.

[Ian]

they're kinda lucky the cruise thing has worked...and that is largely because they basically run half of florida - my opinion

I think the thing for the cruise is that they can tie it in with a Disney World vacation.

So they sort of had a built-in starting point in terms of a customer base ... "Hey, you're already going to be in Orlando anyway to go to Disney World so why not add on this great cruise??!" .... and then they wowed everyone with their service and it took off from there.

But I'll tell you ... I know everyone raves about Disney Cruises, but I'm hard-pressed to see the value. We took an amazing cruise on NCL earlier this year that cost us literally 1/3 of what we would have paid to do the same cruise on DCL.

There isn't much Disney could offer to convince me their cruise could be three times better than NCL's!

[lockedoutlogic]

I think the thing for the cruise is that they can tie it in with a Disney World vacation.

So they sort of had a built-in starting point in terms of a customer base ... "Hey, you're already going to be in Orlando anyway to go to Disney World so why not add on this great cruise??!" .... and then they wowed everyone with their service and it took off from there.

But I'll tell you ... I know everyone raves about Disney Cruises, but I'm hard-pressed to see the value. We took an amazing cruise on NCL earlier this year that cost us literally 1/3 of what we would have paid to do the same cruise on DCL.

There isn't much Disney could offer to convince me their cruise could be three times better than NCL's!

disney cruises are amazingly overpriced....

you get better service...and hidden mickeys....but the value is not there

[meldan98]

I personally would love to take some of the tours, once my kids are a little older. I would really consider them when the youngest starts school.

On the cruise thing, at the D23 expo when they announced the repositioning of the Wonder and the Alaska itinerary, the audience went wild...when they announced Mexico...the audience did a polite golf clap. Mexico is really going to be a tough sell at their current price points. I personally can't wait to book an Alaska cruise!

[brownie]

"You know, a lot of people who visit our parks don't come back, and yet they continue to take family vacations," Disney Co. Chief Executive Officer Bob Iger said last year, after being asked about Adventures By Disney at a conference. "We would like to capture a little bit more of that spend with an experience that has all the brand attributes of the experience they might have when they go to our parks."

Maybe they could focus more on getting people to return. I just watched the Walt Disney Treasures DVD on Disneyland today and someone talked on it about the necessity of have something new for people to talk about to get them to come back.

[Ian]

Maybe they could focus more on getting people to return. I just watched the Walt Disney Treasures DVD on Disneyland today and someone talked on it about the necessity of have something new for people to talk about to get them to come back.

Yeah really ... this is actually kind of an odd thing for Iger to say, isn't it?

[lockedoutlogic]

Yeah really ... this is actually kind of an odd thing for Iger to say, isn't it?

Take two doses of wishful thinking and call me in the morning...

[Goofster]

Yeah really ... this is actually kind of an odd thing for Iger to say, isn't it?

It is an odd statement. I initially thought that maybe he meant many families take one vacation to WDW and then cannot really afford to come back and vacation elsewhere....but then, Adventures by Disney is not marketing itself to that type of family. Weird.

[ChipDale]

...The company has cut scores of trips from Adventures' 2010 schedule and has dropped a handful of destinations — including ...the Czech Republic...

This is so weird - I was in Prague last week and Adventures by Disney had a desk at the hotel where were staying (Marriott). I commented how I didn't even know they offered that as one of their destinations.

I've read some of their itineraries and it really looks like an amazing way to see different places if you're into tour groups. I wonder if they'll be able to survive the recession.

[4ubie1]

The reason that I was looking into Adventures by Disney is not so much that it is a good price for a tour but because of the name. I know that with Disney, I will be taken care of and when I take my first tour in Europe, it will be with a company I can trust. It gives me alil security when wondering into the unknown.


And you are right, their tours are grossly over-priced.

[lockedoutlogic]

The reason that I was looking into Adventures by Disney is not so much that it is a good price for a tour but because of the name. I know that with Disney, I will be taken care of and when I take my first tour in Europe, it will be with a company I can trust. It gives me alil security when wondering into the unknown.


And you are right, their tours are grossly over-priced.

europe is harmless....africa on the other hand, parts of south america and asia....yeah, i would pay more for the name in those places

[lindique]

I was hoping for a trip to Japan that would include Toyko Disneyland, but they don't seem to have one. I looked at the prices for some of the trips, and they are really high. I'd book one in a minute if they weren't all super-deluxe - I'm a moderate kind of tourist.

[TheTexasKid]

They are just retrenching due to the downturn in tourism due to the world economic conditions.

Expensive? Yes. Worth it? (IMHO) Yes. I've been on two of the tours--the Mid-Atlantic and the Hollywood & Disneyland Resort. And I have plans to tour with them again, even though they have canceled some of the tours that I was planning on doing, such as the Boston to New York City tour and the signature tour of northern California. But they still offer tours to Australia and South Africa, which I plan on doing, having been to neither country. They also offer, for now, an Alaska Family Vacation, and if I don't do one of the repo cruises to Alaska, I'm planning on doing the Alaksa Family vacation in conjunction with the Alaska cruise on DCL.

The same for DCL. Are there cheaper cruises? Yes. Are there better cruises? Maybe. But I've cruised seven times already with them and been happy everytime, so why should I gamble and cruise with someone else.

Indeed, I'm booked on the Baltic cruise in 2010, want to do an Alaska cruise in 2011, maybe a repo cruise in 2011, and thinking of doing one of the holiday cruises in 2010 and 2011.

Everytime DCL cruises to a new destination, I'll be there.