Prior to Magic Your Way, all inclusive meal plans for resort guests were offered close to retail prices and included add-on features with limited appeal, resulting in extremely low penetration. And while Disney provided great on-site transportation, guests who flew needed to pay for a cab or shuttle to the resort, or rent a car that went virtually unused the rest of the week. While aggressive price increases had been realized for a decade preceding Magic Your Way, research indicated some consumers were being priced out of the market, and significant hotel discounts, shorter length of stays and lower occupancy were eroding profits.
Other new products and services encouraged guests to stay in Disney resorts, reducing the need for discounts to drive demand. “Disney Dine Plans” that represented a 40% discount on retail prices were offered to resort guests only, provided the plan was purchased for all nights of the guest stay. “Extra Magic Hours” were implemented – at no charge – to give resort guests additional theme park privileges. Every day, one of the four theme parks would open an hour early just for guests staying in a Walt Disney World resort, and every evening, one of the four theme parks would stay open three hours later. An added benefit was a more optimal spread of demand, with fewer guests in the theme park during the peak afternoon period and stronger utilization of hotel restaurants during the lunch hour.
The holistic Magic Your Way strategy was a win for guests in many ways. Not only did they now have choice to plan the vacation that best fit their need, but the price of a Disney vacation plummeted. Comparing a seven-night, eight-day vacation in a Disney value resort pre and post Magic Your Way showed a 36% reduction in price. Families that previously could not afford a stay in a Disney hotel or could not afford the vacation itself were now flocking to Orlando and spending their entire stay with Disney.
Understanding the value proposition was next. Not just the value proposition for the business, but the guest as well. For guests, time with family, magical moments and just the amount of attractions, entertainment and character interactions contained in a day long visit speak to value. The pricing power is in the parks but the fantasy and emotional drivers of value carry over to the Disney resorts, specialty dining and merchandise as well. Disney guests are buying memories and magic no matter what the product or service may be.
Implementing transformational strategies typically impact many areas of the business and such was the case for Magic Your Way. Breaking down organizational barriers and aligning the company around the transformation is a critical factor for success. IT was tasked with re-designing ticketing systems, introducing biometrics for every ticket purchase, enabling the selling of new dine plans and packages, and tracking millions of bags for arriving and departing guests. Operations were impacted on every front from theme park hours to new and popular dine plans in fast food and sit down restaurants, to an entirely new luggage handling facility and hundreds of buses a day arriving with multiple families ready to check-in – and expecting their bags to be in their room.
The organizational alignment probably most impactful was the ability to price holistically – to use all products and services to fashion the most profitable strategy. While responsibility for pricing tickets, hotel rooms, merchandise, food and beverage, and ancillary products and services were previously scattered throughout the organization, post Magic Your Way, all were housed in one cohesive Pricing and Revenue Management organization. No longer beholden to independent profit and loss statements, the Pricing organization was now able to price where guests placed value and maintain reasonable pricing or offer free services where it strategically made sense to do so.
Finally, having the courage to take calculated risk was the key to the successful implementation of Magic Your Way. Like many other strategies, this one was hard to test in real time without going all the way. While research and due diligence on the analytics indicated the strategy would be a success, it was easy to become skeptical and leery of such a large scale change. But significant reward is often the by-product of significant risk and Magic Your Way was no exception. Step changes in business usually require more than just a little tweaking and aversion to risk can easily dilute a strategy and its upside potential.
Having courage to execute when the risk is calculated and clear is often what keeps some of the best innovation from being realized. Leaders want assurance the risk being taken will pay off, and pay off handsomely. Embracing research, approaching analysis with rigor, and leveraging the most skeptical of skeptics to find the holes will help ensure success. All that’s left is a little courage.