Niles: What does Disney management expect from Disneyland?

Disneyland’s Magic Key annual pass system seems to have locked the resort into a trap.

Disneyland recently opened renewals for its initial Magic Key holders, who bought Disneyland’s new annual passes when they first went on sale last August. Renewing passholders are paying between 7% and 16% more for their passes, which now include blockout dates at all levels.

The resort dropped its old annual pass program during the lockdown, when it became clear that there was no way to accommodate all those passholders while Disneyland had to operate under capacity restrictions. When those restrictions lifted, Disneyland introduced Magic Key, but even with its new reservation requirements, Disney officials continue to lament the “unfavorable mix” of so many Magic Key holders coming to the parks instead of bigger-spending daily ticket buyers.

Here’s the trap: The higher that Disney raises Magic Key pass prices, the more often passholders will try to visit, to get more value from their pass. If Disney were to cut Magic Key prices (hold for laughter), more Disney fans would buy them, again leading to more visits by annual passholders. If Disney wants to limit visits by its passholders, it must then limit the number of reservations available to them, leaving the loyal fans who spent all that money on their passes frustrated and unhappy.

Since, ultimately, Disneyland’s product is happiness, that’s a problem. If Disneyland wants to be the “Happiest Place on Earth” again for its most loyal customers while delivering a return to satisfy the C-suite up in Burbank, it needs to find a way out of this trap.

If Disney’s goal is to make Disneyland more driven by out-of-market visitors, like at its Walt Disney World Resort, it needs to present a vision to make that happen. Two theme parks and three hotels offer a great destination for a staycation or a stop on a Southern California visit, but it’s far from enough to make the Disneyland Resort a weeklong vacation destination on its own, as Disney World has been for decades. The resort’s DisneylandForward proposal to the community does not detail the additional hotels, attractions, meeting facilities and other amenities that the resort would need to attract and support more out-of-town visitors.

Or Disneyland could abandon that goal and just embrace Disneyland running primarily as a locals’ resort. That would mean treating Disneyland like the world’s most elaborately themed country club. The pass holders are the members and park reservations are the tee times. The more you pay for your “membership,” the easier the club makes it for you to get the reservations you want.

It’s all about setting expectations — and not just for guests. If Disney management’s expectation is that more out-of-town visitors and daily ticket buyers will be coming to Disneyland, then it needs to change the resort’s offerings and ticketing system to make that happen.

If Disney management is not willing to do that, then it needs to set its expectations to match the reality of what its actual customers want in Anaheim.