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Can Destinations and DMOs Learn from Disney's Dynamic Pricing?

Issue # 4 (572 Words/3 Minutes)

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Can Destinations and DMOs Learn from Disney's Dynamic Pricing?

While DMO’s and destinations search for real-world solutions to deal with peak travel traffic, crowding, and congestion in their destinations, Disney may be giving some insight to a possible solution with its dynamic pricing. While many DMO’s have tried without real success to implement destination management plans effectively, there is a realization that ultimately management of peak travel will have to include pricing as a tool to help manage visitor demand. Education, signage, trying to get people to visit during different times of the years, spreading the out to less utilized destinations are all part of the mix but the one tool that destinations have been a bit reluctant to consider openly is pricing. What is dynamic pricing? Simply put, pricing has a significant impact on demand, and Disney recognizes that and has been moving to dynamic pricing since the pandemic. Dynamic pricing refers to the practice of varying the price for a product or activity, or service that reflects changing market conditions, in particular, the charging of a higher price at a time of greater demand. Recently Disney announced changes to its Disneyland pricing strategy; it is raising its single-day ticket price for the most popular times to $164 for admission to one park. While they did not change their cheapest ticket, which remains $104, they indicated that ticket price is only available during its least popular days of the year.

In addition, Disney raised its pricing on its “park hopper” pass, allowing customers to experience two parks to $319, up to nine percent from its current $290. As well, Disney increased its parking by twenty percent to $30. According to Disney, the resort is “offering guests more ticket choices to meet a variety of budgets as it moves closer to dynamic pricing designed to spread visitation throughout the weeks, months and year.” What can DMOs, and destinations learn from Disney’s actions? Disney uses pricing to effectively manage crowding and revenue optimization, rushing to increased yield per visitor instead of increasing peak volumes of visitors. Additionally, they are using price incentives to shift demand to traditional non-peak times of the year. Sound Familiar? It’s becoming more apparent that destination management without a strong pricing element across the destination may not have the desired effects that destinations are looking for. Hotels and airlines have been using this approach for years, but what about the rest of the destination? What about dynamic pricing for restaurants, attractions, recreation rentals, etc.? Is it time for DMO’s to encourage destinations to look at how this could work? It’s also important to note that dynamic pricing is NOT about creating exclusivity or denying access. As Disney illustrates, its lowest ticket price of $104 is significantly cheaper than its peak single-day tickets price of $164 and is available. But visitors will now have to plan what days best fit their budget. DMOs are continually looking for ways to transition to the ever-changing environment. Destinations may need to consider a more comprehensive shift to managing their destination for yield and total revenue. They might also have to change how they measure success and look at revenue per visitor and other metrics that emphasize yield. This type of approach is undoubtedly coming to destinations; it is just a matter of how it gets implemented and when it happens. With the dynamic pricing concept destinations can be managed in a way they might not ever have envisioned. For more information contact Carl Ribaudo:

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