What Happens Next with Annual Passes?
I purchased my first Walt Disney World annual pass in 2014, which feels like forever ago.
Realistically, that’s a very short duration for the diehards who grew up near Disneyland and Walt Disney World.
Many of them can recount stories of annual pass usage from their childhoods, making these park tickets essential to many.
Recently, Disney park officials have taken an unusual approach with current/potential annual pass owners, and the ramifications are fascinating.
What happens next with annual passes? That’s a good question that I’m glad some of you have asked. So here’s what we know.
What Are Annual Passes, and Why Do They Matter?
I’m confident you know what Disneyland/Walt Disney World annual passes are.
These unique admission tickets provide nearly unlimited access to the parks.
In fact, until a few years ago, Disney annual passes included no significant restrictions.
Then, in 2016, management unveiled its new tiered admission system.
Historically, Disney had charged customers the same price for any visitation date.
Obviously, some dates on the annual calendar, like Christmas Week and July 4th, should cost more. It’s the same logic as paying for better seats at a concert.
Still, many loyal Disney fans bemoaned the change because, well, that’s what we do.
As fate would have it, we had cause for concern. Disney eventually added some caveats to the annual pass program as well.
Several forms of the annual pass had existed in the past. Disney wanted to encourage in-state locals to visit on weekdays and during the off-season.
The new changes wreaked havoc with the longstanding usage of the most expensive annual passes.
Disney no longer wanted these passholders to visit on those crowded dates, as they pay less per visit overall.
This stat, per capita, has proven so vital to Disney that executives discuss it during every fiscal earnings report.
That’s problematic for passholders, as Disney gets better numbers when they visit less regularly. So you can see where this is going…
What Has Changed Philosophically during the Pandemic?
A forced move has led to some unexpected changes in Disney’s overall park philosophies.
During the early days of the pandemic, Disney liaised with the Centers for Disease Control and Prevention (CDC) about the best ways to operate safely.
The CDC urged Disney to limit the overall park capacity. Otherwise, guests would violate social distancing and risk spreading the infectious disease.
Scrambling for ways to reopen, Disney invented a solution on the fly. When Walt Disney World reopened, it required guests to book Park Passes.
You can think of these digital tickets as reservations to enter theme parks. However, they’re not admission tickets in and of themselves.
Customers suddenly needed Park Passes AND admission tickets to visit Disney.
In the process, management discovered that it could staff the parks substantially more efficiently.
Simultaneously, Disney uncovered previously unknown dark arts regarding theme park revenue.
Since annual passholders needed Park Passes as well, they didn’t have the run of Walt Disney World any longer. Suddenly, they couldn’t come and go as they pleased.
At this point, Disney tracked a surge in per capita spending for the reason I previously mentioned.
Annual passholders visit Walt Disney World frequently. So, they don’t splash around as much cash as those who vacation at Disney less often.
When you know you’ll be back, you don’t feel the compulsion to empty your bank account. But, if you don’t plan to return for years, your credit card gets scorch marks.
Recently, Disney strategists have been incentivized to dissuade their most loyal customers from visiting…which is an INSANE business model.
Somehow, the numbers underscore this counterintuitive philosophy, though.
What Has Disney Done to Discourage Annual Pass Sales?
When Disneyland finally reopened after more than a year, all its annual passes had technically expired.
Due to some loopholes, some lucky folks extended theirs, but it wasn’t a significant percentage.
Instead, management enjoyed a rare opportunity to reboot the annual pass program, and that’s what happened.
Disney introduced the Magic Key annual pass, which came in four tiers.
Due to some ill-considered language, Disney promised guests that if they purchased the Dream Key, the top tier, they’d get to visit Disneyland on all calendar dates.
Importantly, Magic Key owners still needed Park Passes for admission, though. Disney presumed its customers would understand this aspect.
Alas, some debate exists about whether the legalese on Disney’s website clarified this point.
When Dream Key purchasers tried to schedule Disney visits, they encountered a substantial number of sold-out dates for Park Passes.
In other words, their annual passes indicated that they could enter the parks. Without Park Passes, Disney wouldn’t allow them, though.
Disney recognized this error as complaints arose from loyal customers. Eventually, the Disneyland site listed the top two tiers of Magic Keys as “sold out.”
How can a company sell out of a digital item? I dunno, but there’s an NFT joke in there somewhere.
At Walt Disney World, a similar process unfolded. Again, Disney willingly took the money from annual passholders, secretly hoping they wouldn’t visit as much.
I don’t like saying that, but it’s the honest evaluation here. Disneyland fans eventually started a class action suit that’s a trouble spot for Disney.
As a counter, Disney has ended all annual pass sales at Disneyland.
Meanwhile, out-of-state residents currently cannot purchase annual passes at Walt Disney World either.
When Disney recognized the scope of its legal liability here, it effectively placed both annual pass programs in cold storage.
What Happens Next with Annual Passes?
Let’s talk about the timeline here. Disneyland reopened on April 30th, introduced Magic Key on August 3rd, and stopped selling the Dream Key on October 25th.
So, loyal Disneyland fans begged Disney to bring back annual passes for three months.
When park officials finally did so, they had to panic and hit the reset button after less than three months.
Walt Disney World’s timeline stretches out longer, but the generalities hold true.
Disney hasn’t said the quiet part loud yet. However, management wants to normalize a new behavior for annual passholders.
The goal is for them to pay $1,000 or more without expecting to visit the parks whenever they want.
This business approach allows Disney to maximize per capita spending without overloading the parks.
For annual passholders, it’s like getting simultaneously punched in the face and kicked in the crotch.
Everyone is waiting for the other shoe to drop here. And nobody’s anticipating a happy ending.
Disney recently confirmed that all Disneyland Magic Key owners may renew their annual passes this summer.
The opposite is true at Walt Disney World, where out-of-state guests must await the expiration of their current annual passes.
At that point, Disney will likely reboot the annual pass program again, utilizing more precise language to reinforce the necessity of Park Passes.
Based on previous data, management knows roughly how many guests will renew at Disneyland.
I expect a much higher conversion rate this time since Disneyland fans are braced for the worst with Magic Key 2.0.
Still, the number is fractional enough that Disney can tolerate it while the class action suit works its way through the court system.
For the time being, you should expect the status quo with annual passes, and the situation may get worse before it gets better.
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Feature Photo: Disney