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Baby You Won't Drive My Car (continued)
Disney had long done research on visitor spending habits, and knew that
on-property visitors spent more and were happier, by and large. So it makes
sense for them to ask themselves how they can make their captive audience
even more captive.
At the time, there was no official shuttle from Orlando International Airport
(OIA) to Disney. You could rent a Florida Town Car ($75/each way in the
late-1990s, now $95/each way) or you could get an American Luxury Van ($45/each
way in the late-1990s, now $65/each way). Or you could take the giant shuttle
bus, run by Mears, for $14/person (that price is from the late 1990s).
Disney did calculations and tried to figure out what would be the best price
to charge customers to move them over to the Disney property. As we all know,
the answer turned out to be $0. Free! Disney made a deal with Mears, and now
loses quite a bit of money daily in offering a completely free shuttle to the
parks and resorts.
The results were predictable inside the parks. If you're stuck in the parks
and on Disney property, you'll feel you have little choice other than to pay
what is needed. With Disney offering free rides to the parks, everyone will take
them up on the offer, and people will stop renting cars. They'll become virtual
prisoners of the Mouse. That has happened, and prices went up (as they have
always done, admittedly). And this price hike for stroller rentals is no
exception.
You won't often see the
Mears brand name now.
All these tourists come on the free Disney shuttle and have no way to get to
the local supermarkets to buy a cheap stroller, so they rent Disney's instead.
At $15/day and thus $105/week, Disney easily makes back the money it "lost" on
the free shuttle. Not bad, eh? And it's happening over and over and over again
in the parks, with the souvenirs and the food and the snacks and the drinks and
the balloons and the t-shirts, etc.
Aha, you say, but there's a flaw in the theory! People will just rent a car
instead! I can see why you'd think that. After all, for years the Orlando
International Airport boasted a tremendously competitive rental car market. The
players were huge. An entire floor of the airport is given over to rental car
counters.
That may be Jack Wagner's
voice (or his son's) you hear on the
terminal train, but it's not really Disney World, not yet.
But with Disney now offering free rides, all that collapsed. Squeezed for
profits, the rental car companies in recent years have had no choice but to
raise prices dramatically. What was once a highly affordable rental market had
to evolve into a pricey one, just to stay alive. The lack of volume had to be
counteracted in some way, and the only thing left to adjust is price. And so it
is that we find ourselves here in 2008, with Orlando costing more money to rent
a car than Honolulu. Here's what June 6-13, 2008 would look like in the two
cities:
Dollar:
- $150/week for subcompact, $191/week for full size in Orlando.
- $90/week for subcompact, $95/week for full size in Honolulu.
Hertz:
- $290/week for subcompact, $319/week for full size in Orlando.
- $169/week for subcompact, $204/week for full size in Honolulu.
Perhaps in recognition that it's being dramatically underbid by Dollar
(and/or that the rental market in Orlando has really REALLY collapsed), Hertz
recently rolled out an ATM-driven, human-free rental service called Simply
Wheelz. That same week using the human-free rental system would cost $153/week
for the subcompact and $193/week for the full size, which is about what Dollar
charges anyway.
Hit the road Mick...
What the example of Hertz and Dollar really shows is just how far the rental
market has evaporated in Florida since the advent and entrenching of DME as a
free service. It says to me that just about everyone is using Disney's free
shuttle. And that means Disney feels it has a free hand to raise prices, cut
services, lower expectations, and still rake in millions of dollars a day.
DME may only be three years old, but its lingering effect is enormous, and
we're all paying the price every day.
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