Disney's (HK) admission ticket increases by 20pc for tourists

Today, a local newspaper said that Disneyland (HK) will increase ticket prices by 20pc for tourists (Mainland China & Other Countries) and it will effectively start on next Monday. At the moment, prices will remain the same for HK residents, but it will increase as well within 6 months. There will be 15pc reduction for senior citizens (65 years old and above) though.

There are several issues here :
1. In economics, generally when a price of a good rises, demand of it will fall. If we assume that tendency occurs in Disneyland's case, we might make a rough estimates of this year expected ticket sales. To maintain the same total revenue (let it be 1) with 20pc increase in price (let it be 1.2), we will have visitor rate of 0.83 (=17% fall in ticket sales) of 2008. This simple calculation is based on simplified assumption. If the assumption holds, Disney probably expects that there will be 17% (at most) decrease (recession? other causes?) in number of visitors in 2009 compared to its of 2008, so 20pc price increase is imposed. Of course, if the number of visitors fall less than 17% or if there is an increase in number of visitors, Disney will make higher total revenue (which is good for them). Other factors (such as inflation, wage level, etc) are ignored because its significance is regarded as relatively small.

2. 15pc ticket reduction for senior citizens is simply insignificance for Disneyland. Most of the visitors of Disneyland are below 65 years old. Disneyland is a fun place for kids and adults, but probably not for senior citizens. Hence, this 15pc ticket price reduction for senior citizens is only a way to make a 'emotional compensation' for 20pc increase in general ticket price.

3. Demand for entertainment (especially for tourists) will not fall as directly as other goods with respect to price. People are not going vacations (abroad) everyday. Most ordinary people only do it once a year, or probably twice. Raising price tickets will not have a big impact for number of foreign visitors. Tourism industry is relatively stable. They do not really fluctuate with acceptable economic situation.

If 3 & 2 hold, then in the end, Disneyland will grasp extra revenue (probably extra profit).

Cost and Benefit Analysis.