C H A P T E R
4
Forecasting Provides a Competitive
Advantage for Disney
GLOBAL COMPANY PROFILE
Walt Disney Parks & Resorts
W
hen it comes to the world’s most respected global brands, Walt Disney Parks & Resorts
is a visible leader. Although the monarch of this magic kingdom is no man but a mouse—
Mickey Mouse—it’s CEO Robert Iger who daily manages the entertainment giant.
Disney’s global portfolio includes Shanghai Disney (2016), Hong Kong Disneyland (2005),
Disneyland Paris (1992), and Tokyo Disneyland (1983). But it is Walt
Disney World Resort (in Florida) and Disneyland Resort (in California)
Travelshots/Peter
rTavelshots/Peter Phipp/Travelshots.com/Alamy
that drive profits in this $50 billion corporation, which is ranked in the
top 100 in both the Fortune 500 and Financial Times Global 500.
Revenues at Disney are all about people—how many visit the
parks and how they spend money while there. When Iger receives
a daily report from his four theme parks and two water parks near
Orlando, the report contains only two numbers: the forecast of yesterday’s attendance at the parks (Magic Kingdom, Epcot, Disney’s
Animal Kingdom, Disney-Hollywood Studios, Typhoon Lagoon, and
Donald Duck, Goofy, and Mickey Mouse provide the public image of
Disney to the world. Forecasts drive the work schedules of 72,000
cast members working at Walt Disney World Resort near Orlando.
Blizzard Beach) and the actual attendance. An error close to zero is
expected. Iger takes his forecasts very seriously.
The forecasting team at Walt Disney World Resort doesn’t just do
a daily prediction, however, and Iger is not its only customer. The team
also provides daily, weekly, monthly, annual, and 5-year forecasts to the labor management,
maintenance, operations, finance, and park scheduling departments. Forecasters use judgmental
models, econometric models, moving-average models, and regression analysis.
Nicolas Chan/Alamy
The giant sphere is the symbol of Epcot,
one of Disney’s four Orlando parks, for
which forecasts of meals, lodging,
entertainment, and transportation must be
made. This Disney monorail moves guests
among parks and the 28 hotels on the
massive 47-square-mile property (about the
size of San Francisco and twice the size of
Manhattan).
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Melvyn Longhurst/Corbis
Kevin Fleming/Corbis
A daily forecast of attendance is made by adjusting Disney’s annual operating
plan for weather forecasts, the previous day’s crowds, conventions, and
seasonal variations. One of the two water parks at Walt Disney World Resort,
Typhoon Lagoon, is shown here.
With 20% of Walt Disney World Resort’s customers
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family and friends in the massive park. The statue of Walt
Disney greets visitors to the open plaza.
coming from outside the United States, its economic model
includes such variables as gross domestic product (GDP),
cross-exchange rates, and arrivals into the U.S. Disney also
uses 35 analysts and 70 field people to survey 1 million
people each year. The surveys, administered to guests at the
parks and its 20 hotels, to employees, and to travel industry
professionals, examine future travel plans and experiences at
the parks. This helps forecast not only attendance but also
behavior at each ride (e.g., how long people will wait, how
many times they will ride). Inputs to the monthly forecasting model include airline specials, speeches by the chair of
the Federal Reserve, and Wall Street trends. Disney even
monitors 3,000 school districts inside and outside the U.S.
for holiday/vacation schedules. With this approach, Disney’s
5-year attendance forecast yields just a 5% error on average.
dmac/Alamy
Its annual forecasts have a 0% to 3% error.
Attendance forecasts for the parks drive a whole slew of
management decisions. For example, capacity on any day
can be increased by opening at 8 A.M. instead of the usual
9 A.M., by opening more shows or rides, by adding more food/
beverage carts (9 million hamburgers and 50 million Cokes
Forecasts are critical to making sure rides are not overcrowded.
Disney is good at “managing demand” with techniques such as
adding more street activities to reduce long lines for rides. On
slow days, Disney calls fewer cast members to work.
are sold per year!), and by bringing in more employees (called
parks, with the “FAST PASS” reservation system, and by shift-
“cast members”). Cast members are scheduled in 15-minute
ing crowds from rides to more street parades.
intervals throughout the parks for flexibility. Demand can be
managed by limiting the number of guests admitted to the
At Disney, forecasting is a key driver in the company’s
success and competitive advantage.
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