The Walt Disney Co. (NYSE:DIS) has changed the way people use its theme parks through its FastPass+ reservation system. Now the theme park giant is testing a new use of the technology that could end the concept of waiting in line for rides while also opening up a significant potential source of revenue.
What is FastPass+?
The FastPass+ reservation system allows visitors to the various Disney parks to make reservations for popular rides, shows, and attractions as long as six months before their visit. Using the Disney website or the My Disney Experience app, future park visitors register their tickets, select which park they will be visiting on which date, then select from a variety of ride choices. In general, users get to pick one premium attraction and two less-popular ones. The FastPass+ system then gives them a number of different package choices by times where they will have a reserved one hour window to visit each ride.
For example, on my recent visit to Disney's Hollywood Studios in Orlando, I selected Toy Story Midway Mania as our premium attraction and was able to pick Star Tours (the Star Wars ride) and The Lights, Motors, Action! Extreme Stunt Show. At the Toy Story ride, this spared us an hour-long wait. At the stunt show the FastPass+ reservation got us better seating, and at Star Tours the system saved us a few minutes.
If the new system works it could radically alter the theme park experience for visitors to the various Disney parks. Instead of visits being a day-long process of riding what you want when you want, which can involve long waits, a park trip would become a planned, regimented experience. That fundamentally alters how people currently experience Disney World, Disney Land, and their various sister parks. It's a matter of trading spontaneity for not having to wait in long lines, which is something that could improve customer satisfaction.
"If visitors have to wait more than an hour, It almost doesn't matter how good the ride is -- they're upset," said John Gerner, founder of Leisure Business Advisors, in the The Orlando Sentinel.
Because lines for Toy Story Midway Mania are so long, Disney is conducting a multiday experiment where the ride is only available with a FastPass+ reservation. Standing in line won't be an option. Disney did this once before using FastPass+ as the only way to reserve a spot at a meet and greet from characters from Frozen at its Magic Kingdom park.
The positive of this system is that there won't be any long lines. The negative is that if you miss out on a reservation, you won't have a chance to experience the popular attraction. The system will also limit people's ability to ride a ride over and over.
"You're essentially making people reserve in advance and are taking away this really long line at the scene," Gerner told The Sentinel. "The trade-off is that people willing to wait six hours don't get to do so."
How can Disney profit off of this?
Disney's main theme park competition, Comcast's (NASDAQ:CMCSA) Universal Studios, already makes money from a variation on the FastPass+ model. The parks sell something called Express Pass, which allows holders to skip the main line and wait in a much shorter line. The Universal Studios parks sell a number of variations of the pass -- some which allow one trip on every ride and others which allow unlimited visits -- but the revenue driver is how the passes are priced. Universal charges more for the pass on crowded days and less on days when lines would not be a problem except on the most popular rides.
Having an Express Pass is essential to enjoying the Universal Studios experience I discovered on a family trip to the theme park two summers ago. The price of the passes -- even the single trip ones -- were close to what we paid for our tickets in the first place. During our July trip, the parks were very crowded and Express Pass, which works on most but not all rides, allowed us to experience much more and wait in line for dramatically less time.
How could this work for Disney?
Making the most popular rides FastPass+ only would allow Disney to charge extra for the ability to ride popular attractions more often. The company could sell a limited amount of unlimited tickets, which allow users to snap up as many passes as they want. The company could also sell small add-ons -- such as the ability to ride a specific ride one extra time for a small fee. More importantly, the company could do this while protecting the current FastPass+ experience.
Want to visit Epcot and ride Soarin' once? You pay the normal ticket price. Want to ride it five times, you can, if you pay extra.
With FastPass+ Disney has the opportunity to end lines, deliver a better regular ticket experience while also opening up additional ways to make money by offering premium experiences. The company already does this through character breakfasts, dinner shows, and other premiums. Making their parks entirely reservation based would open up more opportunities to drive revenue from existing park customers in a way that feels like an added service rather than a shakedown.
Daniel Kline has no position in any stocks mentioned. He generally liked FastPass+ when he visited various Disney parks last summer. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.