Disney World guests may be upset over increased ticket prices, but in the eyes of Disney chairman and CEO Bob Iger, the company’s pricing strategy is working.
During the earnings call covering Disney’s second quarter of its fiscal year, Iger said the current approach is “really paying off” as the parks add new attractions.
“I think it has created an even greater demand and more popularity, which gives us more flexibility on the pricing side,” Iger said. “But it’s not just about raising prices, it’s about being really smart about it, and it’s showing.”
Disney’s chief financial officer, Christine McCarthy, then added that she’s often been asked if the company can continue to grow profit margins in its theme parks — and she sees no reason why not.
“The yield strategy is something that benefits the parks on multiple levels, spreading the demand, improving the guest experience, and also driving to the bottom line,” McCarthy said. “We also see further potential for improvement in our international parks businesses and also managing our cost base effectively by deploying capital and labor efficiently. There’s no constraint right now on our parks’ margins.”
Despite Disney’s justification that price increases will help control crowds, that has yet to be borne out in attendance figures. As Bill Zanetti, a founding member of the University of Central Florida’s Entertainment Management Advisory Board, told Orlando Rising in January, Disney “doesn’t really know the maximum price that a guest will pay for a ticket to their theme parks.”
Disney reported that theme park division revenue was up 5 percent and segment operating income was up 15 percent over the same quarter in 2018 — an impressive feat, considering the unfavorable year-over-year comparison with the busier Easter holiday falling inside the second quarter last year.
Disney reported higher attendance, guest spending, and hotel occupancy at Disney World, without specifying the exact increase in Central Florida. Attendance at all its U.S. parks was up by 1 percent. These gains were partially offset by increased costs, like Disney World’s union contract signed last year that will ramp up starting wages to $15 per hour by 2021.
The parks are expecting to see a major boost later in the year, with Star Wars: Galaxy’s Edge opening in Anaheim on May 31 and in Disney’s Hollywood Studios on August 29.
“The excitement around this new land is unbelievable and will only grow once people have a chance to experience it for themselves,” iger said. “As we’ve said, it’s the largest land we’ve ever built, but the sheer audacity of the creativity and technology is even more impressive than the size.”
Now that Galaxy’s Edge is close to its debut, financial analysts wanted to know whether Disney would turn its attention to building more Marvel attractions to capitalize on the success of Avengers: Endgame, currently the second highest-grossing film of all-time.
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