The Walt Disney Company reported an overall positive quarter for its theme park division in its Tuesday earnings call with a slight bump in attendance and increases in spending by guests at its U.S. parks. It also suggested new attractions opening at Walt Disney World offer another chance to hike ticket prices.
On the call, a financial analyst said the company is approaching its previous peak for its operating income margin. When asked where those margins may be headed, the company indicated it may turn to more “yield management” in its domestic parks.
In other words, Disney will look for ways to maximize revenue from its theme park guests.
“And particularly given the fact that we’ve launched some very, very attractive new properties, including Toy Story Land and the Star Wars Land is going to open sometime in calendar 2019, that’s going to give us some pricing or revenue yield opportunities as well,” Disney chairman and CEO Bob Iger said on the call.
Disney fans are no strangers to ticket prices being raised. Since Iger took over as CEO in 2005, the price of a single-day ticket to a Walt Disney World park has jumped from $59.75 to as high as $129 during peak season for the Magic Kingdom. While that hike was announced only six months ago, there is a precedent for Disney boosting ticket prices twice in a calendar year.
As in other recent quarterly reports, Disney’s revenue grew faster than its attendance or hotel bookings. Throughout the entire theme park division — including Disney’s resorts in Paris, Hong Kong, Shanghai and Tokyo — revenues increased by 6 percent and operating income was up 15 percent.
For the U.S. parks, guests were spending 5 percent more per capita on admissions, food, beverage and merchandise and 8 percent more at Disney hotels.
Attendance, however, rose only 1 percent at Disney’s parks in California and Florida. Hotel occupancy rates dipped by 2 percentage points to 86 percent, which Disney blamed on “reduced room inventory due to room refurbishments and conversions.” Several of its Orlando properties, including the Caribbean Beach, Pop Century and All-Star Movies resorts, are undergoing renovations ranging from major overhauls to retheming rooms.
Iger and Disney’s chief financial officer, Christine McCarthy, was asked if the company has plans to build more hotels over the next three years, but the question went unanswered.
Financial analysts and the Disney executives were more focused on discussing the $71 billion proposed acquisition of 21st Century Fox, which each company’s shareholders approved late last month, with no mention on how the deal could benefit the theme parks.