Posted Thursday, November 7, 2019 8:46 PM | Contributed by Jeff
Revenue for parks and resorts came in at $6.7 billion. Disney’s park in Hong Kong seems to have taken a hit as a result of protests in the region. Domestically, Iger said he believes they saw some "delayed visitation" because some consumers were waiting for the full opening of its new Star Wars attraction at Disney World and Disneyland.
Read more and see video of CEO Bob Iger from CNBC.
From the company release:
Parks, Experiences and Products revenues for the quarter increased 8% to $6.7 billion, and segment operating income increased 17% to $1.4 billion. Operating income growth for the quarter was due to increases from merchandise licensing, Disneyland Resort and Disney Vacation Club.
Higher operating income at our merchandise licensing business was due to an increase in revenue from sales of merchandise based on Frozen and Toy Story, partially offset by lower sales of merchandise based on Mickey and Minnie.
Growth at Disneyland Resort was primarily due to higher guest spending, partially offset by expenses associated with Star Wars: Galaxy’s Edge, which opened on May 31, and, to a lesser extent, lower attendance. Guest spending growth was primarily due to increases in average ticket prices and higher food, beverage and merchandise spending.
The increase in operating income at Disney Vacation Club was due to higher sales at Disney’s Riviera Resort in the current quarter, which included a timing benefit from the adoption of new revenue recognition accounting guidance (see page 6), compared to sales of Copper Creek Villas & Cabins in the prior-year quarter.
Results at Walt Disney World Resort were comparable to the prior-year quarter, despite the adverse impact of Hurricane Dorian in the current quarter. Increases in guest spending and, to a lesser extent, occupied room nights and attendance were offset by higher costs. Higher costs were driven by costs associated with Star Wars: Galaxy’s Edge, which opened on August 29, and cost inflation. Guest spending growth was primarily due to increased food, beverage and merchandise spending and higher average ticket prices.
Operating income at our international parks and resorts was comparable to the prior-year quarter, as growth at Disneyland Paris and Shanghai Disney Resort was largely offset by a decrease at Hong Kong Disneyland Resort. The increase at Disneyland Paris was driven by higher average ticket prices and attendance growth. At Shanghai Disney Resort, higher operating income was due to an increase in average ticket prices, partially offset by lower attendance. Lower results at Hong Kong Disneyland Resort were due to decreases in attendance and occupied room nights reflecting the impact of recent events.
Read the financial results from The Walt Disney Company.
So in the US, slightly lower attendance in California, slightly higher in Florida, but higher prices for everything including admission in both cases. I think this is the closest thing we've seen to Iger's previous suggestion that fewer people at higher prices is the way to go.
I'm also endlessly amused at all of the blogger nonsense in the last year that suggested WDW was suffering a decline in attendance. Now we know that wasn't true.
I thought the Iger model was fewer people paying more. Per the title of this thread, the expectation is that Star Wars lands will result in higher attendance not lower (I thought the question was rhetorical when I asked it in the other thread -- and Iger thinks they did see some delayed visitation with respect to opening of Star Wars). So they are still operating in the higher prices/sell more mode. That is the dream of every business on the planet and the reality of next to none of them.
I don't think it's binary. Any new attraction will bring in more people, and I think he's responding to the apparently delay in bringing them in. New attractions do create a net increase in capacity. It would be interesting if they provided some kind of measurement of capacity vs. attendance.
That's a good point--relatively flat attendance in the face of new capacity means an improved guest experience just as reduced attendance in the face of fixed capacity does.
Capacity for Disney is something of a different animal (at least in the US; don't know much about the non-US parks). What do you count? Rides. Shows. Resorts. Stores. Restaurants. Character meet/greets. Parades. Downtown Disney (or whatever its called now). Transportation. Lots of ways to keep people occupied and a large number of guests touch all or most of them. Some easier to view in quantifiable capacity type numbers than others.
May be the case that say Star Wars lands added x in terms of daily capacity and that attendance increase as a result will not be 365x (or whatever percentage of capacity they ran on annual average before Star Wars lands). In that sense, ratio of attendance to capacity decreased. Tough to know given public info. Though I expect they do everything they can to analyze that. And they have multiple projects going on at the same time with different initial peak interests/maturities so the capacity increases are not simple. Hope its true as the last couple times I have been there its been very crowded. And I keep seeing people here say Disney just has crowded days and very crowded days now.
It's literally all quantifiable, with fidelity most parks can never achieve because of MagicBands. They have a small army of actuaries that process data and forecast everything, which is why I think they're so good at discounting the right things at the right time (and never admission).
You know a lot more about Disney and IT matters than I. Each of the various capacities at Disney are as equally quantifiable as all others.
In slowdowns, you discount that which makes the most sense given your business model. When you have a lot of hotel rooms and restaurants and large number of guests that visit multiple times per stay over multiple days, you will discount differently than someone with few/no hotel rooms and a larger number people who come for the day and go home. Discount tickets and you help to maintain people staying offsite without dining plans which is the first group of people you are willing to lose. Discount rooms and dining and you help retain your biggest spenders (and keep hotels/restaurants running closer to capacity). Guests care more about total costs of trip rather than individual components of it. In the process, you offload some of the negative effects of the slowdown on non-Disney businesses.
For parks with a lot of day trippers, you pretty much have tickets and food to discount. And going just for the day, you can have breakfast at home, take a picnic lunch and eat dinner on your way home. Tickets likely will be the major opportunity to mitigate impact of slowdown.
If Disney wants to keep saying they never discount admissions, you should have to pay one day price each time you go and family taking 7 day trip should have to pay 7 times daily ticket price. :)
^Not when the point of a multi day discount is to keep people for the whole week instead of share them with Universal or Sea World. Disney makes a lot more money off of you if you stay on property for 7 nights instead of 4. Every discount that company does makes sense, hotels are only discounted when booking rates are below expectations, deluxe rooms are discounted a bigger % to convince people to upgrade (and thus pay more then they were going to.)
Exactly. Disney discounts when/where it makes the most business sense. Including admission. Its not because they view admission as sacrosanct. It is good marketing though.
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