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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2 Responses

  1. Jake

    It’s about raising prices and adding cheap new attractions as cheaply as possible so Iger can point to the temporary increased revenue and pad his pay as much as possible before he exits. While Universal continues to add higher quality attractions an gain more ground every year.
    The constraints on the parks margins are park capacity which continues to not increase as old attractions are demolished for new ones. Does not take a genius to see that, so their only solution is to keep raising prices, brilliant.

    Reply
    • JM

      This comment makes very little sense. Disney attractions are not cheap. The ones currently being built are FAR from that. You do know they just built a brand-new park in Shanghai, right? It went OVER BUDGET and had a delayed opening. BUT it features many state-of-the-art innovations, even to classic attractions such as Peter Pan’s Flight. They are also improving the cheaply-built Hong Kong park into a quality showstopper.

      If you think they have cheaped out on anything, you have obviously not ridden Seven Dwarfs Mine Train or Slinky Dog Dash. Incredible attention to detail and animatronics went into that.

      Sure, Universal has done some great things recently. But remember, they closed T2 TWO YEARS AGO and have yet to name a replacement. And no one knows when that replacement will be opened. They are also about to close Fear Factor Live. They have closed Sinbad at Islands of Adventure. So if you want to talk about demolishing old attractions to make way for new ones, Universal has done so too. I argue it’s worse there, because they sit on much less land. The empty spaces are far more noticeable there.

      You do realize Disney World has hit capacity TWICE in the last two years right? Sure, the numbers right now are a bit down, but we are about to see the opening of Star Wars in Hollywood Studios. It’s a very different ball game here in Florida than in CA. It is likely to be a good hit. And we have holiday celebrations come up. This Christmas looks to bring in good numbers as in all years before.

      Look, Disney isn’t hurting for attendance. That is why these price increases are happening. If the numbers were to drop (and they could), you will see a reverse. But it has little to do with Iger wanting to pad his pockets. He’s not Eisner. He really does care about building quality experiences.

      Reply

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