Disney attendance down, but future bookings up, thanks to discount deal
Disney reported today that attendance was down - by 5 percent - at its U.S. theme parks in the first quarter of its fiscal year (Oct.- Dec.) That's the bad news. The good news (for Disney, if not for fans looking for short lines in the parks) is that attendance is up this month over last year at the the Disney parks, as are advance bookings through June.
Disney's extending its "buy four nights, get three free" promotion at Walt Disney World, allowing trips to be booked with the offer until March 29, good for travel dates through Aug. 15. The company credited the deal, and its promotion, with the relatively strong showing at the parks.
The bottom line across the company, however, is carnage, with a 32% drop in first-quarter net income. The parks out-preformed the rest of the company, though... only dropping 24% in net income during the first quarter.
The message for theme parks in 2009 is clear: Discount or die, folks.
They made a profit and I think that is important…
Is that Disney's attendance figures for both US sites combined? It would be interesting to see the difference in attendance between DLR and WDW. I'd wager the latter is dropping much harder.
Iger said that the attendance drop was even between the two properties.
Disney is attacking the situation perfectly. I mean, that deal is exceptional, especially when combined with the on-par deal for Canadians (where our dollar is equivalent to the American dollar). We could potentially save thousands.
Future bookings up....but what exactly is a booking, and will they actually make the trip? This isn't the regional amusement park, it's an expensive destination vacation. Even with the hotel discounts, costs inside the park and the tickets themselves are high. The economy is still in the pits, and unemployment continues to rise. In these conditions, what makes them so confident in a future bookings statistic? Disney is doing well to fight the down times by trying to boost attendance with discounts, but those discounts will cost them if they work to begin with. Once again, this isn't the regional amusement park. Disney's operating costs are without a doubt gigantic. They need robust attendance and big revenue to keep that magic going, and if trends continue, it will get tougher and tougher to maintain the pace, let alone build anything new. Disney and the Orlando parks are venturing into survival mode, somewhere they haven't really gone in a long time. Time will tell how well they handle it.
I dunno, Derek, I think Disney will be fine. Movies, theme parks, tv shows, music, toys, etc, etc...they are so diversified, they will surely survive. I mean, if Disney falls, our way of life will pretty much be over, so a theme park trip will be irrelevant anyway.
I'm not saying that Disney will necessarily sink. They have a lot of money..(although the phrase "It's too big to fail" is a load of crap and has been recently said about a few choice things.). I'm saying that they will at the very least be stagnant when it comes to growth and expansion. We all saw the numbers, 5 percent decrease in attendance, 24 percent net income drop. Some of that will be remedied with job cutting, but per visitor spending will surely be down as well. Couple that with the discounts they are giving and their operating costs, and the bottom line will take a hit. Amusement parks deal with this kind of stuff all the time. They have to fight roller coaster attendance numbers, operating costs, guest spending, and balancing the budget, all while having to remain competitive and building new rides annually. The major chains saw modest increases in the face of the economy, while Disney took a big hit. That alone tells me that many amusement parks are prepared to deal with this economy because they have learned to watch their pennies. Some the hard way (Six Flags), and some the smart way (Cedar Fair). It's the Orlando parks I wonder about.
So, because the smaller amusement companies never had any money, they can better handle a down economy? You may be right. Heck, Six Flags has been operating in the red for so long, I am beginning to think companies do not need to make money to stay in business!
You usually see a big add to Cedar Point every three years. This is year number two. They've wisely been improving their other parks the past couple of years, with Kings Island getting the biggest investment this year in Diamondback. 2010 will likely bring something.
Derek, I mostly agree. Disney, and to a certain extent all the Orlando parks, will face a very tough challenge this year as their ability to draw out of state visitors is going to be severely tested. However, for those travelers that do make the trip, I think the "magical experience" of the parks will be unaltered. Rides may open later, parks may close earlier, shows may have fewer performances, but the "patented" visitor experience will be the last thing Disney will allow to be impacted. It is their bread and butter. Things will have to get a lot worse before Disney lets that aspect of their business model go by the wayside.
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