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Revenue, guest spending down at Walt Disney theme parks

By Robert Niles
Published: November 12, 2009 at 3:13 PM
The Walt Disney Company has released its financial results for the past quarter and fiscal year. Overall, the numbers are a bit grim:
  • Annual revenue: $10.67 billion in the 12-month period ending Oct. 3, 2009, down from $11.50 billion in year ending Sept. 27, 2008.
  • Quarterly revenue: $2.84 billion in the three months ending Oct. 3, 2009, down from $2.97 billion in the same period in 2008.

Here is the section on theme park performance from Disney's earnings report:

Parks and Resorts revenues for the year decreased 7% to $10.7 billion and segment operating income decreased 25% to $1.4 billion. For the quarter, revenues decreased 4% to $2.8 billion and segment operating income decreased 17% to $344 million. Results for the year and quarter reflected decreases at our domestic operations and at Disneyland Paris.

For the year, lower operating income at our domestic operations was driven by decreased guest spending, principally at our domestic parks and resorts, and lower gains on securitized sales of ownership interests at Disney Vacation Club, partially offset by lower costs at Walt Disney World Resort.

Decreased guest spending at the domestic parks and resorts was due to lower average ticket prices, lower average daily hotel room rates and decreased merchandise spending. Lower costs at Walt Disney World Resort reflected savings from cost mitigation activities, partially offset by labor and other cost inflation.

The decrease at Disneyland Paris was due to decreased guest spending and lower hotel occupancy, partially offset by lower costs. Decreased guest spending reflected lower average ticket prices, decreased merchandise spending and lower average daily hotel room rates. Lower costs were driven by savings from cost mitigation activities, partially offset by labor and other cost inflation.

For the quarter, lower operating income at our domestic operations reflected decreased guest spending and increased costs, partially offset by higher attendance, which was driven by the benefit of the additional week of operations, and increased revenue recognition at Disney Vacation Club in connection with the completion of vacation club properties. Decreased guest spending was due to lower average ticket prices, decreased merchandise, food and beverage spending and lower average daily hotel room rates. Higher costs reflected the additional week of operations in the current quarter and labor and other cost inflation, partially offset by cost mitigation activities.

Lower operating income at Disneyland Paris reflected decreased guest spending due to lower average ticket prices and lower average daily hotel room rates, partially offset by lower costs driven by cost mitigation activities and a favorable claim settlement.

Interesting that attendance is trending up (see, everyone, discounts and heavy advertising do work!) - that's a troublesome development for Disney's competition. While the Mouse's income might be down, it is building market share and keeping people in the habit of visiting Disney theme parks.

So guess at which theme parks those people will be spending their money once they've got a bit more in their wallets?

Readers' Opinions

From Anthony Murphy on November 12, 2009 at 10:54 PM
As from working and selling a couple of park passes, people pretty much have budgeted their money down to a T. If you do the meal plan plus get the rest of the packaged deal, there is , in theory, no reason to spend anymore money. Top that off with me thinking many people are buying things at the Disney Store and Disneystore.com, especially princess costumes. So I think, in the end, Disney is making about the same money, but just not at the parks. Who knows though. Its just a theory that I have to think that Disney Store is playing a bigger chunk which all goes into the Disney bank.
From Steven Lee on November 13, 2009 at 1:16 PM
I agree with you last comments Robert. As long as attendance is up and it is broading the focus, spending being down is not as important. The most important thing now is to get people to feel that it is a good value during these tuff economic times and they will be more likely to return to your park.
From Larry Zimmerman on November 13, 2009 at 7:55 PM
"...keeping people in the habit..." is exactly right. Disneyphiles are truly addicted -- or brainwashed -- to the whole concept. You gotta keep the fix affordable. If you break the cycle, people might realize they don't really NEED to go to the Mouse.

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