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Vote of the week: The Walt Disney Co. vs. Wall Street

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Published: August 11, 2011 at 8:44 PM

The Walt Disney Company's stock was one of the biggies driving Wall Street into the dirt this week, in large part due to analysts' skepticism that the company's theme parks can keep revenues up during a bad economy.

Cinderella's Castle in the Magic Kingdom at Walt Disney World

That makes me wonder just how much analysis Wall Street analysts actually do.

First, the Disneyland Resort in California traditionally does better when the economy tanks, keeping millions of Southern Californians closer to home for their vacations. When a tight family budget puts Hawaii or Mexican resorts out of the question, it's "I'm going to Disneyland!" time for those of us who live in Southern California.

Second, I've noticed that changes in the economy tend to do more to change the make-up of visitors to the Walt Disney World Resort in Florida than it does to reduce the number of those visitors, as opposed to the regional amusement parks, which can get killed in a bad economy. Disney's made huge moves in recent years to add upscale services and accommodations at Disney World, making the resort more attractive to wealthy visitors who are immune to economic downturns. Walt Disney World is no longer exclusively a middle-class destination, and anyone who believes that hasn't been paying attention for the past 15 years. Sure, a flush economy will bring more middle-class visitors as the wealthy tourists jet off to Europe. But a poor economy brings the wealthy and upper middle class back to Disney even as many working-class visitors stay home. Either way, tens of millions of visitors keep coming to Walt Disney World each year.

I don't want to deny that a bad economy could cause Disney World attendance and revenue to dip in 2012. But Disney theme parks have proven themselves quite resilient during the latest downturn - outperforming the rest of the industry up until Harry Potter's debut powered Universal Orlando to even higher percentage growth. (If there's an ongoing threat to Disney in Florida, it's not the economy - it's Potter stealing visitors off Disney property and over to Universal Orlando.)

Ultimately, though, it's you who will decide Disney's financial fate. Not me. And not Wall Street analysts. So tell us what you're planning in 2012. Are you planning to visit Disney's theme parks more often, or less, than you did this year?


Do you or have you owned Disney stock? If so, what's your attitude toward Disney shares these days? As always, thank you for reading Theme Park Insider and sharing your experiences with this community.

Readers' Opinions

From Dominick D on August 11, 2011 at 9:40 PM
This year, the only Disney park Im going to is Typhoon Lagoon. My mom and I are hoping to explore more of Epcot and DHS next year, along going to Magic Kingdom.
From Andrew Mooney on August 12, 2011 at 1:35 AM
Coming from Scotland, we go every few years to WDW for several weeks - we went for three weeks in June/July. Therefore we sadly fall into the bottom category.
From Mitchell Botwin on August 12, 2011 at 5:20 AM
Being a local, We tend to go the same amount each year. I also own Disney stock and I am not concerned, being in the market for the long term, stocks go up and down, it's the normal flex of the market.
From Donna McKay on August 12, 2011 at 5:49 AM
I'm also from (rainy) Scotland. I last visited in 2010 and just couldn't afford to visit this year. Planning my next trip (and my boyfrien'd first) in May 2012...and really can't wait!
From Michael Owen on August 12, 2011 at 8:02 AM
I'm moving from the United Kingdom to Florida in October, so my visits to Walt Disney World are certainly going to increase.

I'm sure, as Robert points out, a deeper analysis into the way in which Disney are developing their revenue streams will show the company is pushing the premium-price services in its parks, with a focus on luxury to attract a more cash-rich visitor.

That's not to say they'll neglect their core crowd, though, I'd imagine Disney will continue to offer considerable discounts on vacations, particularly on value and moderate hotels, whilst I'd take a punt on them continuing with free ticket offers similar to 'give a day, get a day'.

The result would hopefully be that Disney see's an increase in revenue from upper class visitors to offset any potential decreases in spending from lower/middle class guests, whilst at the same time bolstering attendance using the attractive discounts.

Whilst I agree with Robert that Southern Californian's will flock to Disneyland Resort instead of booking vacations in destinations further afield, the key issue Disney has to solve is how to keep on resort guest spending up in the face of a bad economic climate.

From Aaron Mencia on August 12, 2011 at 9:39 AM
Disney World was meant for everybody not just the wealthy. Walt Disney would be ashamed.
From Ted Heumann on August 12, 2011 at 10:12 AM
I've owned Disney stock for years. Unfortunely I had to sell most of my stock to help me buy a house, but I made a KILLING. Fortunely I sold a couple of weeks ago, when the stock was at almost $41. But I bought a couple of shares just this week. The stock is most good companies is usually better over the long haul.
I don't understand why people freak out on Disney. They are still PROFITTING $1.4 BILLION in ONE quarter. They made more PROFIT in one quarter than Six Flags or Cedar Fair GROSSED in the WHOLE year (Six Flags: 2010 gross-$897 mil, profit-$94 mil; Cedar Fair: 2010 gross-$891 mil, profit-$154 mil)! I know that they are different companies (Disney being the world largest media company), but it's still an interesting comparison.
From Mike Gallagher on August 12, 2011 at 11:40 AM
2011..Zero
2012..Zero

'Nuff said.

There, that's better :)

From Brandon Mendoza on August 12, 2011 at 11:49 AM
As long as I have an AP for Disneyland, I'll still go an average of once a quarter. Plus my AP expires right after tax time so that always lets me analyze whether or not I can renew!
From Joe Brown on August 12, 2011 at 12:31 PM
We plan on going in 2012 depedning on if my son gros enough to be able to ride more rides.
From TH Creative on August 12, 2011 at 6:53 PM
The inclusion of Wall Street in the poll comes with the implication that the success of the Disney parks is limited to the health of the American economy.

It's not.

Aaron writes: "Disney World was meant for everybody not just the wealthy. Walt Disney would be ashamed.

I Respond: The assertion that Walt Dinsey would be "ashamed' of the state of the company named after him, may well be (in my opinion) the most ridiculous contention I've read on TPI.

From 24.171.77.211 on August 12, 2011 at 7:08 PM
disney cruise in oct.2011 disney world march 2012 disney cruise again in oct 2012
From Anthony O'Neal on August 12, 2011 at 11:55 PM
Everything was set for us to go in 2012 a month ago.
From 68.5.89.87 on August 13, 2011 at 1:25 AM
I've been an AP at Disneyland for over a decade and go at least once a month, so that won't change. However, we're going to WDW for the fist time ever and for 2 weeks, so that will move the numbers toward 2011, so I suppose 2012 will go down overall, but Dland will probably be the same.
From David Sutter on August 13, 2011 at 5:12 AM
Ahh back to this again. Disney does preform well on it stocks. But at what price? While Ill admit that Walt Disney World is a cash cow for the company. One needs to look deeper. I live only 13 miles form the Magic Kingdom Gate. And Have not seen any Major inprovement to the locals situation. Aka jobs that allow them to live comfortably. Afford better things for there faimlies. Ill be honest the only one who bennfits from Disney is Disney. And if one chooses to belive it or not most enployers only pay what they pay. Which for an hourly cast member still maxs out around 13.50 hour. So while a lot of high doller Guests do flock to the Mouse House in droves. Remember to about 65,000
hour cast memebers this is their living, Its what puts bread on the table. And remember they do this anywere from 32-40 hours a week and during peek times 48hrs. As I was once told when I was a cast member " Its all about the share holders we can always replace hourlys". And thank the heavens hes no longer with the company. There is a major list of what I could go on about. But ill let that pass.
From Tim Hillman on August 13, 2011 at 12:46 PM
THC, I couldn't agree with you more on both statements. Some of the busiest times I have seen at Disney and Universal have been when the US economy is in the doldrums. Matter of fact on one visit to the Magic Kingdom, I think I heard less english spoken by the patrons than I did on my visit to Europa Park.

David, stop the whining. Most castmember jobs are service jobs, and most service jobs are lousy. If somebody chooses to make it a career then they should be willing to accept the downside. Nobody makes them stay.

From Sylvain Comeau on August 14, 2011 at 12:18 PM
This is somewhat off-topic, but...
I'm in favor of higher pay for CMs. Happier employees means better service and more smiles, which makes the guest experience better. If that means higher ticket prices, then so be it. That would cut down on crowds a bit, which, again, makes for a better guest experience.
From Aaron Mencia on August 14, 2011 at 7:02 PM
From David Sutter on August 15, 2011 at 4:41 AM
Im not compalinning. Just stating a fact. And ok Tim Ill give you its a service job. But as Walt said "You can Build the greast place on earth. And If you dont have the right people to run it no one will come." So with that said I refer back to my point. yea you can make lots of money keep your share holders happy. But if you dont keeep those who produce your brand. Sooner or later people notice.
From 68.200.212.214 on August 15, 2011 at 5:06 AM
As a CM at WDW, I can tell you that this year it seems we have a smaller domestic crowd, but a larger number of foreign visitors. Particularly the folks from S. America, which come in tour groups of from around 500 to 1500 (love those S. Am.'s). Where I'm used to seeing car license plates from every state, plus Canada, this year it is mostly Florida, which could me an increase number flying in; however, I'm doubtful. Most of my guests have an accent of one form or another. I'm hearing more German, and French than this time last year, and I've spoken to a larger number from Scotland and Ireland that in previous years. In my opinion, a big reason for the shift in attendance is the new street price of a one day/park ticket at WDW to $85. It simply puts the price of admission out of the reach of most middle-class families. I know that there are various ways to visit Disney at a discount, but it is this price that families use to plan with. And I don't agree with the writer who said that if Walt were alive he'd "... be ashamed" - I do feel he'd be greatly dismayed that his creation would no longer be affordable - and thereby available to everyone.

Disney recently release 3rd quarter attendance figures which showed an increase in attendance. Take that Wall Street! Furthermore, with the recent sellout of Disney's timeshares - the Vacation Club - Disney no longer requires attendance to make its payroll. I'm sure that the money imagineers have been busy cooking up other residual income for the company over the years.

Lastly, to my griping CM brother... Yes, the pay is lousy, but the benefits are better than average, which should be included in your review of your pay package. Furthermore, the topped-out CM can earn more than the $13.50 you noted, depending on their position. Call it Disney Magic, but I don't know of too many other companies that retain as many employees for 30 plus years as Disney Parks and Resorts.

From Andy Stevens on August 15, 2011 at 9:42 PM
Visited WDW in Mid July. It was much busier than usual. On the last night (25th) we thought we'd head to Downtown Disney for a meal. We've never seen it so busy. Even the large car-park to the West of Cirque de Soleil was full. We've never seen that before and we've been holidaying in Florida for 15 years or so.

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