Disney's theme parks set attendance records while hauling in more profits
The Walt Disney Company reported this week
that it's taking in more than a billion dollars a month
from its theme parks, for more than $600 million in profits for the first three months of the company's current fiscal year. Disney reported record attendance at Walt Disney World, Tokyo Disney and Hong Kong Disneyland, offsetting attendance dips at Disneyland and Disneyland Paris.
Disney CEO Bob Iger is probably a very happy man, given Disney's recent financial performance.
It's great news for Disney, which is also hauling in the cash from its media divisions, thanks in part to the overwhelming success of Frozen. But theme park fans might also be interested in a couple of other tidbits from Disney's earnings call.
First, Disney's reporting that it spent $539 million on capital investments for its theme parks during the quarter. Remember that Universal's been earning widespread praise from theme park fans for declaring that it will be spending $500 million a year in new capital on its parks. If Disney continues to invest at the same rate it has this quarter, that would put Disney on pace to be spending more than $2 billion a year on its theme park and resort expansions and improvements.
Of course, Disney's got a lot more capital to support, with six wholly-owned theme parks (all in the United States) to Universal's three. Plus, Disney has spending on international parks outside Tokyo (including the new Shanghai park), the Disney Vacation Club properties, and the Disney Cruise Line falling under the Parks and Resorts' capital budget, so one should expect Disney to spend more than Universal overall. But this week's report suggests that Disney's spending just as aggressively as Universal, if not more, on a per-park basis.
Disney's Chief Financial Officer, Jay Rasulo, also noted that Disney World's MyMagic+ system allowed the resort to handle more than 3,000 additional guests a day in the Magic Kingdom during the recent holiday period. That might sound like an impressive justification for the expensive new reservation management system, but let's consider this perspective: 3,000 people per day when the park is operating from 8am to midnight works out to an effective capacity increase of about 188 people per hour. An off-the-shelf spinner ride could deliver that same capacity increase for a fraction of the cost of developing and implementing MyMagic+.
Disney's got plenty of reasons for developing this system beyond better capacity management. But adding the capacity of an extra B-ticket ride isn't Disney's strongest argument in favor of this system.
Finally, Rasulo said that the Magic Kingdom's Seven Dwarfs Mine Train would open "in a few months," further fudging the attraction's once-promised "spring" opening date. At this rate, a cynic might joke if Shanghai Disneyland's version of the Seven Dwarfs Mine Train might see its debut before the Florida version.
And the money keeps rolling in...
Is it weird that this makes me sad? They don't create new attractions, yet attendance at Disney World keeps increasing. This gives them no incentive to really push the envelope.
"In a few months" could mean May or early June, thus still be technically in the Spring. It is surely disappointing, but no less disapointing than Big Thunder Mountain's delayed opening in Disneyland. Visitors are wise to plan for this, or not. It won't hurt Disney either way.
Thats cause most of the workers are paid at the poverty level one step up the ladder from people working at Walmart
So they claim to have spent $539 million in one quarter. How come that money seems to disappear without a trace? Surely not all of it went into Avatar and the Mine Train ride.
Disney is a Huge entertainment company. They make the most $$ of their earnings from ESPN. So if they spent a lot, it does not necessarily mean they spent that in on Theme Parks.
CapEx for Disney's theme parks includes not just new attractions at WDW, but all building projects beyond ordinary cleaning and maintenance at DL, DLP, HKDL, and Shanghai, as well as DVC resorts and DCL ships. Tokyo Disney isn't included, as Disney doesn't have any ownership share of that resort -- Oriental Land Co. owns it under license from Disney. (The license and royalties from OLC count as Disney theme park income, however.)
Brian, that's exactly what Robert reported in his article --Disney put that $539 million into their parks.
Exactly… There are many ways to add monies to a balance sheet. Contactors need deposits, law suits need to be paid…
Fantastic news for Disney! Especially hearing about record attendance at the parks.
I would find it interesting to see a side-by-side comparison of Universal's park approach today vs. Disney's. Why does it feel like Universal is moving full-speed while Disney is moving at a snails pace regarding development in their domestic parks? That would be a good read.
Just to clarify some things...
Mr. McKaig writes: "I would find it interesting to see a side-by-side comparison of Universal's park approach today vs. Disney's. Why does it feel like Universal is moving full-speed while Disney is moving at a snails pace regarding development in their domestic parks? That would be a good read."
Making record profits is easy if you have a monopoly on a product that everyone wants. All you have to do is limit the supply and keep raising prices.
Us capex is 215 million $. International 324 - should be almost all Shanghai. Gota love how Disney never discloses where the profits come from (from which parks, how much from franchise fees). In the annual report theres foreign/domestic disclosed sowewhere below page 100 thats it.
I don't want to be dismissive of those numbers. They are impressive. I probably would have guessed half that number for capital investments, although I did not know the cruise ships were included. So way to go Disney!! I do wonder how much of the $500M is for MyMagic, diesel buses, and stateroom remodels.
I believe one reason it looks as though Universal is outpacing Disney in the new rides dept. is because they had to do it to compete with Disney. Up until WWoHP opened in IOA the Universal parks were sorely lacking in attendance, my family routinely hit the major rides at the two parks in a single day. When Harry Potter opened the huge attendance gave them an influx of cash they wisely reinvested in the parks. However that being said WWoHP actually "hurt" attendance at the Studios side that is why I believe they chose to put the "London" side there as opposed to taking over more of IOA. So basically Universal is playing catch-up with Disney and unfortunately whether we like it or not Disney does not see the need for major changes due to the record attendance numbers.
This is pretty simple. Disney believes the Orlando market is saturated and is focused on increasing incremental dollars per guest. Whether their hotels are full or their parks are packed, they don't see the return on investment for big projects except at underperforming properties. They are in maintenance mode and still seeing attendance gains! When the attendance drops off, or one parks numbers impact another (DL and DCA) then you might see investment. The Asian market is booming and an obvious growth opportunity. Sooner or later Disney spending in China will eclipse that in the US, which is why they are getting a new park.
Robert, I understand the spirit of your comments but your arithmetic is wrong. To divide the 3,000 additional daily guests by the number of hours the park is open as you did implies that each guest is only riding 1 ride in a whole day. To get at the equivalent cappacity increase as that provided by the MyMagic+ system you would need to take into account how many rides (on average) each person rides on a day.
You just can't argue with the bottom line. So long as attendance continues to rise and profits increase, there isn't much incentive to adopt Universal's approach of continuing to club people over the heads with E-Ticket after E-Ticket. Disney isn't playing catch up to anybody. Even with the FP+ hiccup, the Avatar vitriol, on again off again Star Wars Land talks and a generally lukewarm reception of New Fantasyland on the interwebs, Disney just keeps chugging along turning record profits. I'm happy for the company and the executives that continue to run the show and earn their bonuses, good for them. It's the Imagineers who continue to turn out cutting edge concepts for new attractions that get filed away or shelved, possibly to never see the light of day, due to there being no feeling of urgency to give the fans something truly spectacular, that I feel bummed out for.
Price of a Disneyland ticket in 1981: $10.75
Buying gasoline is not nearly as fun as going to Disneyland.
Comparing the price of a commodity with the price of a service is not exactly an apples to apples comparison. Let's see how entertainment venues have increased compared to Disney over the years:
Good job comparing apples to apples Tim. I think Walt, even though he understood what he did as being a business and needing to profit in order to grow, would be embarrassed by those numbers.
I wish Disney park tickets were cheaper, but then it would be too crowded to get your money's worth. It's a trade off Disney has to balance. Hint: They're balancing it well since guests continue to come back.
Phil B. :"Good job comparing apples to apples Tim. I think Walt, even though he understood what he did as being a business and needing to profit in order to grow, would be embarrassed by those numbers (Disney ticket prices).
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